10-K: RXO Reports 26% Revenue Growth in 2025, Net Loss Narrows

RXO, Inc. announced a 26.2% revenue increase to $5.742 billion in 2025, driven by the Coyote acquisition and last mile volume, despite reporting a net loss of $(100) million.

Summary

• Revenue increased by 26.2% to $5.742 billion in 2025, up from $4.550 billion in 2024.
• The revenue growth was primarily driven by a $1.2 billion increase in truck brokerage revenue due to the Coyote acquisition and a $141 million increase in last mile revenue from a 13% volume increase.
• Net loss for 2025 was $(100) million, an improvement from a $(290) million loss in 2024.
• Operating loss was $(79) million in 2025, compared to an operating loss of $(56) million in 2024.
• A goodwill impairment charge of $12 million was recognized in 2025 for the ground and air express reporting unit.
• Net cash provided by operating activities significantly improved to $51 million in 2025 from $(12) million used in 2024.
• The Coyote acquisition, completed on September 16, 2024, for $1.038 billion in cash, with an additional $10 million paid in Q1 2025 for working capital adjustments, was a key driver of revenue growth.
• The company entered into a new $450 million asset-based revolving credit facility (ABL Facility) on February 5, 2026, which fully repaid and terminated the previous $600 million Revolver.
• As of December 31, 2025, total assets decreased by $137 million to $3.277 billion, and total liabilities decreased by $66 million to $1.736 billion.
• RXO's common stock performance from November 1, 2022, to December 31, 2025, showed a decline from $100 to $66.32, underperforming the Dow Jones Transportation Average ($128.37) and S&P SmallCap 600 ($122.22) over the same period.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed filing. While revenue growth and improved net loss are positive, the worsening operating loss, increased cost of services as a percentage of revenue, goodwill impairment, and significant stock underperformance indicate underlying operational challenges and market skepticism.

Positives

• Significant revenue growth of 26.2% to $5.742 billion in 2025, primarily driven by the strategic Coyote acquisition and strong last mile volume growth (13%).
• Improved net loss, narrowing to $(100) million in 2025 from $(290) million in 2024, indicating progress in financial performance.
• Strong improvement in cash flow from operating activities, moving from a $(12) million use in 2024 to $51 million provided in 2025.
• Direct operating expense as a percentage of revenue decreased to 3.3% in 2025 from 4.4% in 2024, driven by cost reduction initiatives and improved leverage from increased scale.
• SG&A as a percentage of revenue slightly decreased to 14.5% in 2025 from 14.6% in 2024, also benefiting from increased scale and restructuring cost savings.
• Successful integration of the Coyote acquisition, which significantly expanded truck brokerage revenue.
• Management believes existing liquidity and capital sources are sufficient for the next 12 months and the foreseeable future.
• The company was in compliance with all debt covenants as of December 31, 2025.
• Effective disclosure controls and procedures and internal control over financial reporting as of December 31, 2025.

Negatives

• The company reported an operating loss of $(79) million in 2025, worsening from an operating loss of $(56) million in 2024.
• Net loss, while improved, remained substantial at $(100) million in 2025.
• Cost of transportation and services as a percentage of revenue increased to 80.3% in 2025 from 78.4% in 2024, primarily due to a tightening market, capacity exit in certain regions, and buy rates increasing faster than contractual sell rates in truck brokerage, and freight mix changes in last mile.
• Goodwill impairment of $12 million was recognized in 2025 for the ground and air express reporting unit due to lower than anticipated operating results and changing market fundamentals.
• The Managed Solutions reporting unit has $116 million in goodwill with only a 9% excess of estimated fair value over carrying value, indicating potential future impairment risk.
• Managed transportation revenue decreased by $51 million, driven by a decrease in automotive expedite volume.
• RXO's common stock significantly underperformed market indices, declining from $100 to $66.32 between November 1, 2022, and December 31, 2025.
• Total assets decreased by $137 million, including an $18 million decrease in cash and cash equivalents.
• Net cash provided by financing activities dropped sharply from $1.108 billion in 2024 (due to equity offerings for acquisition) to $1 million in 2025.

Risks

• Intense competition in the transportation services industry could lead to reduced revenues, profit margins, or loss of market share.
• Economic recessions, downturns, inflation, interest rate fluctuations, political instability, pandemics, geopolitical conflicts, and changes in international trade policies could materially impact business.
• Volatility in fuel prices may impact fuel surcharge revenue and profitability, as cost recovery mechanisms may not fully capture increases.
• Higher carrier prices, driven by market conditions or increased operating expenses, could decrease income from operations if pricing to customers cannot be increased, potentially leading to losses on contracted freight.
• Extreme or unusual weather conditions can disrupt operations, impact freight volumes, and increase costs.
• Dependence on third-party carriers and vendors for transportation and value-added services, with risks including equipment/labor shortages, service interruptions, and inability to maintain positive relationships.
• Ongoing legal challenges and potential legislative changes regarding the classification of independent contractors as employees, which could significantly increase costs and liabilities.
• Labor disputes or organizing efforts at seaports, railroads, or within the company could adversely affect operations and financial results.
• Failure to develop, implement, maintain, upgrade, enhance, protect, and integrate information technology systems, including those of acquired businesses, could seriously harm the business.
• Cyberattacks or breaches of information systems could result in service interruptions, data loss, liability, reputational damage, and negative financial impact.
• Failure of information technology infrastructure, systems, networks, or processes could lead to transaction errors, billing issues, and loss of sales or customers.
• Issues related to intellectual property rights, including failure to enforce rights or infringement claims by others, could have a material adverse effect on the business.
• Third-party security incidents could result in loss of data, liability, harm to reputation, and negative financial results.
• Risks associated with the use of machine learning and artificial intelligence (AI) technologies, including failure to integrate, keeping pace with developments, new liabilities, regulatory scrutiny, and ethical concerns.
• Challenges in the commercial and credit environment may adversely affect future access to capital on favorable terms.
• Significant debt obligations ($408 million as of December 31, 2025) could adversely affect business and profitability if cash flows are insufficient or refinancing is difficult.
• Claims arising from transportation operations, including accidents, personal injuries, and cargo loss/damage, which may exceed insurance coverage or not be covered.
• Lawsuits and various claims, including independent contractor misclassification claims, could result in significant expenditures and impact operations.
• Increasingly stringent environmental laws and regulations, including transitional risks relating to climate change, could increase operating expenses or reduce available trucking equipment.
• Governmental regulations and political conditions, including new laws related to minimum wages, union rights, or independent contractor classification, could negatively impact the business.
• Inability to attract and retain qualified employees and temporary workers could hinder competitive position, customer satisfaction, and business growth.
• Failure to successfully implement cost and revenue initiatives could negatively impact future financial results.
• Difficulties in managing rapid growth, including integrating new customers or increased volume, could strain resources and negatively affect financial condition.
• Customer concentration risk, with the top five customers accounting for 23% of total revenue in 2025, and the largest customer 11.4%.
• Damage to reputation through unfavorable publicity or actions of employees/contractors could adversely affect financial condition.
• Potential goodwill impairment charges, as seen with the $12 million impairment in 2025.
• Risks associated with future acquisitions, including integration difficulties and failure to achieve anticipated benefits.
• Risks associated with future divestitures, including separation difficulties and potential losses.
• Potential dilution of common stock due to sales of shares under registration rights or future equity issuances.
• Certain provisions in RXO's corporate documents and Delaware law may prevent or delay an acquisition, potentially decreasing the trading price of common stock.
• Exclusive forum provisions in the certificate of incorporation may limit stockholders' ability to bring claims in preferred judicial forums.

Future Outlook

The company anticipates continued growth by leveraging its extensive carrier relationships, proprietary technology, and strong customer service to capitalize on secular trends like increasing broker penetration and shipper preference for digital brokerage. Management expects to continue recruiting and retaining talent, attracting high-caliber independent carriers, and optimizing brokerage processes and pricing. The company believes its existing liquidity and capital sources are sufficient to support operations for the foreseeable future.

Management Comments

• Our truck brokerage business has a history of generating robust free cash flow conversion and a high return on invested capital.
• We believe our technology strongly differentiates us as a leading innovator of complex brokerage solutions that enhance visibility, reliability, speed, accuracy and cost effectiveness, and by the fully automated transactional capabilities of our digital platform.
• We have continued to invest in our cutting-edge technology, including artificial intelligence and machine learning, based on decades of high-quality internal data sets that include attributes that we believe are not available elsewhere.
• Our business operations are led by highly experienced executives who are recognized as leading truck brokerage experts and technologists. These executives have worked together for many years, creating value through operational excellence, data science and a people-centric culture.
• We believe our services are both highly responsive to customer needs and allow us to be proactive in identifying potential improvements.
• Our culture defines success as mutually beneficial results for our stockholders and other stakeholders.
• We believe that our existing liquidity and sources of capital are sufficient to support our operations over the next 12 months and thereafter, for the foreseeable future.
• We believe that our operations are in compliance with current laws and regulations, and we do not know of any existing environmental condition that reasonably would be expected to have a material adverse effect on our business or operating results.
• We believe that we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable.
• We continue to believe the other misclassification claims are without merit and we intend to defend the Company vigorously in these matters.

Industry Context

StockSavvy.ai notes that RXO operates in a highly fragmented and competitive transportation industry, where digital capabilities and scale are increasingly critical differentiators. The company's focus on proprietary technology, including AI and machine learning, aligns with broader industry trends towards digitization and automation in logistics. The successful integration of the Coyote acquisition positions RXO to benefit from increased broker penetration in the for-hire truckload industry and growing shipper preference for digital services. However, the industry remains susceptible to macroeconomic conditions, fuel price volatility, and ongoing challenges related to independent contractor classification, which could impact operational costs and business models across the sector.

Comparison to Industry Standards

• RXO's stock performance, declining from $100 to $66.32 from November 1, 2022, to December 31, 2025, significantly underperformed the Dow Jones Transportation Average (which rose to $128.37) and the S&P SmallCap 600 (which rose to $122.22) over the same period. This indicates a substantial underperformance relative to broader transportation and small-cap market benchmarks.
• The company competes with major players like C.H. Robinson, Echo Global Logistics, Expeditors, Forward Air, Flexport, J.B. Hunt, Landstar System, Total Quality Logistics, and Uber Freight, some of whom have larger customer bases, more resources, and more experience. RXO's ability to maintain or gain market share against these established and digitally aggressive competitors is crucial.
• The increase in cost of transportation and services as a percentage of revenue (from 78.4% to 80.3%) suggests that RXO faced greater pressure on buy rates relative to sell rates in a tightening market, a common challenge for asset-light brokers when capacity is constrained, potentially impacting its competitive pricing against peers.

Corporate Governance

Legal Proceedings

• Involved in numerous proceedings arising from business conduct, including claims for property damage, personal injury, environmental liability, commercial disputes, and employment-related claims.
• Subject to several class action and collective action lawsuits claiming that contract carriers or their delivery workers should be treated as employees rather than independent contractors (misclassification claims).
• Reached an agreement to settle the Gonzalez v. RXO Last Mile, Inc. misclassification claim for an immaterial amount, with the full amount accrued.
• Believes other misclassification claims are without merit and intends to vigorously defend the company; no probable loss has been accrued, and the amount of possible loss cannot be determined at this time.
• Liability and excess umbrella insurance policies generally do not cover misclassification claims.

Related Party Transactions

• The acquisition of Coyote was from United Parcel Service of America, Inc. (UPS) and certain subsidiaries of UPS. RXO's Chief Legal Officer, Jeff Firestone, previously held senior legal positions with UPS for 22 years, which could be considered a related party transaction due to the past employment of a key executive with the seller.
• The Separation and Distribution Agreement between XPO and RXO includes an indemnification clause where RXO agreed to indemnify XPO for certain matters relating to RXO, including misclassification claims, representing a transaction between previously related entities.

Stakeholder Impact

• Shareholders: Potential for dilution from future equity issuances and stock-based awards. Underperformance of stock price compared to market indices may negatively impact shareholder returns. Anti-takeover provisions may limit opportunities for premium acquisition offers.
• Employees: Company is committed to professional development, competitive compensation, and a safe work environment. However, restructuring actions include severance costs, indicating potential job impacts. Unionization efforts could lead to business interruptions.
• Customers: Benefit from cutting-edge technology, access to massive truckload capacity, and asset-light solutions for reliability, visibility, and cost savings. Risk of service disruption due to economic downturns, carrier shortages, or IT failures.
• Carriers (Independent Contractors): Company relies heavily on independent contractors. Ongoing legal challenges regarding their classification as employees pose a significant risk, potentially impacting their operating model and compensation structure.
• Creditors: Debt obligations of $408 million as of December 31, 2025, expose creditors to the company's financial health. Compliance with debt covenants is crucial. The new ABL facility provides secured financing.
• Regulatory Authorities: Company is subject to extensive regulations across various governmental agencies. Non-compliance or changes in regulations (e.g., independent contractor status, environmental) could lead to fines, penalties, or require costly operational changes.

Next Steps

• Continue to market brokerage capabilities and value-added services to new and existing customers.
• Leverage positioning to capitalize on secular trends in demand, such as increasing broker penetration and growing shipper preference for digital brokerage services.
• Continue to recruit and retain talented customer and carrier sales representatives and improve their productivity with technology.
• Continue to attract and retain high-caliber independent carriers.
• Capitalize on first-mover technology advantage to gain market share by optimizing brokerage processes and pricing.
• Monitor the evolving macroeconomic environment and its impact on the business.
• Address ongoing legal challenges related to independent contractor classification.
• Manage the remaining $123 million under the 2023 Share Repurchase Program (no specific plans mentioned, but authorization exists).
• Commence new operating leases in 2026 with future undiscounted lease payments of $52 million.

Key Dates

Recommendation

RXO's 2025 results show significant revenue growth driven by the Coyote acquisition and improved net loss, indicating some operational progress. However, the worsening operating loss, increased cost of services as a percentage of revenue, and a goodwill impairment suggest underlying challenges. The stock's substantial underperformance against industry benchmarks raises concerns about its valuation and future growth prospects despite strategic investments in technology and scale. Given the mixed financial signals and ongoing risks, particularly around independent contractor classification and macroeconomic headwinds, a "hold" recommendation is appropriate. Investors should monitor the company's ability to improve operating margins, integrate acquisitions profitably, and navigate regulatory and competitive pressures before considering further investment.

Keywords

Truck brokerage, Logistics, Transportation, Freight forwarding, Last mile delivery, Managed transportation, Supply chain, Digital brokerage, Coyote acquisition, SEC filing, 10-K, Financial results, Goodwill impairment, Independent contractors, Cybersecurity, Debt, Capital resources, Market risk, Corporate governance