RXO (NYSE:RXO) Posts Quarterly Earnings Results

Key Points

• RXO beat quarterly expectations: EPS was $0.06 versus the $0.04 consensus, while revenue reached $1.77 billion, up 25% year over year and above the $1.63 billion estimate.
• Brokerage momentum strengthened: Truckload volume increased 2% year over year, gross profit per load rose 11% sequentially, and management expects third-quarter adjusted EBITDA of $35 million to $45 million.
• Risks remain despite the improved outlook: Last Mile is expected to create a $3 million to $5 million sequential headwind, adjusted free cash flow was negative $42 million, and net leverage stood at 4.1 times. Analysts maintain a consensus “Hold” rating with a $23.85 price target.

RXO (NYSE:RXO - Get Free Report) posted its quarterly earnings results on Thursday. The company reported $0.06 EPS for the quarter, topping the consensus estimate of $0.04 by $0.02, FiscalAI reports. RXO had a negative net margin of 1.72% and a negative return on equity of 0.98%. The firm had revenue of $1.77 billion for the quarter, compared to the consensus estimate of $1.63 billion. During the same period last year, the firm posted $0.04 earnings per share. The business's revenue was up 25.0% compared to the same quarter last year.

Here are the key takeaways from RXO's conference call:

• Brokerage momentum improved significantly: truckload volume grew 2% year over year, outperforming the market, while truckload gross profit per load increased 11% sequentially as spot mix rose 900 basis points to 42%.
• RXO raised confidence in near-term performance, citing continued July strength, a 50% truckload spot mix, and expectations for low- to mid-single-digit brokerage volume growth in the third quarter. The company expects third-quarter adjusted EBITDA of $35 million to $45 million and sees a path to the high end.
• Complementary businesses added support, with Last Mile stops up 3% and Managed Transportation winning approximately $100 million of freight under management in Q2 and another $100 million in July. Management also said managed expedite volume rose nearly 30% year over year.
• Agentic AI deployment is gaining traction, with five times more spot quotes processed through the email agent and a 25% sequential increase in digital carrier offers; management said the tools are improving volume, margins, productivity, and service while reducing headcount intensity.
• Last Mile is expected to weaken more than normal seasonality in Q3 because of softer customer demand and higher carrier costs, creating a sequential headwind of approximately $3 million to $5 million. Adjusted free cash flow was negative $42 million in Q2 due primarily to working-capital needs, while net leverage stood at 4.1 times.

RXO Trading Up 7.7%

Shares of NYSE:RXO traded up $1.55 during midday trading on Friday, hitting $21.79. 2,133,694 shares of the stock traded hands, compared to its average volume of 2,203,756. RXO has a one year low of $10.43 and a one year high of $29.90. The stock has a market capitalization of $3.59 billion, a PE ratio of -35.72 and a beta of 2.10. The company has a quick ratio of 1.27, a current ratio of 1.27 and a debt-to-equity ratio of 0.30. The business's 50 day moving average is $26.10 and its two-hundred day moving average is $20.09.

Institutional Investors Weigh In On RXO

A number of large investors have recently made changes to their positions in the business. Corient Private Wealth LLC purchased a new position in shares of RXO during the fourth quarter valued at approximately $152,000. Invesco Ltd. lifted its stake in RXO by 22.6% in the fourth quarter. Invesco Ltd. now owns 1,172,748 shares of the company's stock worth $14,824,000 after acquiring an additional 216,399 shares during the period. Mercer Global Advisors Inc. ADV lifted its stake in RXO by 41.1% in the fourth quarter. Mercer Global Advisors Inc. ADV now owns 15,436 shares of the company's stock worth $195,000 after acquiring an additional 4,499 shares during the period. Mackenzie Financial Corp bought a new stake in RXO in the fourth quarter valued at $129,000. Finally, Empowered Funds LLC bought a new stake in RXO in the fourth quarter valued at $660,000. 92.73% of the stock is currently owned by institutional investors.

Wall Street Analysts Forecast Growth

A number of equities analysts recently commented on the stock. UBS Group decreased their target price on shares of RXO from $26.00 to $23.00 and set a "neutral" rating on the stock in a research report on Friday. Morgan Stanley restated an "equal weight" rating and set a $22.00 price target (up from $19.00) on shares of RXO in a research report on Thursday, May 7th. Wall Street Zen raised RXO from a "sell" rating to a "hold" rating in a research note on Saturday, May 9th. Barclays lifted their price objective on RXO from $20.00 to $28.00 and gave the stock an "overweight" rating in a report on Thursday, June 25th. Finally, The Goldman Sachs Group boosted their target price on RXO from $18.00 to $20.00 and gave the company a "neutral" rating in a research note on Thursday, July 16th. Five equities research analysts have rated the stock with a Buy rating, ten have issued a Hold rating and four have given a Sell rating to the company. According to data from MarketBeat, the stock has an average rating of "Hold" and a consensus price target of $23.85.

Trending Headlines about RXO

Here are the key news stories impacting RXO this week:

• Positive Sentiment: RXO highlighted market-share gains and profitable volume growth, including a 2% increase in truckload brokerage volume and a record sequential improvement in gross profit per load. Market Share Gains and Improved Profitability Drive Strong Second-Quarter Results for RXO
• Positive Sentiment: The earnings and revenue beats, along with stronger-than-expected operating metrics, helped drive investor enthusiasm and a positive premarket reaction. RXO Q2 Earnings and Revenues Surpass Estimates
• Positive Sentiment: Citizens JMP upgraded RXO from “market perform” to “outperform” and set a $30 price target, while Truist maintained a “buy” rating with a $28 target, both implying meaningful potential upside. Analyst Ratings
• Neutral Sentiment: Citi lowered its price target from $30 to $23 and shifted to a “neutral” rating, reflecting more cautious expectations despite the quarterly beat. Citi Analyst Action
• Negative Sentiment: Some analysis argues that RXO’s strong revenue growth was driven largely by higher freight rates and fuel prices, while gross profit declined and adjusted EBITDA remained flat. Rising working-capital requirements and leverage also raise concerns about the quality and durability of the recovery. RXO Still Unable To Capture Upcycle Economics

RXO Company Profile

RXO Inc NYSE: RXO is a leading asset-light provider of digital freight brokerage and managed transportation solutions. The company leverages a proprietary technology platform to connect shippers with a network of third-party carriers, enabling optimized route planning, real-time shipment tracking, and dynamic pricing. RXO’s end-to-end service model spans full truckload, less-than-truckload (LTL), intermodal and cross-border freight movements, designed to improve efficiency and reduce transportation costs for its customers.

Operating primarily across North America, RXO serves a diverse base of shippers in industries ranging from retail and consumer goods to manufacturing and automotive.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

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