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    RXO
    Earnings call· Mar 2026(Q1 FY26)

    RXO Q1 FY26 earnings call RXO

    May 7, 2026 Source

    Executive summary

    RXO Q1 FY26 — Supply-Driven Recovery and AI-Powered Growth

    RXO is navigating a supply-driven freight market recovery, marked by capacity tightening due to regulatory changes. The company demonstrated strong momentum in Q1 FY26, particularly in brokerage spot opportunities and managed transportation wins, while aggressively deploying Agentic AI solutions to enhance productivity and service. Despite Q1 EBITDA being at the low end of expectations due to weather, RXO anticipates significant sequential EBITDA growth in Q2, driven by improved volume, higher spot mix, and increased contract rates, positioning itself for sustained long-term earnings power.

    Highlights

    5

    • Brokerage full truckload volume improved every month throughout Q1 FY26.

    • Spot mix increased by 500 basis points sequentially in Q1 FY26, leading to strong gross profit per load improvement.

    • Awarded over $100 million in freight under management in Q1 FY26, with late-stage sales pipeline increasing by over $200 million sequentially.

    • Full-year 2026 contract rates are now expected to increase by high single digits, an improvement from the prior low-to-mid single-digit expectation.

    • Reps adopting the new AI spot agent are seeing a 15% increase in both volume and gross profit per load.

    Concerns

    6

    • Adjusted EBITDA was $6 million in Q1 FY26, at the low end of guidance, primarily due to an approximate $3 million impact from severe weather.

    • Reported an adjusted loss per share of $0.09 in Q1 FY26.

    • Complementary Services revenue was $388 million, down 7% year-over-year in Q1 FY26.

    • Last Mile stops declined by 8% year-over-year in Q1 FY26, impacted by severe weather and continued weak demand for big and bulky goods.

    • Adjusted free cash flow was negative $15 million in Q1 FY26, affected by lower profitability and timing considerations.

    • Net leverage stood at 3.7x LTM bank adjusted EBITDA at quarter-end due to lower profitability levels.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 contract rates
    high single digits
    high materiality
    High
    Adjusted EBITDA
    $27 million to $37 million
    high materiality
    High
    Brokerage volume
    about flat year-over-year
    medium materiality
    Medium
    Truckload volume outperformance vs. market
    resume as early as the middle of the year
    medium materiality
    Medium
    LTL volume growth
    returning to year-over-year volume growth
    medium materiality
    Medium
    Last Mile stops
    down a low single-digit percent year-over-year
    medium materiality
    Medium
    Leverage ratio
    move lower
    medium materiality
    Medium
    Free Cash Flow conversion
    40% to 60%
    medium materiality
    High
    Capital expenditures
    decline approximately 30%
    medium materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Brokerage
    Revenue growth driven by increased freight rates, truckload length of haul, and higher fuel prices. Gross margin impacted by tightening market and higher fuel prices (20-30 bps headwind). Truckload volume improved every month throughout Q1.
    Percentage of total revenue: 74%LTL volume growth: 5% YoYLTL volume as percentage of brokerage volume: 28%Truckload volume decline: 12% YoYTruckload volume as percentage of brokerage volume: 72%Spot mix as percentage of truckload volume: 33%Spot mix sequential increase: 500 bpsSpot mix year-over-year increase: 600 bpsContract volume as percentage of truckload volume: 67%Truckload revenue per load increase: 8% YoY (excluding fuel and length of haul)Truckload gross profit per load increase: 9% sequentially
    		$1.1 billion3%—11.4%
    Complementary Services
    Most of the sequential gross margin decline was due to weather impact. Includes Managed Transportation and Last Mile businesses.
    Percentage of total revenue: 26%Gross margin sequential decline: 40 bpsGross margin year-over-year decline: 120 bps
    		$388 million-7%—19.8%
    Managed Transportation
    Year-over-year revenue decline primarily due to restructuring of express service offering. Automotive business increased slightly year-over-year.
    		$123 million-10%——
    Last Mile
    Revenue and stops were lower than expectations due to severe weather impact and continued weak demand for big and bulky goods. Seeing more favorable trends to start Q2.
    Stops decline: 8% YoY
    		$265 million-5%——

    Operational metrics

    26
    Adjusted EBITDA
    $6 million
    Q1 FY26

    At the low end of the provided range, impacted by severe weather.

    Gross margin
    14.2%
    Q1 FY26

    Impacted by severe weather conditions.

    Adjusted loss per share
    $0.09
    Q1 FY26

    Resulting from Q1 performance.

    Debt extinguishment loss
    $11 million
    Q1 FY26

    Result of refinancing 2027 senior notes.

    Interest expense
    $9 million
    Q1 FY26

    Incurred during the quarter.

    Brokerage gross margin headwind from fuel prices
    20 to 30
    Q1 FY26

    Rising fuel prices lead to increased revenue without meaningful corresponding gross profit increase.

    Truckload gross profit per load
    9%sequentially
    Q1 FY26

    Largest sequential improvement in over 3 years.

    Truckload gross profit per load
    10%higher when compared to Q1 FY26
    April

    Continued improvement into the second quarter.

    Freight under management awarded
    $100 million
    Q1 FY26

    New wins resulting in increased synergy loads for other RXO lines of business.

    Managed Transportation late-stage sales pipeline increase
    $200 millionsequentially
    Q1 FY26

    Pipeline composed of high-quality new names and long-tenured existing enterprise customers.

    Middle Mile Solutions sales pipeline
    $70 million
    Q1 FY26

    Pipeline built since the offering launched in February.

    Middle Mile Solutions wins
    $20 million
    Q1 FY26

    Wins secured since the offering launched in February.

    Total available liquidity
    $386 million
    Q1 FY26

    Strong capital structure and liquidity position after refinancing and new ABL facility.

    Net leverage
    3.7x
    Q1 FY26

    Due to lower levels of profitability.

    Cash balance
    $21 millionup $4 million sequentially
    Q1 FY26

    Ended the quarter with increased cash.

    Cash outflows for bond refinancing
    $12 million
    Q1 FY26

    Associated with the bond refinancing.

    Cash outflows for restructuring and integration
    $9 million
    Q1 FY26

    In line with expectations.

    Productivity (loads per person per day)
    15%up
    last 12 months

    Benefiting from technology investments.

    Digital quotes
    30%sequentially improved
    Q1 FY26

    Result of continued investment in proprietary spot bot and API tools.

    Digital offers from carriers
    15%increased
    Q1 FY26

    Result of testing a new matching algorithm.

    Automated phone calls
    500,000
    Q1 FY26

    Automated through Agentic AI deployments.

    Contract renewal rates (excluding fuel)
    mid- to high single digitsup
    Q1 FY26

    Average increase through bid season.

    Contract rates (awarded in last month)
    low double-digit percentageincreased on average by
    Q1 FY26

    Reflects recent bid season outcomes.

    Industry-wide line haul rates
    20%up approximately
    since Q3 last year

    Primarily due to supply side market tightening.

    Industry-wide tender rejections
    15%eclipsed
    Q1 FY26

    Despite muted demand and a seasonally slow quarter.

    Brokerage headcount
    double digitsdown year-over-year
    Q1 FY26

    Efficiency gains from technology and AI.

    Industry KPIs

    4
    MetricValueDetails
    Revenue per load ex fuel8%%
    Fuel surcharge diesel price20 to 30bps
    Intermodal truckload volume-12%%
    Labor productivity headcount15%%

    Product announcements

    3
    ProductTypeDetails
    Middle Mile Solutionslaunch
    AI spot agentlaunch
    AI fraud protection agentlaunch

    Risks & headwinds

    6
    Severe weather impact on EBITDAQ1 FY26

    approximately $3 million

    Soft demand and macroeconomic uncertaintyQ1 FY26, ongoing

    No sustained increase in demand for goods

    Mitigation: Focus on winning spot, project, and mini-bid business; leveraging strong customer relationships and service.

    Tightening full truckload market and higher fuel pricesQ1 FY26, ongoing

    20-30 bps headwind to Brokerage gross margin from higher fuel prices

    Mitigation: Capitalizing on spot opportunities, implementing higher contract rates, leveraging AI for efficiency.

    Weak demand for big and bulky goodsQ1 FY26

    Last Mile stops down 8% YoY

    Mitigation: Seeing more favorable trends to start Q2; focus on gaining profitable market share through exceptional service and scale.

    Potential negative outcome of Montgomery caseFuture (Supreme Court decision pending)

    Could drive out the tail on brokers, increase insurance costs for smaller players

    Mitigation: Prepared for anything; potential for organic growth and M&A opportunities for RXO due to scale, technology, and financial stability.

    Geopolitical concerns and higher oil pricesQ1 FY26, ongoing

    Consumer confidence recently decreased

    What to watch in Q2 FY26

    5

    Truckload volume outperformance vs. market

    as early as mid-year
    Currentdown 12% YoY in Q1, down 2% YoY in April
    Targetresume outperformance

    Why it matters

    Indicates RXO's ability to gain market share and capitalize on improving freight market conditions.

    We expect brokerage volume to be about flat year-over-year in the second quarter and truckload volume to resume its outperformance versus the market as early as the middle of the year.

    Q&A highlights

    6

    RXO's spot mix is up significantly, contrasting with a major competitor's increased contract exposure. What's driving RXO's strategy and ability to execute on increased spot volumes?

    Drew Wilkerson emphasized RXO's service-built model, strong customer relationships (top customers with RXO for 16 years), and ability to win spots, projects, and mini-bids during market disruptions. He highlighted the conversion of a larger sales pipeline and the use of AI for efficiency.

    “We've been very clear for the last several years that this is the part of the market that we win in. We've got a model that's built on service.”

    asked by Stephanie Benjamin Moore · answered by Drew Wilkerson

    2 min read5 chapters

    Detailed Narrative

    01

    Freight Market Dynamics and Supply-Driven Recovery

    The freight market is showing clear signs of improvement, primarily driven by supply-side tightening, despite overall soft demand, typical seasonality, and severe Q1 weather. Capacity continues to exit the market, a trend accelerating due to regulatory changes and enforcement, which RXO believes are structural. This sets the market up for a multi-year recovery when demand eventually improves, though demand remains soft due to macroeconomic uncertainty🌐.

    02

    Customer Wins and Bid Season Success

    Shippers are increasingly selective, choosing scaled brokers like RXO, evidenced by Carrier of the Year awards from Heineken USA, Graphic Packaging, and Rise Baking. RXO's bid season strategy has been successful, with contract renewal rates (excluding fuel) up mid- to high single digits. Contract rates awarded in the last month have increased by low double-digit percentages, leading to an updated expectation of high single-digit growth for full-year 2026 contract rates.

    03

    Momentum in Brokerage and Complementary Services

    Brokerage full truckload volume improved every month in Q1, and spot mix increased by 500 basis points sequentially, contributing to improved gross profit per load. In Managed Transportation, RXO was awarded over $100 million in freight under management in Q1, and the late-stage sales pipeline grew by over $200 million. The new Middle Mile Solutions offering, launched in February, has already secured over $20 million in wins and built a sales pipeline exceeding $70 million.

    04

    Technology and AI Deployment

    RXO is aggressively deploying Agentic AI, focusing on moving beyond repetitive tasks to smart, proactive decision-making. A new AI spot agent, rolled out late in Q1, is showing promising early results, with adopting reps seeing a 15% increase in volume and gross profit per load. The company also automated over 500,000 phone calls in Q1 and introduced an AI fraud protection agent, aiming to structurally improve long-term margin profile and productivity.

    05

    Capital Structure and Liquidity

    RXO refinanced its 2027 senior notes with new notes maturing in May 2031 at a 6.38% coupon. Total available liquidity at quarter-end was $386 million, providing flexibility for investment and growth. Despite lower profitability impacting the net leverage ratio to 3.7x LTM bank adjusted EBITDA, the company anticipates this ratio will move lower in the second half of the year.

    AI-generated summary of the company’s earnings call. Not investment advice.