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    RXO
    Earnings call· Jun 2026(Q2 FY26)

    RXO Q2 FY26 earnings call RXO

    Aug 6, 2026 Source

    Executive summary

    RXO Q2 FY26 — Strong Brokerage Momentum and Market Share Gains

    RXO delivered strong Q2 FY26 results, driven by significant market share gains and improved profitability in brokerage, alongside robust performance in Managed Transportation and Last Mile. The company is leveraging its differentiated carrier vetting and Agentic AI tools to capitalize on a tightening supply-side market, positioning for continued momentum despite anticipated Q3 headwinds in Last Mile. Management believes the company is in the early innings of a multiyear recovery, with a clear path to normalized earnings.

    Highlights

    5

    • Brokerage truckload volume grew by 2% year-over-year, outperforming the market by 500 basis points.

    • Achieved the largest sequential increase in gross profit per load growth rate in 4 years, driven by a 42% spot mix.

    • Managed Transportation was awarded $100 million in freight under management in Q2, with another $100 million in July.

    • Last Mile stops grew by 3%, gaining market share despite continued softness in the housing market.

    • Adjusted EBITDA of $40 million exceeded the high end of the company's guidance range.

    Concerns

    3

    • Last Mile is expected to decline more than typical seasonality in Q3, facing an incremental sequential headwind of $3 million to $5 million.

    • Brokerage gross margin declined by 70 basis points sequentially, primarily due to a 90 basis point headwind from higher fuel prices.

    • Adjusted free cash flow was negative $42 million in the quarter, mainly driven by working capital usage from revenue growth and increased QuickPay usage.

    Guidance & targets

    6
    CategoryTargetConfidence
    Adjusted EBITDA
    $35 million to $45 million
    high materiality
    High
    Truckload volume growth
    low to mid-single-digit percent year-over-year
    medium materiality
    High
    LTL volume growth
    low to mid-single-digit percent year-over-year
    medium materiality
    High
    LTL growth rate
    accelerate
    low materiality
    Medium
    Truckload gross profit per load
    another quarter of sequential improvement
    high materiality
    High
    Automotive managed expedite volume growth
    grow again on a year-over-year basis
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Brokerage
    Revenue growth primarily driven by increased freight rates and higher fuel prices. Gross margin declined 70 basis points sequentially due to a 90 basis point headwind from higher fuel prices. Truckload volume grew sequentially every month in the first 6 months of the year. Spot mix increased by 900 basis points sequentially and 1,500 basis points year-over-year.
    Truckload volume: up 2% YoYLess-than-truckload (LTL) volume: up 3% YoYSpot mix: 42%Truckload gross profit per load: up 11% sequentially
    		$1.3 billion32%—10.7% gross margin
    Complementary Services
    Gross margin was up 130 basis points sequentially and down 170 basis points year-over-year.
    		$488 million7%—21.1% gross margin
    Managed Transportation
    Automotive business contributed to performance. Late-stage sales pipeline remains robust.
    Managed expedite volume: up almost 30% YoYFreight under management awarded: $100 million (Q2 FY26)Freight under management awarded: $100 million (July)
    		$144 million1%——
    Last Mile
    Stops growth was higher than expectations of approximately flat, despite continued softness in the housing market. RXO outperformed the broader industry and gained share within the big and bulky category.
    Stops: grew by 3%
    		$344 million9%——

    Operational metrics

    26
    Gross margin
    13.9%
    Q2 FY26

    Company-wide gross margin.

    Adjusted EBITDA
    $40 million
    Q2 FY26

    Exceeded the high end of the provided range.

    Adjusted EPS
    $0.06
    Q2 FY26

    Reported for the quarter.

    Brokerage revenue as % of total revenue
    73%
    Q2 FY26

    Brokerage revenue was $1.3 billion.

    Complementary Services revenue as % of total revenue
    27%
    Q2 FY26

    Complementary Services revenue was $488 million.

    Net leverage
    4.1x
    Q2 FY26

    Reflecting working capital usage. Anticipated to decline significantly by year-end.

    Total available liquidity
    $350 million
    Q2 FY26

    At the end of the second quarter.

    ABL accordion feature
    $200 million
    Q2 FY26

    Additional capacity on the ABL facility.

    Cash balance
    $15 million
    Q2 FY26

    At the end of the quarter.

    Free cash flow conversion
    40% to 60%
    long term

    Expected over the long term and across market cycles, given asset-light business model.

    Annual casualty insurance spend
    $15 million to $20 million
    annual

    Current annual spend on casualty insurance.

    Insurance deductible per occurrence
    $5 million
    per occurrence

    Deductible in the company's insurance program, in place for a number of years.

    Normalized EBITDA margin
    at least mid-single-digit percent
    through cycle

    Management's expectation for the business through cycle, prior to further technology advantages.

    Truckload volume outperformance
    500 basis points
    Q2 FY26

    Truckload volume outperformed the Cass freight shipments index.

    Truckload spot mix sequential increase
    900 basis pointssequential
    Q2 FY26

    Spot mix increased sequentially.

    Truckload spot mix year-over-year increase
    1,500 basis pointsYoY
    Q2 FY26

    Spot mix increased year-over-year.

    Contract volume as % of overall truckload volume
    58%
    Q2 FY26

    Contract volume remains foundational to the business.

    Buy rate favorability on contract freight improvement
    over 25%YoY
    Q2 FY26

    Augmented capacity to include dedicated and private fleets enabled this improvement.

    Truckload revenue per load increase
    19%YoY
    Q2 FY26

    Benefited from a richer mix of spot freight and higher contract rates.

    July truckload revenue per load growth
    more than 25%YoY
    July

    Accelerated due to increased spot mix and continued contract repricing.

    July truckload gross profit per load increase
    about 40%vs. January
    July

    Reflects strong momentum in the business.

    Industry-wide tender rejections
    approached 18%
    June

    Despite soft demand, indicates a tight market.

    Cass Freight Shipments Index decline
    3%YoY
    Q2 FY26

    Has been down year-over-year since the beginning of 2023, indicating soft demand.

    Spot quotes processed via email through AI agent
    5x more
    Q2 FY26

    Contributed to strong spot mix and adoption of the tool.

    Digital offers from carriers increase
    25%sequential
    Q2 FY26

    Result of improved AI freight matching model and better carrier user experience.

    RXO Connect repeat business
    75%
    within a week

    Percentage of carriers returning to do business with RXO after initial engagement.

    Industry KPIs

    4
    MetricValueDetails
    VolumeTruckload volume up 2% YoY, LTL volume up 3% YoY%
    Revenue per load ex fuel19%%
    Fuel surcharge diesel pricehigher fuel prices
    Intermodal truckload volumeTruckload volume up 2% YoY, LTL volume up 3% YoY%

    Risks & headwinds

    5
    Last Mile weaknessQ3 FY26

    Incremental sequential headwind of $3 million to $5 million

    Mitigation: Brokerage momentum is expected to offset this impact.

    Negative adjusted free cash flowQ2 FY26

    -$42 million

    Mitigation: Expect strong adjusted free cash flow conversion in Q3 FY26 as cash associated with working capital usage is collected.

    Brokerage gross margin compressionQ2 FY26

    70 bps sequential decline, with 90 bps headwind from higher fuel prices

    Mitigation: Higher spot mix and phasing in of higher contract rates are expected to result in sequential truckload gross profit per load improvement in Q3 FY26.

    Rising cost of purchased transportation

    Costs continue to rise due to capacity exits, but contract rates are not rising fast enough to fully offset.

    Mitigation: RXO is the partner of choice for covering spots, projects, and mini bids, which have a higher gross profit per load, enabling volume and profitability growth.

    Insurance market selectivity and potential premium increasesApproaching year-end renewals

    Many brokers in the industry are believed to be significantly underinsured, facing larger increases in insurance capacity and premiums.

    Mitigation: RXO's best-in-class carrier vetting process and safety record are expected to result in a more favorable renewal outcome than the broader market, with a $15 million to $20 million annual spend and $5 million deductible per occurrence.

    What to watch in Q3 FY26

    5

    RXO Adjusted EBITDA

    Q3 FY26
    Current$40 million
    Target$35 million to $45 million

    Why it matters

    This is the headline profitability metric and will indicate if brokerage momentum successfully offsets Last Mile weakness as guided.

    We expect to generate between $35 million and $45 million of adjusted EBITDA in the third quarter.

    Q&A highlights

    8

    Inquiring about the long-term viability of the high spot mix, potential target mix, and hiring needs given increased spot volumes.

    Drew Wilkerson explained that strong contract service enables spot participation, with the company converting spots into 30-90 day projects and leveraging its spot quote agent for speed. He noted that with capacity exits, the spot mix could continue to rise, and there isn't an optimal mix, but rather a focus on customer service. He also highlighted being staffed for growth.

    “If you would have asked me a year ago, I would have told you 60-40 was a good target mix. But when you look at what's going on, on the capacity side and the exits that we have seen and that we're continuing to see, and you're seeing this without strong demand, I think that we still have room for spots to increase off of where we are now, and we're seeing that in the third quarter.”

    asked by J. Bruce Chan · answered by Drew Wilkerson

    2 min read5 chapters

    Detailed Narrative

    01

    Market Dynamics and Supply-Driven Recovery

    The freight market is experiencing a supply-driven recovery, primarily due to regulatory enforcement actions leading to capacity exits. This structural change is improving industry safety and combating theft, setting the stage for a multiyear recovery. Industry-wide tender rejections approached 18% in June, a four-year high, despite soft demand, indicating a tight market where shippers seek trusted partners for covering spots, projects, and mini bids with higher gross profit per load.

    02

    Carrier Vetting and Insurance Advantage

    RXO emphasizes its best-in-class carrier vetting process, which includes not allowing conditional carriers and requiring active authority for at least 90 days. This rigorous approach, recognized by CargoNet and FreightWaves, positions RXO favorably for insurance renewals, as the market becomes more selective. The company believes many competitors are underinsured, creating a market share opportunity due to RXO's superior safety record and comprehensive insurance program.

    03

    Agentic AI and Technology Advancements

    Significant progress has been made in rolling out Agentic AI tools, driving improvements in volume, margin, productivity, and service. Examples include a spot quote agent that processed 5x more email quotes, contributing to a strong spot mix, and an improved AI freight matching model that led to a 25% sequential increase in digital offers from carriers. These tools are also being deployed in complementary services for faster customer onboarding and delivery, decoupling volume growth from headcount growth.

    04

    Managed Transportation Growth

    Managed Transportation continues to be a strong growth driver, securing $100 million in freight under management in Q2 and another $100 million in July. These wins are strategic, increasing synergy loads for other RXO business lines and leveraging the company's scale and technology to solve complex logistics challenges for enterprise shippers. The late-stage sales pipeline remains robust, composed of diverse new names and existing enterprise customers.

    05

    Long-Term Earnings Potential

    Management reiterated that RXO is in the early innings of a multiyear recovery and is "not even close" to normalized earnings. The path to normalized earnings, estimated as at least a mid-single-digit EBITDA margin business, is visible and achievable, driven by further improvements in gross profit per load, continued growth in Managed Transportation, and Last Mile profitability initiatives, with any increase in overall demand expected to result in outsized growth.

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