RXO (RXO -4.21%), a logistics and digital truck brokerage company, reported its financial results for the second quarter of fiscal 2025 on August 7, 2025. The most notable news from the release: adjusted EPS (non-GAAP) for Q2 2025 reached $0.04, ahead of analyst estimates of $0.03, while GAAP revenue for Q2 2025 came in below expectations at $1.4 billion, compared to a $1.44 billion consensus. Despite missing the GAAP revenue target for Q2 2025, RXO showed strong operational progress with significant LTL brokerage growth, ongoing cost synergy capture, and improving cash balances. However, the period also reflected ongoing challenges, as full truckload volumes declined by 8% year-over-year and the company recorded a GAAP net loss of $9 million for Q2 2025, which included $10 million in transaction, integration, restructuring, and other costs.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $0.04 | $0.03 | N/A | N/A |
| Revenue | $1.4 billion | N/A | $930 million | 52.7% |
| Adjusted EBITDA | $38 million | $28 million | 35.7% | |
| Brokerage Gross Margin | 14.4% | 14.7% | (0.3 pp) | |
| Company Gross Margin | 17.8% | 19.0% | (1.2 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding RXO: Business Model and Strategic Focus
RXO operates as an asset-light truck brokerage, meaning it arranges freight transportation without owning a fleet of trucks. Instead, it uses its digital RXO Connect platform to match shippers’ loads with a broad network of independent carriers. This approach reduces the need for expensive capital investments and helps generate steady cash flow.
The company’s recent strategy has centered on growing scale via acquisitions, such as the purchase of Coyote Logistics. This move bolstered RXO’s capabilities and extended its reach, particularly in the UK. Success for RXO hinges on its ability to deepen long-term customer relationships, use proprietary technology to optimize routes and pricing, and realize cost synergies from integration while expanding higher-growth service lines like less-than-truckload (LTL) brokerage and last mile delivery.
What Drove Second Quarter Results?
The second quarter saw both progress and challenges. From a financial perspective, RXO’s adjusted EPS (non-GAAP) for Q2 2025 was $0.04, outperforming analyst estimates of $0.03. Adjusted EBITDA rose 35.7% in Q2 2025 compared to Q2 2024. However, Revenue gains—up over 50% year over year in Q2 2025—were not specified as being largely driven by the roll-in of Coyote Logistics. When compared to analyst forecasts, GAAP revenue for Q2 2025 fell short by about $36 million, or 2.5%. The company also posted a GAAP net loss of $9 million for Q2 2025, reflecting $10 million in transaction, integration, restructuring, and other costs for Q2 2025 (GAAP).
Segment performance highlighted major shifts in business mix. Brokerage, RXO’s core service segment, grew its total volume by 1% year-over-year in Q2 2025, but this masked a sharp contrast between service types: LTL volume—moving smaller freight shipments for multiple customers on the same truck—jumped 45% year-over-year in Q2 2025, suggesting notable market share gains. Conversely, full truckload (FTL) volumes dropped 12% in Q2 2025. The strong LTL growth provided some margin stability, but overall brokerage gross margin dipped to 14.4% in Q2 2025 from 14.7% in Q2 2024.
Complementary services, which include last mile delivery—specialized shipments of large consumer items to final destinations such as homes—delivered positive headline figures. Last mile stop counts rose 17% year-over-year in Q2 2025, marking a fourth consecutive quarter of double-digit expansion.
Operationally, RXO continued to emphasize its asset-light strategy. Capital expenditures (spending on property, systems, and equipment) totaled $29 million for the first six months of 2025, with management lowering its full-year forecast and predicting further reductions in 2026. RXO increased its cash balance sequentially from the first quarter of 2025, even as integration costs climbed. The company also completed major milestones in unifying its technology systems and carrier network post-acquisition, citing early benefits like faster procurement and better carrier matching. RXO is targeting $70 million in annualized cost synergies—with $45 million of that expected in 2025 alone.
Looking Ahead: Guidance and Key Metrics for Investors
For Q3 2025, RXO provided a narrow forward outlook, guiding to adjusted EBITDA of $33 million to $43 million. In the key brokerage segment, leadership expects volume to be approximately flat year-over-year for Q3 2025, with projected brokerage gross margin of 13.5% to 15.0% for Q3 2025. Notably, management clarified that the new Q2 2025 guidance does not factor in additional cost savings from the ongoing Coyote integration, introducing potential upside if synergy targets are surpassed.
No further commentary on dividends was included in the release. Investors should watch how RXO captures more of the targeted synergy cost savings, executes on contract pricing increases, and navigates potential industry headwinds—like continued softness in automotive-related freight and exposure to shifting demand in both LTL and last mile segments.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
