RXO Earnings Call Signals Early Supply-Led Recovery

RXO, Inc. ((RXO)) has held its Q1 earnings call. Read on for the main highlights of the call.

RXO’s latest earnings call struck a cautiously optimistic tone as management balanced near-term financial pressure with clear signs of operational momentum. Executives highlighted rising spot exposure, improving revenue per load and early wins from AI-driven initiatives, while acknowledging that volumes, margins and cash flow remain under strain in a still-soft freight market.

Revenue Growth Led by Brokerage and Pricing

Total revenue reached $1.4 billion in the first quarter, with gross margin at 14.2% despite a difficult backdrop. Brokerage remained the core engine at $1.1 billion, or 74% of sales, up 3% year over year as higher freight rates, longer hauls and elevated fuel costs offset volume declines.

Spot Mix and Gross Profit per Load Rising

RXO leaned into the tightening spot market, lifting spot mix by 500 basis points from the prior quarter and roughly 600 basis points year over year. April spot mix hit about 35%, while truckload gross profit per load climbed 9% sequentially and was roughly 10% higher in April than the quarter average, materially aiding margins.

Revenue per Load Accelerates to Four-Year High

Truckload revenue per load jumped 8% year over year in the quarter, the fastest pace in four years as pricing power returned. The trend strengthened further in April, when revenue per load excluding fuel and haul length rose 12% year over year, underscoring a supply-driven rate recovery.

Managed Transportation and New Offerings Gain Traction

Managed Transportation booked more than $100 million of new freight under management in the quarter, signaling sustained demand from shippers for outsourced solutions. The late-stage pipeline swelled by over $200 million, and a new middle-mile solution launched in February has already built a pipeline above $70 million with over $20 million locked in.

AI and Technology Deliver Tangible Productivity Gains

The company showcased measurable benefits from agentic AI and automation, including over 500,000 automated calls in the quarter and a roughly 30% sequential jump in digital truckload quotes. Carrier digital offers rose around 15%, while early adopters of the AI spot agent reported higher volumes and gross profit per load, supporting better unit economics.

Customer Recognition Underscores Relationship Depth

RXO highlighted a string of Carrier of the Year awards from major customers, including Heineken USA, Graphic Packaging and Rise Baking, as proof of service quality. Roughly half of the Fortune 500 now use RXO, and its top customers average about 16 years of tenure, giving the company sticky relationships and cross-sell opportunities.

Productivity Metrics Point to Structural Efficiency

Productivity, measured as loads per person per day, improved about 15% year over year, reflecting process refinement and technology leverage. Management framed these gains as a key pillar for long-term margin expansion, suggesting the company can scale volumes without a proportional increase in headcount.

Adjusted EBITDA and Weather Drag on Results

Adjusted EBITDA landed at just $6 million in the first quarter, at the low end of guidance and underscoring the earnings pressure from soft demand. Management noted that severe weather, particularly impacting the last-mile business, shaved roughly $3 million off results, compounding the profitability drag.

Volume Declines Across Core and Complementary Lines

Overall brokerage volume fell 8% year over year as the freight environment stayed subdued, with truckload loads down 12% and last-mile stops down 8%. Complementary services revenue also slipped 7%, reflecting the broader demand softness across RXO’s portfolio.

Complementary Services See Revenue and Mix Weakness

Complementary services generated $388 million, or 26% of company revenue, but declined 7% year over year amid restructuring and softer demand. Managed Transportation revenue dropped 10% to $123 million, partly tied to an Express restructuring, while last-mile revenue of $265 million declined 5%.

Margin Pressure from Fuel and Transportation Costs

Brokerage gross margin came in at 11.4%, down 50 basis points sequentially, while complementary services margin slid to 19.8%, falling both sequentially and year over year. Higher fuel prices shaved an estimated 20 to 30 basis points from brokerage margin, and tightening truckload capacity increased transportation costs.

Cash Flow, Leverage and Refinancing Costs Weigh

Adjusted free cash flow was negative $15 million, reflecting low profitability and investment needs, pushing net leverage to 3.7 times last-twelve-month bank-adjusted EBITDA. The company also absorbed an $11 million debt extinguishment loss and about $12 million of cash outflows tied to refinancing its senior notes.

Soft Demand and Supply-Driven Tightness Coexist

Management stressed that demand remains muted amid macro uncertainty, with no clear broad-based uptick yet visible, particularly in consumer-sensitive categories. Even so, tender rejection rates across the industry stayed elevated above 15%, signaling capacity tightening and a supply-driven recovery that is beginning to favor brokers.

Last Mile Hit by Seasonal and Category Weakness

The last-mile segment struggled with weaker appetite for big and bulky goods and weather-related disruptions, leaving performance below management’s prior expectations for a modest mid-single-digit decline. Executives still expect improvement going forward but acknowledged that last mile was a notable drag on the quarter.

Guidance and Forward Outlook

For the second quarter, RXO guided adjusted EBITDA to a range of $27 million to $37 million, with the midpoint implying roughly a five to six-fold increase from the first quarter. Management expects brokerage and truckload volumes to be roughly flat year over year in Q2, improving gross profit per load and higher spot mix, along with high single-digit contract rate gains in 2026, to support a path toward the upper end of that range.

RXO’s earnings call painted a picture of a company in transition, navigating a soft demand backdrop while steadily improving its pricing, mix and productivity. For investors, the story hinges on whether the emerging supply-driven recovery and AI-enabled efficiency gains can translate into sustained margin expansion and deleveraging, even if freight volumes remain choppy in the near term.