0001929561-25-000102
SEC filingRevenue surged 52.6% YoY to $1.4B driven by Coyote acquisition, but net loss widened to $9M.
In Q2 2025, RXO reported revenue of $1.419 billion, a 52.6% increase from $930 million in Q2 2024. The growth was primarily driven by the Coyote acquisition, which contributed $482 million in truck brokerage revenue. Last mile revenue increased $50 million (17% volume growth), while managed transportation declined $14 million due to lower expedite automotive volume. Gross profit (revenue minus cost of transportation and services) rose to $301 million from $230 million, but gross margin contracted to 21.2% from 24.7% as cost of transportation grew faster (78.8% of revenue vs 75.3%). Direct operating expenses decreased $3 million to $47 million, improving as a percentage of revenue to 3.3% from 5.4% due to cost reduction initiatives and scale from Coyote. SG&A increased $60 million to $214 million but improved as a percentage of revenue to 15.1% from 16.6%. Depreciation and amortization rose to $30 million from $17 million, including $11 million from Coyote. Operating income was $0 million in both periods. Net loss widened to $9 million from $7 million, with effective tax rates of 14.5% and 11.3% respectively.
Truck brokerage revenue surged 93% YoY to approximately $1.0 billion, driven by Coyote. However, cost of transportation as a percentage of revenue increased 0.5 percentage points due to lower freight rates not fully offset by cost reductions. Last mile revenue grew 16.7% to approximately $350 million on 17% volume growth, but cost of transportation as a percentage of revenue rose 2.4 percentage points due to freight mix changes. Managed transportation revenue declined 16.7% to approximately $70 million, driven by lower expedite automotive volume. The Coyote acquisition significantly altered revenue mix, with truck brokerage now representing a larger share.
Management did not provide specific guidance for future periods. The company highlighted its focus on cost reduction initiatives and restructuring actions to improve leverage. The Coyote acquisition is expected to continue driving scale benefits. Key risks include inflationary pressures on operating costs and competitive pricing environment during economic downturns. The company believes existing liquidity is sufficient for the next 12 months.
As of June 30, 2025, RXO held $18 million in cash and cash equivalents, down from $35 million at year-end 2024. Total assets stood at $3.201 billion, with goodwill of $1.125 billion and identifiable intangible assets of $474 million net, largely stemming from the Coyote acquisition. Total debt principal was $408 million, consisting of $35 million drawn on the Revolver, $355 million in 7.50% Notes due 2027, and $18 million in finance leases and other short-term debt. The carrying value of total debt was $403 million. Shareholders' equity was $1.588 billion, reflecting an accumulated deficit of $324 million. The Revolver, with total commitments of $600 million, had an effective interest rate of 8.00% and requires a minimum interest coverage ratio of 3.00:1.00 and a maximum consolidated leverage ratio of 4.50:1.00. The Company was in compliance with all covenants.
The Notes section discloses $22 million in fixed consideration remaining performance obligations as of June 30, 2025, with approximately 98% expected to be recognized over the next three years. These obligations represent firm contracts for which services have not yet been performed. The Company omits from this disclosure obligations with original expected durations of one year or less or those containing variable consideration. No other purchase commitments or contractual obligations are quantified in the Notes.
Capital allocation activities in the first half of 2025 included $29 million in payments for property and equipment, representing approximately 1.0% of revenue. Financing activities provided $4 million in net cash, driven by $261 million in proceeds from revolving credit borrowings, offset by $227 million in repayments. The Company made $18 million in payments for tax withholdings related to vesting of stock compensation awards. No share repurchases occurred during the period; $123 million remains authorized under the 2023 Share Repurchase Program. No dividends were declared or paid.
RXO operates as a single reportable segment. Revenue for the six months ended June 30, 2025, was $2.852 billion, with segment adjusted EBITDA of $81 million. Revenue by service offering: Truck brokerage $2.092 billion, Last mile $593 million, Managed transportation $279 million, less eliminations of $112 million. Geographically, approximately 7% of revenue was generated outside the U.S., primarily in Canada, Mexico, Europe, and Asia. By industry sector, Retail/e-commerce contributed $1.071 billion, Industrial/manufacturing $547 million, Food and beverage $453 million, Logistics and transportation $236 million, Automotive $188 million, and Other $357 million.
CFO of $21M significantly exceeded the $40M net loss, driven by $62M depreciation/amortization and a $159M reduction in accounts receivable. Working-capital swings were material, with accounts payable declining $93M and accrued liabilities falling $71M. Capex intensity remained moderate at $29M (1.4x CFO), producing negative free cash flow absent any stated FCF metric. Financing activity contracted to $4M net inflow, primarily from net revolving-credit draws of $34M, while equity-related outflows totaled $19M. No dividends or share repurchases were disclosed. Cash balance declined $16M to $19M. Overall, cash generation improved year-over-year but remains sensitive to working-capital timing and acquisition spend.