0001929561-26-000013
SEC filingRXO revenue rose 26% to $5.7B in 2025 from Coyote acquisition and last-mile volume, narrowing net loss to $100M while transportation costs rose as a percent of revenue.
Revenue grew 26.2% to $5.742 billion in 2025 versus $4.550 billion in 2024. The increase was attributable to a $1.2 billion rise in truck brokerage revenue from the Coyote acquisition and a $141 million increase in last-mile revenue from 13% higher volume, partially offset by a $51 million decline in managed transportation. Cost of transportation and services increased to 80.3% of revenue from 78.4%, driven by faster-rising buy rates in tightening capacity markets and last-mile freight mix shifts. Operating loss widened to $79 million from $56 million, reflecting higher depreciation, $12 million goodwill impairment, and restructuring costs, while net loss narrowed to $100 million from $290 million after the absence of the prior-year $216 million one-time distribution expense.
RXO operates as a single reportable segment encompassing truck brokerage, managed transportation, and last-mile services. Truck brokerage benefited most from the Coyote acquisition, while last-mile delivered volume-led growth. Managed transportation faced headwinds from lower automotive expedite volumes. Overall, scale from the acquisition improved SG&A leverage to 14.5% of revenue and reduced direct operating expense as a percent of revenue to 3.3%.
Management stated that existing liquidity and capital sources are sufficient to fund operations for the next twelve months and foreseeable future. Capital expenditures will focus on technology, equipment, and real estate with significant discretion over timing. Post-year-end, the company replaced its revolver with a new $450 million ABL facility. No quantitative forward guidance was provided in the MD&A.
As of December 31, 2025, RXO, Inc. reported a cash position of $17 million, a decrease from $35 million at the end of 2024. Total debt and obligations under finance leases stood at $404 million in principal balance, with a carrying value of $391 million classified as long-term. This debt primarily consists of $355 million in 7.50% Notes due 2027 and a $35 million draw on the revolving credit facility. Shareholders' equity was $1.541 billion. The Company's available borrowing capacity under its Revolver was $202 million as of year-end, constrained by financial covenants. Subsequent to year-end, on February 5, 2026, the Company entered into a new $450 million asset-based revolving credit facility (ABL Facility), using proceeds to repay and terminate the existing Revolver.
The Notes detail significant lease obligations. Future minimum operating lease payments total $301 million, with $85 million due in 2026. An additional $52 million in undiscounted lease payments relates to operating leases that have not yet commenced. The Company's remaining performance obligations, representing fixed consideration from contracts with customers, were approximately $13 million, with 94% expected to be recognized over the next three years. The Company is also involved in several legal proceedings, including class action misclassification claims, for which a loss is not considered probable and no material accrual has been recorded, except for one immaterial settlement.
Capital allocation activities in the Notes include $59 million in payments for purchases of property and equipment during 2025. The Company did not repurchase any shares in 2025, leaving $123 million remaining under its 2023 Share Repurchase Program authorization. No dividends were declared. Financing activities included net proceeds of $33 million from borrowings on revolving credit facilities. The Company also paid $19 million for tax withholdings related to the vesting of stock compensation awards.
RXO operates as a single reportable segment, a brokered transportation platform. The Notes provide a disaggregation of revenue by service offering: Truck brokerage generated $4.225 billion, Last mile $1.196 billion, and Managed transportation $549 million in 2025. Revenue from the largest customer represented approximately $653 million, or 11.4% of total revenue. Geographically, approximately 7% of revenues were generated outside the U.S., primarily in Canada, Mexico, Europe, and Asia. The Company recognized a $12 million goodwill impairment related to its ground and air express reporting unit during the year.
RXO operates in a highly competitive transportation services industry. Intense competition from larger players with greater capital and technology could reduce revenues and margins. Economic recessions, trade policy changes, and geopolitical conflicts reduce freight demand and pressure pricing. Fuel price volatility affects revenue and costs, with surcharge mechanisms providing incomplete mitigation.
The company relies on third-party carriers for capacity. Equipment/labor shortages, independent contractor misclassification lawsuits (multiple class actions) pose significant legal and financial exposure. Labor disputes at ports or railroads could disrupt operations. Seasonal demand peaks require workforce scaling, and failure to meet customer expectations could harm relationships.
Heavy reliance on proprietary IT systems; failure to enhance or protect them could lead to service interruptions, loss of customers, or regulatory penalties. Cyberattacks or data breaches could harm reputation and incur liability. Adoption of AI introduces competitive pressure and regulatory uncertainty.
$408M debt with covenants; inability to refinance or generate cash flows could trigger default. Customer concentration (top 5 = 23% of revenue) creates vulnerability. Goodwill of $1.1B is subject to impairment. Acquisitions and divestitures carry integration risks and may not achieve expected benefits.
Ongoing litigation over independent contractor classification could force business model changes. Environmental regulations and climate change concerns may increase carrier costs. Evolving labor laws (minimum wage, unionization) could raise expenses.
Registration rights for 28.5M shares (17.4% of outstanding) could depress stock price. Anti-takeover provisions and exclusive forum clause may discourage acquisition or stockholder lawsuits.