RXO, Inc. 2026 Q2 Earnings Call

Good morning, everyone. Thank you for joining today. With me here in Charlotte are RXO's Chief Financial Officer, Jamie Harris, and Chief Strategy Officer, Jared Weisfeld. We delivered strong results in the second quarter, including volume gains across the business and improved profitability. There are four main points I want to convey this morning. First, in brokerage, we gained profitable market share. Truckload volume grew by 2%, outperforming the market. As you'll recall, we previously committed to resuming our truckload outperformance as early as the middle of the year. We achieved that ahead of schedule. We had the largest sequential increase in the gross profit per load growth rate in four years, driven by our spot mix, which was 42% in the quarter. Second, complementary services delivered strong results.

Last mile gained share and grew stops by 3%, and Managed Transportation was awarded about $100 million in freight under management in the quarter. Third, we expect the momentum in the business to continue with anticipated year-over-year brokerage volume and gross profit per load growth again in the third quarter. Lastly, our results are underpinned by our continuous innovation. We made significant advancements in our rollout of agentic AI tools in the quarter, which drove improvements in volume, margin, productivity, and service. I'll start by discussing our second quarter results. In brokerage, we grew overall volume by 2% year-over-year. Full truckload volume grew by 2%, and less-than-truckload volume grew by 3%. Full truckload volume grew sequentially every month in the first six months of the year. We also, again, increased our truckload spot mix, which we grew by 900 basis points sequentially.

This helped to drive an 11% sequential increase in truckload gross profit per load, the highest growth rate in four years. Our focus on having deep customer relationships, providing exceptional service, and being staffed for growth to respond quickly to customer needs is enabling us to win spots, projects, and mini bids. In complementary services, managed transportation continues to win. We were awarded about $100 million in freight under management in the second quarter. These wins are significant because they result in increased synergy loads for RXO's other lines of business. Shippers continue to choose RXO for their managed transportation needs because we help them solve complex logistics challenges with unique high-tech solutions that leverage our scale and infrastructure. Our late-stage sales pipeline in managed transportation remains robust and composed of a diverse set of high-quality new names and long-tenured existing enterprise customers with whom we've built successful, deep relationships.

In last mile, stops grew by 3% as a result of market share gains. RXO remains the preferred provider for leading big and bulky brands. Our exceptional service and significant last mile scale continue to help us gain profitable market share. Overall, RXO's EBITDA was $40 million in the quarter, exceeding the high end of the range we provided due to the rapidly improving dynamics in brokerage and better-than-anticipated last mile stop growth. We've seen all of the key brokerage trends, including volume, spot mix, and gross profit per load, continue into July. Managed transportation also won another $100 million in freight under management in July. Those results give us confidence in our third quarter outlook, which includes continued growth in brokerage volume and gross profit per load, but weakening within last mile. Jamie and Jared will talk more about our outlook in detail later in the call.

Now I'd like to provide an update on the freight market and how we're winning. The supply-driven recovery is well underway. When regulatory enforcement began last fall, we said it was a structural change to the market, and that's proving to be true. This structural change will improve the safety of the industry, help combat theft and fraud, and set the market up for a multiyear recovery once there is a sustained improvement in demand. I'd like to talk about how this is affecting our business. The cost of purchased transportation continues to rise due to the capacity exits, but the contract rates are not rising fast enough to fully offset the increase in cost.

You can see the effect this is having on the industry by looking at the industry-wide tender rejections rate as measured by FreightWaves SONAR, which approached 18% in June, the highest in more than four years. This is normal for this part of the cycle. In this environment, shippers turn to their most trusted partners to get their freight covered. They turn to the partners that have delivered unique solutions for them in all parts of the cycle, that provide deep relationships, and importantly, have the resources to be able to handle significant increases in volume. RXO is working closely with our customers to optimize service, volume, and price, and we're their partner of choice for covering spots, projects, and mini bids. This freight has a higher gross profit per load. We're growing volume and profitability and taking market share despite continued soft demand.

I'd now like to talk about another important topic in today's freight market: carrier vetting, cargo security, and insurance programs. Our approach to these areas is also differentiated. We serve large enterprise shippers with complex needs and a strict standard, and we do not compromise on the quality of carriers we allow onto the RXO platform. Our cargo security program has been recognized externally, recently earning awards from both CargoNet and FreightWaves. As insurance providers put more emphasis on the quality of broker procurement and carrier vetting process, we believe RXO is well-positioned versus the broader industry. Shippers are becoming more selective about their partners, not only selecting providers based on their scale and service, but also on their rigorous carrier vetting process and financial stability. These strengths define the RXO brand and are why about half of the Fortune 500 trust us with their freight.

Jamie will give you more details about our carrier vetting and insurance programs later in the call. Turning to technology, we continue to make significant progress on our roadmap in the second quarter, especially when it comes to our agentic AI initiatives. All are driving results when it comes to volume, margin, productivity, and service. Let me give you some examples of recent wins in this area. Earlier this year, we announced the launch of a new spot quote agent that was driving increases in both volume and gross profit per load for the reps that were using it. In the second quarter, we focused on driving adoption of this tool and processed five times more spot quotes via email through the agent. This contributed to our strong spot mix in the quarter. We're also seeing increased engagement from our carriers as a result of deploying new tools.

Our improved AI freight matching model, combined with a better carrier user experience, helped drive a 25% sequential increase in digital offers from carriers in the quarter. This is a powerful tool, especially given how tight capacity is in the market. AI is helping onboard new managed transportation customers faster and enabling faster delivery within Last Mile. We remain focused on putting these types of powerful tools in more hands and expanding technology's impact across our business to improve volume, margin, productivity, and service. I'm excited for the momentum we've built across the business. In brokerage, we're gaining share, winning lucrative spot opportunities, and achieving significant increases in gross profit per load.

In managed transportation, we have a robust sales pipeline and are winning new customers and expanding with existing customers, which in turn will fuel outperformance in brokerage. In Last Mile, we're the largest provider of home delivery services for the biggest brands in the big and bulky space. We're rolling out and are driving adoption of new tools that are having a significant impact on our ability to capture new business opportunities, improve the user experience for our network of carriers, and reduce the time it takes for people to handle routine tasks. This is helping free up time for our people to build even deeper relationships with our customers and carriers, which in turn helps drive the sales flywheel within the business. On top of the winning formula our business has, the market is much more favorable now than it has been in the last three years.

Capacity continues to leave the market, spurring a supply-driven recovery, and we're clearly in the early innings of it. We've made the most of the current market conditions to fuel our outperformance in the second quarter. Any increase in overall demand will result in even more outsized growth for RXO. We haven't hit normalized earnings for RXO yet. We're not even close, but the path is visible and achievable. I couldn't be more excited for the future. Now, Jamie will discuss our financial results in more detail.

Jamie? Thank you, Drew, and good morning.