RXO 2025 Q1 Earnings Misses Targets as Net Loss Widens by 106.7%

RXO (RXO) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The company posted a significant increase in revenue but missed expectations with a wider net loss. The revenue jump was primarily attributed to the acquisition of Coyote. RXO's guidance remains in line with adjusted EBITDA expectations for the second quarter of 2025 projected between $30 million and $40 million, and a Brokerage gross margin anticipated between 13% and 15%.

Revenue
RXO's total revenue surged by an impressive 57.0% to reach $1.43 billion in Q1 2025, up from $913 million in Q1 2024. This growth was driven by its truck brokerage segment, which generated $1.07 billion. The last mile segment contributed $278 million, while managed transportation added $137 million. However, there were eliminations of $49 million, bringing the total revenue to $1.43 billion.

Earnings/Net Income
RXO's net loss deepened to $0.18 per share in Q1 2025, compared to a loss of $0.13 per share in Q1 2024, marking a 38.5% wider loss. The net loss increased to $31 million in Q1 2025, a substantial 106.7% rise from the $15 million loss in the previous year. The performance indicates a negative earnings trend.

Price Action
The stock price of RXO dropped 4.63% during the latest trading day, decreased by 7.81% over the most recent full trading week, and has fallen 10.29% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing RXO shares following a quarter-on-quarter revenue dip and maintaining them for 30 days has historically yielded a 13.79% return over the past five years, underperforming when compared to a benchmark return of 43.18%. This strategy resulted in an excess return of -29.40% and exhibited a compound annual growth rate (CAGR) of 5.33%. The Sharpe ratio stood at 0.43, indicating the return per unit of risk, while the maximum drawdown was recorded at -15.25%, reflecting the largest peak-to-trough decline over the period. The strategy's volatility was noted at 12.54%, showcasing the degree of variation in returns.

CEO Commentary
"Our technology team has been working diligently to integrate the best features of the legacy Coyote technology platform into RXO Connect," said Drew Wilkerson, Chief Executive Officer of RXO. He highlighted that the successful migration to a unified system will enable the company to leverage its scale and realize future cost-of-purchased-transportation synergies, raising the synergy estimate to over $70 million. RXO achieved a 26% year-over-year increase in less-than-truckload brokerage volume and a 24% growth in Last Mile stops, positioning the company favorably for long-term success due to its scale, service, solutions, innovation, and customer relationships.

Guidance
RXO expects second-quarter 2025 adjusted EBITDA to be in the range of $30 million to $40 million. The company also anticipates that its Brokerage gross margin for the second quarter will be between 13% and 15%.

Additional News
In recent corporate developments, RXO announced its participation in the Oppenheimer 20th Annual Industrial Growth Conference, which will be held virtually on May 8, 2025. Drew Wilkerson, Chief Executive Officer, and Jared Weisfeld, Chief Strategy Officer, are set to represent the company. The conference will provide insights into RXO's strategic direction and industry positioning. Additionally, RXO has been working on integrating Coyote’s technology into its RXO Connect platform, a move that is expected to streamline operations and enhance technological capabilities. This integration is part of RXO’s broader strategy to leverage scale and improve efficiency across its operations.