RXO, Inc. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This filing covers the quarterly period ended March 31, 2026. RXO, Inc. operates as a brokered transportation platform with an asset-light business model, primarily focused on truck brokerage, complemented by managed transportation and last-mile services. The company reported results as a single reportable segment.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $1,425 million | $1,433 million |
| Operating Loss | $(28) million | $(30) million |
| Net Loss | $(36) million | $(31) million |
| Loss Per Share (Diluted) | $(0.21) | $(0.18) |
| Segment Adjusted EBITDA | $17 million | $29 million |
| Cash and Cash Equivalents | $21 million | $17 million (Dec 31, 2025) |
| Total Debt (Carrying Value) | $447 million | $404 million (Dec 31, 2025) |
| ABL Facility Availability | $365 million | N/A |
Material Changes vs. Prior Period
- Revenue: Decreased $8 million (0.6%) year-over-year. This was driven by a $14 million decline in managed transportation and a $13 million decline in last-mile revenue, partially offset by a $30 million increase in truck brokerage revenue due to higher rates.
- Cost Structure: Cost of transportation and services increased to 82.2% of revenue from 80.5% in Q1 2025, attributed to tight market capacity and regulatory changes increasing buy rates faster than sell rates.
- Operating Expenses: SG&A decreased $13 million (6.2%) due to restructuring cost savings. Restructuring costs fell to $7 million from $14 million.
- Debt Refinancing: The company issued $400 million in 6.375% Notes due 2031 and used proceeds to redeem all outstanding 7.50% Notes due 2027, resulting in an $11 million debt extinguishment loss.
- Cash Flow: Net cash used in operating activities was $7 million, compared to $2 million in Q1 2025. Financing activities provided $28 million, primarily from the new note issuance.
Outlook, Risks, and Management Commentary
- Market Conditions: Management noted a tight market in Q1 2026 with capacity exiting due to regulatory enforcement, causing buy rates to rise faster than contractual sell rates in the brokerage segment.
- Liquidity: The company entered a new $450 million Asset-Based Lending (ABL) facility in February 2026, replacing the previous revolver. As of March 31, 2026, $365 million was available. Management believes existing liquidity is sufficient for the next 12 months.
- Restructuring: Ongoing restructuring actions include severance and lease impairments. The company expects the majority of severance cash outlays to be completed within twelve months.
- Legal Risks: The company faces several class action and collective action cases regarding worker misclassification in its last-mile business. While one case was settled for an immaterial amount, the company believes other claims are without merit and has not accrued for them as a loss is not considered probable.
- Share Repurchases: No shares were repurchased in Q1 2026. $123 million remains available under the existing $125 million authorization.
Investor Verification Checklist
- Verify the sustainability of the truck brokerage revenue per load increase (12%) against the volume decline (8%) in a tight capacity market.
- Monitor the impact of the new 6.375% Notes due 2031 on future interest expense compared to the redeemed 7.50% Notes.
- Assess the potential financial exposure from ongoing last-mile worker misclassification litigation, noting the lack of insurance coverage for these specific claims.
- Review the trajectory of Segment Adjusted EBITDA, which declined $12 million year-over-year to $17 million.
- Confirm the utilization and borrowing base calculations of the new $450 million ABL facility to ensure continued liquidity flexibility.