RXO 10-K & 10-Q changes, risk factors and insider trading
RXO, Inc. · NYSE · Transportation Services · CIK 1929561 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We use, and may continue to expand our use of, machine learning and artificial intelligence (“AI”) technologies to deliver our services and operate our business.”
Removed heading “Risks Related to the Acquisition of Coyote”
Removed heading “We may be unable to integrate Coyote successfully and realize the anticipated benefits of the Coyote acquisition.”
Removed heading “Coyote may have liabilities that are not known to us.”
Removed heading “Acquisition accounting adjustments could adversely affect our financial results.”
Removed heading “Risks Related to the Separation”
Removed heading “We have a limited operating history as a standalone, publicly traded company, and our historical financial information, prior to the Separation, is not necessarily representative of the results we would have achieved as a standalone, publicly traded company and may not be a reliable indicator of our future results.”
Removed heading “If the Separation, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, we could be subject to significant tax liabilities, and, in certain circumstances, we could be required to indemnify XPO for material amounts of taxes and other related amounts pursuant to indemnification obligations under the TMA. In addition, if certain internal restructuring transactions were to fail to qualify as transactions that are generally tax-free for U.S. federal or non-U.S. income tax purposes, we, as well as XPO, could be subject to significant tax liabilities.”
Removed heading “Certain of our directors and employees may have actual or potential conflicts of interest because of their positions with or financial interests in XPO.”
Largest changes
“If the Separation, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, we could be subject to significant tax liabilities, and, in certain circumstances, we could be required to indemnify XPO for material amounts of taxes and other related amounts pursuant to indemnification obligations under the TMA. In addition, if certain internal restructuring transactions were to fail to qualify as transactions that are generally tax-free for U.S. federal or non-U.S. …”see in full comparison
“If we fail to successfully integrate AI into our platform and business processes, or if we fail to keep pace with rapidly evolving AI technological developments, including attracting and retaining talented AI developers and programmers and cybersecurity personnel, we may face a competitive disadvantage. At the same time, the use or offering of AI technologies may result in new or expanded risks and liabilities, including enhanced government or regulatory scrutiny, litigation, privacy and compliance issues, ethical concerns, confidentiality, reputational harm, and security risks. …”see in full comparison
“Under the TMA, we generally are required to indemnify XPO for any taxes resulting from the Separation (and any related costs and other damages) to the extent such amounts resulted from: …”see in full comparison
“We use, and may continue to expand our use of, machine learning and artificial intelligence (“AI”) technologies to deliver our services and operate our business.”see in full comparison
“In connection with the Separation, XPO received an opinion of outside counsel regarding the qualification of the Separation, together with certain related transactions, as a “reorganization” within the meaning of Sections 355 and 368(a)(1)(D) of the Internal Revenue Code (the “Code”). The opinion of counsel was based upon and relies on, among other things, various facts and assumptions, as well as certain representations, statements and undertakings of XPO and RXO, including those relating to the past and future conduct of XPO and RXO. …”see in full comparison
“We have a limited operating history as a standalone, publicly traded company, and our historical financial information, prior to the Separation, is not necessarily representative of the results we would have achieved as a standalone, publicly traded company and may not be a reliable indicator of our future results.”see in full comparison
Full comparison: every changed paragraph (44)
The following are important factors that could affect our financial performance and could cause actual results for future periods to differ materially from our anticipated results or other expectations, including those expressed in any forward-looking statements made in this Annual Report or our other filings with the SEC or in oral presentations such as telephone conferences and webcasts open to the public. You should carefully consider the following factors in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and our Consolidated Financial Statements and related Notes in Part II, Item 8.
•A prolonged,Prolonged, escalated or expanded warcurrent inand Ukrainefuture orinternational conflicts, and potential sanctions imposed in response to thethese war, the Israel-Hamas war and future conflictsconflicts, may adversely impact global supply chain activities and the economy at large; and
•The U.S. government has made significant changes in U.S. trade policy and has taken certain actions that have negatively impacted U.S. trade, including imposing tariffs on certain goods imported into the United States. To date, several governments, including the European Union (“EU”) and China have imposed tariffs on certain goods imported from the United States. These actions may contribute to weakness in the global economy that could adversely affect our results of operations. Any further changes in U.S. or international trade policy could trigger additional retaliatory actions by affected countries, resulting in “trade wars” and further increased costs for goods transported globally, which may reduce customer demand for these products if the parties having to pay those tariffs increase their prices, or in trading partners limiting their trade with countries that impose anti-trade measures.
Motor carriers can be expected to charge higher prices if market conditions warrant or to cover higher operating expenses. Our income from operations may decrease if we are unable to increase our pricing to our customers. Increased demand for over the roadover-the-road transportation services andservices, changes in regulations and increased enforcement of existing regulations may reduce available capacity and increase motor carrier pricing. In some instances where we have entered into contract freight rates with customers, in the event market conditions change and those contracted rates are below market rates, we may be required to provide transportation services at a loss.loss or lower margin. This may be more acute when we have a high percentage of contracted freight with customers and when there are significant changes in prices charged by motor carriers in a short period, as most of our transportation services are procured transactionally. To date, such losses have not been material, but there can be no assurances that such losses will not be material in the future.
As our volumes increase or we increase freight rates charged to our customers, the resulting increase in revenues may increase our working capital needs due to our business modelmodel, which generally has a higher length of days sales outstanding than days payables outstanding.
We may be subject to cybersecurity attacks and other intentional hacking. Any failure to identify and address such defects or errors or prevent a cyber-attack could result in service interruptions, operational difficulties, loss of revenues or market share, liability to our customers or others, the diversion of corporate resources, injury to our reputation or increased service and maintenance costs. Addressing such issues could prove to be impossible or very costly and responding to the resulting claims or liability could similarly involve substantial cost. Also, due to recent advances in technology and well-known efforts on the part of computer hackers and cyber-terroristscyber-criminals to breach data security of companies, we face risks associated with potential failure to adequately protect critical corporate, customer and employee data, which, if released, could adversely impact our customer relationships, our reputation, and even violate privacy laws. Recently, regulatory and enforcement focus on data protection has heightened in the United States. Failure to comply with applicable data protection regulations or other data protection standards may expose us to litigation, fines, sanctions or other penalties, which could harm our business, our reputation, results of operations and financial condition.
We rely on third parties to provide us with a number of operational and technical services. These third parties may have access to our systems, provide hosting services or otherwise processpossess data about us or our customers, employees or partners. Our ability to monitor such third parties’ security measures is limited. Any security incident involving such third parties could compromise the integrity or availability of, or result in the theft of, our and our customers’ data. Unauthorized access to data and other confidential or proprietary information may be obtained through break-ins, network breaches by unauthorized parties, employee theft or misuse, or other misconduct. If any of the foregoing were to occur or to be perceived to occur, our reputation may suffer, our competitive position may be diminished, we could face lawsuits, regulatory investigation, fines, and potential liability and our financial results could be negatively impacted.
We use, and may continue to expand our use of, machine learning and artificial intelligence (“AI”) technologies to deliver our services and operate our business.
If we fail to successfully integrate AI into our platform and business processes, or if we fail to keep pace with rapidly evolving AI technological developments, including attracting and retaining talented AI developers and programmers and cybersecurity personnel, we may face a competitive disadvantage. At the same time, the use or offering of AI technologies may result in new or expanded risks and liabilities, including enhanced government or regulatory scrutiny, litigation, privacy and compliance issues, ethical concerns, confidentiality, reputational harm, and security risks. It is not possible to predict all of the risks related to the use of AI and changes in laws, rules, directives, and regulations governing the use of AI that may adversely affect our ability to develop and use AI or subject us to legal liability. The cost of complying with laws and regulations governing AI could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. Further, market demand and acceptance of AI technologies are uncertain, and we may be unsuccessful in efforts to further incorporate AI into our processes.
Volatility in the worldglobal financial markets could increase borrowing costs or affect our ability to access the capital markets. Our ability to issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for our services or in the financial health of our customers or suppliers or if there are other significantly unfavorable changes in economic conditions.
As of December 31, 2024,2025, we had $374$408 million of outstanding debt and finance leases, consisting primarily of $355 million of our unsecured notes, in addition to $600$565 million of undrawn commitments under the unsecured, multi-currency revolving credit facility that matures in 2029 (the “Revolver”). On February 5, 2026, we entered into the ABL Facility (as defined below) and, in connection therewith, the Revolver was fully repaid and terminated. Refer to Note 10 — Debt to the consolidated financial statements for additional information. We may also incur additional indebtedness in the future.
We use the services of thousands of transportation companies in connection with our transportation operations. From time to time, the drivers employed and engaged by the motor carriers we contract with are involved in accidents, which may result in serious personal injuries. The resulting types and/or amounts of damages may be excluded by or exceed the amount of insurance coverage maintained by the third-party carrier. Although these drivers are not our employees and all of these drivers are employees, owner-operators, or independent contractors working for the third-party carriers, from time to time, claims may be asserted against us for their actions or for our actions in retaining them. Claims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all. A material increase in the frequency or severity of accidents, liability claims or workers’ compensation claims, or unfavorable resolutions of claimsclaims, could materially and adversely affect our operating results. In addition, significant increases in insurance costs or the inability to purchase insurance as a result of these claims could reduce our profitability. Our involvement in the transportation of certain goods, including but not limited to, hazardous materials, could also increase our exposure in the event one of our third-party carriers is involved in an accident resulting in injuries or contamination.
As of December 31, 2024,2025, we had $1.1 billion of goodwill on our Consolidated Balance Sheet.Sheets. Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations. We assess potential impairment of our goodwill annually, or more frequently if an event or circumstance indicates an impairment loss may have been incurred. Impairment may result from significant changes in the manner or use of the acquired assets, in connection with the sale, spin off or other divestiture of a business unit, negative industry or economic trends and/or significant underperformance relative to historic or projected operating results. For a discussion of our goodwill impairment testing, see “Critical Accounting Policies and Estimates—Evaluation of Goodwill” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Risks Related to the Acquisition of Coyote
We may be unable to integrate Coyote successfully and realize the anticipated benefits of the Coyote acquisition.
On September 16, 2024, we completed the acquisition of Coyote for $1.038 billion in cash, subject to certain additional customary adjustments. The successful integration of Coyote and operations into those of our own and our ability to realize the expected synergies and benefits of the transaction are subject to a number of risks and uncertainties, many of which are outside of our control. We will also be required to devote significant management attention and resources to integrating business practices, cultures and operations of each business. The risks and uncertainties relating to integrating the two businesses include, among other things:
•the challenge of integrating complex organizations, systems, operating procedures, compliance programs, technology, networks and other assets of Coyote;
•the difficulties harmonizing differences in the business cultures of our company and Coyote;
•the difficulties of integrating Coyote's European business and operating it in a complex commercial and regulatory environment;
•the inability to successfully integrate our respective businesses in a manner that permits us to achieve the cost savings, synergies and other anticipated benefits from the Coyote acquisition;
•the inability to minimize the diversion of management attention from ongoing business concerns during the process of integrating Coyote into our businesses;
•the inability to resolve potential conflicts that may arise relating to customer, supplier and other important relationships of our business and Coyote;
•difficulties in retaining key management and other key employees; and
•the challenge of managing the expanded operations of a significantly larger and more complex company and coordinating geographically separate organizations.
We incurred substantial expenses to consummate the Coyote acquisition but may not realize the anticipated cost synergies and other benefits. In addition, even if we are able to integrate Coyote successfully, the anticipated benefits of the Coyote acquisition may not be realized fully, or at all, or may take longer to realize than expected. Given the size and significance of the Coyote acquisition, we may encounter difficulties in the integration of the operations of Coyote and may fail to realize the full benefits and synergies of the Coyote acquisition, which could adversely impact our business, results of operation and financial condition.
Coyote may have liabilities that are not known to us.
Coyote may have liabilities that we failed, or were unable, to discover in the course of performing our due diligence investigations. We cannot assure you that the indemnification available to us under the purchase agreement in respect of the Coyote acquisition in connection with such agreement will be sufficient in amount, scope or duration to fully offset the possible liabilities associated with the business of Coyote or property that we assumed upon consummation of the Coyote acquisition. We may learn additional information about Coyote that materially adversely affects us, such as unknown or contingent liabilities and liabilities related to compliance with applicable laws. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations.
Acquisition accounting adjustments could adversely affect our financial results.
We account for the Coyote acquisition using the acquisition method of accounting. We allocate the total estimated purchase price to net tangible assets and amortizable intangible assets, and based on their fair values as of the acquisition date record the excess, if any, of the purchase price over those fair values as goodwill. Differences between preliminary estimates and the final acquisition accounting may occur, and these differences could have a material impact on the consolidated financial statements and the combined company’s future results of operations and financial position.
Risks Related to the Separation
We have a limited operating history as a standalone, publicly traded company, and our historical financial information, prior to the Separation, is not necessarily representative of the results we would have achieved as a standalone, publicly traded company and may not be a reliable indicator of our future results.
The financial information in this Annual Report refers to RXO as a public company that began regular-way trading on November 1, 2022. Prior to the Separation, we derived our combined financial statements from XPO’s accounting records and presented these on a standalone basis as if RXO had been operated independently from XPO. Our historical financial information, prior to the Separation, does not necessarily reflect the financial condition, results of operations or cash flows that we will achieve as a standalone publicly traded company.
Prior to the Separation, we were able to benefit from XPO’s shared economies of scope and scale in costs, employees, vendor relationships and customer relationships. Additionally, XPO performed various corporate functions for us, such as legal, treasury, accounting, human resources, investor relations, and finance. Our historical financial results, prior to the Separation, reflect allocations of corporate expenses from XPO for such functions, which may be less than the expenses we will incur as a separate, publicly traded company. In addition, our working capital requirements and capital for our general corporate purposes, including capital expenditures and acquisitions, historically were part of the corporate-wide cash management policies of XPO. Following the completion of the Separation, our results of operations, cash flows, working capital and financing requirements may be subject to increased volatility and our ability to fund capital expenditures and investments, and service debt, may be diminished and we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements, which may or may not be available and may be more costly. For these reasons, as well as the additional risks related to the Separation noted below, we may not achieve the expected benefits of the Separation.
If the Separation, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, we could be subject to significant tax liabilities, and, in certain circumstances, we could be required to indemnify XPO for material amounts of taxes and other related amounts pursuant to indemnification obligations under the TMA. In addition, if certain internal restructuring transactions were to fail to qualify as transactions that are generally tax-free for U.S. federal or non-U.S. income tax purposes, we, as well as XPO, could be subject to significant tax liabilities.
In connection with the Separation, XPO received an opinion of outside counsel regarding the qualification of the Separation, together with certain related transactions, as a “reorganization” within the meaning of Sections 355 and 368(a)(1)(D) of the Internal Revenue Code (the “Code”). The opinion of counsel was based upon and relies on, among other things, various facts and assumptions, as well as certain representations, statements and undertakings of XPO and RXO, including those relating to the past and future conduct of XPO and RXO. If any of these facts, assumptions, representations, statements or undertakings is, or becomes, inaccurate or incomplete, or if XPO or RXO breaches any of its representations or covenants contained in the separation agreement and certain other agreements and documents or in any documents relating to the opinion of counsel, the opinion of counsel may be invalid and the conclusions reached therein could be jeopardized.
Notwithstanding receipt of the opinion of counsel, the U.S. Internal Revenue Service (the “IRS”) could determine that the Separation and/or certain related transactions should be treated as taxable transactions for U.S. federal income tax purposes if it determines that any of the representations, assumptions or undertakings upon which the opinion of counsel was based are false or have been violated. In addition, the opinion of counsel represents the judgment of such counsel and will not be binding on the IRS or any court, and the IRS or a court may disagree with the conclusions in the opinion of counsel. Accordingly, notwithstanding receipt of the opinion of counsel, there can be no assurance that the IRS will not assert that the Separation and/or certain related transactions do not qualify for tax-free treatment for U.S. federal income tax purposes or that a court would not sustain such a challenge. In the event the IRS were to prevail with such a challenge, we, as well as XPO and XPO’s stockholders, could be subject to significant U.S. federal income tax liability.
If the Separation, together with certain related transactions, were to fail to qualify as a transaction that is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, in general, for U.S. federal income tax purposes, XPO would recognize taxable gain as if it had sold the RXO common stock in a taxable sale for its fair market value, and XPO stockholders who receive such RXO shares in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.
In addition, as part of and prior to the Separation, XPO and its subsidiaries completed an internal reorganization, and XPO, RXO and their respective subsidiaries incurred certain tax costs in connection with the internal reorganization, including non-U.S. tax costs resulting from transactions in non-U.S. jurisdictions, which may be material. With respect to certain transactions undertaken as part of the internal reorganization, XPO obtained opinions of external tax advisors regarding the tax treatment of such transactions. Such opinions are based and relied on, among other things, various facts and assumptions, as well as certain representations, statements and undertakings of XPO, RXO or their respective subsidiaries. If any of these representations or statements is, or becomes, inaccurate or incomplete, or if XPO, RXO or their respective subsidiaries do not fulfill or otherwise comply with any such undertakings or covenants, such opinions may be invalid or the conclusions reached therein could be jeopardized. Further, notwithstanding receipt of any such tax opinions, there can be no assurance that the relevant taxing authorities will not assert that the tax treatment of the relevant transactions differs from the conclusions reached in the relevant tax opinions. In the event the relevant taxing authorities prevail with any challenge in respect of any relevant transaction, XPO, RXO and their subsidiaries could be subject to significant tax liabilities.
Under the TMA, we generally are required to indemnify XPO for any taxes resulting from the Separation (and any related costs and other damages) to the extent such amounts resulted from: (i) an acquisition of all or certain portions of the equity securities or assets of RXO, whether by merger or otherwise (and regardless of whether we participated in or otherwise facilitated the acquisition), (ii) certain other actions or failures to act by RXO, or (iii) any breach of RXO’s covenants or undertakings contained in the Separation and Distribution Agreement and certain other agreements and documents. Further, under the TMA, we generally would be required to indemnify XPO for a specified portion of any taxes (and any related costs and other damages) arising as a result of the failure of the Separation and certain related transactions to qualify as a transaction that is generally tax-free (including as a result of Section 355(e) of the Code) or a failure of any internal distribution that is intended to qualify as a transaction that is generally tax-free to so qualify, in each case, to the extent such amounts did not result from a disqualifying action by, or acquisition of equity securities of, XPO or RXO. Any such indemnity obligations could be material.
Certain of our directors and employees may have actual or potential conflicts of interest because of their positions with or financial interests in XPO.
Because of their current or former positions with XPO, certain of our executive officers and directors continue to own equity interests in XPO following the Separation. In addition, Mr. Jacobs serves as executive chairman of XPO while also serving as chairman of our board of directors. These factors could create, or appear to create, potential conflicts of interest to the extent that we and XPO face decisions that could have different implications for the two companies. For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between XPO and our company regarding the terms of the agreements governing the Separation and the relationship between the companies.
We have entered into a registration rights agreement (the “Registration Rights Agreement”) with Jacobs Private Equity, LLC (“JPE”), an affiliate of Brad Jacobs, our chairman, as well as purchase agreements with certain significant stockholders that have granted such stockholders certain registration rights. AsPursuant ofto Decemberthese 31,agreements, 2024,we JPEregistered andfor theresale significant stockholders beneficially owned 21.628.5 million shares of our common stock with registration rights,stock, which represents approximately 13.3%17.4% of our outstanding shares of common stock.stock as of December 31, 2025. Any sales inof connectionthese withregistered the Registration Rights Agreement and such purchase agreements,shares, or the prospect of any such sales, could adversely impact the market price of our common stock.stock and could impair our ability to raise capital through future sales of equity securities.
In the future, existing holders of our common stock may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including any equity awards that we will grant to our directors, officers and employees. Our employees have stock-based awards that correspond to shares of our common stock after the Separation as a result of conversion of their XPO stock-based awards.stock. We anticipate that the compensation committee of our board of directors will grant additional stock-based awards to our employees under the employee benefits plan. Such awards will have a dilutive effect on the number of RXO shares outstanding, and therefore on our earnings per share, which could adversely affect the market price of our common stock.
In addition, we are subject to Section 203 of the Delaware General CorporateCorporation Law (the “DGCL”), which could have the effect of delaying or preventing a change of control that you may favor.control. Section 203 provides that, subject to limited exceptions, persons that acquire, or are affiliated with persons that acquire, more than 15% of the outstanding voting stock of a Delaware corporation may not engage in a business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which that person or any of its affiliates becomes the holder of more than 15% of the corporation’s outstanding voting stock.
Management's Discussion & Analysis (MD&A)
Largest changes
“The ABL Facility contains customary representations and warranties, events of default and financial, affirmative and negative covenants for facilities of this type, including, but not limited to, financial covenants relating to a fixed charge coverage ratio, a minimum liquidity requirement and a minimum excess availability requirement, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, specified agreements, restricted payments and prepayment of certain indebtedness.”see in full comparison
“For our 2025 goodwill assessment, we performed a quantitative analysis for our reporting units using a combination of the income and market approaches. As of November 30, 2025, we completed our annual impairment tests for goodwill. During 2025, our ground and air express reporting unit experienced lower than anticipated operating results and changing market fundamentals, resulting in the decision to restructure the reporting unit. …”see in full comparison
“As of November 30, 2025, our Managed Solutions reporting unit had $116 million in goodwill and the excess of its estimated fair value over carrying value was 9%. Should our estimates change based on Managed Solutions’ operating results, market conditions, long-term growth projections or other assumptions underlying our forecast, including changes to the discount rate, the Managed Solutions reporting unit may become subject to goodwill impairment in future periods.”see in full comparison
“For our 2024 goodwill assessment, we performed a quantitative analysis for our reporting units using a combination of the income and market approaches. As of November 30, 2024, we completed our annual impairment tests for goodwill with all of our reporting units having fair values in excess of their carrying values, resulting in no impairment of goodwill.”see in full comparison
“Goodwill impairment in 2025 was $12 million and was driven by the impairment of our ground and air express reporting unit resulting from our annual goodwill assessment.”see in full comparison
“Prior to the Separation, the historical results of operations included allocations of XPO costs and expenses including XPO’s corporate function which incurred a variety of expenses including, but not limited to, information technology, human resources, accounting, sales and sales operations, procurement, executive services, legal, corporate finance and communications. An allocation of these expenses is included to burden all business units comprising XPO’s historical results of operations, including RXO. …”see in full comparison
Full comparison: every changed paragraph (46)
Our managed transportation service provides asset-light solutions for shippers who outsource their freight transportation to gain reliability, visibility and cost savings. The service uses proprietary technology to enhance our revenue synergy, with cross-selling to truck brokerage and last mile. Our managed transportation offering includes bespoke load planning and procurement, complex solutions tailored to specific challenges, performance monitoring, engineering and data analytics, among other services. Our control tower solution leverages the expertise of a dedicated team focused on continuous improvement, and digital, door-to-door visibility into order status and freight in transit. In addition, we offer technology-enabled managed expedite services that automate transportation procurement for time-critical freight moved by road and air charter carriers. We also offer freight forwarding services, including facilitation of ocean and air transportation, customs brokerage and additional domestic services.services including middle mile.
Our last mile offering is an asset-light service that facilitates consumer deliveries performed by highly qualified third-party contractors. We are the largest provider of outsourced last mile transportation for heavy goods in the United States,U.S., positioned within 125 miles of the vast majority of the U.S. population and serving a customer base of omnichannel and e-commerce retailers and direct-to-consumer manufacturers.
The Separation
On November 1, 2022, we completed the separation from XPO, which we refer to as the Separation. The Separation was accomplished by the distribution of 100 percent of the outstanding common stock of RXO to XPO stockholders as of the close of business on October 20, 2022, the record date for the distribution. XPO stockholders received one share of RXO common stock for every share of XPO common stock held at the close of business on the record date. On November 1, 2022, RXO became a standalone publicly-traded company.
On theSeptember acquisition16, date,2024, the Company acquired Coyote from UPS and certain subsidiaries of UPS. We acquired Coyote for $1.038 billion in cash, subject to certain additional customary adjustments. The purchase price was subsequently increased by $10 million for working capital and other post-closing adjustments totaling $10 million,adjustments, which was paid in the first quarter of 2025. Refer to Note 3 — Acquisition to the consolidated financial statements in this Annual Report on Form 10-K for disclosures regarding the Company’s acquisition of Coyote.
Economic inflation can have a negative impact on our operating costs, and any economic recession could depress activity levels and adversely affect our results of operations. A prolonged period of inflation could cause interest rates, fuel, wages and other costs to continue to increase, which would adversely affect our results of operations unless our pricing to our customers correspondingly increases. Generally, inflationary increases in labor and operating costs related to our operations have historically been offset through price increases. However, the pricing environment generally becomes more competitive during economic downturns, which may, as it has in the past, affect our ability to obtain price increases from customers both during and following such periods.
Prior to the Separation, the Company’s financial statements were prepared on a standalone combined basis and were derived from the consolidated financial statements and accounting records of XPO (the “historical financial statements”). On November 1, 2022, the Company became a standalone publicly traded company, and its financial statements post-Separation are prepared on a consolidated basis. The combined financial statements for all periods presented prior to the Separation are now also referred to as “consolidated financial statements,” and have been prepared under the U.S. generally accepted accounting principles (“GAAP”).
Sales, general and administrative expense (“SG&A”), including the allocated costs of XPO prior to the Separation, primarily consists of salaries and commissions for the sales function; salary and benefit costs for executive and certain administration functions; third-party professional fees; facility costs; bad debt expense; and legal costs.
Prior to the Separation, the historical results of operations included allocations of XPO costs and expenses including XPO’s corporate function which incurred a variety of expenses including, but not limited to, information technology, human resources, accounting, sales and sales operations, procurement, executive services, legal, corporate finance and communications. An allocation of these expenses is included to burden all business units comprising XPO’s historical results of operations, including RXO. The charges reflected have either been specifically identified or allocated using drivers including proportionally adjusted earnings before interest, taxes, depreciation and amortization, which includes adjustments for transaction and integration costs, as well as restructuring costs and other adjustments, or headcount. The Company believes the assumptions regarding allocations of XPO corporate expenses are reasonable. Nevertheless, the consolidated financial statements may not reflect the results of operations, cash flows and financial position had the Company been a standalone entity during the periods presented. The majority of these allocated costs are recorded within SG&A; Depreciation and amortization expense; Transaction and integration costs; and Restructuring costs in the Consolidated Statements of Operations. All charges and allocations for facilities, functions and services performed by XPO organizations have been deemed settled in cash by RXO to XPO in the year in which the cost was recorded in the Consolidated Statements of Operations.
For the periods ended before the Separation, XPO investment represents XPO’s historical investment in RXO and includes the net effects of transactions with and allocations from XPO as well as RXO’s accumulated earnings. Certain transactions between RXO and XPO, including XPO’s non-RXO subsidiaries, have been included in these consolidated financial statements, and are considered to be effectively settled at the time the transaction is recorded. The total net effect of the cash settlement of these transactions is reflected in the Consolidated Statements of Cash Flows as a financing activity and in the Consolidated Statements of Changes in Equity as XPO investment. The components of the net transfers to and from XPO include certain costs allocated from XPO’s corporate functions, income tax expense, certain cash receipts and payments made on behalf of RXO and general financing activities.
For the periods ended before the Separation, the Company was a member of the XPO consolidated group, and its U.S. taxable income was included in XPO’s consolidated U.S. federal income tax return as well as in the tax returns filed by XPO with certain state and local taxing jurisdictions. For the periods ended after the Separation, the Company will file a consolidated U.S. federal income tax return as well as certain state and local income tax returns.
The Company’s consolidated financial statements include the accounts of RXO, Inc. and its majority-owned subsidiaries. The Company has eliminatedAll intercompany accounts and transactions.transactions have been eliminated.
Revenue increased by 15.9%26.2% to $5.7 billion in 2025, compared with $4.6 billion in 2024, compared with $3.9 billion in 2023.2024. The year-over-year increase in revenue in 2025 was driven primarilyby by(i) a $796$1.2 millionbillion increase in revenuetruck brokerage revenue, primarily as a result of the Coyote acquisition and (ii) a $141 million increase in ourlast truckmile brokeragerevenue, business.primarily as a result of a 13% increase in volume. This was partially offset by (i) a $125 million decrease in legacy RXO truck brokerage revenue, driven primarily by a 7% decrease in revenue per load, which was impacted by a combination of fuel prices, freight mix and transportation market rates, partially offset by a 1% increase in legacy RXO load volume and (ii) a $90$51 million decrease in revenue in our managed transportation business, driven primarily by a decrease in ocean andautomotive expedite air rates and volume.
Cost of transportation and services (exclusive of depreciation and amortization) in 20242025 was $4.6 billion, or 80.3% of revenue, compared with $3.6 billion, or 78.4% of revenue, compared with $3.0 billion, or 75.6% of revenue in 2023.2024. The $1.0 billion increase is primarily attributable to a full year of Coyote activity in 2025. The year-over-year increase as a percentage of revenue induring 20242025 was driven primarily by (i) a 1.60.5 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue,revenue as lowerthe freightmarket tightened during 2025, with capacity rapidly exiting in certain regions driven primarily by regulatory changes and enforcement, which caused buy rates wereto notincrease fullyfaster offsetthan byour correspondingcontractual reductionssell in cost of purchased transportation,rates and (ii) a 0.52.7 percentage point increase in last mile cost of transportation and services as a percentage of revenue as a result of freight mix changes.
Direct operating expense (exclusive of depreciation and amortization) of $190 million in 2025 decreased $12 million, or 5.9%, from $202 million in 2024 decreased $33 million, or 14.0%, compared with $235 million in 2023.2024. As a percentage of revenue, direct operating expense (exclusive of depreciation and amortization) decreased to 3.3% in 2025 compared to 4.4% in 2024 compareddriven toprimarily 6.0%by incost 2023reduction initiatives and improved leverage as a result of increased scale due to costthe reductionCoyote initiatives.acquisition.
SG&A of $832 million in 2025 increased $166 million, or 24.9%, from $666 million in 20242024, increasedprimarily $75attributable million,to ora 12.7%,full fromyear $591of millionCoyote activity in 2023, primarily due to the Coyote acquisition.2025. As a percentage of revenue, SG&A decreased to 14.5% in 2025 compared with 14.6% in 2024 compared with 15.0% in 2023 driven primarily by improved leverage as a result of increased scale due to the Coyote acquisition, as well as cost savings from restructuring actions executed in 2024.actions.
Depreciation and amortization expense in 20242025 was $87$116 million, compared with $67$87 million in 2023.2024. Depreciation and amortization expense for 20242025 included $19an increase of $28 million asattributable to a resultfull year of the Coyote acquisition.activity in 2025.
Transaction and integration costs in 2024 and 20232025 were $22 million, compared with $53 million andin $12 million, respectively.2024. Transaction and integration costs for 2025 and 2024 included $49$19 million asand a$49 resultmillion, ofrespectively, attributable to the Coyote acquisition. Transaction and integration costs for 2023 primarily comprised spin-off related costs.
Restructuring costs in 20242025 and 20232024 were $33$38 million and $16$33 million, respectively, and primarily comprised severance costs and operating lease impairment costs.impairments.
Goodwill impairment in 2025 was $12 million and was driven by the impairment of our ground and air express reporting unit resulting from our annual goodwill assessment.
Other expense in 2024 includesincluded a one-time charge of $216 million representing a deemed non-pro rata distribution in connection with the private placement common stock issuance completed in August 2024, based on the difference between the issuance price and the closing market price of common stock on August 12, 2024, the effective date of the private placement.2024.
Our effective income tax rates were 4.6%13.3% and (13.0)%4.6% for 20242025 and 2023,2024, respectively. Our effective tax rate for 2025 differs from the U.S. corporate income tax rate of 21% primarily due to the effect of non-deductible expenses when experiencing a pre-tax loss. Our effective tax rate for 2024 differs from the U.S. corporate income tax rate of 21% primarily due to the effect of large non-deductible tax items associated with the Coyote acquisition and related common stock issuances. Our effective tax rate for 2023 differs from the U.S. corporate income tax rate of 21% primarily due to a discrete tax benefit of $2 million from changes in reserves for uncertain tax positions.
Our ability to fund our operations and anticipated capital needs are reliant upon the generation of cash from operations, supplemented as necessary by utilization of our revolving credit facilities.facility. Our principal uses of cash in the future will be primarily to fund our operations, working capital needs, capital expenditures, repayment of borrowings, share repurchases and strategic business development transactions. The timing and magnitude of our growth and working capital needs can vary and may positively or negatively impact our cash flows.
On October 18, 2022, we entered into a five-year, $500 million,million unsecured, multi-currency revolving credit facility (the “Revolver”) with $50 million available for the issuance of letters of credit. Loans under the Revolver bear interest at a fluctuating rate plus an applicable margin based on the Company's credit ratings. There werewas no$35 amountsmillion outstanding under the Revolver as of December 31, 2024.2025.
As of December 31, 2025, the Company had $565 million committed under the Revolver, net of outstanding borrowings. As of December 31, 2025, the Company's available borrowing capacity under the Revolver, after giving effect to the financial covenants described above, was $202 million.
In connection with entering into the ABL Facility, on February 5, 2026, the existing Revolver was fully repaid and terminated.
ABL Facility
On February 5, 2026, we entered into an asset-based five-year revolving credit facility (the “ABL Facility”) in an amount of up to $450 million, with $100 million available for the issuance of letters of credit. Proceeds from loans under the ABL Facility were used to repay and terminate the existing Revolver. Loans under the ABL Facility bear interest at a rate per annum equal to, at the Company’s election: (i) a base rate plus an applicable margin or (ii) an adjusted term Secured Overnight Financing Rate (“SOFR”) plus an applicable margin; interest is payable quarterly. The Company is required to pay a commitment fee on any unused commitment, based on pricing levels set forth in the agreement.
The ABL Facility contains customary representations and warranties, events of default and financial, affirmative and negative covenants for facilities of this type, including, but not limited to, financial covenants relating to a fixed charge coverage ratio, a minimum liquidity requirement and a minimum excess availability requirement, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, specified agreements, restricted payments and prepayment of certain indebtedness.
Refer to Note 10 — Debt to the consolidated financial statements for additional information.
Our asset and liability balances are summarized as follows:
Total assets decreased by $137 million from December 31, 2024 to December 31, 2025, primarily due to (i) an $18 million decrease in cash and cash equivalents, as described in the Cash Flow Activity section below, (ii) a $46 million decrease in identifiable intangible assets as a result of amortization and (iii) a $38 million decrease in operating lease assets primarily as a result of amortization. Total liabilities decreased by $66 million from December 31, 2024 to December 31, 2025, primarily due to (i) a $30 million decrease in short-term and long-term operating lease liabilities as a result of lease payments and (ii) a $37 million decrease in deferred tax liabilities. These decreases were partially offset by a $36 million increase in long-term debt and obligations under finance leases.
The following table summarizes our asset and liability balances as of December 31, 2024 and 2023:
Total assets and liabilities increased from December 31, 2023 to December 31, 2024, primarily due to the acquisition of Coyote. Refer to Note 3 — Acquisition for additional information related to assets acquired and liabilities assumed.
Net cash usedprovided inby operating activities forin 20242025 decreasedwas by $101$51 million compared with 2023.$12 million used in 2024. The decreaseincrease in net cash provided by operating activities was primarily due primarily to the decrease in nethigher income between periods and changes in working capital. The $294 million decrease in net income was driven primarily by higher non-cash adjustments including a $216 million deemed non-pro rata distribution and increased depreciation and amortization expense related to the Coyote acquisition.
InvestingNet cash used in investing activities in 2025 was $71 million compared with $1.1 billion used $1,064in million2024. The primary uses of cash in 20242025 comparedwere with(i) $66$59 million for purchases of cashproperty usedand inequipment 2023.and (ii) $10 million paid related to the Coyote acquisition for working capital and post-closing adjustments. The primary uses of cash in 2024 were (i) $1,019$1.0 millionbillion for the acquisition of Coyote, net of cash acquired, and (ii) $45 million tofor purchasepurchases of property and equipment. The primary use of cash in 2023 was to purchase property and equipment.
Net cash provided by financing activities in 2025 was $1 million compared with $1.1 billion in 2024. The primary source of cash in 2025 was $33 million in net proceeds from borrowings on revolving credit facilities, partially offset by $19 million in payments for tax withholdings primarily attributable to the vesting of stock compensation awards held by non-RXO employees at the spin which are now substantially complete. The primary source of cash from financing activities in 2024 was $1.1 billion in net proceeds from the issuance of common stock.
Financing activities provided $1,108 million of cash in 2024 compared with using $117 million of cash in 2023. The primary source of cash from financing activities in 2024 was $1,095 million in net proceeds from the issuance of common stock. The primary uses of cash from financing activities in 2023 were (i) $104 million for debt and finance lease repayments, driven primarily by the payoff of the $100 million term loan facility and (ii) $14 million for payments of tax withholdings related to vesting of stock compensation awards.
As of December 31, 2024,2025, we had no$35 amountsmillion outstanding under the Revolver. Interest on any outstanding borrowings is payable monthly or quarterly, depending on RXO’s upfront election. Borrowings under the Revolver are payable, at our option, at any time prior to or at maturity on September 16, 2029. We also have a non-U.S. revolving credit facility with a maximum commitment of approximately $14$17 million. This facility has a one-year term and we had $14$15 million outstanding as of December 31, 20242025 classified as short-term debt. See Note 10 — Debt to the consolidated financial statements for additional information.
In connection with entering into the ABL Facility, on February 5, 2026, the existing Revolver was fully repaid and terminated.
We prepare our consolidated financial statements in accordance with GAAP.U.S. generally accepted accounting principles (“GAAP”). A summary of our significant accounting policies is contained in Note 2 — Basis of Presentation and Significant Accounting Policies to our consolidated financial statements. The methods, assumptions, and estimates that we use in applying our accounting policies may require us to apply judgments regarding matters that are inherently uncertain and may change based on changing circumstances or changes in our analysis. Material changes in these assumptions, estimates and/or judgments have the potential to materially alter our results of operations. We have identified below our accounting policies that we believe could potentially produce materially different results if we were to change underlying assumptions, estimates and/or judgments. Although actual results may differ from estimated results, we believe the estimates are reasonable and appropriate.
For our 2025 goodwill assessment, we performed a quantitative analysis for our reporting units using a combination of the income and market approaches. As of November 30, 2025, we completed our annual impairment tests for goodwill. During 2025, our ground and air express reporting unit experienced lower than anticipated operating results and changing market fundamentals, resulting in the decision to restructure the reporting unit. Based on the quantitative assessment performed in 2025, we recognized an impairment loss of $12 million to fully impair the goodwill of our ground and air express reporting unit as the discounted cash flows expected to be generated by the reporting unit were not sufficient to recover its carrying value. No impairments resulted for our remaining reporting units as their assessed fair values exceeded their carrying values.
As of November 30, 2025, our Managed Solutions reporting unit had $116 million in goodwill and the excess of its estimated fair value over carrying value was 9%. Should our estimates change based on Managed Solutions’ operating results, market conditions, long-term growth projections or other assumptions underlying our forecast, including changes to the discount rate, the Managed Solutions reporting unit may become subject to goodwill impairment in future periods.
For our 2024 goodwill assessment, we performed a quantitative analysis for our reporting units using a combination of the income and market approaches. As of November 30, 2024, we completed our annual impairment tests for goodwill with all of our reporting units having fair values in excess of their carrying values, resulting in no impairment of goodwill.
A quantitative goodwill impairment test, when performed, includes estimating the fair value of a reporting unit using an income approach and/or a market-based approach. The income approach of determining fair value is based on the present value of estimated future cash flows, which requires us to make various judgmental assumptions, including assumptions about the timing and amount of future cash flows, growth rates and discount rates. The discount rates reflect management’s judgment and are based on a risk adjusted weighted-average cost of capital utilizing industry market data of businesses similar to the reporting units. Inherent in our preparation of cash flow projections are assumptions and estimates derived from a review of our operating results, business plans, expected growth rates, cost of capital and tax rates. Our forecasts also reflect expectations concerning future economic conditions, interest rates and other market data. The market approach of determining fair value is based on comparable market multiples for companies engaged in similar businesses, as well as recent transactions within our industry. We believe our approach, which utilizes multiple valuation techniques, yields the most appropriate evidence of fair value.
We participate in a combination of self-insurance programsprograms, partially through our wholly-owned captive insurance company, and purchased insurance that are managed to provide for the costs of medical, casualty, liability, vehicular, cargo, workers’ compensation, cyber risk and property claims. Insurance coverage levels are adjusted annually based on risk tolerance and premium expense.
What changed in the latest 10-Q
Risk Factors
For a discussion of our potential risks and uncertainties, see the information under the heading “Risk Factors” in the 2025 Form 10-K. There have been no material changes with respect to these risk factors.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025”
Largest changes
“Restructuring costs for the first six months of 2026 and 2025 were $14 million and $17 million, respectively, and primarily comprised severance and operating lease impairment costs.”see in full comparison
“Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025”see in full comparison
“SG&A of $408 million in the first six months of 2026 decreased $16 million, or 3.8%, from $424 million in the same period in 2025. As a percentage of revenue, SG&A decreased to 12.8% in the first six months of 2026 compared with 14.9% for the same period in 2025 driven primarily by cost savings from restructuring actions and improved operating leverage.”see in full comparison
Revenuesee in full comparisondecreasedincreased by$8$355millionmillion, or 25.0%, to $1.8 billion in thefirstsecond quarter of2026 to $1,425 million,2026, compared with$1,433$1.4millionbillion for the same quarter in 2025. The year-over-yeardecrease in revenueincrease in thefirstsecond quarter of 2026 was driven by(i)a$14 million decrease in revenue in our managed transportation business, driven primarily by a decrease in expedite ground volume and (ii) a $13 million decrease in last mile revenue as a result of an 8% decrease in volume. This was partially offset by a $30$324 million increase in truck brokerage revenue, primarily as a result of a12%44% increase in revenue per load driven by increases in freight rates and fuelprices,prices.partiallyTruckoffsetbrokerage load volume increased 2% year-over-year, excluding the impact in both periods of the business transitioned from truck brokerage to managed transportation; volume growth was driven by an8%increasedecreasein accretive spot volume. The increase in revenue was also driven by a $29 million increase in last mile revenue as a result of a 6% increase in rates and a 3% increase in volume.
“Cost of transportation and services (exclusive of depreciation and amortization) in the first six months of 2026 was $2.6 billion, or 82.6% of revenue, compared with $2.3 billion, or 79.6% of revenue in the same period in 2025. …”see in full comparison
“Revenue increased by $347 million, or 12.2%, to $3.2 billion in the first six months of 2026, compared with $2.9 billion for the same period in 2025. The year-over-year increase in the first six months of 2026 was driven by a $354 million increase in truck brokerage revenue, primarily as a result of a 27% increase in revenue per load driven by increases in freight rates and fuel prices. Truck brokerage load volume decreased 4% year-over-year, excluding the impact in both periods of the business transitioned from truck brokerage to managed transportation. …”see in full comparison
Full comparison: every changed paragraph (28)
The Company’s condensed consolidated financial statements include the accounts of RXO, Inc. and its majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated. In management’s opinion, the condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of financial condition, results of operations and cash flows for the interim periods presented. Operating results for the three and six months ended MarchJune 31,30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. Refer to Note 2—Basis of Presentation and Significant Accounting Policies for additional details regarding the basis of presentation used for the Company’s condensed consolidated financial statements.
Three Months Ended MarchJune 31,30, 2026 Compared with Three Months Ended MarchJune 31,30, 2025
Revenue decreasedincreased by $8$355 millionmillion, or 25.0%, to $1.8 billion in the firstsecond quarter of 2026 to $1,425 million,2026, compared with $1,433$1.4 millionbillion for the same quarter in 2025. The year-over-year decrease in revenueincrease in the firstsecond quarter of 2026 was driven by (i) a $14 million decrease in revenue in our managed transportation business, driven primarily by a decrease in expedite ground volume and (ii) a $13 million decrease in last mile revenue as a result of an 8% decrease in volume. This was partially offset by a $30$324 million increase in truck brokerage revenue, primarily as a result of a 12%44% increase in revenue per load driven by increases in freight rates and fuel prices,prices. partiallyTruck offsetbrokerage load volume increased 2% year-over-year, excluding the impact in both periods of the business transitioned from truck brokerage to managed transportation; volume growth was driven by an 8%increase decreasein accretive spot volume. The increase in revenue was also driven by a $29 million increase in last mile revenue as a result of a 6% increase in rates and a 3% increase in volume.
Cost of transportation and services (exclusive of depreciation and amortization) in the firstsecond quarter of 2026 was $1,171$1.5 million,billion, or 82.2%83.0% of revenue, compared with $1,153$1.1 million,billion, or 80.5%78.8% of revenue in the same quarter in 2025. The year-over-year increase as a percentage of revenue during the firstsecond quarter of 2026 was driven primarily by (i) a 1.93.8 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue as the market remained tight in the firstsecond quarter of 2026, with capacity continuing to exit, driven primarily by regulatory changes and enforcement, which caused buy rates to increase faster than our contractual sell ratesrates. and (ii) a 0.8 percentage pointThe increase in truck brokerage cost of transportation and services as a percentage of revenue was also due to higher fuel prices, which lead to increased revenue without a meaningful corresponding increase in gross profit dollars, as fuel costs are a passthrough over time. In addition, last mile cost of transportation and services as a percentage of revenue increased 1.7 percentage points as a result of freight mix changes.
Direct operating expense (exclusive of depreciation and amortization) of $50$53 million in the firstsecond quarter of 2026 increased $2$6 million, or 4.2%,12.8%, from $48$47 million in the same quarter in 2025. As a percentage of revenue, direct operating expense (exclusive of depreciation and amortization) increaseddecreased to 3.5%3.0% in the firstsecond quarter of 2026 compared with 3.3% in the same quarter in 2025 driven primarily by changesimproved inoperating cost mix between periods.leverage.
SG&A of $197$211 million in the firstsecond quarter of 2026 decreased $13$3 million, or 6.2%,1.4%, from $210$214 million in the firstsecond quarter of 2025. As a percentage of revenue, SG&A decreased to 13.8%11.9% in the firstsecond quarter of 2026 compared with 14.7%15.1% for the same quarter in 2025 driven primarily by cost savings from restructuring actions.actions and improved operating leverage.
Depreciation and amortization expense for the firstsecond quarter of 2026 was $26 million, compared with $32$30 million for the same quarter in 2025. The decrease was primarily due to a $5$4 million decrease in intangible amortizationdepreciation expense.
Transaction and integration costs for the firstsecond quarter of 2026 and 2025 were $2$4 million and $6$7 million, respectively, and primarily comprised acquisition integration costs.
Restructuring costs for the firstsecond quarter of 2026 and 2025 were $7 million and $14$3 million, respectively, and primarily comprised severance and operating lease impairment costs.
Debt extinguishment loss for the first quarter of 2026 was $11 million, resulting from the redemption of our outstanding 7.50% Notes due 2027 and the write off of the related unamortized debt issuance costs and discount.
Our effective income tax rates were 25.5%(3.7)% and 19.2%14.5% for the firstsecond quarter of 2026 and 2025, respectively. The effective tax rates for the firstsecond quarter of 2026 and 2025 were calculated using the discrete method. Our effective tax raterates for the firstsecond quarter of 2026 differs from the U.S. corporate income tax rate of 21% primarily due to the recognition of discrete tax benefits. Our effective tax rate for the first quarter ofand 2025 differsdiffer from the U.S. corporate income tax rate of 21% primarily due to the effect of non-deductible expensesexpense when experiencing a pre-tax loss.
Six Months Ended June 30, 2026 Compared with Six Months Ended June 30, 2025
Revenue increased by $347 million, or 12.2%, to $3.2 billion in the first six months of 2026, compared with $2.9 billion for the same period in 2025. The year-over-year increase in the first six months of 2026 was driven by a $354 million increase in truck brokerage revenue, primarily as a result of a 27% increase in revenue per load driven by increases in freight rates and fuel prices. Truck brokerage load volume decreased 4% year-over-year, excluding the impact in both periods of the business transitioned from truck brokerage to managed transportation. The increase in revenue was also driven by a $16 million increase in last mile revenue as a result of a 5% increase in rates, partially offset by a 2% decrease in volume.
Cost of transportation and services (exclusive of depreciation and amortization) in the first six months of 2026 was $2.6 billion, or 82.6% of revenue, compared with $2.3 billion, or 79.6% of revenue in the same period in 2025. The year-over-year increase as a percentage of revenue in the first six months of 2026 was driven primarily by (i) a 2.9 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue as the market remained tight in the first six months of 2026, with capacity continuing to exit, driven primarily by regulatory changes and enforcement, which caused buy rates to increase faster than our contractual sell rates and (ii) a 1.3 percentage point increase in last mile cost of transportation and services as a percentage of revenue as a result of freight mix changes.
Direct operating expense (exclusive of depreciation and amortization) of $103 million in the first six months of 2026 increased $8 million, or 8.4%, from $95 million in the same period in 2025. As a percentage of revenue, direct operating expense (exclusive of depreciation and amortization) decreased to 3.2% in the first six months of 2026 compared with 3.3% in the same period of 2025 driven primarily by improved operating leverage.
SG&A of $408 million in the first six months of 2026 decreased $16 million, or 3.8%, from $424 million in the same period in 2025. As a percentage of revenue, SG&A decreased to 12.8% in the first six months of 2026 compared with 14.9% for the same period in 2025 driven primarily by cost savings from restructuring actions and improved operating leverage.
Depreciation and amortization expense for the first six months of 2026 was $52 million, compared with $62 million for the same period in 2025. The decrease was attributable to a $5 million reduction in depreciation expense and a $5 million reduction in intangible amortization expense.
Transaction and integration costs for the first six months of 2026 and 2025 were $6 million and $13 million, respectively, and primarily comprised acquisition integration costs.
Restructuring costs for the first six months of 2026 and 2025 were $14 million and $17 million, respectively, and primarily comprised severance and operating lease impairment costs.
Debt extinguishment loss for the first six months of 2026 was $11 million, resulting from the redemption of our outstanding 7.50% Notes due 2027 and the write off of the related unamortized debt issuance costs and discount.
Our effective income tax rates were 21.1% and 18.2% for the first six months of 2026 and 2025, respectively. The effective tax rates for the first six months of 2026 and 2025 were calculated using the discrete method. Our effective tax rate for the first six months of 2026 differs from the U.S. corporate income tax rate of 21% primarily due to the effect of nondeductible expenses when experiencing a pre-tax loss, partially offset by the recognition of discrete tax benefits. Our effective tax rate for the first six months of 2025 differs from the U.S. corporate income tax rate of 21% primarily due to the effect of nondeductible expenses when experiencing a pre-tax loss.
As of MarchJune 31,30, 2026, the Company had $365$335 million available under the ABL Facility, net of $35$65 million of outstanding borrowings and $50 million of outstanding letters of credit.
Refer to Note 6—Debt to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for additional disclosures regarding the Company’s debt and financing arrangements as of MarchJune 31,30, 2026.
Total assets decreasedincreased by $9$182 million from December 31, 2025 to MarchJune 31,30, 2026, primarily due to (i) a $10$218 million decreaseincrease in accounts receivable as a result of aan sequential decreaseincrease in revenue,revenue and (ii) an $11 million decrease in identifiable intangible assets as a result of amortization and (iii) a $16 million decrease in operating lease assets as a result of amortization, partially offset by a $24$23 million increase in other current assets primarily as a result of the timing of prepaid contracts.contracts, partially offset by (i) a $33 million decrease in operating lease assets as a result of amortization and (ii) a $21 million decrease in identifiable intangible assets as a result of amortization.
Total liabilities increased by $23$217 million from December 31, 2025 to MarchJune 31,30, 2026, primarily due to (i) a $43$174 million increase in long-termaccounts debtpayable as a result of debtan refinancing transactions completedincrease in third party transportation costs and (ii) a $91 million increase in short-term and long-term debt used to fund working capital needs associated with the firstincrease quarterin of 2026,revenue, partially offset by a $14$33 million decrease in short-term and long-term operating lease liabilities as a result of lease payments.
Net cash used in operating activities for the first threesix months of 2026 was $7$47 million compared with $2$21 million usedprovided by operating activities in the same period in 2025. The increase in net cash used by operating activities was primarily due to lowerincreased income.working capital requirements associated with higher revenue. The increase in revenue resulted in higher accounts receivable and a corresponding use of cash, partially offset by increased accounts payable.
Net cash used in investing activities for the first threesix months of 2026 was $17$29 million compared with $25$43 million in the same period in 2025. The use of cash in the first threesix months of 2026 was $17$29 million for purchases of property and equipment. The primary uses of cash in the first threesix months of 2025 were (i) $15$29 million for purchases of property and equipment and (ii) $10 million paid related to the Coyote acquisition for working capital and post-closing adjustments.
Net cash provided by financing activities for the first threesix months of 2026 was $28$74 million compared with $7$4 million in the same period in 2025. The primary sourcesources of cash in the first threesix months of 2026 waswere (i) $400 million in proceeds from the issuance of the 2031 Notes,Notes and (ii) $49 million in net proceeds from borrowings on revolving credit facilities, partially offset by (i) $362 million paid for the redemption of the 2027 Notes and (ii) $8$9 million paid for debt issuance costs. The primary source of cash in the first threesix months of 2025 was $35$34 million in net proceeds from borrowings,borrowings on revolving credit facilities, partially offset by $17$18 million in payments for tax withholdings primarily attributable to the vesting of stock compensation awards held by non-RXO employees at the time of the Company’s spin-off from XPO, Inc.
RXO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-26 | Harris James E |
Option exercise | 64,129 | — | — |
| 2026-09-26 | Harris James E |
Shares withheld for tax | 27,858 | $19.79 | $551.3K |
| 2026-08-22 | Firestone Jeffrey D. |
Option exercise | 25,716 | — | — |
| 2026-08-22 | Firestone Jeffrey D. |
Shares withheld for tax | 11,172 | $22.54 | $251.8K |
| 2026-05-15 | Wilkerson Andrew M. |
Gift | 168,943 | — | — |
| 2026-05-15 | Wilkerson Andrew M. |
Gift | 168,943 | — | — |
| 2026-05-02 | Wilkerson Andrew M. |
Option exercise | 92,931 | — | — |
| 2026-05-02 | Wilkerson Andrew M. |
Shares withheld for tax | 40,370 | $19.59 | $790.8K |
Well-known investors holding RXO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 807,076 | $22.3M | 0.01% | Added 14% |
| PRIMECAP Management | 2026-06-30 | 565,546 | $15.6M | 0.01% | Reduced 6% |
| D. E. Shaw & Co. | 2026-06-30 | 542,415 | $15.0M | 0.01% | New position |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 514,660 | $14.0M | 0.0% | Reduced 19% |
| Millennium Management (Israel Englander) | 2026-06-30 | 102,926 | $2.8M | 0.0% | New position |
| Southeastern Asset Management (Longleaf) | 2026-06-30 | 43,731 | $1.2M | 0.06% | No change |
| Polen Capital Management | 2026-06-30 | 37,400 | $1.0M | 0.01% | New position |