Freight Delivery Company RXO (NYSE:RXO) beat Wall Street’s revenue expectations in Q2 CY2026, with sales up 25% year on year to $1.77 billion. Its non-GAAP profit of $0.06 per share was $0.02 above analysts’ consensus estimates.
Is now the time to buy RXO? Find out by accessing our full research report, it’s free.
RXO (RXO) Q2 CY2026 Highlights:
- Revenue: $1.77 billion vs analyst estimates of $1.64 billion (25% year-on-year growth, 7.9% beat)
- Adjusted EPS: $0.06 vs analyst estimates of $0.04 ($0.02 beat)
- Adjusted EBITDA: $40 million vs analyst estimates of $34.86 million (2.3% margin, 14.7% beat)
- EBITDA guidance for Q3 CY2026 is $40 million at the midpoint, above analyst estimates of $35.12 million
- Operating Margin: 0.1%, in line with the same quarter last year
- Free Cash Flow was -$52 million, down from $10 million in the same quarter last year
- Sales Volumes rose 2% year on year (1% in the same quarter last year)
- Market Capitalization: $3.46 billion
Company Overview
With access to millions of trucks, RXO (NYSE:RXO) offers full-truckload, less-than-truckload, and last-mile deliveries.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, RXO’s 8% annualized revenue growth over the last five years was decent. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. RXO’s annualized revenue growth of 26.6% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
RXO also reports its number of units sold. Over the last two years, RXO’s units sold averaged 2.5% year-on-year declines. Because this number is lower than its revenue growth, we can see the company benefited from price increases. 
This quarter, RXO reported robust year-on-year revenue growth of 25%, and its $1.77 billion of revenue topped Wall Street estimates by 7.9%.
Looking ahead, sell-side analysts expect revenue to grow 9.9% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is admirable and indicates the market is baking in success for its products and services.
ALSO WORTH WATCHING: Nvidia’s Quiet Partner. Nvidia’s chips cost a hundred grand. The connectors that make them work cost even more. One company makes them all.
Every AI server needs specialized infrastructure the chip companies don’t make. High-speed cables. Power connectors. Thermal sensors. This 90-year-old company built a monopoly on it. The AI boom just started. This stock is still flying under the radar. Claim The Stock Ticker Here for FREE.
Operating Margin
RXO was roughly breakeven when averaging the last five years of quarterly operating profits, inadequate for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
Looking at the trend in its profitability, RXO’s operating margin decreased by 5.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. RXO’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.
This quarter, RXO’s breakeven margin was 0.1%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
RXO broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders.
Taking a step back, we can see that RXO’s margin dropped by 5.3 percentage points during that time. Almost any movement in the wrong direction is undesirable because of its already low cash conversion. If the trend continues, it could signal it’s in the middle of a big investment cycle.
RXO burned through $52 million of cash in Q2, equivalent to a negative 2.9% margin. The company’s cash burn increased meaningfully year on year while its cash conversion fell 3.6 percentage points. This relationship shows RXO’s management team spent more cash this quarter but was less efficient at generating sales with that cash.
Key Takeaways from RXO’s Q2 Results
We were impressed by RXO’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 6.4% to $22.34 immediately following the results.
Sure, RXO had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).