RXO, Inc.

Previous wording

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 June 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.

Current wording

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 nine months ended September 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.

Previous wording

Direct operating expenses (exclusive of depreciation and amortization) includes both fixed and variable expenses and consists mainly of personnel costs; facility and equipment expenses, such as rent, utilities, equipment maintenance and repair; costs of materials and supplies; information technology expenses; and gains and losses on sales of property and equipment.

Current wording

Direct operating expenses (exclusive of depreciation and amortization) include both fixed and variable expenses and consists mainly of personnel costs; facility and equipment expenses, such as rent, utilities, equipment maintenance and repair; costs of materials and supplies; information technology expenses; and gains and losses on sales of property and equipment.

Previous wording

Revenue increased by $355 million, or 25.0%, to $1.8 billion in the second quarter of 2026, compared with $1.4 billion for the same quarter in 2025. The year-over-year increase in the second quarter of 2026 was driven by a $324 million increase in truck brokerage revenue, primarily as a result of a 44% increase in revenue per load driven by increases in freight rates and fuel prices. Truck brokerage 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 increase in 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.

Current wording

Revenue increased by $450 million, or 31.7%, to $1.9 billion in the third quarter of 2026, compared with $1.4 billion for the same quarter in 2025. The year-over-year increase in the third quarter of 2026 was driven by a $394 million increase in truck brokerage revenue, primarily as a result of a 48% increase in revenue per load driven by increases in freight rates and fuel prices. Truck brokerage 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 increase in accretive spot volume. The increase in revenue was also driven by a $29 million increase in last mile revenue as a result of a 5% increase in volume and a 4% increase in rates. In addition, managed transportation revenue increased by $26 million, driven primarily by an increase in freight forwarding revenue per load as a result of freight mix changes, as well as an increase in managed expedite volume.

Previous wording

Cost of transportation and services (exclusive of depreciation and amortization) in the second quarter of 2026 was $1.5 billion, or 83.0% of revenue, compared with $1.1 billion, or 78.8% of revenue in the same quarter in 2025. The year-over-year increase as a percentage of revenue during the second quarter of 2026 was driven primarily by a 3.8 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue as the market remained tight in the second 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 rates. The 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.

Current wording

Cost of transportation and services (exclusive of depreciation and amortization) in the third quarter of 2026 was $1.5 billion, or 82.2% of revenue, compared with $1.1 billion, or 80.0% of revenue in the same quarter in 2025. The year-over-year increase as a percentage of revenue during the third quarter of 2026 was driven by a 0.8 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue as the market remained tight in the third 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 rates. The increase in truck brokerage cost of transportation and services as a percentage of revenue was also due to higher fuel prices, which led 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 1.6 percentage points as a result of freight mix changes.

Previous wording

Direct operating expense (exclusive of depreciation and amortization) of $53 million in the second quarter of 2026 increased $6 million, or 12.8%, from $47 million in the same quarter in 2025. As a percentage of revenue, direct operating expense (exclusive of depreciation and amortization) decreased to 3.0% in the second quarter of 2026 compared with 3.3% in the same quarter in 2025 driven primarily by improved operating leverage.

Current wording

Direct operating expense (exclusive of depreciation and amortization) of $58 million in the third quarter of 2026 increased $10 million, or 20.8%, from $48 million in the same quarter in 2025. As a percentage of revenue, direct operating expense (exclusive of depreciation and amortization) decreased to 3.1% in the third quarter of 2026 compared with 3.4% in the same quarter in 2025 driven primarily by improved operating leverage.

Previous wording

SG&A of $211 million in the second quarter of 2026 decreased $3 million, or 1.4%, from $214 million in the second quarter of 2025. As a percentage of revenue, SG&A decreased to 11.9% in the second quarter of 2026 compared with 15.1% for the same quarter in 2025 driven primarily by cost savings from restructuring actions and improved operating leverage.

Current wording

SG&A of $223 million in the third quarter of 2026 increased $15 million, or 7.2%, from $208 million in the third quarter of 2025, driven primarily by an increase in variable compensation expense due to improved profitability. As a percentage of revenue, SG&A decreased to 11.9% in the third quarter of 2026 compared with 14.6% for the same quarter in 2025 driven primarily by cost savings from restructuring actions and improved operating leverage.

Previous wording

Depreciation and amortization expense for the second quarter of 2026 was $26 million, compared with $30 million for the same quarter in 2025. The decrease was primarily due to a $4 million decrease in depreciation expense.

Current wording

Depreciation and amortization expense for the third quarter of 2026 was $28 million, compared with $26 million for the same quarter in 2025. The increase was primarily due to a $2 million increase in depreciation expense.

Previous wording

Transaction and integration costs for the second quarter of 2026 and 2025 were $4 million and $7 million, respectively, and primarily comprised acquisition integration costs.

Current wording

Transaction and integration costs for the third quarter of 2026 and 2025 were $1 million and $5 million, respectively, and primarily comprised acquisition integration costs.

Previous wording

Restructuring costs for the second quarter of 2026 and 2025 were $7 million and $3 million, respectively, and primarily comprised severance and operating lease impairment costs.

Current wording

Restructuring costs for the third quarter of 2026 and 2025 were $6 million and $4 million, respectively, and primarily comprised severance and operating lease impairment costs.

Previous wording

Our effective income tax rates were (3.7)% and 14.5% for the second quarter of 2026 and 2025, respectively. The effective tax rates for the second quarter of 2026 and 2025 were calculated using the discrete method. Our effective tax rates for the second quarter of 2026 and 2025 differ from the U.S. corporate income tax rate of 21% primarily due to the effect of non-deductible expense when experiencing a pre-tax loss.

Current wording

Our effective income tax rates were 49.4% and 9.2% for the third quarter of 2026 and 2025, respectively. The effective tax rates for the third quarter of 2026 and 2025 were calculated using the discrete method. Our effective tax rate for the third quarter of 2026 differs from the U.S. corporate income tax rate of 21% primarily due to the effect of nondeductible expenses and state income taxes within the U.S. Our effective tax rate for the third quarter 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.

Previous wording

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.

Current wording

Revenue increased by $797 million, or 18.7%, to $5.1 billion in the first nine months of 2026, compared with $4.3 billion for the same period in 2025. The year-over-year increase in the first nine months of 2026 was driven by a $748 million increase in truck brokerage revenue, primarily as a result of a 34% increase in revenue per load driven by increases in freight rates and fuel prices. Truck brokerage load volume decreased 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 increase in accretive spot volume. The increase in revenue was also driven by a $45 million increase in last mile revenue as a result of a 5% increase in rates.

Previous wording

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.

Current wording

Cost of transportation and services (exclusive of depreciation and amortization) in the first nine months of 2026 was $4.2 billion, or 82.5% of revenue, compared with $3.4 billion, or 79.8% of revenue in the same period in 2025. The year-over-year increase as a percentage of revenue in the first nine months of 2026 was driven primarily by (i) a 2.1 percentage point increase in truck brokerage cost of transportation and services as a percentage of revenue as the market remained tight in the first nine 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 1.4 percentage point increase in last mile cost of transportation and services as a percentage of revenue as a result of freight mix changes.

Previous wording

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.

Current wording

Direct operating expense (exclusive of depreciation and amortization) of $161 million in the first nine months of 2026 increased $18 million, or 12.6%, from $143 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 nine months of 2026 compared with 3.3% in the same period of 2025 driven primarily by improved operating leverage.

Previous wording

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.

Current wording

SG&A of $631 million in the first nine months of 2026 decreased $1 million, or 0.2%, from $632 million in the same period in 2025. As a percentage of revenue, SG&A decreased to 12.4% in the first nine months of 2026 compared with 14.8% for the same period in 2025 driven primarily by cost savings from restructuring actions and improved operating leverage.

Previous wording

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.

Current wording

Depreciation and amortization expense for the first nine months of 2026 was $80 million, compared with $88 million for the same period in 2025. The decrease was attributable to a $3 million reduction in depreciation expense and a $5 million reduction in intangible amortization expense.

Previous wording

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.

Current wording

Transaction and integration costs for the first nine months of 2026 and 2025 were $7 million and $18 million, respectively, and primarily comprised acquisition integration costs.

Previous wording

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.

Current wording

Restructuring costs for the first nine months of 2026 and 2025 were $20 million and $21 million, respectively, and primarily comprised severance and operating lease impairment costs.

Previous wording

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.

Current wording

Debt extinguishment loss for the first nine 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.

Previous wording

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.

Current wording

Our effective income tax rates were 17.4% and 16.0% for the first nine months of 2026 and 2025, respectively. The effective tax rates for the first nine months of 2026 and 2025 were calculated using the discrete method. Our effective tax rate for the first nine 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 nine 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.

Previous wording

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 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.

Current wording

Our ability to fund our operations and anticipated capital needs is reliant upon the generation of cash from operations, supplemented as necessary by utilization of our revolving credit 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.

Previous wording

On February 20, 2026, we completed an offering of$400 million in aggregate principal amount of unsecured notes (the “2031 Notes”). A portion of the proceeds from the offering were used to redeem all the outstanding 2027 Notes at a redemption price of 101.875% of the principal amount thereof, plus accrued and unpaid interest. We recorded a debt extinguishment loss of$11 million in the first quarter of 2026 due to the redemption of the 2027 Notes.

Current wording

On February 20, 2026, we completed an offering of$400 million in aggregate principal amount of unsecured notes (the “2031 Notes”). A portion of the proceeds from the offering was used to redeem all the outstanding 2027 Notes at a redemption price of 101.875% of the principal amount thereof, plus accrued and unpaid interest. We recorded a debt extinguishment loss of$11 million in the first quarter of 2026 due to the redemption of the 2027 Notes.

Previous wording

The 2031 Notes bear interest at a rate of 6.375% per annum payable semiannually in cash in arrears on May 15 and November 15 of each year, beginning November 15, 2026, and mature on May 15, 2031, unless repurchased or redeemed earlier, if applicable. The 2031 Notes were issued at an issue price of 100% of par. The Company may redeem the 2031 Notes in whole or in part prior to the 2031 redemption date at predetermined prices depending on the date the 2031 Notes are redeemed.

Current wording

The 2031 Notes bear interest at a rate of 6.375% per annum payable semiannually in cash in arrears on May 15 and November 15 of each year, beginning November 15, 2026, and mature on May 15, 2031, unless repurchased or redeemed earlier, if applicable. The 2031 Notes were issued at an issue price of 100% of par. The Company may redeem the 2031 Notes in whole or in part prior to the 2031 maturity date at predetermined prices depending on the date the 2031 Notes are redeemed.

Previous wording

Total assets increased by $182 million from December 31, 2025 to June 30, 2026, primarily due to (i) a $218 million increase in accounts receivable as a result of an increase in revenue and (ii) a $23 million increase in other current assets primarily as a result of the timing of prepaid 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.

Current wording

Total assets increased by $219 million from December 31, 2025 to September 30, 2026, primarily due to (i) a $252 million increase in accounts receivable as a result of an increase in revenue and (ii) a $30 million increase in other current assets primarily as a result of an increase in contract assets related to shipments in-transit at period end, partially offset by (i) a $35 million decrease in operating lease assets as a result of amortization and (ii) a $31 million decrease in identifiable intangible assets as a result of amortization.

Previous wording

Total liabilities increased by $217 million from December 31, 2025 to June 30, 2026, primarily due to (i) a $174 million increase in accounts payable as a result of an increase 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 increase in revenue, partially offset by a $33 million decrease in short-term and long-term operating lease liabilities as a result of lease payments.

Current wording

Total liabilities increased by $244 million from December 31, 2025 to September 30, 2026, primarily due to (i) a $169 million increase in accounts payable as a result of an increase in third party transportation costs and (ii) a $92 million increase in short-term and long-term debt used to fund working capital needs associated with the increase in revenue, partially offset by a $35 million decrease in short-term and long-term operating lease liabilities as a result of lease payments.

Previous wording

Net cash used in operating activities for the first six months of 2026 was $47 million compared with $21 million provided by operating activities in the same period in 2025. The increase in net cash used by operating activities was primarily due to increased 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.

Current wording

Net cash used in operating activities for the first nine months of 2026 was $22 million compared with $44 million provided by operating activities in the same period in 2025. The increase in net cash used by operating activities was primarily due to increased 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.

Previous wording

Net cash used in investing activities for the first six months of 2026 was $29 million compared with $43 million in the same period in 2025. The use of cash in the first six months of 2026 was $29 million for purchases of property and equipment. The primary uses of cash in the first six months of 2025 were (i) $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.

Current wording

Net cash used in investing activities for the first nine months of 2026 was $42 million compared with $56 million in the same period in 2025. The use of cash in the first nine months of 2026 was $42 million for purchases of property and equipment. The primary uses of cash in the first nine months of 2025 were (i) $43 million for purchases of property and equipment and (ii) $10 million paid related to the Coyote acquisition for working capital and post-closing adjustments.

Previous wording

Net cash provided by financing activities for the first six months of 2026 was $74 million compared with $4 million in the same period in 2025. The primary sources of cash in the first six months of 2026 were (i) $400 million in proceeds from the issuance of the 2031 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) $9 million paid for debt issuance costs. The primary source of cash in the first six months of 2025 was $34 million in net proceeds from borrowings on revolving credit facilities, partially offset by $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.

Current wording

Net cash provided by financing activities for the first nine months of 2026 was $72 million compared with $1 million in the same period in 2025. The primary sources of cash in the first nine months of 2026 were (i) $400 million in proceeds from the issuance of the 2031 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) $9 million paid for debt issuance costs. The primary source of cash in the first nine months of 2025 was $33 million in net proceeds from borrowings on revolving credit facilities, partially offset by $20 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.

Previous wording

Our significant accounting policies, which include management’s most subjective and complex estimates and judgments, are included in Note 2—Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements for the year ended December 31, 2025 included in the 2025 Form 10-K. A discussion of accounting estimates, considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates, are disclosed in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2025 Form 10-K. There have been no significant changes in the Company’s critical accounting estimates since December 31, 2025.

Current wording

Our significant accounting policies, which include management’s most subjective and complex estimates and judgments, are included in Note 2—Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements for the year ended December 31, 2025 included in the 2025 Form 10-K. A discussion of accounting estimates, considered critical because of the potential for a significant impact on the financial statements due to the inherent uncertainty in such estimates, is disclosed in the Critical Accounting Policies and Estimates section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2025 Form 10-K. There have been no significant changes in the Company’s critical accounting estimates since December 31, 2025.