Released on November 7, 2023, RXO Inc (RXO, Financial)'s third-quarter earnings report shows a strong performance in brokerage volume growth despite a soft market. The company's full-truckload brokerage volume increased by 13% year-over-year, and less-than-truckload volume saw a significant 55% increase. RXO Inc's gross margin stood at 17.7%, with a brokerage gross margin of 15.1%.
Financial Performance Overview
The company's revenue for the third quarter was $1.0 billion, compared to $1.1 billion in the third quarter of 2022. RXO Inc reported a GAAP net loss of $1 million, compared to a net income of $13 million in the same quarter of the previous year. The GAAP net loss included $5 million in transaction, integration, restructuring, and other costs. Adjusted net income for the quarter was $6 million, compared to $39 million in the third quarter of 2022.
Brokerage Business Growth
RXO's brokerage business grew volume by 18% year-over-year in the third quarter. The company's brokerage contract volume increased by 30% year-over-year in the third quarter, a result of a strong brokerage sales pipeline, which has increased in size by 115% since the third quarter of 2021. The company expects brokerage volumes to continue to grow on a year-over-year basis in the fourth quarter of 2023.
Technology and Capital Structure
In the third quarter of 2023, 97% of RXO’s brokerage loads were created or covered digitally using RXO’s cutting-edge technology platform, up from 81% in the third quarter of 2022. The seven-day carrier retention rate was 77%, compared to 75% in the third quarter of 2022. In early November, RXO increased total commitments from $500 million to $600 million under its Revolving Credit Agreement and repaid all outstanding obligations under its Term Loan Credit Agreement.
Financial Tables Summary
The company's condensed consolidated statements of operations show a decrease in revenue from $1,138 million in Q3 2022 to $976 million in Q3 2023. The net income also shifted from a gain of $13 million in Q3 2022 to a loss of $1 million in Q3 2023. The condensed consolidated balance sheets show total assets of $1,946 million in September 2023, slightly down from $2,031 million in December 2022. The company's cash and cash equivalents increased slightly from $98 million in December 2022 to $104 million in September 2023.
Despite the market challenges, RXO Inc continues to demonstrate resilience and strategic growth, particularly in its brokerage business. The company's continued investment in technology and strategic financial decisions position it well for future growth.
Explore the complete 8-K earnings release (here) from RXO Inc for further details.
