XPO’s Q2 earnings beat expectations behind strong LTL performance

XPO blew past analysts’ expectations for the second quarter. A better freight mix and numerous AI-fueled efficiency initiatives produced record operating results in its less-than-truckload unit. The Greenwich, Connecticut-based company said the industry is still in the “early innings” of a multiyear double-digit rate growth cycle. XPO expects to capture rate increases that outpace competitors by two to three percentage points given the investments it has made to its service offering. It’s adding more freight from SMBs and shipments that incur accessorial charges, which are also driving the outperformance. XPO ( NYSE: XPO ) reported second-quarter adjusted earnings per share of $1.70, which was 23 cents ahead of the consensus estimate and 65 cents higher year over year. The adjusted EPS number excluded transaction and restructuring costs among other items. It included a 6-cent tailwind from gains on real estate sales. Consolidated revenue of $2.36 billion was 13% higher y/y and $85 million better than expectations. Less-than-truckload revenue increased 15% y/y to $1.43 billion. Revenue was 5% higher excluding fuel surcharges. (Diesel prices were roughly 50% higher y/y in the quarter.) Tonnage increased 1% y/y with yield up 14% (4% higher excluding fuel surcharges). A 3% increase in daily shipments and a 2% decline in weight per shipment formed the tonnage increase. A 1% increase in length of haul along with the lighter shipment weights were tailwinds to the yield calculation (revenue per hundredweight) in the quarter. Tonnage trends improved throughout the quarter as it is seeing “a lot of positivity from customers.” On a y/y comparison, tonnage was down 1.5% in April, up 0.5% in May and 4% higher in June. July tonnage is up more than 6%. Daily tonnage was up 4.5% from the first to the second quarter. Better-than-normal seasonality is expected to drive volumes up by a mid-single-digit percentage y/y in the third quarter. XPO has been taking market share among local accounts (SMBs), which typically have lighter shipments but produce better margins. Both yield and revenue per shipment (excluding fuel) improved y/y and sequentially, which was in line with management’s guidance. Table: XPO’s key performance indicators The LTL unit recorded a 79.9% adjusted operating ratio (inverse of operating margin ), which was 300 basis points better y/y and 400 bps better than the first quarter. The result was 100 bps better than management’s guidance. Revenue per shipment outpaced adjusted cost per shipment by nearly 400 bps in the quarter. The carrier normally sees 200 to 250 bps of OR degradation from the second to the third quarter, implying a third-quarter result “north of 82%.” However, better pricing and the other idiosyncratic initiatives are expected to produce an adjusted OR below 81% in the period. It raised its full-year margin expectation from 100 to 150 bps of y/y improvement to “at least 200 bps” of improvement. It now sees a path to annual ORs in the low-70s, “or better,” longer term. It has improved the OR roughly 800 bps through the downturn. XPO’s European transportation segment reported a 10% y/y increase in revenue to $927 million. Adjusted EBITDA of $48 million was 9% higher y/y. It has added sales associates to grow into select verticals while removing some structural costs. It still plans to sell the unit to make XPO a true pure-play LTL company. Shares of XPO were off 0.2% at 12:59 p.m. EDT on Thursday compared to the S&P 500, which was up 1.3%. The stock is up 43% year-to-date. Why it matters? XPO is one of a few publicly traded LTL carriers. Its quarterly results provide insight into a subsegment of trucking where few public datasets exist. More FreightWaves articles by Todd Maiden: ArcBest’s Q2 a step on path to recovery Regulatory cleanup fuels Knight-Swift’s bullish outlook Forward Air secures deal to keep at least 50% of $250M account Upcoming FreightWaves Events Compliance Brokerage Compliance Symposium The day before F3. Every compliance issue you face - fraud exposure, carrier liability, FMCSA rules, cargo theft, insurance gaps - navigated by attorneys and operators defining best practices in a changing industry. October 26, 2026 The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now Awards F3 Awards Dinner The night before F3. FreightTech100 companies honored. FreightTech 25 and Shipper of Choice winners revealed live. Cocktail reception into dinner and live music - 300 industry leaders in one purpose-built room. October 26, 2026 The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now FreightTech F3: Future of Freight Festival Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals. October 27, 2026 – October 28, 2026 The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now Compliance Brokerage C