XPO (XPO -1.25%), a leading provider of freight transportation services specializing in less-than-truckload (LTL) shipping, announced its second quarter fiscal 2025 results on July 31, 2025. The company beat analyst expectations on adjusted diluted earnings per share, reporting $1.05 versus the $0.99 estimate in Q2 2025, and on revenue, posting $2.08 billion (GAAP) in Q2 2025 compared to a $2.05 billion forecast. However, Results for Q2 2025 were modestly below Q2 2024 figures as shipment volumes continued to soften across the sector. XPO delivered another quarter of margin improvement and efficiency despite market headwinds in Q1 2025, with progress in pricing and cost controls. Overall, the quarter highlighted strong operating discipline but ongoing challenges in freight demand.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| Adjusted Diluted EPS (Non-GAAP) | $1.05 | $0.99 | $1.12 | (6.3%) |
| Revenue | $2.08 billion | $2.05 billion | N/A | -6.3% |
| Adjusted EBITDA | $340 million | $343 million | (0.9%) | |
| North American LTL Revenue | $1.24 billion | $1.27 billion | (2.5%) | |
| North American LTL Adjusted Operating Ratio | 82.9% | 83.2% | 0.3 pp |
Source: Analyst estimates for the quarter provided by FactSet.
XPO’s Business and Strategic Focus
XPO is a major player in North American LTL shipping, moving smaller freight loads for thousands of businesses. It operates one of the sector’s largest networks, covering 99 % of U.S. ZIP codes. The company’s LTL services ensure cargo reaches its destination efficiently, even when shipments are too small to fill a truck on their own.
Over the last few years, XPO has focused on five critical areas: strengthening its North American LTL market position, investing in proprietary technology for efficiency, expanding terminal capacity, maintaining sustainability efforts, and delivering strong customer service. These factors drive its ability to offer competitive pricing, reliable delivery, and margin improvement in a challenging environment where industry shipment volumes are under pressure.
Quarterly Developments: Operations, Margins, and Market Trends
For the quarter ended June 30, 2025, XPO’s revenue (GAAP) edged above Wall Street expectations in the quarter Adjusted diluted EPS of $1.05 exceeded analyst forecasts, but was down from $1.12 (adjusted diluted earnings per share) a year earlier. Operating income totaled $198 million, a 1% increase from last year. The company posted adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, of $340 million, down 0.9% from Q2 2024.
In the key North American LTL segment, Revenue (GAAP) slipped 2.5% year-over-year as market-wide demand trends weighed on shipment volumes. Despite this, the segment’s adjusted operating ratio—a profitability metric where a lower percentage means higher efficiency—improved to 82.9%, 0.3 percentage points better than last year (non-GAAP). XPO’s rapid progress in linehaul insourcing (moving freight using its own trucks rather than third parties) helped cut purchased transportation expense by over half, to $32 million in Q2 2025. The proportion of linehaul miles outsourced shrank to 6.8%, while the company recorded a 6.1% year-over-year increase in LTL yield, or revenue per hundred pounds shipped, indicating that pricing strategies continue to offset some volume softness.
On the service side, XPO saw its LTL damage claims ratio hold steady at 0.3%, with further improvements in underlying damages. On-time delivery performance advanced for the 13th straight quarter, highlighting steady gains in customer service. The company’s local sales force contributed to rising tonnage in higher-margin segments, strengthening the mix of its business channels. In Europe, XPO’s transportation segment stayed profitable but confronted slower economic conditions, with $841 million in revenue and $44 million in adjusted EBITDA.
XPO accelerated the rollout of new technology, especially AI tools for labor planning and route optimization, producing early benefits in labor productivity and freight transit. Recent investments allowed XPO to lower tractor fleet age to 3.7 years and add excess capacity, positioning it for future growth when freight demand recovers. The company noted that newly added terminals, including those acquired from defunct competitors, are operating at or above expectations and boosting margins. However, the company continues to face muted freight volumes industrywide, with tonnage per day down 7.5% year-over-year. Tighter trade policy, tariffs, and slower industrial demand continue to affect the industry and XPO’s volumes.
There was no dividend announced or adjusted for the quarter.
Looking Ahead: Guidance and Investor Focus
Management issued full-year 2025 guidance, projecting gross capital expenditures of $600 million to $700 million and an adjusted effective tax rate of 24% to 25% for full year 2025. The company expects to deliver 150 basis points of full-year operating ratio improvement in 2025, even if shipment growth is negative. If shipment tonnage drops by mid-single digits throughout the year, management still aims for roughly 100 basis points of operating ratio progress by year-end. Guidance for interest expense is $220–$230 million for the full year, with an estimated diluted share count of 120 million for the full year.
XPO’s outlook remains cautious, as it continues to monitor soft freight demand and potential impacts from trade policies and tariffs. The company’s $750 million share repurchase authorization gives it flexibility to buy back stock as conditions permit. Investors should keep an eye on the sustainability of recent mid-single-digit pricing increases, further reduction in outsourced linehaul, productivity gains from technology.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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