Company diagnostic
Freight brokerage
RXO
RXO
Gross margin near the median and top-quartile payables; the observed gaps are SG&A at 14.5% of revenue and DSO at 77.9 days.
Why now
In the news
RXO reported third-quarter 2026 revenue of $1,871M, up from $1,421M a year earlier, with gross margin of 14.6% against 16.5%, per its October 29, 2026 results release.
Business health score
33
Out of 100
Addressable estimate
$91.1M addressable estimate (observed gap $173.8M)
Revenue
$5,742M (FY2025)
Operating margin
-1.4%
As reported
Filing
Form 10-K, fiscal year 2025 (year ended December 31, 2025)
Run
November 1, 2026
Processing
5
minutes
Output
32
-page PDF and Excel model
Data quality
90
Point-in-time analysis from the filing and run date shown. The news context reflects reporting available on that date, and this page is not updated as events move on.
Score by dimension
Financial health
27
Growth potential
Strategic readiness
Market position
Innovation and digital
Operational efficiency
40
First 100-day action
Set up a cross-functional integration steering committee of Finance, Operations, IT and Sales to oversee completion of the Coyote integration and the DSO reduction work.
How it compares
- Net margin: -1.7% vs peer median 1.9% (Well behind median)
- EBITDA margin: 0.6% vs peer median 5.3% (Well behind median)
- Return on assets: -3.1% vs peer median 4.4% (Well behind median)
- Debt-to-equity: 0.39x vs peer median 0.26x (Behind median)
- Days payable outstanding: 41 days vs peer P75 41 days (Top quartile)
- Gross margin: 16.4% vs peer median 16.8% (Behind median)
- SG&A, % of revenue: 14.5% vs peer median 12.1% (Behind median)
- Asset turnover: 1.75x vs peer median 2.26x (Behind median)
- Days sales outstanding: 77.9 days vs peer median 55 days (Well behind median)
Top three levers
Lever 1
Coyote Logistics synergies and SG&A overhead rationalization
Why this lever
SG&A of $832.0M is 14.5% of revenue against a 12.1% 3PL median, a 2.4-point gap. The report links it to redundant corporate functions, overlapping regional brokerage branches and incomplete integration of Coyote's operations onto the RXO Connect platform, and treats 40% of the gap as addressable.
Size
$55.1M
Observed gap $137.8M
Lever 2
Accounts receivable optimization and working capital cash release
Why this lever
DSO of 77.9 days trails the 55-day median by 22.9 days, which the report ties mainly to the newly acquired Coyote customer base, where billing and collections workflows have not been fully standardized. Closing the gap is a one-time cash release; the recurring benefit is the carrying cost.
Size
$36M a year
Carrying benefit on a one-time $360.3M cash release
Lever 3
Brokerage gross margin expansion via automated carrier matching
Why this lever
Gross margin of 16.4% sits just below the 16.8% 3PL median and well below top-quartile peers at 23.1%. The report ties the gap to limited pricing power as carrier capacity tightened in 2025 and compressed brokerage spreads, and with truck brokerage at $4.22B, 74% of revenue, it treats machine learning pricing, carrier procurement and carrier scorecarding as a lever without sizing it.
Size
Directional
Not sized in the report
Questions for management
- What is the detailed timeline and go-live date for completing the Coyote systems integration (billing, carrier management, TMS), and what are the key risks and contingency plans if cutover is delayed beyond Q2?
- How much of the $137.8M SG&A gap versus the sector median is addressable through corporate function consolidation, branch rationalization, and system unification, and what is the realistic timeline and cost to capture $55.1M in savings?
- What are the root causes of the 22.9-day DSO gap (77.9 days vs. 55-day median), and what specific billing, collections, and customer communication actions will be taken to reduce DSO to 65 to 70 days by end of Q1?
Summary
RXO closed fiscal 2025 with revenue of $5,742M, gross profit of $941.0M and an operating loss of $79M, an operating margin of -1.4%. Net loss was $100M. Operating cash flow of $51.0M against $59M of capital expenditure left free cash flow of -$8M. The report counts $72M of exceptional restructuring, transaction, integration and impairment charges in the year; excluding them, adjusted operating margin is -0.1%.
Against the 3PL peer set, gross margin is close to the median and payables are top quartile. The observed gaps are SG&A at 14.5% of revenue against a 12.1% median, a $137.8M gap of which the report treats $55.1M as addressable, and DSO of 77.9 days against 55 days. The addressable share is an estimate to be tested in diligence. Closing the receivables gap would release $360.3M of cash once; the report counts only the $36M annual carrying benefit, because the release is a one-time event and not recurring profit.
The first 100-day moves are a cross-functional steering committee for the Coyote integration and DSO work, a diagnostic of billing records and workflows across the RXO and Coyote platforms, and a baseline study of SG&A by corporate function across both businesses.
What this report does not cover
The analysis rests on FY2025 filed statements only: prior-period comparative line items, inventory and R&D expense were not fully in the extraction, peer medians come from ValueChaser's 3PL benchmark set, and market position, growth, strategic readiness and digital dimensions were not rated. Later developments come from market intelligence and are not reflected in the figures, and a pending acquisition announced after the filing is outside the analysis.
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