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XPO reported Q2 FY2026 revenue of $2.4 billion, above the consensus estimate of $2.3 billion. Adjusted diluted EPS of $1.70 also exceeded the consensus estimate of $1.49.
Revenue rose 13.2% from $2.1 billion a year earlier. XPO’s filing attributed the increase to growth in both North American less-than-truckload (LTL) and European Transportation, including higher fuel surcharge revenue. In North American LTL, the filing said higher yield and tonnage lifted revenue excluding fuel surcharges; European revenue benefited from pricing, currency movements and higher fuel revenue.
XPO reported an operating margin of 11.5%, compared with 9.57% a year earlier. Its filing said employee compensation costs fell as a share of revenue, partly because those costs were spread across a larger revenue base, while fuel, operating expenses and supplies rose as a share of revenue primarily due to higher fuel costs. Free cash flow rose to $207.0 million from $56.0 million.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $2.4 billion | $2.1 billion | 13.2% |
| Diluted EPS | $1.36 | $0.89 | 52.8% |
| Gross margin | 100.0% | 100.0% | 0.0 percentage points |
| Operating margin | 11.5% | 9.57% | 2.0 percentage points |
| Free cash flow | $207.0 million | $56.0 million | 269.6% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $1.70 | $1.49 | Beat by 14.1% |
| Revenue | $2.4 billion | $2.3 billion | Beat by 3.23% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
Asked about the sources of volume growth, CEO Mario Harik said XPO was gaining market share and beginning to see both truckload-to-LTL conversion and improving industrial demand. He said it was difficult to quantify the contribution of each, although he believed XPO’s own market-share gains were currently the larger component. Harik said retail demand had remained positive and manufacturing had begun to build momentum during the quarter.
On pricing, CFO Kyle Wismans said contract renewal increases had accelerated into the mid to high single-digit range. Harik said XPO was pursuing more business from small and medium-sized customers and expanding premium services. He also said the company’s service quality had helped it accelerate renewal pricing.
Asked about the third quarter, Harik said he expected the operating ratio to be below 81%, compared with normal seasonality that would put it above 82%. He attributed the expected performance to pricing, accelerating volumes and cost efficiency.
Harik said workforce planning technology improved productivity by nearly 2.5 points in the second quarter. He said a pilot of trailer-loading technology uses AI to give dockworkers feedback as they load freight; XPO expected to roll it out across the network in the second half of the year.
On capacity, Harik said XPO had expanded its trailer fleet by more than 30% and its tractor count by more than 20% since 2021. He said the company had begun hiring in some markets, while acknowledging that the driver hiring market was tightening.
Discussing Europe, Harik said XPO was pursuing cost control and new customer sectors. He said the company’s eventual goal was to sell the business, but that it was patient about the price.
Guidance
On the call, Harik said XPO now expected full-year margin improvement of at least 200 basis points, versus its initial outlook for 100 to 150 basis points. He said the company now expected tonnage to rise a few points for the full year, compared with an approximately flat expectation at the start of the year.
Wismans said XPO now expected to more than double full-year free cash flow compared with 2025; he said it had begun the year expecting a 50% increase.