RXO’s tech turnaround: why investors are watching 

One is the freight market, which CEO Drew Wilkerson said has been strengthened not by a surge in demand, which he said repeatedly on the company’s conference call with analysts Thursday had been mostly flat. 

“For now, demand remains soft,” Wilkerson said in his opening remarks. “Our customers are still managing through macro economic uncertainty, and we have yet to see a sustained increase in the demand for goods.”

Supply-driven boost

Instead, Wilkerson said RXO (NYSE: RXO) is benefitting from “a supply driven recovery (that) is taking shape. Capacity continues to exit the market, a trend that began to accelerate late last year due to regulatory changes in enforcement.”

But the second factor that RXO officials on the call kept coming back to is technology, and that is where C.H. Robinson (NASDAQ: CHRW) loomed large.

Since the first quarter of 2024, C.H. Robinson has been a Wall Street star, with steady increases in its performance driven by several factors, including aggressive adoption of AI. 

Since May 1, 2024, when those first quarter earnings signaled the company had turned the corner, the stock is up about 141%, though at a price of approximately $172 on Thursday, C.H. Robinson is down about 15.6% from its 52-week and all-time high of $203.34 on February 6.

C.H. Robinson executives in various forums have been about as “on message” as might be found in any industry. In the company’s latest earnings call with analysts, CEO David Bozeman referred to “lean AI…our unique disciplined approach to AI innovation that is transforming supply chains.”

That term, or something similar, has been heard from C.H. Robinson officials repeatedly. 

At RXO, they have talked about the adoption of AI, but it’s never been as aggressive as heard from their competitor.

That started to change with the first quarter earnings call. And what investors heard and saw in the earnings was viewed as positive. 

At approximately 1:45 p.m. EDT, RXO stock was at $22.43, up $2.86 or 14.27%. It has more than doubled since a 52-week low of $10.43 on November 18. 

But even the current stock price, after its Thursday increase, is down significantly from its more than $31 high in late July 2024.

Investors presumably were reacting positively, among other things, to RXO’s forecast of EBITDA in the second quarter. 

Big jump foreseen in EBITDA

After coming in with a figure of $6 million in EBITDA for the first quarter, RXO is now forecasting, based on both a stronger market and its own productivity gains, EBITDA of $27 million to $37 million in the second quarter. That assumption is based on higher pricing and the waning of the brokerage squeeze that occurs when spot rates are rising but contract rates are not. 

Even if it came in at the high end of that range, EBITDA at RXO would still be below the second quarter 2025 EBITDA of $38 million. But it would be getting close. 

The company’s EBITDA margin in the first quarter was 0.6%, compared to 1.5% in the first quarter of 2025. For the full year 2025, it was 1.9%. 

Wilkerson said on the call that a normalized cycle would see RXO with an EBITDA margin in the mid single digit range, and an “upcycle” is high single digits to low double digits.

Gains starting to hit with AI

Technology will help drive those gains in EBITDA, company officials said.

“We made significant progress on our roadmap, especially when it comes to putting AI into action,” Wilkerson said. “The systems integration we completed last year (with the tech stack of Coyote Logistics, which RXO bought from UPS) has enabled us to move faster to build and launch smart AI tools that tap into RXO’s decades worth of data.”

Wilkerson made comments about AI similar to those heard from C.H. Robinson executives in its early adoption and touting of the technology, the type of boasting that has been more muted coming out of RXO, at least until this call.

“Everything our technology team is currently working on is centered around moving beyond basic repetitive tasks and toward smart, proactive decision making,” Wilkerson said.

One of the consequences of the move to Lean AI at C.H. Robinson has been a reduction in headcount. RXO does not release personnel numbers with its earnings, but C.H. Robinson does. 

In the first quarter of 2024, total headcount at C.H. Robinson was 14,990. In the first quarter of this year, it was down to 11,705.

Wilkerson said the brokerage headcount at RXO was down an unspecified double digit percentage in the first quarter compared to a year earlier.

Size of the downturn in workforce

In the company’s 10-K filing with the Securities & Exchange Commission earlier this year, RXO said as of December 31, 2025 it had 9,218 “team members” made up of 6,906 full-time and part-time employees and 2,312 temporary workers. 

A year earlier in its 10-K, RXO said the corresponding numbers were 9,873 team members of which 7,540 were full-time and part-time employees and 2,333 were temporary workers. That would mark a decline of about 6.6% as measured in the full count of team members. That figure would not have measured further declines in the first quarter or the current second quarter.  

Jared Weisfeld, the chief strategy officer at RXO, said on the call that productivity at RXO in the quarter was 15% percent improved over the prior 12 months, “benefitting from those investments.” In an interview with FreightWaves conducted in parallel with the earnings release, Weisfeld said productivity at RXO is measured as loads per person per day. 

Weisfeld said in the last 12 months, that productivity measurement is up “mid teens percentage.” As an example, he said agentic AI deployment automated more than 500,000 phone calls the company made during the quarter. 

“We are still in the very early days of enabling a lot of our AI driven incremental productivity,” Weisfeld said. He said the four “key pillars” of technology measurements at RXO are volume, margin, productivity and service. “And as we go ahead and deploy agentic AI across the organization, we’re very excited what that means to the long term incremental margin for the company.”

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