XPO Increases Earnings Off Lower Revenue for Q1
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XPO Inc. increased earnings 3% despite a year-over-year decline in revenue during the first quarter of 2025, the company reported April 30.
The Greenwich, Conn.-based less-than-truckload carrier posted net income of $69 million, or 58 cents a diluted share, for the three months ending March 31. That compared with $67 million, 56 cents, during the same time the previous year. Total revenue decreased by 3.2% to $1.95 billion from $2.02 billion.
“This morning we reported financial results that delivered on our outlook in a challenging freight market,” XPO CEO Mario Harik said during a call with investors. “The highlight of the quarter was a sequential LTL margin improvement that was better than normal seasonality. We’ve now improved our adjusted operating ratio by a cumulative 370 basis points over two years, keeping us on the industry’s best trajectory for operating efficiency and profitability.”
In addition to its margin performance, XPO reported that it accelerated yield growth, operated costs more efficiently with linehaul and labor, and enhanced service quality. It continued to invest in its network to strengthen its competitive position and sustain high returns over time.
“Our first-quarter results reflected strong execution across the business,” Harik said. “We delivered above-market yield growth, improved cost efficiency and raised the bar on service quality, all of which strengthened our competitive position, and our investments in capacity and technology are making our networks smarter and more agile while leveraging our scale.”
XPO noted that the decrease in revenue primarily was due to lower fuel surcharge revenue in the North American LTL segment. But the company drove an increase in earnings by improving performance and pricing despite the various headwinds companies across the industry are facing.
“Obviously the volume environment is the volume environment,” Chief Strategy Officer Ali Faghri told Transport Topics. “It’s a soft macro, and so to a large extent, that’s out of our control. But where we have control, and where we’ve executed really well, one is on the pricing side. So you saw in the quarter our yield, which is a measure of pricing, [with the exception of] fuel, was up 6.9%. That was the strongest pricing growth in the industry.”
Faghri added that the company can earn a higher price as services continue to improve. On top of that, the company has worked to improve cost efficiency to further those gains. He said linehaul operations is the biggest area for improvement, with a focus on finding ways to reduce reliance on third-party carriers within the linehaul network.
“We improved purchase transportation costs in the first quarter by 53% on a year-over-year basis, as we insourced those third-party linehaul miles,” Faghri said. “So that was also a big driver of the strong bottom-line performance. And then lastly, from a cost perspective, I would just also highlight that we’re continuing to manage labor very productively as well too.”
Revenue by segment:
- North American Less-Than-Truckload decreased 4% to $1.17 billion from $1.22 billion during the same time the previous year. The report noted that shipments per day for the segment decreased 5.8%, tonnage per day decreased 7.5% and yield increased 6.9%. Operating income declined 4.2% to $158 million from $165 million.
- European Transportation declined 1.9% to $782 million from $797 million the prior year. Operating income was $1 million for the quarter, compared with a loss of $4 million for the same period in 2024.
In the earnings report, Harik said, “We carried our momentum into 2025 and delivered first-quarter financial results that outperformed the industry. Our plan is driving results, with a long runway for margin expansion, supported by superior service and high-return investments in our network. We’re executing to achieve years of outperformance, regardless of the freight market environment.”
XPO ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 3 on the LTL sector list. It also ranks No. 35 on the TT Top 50 list of the largest global freight companies.
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