RXO, Inc. (RXO) Earnings Call Transcript & Summary

Hello, everyone. Welcome to the RXO Q2 2026 Earnings Conference Call and Webcast. My name is Erica, and I will be your operator for today's call. Please note that this conference is being recorded. During this call, the company will make certain forward-looking statements within the meaning of federal securities laws, which, by their nature, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in the forward-looking statements. A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings as well as in its earnings release. You should refer to a copy of the company's earnings release in the Investor Relations section on the company's website for additional important information regarding forward-looking statements and disclosures and reconciliations of non-GAAP financial measures that the company uses when discussing its results. I will now turn the call over to Drew Wilkerson. Mr. Wilkerson, you may begin.

Good morning, everyone. Thank you for joining today. With me here in Charlotte are RXO's Chief Financial Officer, Jamie Harris; and Chief Strategy Officer, Jared Weisfeld. We delivered strong results in the second quarter, including volume gains across the business and improved profitability. There are 4 main points I want to convey this morning. First, in brokerage, we gained profitable market share. Truckload volume grew by 2%, outperforming the market. As you'll recall, we previously committed to resuming our truckload outperformance as early as the middle of the year. We achieved that ahead of schedule. We had the largest sequential increase in the gross profit per load growth rate in 4 years, driven by our spot mix, which was 42% in the quarter. Second, complementary services delivered strong results. Last Mile gained share and grew stops by 3% and Managed Transportation was awarded about $100 million in freight under management in the quarter. Third, we expect the momentum in the business to continue with anticipated year-over-year brokerage volume and gross profit per load growth again in the third quarter. And lastly, our results are underpinned by our continuous innovation. We made significant advancements in our rollout of Agentic AI tools in the quarter, which drove improvements in volume, margin, productivity and service. I'll start by discussing our second quarter results. In brokerage, we grew overall volume by 2% year-over-year. Full truckload volume grew by 2% and less than truckload volume grew by 3%. Full truckload volume grew sequentially every month in the first 6 months of the year. We also again increased our truckload spot mix, which we grew by 900 basis points sequentially. This helped to drive an 11% sequential increase in truckload gross profit per load, the highest growth rate in 4 years. Our focus on having deep customer relationships, providing exceptional service and being staffed for growth to respond quickly to customer needs is enabling us to win spots, projects and mini bids. In complementary services, managed transportation continues to win. We were awarded about $100 million in freight under management in the second quarter. These wins are significant because they result in increased synergy loads for RXO's other lines of business. Shippers continue to choose RXO for their managed transportation needs because we help them solve complex logistic challenges with unique high-tech solutions that leverage our scale and infrastructure. Our late-stage sales pipeline in Managed Transportation remains robust and composed of a diverse set of high-quality new names and long-tenured existing enterprise customers with whom we've built successful deep relationships. In Last Mile, stops grew by 3% as a result of market share gains. RXO remains the preferred provider for leading big and bulky brands. Our exceptional service and significant Last Mile scale continue to help us gain profitable market share. Overall, RXO's EBITDA was $40 million in the quarter, exceeding the high end of the range we provided due to the rapidly improving dynamics in brokerage and better-than-anticipated Last Mile stop growth. We've seen all of the key brokerage trends, including volume, spot mix and gross profit per load continue into July. Managed Transportation also won another $100 million in freight under management in July. Those results give us confidence in our third quarter outlook, which includes continued growth in brokerage volume and gross profit per load, but weakening within Last Mile. Jamie and Jared will talk more about our outlook in detail later in the call. Now I'd like to provide an update on the freight market and how we're winning. The supply-driven recovery is well underway. When regulatory enforcement began last fall, we said it was a structural change to the market, and that's proving to be true. This structural change will improve the safety of the industry, help combat theft and fraud and set the market up for a multiyear recovery once there is a sustained improvement in demand. I'd like to talk about how this is affecting our business. The cost of purchased transportation continues to rise due to the capacity exits, but the contract rates are not rising fast enough to fully offset the increase in costs. You can see the effect this is having on the industry by looking at the industry-wide tender rejections rate as measured by FreightWaves SONAR, which approached 18% in June, the highest in more than 4 years. This is normal for this part of the cycle. In this environment, shippers turn to their most trusted partners to get their freight covered. They turn to the partners that have delivered unique solutions for them in all parts of the cycle that provide deep relationships and importantly, have the resources to be able to handle significant increases in volume. RXO is working closely with our customers to optimize service, volume and price, and we're the partner of choice for covering spots, projects and mini bids. This freight has a higher gross profit per load. We're growing volume and profitability and taking market share despite continued soft demand. I'd now like to talk about another important topic in today's freight market, carrier vetting, cargo security and insurance programs. Our approach to these areas is also differentiated. We serve large enterprise shippers with complex needs and a strict standard, and we do not compromise on the quality of carriers we allow onto the RXO platform. Our cargo security program has been recognized externally, recently earning awards from both CargoNet and FreightWaves. As insurance providers put more emphasis on the quality of broker procurement and carrier vetting process, we believe RXO is well positioned versus the broader industry. Shippers are becoming more selective about their partners, not only selecting providers based on their scale and service, but also on their rigorous carrier vetting process and financial stability. These strengths define the RXO brand and are why about half of the Fortune 500 trust us with their freight. Jamie will give you more details about our carrier vetting and insurance programs later in the call. Turning to technology. We continue to make significant progress on our road map in the second quarter, especially when it comes to our Agentic AI initiatives. All are driving results when it comes to volume, margin, productivity and service. Let me give you some examples of recent wins in this area. Earlier this year, we announced the launch of a new spot quote agent that was driving increases in both volume and gross profit per load for the reps that were using it. In the second quarter, we focused on driving adoption of this tool and processed 5x more spot quotes via e-mail through the agent. This contributed to our strong spot mix in the quarter. We're also seeing increased engagement from our carriers as a result of deploying new tools. Our improved AI freight matching model, combined with a better carrier user experience helped drive a 25% sequential increase in digital offers from carriers in the quarter. This is a powerful tool, especially given how tight capacity is in the market. We're deploying these types of tools within complementary services as well, and AI is helping onboard new Managed Transportation customers faster and enabling faster delivery within Last Mile. We remain focused on putting these types of powerful tools in more hands and expanding technology's impact across our business to improve volume, margin, productivity and service. I'm excited for the momentum we've built across the business. In brokerage, we're gaining share, winning lucrative spot opportunities and achieving significant increases in gross profit per load. In Managed Transportation, we have a robust sales pipeline and are winning new customers and expanding with existing customers, which in turn will fuel outperformance in brokerage. And in Last Mile, we're the largest provider of home delivery services for the biggest brands in the big and bulky space. We're rolling out and driving adoption of new tools that are having a significant impact on our ability to capture new business opportunities improve the user experience for our network of carriers and reduce the time it takes for people to handle routine tasks. This is helping free up time for our people to build even deeper relationships with our customers and carriers, which in turn helps drive the sales flywheel within the business. On top of the winning formula our business has, the market is much more favorable now than it has been in the last 3 years. Capacity continues to lead the market, spurring a supply-driven recovery, and we're clearly in the early innings of it. We've made the most of the current market conditions to fuel our outperformance in the second quarter. Any increase in overall demand will result in even more outsized growth for RXO. We haven't hit normalized earnings for RXO yet. We're not even close, but the path is visible and achievable. I couldn't be more excited for the future. Now Jamie will discuss our financial results in more detail. Jamie?

Thank you, Drew, and good morning. Let's review our second quarter performance in more detail. For the quarter, we reported $1.8 billion in total revenue, gross margin of 13.9%, adjusted EBITDA of $40 million and adjusted EPS of $0.06. We exceeded the high end of our outlook, driven by better-than-expected performance within brokerage and Last Mile. Let's talk about our lines of business in more detail. Brokerage revenue was $1.3 billion, up 32% year-over-year and was 73% of our total revenue. The year-over-year revenue growth was primarily driven by increased freight rates and higher fuel prices. We continue to capture additional spot opportunities in the quarter with our spot mix increasing sequentially by 900 basis points to 42%. Spot volume carries a significantly higher revenue and gross profit per load when compared to contract volume. Cost of transportation increased in the quarter due to a continued tightening of the full truckload market, driven largely by regulatory enforcement, increased spot mix and higher fuel prices. Brokerage gross margin was 10.7% in the quarter, declining by 70 basis points sequentially. This was due to higher fuel prices, which represented an approximately 90 basis point headwind. As a reminder, rising fuel prices lead to increased revenue without meaningful corresponding increase in gross profit dollars as fuel costs are a pass-through over time. Importantly, truckload gross profit per load increased by 11% sequentially, which is reflective of the significant increase in spot loads. Complementary services revenue in the quarter of $488 million increased 7% year-over-year and represented 27% of total revenue. Complementary services gross margin was 21.1%, up 130 basis points sequentially and down 170 basis points year-over-year. Within complementary services, Managed Transportation generated $144 million of revenue in the quarter, up 1% year-over-year. Our automotive business contributed to that performance. Specifically, managed expedite volume was up almost 30% year-over-year. Last Mile generated $344 million in revenue in the quarter, up 9% year-over-year. Stops increased by 3%, higher than our expectations of approximately flat despite continued softness in the housing market. RXO outperformed the broader industry, and we gained share within the big and bulky category. Now turning to Slide 8. Let's discuss our capital structure and balance sheet. Quarter end net leverage was 4.1x LTM bank adjusted EBITDA, reflecting the working capital usage of the business, which I'll discuss shortly. Importantly, we anticipate our LTM leverage ratio to decline significantly by year-end as results continue to improve. At the end of the second quarter, our total available liquidity was $350 million. We also have a $200 million accordion feature on our ABL. RXO has a strong capital structure and liquidity position that gives us the flexibility to invest and grow across all phases of the freight cycle. Moving to Slide 9. Let's talk about cash. For the quarter, adjusted free cash flow was negative $42 million, primarily driven by working capital. There were 2 key drivers, revenue growth and Carrier QuickPay. Revenue growth represented approximately 2/3 of our working capital usage in the quarter. This is consistent with how our model typically performs early in a freight cycle recovery. As revenue growth accelerates, it has an outsized temporary impact on working capital before it normalizes. The rest was due to increased usage of QuickPay, primarily within managed transportation. As a reminder, QuickPay gives our carriers the option to get paid faster than standard terms. We view this as a good use of capital with a strong return. It also improves carrier liquidity and strengthens our carrier relationships, which matter more than ever in the current environment. From a cash balance perspective, we ended the quarter with $15 million of cash. Based on our current forecast, we expect strong adjusted free cash flow conversion in the third quarter as we collect cash associated with the working capital used during the second quarter. Given our asset-light business model, we remain confident in a 40% to 60% conversion over the long term and across market cycles. Before turning to our outlook, given recent developments in the industry, I thought it would be useful to walk through our carrier vetting processes and insurance program. We believe that our carrier vetting process is best-in-class. In fact, our cargo security program recently won 2 industry awards. Our business was built on large enterprise shippers, many of which have complex needs that require superior service. To meet those needs, we built a network of loyal carrier partners, each of which has met some of the strictest vetting standards in the industry. We have invested significant time and money in people and process over the years to thoroughly vet carriers before signing freight. As an example, we do not allow conditional carriers on the RXO network. And carriers must have an active authority for at least 90 days before they even have an opportunity to serve a customer. All carriers must speak with and be vetted by a member of our carrier team before they book their first load. These are a few of the policies that have led to our excellent safety record. Jared will provide more details about our program later in the call. As it relates to insurance, we maintain a comprehensive and data-driven program that we believe is appropriate given our scale and safety record. We have been in communication with our insurance partners and are confident that insurers will be even more focused on carrier vetting processes and controls as well as safety outcomes. We believe that our best-in-class process and safety record will continue to be a significant benefit when we renew our policies at the end of the year. While the situation is fluid, we are expecting the insurance market to be much more selective than in the past, which plays to RXO's advantage given our stronger infrastructure and tracking capabilities. We have heard some of the industry commentary around insurance renewals. Unlike RXO, we believe many brokers in the industry, small and large, are significantly underinsured, and those companies are likely to face larger increases in insurance capacity as well as premiums. Based on our initial analysis, we believe our renewal outcome should be more favorable than the broader market. Now let's move to Slide 15 and discuss our outlook. We expect to generate between $35 million and $45 million of adjusted EBITDA in the third quarter. Within brokerage, we're seeing continued momentum as the team improves contract pricing and capitalizes on spot opportunities. Last Mile is expected to decline more than typical seasonality, primarily due to weaker demand and higher carrier costs. This is incorporated into our third quarter outlook, and our brokerage momentum will offset the impact. To close, we continue to believe the supply side tightening is structural in nature and any sustained broad-based improvement in demand will set up for a sharp inflection. RXO is well positioned to win. Now I'd like to turn it over to Chief Strategy Officer, Jared Weisfeld, who will talk in more detail about our results and our outlook.

Thanks, Jamie, and good morning, everyone. Let's start by reviewing our quarterly brokerage performance in more detail. Overall brokerage volume increased by 2% year-over-year, exceeding our expectations. Truckload volume increased by 2% year-over-year and was 76% of brokerage volume. Truckload volume improved every month in the quarter and outperformed the cash freight shipments index by 500 basis points. LTL volume increased by 3% year-over-year. This reflects the business that transitioned to managed transportation beginning in the second quarter, as we mentioned on last quarter's call. Across the verticals we serve in truckload, we saw significant improvements in automotive, food and beverage and retail and e-commerce, all of which returned to growth for the first time in 2 years. This helped drive our profitable share gains. Let's talk about the momentum we're seeing in our spot business. Spot was 42% of our truckload volume in the quarter, increasing by 900 basis points sequentially and 1,500 basis points year-over-year. Because we're servicing our contractual freight exceptionally well, RXO is the broker of choice for spots, projects and mini bids. This often includes spot freight we handle in partnership with our contract customers while we work with them to optimize service, volume and price. This is part of our playbook at this point in the cycle. Contract volume remains foundational to our business and long-term growth and was 58% of overall truckload volume in the quarter. Contract rates continue to increase to better reflect current market conditions, and there is a long runway for growth. We're also focused on procuring capacity more effectively to improve our profitability. Recall, in times of market tightening, this acts as cost avoidance to the P&L. We've augmented our capacity to include dedicated and private fleets, which has enabled buy rate favorability on contract freight to improve by over 25% year-over-year. Moving to Slide 10. In the second quarter, truckload revenue per load increased by 19% year-over-year, the fastest increase in 5 years. Note, this excludes the impact of both fuel prices and length of haul. Revenue per load benefited from a richer mix of spot freight and contract rates also moved higher. Let's now discuss market conditions and brokerage margin performance on Slide 11. The truckload market remains tight, primarily driven by continued supply side tightening as demand remains muted. From a profitability standpoint, truckload gross profit per load increased by 11% from the first quarter as a stronger spot mix more than offset the squeeze in our contractual book of business. Our unique algorithm allows us to capture significant spot opportunities even in a soft demand environment. This is the power of the RXO model, delivering a significant gross profit per load increase despite a material increase in the cost of purchase transportation with market share gains. This is true competitive differentiation. I'd like to expand upon the structural supply side changes taking place in our industry and the resulting impact on our business. Please turn to Slide 12. The supply side has tightened materially, driven by federal enforcement actions and stricter safety rules. FMCSA's own estimate is that the vast majority of the roughly 200,000 non-domiciled CDL holders will not meet the new requirements, which is reflected in market indicators. Industry-wide tender rejections reached 4-year highs in the quarter despite soft demand and industry-wide volume as measured by the Cass Freight shipments Index declined by 3% year-over-year in the quarter and has been down year-over-year since the beginning of 2023. Despite soft demand, the significant reduction in supply has resulted in additional spot opportunities, and our team has capitalized on them. Our truckload gross profit per load returned to year-over-year growth in the second quarter. And in July, it increased by approximately 20% year-over-year. With capacity this constrained, we'd expect any sustained recovery in demand to move freight rates meaningfully higher from here. Moving to LTL on Slide 14. RXO's LTL brokerage volume continues to outperform the broader LTL market. We're winning LTL business with existing truckload customers and new customers that trust us with their freight because of our excellent service, increasing the stickiness of the relationships. I'd now like to give you some more details on our third quarter outlook. Let me first start with what we're seeing in the month of July in our brokerage business. Our spot mix increased further and was 50% of truckload volume. This, combined with continued contract repricing has accelerated our truckload revenue per load growth. Revenue per load increased by more than 25% year-over-year in July, excluding the impact of fuel and length of haul. And July truckload gross profit per load was up about 40% when compared to January. Turning to brokerage volume for the third quarter. We again expect to gain profitable market share. We expect truckload volume to be up a low to mid-single-digit percent year-over-year, accelerating from the second quarter growth rate. We also expect our LTL volume to grow by low to mid-single-digit percent year-over-year. Based on the strength of our LTL pipeline, we anticipate our LTL growth rate to accelerate in the fourth quarter. Moving to truckload gross profit per load. We expect a higher spot mix and the phasing in of higher contract rates to result in another quarter of sequential truckload gross profit per load improvement. Let's now talk about complementary services. In Managed Transportation, we're winning new business and the pipeline remains strong. We expect automotive managed expedite volume to grow again on a year-over-year basis in the third quarter. And in Last Mile, as a reminder, the second quarter is our seasonally strongest quarter. In addition to the typical seasonal decline in the third quarter, our outlook also incorporates an incremental sequential headwind of $3 million to $5 million. This is primarily due to weaker demand from our customers and higher carrier costs. Putting it all together, we expect RXO's third quarter adjusted EBITDA to be in the range of $35 million to $45 million with brokerage momentum offsetting Last Mile weakness. We see a path to achieve the high end of our outlook. The midpoint of our range assumes truckload gross profit per load declines from July through September with no meaningful uptick in demand. Before I close, I wanted to provide you with more details about our carrier vetting program, which both Drew and Jamie referenced earlier. Our approach is to build a vetting ecosystem around our carrier network so that we're not solely reliant on the FMCSA. This ecosystem is multilayered and always on. To ensure the highest level of integrity, our carrier compliance and carrier sales teams are completely separate, allowing our expert to enforce strict security protocols without operational bias. Our technology ecosystem includes trusted partners and vendors that help vet every partner thoroughly before they can access freight. We have a proprietary AI-powered system that evaluates carrier reliability and history. This system includes real-time identity verification with the FMCSA. We also aggregate real-time tracking from nearly all major ELD and visibility providers to eliminate blind spots. This proactive approach allows us to identify suspicious patterns long before they can impact our customers' supply chains. Our customers tell us that our carrier vetting program is a competitive advantage for RXO. And as Jamie said, as we approach our insurance renewal, we believe that our rate of increase will be significantly better than the industry. And to the extent higher insurance premiums become prevalent across the industry, these costs are likely to get passed on and lead to even higher freight rates. To close, we're entering the third quarter with strong brokerage momentum with accelerating truckload volume and gross profit per load growth. Managed transportation continues to win new awards and automotive expedite continues to grow. While Last Mile has headwinds, we are extremely well positioned to gain share over the long term as the largest provider of big and bulky delivery. We are accelerating the deployment of our AI tools across the organization, decoupling volume growth from headcount growth. We are still in the very early innings of what is setting up to be a multiyear recovery. We're not even close to normalized earnings, but there is a clear path ahead. Given the structural changes to industry capacity, any sustained recovery in demand would move gross profit per load and volume meaningfully higher from current levels. RXO is well positioned to deliver strong free cash flow and shareholder returns over the long term. With that, I'll turn it over to the operator for Q&A.

[Operator Instructions] Our first question comes from the line of Bruce Chan with Stifel.

Very encouraging results here. And you already gave us some good color on the spot mix, which seems pretty significant, but maybe I want to dig a little bit deeper there. One of your peers commented that they're still more focused on contractual volumes because they think it's more sustainable. Maybe we could get your perspective on that. How enduring do you think the spot opportunity is here just based on what you're seeing with capacity in project business, for example. Do you have a target mix in mind? And then, Jared, I think you said there isn't any reason why the higher spot would affect your ability to service contract, but maybe any thoughts on incremental hiring needs to address the increasing mix?

Bruce, when you look at the contract book of business, you have to start there. And the service that you provide on the contract business is what allows you the right to participate on the spots. So we built the business on the contractual side. We're servicing that business extremely well. When you look at our tender rejections, they're below what the industry average is right now, which our customers appreciate during this tight environment. We have to go to our customers, and we got to provide solutions. So on the solution side, it's not just going out there and bidding a spot load. It's looking at the spot loads that are coming in, and we see time and time again that we're able to go out there and we're able to create solutions for our customers for 30, 60, 90 days that turned into a project for us. The next thing I'd say is on the tech side. We talked last quarter of our new spot quote agent tool. We're seeing a lot of success off of that. And one of the things that customers look for on spots is the speed of response, and this has definitely helped us in that area, and we're seeing significant gains. And then the last thing that you hit on is bandwidth. You have to be able to have the bandwidth to cover the loads. You can have the service, you can have the solutions. But if you don't have the bandwidth to cover the loads from a coverage perspective, you can't participate in the spot market. And as we've told you all for 3 years, we've been staffed for growth. So we're hitting on all marks right now for the customers.

That's super helpful. And then just any thoughts on whether you have a target mix in mind?

If you would have asked me a year ago, I would have told you 60-40 was a good target mix. But when you look at what's going on, on the capacity side and the exits that we have seen and that we're continuing to see, and you're seeing this without strong demand, I think that we still have room for spots to increase off of where we are now, and we're seeing that in the third quarter. So I don't know that there is an optimal mix. Our goal is just to service the customers well. And we don't really look at it on spot versus contract. We look at our overall service metrics with the customer and being able to create results for them. But I do anticipate spots continuing to rise from here.

Your next question comes from the line of Ken Hoexter with Bank of America.

Maybe talk a little bit about the $35 million, $45 million outlook, if there are parameters on that kind of top end, bottom end, what gets you there? And within that, your thoughts on brokerage margins going from the second quarter to third quarter, given your expectation for higher GP per load and growth across truckload and LTL?

Ken, it's Jared. When you look at the range that we provided for the third quarter of $35 million to $45 million, we talked about embedded within that range is a compression in gross profit per load from the July jump-off point. So we've got that declining by about, call it, 10% from July through quarter end. To the extent that we outperform, certainly, as we said, there's a path to the high end. And that's really the biggest variable across -- when you look from the bridge from Q2 to Q3, truckload volume growth is accelerating. It's going to be up low to mid-single digits year-over-year. And I think it's also important to put in context, this is despite incremental last mile seasonality, which is Q2 is our strongest quarter of the year. We do have embedded within the outlook incremental $3 million to $5 million of headwinds given some weak demand and rising carrier costs within Last Mile. And despite that, we're able to go ahead and offset -- more than offset that with the strength in brokerage. And to your point, in terms of gross margin, we've got spot and gross profit per load increasing again sequentially from Q2 to Q3.

Great. And then I guess, thanks for the oversight on the carrier insurance. Those are clearly the topics of the day. But I think, Drew, your interesting points on the scaling of Agentic AI, you talked a bit about that last quarter. Now you're seeing 5x more spot quote e-mails process. Maybe can you talk about the scale of the program? How big is this in terms of you're winning that spot? Is that kind of what's defining this? Is that the shift that we're seeing? Is it maybe more? Just talk about the size and scale of that.

Yes. We're in the early innings of our Agentic AI journey. And I think when you look at it, our team is seeing benefits. Productivity continues to increase. And the biggest thing that as you walk on to the brokerage floor, they look at it is how does this help us service our customers better? How does this help us add gross margin dollars? And how does this help us source capacity differently. And we're seeing wins on all front. They're able to get to their customers faster. They're able to have more touch points. From a tracking and tracing standpoint, we see better visibility for our customers. And on the carrier side, we're seeing a lot more adoption and it's creating higher digital loads on the carrier front. But I think we're in the very early innings of it. We are making big investments there, and we'll continue to make investments there. But our journey is just getting started. And when you look at our tech team, they're not just great technologists, they're also people who understand the business. So we're partnering great operators with great technologists, which is creating good results for us.

Your next question comes from the line of Stephanie Moore with Jefferies.

I appreciate all the color you've provided about your vetting process and the details behind that. So is this vetting process leading to some of the market share gains that you're seeing today? Like are you already seeing shippers gravitate towards larger brokers or brokers like yourselves that have these standards in place?

Absolutely. When you look at doing business with large enterprise customers, you're talking Fortune 100, Fortune 500 companies, it's the topic of every conversation. And our conversations didn't just start over the last couple of weeks. Our carrier vetting process has been differentiated because of how we built the business. Our business was built on high cargo value shipments, just-in-time shipments. So safety and service has always been at the forefront. And when you're working with the biggest brands in the country, making sure that your service level metrics are there are important. And then I think it's important to note, like these aren't new relationships for us. These are people that we have delivered results for time and time again. Our top customers have been with us for 16, 17 years on average. And so they know the results that we've created for them. And so you're seeing the first inning of the market starting to turn. And it's good to see that they know who can service their freight the best in times of stress, and that's RXO.

Got it. Got it. Just as a follow-up, you commented on being back for growth here and part of why you've been able to successfully win some of these spot loads. Could you maybe talk about how much growth you can handle before needing to ramp hiring or if or when demand really starts to bounce back?

Yes, so the way that we look at growth is we want to be able to grow 15% to 20% overnight because we know that the market can turn very, very quickly. You saw that with spot loads increasing 900 basis points sequentially. So we know the market can turn quickly, and we want to be staffed for growth on the account side as well as on the carrier side. And this is -- while technology is a differentiator for us, this is still a people business built on relationships, and those take time. You have to invest in the training. So it's not just looking to hire now. We've been hiring and productivity continues to increase with the hiring that we're doing. And our hiring, we're not doing at the same rate because of the technology tools that we have built. We're growing volume faster than what we're adding headcount.

Your next question comes from the line of Chris Wetherbee with Wells Fargo.

I guess maybe if we could talk a little bit about July. It sounds like trends for you are quite good in July. I guess we've seen spot rates kind of come down, which is I know is normal with seasonality. But it doesn't sound like there's been any sort of deceleration in the spot demand for your services. I guess maybe can you help us sort of piece apart what you're seeing from a share perspective and maybe what you're seeing from a broader market perspective here in the early third quarter?

For sure. Chris, it's Jared. So to your point, the momentum is continuing into July despite the seasonal softness of the month. So our spot mix increased further and was 50% of truckload volume despite, obviously, July is typically a weak month from a seasonality perspective. And I think that speaks to what Drew was just talking about. We are staffed for growth. We are capturing spot opportunities. And we're also pairing that with some of the best technology that's in the industry and that AI spot quote agent that we talked about, we're seeing some nice results with. So -- and I think that speaks to some of the idiosyncratic levers that we have at RXO, where ultimately, while it is softer month-on-month from an industry-wide tender rejection standpoint, there are still lots of spots to be had, and our team is capitalizing on them. So when you combine that with some of the contract repricing that we've talked about, revenue per load growth, excluding fuel, accelerated, and we were up 25% year-over-year, and that's translated into July truckload gross profit per load up about 40% since the beginning of the year. So a ton of momentum in the business as we enter the third quarter.

That's super helpful. And then, Drew, maybe just sort of coming back to the Montgomery sort of liability issue, I guess, a little bit bigger picture. It sounds like you guys feel confident around the insurance renewal dynamics. I guess. I know it's difficult to look at a "pipeline of potential risk out there. But is there any way you can help us sort of think about it conceptually? How are you managing that process? Because clearly, I think plaintiff's attorneys can get a little bit more aggressive once we've seen some of these decisions that are out there. So maybe just help us sort of frame up that potential risk and how you're managing it.

Yes. So I think, Chris, it's important to note that when you look at these insurance discussions that you're referencing, not all of us are starting at the same starting point. This is not a new discussion for us. And when you look at our coverage, it's in the top percentile. It's right there with the largest asset-based carriers and some other peer in the industry that have significant coverage of excess liability. So I think the starting point is not the same. There's top 5 and 10 brokers out there who are not in the same realm from an insurance coverage. And so the conversations with the insurance company is not something that we're just starting this year. If you look at the last couple of years, we've got a great data point out there. You saw the industry insurance cost rise. We were significantly better than what happened in the industry. And the feedback that we got from our insurance brokers was that our carrier vetting processes were differentiated in the market. And that's because of how we built the business of what I referenced earlier, it was built off of service and safety of being able to do just-in-time shipments, high cargo value shipments. The vetting process is different on those. And I think the other thing that we could point to clearly is when you look at our claims record and our safety record, it is significantly better than the overall industry average, and I'm talking asset-based carriers and brokerage. And that's a selling point for us with customers. So now whenever you start to look at what happens, these customers, especially enterprise customers are not just looking at what are your carrier vetting processes. They're also looking at where you're at from the insurance side, and we're in a good position on those. So we see this as a great opportunity for us to be able to go out there and take market share and price.

The next question comes from the line of Fadi Chamoun with BMO Capital Markets.

Just a clarification maybe for Jared first. On the July data and what you're assuming for the rest of the quarter, I mean, I'm understanding that based on July, you're probably tracking kind of towards the higher end of range for your guidance. But what you've assumed for the rest of the quarter, is that typical kind of seasonality for you? Or is that kind of educated by what you're seeing in the market or just a little bit of conservatism? I just want to understand kind of how you -- what you need to see to kind of see the higher end of that range for your guidance? And the follow-up is maybe for Drew on all this liability issue. I mean it sounds like you're doing all you can on the vetting process and insurance and all that kind of envelope. But are you considering or looking into other things that you can do to protect your company in this kind of post Montgomery world? And how -- what does a resolution of this overhang look like from your perspective? What do we need to see to maybe have a little bit more clarity and finality to this kind of liability issue from your perspective?

Fadi, it's Jared. I can start and hand it over to the team for the second part of the question. With respect to July, to your point, July is starting off quite strong, and we've got revenue per load up more than 25% year-over-year, excluding fuel, gross profit per load up about 40%. From July to September, the midpoint is anchoring to about a 10% decline in gross profit per load throughout the quarter. If you look over the last 3 to 5 years, it has been about flattish in terms of historical cadence. So to the extent that remains true, certainly, it would be at the high end of our outlook of $35 million to $45 million. And I think that's consistent with the commentary that we gave that we do see a path to the high end, but we're certainly starting off the quarter quite strong as we capture spot opportunities with spot at about 50% of the mix in July. I'll hand it to Drew for the second part.