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GXO Logistics, Inc. (GXO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $3.30B, up 16% YoY, with organic revenue growth of 5.6%, the highest in nine quarters; adjusted EBITDA was $212M (+13% YoY), and adjusted diluted EPS was $0.57 .
  • GXO raised FY2025 guidance again: adjusted EBITDA to $865–$885M, organic revenue growth to 3.5%–6.5%, adjusted diluted EPS to $2.43–$2.63, and FCF conversion to 25%–35% .
  • Results exceeded Wall Street consensus: revenue of $3.30B vs $3.10B consensus and adjusted EPS of $0.57 vs $0.56 consensus; GAAP diluted EPS was $0.23 due to non-GAAP adjustments and regulatory items (small beat on adjusted metrics) *.
  • Strategic catalysts: final UK CMA clearance to integrate Wincanton with cost synergies ramping into 2026, robust pipeline ($2.4B, ex-Wincanton), strong momentum in aerospace/defense and healthcare (NHS Supply Chain contract) .
  • Leadership transitions noted: incoming CEO Patrick Kelleher (effective Aug 19) and planned CFO transition; management emphasized continuity and a technology-led strategy (GXO IQ AI platform) .

What Went Well and What Went Wrong

What Went Well

  • “We generated revenue of $3.3 billion, up 16% year over year… and delivered $212 million in adjusted EBITDA, up 13% year over year” — CEO Malcolm Wilson .
  • Sequential margin expansion: “Our margins expanded by 90 basis points sequentially as sizable automated startups and productivity initiatives… matured more quickly than expected” — CFO Baris Oran .
  • Strategic wins and pipeline: $307M new business wins in Q2 (first-half >$0.5B), robust $2.4B sales pipeline excluding Wincanton; accelerating momentum in aerospace/defense and healthcare — NHS Supply Chain landmark deal .

What Went Wrong

  • Free cash flow usage: FCF was -$43M vs +$31M YoY in Q2 due to working capital and payment of a one-time regulatory matter recognized in Q1 .
  • GAAP profitability down YoY: net income $28M and diluted EPS $0.23 vs $39M and $0.32 in Q2 2024, reflecting regulatory, integration, and restructuring costs .
  • FX dynamics: management cited ~4% of the 16% reported revenue growth from FX, and noted hedging limited impact in 2025; FX tailwind expected to be more visible in 2026 .

Financial Results

Headline Metrics vs Prior Year and Prior Quarter

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$2.85 $2.98 $3.30
Net Income ($USD Millions)$39 $(95) $28
Diluted EPS (GAAP) ($USD)$0.32 $(0.81) $0.23
Adjusted Diluted EPS ($USD)$0.55 $0.29 $0.57
Adjusted EBITDA ($USD Millions)$187 $163 $212
Adjusted EBITDA Margin (%)6.6% 5.5% 6.4%
Cash from Operations ($USD Millions)$115 $29 $3
Free Cash Flow ($USD Millions)$31 $(48) $(43)

Consensus vs Actual (Quarterly)

MetricQ1 2025Q2 2025Q3 2025Q4 2025
Revenue Consensus Mean ($USD Billions)$2.93*$3.10*$3.39*$3.48*
Revenue Actual ($USD Billions)$2.98 $3.30 ——
Primary EPS Consensus Mean ($USD)$0.25*$0.56*$0.78*$0.84*
Adjusted Diluted EPS Actual ($USD)$0.29 $0.57 ——
# EPS Estimates15*13*14*14*
# Revenue Estimates14*14*13*13*

Values marked with * retrieved from S&P Global.

Segment/Geography Disaggregation (Q2 2025 vs Q2 2024)

GeographyQ2 2024 ($MM)Q2 2025 ($MM)
United Kingdom1,289 1,590
United States731 767
Netherlands220 253
France201 216
Spain145 166
Italy97 105
Other163 202
Total2,846 3,299

Industry Vertical Disaggregation (Q2 2025 vs Q2 2024)

IndustryQ2 2024 ($MM)Q2 2025 ($MM)
Omnichannel Retail1,316 1,626
Technology & Consumer Electronics363 402
Industrial & Manufacturing331 403
Food & Beverage326 359
Consumer Packaged Goods290 290
Other220 219
Total2,846 3,299

KPIs and Balance Sheet Snapshot

KPIQ2 2024Q2 2025
New Business Wins ($USD Millions)—307
Organic Revenue Growth (%)—5.6%
Net Debt ($USD Billions)—$2.55
Net Leverage (TTM Adj. EBITDA)—3.0x
Cash & Equivalents ($USD Millions)—$205
Total Debt ($USD Billions)—$2.686

Note: Non-GAAP measures and reconciliations provided in company materials; adjustments include transaction/integration, regulatory matters/litigation, restructuring, and FX-related items .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Organic Revenue Growth (%)FY 20253%–6% (May 7) 3.5%–6.5% (Aug 5) Raised
Adjusted EBITDA ($USD Millions)FY 2025840–860 (May 7) 865–885 (Aug 5) Raised
Adjusted Diluted EPS ($USD)FY 20252.40–2.60 (May 7) 2.43–2.63 (Aug 5) Raised
Adj. EBITDA → FCF Conversion (%)FY 202525%–35% (May 7) 25%–35% (Aug 5) Maintained
Interim Guidance UpdateFY 2025860–880 (June 19) 865–885 (Aug 5) Raised

Context: CMA cleared Wincanton subject to divestment of a small number of UK grocery contracts; integration permitted for most of the business and expected to commence in Q3, informing guidance raises .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24)Previous Mentions (Q1’25)Current Period (Q2’25)Trend
AI/Technology (GXO IQ)Piloting proprietary AI apps across replenishment/dimensioning/routing with strong productivity gains First non-pilot cost savings realized; plan to scale modules across sites Launch of GXO IQ (AI-first platform with Google Cloud/Snowflake); role in logistics/returns orchestration Accelerating
Supply Chain/Tariffs & MacroSequential organic acceleration; cautious on macro; FX/pricing headwinds Support customers with bonded warehouses, retagging; prudent guidance reaffirmed Environment seen as calmer; retention improving; modest margin benefits from shared network utilization Improving/Stabilizing
Aerospace & DefenseGrowth noted; targeting via Wincanton Pipeline doubled in 18 months; US strong, EU opportunity 12 RFPs with Wincanton; Pratt & Whitney renewal; revenue/cost synergies to 2026 Expanding
HealthcareLandmark NHS contract; Germany growth NHS operations to start Q3; minimal startup costs; largest-ever contract NHS start contributes ~0.4% organic growth; healthcare TAM cited Ramping
Regional TrendsContinental Europe fastest; UK softened late-2024; US improving All regions organic growth; UK rebounding in Q2 US strongest in volumes; UK improving; Q3 volume trends consistent with Q2 Improving
Capital Allocation & LeverageNet leverage 2.7x; M&A off near-term agenda; focus deleveraging $500M buyback authorization, 2.8M shares repurchased; M&A not near-term 5.4M shares repurchased in H1; maintain IG ratings; buyback balanced vs organic growth Balanced

Management Commentary

  • “Given our better-than-expected performance in the first half of the year, we are again raising our full-year adjusted EBITDA guidance…” — CEO Malcolm Wilson .
  • “Our margins expanded by 90 basis points sequentially… start-ups matured more quickly than expected… improved space utilization in our shared network.” — CFO Baris Oran .
  • “We launched GXO IQ… designed in partnership with Google Cloud… leveraging AI to orchestrate more productive, more dynamic logistics operations.” — CTO narrative via press release .
  • “We received final regulatory approval of the Wincanton acquisition… unlock growth opportunities in the UK as well as in aerospace and industrial across Europe.” — CEO .

Q&A Highlights

  • Organic Growth & Guidance: Management maintained a conservative stance despite strong momentum, citing visibility into Q3/Q4 and NHS ramp; guidance raised twice (June and August) due to internal efficiency and start-up maturity (not inventory stocking) .
  • Buybacks vs Growth: Board authorized $500M; H1 repurchases totaled ~5.4M shares (~4% of shares outstanding) at attractive discounts; capital allocation prioritizes high-return organic growth while maintaining IG ratings .
  • Wincanton Synergies: Cost synergies of ~$60M run-rate, lion’s share by 2026; revenue synergies expected over 2 years, akin to Clipper experience; small mandated divestiture ($100M revenue) immaterial .
  • Reverse Logistics/AI: Reverse logistics ~high single/low double-digit percent of revenue; >10% of pipeline; AI enhances returns processing and replenishment to unlock margins .
  • ERP Rollout: Phase 2 live in UK; US next; expected SG&A productivity and synergy acceleration through integration .
  • FX: ~4% of Q2 reported revenue growth from FX; limited impact in 2H25 due to hedging; potential tailwind in 2026 .

Estimates Context

  • Revenue: Q2 2025 actual $3.30B vs consensus $3.10B — beat of ~$$0.20B (≈+6.4%)* .
  • Adjusted EPS: Q2 2025 actual $0.57 vs consensus $0.56 — slight beat* .
  • Q1 2025 actual vs consensus: $2.98B vs $2.93B; $0.29 vs $0.25* .
  • Forward consensus: Q3 2025 revenue $3.39B, EPS $0.78; Q4 2025 revenue $3.48B, EPS $0.84*.

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Guidance momentum is the core catalyst: second raise in two months signals confidence in internal operational drivers (start-up maturity, site efficiency, shared network utilization) — watch for continued margin expansion in 2H25 .
  • Wincanton integration unlocks both cost and revenue synergies in aerospace/defense and industrials; expect measurable EBITDA contribution in 2026 and pipeline conversion in Europe .
  • Healthcare secular growth (NHS) and AI-led logistics orchestration (GXO IQ) deepen differentiation, particularly in complex returns and omnichannel environments .
  • Cash conversion and free cash flow should normalize post one-time regulatory payment; monitor working capital discipline and FCF conversion within the 25%–35% target .
  • Capital allocation remains balanced: opportunistic buybacks within IG credit guardrails; near-term M&A off agenda while leverage is reduced .
  • FX and macro appear more benign; management notes calmer supply chain backdrop, improving UK trends, and steady US volumes with elevated inventory normalizing .
  • Near-term trading implications: modest beats on adjusted metrics and guidance raise are supportive; watch execution on start-up maturities in Q3/Q4 and early signs of Wincanton synergy realization as potential upside drivers .

Footnotes:

  • Non-GAAP measures (Adjusted EBITDA, Adjusted EPS, organic revenue, FCF, net debt/leverage) are defined and reconciled in GXO’s press release and 8‑K .
  • S&P Global consensus estimates used for comparisons; values marked with * are retrieved from S&P Global.