XPO’s third quarter results drew a strong positive response from the market, as the company delivered above-consensus revenue and non-GAAP earnings despite ongoing softness in the freight sector. Management attributed the outperformance to continued operational improvements, particularly within its North American less-than-truckload (LTL) business, where proprietary technology and process optimization drove both cost reductions and yield gains. CEO Mario Harik highlighted that XPO’s “service product has never been better,” citing record improvements in damage frequency and on-time performance. The company also benefited from a rising share of high-margin local and premium shipments, reflecting the success of targeted sales and service initiatives.

Is now the time to buy XPO? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From XPO’s Q3 Earnings Call

• Ken Hoexter (Bank of America) asked how XPO’s systems enabled better customer response and pricing amid volume declines; CEO Mario Harik pointed to onboarding 2,500 new local customers and expanding premium services as key drivers.
• Scott Group (Wolfe Research) inquired about the magnitude of potential margin improvement into next year; CFO Kyle Wismans stated incremental margins should be "comfortably above 40%", citing yield and cost discipline.
• Jonathan Chappell (Evercore ISI) questioned the sustainability of cost reductions through AI and in-sourcing; Harik outlined that most savings to date came from improved productivity, with further gains possible from ongoing tech rollouts.
• Stephanie Moore (Jefferies) probed management’s confidence in sustaining pricing power despite tougher comps; Harik explained that structural levers such as premium services and local account growth provide a multiyear path for yield gains.
• Bascome Majors (Susquehanna International Group) asked about raising Europe’s profit contribution; Harik confirmed ongoing cost initiatives but noted North America remains the focus, reiterating plans to eventually divest the European business.

Catalysts in Upcoming Quarters

Looking ahead, our analyst team will be tracking (1) the pace of adoption and impact of new AI-driven productivity tools, (2) further gains in high-margin local and premium service mix, and (3) the trajectory of free cash flow improvement as capital expenditures moderate. Execution against these milestones, as well as progress toward eventual divestiture of the European business, will be important markers of management’s ability to deliver on long-term targets.

XPO currently trades at $137.30, up from $124.78 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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