GXO sets new revenue record in Q2 earnings results

Second quarter 2023 earnings for Greenwich, Conn.-based global contract logistics services provider GXO Logistics set a new company record, going back to when it was spun off from XPO Logistics in August 2021, the company reported this week.

Second quarter revenue rose 12% annually to $2.3 billion, for a new company record. And the company reported $25 million of net income attributable to GXO, down from $37 million a year ago, and $158 million of adjusted EBITDA. Adjusted earnings per share came in at $0.49, topping Wall Street expectations of $0.44. Operating income came in at $42 million, up 14% year over year compared with $37 million for the first quarter 2022.

“We’ve kicked off the year by signing exciting new partnerships and expanding relationships across multiple verticals and markets, with several transformative projects coming to fruition,” said GXO Chief Executive Officer Malcolm Wilson. “Our new project with Sainsbury’s, a leading grocery retailer in the UK, is the largest annual revenue contract awarded in GXO’s history and represents nearly $1 billion in lifetime value. Through the end of April, we’ve secured over $800 million of incremental revenue for 2023, while bringing our pipeline to a near-record level. We saw increased outsourcing and automation in the quarter. Operational tech was up a record 64 percent year over year, and we are accelerating our deployment of artificial intelligence, which boosts productivity significantly. We also continued to make strong progress on our key initiatives: we are seeing the benefits of our central efficiencies program sooner than expected, and the integration of Clipper is largely complete, allowing GXO to accelerate the expansion of GXO Direct, our industry-leading shared-user solution, to the UK.

Wilson added that GXO’s first quarter performance, strong wins, growing pipeline, and excellent execution put the company squarely on track for achieving its raised 2023 guidance and delivering our 2027 targets.

“It’s an exciting year, and we see significant opportunity to take share and grow our business,” he said.

Addressing the lower net income results on an annual basis, the reason for it, according to the company is due to non-operational items, including the impact of foreign exchange rates, interest expense, and reduced pension income.

“It is not a reflection of how the business is performing,” said GXO. “It was a very strong quarter—revenue; new business wins, pipeline growth etc.—and we raised FY adjusted EBITDA guidance [to $715-to-$745 million].

GXO highlighted various business highlights for the quarter, including:

• Sales pipeline grows to approximately $2.3 billion, up from fourth quarter 2022;
• Strong first half momentum in new wins, including signing GXO’s largest-ever annual revenue contract;
• Incremental 2023 revenue of $782 million secured through the first quarter;
• Revenue retention rate remains in the mid-to-high 90s;
• First quarter e-commerce revenue up 34% year over year; reverse logistics revenue up 50% year over year;
• Record operational tech deployment, up 64% year over year; and
• Expanded GXO Direct product to UK; rollout to Continental Europe planned later this year