Xos (XOS 8.31%), a manufacturer of battery-electric commercial vehicles, reported its second quarter earnings on August 13, 2025. The release was notable for record GAAP revenue of $18.4 million, marking a significant outperformance against analyst expectations of $13.1 million (GAAP) revenue. However, the company posted a GAAP earnings per share of $(7.50), which was below GAAP estimates of $(1.16) but still reflecting operating losses. Gross margin (GAAP) declined sharply to 8.8% and raised its projected non-GAAP operating loss range for FY2025 by approximately $10 million due to tariff and product-mix pressures. Overall, the period highlighted Xos’s ability to scale sales, but profitability and margin questions remain.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $(0.91) | $(1.16) | $(1.23) | 25.9 % |
| Revenue (GAAP) | $18.4 million | N/A | $15.5 million | 18.7 % |
| Non-GAAP Operating Loss | $(6.9 million) | $(9.7 million) | 28.9 % | |
| Gross Margin (GAAP) | 8.8 % | 13.1 % | (4.3) pp | |
| Free Cash Flow | $4.6 million | $(26.1 million) | NM |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding Xos’s Business and Strategic Priorities
Xos focuses on designing and manufacturing battery-electric commercial vehicles for fleet operators. Its products include stepvan trucks, medium-duty chassis cab models, and increasingly, powertrain kits and mobile charging solutions for broader electrification needs.
Key areas of recent focus for Xos include scaling production efficiently, providing end-to-end electrification (vehicles plus charging solutions), and adapting to cost challenges like input tariffs. The company’s ongoing ability to attract large customers such as UPS and leverage high component commonality across its models are seen as central factors for future growth.
Highlights and Challenges in the Quarter
Revenue (GAAP) reached an all-time high, driven by unit deliveries increasing to 135 from 90 in Q2 2024. This marked the largest quarter for both deliveries and sales (GAAP revenue). UPS accounted for a substantial proportion of shipments, with additional volume from FedEx independent service providers and other large fleets.
The revenue figure (GAAP) topped analyst predictions by more than 40%. Inventory levels (GAAP) dropped to $31.0 million from $38.0 million in Q1 2025.
Gross margin (GAAP) fell to 8.8%, down from 13.1% in Q2 2024 and compared to the previous quarter’s GAAP gross margin of 20.6% in Q1 2025. Management attributed the margin reduction to product mix shifts—large fleet contracts tend to carry lower margins—and to inventory adjustments. Non-GAAP gross profit also shrank, showing the margin impact was not limited to special charges.
Operating expenses were reduced by 35% year over year to $8.7 million, compared to $13.4 million in Q2 2024, reflecting deep cost cuts and enhanced efficiency. The company reported positive free cash flow (non-GAAP) for just the second time as a public company, reaching $4.6 million in free cash flow compared to negative $26.1 million in Q2 2024. Cash and equivalents (GAAP) increased to $8.8 million at period end.
Product Expansion, Infrastructure and Market Context
Xos continued developing its core stepvan platform and advanced the MDXT medium-duty chassis cab, which is highly modular and shares more than 90 % of its parts with the stepvan. This approach minimizes incremental manufacturing investment and supports efficient scale-up. The MDXT program is expected to enter broader production in Q3 2026, with growing customer interest based on early demonstrations.
Mobile charging products, marketed as Xos Hub, and powertrain kits became a larger focus during the quarter. These products allow customers to deploy electric vehicles without being limited by permanent charging infrastructure. Hub units are gaining interest both from Xos vehicle buyers and outside fleets, showing Xos’s aim to become a provider of integrated electrification platforms rather than just a vehicle builder.
However, management has cautioned that competitive pricing on large contracts, ongoing tariffs, and product mix effects make margin improvement an ongoing challenge, as discussed in commentary for FY2025, likely to persist into future quarters.
Financial Outlook and Priorities Ahead
Xos reaffirmed its guidance for revenue at $50.2 million to $65.8 million and for unit deliveries at 320 to 420 vehicles. However, it widened the projected non-GAAP operating loss to a range of $24.4 million to $26.9 million, compared with an earlier outlook of $14.0 million to $17.2 million (non-GAAP). The upward revision reflects expectations of higher tariffs and less favorable product mix in the second half.
Management did not lower targets for sales or volume, but flagged sustained cost headwinds from tariffs and input materials. Investors should focus on gross margin trends, execution on new product lines like mobile charging and the MDXT chassis, and ongoing progress in cash flow and liquidity in coming quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
