Qxo Posts 1,906 Million Revenue in Q2

Qxo (QXO -3.09%), a rapidly transforming distributor of building products, released its second quarter earnings for fiscal 2025 on August 14, 2025. The most notable news was that it recorded Adjusted Diluted EPS (non-GAAP) of $0.11, beating the consensus estimate of $0.04. Revenue (GAAP) reached $1,906.4 million, driven mainly by the Beacon Roofing Supply acquisition, and beat GAAP revenue estimates by $32.7 million. Qxo’s second quarter only included legacy Beacon’s operations from April 29, 2025 through June 30, 2025 after acquiring Beacon, with adjusted EBITDA of $204.6 million. However, Qxo posted a GAAP net loss, reflecting heavy integration costs and significant one-time charges. The period marked a major milestone as Qxo reshaped its business into a scaled building products distributor, exceeding analyst expectations for Adjusted Diluted EPS (non-GAAP).

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

What Qxo Does and Where It’s Going

Qxo operates as a distributor of building and roofing materials, offering a wide range of products for commercial and residential construction. Its business model was recently transformed by the $10.6 billion acquisition of Beacon Roofing Supply, completed on April 29, 2025, shifting Qxo from a software and subscription-based company to a scaled building materials distributor.

The company's strategy centers on growing both organically and through acquisitions, with a goal of becoming a dominant industry player. Management has placed special focus on expanding market presence through major acquisitions, improving supply chain logistics, and leveraging the leadership team’s operational experience. Success in these areas will be key to Qxo’s long-term targets.

Earnings Details and Key Developments

Qxo’s second quarter only included legacy Beacon’s operations from April 29, 2025 through June 30, 2025 after it closed the Beacon acquisition. The acquisition was funded through a mix of new debt and equity, which boosted both its scale and its exposure to the building products distribution market. For this period, GAAP revenue totaled $1.91 billion as QXO integrated Beacon’s residential roofing, non-residential roofing, and complementary building products businesses. The residential roofing segment contributed $929.8 million, or 48.7% of total sales. Non-residential roofing added $535.5 million in GAAP net sales, and complementary building materials made up $426.1 million. The legacy software and services business, once Qxo's core, now represents less than 1% of sales.

Adjusted earnings per share (non-GAAP) of $0.11 topped the consensus estimate by 170.7%, while GAAP EPS remained negative at $(0.15). Adjusted EBITDA, a non-GAAP financial measure, swung from a loss in the prior year to $204.6 million. Adjusted gross margin (non-GAAP) landed at 25.3%, well below Q2 2024 but in line with a distributor-focused model rather than software services. GAAP gross margin was lower, at 21.1%, reflecting the impact of inventory value step-ups and transitional expenses linked to the Beacon deal.

Large one-time and non-cash expenses distorted the GAAP results. These included $80.3 million in inventory step-up charges, $79.8 million in amortization (GAAP), $65.0 million in stock-based compensation, $65.6 million in transaction costs (non-GAAP), and $35.3 million in restructuring charges. Integration and restructuring led to a GAAP net loss of $(58.5) million, a larger loss than the company had posted in earlier, smaller-scale software-focused quarters. Adjusted net income, removing these one-offs, was $109.2 million (non-GAAP). However, these adjustments mean true run-rate performance is still unclear until non-recurring charges normalize.

Qxo’s share count increased significantly as equity was issued to fund the Beacon deal, rising to 671.6 million shares outstanding as of June 30, 2025. Two new classes of preferred stock, worth more than $1 billion combined, were added to the capital structure in connection with the acquisition. Net debt stood at about $1.2 billion as of June 30, 2025, with cash on hand of $2.3 billion as of June 30, 2025—a cushion for ongoing integration costs and potential future acquisitions.

CEO Brad Jacobs emphasized the company’s intention to double Beacon’s legacy earnings before interest, taxes, depreciation, and amortization organically, and repeated a long-term target of reaching $50 billion in revenue over the next decade. He cited strong early progress on integration and “key strategic hires” as support for those ambitions, while also launching broad changes to pricing, procurement, and organizational structure. Recurring software revenue, a previous company aim, now represents only a small portion of sales, and Qxo’s current revenue mix is overwhelmingly tied to physical distribution rather than subscription services.

Looking Ahead

Qxo did not provide formal guidance for the next quarter or for the full year. Management has instead kept focus on its multi-year ambitions, reiterating a target to reach $50 billion in annual revenue within a decade but not offering near-term sales or margin projections. The company expects the inventory fair value adjustments to be fully recognized during the year ended December 31, 2025, which may improve reported margins in future periods. However, until large non-recurring expenses tied to integration and restructuring are complete, underlying earnings power will remain hard to gauge.

With the business now focused on distribution rather than software, integration risks, dilution from new share and preferred issuance, and execution on further acquisitions are areas to monitor in the coming quarters. QXO does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.