Exclusive: GXO CEO sees accelerating growth, margin inflection ahead

With a beat on revenue and earnings per share, accelerating organic growth, and more major business wins, GXO Logistics, one of the world's largest contract logistics providers, gave investors plenty to cheer about on Tuesday when it reported its third-quarter results.

Revenue grew 5.7% to $3.59 billion, organic growth reached 6.4%, and adjusted earnings jumped 13% to $0.89 per share, passing analyst expectations of $0.86. New business wins climbed 34% to $375 million, pushing the company's sales pipeline to a record $3.1 billion.

The market clearly welcomed the results, sending GXO shares 9.5% higher on Wednesday. Investing.com caught up with CEO Patrick Kelleher to take a deeper look into the results and get an idea of what investors can expect next.

Organic growth continues to accelerate

Kelleher has long stated that boosting organic growth and eventually bringing it back to the "mid-teens" is one of his top priorities, and Q3 showed solid progress on that front: organic growth jumped to 6.4%, up dramatically from 3.4% in Q2.

The company also maintained its full-year 2026 organic growth guidance of 4%-5%.

GXO's chief told Investing.com he expects Q4 growth of "at least 5.1%," with the "upward trajectory continuing into 2027."

Importantly, he noted that the company achieved much of that acceleration despite "largely flat volumes among existing customers."

GXO expects to enter 2027 with more than $850 million in incremental revenue from signed business, the highest amount it has ever carried into a new year.

Profitability will catch up

Despite accelerating revenue growth, GXO's Q3 adjusted EBITDA remained flat year-over-year at $251 million, with margins narrowing to 7% from 7.4%, partly reflecting startup costs and investments in the business.

Asked when new revenue would begin translating more directly into earnings growth, Kelleher was clear that the inflection point is on the horizon.

He explained that in his roughly 15 months at the helm, the company has invested heavily in a major overhaul of GXO's commercial organization, including new sales leadership, technology, and a full buildout of global procurement capabilities, in a bid to “match operations to sales.”

Heading into 2027, those costs are now largely "baked in, while organic growth is accelerating." Kelleher said.

He also highlighted the growing "predictability of GXO's commercial pipeline," praising the teams involved.

North America: Strong execution in a growing market

North America, which Kelleher previously identified as an area of focus where the company had historically underperformed, has now emerged as a major growth driver, with GXO's regional sales pipeline up more than 80% over the past year.

Kelleher attributed the momentum to both an expanding market for outsourced logistics, with "many new first-time clients," as well as the company's revamped commercial organization.

He noted that GXO has become much more competitive in converting opportunities into contracts, helped by its new sales leadership and commercial strategy.

The result, he suggested, is that increasingly the "market [is] coming to us."

Biggest long-term growth opportunities

On its post-Q3 conference call, GXO leadership highlighted four strategic growth verticals: technology, including data centers; aerospace and defense; life sciences; and industrials. Together, they accounted for roughly 40% of new business wins year-to-date.

Kelleher was particularly enthusiastic about data centers, where he said demand shows no signs of slowing, despite growing investor caution about the sector.

GXO's chief voiced great confidence in the long-term sustainability of the data center business, noting that GXO's is primarily involved with ongoing maintenance and operational support, rather than benefitting from the current construction boom.

Aerospace and defense is another major opportunity, he said, where the company is both procuring new business and continuously upgrading its tech stack, creating “very significant barriers for entry for competitors.”

AI, operational excellence and margin growth

Technology remains central to Kelleher's vision, with GXO deploying its GXO IQ platform and unified labor management systems across its global network.

On Wednesday's earnings call, he outlined potential labor-cost improvements of 5%-15% at individual operations, with AI offering additional mid-single-digit productivity gains.

Asked whether those efficiencies would translate into lasting margin improvements or eventually be competed away, Kelleher emphasized that technology alone is not what differentiates GXO.

"Anyone can buy software," he noted, but deploying it effectively requires operational expertise, experience and the right people, with GXO striving for "operational excellence."

The company's key advantage, in his view, lies in its ability to apply that expertise across its global network, effectively creating an "arbitrage of expertise" that competitors cannot easily replicate.

Kelleher repeatedly praised the employees, adding that GXO aims not just to recruit the best talent, but to be a company where the best talent naturally wants to work.

He expects the resulting efficiencies to eventually contribute to the bottom line, reiterating GXO's ambition to achieve margins "equal or better than peers."

The bottom line

GXO appears to be entering 2027 with several major pieces well in place: accelerating organic growth, a record commercial pipeline, an increasingly competitive sales organization, and a technological edge.

With much of the heavy transformation now in the rear view, Kelleher is confident that the next phase will be about realizing the returns on those investments.

Investors will get a more detailed look at what's next for the company on November 16, when GXO hosts its Investor Day.