Xos targets $40M–$50M revenue and 350–500 deliveries by 2026 with hub and powertrain expansion

Overview of Xos, Inc.’s Q4 2025 Earnings Call

During the recent earnings call for Xos, Inc. (XOS), the company provided a comprehensive overview of its performance in 2025, highlighting key achievements and future outlook. The CEO, Dakota Semler, emphasized that 2025 was a transformative year for the company, as it managed to achieve positive free cash flow, expand its customer base, and diversify its product portfolio despite operating under financial constraints.

Semler noted that Xos generated $46 million in revenue on 328 units delivered, marking its second consecutive full year of positive GAAP and non-GAAP gross margins. He also pointed out that the company achieved $5.4 million in positive free cash flow for the year, a significant improvement from the negative $49.1 million in 2024. This represents a $54 million swing in performance, with the company delivering its third consecutive quarter of positive free cash flow in Q4.

The CEO highlighted strong demand from major fleet operators such as UPS and FedEx, along with ongoing fulfillment of a 200-plus unit program. Additionally, Xos announced a strategic restructuring with Aljomaih Automotive Company, extending the convertible note’s maturity from August 2025 to quarterly installments through February 2028. This move is seen as a strategic alignment that allows Xos to operate from a position of focus rather than constraint, with Aljomaih now being the largest shareholder.

Product Portfolio Expansion

Xos has expanded its product portfolio significantly, particularly in the powertrain business. The company delivered 15 powertrain systems to Blue Bird Corporation in Q4 and received nearly 100 additional orders since Q2. Furthermore, the Xos Hub product line is undergoing upgrades for 2026, with new configurations ranging from 210 to 630-kilowatt hours. This positions Xos as more than just an electric vehicle company, but also as an energy solutions provider.

Giordano Sordoni, COO, described 2025 as a year defined by focused execution, operational discipline, and continued progress towards scalable production. He discussed manufacturing expansion, supply chain resilience, and a 28% reduction in operating expenses. Acting CFO Liana Pogosyan emphasized the importance of achieving positive free cash flow for the full year and improving liquidity, while also driving substantial reductions in operating losses and expenses.

Financial Performance

For the fourth quarter of 2025, Xos reported $5.2 million in revenue on 34 units, compared to $16.5 million on 130 units in the previous quarter and $11.5 million on 51 units a year ago. Full-year revenue reached $46 million on 328 units, down slightly from $56 million on 297 units in the previous year.

GAAP gross margin for the year was $2.7 million or 5.9%, while the fourth quarter GAAP gross margin was a loss of $2.6 million. However, non-GAAP gross margin was a profit of $0.3 million or 5.2%. Full-year operating expenses were $35.8 million, down 28% from last year, and the operating loss narrowed by 28% to $33.1 million. Year-end cash increased to $14 million from $11 million, and inventory declined to $25 million from $36.6 million.

Xos achieved positive free cash flow of $5.4 million for the year, with Q4 free cash flow at $2.4 million.

Outlook for 2026

Pogosyan provided 2026 guidance, stating that the company anticipates revenue to fall within the range of $40 million to $50 million, with unit deliveries between 350 and 500. Non-GAAP operating loss is expected to be in the range of $11.9 million to $13.3 million. Management indicated that the ongoing shift in product mix toward powertrains and hubs is expected to continue, with double-digit or higher growth rates for these segments.

Q&A Highlights

During the Q&A session, analysts raised several questions about the new hub product opportunities outside traditional EV charging. Semler described diverse customer use cases, including as a direct replacement for large DC charging infrastructure sites, for remote utility power, and for disaster preparedness. The hub’s new configurations target light-duty, flagship, and heavy-duty applications, with additional product upgrades planned for Q2 and Q3.

Analysts also inquired about expanding the powertrain product line. Semler explained that Xos is leveraging engineering synergies to drive cost competitiveness and reliability, stating that they are developing several configurations addressing traditional Type C school buses and rear engine configurations, with a focus on commonizing their platforms.

Edward Jackson from Northland Capital Markets asked about unit mix and future shifts. Pogosyan mentioned that the majority of units were predominantly StepVan’s and hubs, with powertrains making up the remainder of the mix for the full year. For the fourth quarter, powertrain and hubs drove the significant volumes. Semler added that the rate of growth in both the hub and powertrain businesses is high double digits and could easily exceed triple digits this year.

Sentiment and Risk Analysis

Analysts pressed for details on product mix, margin improvement, and working capital outlook, with a neutral to slightly positive tone, acknowledging operational progress but probing on sustainability and segment growth. Jackson described the working capital improvement as “unbelievable, amazing” but probed whether further gains are possible.

Management maintained a confident and constructive tone in both prepared remarks and responses. Semler used phrases such as “the foundation is built, now it is the time to scale” and “we are building a business that is increasingly self-sustaining.” Compared to Q3, analysts’ tone remains measured but constructive; management’s tone remains confident, with more emphasis on scalability and segment expansion versus prior quarters’ focus on risk mitigation.

Quarter-over-Quarter Comparison

The company shifted from record Q3 deliveries and revenue momentum to a seasonally lighter Q4, with operating performance and cost discipline sustaining. Q3 revenue was $16.5 million on 130 units, while Q4 was $5.2 million on 34 units. Guidance language shifted from reaffirming 2025 targets in Q3 to providing a specific 2026 range, reflecting greater confidence in segment growth (hubs and powertrains) and ongoing cost control.

Management’s tone moved from emphasizing resilience and discipline in Q3 to scaling and expanding product reach in Q4. Analysts’ focus evolved from margin mix and working capital to deeper questions on segment-specific growth and product innovation.

Risks and Concerns

Management cited risks from supply chain disruptions, tariff changes, and macroeconomic volatility. Semler highlighted the strategic restructuring of debt to extend runway, and discussed ongoing cost discipline, supplier diversification, and inventory management as mitigation strategies. Analysts expressed concern about the sustainability of working capital improvements and the continued margin pressure from product mix and tariff exposure.

Final Takeaway

Xos management emphasized that 2025 marked a turning point, with the company achieving positive free cash flow, broadening its product suite, and strengthening its balance sheet through cost discipline and strategic partnerships. Looking to 2026, Xos targets $40 million to $50 million in revenue and 350 to 500 deliveries, with major growth expected in the hub and powertrain segments. The company is preparing to scale its operations, extend its energy solutions, and deepen relationships with fleet and OEM partners while maintaining a focus on liquidity and margin expansion.