Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2026

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to state fairly the financial position of the Company as of June 30, 2026 and December 31, 2025, the results of operations for the three and six months ended June 30, 2026 and 2025, and cash flows for the six months ended June 30, 2026 and 2025 in accordance with accounting principles generally accepted in the U.S. (“GAAP”). These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and consequently have been condensed and do not include all required disclosures in an Annual Report on Form 10-K. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026. All inter-company transactions and accounts have been eliminated in consolidation.

As the legacy Beacon business comprised substantially all of the Company at the time of its consummation and had significantly larger operations compared to the Company prior to the Beacon Acquisition, QXO determined that Beacon was the predecessor entity (“predecessor”) to QXO for financial reporting purposes. The Company also determined that the Beacon Acquisition represented a fundamental change in QXO’s operations.

In the second quarter of 2026, the Company changed its rounding presentation of these condensed consolidated financial statements and notes to the nearest whole million, except for share or per share data or as otherwise indicated. The change in rounding presentation has been applied to all prior-year amounts presented. In certain circumstances, this change resulted in adjustments to previously reported balances; however, such adjustments were not significant, and no other changes were made to previously reported financial information.

Use of Estimates

The preparation of unaudited financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these unaudited condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Significant items subject to such estimates include inventories, purchase price allocations, income taxes and vendor rebates receivable. Actual results could differ from those estimates.

Business Combinations

The Company records acquisitions resulting in the consolidation of a business using the acquisition method of accounting. Under this method, the Company records the assets acquired, including intangible assets that can be identified, and liabilities assumed based on their estimated fair values at the date of acquisition. Various Level 3 (as hereinafter defined) fair value assumptions are used in the determination of these estimated fair values, including items such as sales growth rates, cost synergies, customer attrition rates, discount rates, and other prospective financial information. The purchase price in excess of the fair value of the assets acquired and liabilities assumed is recorded as goodwill. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. While management believes these estimates are based on reasonable assumptions, they are inherently uncertain and unpredictable; therefore, actual results may differ. During the measurement period, which is up to one year from the acquisition date, the Company may adjust provisional amounts that were recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date. Transaction costs associated with acquisitions are expensed as incurred and are included as a component of selling, general and administrative expense within the condensed consolidated statements of operations.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash. Amounts included in restricted cash as of June 30, 2026 primarily represent the gross proceeds from the issuance of the 2031 Notes and 2034 Notes (as defined in Note 9) that were placed into a segregated escrow account pending the consummation of the TopBuild Acquisition. Upon the consummation of the TopBuild Acquisition on July 1, 2026, the gross proceeds were released from the segregated escrow account and were used to fund a portion of the TopBuild Acquisition and related transaction expenses.


	As of
(in millions)	June 30, 2026		December 31, 2025
Cash and cash equivalents	$	2,774	$	2,362
Restricted cash included in prepaid expenses and other current assets	3,000		4
Total cash, cash equivalents and restricted cash	$	5,774	$	2,366

Accounts Receivable

The following table represents the roll-forward of the allowance for credit losses for the six months ended June 30, 2026 and the year ended December 31, 2025:


(in millions)	June 30, 2026		December 31, 2025
Balance at beginning of period	$	13	$	—
Current period provision for expected credit losses	20		14
Write-offs, net of recoveries	(3)		(1)
Balance at end of period	$	30	$	13

Property and Equipment

The following table presents the components of property and equipment, net:


	As of
	June 30, 2026		December 31, 2025
(in millions)
Equipment	$	471	$	259
Finance lease assets	237		217
Leasehold improvements	159		125
Furniture and fixtures	27		30
Software	38		31
Land and buildings	58		60
Construction in progress	49		55
Total property and equipment	1,039		777
Accumulated depreciation	(214)		(88)
Total property and equipment, net	$	825	$	689

Goodwill

The following table sets forth the change in the carrying amount of goodwill during the six months ended June 30, 2026:


(in millions)
Balance as of December 31, 2025	$	5,111
Acquisitions	1,089
Measurement period adjustments	7
Translation adjustments	4
Balance as of June 30, 2026	$	6,211

Intangible Assets

The Company amortizes certain identifiable intangible assets that have finite lives, currently consisting of customer relationships and trade names. The following table summarizes intangible assets by category:


	As of				Weighted-Average Remaining Life(1) (Years)
(in millions, except time periods)	June 30, 2026		December 31, 2025
Amortizable intangible assets:
Customer relationships and other	$	4,663	$	3,909	9.0
Trade names	315		230		2.9

Total amortizable intangible assets	4,978		4,139		8.6
Accumulated amortization	(577)		(321)
Total amortizable intangible assets, net	4,401		3,818
Indefinite-lived domain names	1		1
Total intangibles, net	$	4,402	$	3,819

(1) As of June 30, 2026.

The following table summarizes the estimated future amortization expense for intangible assets for each of the next five years ending December 31 and thereafter:


(in millions)

2026 (July - December)	$	280
2027	560
2028	508
2029	483
2030	483
Thereafter	2,087
Total future amortization expense	$	4,401

Accrued Expenses

The following table presents the components of accrued expenses:


	As of
(in millions)	June 30, 2026		December 31, 2025
Inventory	$	335	$	170
Short-term portion of insurance liabilities	44		39
Payroll and employee benefit costs	94		67
Interest expense	35		27
Customer rebates	86		148

Business and property taxes	17		11
Professional services	74		18
Sales returns	30		27
Customer advances	38		20
Other	68		47
Total accrued expenses	$	821	$	574

Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

•Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

•Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

•Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The Company’s current financial assets and liabilities approximate fair value due to their short-term nature and include cash and cash equivalents, accounts receivable, vendor rebates receivable, income tax receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities.

Net Sales

Net sales represent the consideration the Company expects to be entitled to in exchange for transferring products to customers and, to a lesser extent, providing installation and construction services to customers. Substantially all of the Company’s performance obligations are satisfied at a point in time, and net sales are recognized when control of the product transfers to the customer, which occurs when the customer accepts the delivery of our product or takes possession of our product with rights and rewards of ownership. For the periods presented, substantially all of the Company’s contracts have a single performance obligation—to deliver products—and are short-term in nature.

The Company does not provide extended payment terms, and payment is due shortly after control transfers. The Company generally does not require prepayments; however, to the extent customers make payments in advance of delivery, the Company records a liability. Total customer advances as of June 30, 2026 were $38 million and are expected to be recognized as revenue within the next 12 months due to the short-term nature of the contracts. Total customer advances as of December 31, 2025 were $20 million.

Net sales are presented net of variable consideration, including estimated product returns, customer sales incentives (including volume rebates), and early payment discounts taken.

The Company estimates product returns based on historical return rates and records accrued sales returns and defers the related cost of products sold. Total accrued sales returns as of June 30, 2026 and December 31, 2025 were $30 million and $27 million, respectively, and total cost of products sold deferred were $23 million and $20 million, respectively. Provisions for early payment discounts are accrued in the same period in which the sale occurs based on historical experience. Commissions paid to internal sales teams to obtain contracts are expensed as incurred because the related contracts have a duration of one year or less. Sales taxes collected from customers and remitted to governmental authorities are excluded from net sales.

The Company offers sales incentives to customers, primarily volume rebates based on achieving specified sales levels. These volume rebates are not in exchange for a distinct good or service and therefore reduce net sales when the related revenue is recognized. The Company estimates volume rebate accruals based on contract terms, historical experience and performance levels. Total customer rebates as of June 30, 2026 and December 31, 2025 were $86 million and $148 million, respectively.

Shipping and handling amounts billed to customers are included in net sales. Related shipping and handling costs are accounted for as fulfillment activities and are recognized in cost of products sold when control of the products transfers to the customer.

Customer advances, sales returns and sales incentives are included in accrued expenses, early payment discounts are included in accounts receivable, net, and cost of products sold deferred are included in prepaid and other current assets in the condensed consolidated balance sheets.

Interest (Expense) Income, Net

The following table presents the components of interest (expense) income, net:


	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2026		2025		2026		2025
Interest income	$	27	$	22	$	52	$	79
Interest expense	(65)		(52)		(121)		(53)
Interest (expense) income, net	$	(38)	$	(30)	$	(69)	$	26

Recent Accounting Pronouncements — Adopted

In July 2025, the FASB issued ASU 2025-05, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”. The standard provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Accounting Standards Codification (“ASC”) Topic 606. This standard should be applied prospectively and is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years, with early adoption permitted. The standard became effective for the Company on January 1, 2026. Upon adoption, the Company elected to apply the practical expedient on a prospective basis. The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

Recent Accounting Pronouncements — Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The standard requires disclosure of disaggregated information about certain financial statement expense line items presented on the consolidated statements of operations in the notes to the financial statements on an interim and annual basis. The standard can be applied either prospectively or retrospectively and is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” The standard modernizes the recognition and disclosure framework for internal-use software costs, removing all references to software development stages and introducing a more judgment-based approach. This standard can be applied either prospectively, retrospectively, or utilizing a modified transition approach and is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements and related disclosures.