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AVIS BUDGET GROUP, INC. (CAR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $2.43B, net loss $505M, and Adjusted EBITDA loss $93M; results were impacted by a planned non‑cash fleet charge of $390M as part of an accelerated fleet rotation in the Americas .
  • Against Wall Street consensus (S&P Global), CAR slightly missed revenue ($2.43B vs $2.49B*) and materially missed EBITDA (−$285M*), but delivered a smaller loss on Primary EPS (−$5.23* vs −$5.95*), a beat on EPS*; Adjusted EBITDA came in better than the company’s prior guide (~$100M loss guided vs −$93M actual) .
  • Management guided to clear improvements in fleet costs and profitability: Q2 per‑unit fleet cost ~$325/month (better than prior “< $350”) and Q2 Adjusted EBITDA expected to exceed $200M; longer‑term target remains “no less than $1B” Adjusted EBITDA for FY 2025 (framed as a goal/target amid macro uncertainty) .
  • Operationally, leisure demand and utilization improved (total utilization up ~3.5 ppts YoY to 69.4%), while commercial demand softened; positive residual values and flexible fleet strategy are key near‑term catalysts into summer .
  • Potential stock reaction catalysts: accelerating normalization of fleet costs (Q2 DPU ~$325, start of Q4 ~$300), Q2 EBITDA >$200M guide, and strengthening used‑car residuals; leadership transitions (CEO on June 30; CFO change effective July 1) are notable context for execution risk and continuity .

What Went Well and What Went Wrong

What Went Well

  • Accelerated fleet rotation executed at record scale, setting stage for lower fleet costs; company recorded $390M non‑cash fleet charge and does not expect further charges from this strategy .
  • Utilization and operational efficiency improved: total vehicle utilization rose to 69.4% (up 3.5 ppts YoY) with Americas nearly 70% and International 69%, supported by tighter fleet sizing and digital fleet tools .
  • Q2 outlook strengthened: per‑unit fleet cost guided down to ~$325/month (from “< $350”) and Adjusted EBITDA expected to exceed $200M, aided by better residual values and leisure demand momentum .

What Went Wrong

  • Topline and margins compressed YoY: revenue down 5% YoY; price (RPD) down 2% on a constant currency basis; Adjusted EBITDA swung to −$93M vs +$12M in Q1 2024, with per‑unit fleet costs up to $351/month (ex‑accelerated disposal charges) .
  • Commercial demand softened through the quarter, partially offset by stronger leisure and partner volumes; calendar shifts (Easter moving to April, one less day in Feb vs leap year) pressured Q1 comps .
  • EBITDA (S&P Global definition) missed consensus by a wide margin (−$285M* actual vs −$113M* est.) as fleet costs remained elevated versus last year despite improving trends intra‑quarter [GetEstimates Q1 2025].

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$3.48 $2.71 $2.43
Net Income ($USD Millions)$237 $(1,958) $(505)
Diluted EPS ($USD)$6.65 $(55.66) $(14.35)
Adjusted EBITDA (Non‑GAAP, $USD Millions)$503 $(101) $(93)
EBITDA Margin %21.0%*4.2%*−11.7%*
Net Income Margin %6.8%*−72.3%*−20.8%*

Values with * retrieved from S&P Global.

Segment performance

MetricQ3 2024Q4 2024Q1 2025
Americas Revenue ($USD Billions)$2.64 $2.12 $1.91
Americas Adjusted EBITDA ($USD Millions)$384 $(63) $(67)
International Revenue ($USD Billions)$0.84 $0.59 $0.52
International Adjusted EBITDA ($USD Millions)$139 $(11) $(3)

Key KPIs (Total Company)

KPIQ3 2024Q4 2024Q1 2025
Rental Days (000s)48,786 41,833 39,455
Revenue per Day (RPD, $)$71.32 $64.79 $61.59
Vehicle Utilization (%)72.1% 67.7% 69.4%
Per‑Unit Fleet Costs per Month ($)$365 $397 $351

Notes: Q1 per‑unit fleet costs exclude accelerated disposal costs per footnote (Table 6) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Per‑unit fleet cost per month (Total)Q1 2025~$400 Actual $351 Improved vs guide
Per‑unit fleet cost per month (Total)Q2 2025Under $350 ~$325 Raised (better)
Per‑unit fleet cost per month (Total)Start of Q4 2025~$300 ~$300 Maintained
Adjusted EBITDA (Total)Q2 2025N/A>$200M New positive guide
Adjusted EBITDA (Total)FY 2025“No less than $1B” target Goal reiterated (amid macro uncertainty) Maintained (framed as target)
Free Cash FlowFY 2025“No less than $500M” by year‑end (Q4 call) Expect positive FCF in later quarters (not reiterating $500M) Softened/qualitative

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Accelerated fleet rotation & DPU normalizationQ4: $2.5B impairment to reset fleet; Q1 DPU guide ~$400; Q2 < $350 Executed record disposals; $390M non‑cash charge; Q2 DPU ~$325; start Q4 ~$300 Improving costs
Pricing & demand mix (leisure vs commercial)Q3: pricing nearly flat; holiday demand strong Leisure strong; commercial pullback; calendar shifts affected comps Mixed; leisure up, commercial down
Residual values & tariffsQ4: set to benefit from lower‑cost MY’25 buys Residuals improved; early tariff chatter could bolster used values; flexibility emphasized Favorable residuals; tariff uncertainty
Technology/app & demand fleet pricingQ3: new app launch; DFP fully deployed Europe App enhancements live; digital fleet tools scaling; efficiency focus Ongoing investment
Capital allocation & leverageQ3/Q4: notes issued; temp term loan; buybacks; leverage context Prioritizing deleveraging while investing; opportunistic returns Deleveraging focus
Leadership transitionsQ4: CEO transition announced CEO farewell timing; CFO transition PR (July 1) Management change underway

Management Commentary

  • “We made substantial progress on our fleet rotation strategy during the first quarter, disposing of a record number of vehicles… These actions will allow us to realize improved vehicle costs sooner than we anticipated.” — CEO Joe Ferraro .
  • “We finalized our fleet‑related charges and recorded a $390 million charge this quarter… we do not expect any further fleet‑related charges from this change in strategy.” — CFO Izilda (“Izzy”) Martins .
  • “Rates are strengthening from Q1 into Q2… we expect adjusted EBITDA in Q2 to exceed $200 million.” — CFO Izilda Martins .
  • “Advanced reservations continue to trend positively… we will keep a close watch on demand trends while maintaining the ability to adjust our fleet accordingly.” — CEO Joe Ferraro .
  • “Our demand fleet pricing system is now fully deployed across Europe and is currently being implemented in our Pacific region.” — CEO Joe Ferraro .

Q&A Highlights

  • Utilization lever: Management detailed operational steps to sustain higher utilization while staying inside demand; fleet rotation improved optionality and auction lane efficiencies supported faster defleeting .
  • Tariffs and residuals: Tariffs may lift new prices and used values; company working closely with OEMs; flexibility in fleet sizing and model mix to mitigate cost pressures .
  • Capital allocation: Balanced approach with priority on deleveraging and efficiency investments, while remaining opportunistic on shareholder returns .
  • Pricing cadence: Americas RPD had March outlier due to calendar; exit trends expected to set up summer seasonal price improvement .
  • Free cash flow: Expect positive FCF in later quarters as fleet costs normalize and residuals benefit; Q1 FCF loss largely reflects vehicle program financing .

Estimates Context

Values retrieved from S&P Global.

MetricQ1 2025 ConsensusQ1 2025 ActualBeat/Miss
Revenue ($USD Billions)$2.492*$2.430 Miss
Primary EPS ($USD)$(5.95)*$(5.23)*Beat
EBITDA ($USD Millions)$(112.9)*$(285.0)*Miss
Primary EPS – # of Estimates7*——
Revenue – # of Estimates5*——

Note: S&P Global “Primary EPS” may differ from GAAP diluted EPS reported by the company.

Key Takeaways for Investors

  • Near‑term setup improves: Q2 per‑unit fleet costs now ~$325/month and Adjusted EBITDA >$200M guide point to sequentially stronger profitability into peak season .
  • Structural cost normalization: Record fleet disposals and inflow of lower‑cost MY’25 vehicles support DPU trending toward ~$300 by start of Q4, de‑risking H2 margins .
  • Demand mix watch: Leisure remains robust (forward bookings up), but commercial pullback tempers topline; pricing should strengthen seasonally into summer .
  • Residual tailwinds vs tariff risk: Elevated used‑car residuals aid defleeting economics; tariff outcomes remain fluid—company’s flexible fleet strategy is key .
  • Balance sheet priorities: Emphasis on deleveraging while funding operational tech and fleet optimization; opportunistic capital returns remain on the table .
  • Execution amid leadership transition: CEO handoff by June 30 and CFO transition July 1 heighten the importance of operational continuity and delivery versus improved Q2/H2 targets .
  • Actionable focus: Track Q2 EBITDA delivery (> $200M), DPU trajectory (~$325 → ~$300), residual values, and summer RPD trends—key drivers for estimate revisions and stock narrative .