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AB

AVIS BUDGET GROUP, INC. (CAR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $3.039B, up sequentially vs Q1 and roughly flat YoY; diluted EPS was $0.10; Adjusted EBITDA rose 29% YoY to $277M as fleet costs improved, particularly in Americas and International .
  • Revenue modestly beat S&P Global consensus ($3.003B), while EPS missed materially versus a $1.77 consensus; the miss reflects pricing pressure, recall-related fleet constraints, and timing of fleet rotation reducing gains, as discussed on the call * .
  • Management emphasized two strategic catalysts: launch of “Avis First” premium concierge service (live in >12 markets, targeting >50 by year-end) and a multi-year Waymo partnership to operate AV ride-hailing in Dallas beginning 2026, both designed to expand TAM and de-commoditize the rental experience .
  • Guidance narrative: reiterated the long-run “$1B Adjusted EBITDA baseline” for a normalized year; H2 2025 commentary implied $900M–$1.0B Adjusted EBITDA given tariffs/recalls, with gains smaller than Q1 due to slower fleet cycling .
  • Liquidity stood near $950M with $1.7B of fleet capacity; debt actions included a $600M note issuance (May) and extension of a $1.1B floating rate term loan to July 2032—supporting balance sheet flexibility into peak season .

What Went Well and What Went Wrong

  • What Went Well

    • Adjusted EBITDA improved YoY to $277M; Americas EBITDA rose 18% and International rose 71% on lower fleet costs, better utilization, and stronger pricing abroad .
    • Launch of “Avis First” premium offering with curbside concierge and preconditioned vehicles; management expects margin accretion and meaningful RPD uplift (upgrade “as little as $10/day”) .
    • Strategic Waymo partnership: multi-year Dallas AV ride-hailing operations beginning 2026; Avis to provide end-to-end fleet operations, positioning for larger mobility TAM tied to vehicle miles driven .

  • What Went Wrong

    • EPS missed consensus; management cited pricing pressure (RPD challenged YTD), tariffs delaying OEM deliveries and inflate schedules, and large recalls impacting ~4% of Americas fleet—especially high-RPD segments (vans/minivans) during peak summer .
    • Gains on depreciation smaller than Q1 due to slower fleet cycling; management kept gross depreciation conservative post-Q1 fleet charges and earlier 2024 impairment .
    • Americas revenue per day declined YoY; total RPD flat YoY, reflecting competitive pricing and demand mix (leisure stronger than commercial), with supply tightening only recently showing “green shoots” in RPD .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$2.710 $2.430 $3.039
Diluted EPS ($USD)$(55.66) $(14.35) $0.10
Net Income (Loss) ($USD Millions)$(1,958) $(505) $4
Adjusted EBITDA ($USD Millions)$(101) $(93) $277
Adjusted EBITDA Margin (%)(3.7%) (3.8%) 9.1%
Total RPD ($USD)$64.79 $61.59 $67.62
Vehicle Utilization (%)67.7% 69.4% 70.7%

Segment performance

SegmentQ4 2024 Revenue ($B)Q1 2025 Revenue ($B)Q2 2025 Revenue ($B)Q4 2024 Adj. EBITDA ($M)Q1 2025 Adj. EBITDA ($M)Q2 2025 Adj. EBITDA ($M)
Americas$2.117 $1.907 $2.332 $(63) $(67) $220
International$0.593 $0.523 $0.707 $(11) $(3) $82
Corporate & Other———$(27) $(23) $(25)
Total$2.710 $2.430 $3.039 $(101) $(93) $277

KPIs

KPI (Total Company)Q4 2024Q1 2025Q2 2025
Rental Days (000s)41,833 39,455 44,945
Revenue per Day ($)$64.79 $61.59 $67.62
Average Rental Fleet671,966 631,375 698,633
Vehicle Utilization (%)67.7% 69.4% 70.7%
Per-Unit Fleet Costs per Month ($)$397 $351 $303

Performance vs S&P Global consensus (Q2 2025)

MetricConsensusActualSurprise
Revenue ($USD Billions)$3.003*$3.039 +$0.036B (Beat)
Primary EPS ($USD)$1.77*$0.10 −$1.67 (Miss)

Notes: Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA (Company)FY 2025“No less than $1B” (normalized baseline) Reiterated long-run $1B baseline; commentary implies H2 2025 at $900M–$1.0B given tariffs/recalls Maintained baseline; added implied H2 range
RevenueFY 2025Not providedNot providedMaintained N/A
RPD / PricingH2 2025Not provided“Green shoots” as industry supply tightens; pricing challenged YTD Narrative update
Depreciation/GainsH2 2025Not providedGains smaller than Q1 due to delayed fleet rotation New qualitative
Capital structureN/A$600M unsecured notes plannedIssued $600M notes; extended $1.1B floating rate term-loan to July 2032 Strengthened maturities/liquidity

No explicit guidance for OpEx, OI&E, tax rate, segment-level revenue/EBITDA, or dividends was provided in Q2 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Premiumization/ProductQ4: No premium concierge; focus on impairment and 2025 baseline . Q1: Tactical fleet charges to accelerate rotation .Launch of “Avis First” premium concierge service; priced to be margin accretive with targeted RPD uplift .Positive, structural
Autonomous MobilityQ4/Q1: NoneMulti-year Waymo partnership in Dallas; AV fleet ops, charging, maintenance, depot operations; public launch 2026 .Emerging growth
Pricing/RPD & DemandQ4: RPD down YoY, utilization improved . Q1: RPD down; utilization up; leisure strength .RPD challenged YTD; recent “green shoots” as supply tightens; leisure stronger than commercial .Stabilizing
Supply Chain/TariffsQ4/Q1: Elevated fleet costs, rotation actions .Tariff uncertainty delaying OEM deliveries/inflate schedule; fleet rotation slowed; holding older vehicles longer .Negative near-term
Recalls/Operational ConstraintsQ4/Q1: Not cited at scaleLarge recalls affecting ~4% of Americas fleet, concentrated in high-RPD segments, with limited parts visibility during peak summer .Negative near-term
Balance Sheet & LiquidityQ4: Liquidity ~$1.1B; well-laddered maturities . Q1: Added $640M fleet funding capacity .Issued $600M notes; extended $1.1B term loan to 2032; liquidity nearly $950M plus $1.7B fleet capacity .Positive

Management Commentary

  • “With Avis First, we've created the category of first-class car rental... With our Waymo partnership, we're stepping into the autonomous future as a critical enabler of next-generation fleet management.” — Brian Choi, CEO .
  • “Avis First is live in over a dozen locations today, and we're planning on over 50 markets being operational by the end of the year.” .
  • “We’re building for what’s coming next by launching category-defining products like Avis First and actively shaping the future of the AV landscape with our Waymo partnership.” .
  • Waymo partnership scope: “Avis… will serve as Waymo’s fleet operations partner in Dallas, delivering end-to-end services including infrastructure, vehicle readiness, maintenance, and depot operations… public launch slated for 2026.” .

Q&A Highlights

  • Tariffs and recalls: Management detailed dual headwinds—tariff uncertainty delaying OEM deliveries (inflate schedule) and recalls affecting ~4% of Americas fleet in vans/minivans—reducing RPD and hampering gains during peak summer .
  • RPD trajectory: Pricing has been challenged, but RPD is showing “green shoots” as supply tightens; leisure demand strong vs commercial .
  • Avis First economics and cadence: Upgrade priced “as little as $10/day,” targeting margin accretion and disciplined rollout to ~50 markets by year-end to protect experience quality .
  • AV revenue model and scaling: Financial details undisclosed; multi-year Dallas launch with vehicles initially on Waymo’s balance sheet; joint incentives aligned to scale into additional cities .
  • H2 gains/depreciation: Gains smaller than Q1; management guiding to net depreciation inclusive of gains, but slower fleet cycling limits gains near term .

Estimates Context

  • Q2 2025 Revenue: Actual $3.039B vs S&P Global consensus $3.003B — modest beat led by improved utilization and lower fleet costs, notably in International * .
  • Q2 2025 EPS: Actual diluted $0.10 vs S&P Global “Primary EPS” consensus $1.77 — material miss, driven by RPD pressure, recall impacts on high-RPD segments, tariffs delaying fleet rotation (thus limiting gains), and conservative depreciation practices post earlier charges * .
  • Prior quarters: Q1 2025 revenue $2.430B vs consensus $2.492B (miss); Q4 2024 revenue $2.710B vs consensus $2.718B (in line) * *.

Notes: Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup: Expect choppy EPS optics as recalls/tariffs compress RPD and delay gains; watch weekly RPD trend and OEM delivery schedules into late summer/fall .
  • Mix and margin tailwind: Avis First is designed to lift RPD and be margin accretive; disciplined scaling (>50 markets by year-end) could structurally re-rate pricing power over time .
  • Strategic optionality: The Waymo partnership positions Avis to monetize mega-fleet operations across AV networks—expanding exposure from travel-dependent volumes to vehicle miles driven .
  • Balance sheet resilience: Recent issuance and maturity extension (to 2032) plus ~$950M liquidity and $1.7B fleet capacity underpin flexibility to navigate supply chain shocks and invest in growth .
  • FY 2025 framing: Management reiterates a normalized ~$1B Adjusted EBITDA baseline; implied H2 2025 $900M–$1.0B suggests heavier back-half weighting if RPD firms and recalls resolve .
  • Monitoring list: 1) Recall parts timing; 2) Tariff policy clarity (Japan/EU); 3) RPD trajectory (supply-demand); 4) International pricing durability; 5) Avis First uptake and service quality metrics .
  • Trading lens: Any confirmation of RPD improvement or recall resolution could catalyze sentiment, while tangible updates on Dallas AV milestones and Avis First market launches offer medium-term multiple support .