AVIS BUDGET GROUP, INC. (CAR)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 resumed top-line growth: revenue rose 1% year over year to $3.519B, diluted EPS was $10.11, and Adjusted EBITDA increased 11% to $559M . Relative to Wall Street consensus, revenue beat by ~$75M and Primary EPS beat by ~$0.24 (S&P Global data)*.
• Segment mix improved: International revenue rose 7% YoY to $898M and Adjusted EBITDA grew 37% to $190M, while Americas Adjusted EBITDA rose 4% to $398M despite a 3% RPD decline .
• Operational headwinds persisted: recalls grounded ~5% of the Americas fleet, driving ~$60M Q3 cost impact and a full-year ~$90–$100M headwind; two-thirds of affected vehicles await parts, with impact likely to linger into Q4 and early 2026 .
• Outlook: management now expects 2025 EBITDA toward the low end of the previously stated range; liquidity stood at nearly $1.0B and the $1.1B floating-rate term loan maturity was extended to July 2032 .

What Went Well and What Went Wrong

What Went Well

• International strength: RPD increased 5% ex-FX, driving International Adjusted EBITDA +37% YoY to $190M despite slightly lower rental days . “We delivered $3.51 billion in revenue this quarter… modest, yes, but meaningful” — CEO Brian Choi .
• Customer experience and premium product traction: Avis First expanded to 36 airports within three months; average renter rating is 4.9/5 and RPD exceeds $100, supporting margin accretion . “Avis First proves that when we deliver consistent excellence, we earn both customer satisfaction and meaningful margin expansion” — CEO .
• Americas profitability resilience: Adjusted EBITDA rose to $398M (+4% YoY) primarily on lower fleet costs and higher rental days, offsetting pricing pressure .

What Went Wrong

• Pricing pressure in the Americas: RPD decreased 3% YoY; total-company consolidated pricing declined 1% . “Our overall Americas RPD still declined 3% this quarter, and I’m not okay with that” — CEO .
• Elevated recall disruption: ~5% of Americas fleet grounded; tangible cost impacts approximated ~$60M in Q3 and ~$90–$100M for FY25, with repairs delayed due to parts supply and 2–4 hour per-vehicle repair times .
• Outlook bias lower: management now expects 2025 EBITDA toward the low end of prior guidance range given recall timing, government shutdown impacts, and softer commercial demand internationally .

Financial Results

Consolidated Performance vs Prior Year, Prior Quarter, and Consensus

Consensus vs Actual (S&P Global)*

Notes: Company-reported Adjusted EBITDA for Q3 2025 was $559M ; S&P Global “EBITDA” may not align with company “Adjusted EBITDA” definitions*.

Segment Breakdown

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategy and revenue stabilization: “This is the first earnings call in eight quarters where we get to say that our revenue is higher than last year’s… sustainable EBITDA growth cannot come from just cost-cutting alone… you have to grow both volume and price by delivering a product that wins the customer’s share of wallet” — CEO Brian Choi .
• Premium product traction: “Avis First renters are giving us an average of 4.9 stars… At an RPD of over $100, Avis First proves… meaningful margin expansion” — CEO .
• Outlook and recalls: “We now expect our 2025 EBITDA to be toward the low end of our previously stated range… the shift in vehicle recall impact into the fourth quarter represents the single largest headwind” — CFO Daniel Cunha . “We still have now over two-thirds of our vehicles awaiting parts… potentially going to have still some amount into Q1” — CFO .

Q&A Highlights

• Pricing trajectory: Within Q3, RPD was stronger in July–August with softening in September; management aims for structurally higher base RPD given inflationary cost pressures .
• Recall quantification: ~$60M Q3 cost, ~$90–$100M FY impact; repairs delayed by part availability and lengthy service times (2–4 hours per vehicle) .
• Interest expense framework: ~$3B fleet term maturities next year split between lower and higher rates; corporate interest steady with planned paydown; most debt fixed-rate .
• International transformation: Intentional mix shift to higher-margin leisure/inbound; EBITDA up ~40% YoY; continued pruning of low-return monthly business .
• Fleet depreciation outlook: MY2025 refresh largely executed; expecting MY2026 to be similar to MY2025; recalls raised per-unit depreciation in Q3 by ~$20; pressure expected to continue into Q4 .

Estimates Context

• Q3 2025 beat: Revenue $3.519B vs consensus $3.44B; Primary EPS (S&P basis) 8.38 vs consensus 8.14; both modest beats*. Q2 showed a revenue beat but EPS miss, demonstrating ongoing pricing pressure amid operational headwinds*.
• Implications: International outperformance and cost discipline support EBITDA; however, recall delays and government/commercial softness likely drive estimate revisions lower near term for Q4 and FY EBITDA despite improving mix*.

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Near-term: Q3 delivered a clean beat on revenue and S&P Primary EPS; trades likely key off improving International EBITDA, premium product traction, and recall cost disclosure .
• Americas pricing remains the swing factor; management is signaling pursuit of structurally higher RPD to meet ROIC thresholds, but industry competitiveness may limit immediate uplift .
• Recalls are the principal headwind into Q4/early 2026; expect continued carry and per-unit cost pressure until parts availability normalizes .
• International strategy is working: deliberate mix shift toward leisure/inbound, with EBITDA momentum and margin support likely to continue if macro stays constructive .
• Balance sheet/liquidity are stable: nearly $1.0B liquidity, $1.9B ABS capacity; term loan extended to 2032, reducing near-term refinancing risk .
• Watch for MY2026 depreciation guidance next quarter; with MY2025 refresh largely executed, depreciation should be driven by newer fleet mix, reducing reliance on used-car market tailwinds .
• Trading setup: Positive narrative on product/brand differentiation (Avis First), International EBITDA strength, and clearer recall quantification; risk remains on Q4 RPD trajectory and government/commercial demand cadence .

Notes on non-GAAP and definitions: Company reports Adjusted EBITDA and Adjusted Free Cash Flow and provides reconciliations and key metric definitions in the Q3 materials **[723612_0000723612-25-000076_a03-pressreleasexq3f25.htm:1]** **[723612_0000723612-25-000076_a03-pressreleasexq3f25.htm:9]** **[723612_0088e306ed7c4340869ec44d679027b4_10]** **[723612_0088e306ed7c4340869ec44d679027b4_13]** **[723612_0088e306ed7c4340869ec44d679027b4_14]**.