Call participants
Chief Executive Officer — Gil West
Chief Commercial Officer — Sandeep Dube
Chief Financial Officer — Scott Haralson
Need a quote from a Motley Fool analyst? Email [email protected]
Risks
Q4 revenue impact from system outages — CFO Scott Haralson stated that three separate vendor infrastructure outages in October will “likely cost us about $10 to $20 million of revenue in Q4 2025.”
Used car pricing pressure in Q4 — Haralson noted, “We are, however, seeing a large number of vehicles being sold at auctions in the quarter, which is having an effect on residuals.” This is expected to be isolated to the quarter, but it will likely have an effect on used car pricing for Q4.
Government business decline — CCO Sandeep Dube said, “Since November, given everything around the federal government, we’ve seen that part of the business come down significantly in November.”
Takeaways
Revenue — $2.5 billion in revenue.
Adjusted corporate EBITDA — $190 million adjusted corporate EBITDA, an 8% margin, representing an approximately $350 million year-over-year improvement.
Net income — Net income of $184 million, with positive EPS achieved for the first time in two years.
Fleet utilization — 84%, the highest since 2018, despite more than 2% of the U.S. fleet under recall and a 7% smaller overall fleet.
RPU (Revenue Per Unit) — Total fleet RPU up 2% year-over-year.
DPU (Depreciation Per Unit) — $273 per month, in line with expectations and under the company’s sub-$350 target.
DOE (Direct Operating Expense) per day — Lowered both year-over-year and sequentially. Direct operating expenses declined 1% year-over-year.
Liquidity — $2.2 billion at quarter end, including about $1.1 billion in unrestricted cash and positive adjusted free cash flow of approximately $250 million.
Hertz Car Sales digital channels — Digital e-commerce initiatives, including Cox Automotive and Amazon Autos partnerships, now deliver “$2,000 or more incremental margin benefit per vehicle versus wholesale channels,” as discussed, according to Gil West.
Net Promoter Score (NPS) — North American NPS rose nearly 50% year-over-year, with noted improvement in ease of rental and confidence in vehicle quality.
Model year 2026 fleet procurement — Over 80% of purchase volume for model year 2026 vehicles is already procured at management target price and volume.
2026 guidance — Targeting a 3%-6% EBITDA margin (non-GAAP) for 2026, with anticipated mid-single-digit transaction day growth, sub-$300 net DPU, and potential mobility segment growth of 10%-20%.
Q4 2025 guidance — Slightly negative EBITDA margin range (low to mid-single digits), with transaction days expected to be nearly flat year-over-year and net DPU forecasted at $280-$285 per month for Q4 2025.
Summary
Hertz Global Holdings (HTZ +36.67%) reported a $350 million year-over-year improvement in adjusted corporate EBITDA. Driven by disciplined fleet management, cost control, and a completed fleet refresh, despite headwinds from fleet recalls. The company achieved record-high utilization above 84% and improved operational efficiency. Translating into its first positive EPS in over two years and a marked increase in Net Promoter Score. Management emphasized rapid adoption and monetization of digital car sales channels, with strategic partnerships contributing to significant incremental margin benefits and supporting future diversification beyond core rentals.
CEO West described the retail car sales operations as transforming “from a simple fleet rotation mechanism into a profit-accretive engine,” with rent-to-buy conversion rates at 70%, as stated on the earnings call.
Haralson introduced EBITDA margin guidance for 2026, indicating a strategic emphasis on sustainable margin expansion through channel management and process improvement, with a targeted EBITDA margin range of 3% to 6%.
CCO Dube highlighted that off-airport and rideshare business lines delivered sequential revenue growth and higher EBITDA, even though these segments are RPD dilutive.
Management stated model year 2026 fleet buys hit both price and volume targets, enabling accelerated execution of the short-hold strategy to optimize utilization and cost.
Hertz Car Sales’ digital channels are positioned to drive future revenue, with management targeting sales of the “vast majority of vehicles” according to Gil West through e-commerce retail over time.
Industry glossary
DPU (Depreciation Per Unit): Average monthly depreciation expense per vehicle in the rental fleet, reflecting capital cost management.
RPU (Revenue Per Unit): Average monthly revenue generated per fleet vehicle, including both rate and utilization effects, used for performance assessment.
DOE (Direct Operating Expense): Per-day direct expenses related to operating the rental fleet, important for cost discipline and margin optimization.
RPD (Revenue Per Day): Daily revenue generated per rental unit, a core pricing and profitability metric in the car rental sector.
Net Promoter Score (NPS): Customer satisfaction metric indicating the likelihood of customers recommending the brand, widely used in service industries.
Short hold strategy: Fleet management approach focused on reducing average vehicle holding periods to sustain favorable economics and sales agility.
ABS (Asset-Backed Securities): Debt instruments backed by pools of operational assets, commonly used by fleet-intensive businesses to finance vehicles.
Full Conference Call Transcript
Unless otherwise noted, our discussion today focuses on our global business. On the call this morning, we have Gil West, our Chief Executive Officer, who will discuss strategy, operational highlights, and our fleet. Our Chief Commercial Officer, Sandeep Dube, will then share insights into our commercial strategy, followed by Scott Haralson, our Chief Financial Officer, who will discuss our financial performance and liquidity. I’ll now turn the call over to Gil. Thanks, Johann.
Gil West: I want to start by thanking our teams for their exceptional work this summer. Their disciplined execution is moving this transformation forward, and I’m grateful for their continued commitment to delivering for our customers every day worldwide. We said it would take consistent, dedicated effort to rebuild this company’s foundation, no matter the macro environment, by focusing on what we can control: disciplined fleet management, revenue optimization, and rigorous cost control. And that is exactly what’s happening. This quarter, we achieved $2.5 billion in revenue and delivered adjusted corporate EBITDA of $190 million, a $350 million year-over-year improvement, and positive EPS for the first time in two years.
In Q3, we completed our transformative fleet refresh, hitting another major milestone and setting a new standard for ourselves and the life cycle of our vehicles. With our younger fleet, we also achieved a record high utilization rate since 2018. While we could not control that 2% of our US fleet was under recall, being able to drive record utilization in that environment shows that even when headwinds get in the way, we’re able to deliver strong results. Managing with rigor also means keeping our customers at the center of everything we do. Our Net Promoter Score continues to rise, up nearly 50% year-over-year in North America, with measurable improvement in ease of rental and confidence in vehicle quality.
Fundamentally, Hertz Global Holdings, Inc. is an asset management company built on a century of buying, renting, and selling vehicles at scale. That’s why we set NorthStar metrics to guide the improvements to our core rental business and ensure operational excellence comes first. This quarter, we maintained our sub-$350 DPU goal, overcame cost headwinds and inflation to lower DOE per day, both year-over-year and sequentially, while continuing to execute initiatives that are driving us closer to the low $30. And made solid progress towards our annual target RPU of over $100. These results continue last quarter’s momentum and show we’re doing what we said we’d do. Our progress is steady.
Our heads are down, but our eyes are on the horizon. Transforming a 100-year-old company requires executing with discipline today while building, testing, and innovating for tomorrow. That’s why our North Star metrics aren’t the finish line. They’re the stakes we’re putting in the ground to rebuild our foundation. Through this work, we’re sharpening our skills, enhancing our systems, and creating a platform for growth. While our near-term priority remains transforming our Rent A Car business with operational rigor and relentless customer focus, we’re simultaneously laying the groundwork for diversified value-creating platforms. That platform spans four strategic areas: Rent a car, fleet, service, and mobility.
Today, these fuel our core rental business, but we see unique opportunities for each to scale and synergies between them all, unlocking new revenue streams across the entire enterprise. It’s still early, but the actions we’re taking are already revealing what a bright future for Hertz Global Holdings, Inc. looks like. Let’s start with the fleet, a powerful economic lever. We’ve transformed our fleet from a headwind to a competitive advantage by continuing to hone our skills sourcing vehicles optimally, deploying them effectively, and monetizing them strategically. Today, our US fleet is newer and more aligned to customer preference than it’s been in years.
With the refresh complete, our average fleet age is now under twelve months, and we’re positioned to sustain a modern fleet aligned with our DPU North Star metric. Model year 2026 buys landed with both price and volume hitting our target, unlocking model year 2025 sales and activating our short hold strategy. Shorter vehicle life cycles sustain favorable fleet economics and enable additional unit cost efficiencies in our service operations while also driving stronger residual values in the used car market, reinforcing our retail car sales momentum. Which brings us to the big story this quarter: Hertz car sales. For fifty years, Hertz car sales existed as a valuable but underleveraged business line and dormant brand.
See More
