Avis stock has soared over the last three months, but second-quarter results couldn't live up to the hype. Shares of Avis Budget Group (CAR -15.51%) were moving in the wrong direction today after the rental car leader came up short in its second-quarter earnings report. As of 1:16 p.m. ET, the stock was down 15.4% on the news. Avis also announced a multiyear strategic partnership with Waymo to launch fully autonomous ride-hailing in Dallas, where Avis will be responsible for fleet management, and it launche ...

Financial Data and Key Metrics Changes - The company is experiencing challenges with revenue per day (RPD) due to tariffs and recalls affecting fleet management, which has led to a conservative approach in accounting for gross depreciation [60][64]. - The company expects a normalized EBITDA of at least $1 billion going forward, despite current challenges [80][81]. Business Line Data and Key Metrics Changes - The introduction of Avis First aims to redefine the premium car rental experience, with expectations that it will capture a significant share of rental days similar to premium airline seats [106][112]. - The company is focusing on maintaining a fleet of newer, low-mileage vehicles for the Avis First offering, which may involve reallocating resources within the existing fleet [50][51]. Market Data and Key Metrics Changes - The overall car rental market is competitive, with the company aiming to differentiate itself through innovative offerings rather than competing solely on price [95]. - The company is seeing signs of demand recovery in the leisure segment, which is stronger than the commercial segment [58]. Company Strategy and Development Direction - The company is prioritizing value-creating innovation as a core responsibility, with a focus on enhancing customer experience and operational efficiency [9][10]. - The partnership with Waymo is seen as a strategic move to position the company within the autonomous vehicle ecosystem, leveraging its fleet management expertise [30][32]. Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current operational challenges due to tariffs and recalls but remains optimistic about long-term growth opportunities in the mobility ecosystem [65][66]. - The company is committed to maintaining a disciplined approach to investments, ensuring that growth translates into free cash flow while enhancing customer experience [102][103]. Other Important Information - Avis First has been launched in over a dozen locations, with plans to expand to over 50 markets by the end of the year [22][112]. - The company is actively managing its fleet to adapt to market conditions, including being cautious with vehicle purchases in light of tariff uncertainties [85][86]. Q&A Session Summary Question: Confirmation of competitive process for Waymo partnership - Management indicated that discussions with multiple AV parties were ongoing, and both parties were aware of the competitive landscape [37]. Question: Long-term vision for Avis Budget's business model - The company sees its core competency in mega fleet management continuing, with potential expansion into autonomous ride-hailing as a future growth area [40][41]. Question: Bandwidth for future partnerships - Management expressed confidence in their capacity to take on future partnerships while maintaining focus on the core rental car business [47]. Question: Fleet considerations for Avis First - The company plans to include more premium vehicles in the fleet for Avis First, ensuring a high-quality customer experience [50][51]. Question: Guidance on RPD and market conditions - Management noted that RPD has been challenged but is seeing signs of improvement due to tightening industry supply and strong leisure demand [58][92]. Question: Revenue model for AV strategy - The specifics of the revenue model for the Waymo partnership are not disclosed, but management emphasized alignment on profitability variables [70][71]. Question: Measuring success of investments - The company evaluates investments based on growth, free cash flow generation, and customer experience enhancement [102][103].

Financial Data and Key Metrics Changes - The company is experiencing challenges with revenue per day (RPD) due to tariffs and recalls affecting fleet management and vehicle availability [60][64][66] - The guidance for the second half of the year is between $900 million to $1 billion, reflecting the impact of these challenges [66][80] Business Line Data and Key Metrics Changes - The introduction of Avis First is aimed at creating a premium product offering that enhances customer experience and differentiates the brand from competitors [11][12][14] - Avis First is expected to be operational in over 50 markets by the end of the year, with a pricing strategy designed to be margin accretive from day one [23][113] Market Data and Key Metrics Changes - The leisure travel segment is currently stronger than commercial travel, indicating a shift in demand patterns post-pandemic [58] - The overall industry supply is tightening, which is expected to positively influence RPD in the coming months [93] Company Strategy and Development Direction - The company is focusing on structural growth through value-creating innovation, such as the Avis First initiative and partnerships with autonomous vehicle companies like Waymo [10][24][34] - Avis aims to expand its footprint in the mobility ecosystem, leveraging its core competencies in fleet management to capture a larger share of the market [32][78] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the competitive environment but emphasizes the importance of not competing solely on price, instead focusing on enhancing customer value through differentiated offerings [96] - The company is optimistic about the future, with plans to grow its market presence and innovate within the car rental industry [34][113] Other Important Information - The company has faced significant challenges due to recalls affecting 4% of its fleet, particularly impacting higher RPD segments [64][66] - The partnership with Waymo is seen as a strategic move to position Avis as a key player in the autonomous vehicle space, with initial testing already underway [30][71] Q&A Session Summary Question: Can you confirm whether the Waymo agreement was the result of a competitive process? - Management indicated that discussions with multiple AV parties were ongoing, suggesting a competitive landscape for the partnership [38] Question: What is the long-term vision for Avis Budget's business model? - The focus remains on mega fleet management, with plans to expand into autonomous ride-hailing as the market evolves [42] Question: How do you view the bandwidth for future partnerships? - Management expressed confidence in their capacity to take on additional partnerships while maintaining focus on the core rental car business [48] Question: What is the expected impact of Avis First on fleet management? - The initiative will involve a careful selection of premium vehicles, with a focus on enhancing the overall customer experience [52][54] Question: How is the company addressing the challenges posed by tariffs and recalls? - Management is taking a disciplined approach to fleet management and is in ongoing discussions with OEMs to navigate these challenges [85][86] Question: What metrics will be used to measure the success of new investments? - The company will focus on growth, free cash flow generation, and customer experience as key metrics for evaluating success [104][105] Question: What is the expected uptake for Avis First? - While it is early to determine trends, management is optimistic about the potential for Avis First to capture a significant share of rental days [107][113] Question: How do you see the market for the Waymo solution evolving? - Management anticipates that the partnership will expand into additional markets, with a focus on developing a sustainable revenue model [115]

PARSIPPANY, N.J., July 29, 2025 (GLOBE NEWSWIRE) -- Avis Budget Group, Inc. (NASDAQ: CAR) announced financial results for second quarter 2025 today. We ended the quarter with revenues of $3.0 billion, net income of $5 million, and Adjusted EBITDA of $277 million. STRATEGIC ANNOUNCEMENTS "At Avis Budget Group, we're building to scale where we hold structural advantages. With Avis First, we've created the category of first-class car rental; designed through product innovation and delivered with operational ex ...