Summary of Hertz Global Holdings Q4 2025 Earnings Call

1Key Financial Results and Metrics

Revenue: $2.0 billion for Q4 2025, exceeding consensus expectations. Adjusted revenue growth was nearly flat year-over-year after adjusting for prior year loyalty gains.

Adjusted EBITDA: Approximately -$200 million for Q4, a $150 million year-over-year improvement but $100 million below targets due to vehicle carrying costs and depreciation adjustments.

Revenue Per Day (RPD): Nearly flat year-over-year, with positive trends noted in airport segments.

Depreciation Per Unit (DPU): Ended the quarter at $330 per unit, down 21% year-over-year but higher than expected. Full year net DPU for 2025 was $300 per month, aligned with North Star metrics.

Utilization: Improved by 200 basis points year-over-year despite elevated recall volumes impacting fleet availability.

2Strategic Updates and Business Highlights

Hertz executed a "back-to-basics" strategy focusing on fleet management, cost control, and customer experience, resulting in a nearly 50% improvement in customer satisfaction.

Fleet rotation was completed, with model year '26 vehicles secured at target prices and volumes, leading to the lowest average fleet age in almost a decade.

Significant progress in commercial strategies, including improved pricing tactics and better monetization of higher RPU assets.

The mobility business is seen as a high-growth area, with plans to leverage existing fleet management capabilities for future autonomous vehicle opportunities.

3Forward Guidance and Outlook

Q1 2026 is expected to show mid-single-digit year-over-year revenue growth, supported by positive trends in January and February.

The company anticipates maintaining disciplined growth, particularly in off-airport locations and mobility, while keeping airport growth at or below TSA levels.

Long-term target of achieving $1 billion in adjusted EBITDA by 2027 remains intact, with confidence in the trajectory of key financial metrics.

4Challenges and Points of Concern

Q4 faced significant headwinds, including a government shutdown, FAA cancellations, technology outages, and elevated recall volumes, which collectively pressured the business by over $100 million.

Recall volumes peaked, removing over 20,000 cars from service, impacting fleet utilization and performance.

The residual value environment remains volatile, with a $60 million noncash charge to depreciation due to unfavorable forecasts.

Liquidity concerns were raised, with expected low points in Q2 liquidity due to fleet investments, although anticipated improvements in free cash flow are expected later in the year.

5Notable Q&A Insights

Hertz's strategy for electric vehicles (EVs) is evolving, focusing on optimizing fleet deployment for rideshare operations, which are seen as a critical growth area.

The mobility business is positioned to potentially surpass the traditional rental car segment, with ongoing partnerships and innovations in autonomous vehicle operations.

Management expressed confidence in maintaining DPU below $300 through effective fleet management and retail sales strategies, despite challenges in vehicle inflation.

Future liquidity strategies include various financing options and potential asset sales, with a focus on improving the capital structure and reducing leverage over time. Overall, Hertz demonstrated resilience in navigating a challenging environment while laying the groundwork for future growth through strategic initiatives and operational improvements.