Avis Budget (CAR) - Q3 2025 Earnings Call
Concise AI-driven summaries of earnings and conference calls, highlighting the numbers, context, and signals that matter most.
Call Details
Call Title: Avis Budget Group Q3 2025 Earnings Call
Date held: October 28, 2025
Management team members present:
Brian Choi, Chief Executive Officer
Daniel Cunha, Chief Financial Officer
David Calabria, Treasurer and Senior Vice President, Corporate Finance
Call Summary
Financial Performance
Avis Budget achieved $3.51 billion in revenue for Q3 2025, marking a 1% increase from $3.48 billion in the same quarter last year.
Brian Choi noted, “This is the first earnings call in eight quarters where we get to say that our revenue is higher than last year’s,” emphasizing a positive shift in revenue trends.
Consolidated adjusted EBITDA rose by 11%, despite challenges, particularly in revenue per day (RPD).
Daniel Cunha reported that RPD in the Americas showed a 3% decline, attributing this to softer leisure pricing resulting from normal market dynamics that affect seasonal demand.
International trends reflected a 5% increase in RPD, driven by a strategic shift towards higher-margin leisure and inbound business.
The impact of safety recalls on the fleet was significant, with the company anticipating $90-$100 million in costs related to elevated recall issues throughout the year.
Adjusted pre-cash flow stood at a negative $517 million, reflecting the impacts of voluntary fleet contributions.
Guidance
The company expects 2025 EBITDA to be toward the low end of the previously stated range due to continued headwinds from vehicle recalls in Q4 and declines in government-related business due to the shutdown.
Management indicated that they are committed to achieving a more sustainable and structurally higher base RPD moving forward, despite challenges.
The leadership emphasized the need for patient investment in customer experience, suggesting that improvements may take time to reflect in financial outcomes.
Capital Allocation
As of September 30, available liquidity totaled nearly $1 billion, along with an additional $1.9 billion in borrowing capacity in ABS facilities.
The company successfully extended its $1.1 billion floating rate term loan debt to 2032, solidifying its capital structure.
Strategic priorities include maintaining a strong balance sheet and investing in fleet and technology modernization while returning capital to shareholders when appropriate.
Daniel highlighted that ongoing capital allocation decisions would be also influenced by the tightening economic conditions impacting vehicle costs and financing rates.
Macro & Demand Trends
Demand was described as mixed, with varied performance across segments and geographies.
Choi mentioned, “Demand is held up better than many expected, but it’s uneven across segments and geographies,” indicating both strength and softness in various areas of the business.
Despite broader pressures, management is focused on agility and disciplined cost management to navigate the evolving marketplace.
The company is preparing for major events like the World Cup and America’s 250th anniversary, which are expected to enhance rental demand, particularly in leisure segments.
Customer Experience and Product Updates
Avis is re-committing to enhancing customer experience through a strategic overhaul, which CEO Brian Choi emphasized, stating, “We are not just a rental car company. We are a service company delivering a dependable product.”
The company has swiftly expanded its Avis First initiative, which aims to enhance the customer experience and elevate brand standards, boasting average customer ratings of 4.9 stars.
Avis has committed to operational excellence as a means of standing out in a highly commoditized industry, a result of the emphasis on service reliability and value proposition.
The shift towards integrating AI technologies into customer care processes aims to streamline post-rental support, intending to drive greater efficiency and customer satisfaction.
Competition and Strategic Positioning
The competitive environment remains challenging but has not intensified beyond typical industry patterns, suggesting manageable rivalry in pricing and service delivery.
Choi noted, “Our focus has to be if we want to offer a differentiated product, our stand is going to be on customer experience,” underlining Avis’ strategy to rise above fierce market competition.
There is an expectation that if Avis can enhance its customer experience, competitors may follow suit, resulting in a better overall market scenario for consumers.
The push for differentiation through service and dependability is expected to help Avis capture more pricing power beyond just competing on price alone.
NOTABLE QUOTES
“This is the first earnings call in eight quarters where we get to say that our revenue is higher than last year’s.” - Brian Choi
“Deliver products consistent enough to build brands around.” - Brian Choi
“We are not just a rental car company. We are a service company delivering a dependable product.” - Brian Choi
“Brand equity and customer experience don’t show up in this year’s EBITDA. They’re investments, and we’re making them.” - Brian Choi
“Demand is held up better than many expected, but it’s uneven across segments and geographies.” - Brian Choi
“Every transaction comes with a direct customer rating, zero to five stars. Avis First renters are giving us an average of 4.9 stars.” - Brian Choi
“We believe that a structurally higher base RPD is justified.” - Brian Choi
“We are a service company, and dependability delivered at the best value proposition is what we stand for.” - Brian Choi
“We are focused on closing the year with the same discipline and execution that defined the third quarter.” - Daniel Cunha
“The vast majority of our anticipated purchases are now complete; we’ve achieved our goal of refreshing the fleet to deliver exceptional customer service.” - Daniel Cunha
Q&A SUMMARY
Q: [John Healy] (North Coast Research), “What do you describe as the main factor of why we saw RPD down this year, especially through the summer months?”
A: Brian Choi explained that while there was a 3% decline in RPD, the performance was stronger in July and August, with typical seasonal demand causing fluctuations. He emphasized the importance of achieving a structurally higher base RPD, given ongoing inflationary pressures.
Q: [Chris Waronka] (Deutsche Bank), “Can you bucket for us the recall impact across RPD, volume, and fleet costs?”
A: Daniel Cunha detailed that recalls impacted costs significantly, estimating about $90 to $100 million for the full year. He noted that the 3% year-over-year decline was due to these recalls as well as a typical seasonal decline in demand from Q3 to Q4.
Q: [Lizzie Dove] (Goldman Sachs), “How do you expect the investments in customer experience to impact RPD?”
A: Brian Choi responded that investments are intended to create a differentiated product, suggesting that while they seek to avoid being solely price-driven, they aim to deliver sufficient value to command better pricing and improve RPD in the long term.
Q: [Ryan Brinkman] (J.P. Morgan), “How does the elevated level of recalls impact utilization and overall fleet management?”
A: Daniel Cunha answered that 5% of their fleet was out of service due to recalls, which translated to significant utilization impacts. The company is actively managing fleet repositioning to maximize use, despite these challenges.
Q: [Dan Levy] (Barclays), “Can you discuss underlying trends in international venues?”
A: Brian Choi noted that recent strategic shifts have led to increased exposure to higher RPD leisure demand and reduced emphasis on lower-performing markets, resulting in substantial year-over-year EBITDA increases in international operations.
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