HERTZ GLOBAL HOLDINGS, INC. (“HERTZ GLOBAL”)
Q3 2026 Prepared Remarks
November 5, 2026
Unless otherwise stated, all comparisons discussed for the third quarter of 2026 are against the same period a year ago.
Gil West, Chief Executive Officer
I want to begin by thanking the Hertz team. This was a busy summer, and they kept delivering for our customers. That is what keeps this transformation moving forward.
Let me start with the bigger picture and the progress we’re making. Adjusted Corporate EBITDA was 233 million dollars, up 15% from a year ago. This is our best quarterly EBITDA result in three years, and our fourth consecutive quarter of year-over-year EBITDA growth. We continue to drive revenue growth and margin expansion on flat capacity and this quarter we saw particular strength in our underlying U.S. core business. The transformation is working.
From the beginning, we anchored our strategy on three priorities: revenue optimization, disciplined fleet management, and rigorous cost control. We’ve made real progress on the first two, revenue and fleet.
We rebuilt our commercial approach, from demand generation to pricing. In our core U.S. business, that gave us steady demand and pricing strength all quarter.
Our accelerated fleet rotation and end-to-end fleet management strategy turned our fleet from a headwind to a tailwind for the business.
However, the third area, cost control, is where most of the work remains. Elevated costs, alongside softness in International, are what led us to our Adjusted Corporate EBITDA shortfall this quarter.
We knew this transformation wouldn’t be linear, and this quarter showed that, but it does not change our approach. We stayed focused on what we can control, and Scott will go deeper into the financial impact and our expectations.
That is the bigger picture. We know where execution needs to improve, and we are diligently actioning it.
The longer I’m in this industry, the more convinced I am that this is fundamentally a local business. We can build better fleet systems, pricing tools and commercial capabilities centrally, but ultimately each market must get supply, demand, price and cost right every day.
That is why we’re pushing accountability closer to the customer, why we’re increasingly focused on profitability at the location level, and why we believe franchising can become a much larger part of Hertz over time.
Hertz’s future also extends beyond our core rental business. We see multiple opportunities to build on Hertz’s capabilities and create new sources of growth across our platform. The recent investment in Oro Mobility is a proof point of the value our strategy can create.
So today, I want to focus on both sides of the work ahead: improving execution today and building the right foundation for tomorrow.
Q3 Results
Turning to our third quarter performance, we continue to see the ongoing benefits of our commercial and fleet management strategies. We are generating more revenue from our fleet, and our end-to-end “Buy Right, Hold Right, and Sell Right” approach to fleet management continues to deliver stability in depreciation.
We are also making meaningful progress in customer experience. In September, Net Promoter Score results in Europe and APAC were up nearly 11%, we achieved our highest net promoter scores of the year at our North American airports, and that momentum is continuing into Q4, with October posting the highest Global net promoter scores in over 6 years.
Our investment in the brand and our product, coupled with an improved revenue management approach, is translating into quality demand generation and improved yield management and accelerating our commercial performance. Global revenue growth was driven by a 5.4% increase in RPD, with U.S. RPD increasing 8%. We achieved this despite the macro environment and even though TSA volumes were down 2.8% in Q3, underscoring the strength of demand for our brands.
As our transformation evolves, how we measure progress is evolving too. Revenue growth matters, but ultimately, it’s about margin. That is why we are focused on increasing the spread between RPD and DOE per day, which is our best measure of operating efficiency and drives margin expansion.
Our spread increased by more than 5% this quarter. Going forward, we are focused on more effectively offsetting operating and inflationary pressures, and greater efficiency across the business and fleet.
Our fleet management strategy is working as planned. We’re sitting on one of our youngest fleets in a dozen years. More than three-quarters of our fleet is less than a year old, and these younger vehicles continue to outperform the broader used car market. While the broader Manheim Used Vehicle Value Index was down 50 basis points in September, the Rental value index was up 420 basis points, driven by improved values for younger vehicles. We remain disciplined on our model year 2027 buys to ensure that unit economics, mix and volumes continue to support our end-to-end strategy of maintaining consistent DPU while giving our customers more choice and a better experience. We also continue to improve the efficiency of our vehicle disposition process by selling and monetizing faster, which reduces vehicle carrying costs and maximizes net proceeds through optimized channel mix.
We also need to continue managing our fleet to produce the lowest economic costs. That’s best represented by DPU, which is below 300 dollars this quarter, and we believe we can bring that number down even more next year.
To address the last piece of the profitability equation, we need to better leverage our corporate overhead costs, which are currently elevated given the multiple initiatives that are underway as part of our transformation.
It is also critical to take this margin expansion philosophy down to the location level. For the company to improve its overall margins, every location needs to focus on running its operations more efficiently and driving margin improvement. This obviously connects to our strategy to drive a broader, enhanced franchise network. A local level focus is required in this business, and our franchisees do that very well. We are already making good progress in this area. Last week, we signed an agreement with our existing Baltic franchise partner to transition our company-owned locations in the Czech Republic and Slovakia to their management under a new franchise arrangement. And that’s just the start. We expect 2027 to produce a lot more progress across the globe in franchise expansion.
In October, we revitalized our Americas franchise conference, reaffirming our commitment to stronger relationships with our franchisees. These are quality operators who know their markets, and who bring an entrepreneurial mindset to running profitable businesses. It was great to see the positive energy in the room around our desire to have more of our locations run by outstanding operators like them.
Platform
While our core Rental business remains the economic foundation of Hertz, and expanding margins is our first priority, Hertz has capabilities that extend well beyond just renting cars. We increasingly see opportunities across all four areas of our platform: Rental, Fleet, Service and Mobility.
We are putting dedicated leadership and accountability around each, while allowing them to leverage Hertz’s scale, infrastructure and expertise. Over time, that creates the opportunity for multiple earnings and value streams, while keeping our capital allocation disciplined.
Mobility is a great example of the value our platform can create. Six months ago, we introduced Oro, built around capabilities Hertz has developed over decades: buying, financing, maintaining and operating vehicles at scale. Today, Oro is a standalone growth platform that just secured an 80-million-dollar investment. This investment gives Oro dedicated capital and greater flexibility to grow across its three business lines: driver-led fleet management, autonomous vehicle fleet management and our rideshare rental business, which will transition to operating under the Oro brand.
Oro operates approximately 45,000 vehicles across its three business lines in every major U.S. mobility market, and Oro’s employed drivers have logged over 10 million miles to date, up from 6 million miles in Q2. In Q3, Oro officially launched its partnership with Uber’s robotaxi program. AV depot operations are now underway in the San Francisco Bay Area, supporting Uber’s fleet of Lucid vehicles equipped with Nuro autonomous technology.
Oro is still on track to deliver approximately 600 million dollars in total revenue this year. The new capital will support investment in its fleet, operating infrastructure, technology and people, as well as the expansion of its strategic partnerships.
As autonomous mobility develops and scales into what could be a multi-trillion-dollar market, Oro is well positioned to play an important role in that evolving ecosystem. Our focus is now continuing to build the partnerships and capabilities that position Oro to capture that opportunity over time.
Oro’s investment gives it the autonomy and agility of a standalone company, along with access to its own capital to pursue opportunities in the fast-moving mobility sector. Hertz will remain actively involved as Oro’s fleet and corporate services provider, allowing them to continue leveraging our expertise and scale to support their growth. Our majority economic interest in Oro ensures Hertz shareholders will share in any future success.
In Fleet, as one of the largest used car dealers in the country, we’re advancing our Hertz Car Sales retail strategy to prioritize higher-yielding, digital channels and build on the scale of our used car operation and rental locations.
We recently launched Test Drive+, an enhanced iteration of our high-conversion Rent2Buy program at our neighborhood rental locations, built for a more modern customer experience. We’re expanding our use of AI in lead management, customer communications and reporting to improve efficiency and conversion, and to make buying a car simpler.
We’re also building deeper strategic relationships with a select group of the nation’s largest used-car retailers. They buy in volume, which speeds up our sales and structurally lowers our cost of sale.
The aim is simple: sell cars faster, spend less to sell each one, and earn more on every vehicle.
In Service, we’re starting to leverage the skills and capabilities that power our Rental business to create new revenue streams and additional growth opportunities. This includes areas like Hertz Logistics, our vehicle transportation service, where we have more than 5,000 drivers and 2,000 partner carriers moving vehicles each day to support our rental operations. We’re now monetizing that capability with third-party customers by transporting vehicles for dealerships, fleet management companies and retail customers, with approximately 50,000 third-party vehicle moves expected this year.
We are also making progress on our part-out initiative to leverage salvage vehicles not only for internal part consumption to lower costs, but also to sell used parts into the marketplace.
There are a lot of positive initiatives underway at Hertz, and the team is focused and aligned on delivering. Our first priority remains improving execution and expanding margins in our core Rental business. At the same time, we’re building a more capital-efficient company with greater local ownership, a larger franchise network, and new ways to put Hertz’s capabilities to work. We won’t get everything right every quarter, but the direction is clear, and we’re making tangible progress on it.
Sandeep Dube, Chief Commercial Officer
Our strong commercial performance continued in Q3, with global revenue, RPU and RPD each growing approximately 5% for the third consecutive quarter. Importantly, we expect this momentum to continue into Q4.
In Q3, we delivered revenue of 2.6 billion dollars, up 5.6%, and operational RPU up 4.7% to 1,639 dollars, and continued RPD strength.
RPD increased by 5.4%. That performance was driven by meaningful gains in our core U.S. business, especially at U.S. airports, with RPD in each increasing approximately 8%, despite lower TSA demand. These gains were partially offset by the softer revenue environment in International.
The improvement in our core U.S. business was primarily a result of our work done in prior quarters to increase quality durable demand. Improved pricing sophistication was a secondary factor too. Q3 is a peak seasonal travel quarter, and we saw expected strength around key summer holidays. That said, our Q3 performance wasn’t driven by a single outsized weekend or temporary demand surge. We saw consistent demand and pricing strength for our brands through July, August, and September. And combining that demand strength with fleet size restraint at the local level enabled us to deliver strong revenue performance. In fact, we have now posted over 300 consecutive days of year-over-year RPD growth. This consistency demonstrates the strength of our commercial strategy and execution as we focus on those actions that are within our control.
International results were below our expectations due to the conflict in the Middle East and the resulting impact on inbound and intra-Europe travel. The team took early action on what we could control, thereby delivering an outcome with revenue up 1% and RPD down 60 basis points. The key actions we took were repositioning our fleet to the right locations, combined with deploying demand build tactics with customers and channels where we have more control, including growth in online direct revenue, small business customer segments, and multi-month rentals. On pricing and product, we have simplified car groups for better monetization and enhanced our pricing for premium groups.
Globally, we also continued our customer-first focus, investing in a more consistent, convenient, and caring experience. We saw strong net promoter scores in September in Europe, APAC, and our North American airports.
Q4 Early Results
Looking ahead, we expect the revenue trajectory to strengthen from here, with expected year-over-year growth improving sequentially in Q4 after moderating somewhat in Q3. We are seeing encouraging early trends for the holiday season this year, with advance bookings up 7% for the Christmas New Years period and 16% for Thanksgiving. Demand for our brands is healthy, and our commercial engine continues to strengthen.
The momentum in customer experience continues to build as we “Make it Golden” for our customers and our employees. We are seeing results from several initiatives we highlighted last quarter, with October net promoter score improvements in every region and business segment across the globe.
Looking ahead to 2027 and 2028
Looking ahead to 2027 and 2028, our commercial roadmap is already positioning us to drive meaningful gains. After spending much of 2025 and 2026 catching up with the industry on commercial innovation, our roadmap is now designed to innovate faster and move beyond current industry capabilities in pricing sophistication, customer experience and new products. Our objective is to build on our revenue momentum quarter after quarter and grow RPU faster than inflation, which will be critical to driving sustained margin expansion.
Today, I want to focus on one of the key levers we are shaping to capture more value: product innovations that help shape customer behavior.
Car rental customers have always been able to make cost-free changes to a booking when prices drop or plans shift. While that flexibility provides value to our customers, it comes at a cost to us, as those rebookings can erase the economics of the original reservation. Airlines solved this problem years ago by implementing flexible pricing as a product. We believe Hertz can adopt a similar approach.
The principle is simple. A customer who wants flexibility is usually willing to pay for that. A customer who is sure of their plans should be able to pay less for committing. In both of these situations, we protect the economics of the booking, and each customer group gets a fair balance between value and flexibility.
Over the next several quarters, we intend to introduce new products built around this concept. This is just one example of how we are reworking our commercial economic engine to capture greater value, improve margins, and create a stronger growth trajectory for the business, while delivering greater value to our customers.
Commercial Outlook
To summarize, demand for our brands is strong and the industry pricing environment is supportive. Our actions, which include managing capacity locally with restraint combined with our strong pipeline of commercial innovation initiatives, are within our control.
We believe we’re on track to deliver a full-year RPU above 1,500 dollars and we expect to exit the year at an even higher annual run rate as our commercial roadmap positions us to build on this progress in 2027 and 2028. Our objective is to make commercial performance a significant driver of margin expansion by delivering RPU gains above cost inflation, largely powered by RPD improvements.
Scott Haralson, Chief Financial Officer
As Gil mentioned, there has been a lot happening at Hertz, and many of the initiatives we’ve been working on are accelerating in the second half of 2026.
We are simultaneously managing a business turnaround, a strategic transformation, and a complex balance sheet. We are making progress, but doing all three at once creates additional costs and puts additional demands on the organization that can obscure some of the underlying improvements in the core business.
We entered the second half expecting continued improvement in the core rental business, and we’ve seen that, particularly in the U.S., with strong RPD and stable residual values. At the same time, international demand and residual values have been softer, and certain costs across the business have run higher than we expected.
Some of the pressures we’re experiencing are external, but others are ours to address.
There is also economic friction inherent in transforming a company at this scale that isn’t captured in a discrete adjustment to our reported results. We’re not going to create an adjusted number for that. But neither do we believe today’s cost structure represents the steady-state economics of the business we’re building.
At the same time, this transformation cannot come at the expense of operating discipline. It has to result in a simpler, more efficient, and more profitable Hertz, and that is the goal. And importantly, these initiatives build on one another. Improving the core rental business, moving more of the network toward a capital-light franchise model, building value in mobility, generating free cash flow, and addressing our capital structure are all components of the same economic plan. The plan that creates a higher-margin, more cash-generative and less capital-intensive Hertz, with multiple avenues for earnings and value creation and a stronger balance sheet.
For decades, the rental car industry has largely been a single-engine business: deploy capital into a fleet, rent vehicles and earn a return on that capital.
Over time we are evolving into a business with multiple earnings and value streams. Core rental will remain the foundation, but we see meaningful opportunities to generate more capital-efficient earnings through franchise revenue, mobility, licensing and strategic partnerships.
Oro is an example of that strategy in practice. The recently announced joint-venture provides Oro with dedicated capital to pursue its growth opportunities while Hertz retains the majority economic ownership. The Oro joint-venture will continue to be part of our consolidated financials and beginning in Q4 we will add a minority interest line to our income statement.
With that, let me walk through the third quarter in more detail and then discuss the Q4 outlook and liquidity for the near term.
Q3 Results
For Q3, we generated revenue of 2.6 billion dollars, up 5.6%, driven by continued commercial momentum in the U.S. GAAP net income for the quarter was 116 million dollars, and diluted GAAP EPS was 20 cents. Adjusted net income was 67 million dollars, and adjusted diluted earnings per share was 14 cents. Adjusted Corporate EBITDA was 233 million dollars, up 30 million dollars year over year, and was our best quarterly result in three years. But it was also more than 40 million dollars below the low end of our guidance. Let me walk through the major drivers.
Global RPD increased 5.4%, with transaction days roughly flat. U.S. RPD increased more than 8%.
More importantly, we believe the RPD increase reflects more than the current pricing environment. The demand-generation initiatives we’ve put in place, together with changes to our pricing algorithms and segment- and location-level optimization, are producing results that we believe have additional runway. We expect these trends to continue into Q4, and to remain an important contributor to the improvement in 2027.
While our U.S. business continues to improve, given continued lower TSA volumes we’re adjusting our U.S. fleet capacity lower. At the same time, the international macroenvironment has weakened. International RPD declined approximately 60 basis points year over year, and we also experienced softer international residual values, which increased global Net DPU by approximately 5 dollars. All in, international results were approximately 30 million dollars below our original expectations.
Much of that pressure appears macroeconomic, and ultimately, we expect those markets to recover. But we’re not planning the business around the timing of that recovery. We’re actively reducing capacity across Europe and taking location-level actions to optimize profitability in the environment we have today.
On the cost side, Adjusted DOE per day increased approximately 5.5% year over year. Approximately 240 basis points of that increase is due to more revenue-related expenses associated with higher RPD and was contemplated in our guidance. But the largest incremental pressure came from collision and maintenance expenses, which ran approximately 15 to 20 million dollars above our expectations for the quarter.
We have experienced both higher collision frequency as well as impact from vehicle repair costs that have meaningfully increased, particularly for parts and repairs on newer vehicles. Given what we’re seeing across fleet types and geographies, we are planning for repair costs to remain elevated.
That makes the work we’re doing to manage the costs within our control even more important. On repairs, we’re focused on reducing costs through better repair planning, greater use of internal capabilities, more effective sourcing and parts utilization, and improved work-scope management. In addition, in partnership with Samsara, we’re investing in a unified maintenance system that will provide a more comprehensive view of fleet location and health, helping us better predict maintenance needs and optimize fleet planning and inventory parts management. Implementation is underway, and we expect to begin seeing results next year.
We’re also continuing to drive labor productivity and vehicle utilization through a number of initiatives. That includes increased automation through Skip the Counter and AI tools, enhanced labor planning, greater use of flex staffing, and process and technology improvements enabled by Daytona, our technology developed in partnership with Palantir to improve vehicle-turn throughput and productivity that is beginning to deliver results.
The other side of that equation is damage recovery. While the vast majority of vehicles are returned undamaged, we incur roughly 200 million dollars annually in unrecovered damage expense. We see a meaningful opportunity to improve that by collecting better insurance information, improved damage documentation, creating a more effective recovery process, as well as pricing our insurance product offerings more effectively, all while maintaining a transparent and fair customer experience.
From an accounting perspective, an improvement in damage collections would generally be an increase to revenue with the gross repair expenses showing up in DOE. This is also why we increasingly look at the spread between RPD and DOE per day rather than either metric in isolation. Ultimately, what matters is our ability to grow the revenue generated from each rental day faster than the operating cost required to produce it.
In Q3, the RPD to adjusted DOE per day spread improved by 1 dollar and 36 cents globally, or 5.4%, year over year. In the U.S., the improvement was more than 2 dollars and 50 cents. That’s progress, although candidly, we were pushing for more. The underlying U.S. improvement was meaningful, but some of that benefit was offset by the pressure in international and the other cost areas I just described.
Net DPU for the quarter was 285 dollars per month, consistent with our previous views. We continue to see reasonable pricing in our model-year 2027 fleet purchases, although total volumes remain somewhat uncertain. Our fleet remains young, which gives us flexibility as we progress through the 2027 fleet-buying cycle.
SG&A increased 15 million dollars, primarily due to higher sales and marketing expenses. As a percentage of revenue, SG&A was 9.8%, nearly flat year over year.
And on capacity, our fleet and transaction days were both roughly flat year over year, and recall activity improved year over year, in line with our expectations, albeit still elevated versus normal levels.
We ended the quarter with 946 million dollars of liquidity, including cash and cash equivalents and available capacity under our revolving credit facility.
Looking ahead, another key area of opportunity is driving profitability at the location and transaction level. We need to be diligent that the rentals we accept and the locations we manage all justify the capital it takes to operate them.
We’re becoming more aggressive about strategically reallocating fleet toward markets, channels and customers where we can generate attractive returns, and thus reducing unprofitable volume and underperforming locations. While that approach could result in a smaller fleet and fewer transaction days in Q4 and into 2027, we’re comfortable with that trade if it produces better margins and stronger returns on capital.
We will continue to consider the value of the overall network, but ultimately every location and part of the business has to earn an appropriate return.
The same capital discipline we’re applying to Hertz at the enterprise level needs to exist at the local level. We are not trying to maximize fleet size or rental days. We are trying to maximize profitable rental days and the return we generate on the capital deployed to produce them.
