Avis Budget's Profit Halved on Fleet Costs, and the Shares Slid After Hours

Avis Budget Group earned $5.15 a share in the third quarter, well below the $8.47 analysts expected, as higher fleet costs cut into profit.

Avis Budget Group, Inc. (NASDAQ: CAR) is a Parsippany, New Jersey rental-car company. It runs the Avis, Budget and Zipcar brands in about 180 countries. Adjusted EBITDA is a non-GAAP profit measure the company uses. GAAP figures follow the standard accounting rules.

The headline numbers fell

Revenue fell to $3.44 billion from $3.52 billion a year earlier. By TickerGrove's calculation, the decline was 2.4%. The quarter ended September 30, 2026.

Net income totaled $199 million, down from $360 million. Net income attributable to Avis Budget Group was $183 million. That attributable figure fell from $359 million.

Diluted earnings were $5.15 a share, down from $10.11. The Americas segment still carried the business. Americas revenue was $2.55 billion, and International revenue was $884 million.

For the first nine months, revenue was $8.96 billion. That was nearly flat against $8.99 billion a year earlier. The attributable result for the nine months was a $65 million loss.

Profit thinned as fleet costs rose

Adjusted EBITDA was $513 million, down from $559 million. By TickerGrove's calculation, the drop was 8.2%. Americas Adjusted EBITDA was $365 million. International contributed $180 million.

Costs did the damage. Operating expenses rose to $1.62 billion from $1.51 billion. Per-unit fleet costs were $316 a month, excluding currency effects. That was up 4% from a year earlier.

Income before income taxes fell to $309 million from $473 million. The tax provision was $110 million, against $113 million. The profit squeeze started above the tax line.

Chief Executive Brian Choi pointed to fleet management instead. He said Americas use of the fleet was the best in twenty years. He said that came despite a softer travel demand environment.

The fleet ran fuller

Total vehicle utilization was 74.0%, up 2.0 points from a year earlier. Utilization is the share of the fleet out on rent. Americas utilization reached 74.1%, up 2.8 points. Both figures were third-quarter record highs.

Revenue per day was $71.54, excluding currency effects. That was a slight increase from $71.22 a year earlier. It was the third straight quarter of positive growth on that measure.

The fleet itself shrank. The average rental fleet was 706,717 vehicles. That was down from 746,161 a year earlier. Fewer cars, fuller use, is the operating story.

Cash, debt and money already in hand

Liquidity ended the quarter at $866 million. The company also cited $2.5 billion of fleet funding capacity. Fleet funding capacity is borrowing room secured by vehicles. Cash and equivalents stood at $561 million.

On November 2, Avis Budget gave notice to redeem its remaining 2027 notes. The redemption covers $350 million of 5.750% senior notes. The company said repayment would land before year end.

A separate cash item lands in the fourth quarter. On October 5, the company received $650 million from a legal settlement. The settlement was with Pentwater Capital Management and affiliates. The cash will be recognized in the fourth quarter.

Against expectations

The one consensus frame here is the Zacks frame. Analysts expected earnings of $8.47 a share, per Zacks. Reported earnings were $5.15 a share. Zacks put the earnings surprise at 39.2% below its estimate. Zacks describes its earnings figures as adjusted for non-recurring items.

Revenue landed almost exactly on that frame. Zacks put reported revenue of $3.44 billion 0.16% above its estimate. Its survey expected about $3.43 billion. The miss was in profit, not in sales.

The release offered no forward guidance. Avis Budget gave no revenue or profit outlook for the fourth quarter. It gave none for the full year either. That leaves the November 4 call as the only near-term guide.

Shares fell after hours

Shares fell 7.5% in after-hours trading to $101.14 as of 7:59 p.m. ET on Tuesday, by TickerGrove's calculation from Nasdaq extended-trading data. The official regular close was $109.34. That figure is an after-hours snapshot, not a close.

The stock had already slipped in the regular session. It closed down 1.95% on Tuesday. Monday's close was $111.52, the prior close. The after-hours move deepened the day's loss.

What remains unknown

What remains unknown starts with the fourth quarter. The company offered no guidance to measure it against. Whether softer travel demand deepens is unanswered. Management's fleet-cost path is likewise unstated.

How the settlement cash changes the debt picture is also open. The $650 million recognition lands in the fourth quarter. The note redemption is announced, not yet completed. Whether the after-hours drop holds is unknown.

What to watch next

What to watch is the earnings call at 8:30 a.m. ET on Wednesday, November 4. Listen for any fourth-quarter color management offers. Listen for the fleet-cost outlook for 2027.

Watch the fourth-quarter print for the settlement recognition. Watch the announced $350 million redemption to completion before year end. Watch the next regular close against the after-hours snapshot.