Hertz Global Holdings (HTZ) Q3 2026 earnings review
Hertz's rental prices rose, but its 2027 profit goal fell
Hertz is charging more for each rental day, yet it still fell short of the profit it had promised. Revenue reached $2.6 billion, the company's best quarter in three years. Core operating profit came to $233 million, under the floor finance chief Scott Haralson had set in August. He blamed weaker European demand, softer used-car values abroad and repair bills that ran above plan.
| Revenue | $2,617M +6% from a year ago |
|---|---|
| Core operating profit, excluding interest, tax and one-offs | $233M the company's own plan was $275-325M |
| Price per rental day | $64.06 +5% from a year ago |
| Profit plan for 2027 | $500-800M the target had been about $1 billion |
⚖️ Verdict: 🔴 Bearish
The story got worse, because management lowered what this business should earn next year. The new plan for 2027 sits about a third below the $1 billion target Haralson had carried for over a year. He also expects less cash and unused credit at the year end. One positive: American pricing keeps climbing, and the Americas arm widened its margin again.
The question now is whether Hertz can hold its costs while it keeps raising prices. If collision and repair bills ease, the gap between price and cost per rental day drops through to profit. If they keep rising, the commercial work only covers the bills. February's cost per rental day will settle it.
🐂 Bull Case
US Prices Rose Again While Fewer Flyers Travelled
Hertz measures pricing as revenue per rental day, the average it collects for every day a car is out; RPD is its own shorthand for that figure. Across the group it reached $64.06, about 5% above a year ago. In the United States, which brings in most of the money, the rise came closer to 8%.
Chief commercial officer Sandeep Dube put the run in plain terms: "we have now posted over 300 consecutive days of year-over-year RPD growth". The gain arrived while air travel thinned, because airport security screenings fell 2.8% in the quarter and Hertz still kept its rental days level. Dube also sees bookings "up 7% for the Christmas, New Year's period and 16% for Thanksgiving".
This matters because extra volume is not available to help. Screenings keep falling, and finance chief Scott Haralson intends to run a smaller fleet. Price per day therefore has to carry the top line on its own, and the fourth-quarter plan assumes it will, with management forecasting another mid-single-digit rise.
What to watch: the price per rental day Hertz reports for the fourth quarter in February, set against that mid-single-digit forecast. A reading near 5% would show the commercial work holds up without any help from airport traffic.
Americas Margin Hit Nine Percent
The Americas unit rents cars across the United States, Canada, Latin America and the Caribbean, and it brings in roughly four-fifths of group revenue. Hertz reports its segment profit after fleet depreciation and vehicle interest but before corporate interest and tax, and in this quarter that figure reached $188 million, $35 million better than last year.
Costs explain why the gain is narrower than it looks. Direct vehicle and operating expense — wages, airport fees, repairs and fuel — absorbed 61 cents of every Americas revenue dollar, one cent more than a year ago, because collision and repair bills climbed. Price per day still outran cost per day in the United States by more than $2.50.
What to watch: the Americas gap between price and operating cost per day in the fourth quarter. Haralson is culling unprofitable rentals, so a wider gap on fewer days would prove the discipline earns its keep.
Positives this quarter didn't test
Four things management counts as progress carry no profit number in these accounts. Each would change the earnings picture if it lands, and each rests for now on a target, a signed intention or a customer survey rather than on a reported result.
- Oro Mobility, the fleet-management arm: West says it is "on track to deliver approximately $600 million in total revenue this year"; a split by business line would show what it earns.
- Franchising: Haralson sees the chance of "more than $500 million of proceeds in the year" during 2027 and left it out of the 2027 profit plan; signed deals would make it real.
- Customer satisfaction: October brought "the highest global Net Promoter Scores in over 6 years", on West's account; repeat-booking data would show whether it pays.
- Damage recovery: Hertz absorbs "roughly $200 million annually in unrecovered damage expense"; a fall in that figure would lift revenue directly.
What to watch: the February results for a revenue split at Oro and a first completed franchise sale. Numbers on either would turn this list from intent into earnings.
🐻 Bear Case
Hertz Missed Its Own Profit Target
Hertz led its announcement with the "strongest quarterly revenue and Adjusted Corporate EBITDA performance in three years", and that claim stands up. The same quarter landed well under the figure the company itself had named in August: core operating profit, which strips out interest, tax and one-offs, came in at $233 million.
- Core operating profit: $233 million, against a plan of $275-325 million
- Repair and collision bills: $15-20 million above plan, on Haralson's account
- International shortfall: about $30 million under original expectations
- Operating costs: 59.1% of revenue, 0.4 points more than a year ago
West named the causes himself: "Elevated cost alongside softness in international are what led us to our adjusted corporate EBITDA shortfall this quarter." Haralson went further, saying "we are planning for repair costs to remain elevated" rather than treating the overrun as a passing problem, while arguing that today's costs do not represent "the steady-state economics of the business we are building".
What to watch: the fourth quarter against the new plan of a $50 million to $100 million loss. Another shortfall would say the forecasting needs as much repair as the cost base does.
International Revenue Stalled As Europe Weakened
The International unit covers everywhere outside the Americas, mostly Europe, and supplies about a fifth of revenue. Dube gave the reason it stopped growing: "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 figures fit that account.
- International segment profit: $94 million, against $103 million
- Margin on that profit: 16%, down from 18%
- Depreciation per vehicle each month: $302, 7% above last year
- Price per rental day: $63.55, against $63.91
Profit moved the other way from revenue, because European used-car values weakened and the fleet now costs more to own. Haralson said that softness alone added about $5 to the group's monthly depreciation per vehicle, and Hertz is cutting capacity across Europe in response. The same unit is where prices have already turned negative.
What to watch: International price per rental day in the fourth quarter, a period management expects to stay under pressure. A second quarter of falling prices there would make the European weakness structural rather than seasonal.
Next Year's Profit Plan Fell by a Third
For more than a year Hertz pointed investors to $1 billion of core operating profit in 2027. Haralson now puts the range at "$500 million to $800 million for next year". He added that the middle of it only matches his earlier view of 2027 barely covering its cash costs, which is a far smaller claim.
- Plan for 2027: $500-800 million, against the $1 billion target carried since 2025
- This year, by our math: about $78 million, against the $225-275 million named in August
- Cash and unused credit at the year end: about $800 million, against $1.0-1.4 billion named in August
Each of these numbers frames how much the company can earn and how much room it has before its debts fall due. West kept the old figure alive, saying Hertz still sees "a path to $1 billion plus of EBITDA" without naming a year. Haralson, meanwhile, assumes nothing at all from franchise sales inside the 2027 range.
What to watch: whether February's report restates the 2027 range alongside fourth-quarter results. A range held at $500 million to $800 million would make this quarter's reduction the new base rather than a low point.
Risks this quarter didn't answer
Four standing worries got no new answer in these materials. They concern the debts Hertz must refinance, the shares its convertible borrowings can create, the used-car prices that set its largest cost, and a lawsuit over what management said in May about its cash position.
- Debt due in 2028: $2,691 million of corporate borrowings; Haralson again declined to describe the plan, promising news on or before the next results.
- Dilution: the share count used for per-share profit reached 475 million, and the June borrowings can create up to 63 million more shares once holders convert.
- Used-car values: weaker prices abroad already lifted fleet depreciation, and management plans for more of the same in the fourth quarter.
- Litigation: the shareholder case over May's statements on cash and used-car prices is at an early stage, and Hertz says it does not expect a material effect.
What to watch: a refinancing announcement for the 2028 borrowings, which Haralson says may come before February. A deal done at a lower cost than June's would ease the pressure; silence into the spring would tighten it.
👓 Other Themes
Oro Investors Bought Half the Votes
Oro Mobility runs about 45,000 vehicles for ride-hail drivers and now manages depots for Uber's robotaxi programme, because "its first AV partnership is now underway in the San Francisco Bay Area". Outside investors paid roughly $81 million for half of Oro's voting units. Hertz contributed $60 million of cash, keeps majority economics and will show a minority interest line from the fourth quarter.
Czech and Slovak Branches Become Franchises
Hertz agreed to hand its Czech Republic and Slovakia operations to the partner that already franchises its Baltic business, part of a push toward a "locally operated and capital-efficient business model". West also split the group into four units — rental, fleet, service and mobility — and "the Company expects to revise its reportable segments effective in the fourth quarter of 2026".
💲 Other KPIs
Cash generation turned negative. Hertz used $38 million in the quarter, where it produced $248 million a year ago, when property sales and fleet financing both helped. Across nine months the outflow reaches $342 million. The measure swings with the timing of car purchases, car sales and the debt that funds them.
Money owed to Hertz outside vehicle sales grew 20% since December, while nine-month revenue grew 8%. The charge for amounts it may never collect reached $120 million over nine months, against $86 million last year. Haralson lists collections among the costs he wants to fix.
Utilization — the share of rentable cars actually out on rent — eased to 83% from 84%, because manufacturer recalls still take vehicles off the line. It has recovered from 78% at the end of last year. The average fleet grew 0.6%, so the dip came from supply rather than demand.
🔮 Guidance
Cut. Hertz now plans a fourth-quarter loss of $50 million to $100 million on this measure, where its August full-year outlook pointed to anywhere between a small loss and a small profit. The middle is still more than $100 million better than last year, which carried heavy one-off charges. By our math the full year then lands near $78 million.
Raised. Fleet depreciation should cost $290 to $300 per vehicle a month, above the $285 just reported, because Hertz expects to sell more cars at a loss. Haralson called that "slightly higher than our previous expectations". The full-year promise of $300 or less still holds by our math, with nine months at $299.
New. Management expects the average price of a rental day to rise by roughly 5% again, matching this quarter. Dube expects the rate of growth to build through the period, helped by Thanksgiving and Christmas reservations. Hertz also intends to sell fewer rental days, so revenue growth may land below the price gain.
Cut. Hertz will shrink its fleet and accept fewer rental days in the fourth quarter and into 2027, abandoning the plan for about 2% more days this year. Haralson said he is "comfortable with that trade if it produces better margins and stronger returns on capital". Fewer days do spread fixed wages and airport costs over a smaller base.
Cut. The 2027 plan now runs from $500 million to $800 million, below the $1 billion Haralson had carried since 2025. He said the middle of the range only matches his earlier view of the year covering its cash costs, and that it assumes nothing from franchise sales. By our math it still needs roughly eight times this year's figure.
Cut. Cash plus unused credit should finish the year near $800 million, against the range management named in August. The figure still covers the bond repayment due in December and assumes no money from franchise sales. Hertz held about $1.5 billion at the end of last year, so the cushion keeps thinning.
Unchanged. Dube still expects each car to earn more than $1,500 of revenue a month across 2026, and says Hertz will leave the year at a higher annual rate. Nine months produced $1,515, and the fourth quarter is seasonally the weakest, so the full-year figure will land close to that target.
New. Haralson said conversions could bring "more than $500 million of proceeds in the year" during 2027, with the first money arriving late in the first quarter or early in the second. None of it sits inside the 2027 profit plan, and he warned that the timing of individual deals is hard to pin down.
❓ Key Questions
What is the plan for the 2028 debt?
Hertz owes $2,691 million of corporate borrowings in 2028 and holds about $946 million of cash and credit. Haralson declined to describe the refinancing for a second quarter running.
How much does each Oro business earn?
Oro should take about $600 million of revenue this year across ride-hail rentals, driver-led fleets and robotaxi depots. Investors still have no split, no margin and no capital requirement for any of the three.
What does one franchise conversion pay?
Haralson sees possible proceeds above $500 million in 2027, yet gave no price per market, no royalty rate and no estimate of how much company-run revenue would leave the accounts.
When do repair costs stop rising?
Collision and maintenance ran $15-20 million above plan, and management now assumes the level persists. The new maintenance system with Samsara only starts to show results next year.
Does profit survive without the one-offs?
Net income of $116 million includes $19 million from warrant revaluation, $76 million from derivatives and a $29 million tax benefit. Management has not shown what the quarter earned without them.