Was the Q2 DPU issue due to temporary market conditions or channel mix? What steps are being taken to improve the channel mix for used car dispositions?

Gil West explained that Q2 DPU was impacted by a temporary seasonal decline in wholesale volume and suboptimal disposition channels. He noted that the Manheim index has since recovered. The company aims to shift from 70-80% wholesale volume to 70-80% through more lucrative channels like direct retail and strategic partnerships with used car dealerships, focusing on increasing throughput and mutual value. “I think ideally, in a perfect world, we would use more lucrative channels that aren't exposed to that. But the challenge that ultimately we're trying to solve is, one, to build additional capacity in those more lucrative markets.”

What are the requirements or standards for franchisees, especially regarding liquidity, and how much regulation will Hertz impose?

Scott Haralson stated it's early to detail specifics but emphasized that franchising is not new for Hertz and they will continue to seek high-quality franchisees. He views franchising as a more efficient use of capital and a way to generate consistent EBITDA, without specifying regulatory details or liquidity requirements for franchisees at this stage. “We have very high-quality franchisees today, and we'll continue to look for high-quality franchisees that can operate this complex business.”

What is the magnitude of investment for the San Francisco autonomous ramp, and is the infrastructure flexible for various AV partners?

Gil West highlighted that Hertz's existing infrastructure, including EV charging networks, provides a significant advantage for Oro's AV expansion, reducing the need for new, costly investments. He views Hertz as providing the 'operating layer' for AVs, akin to data centers for AI, and believes their capabilities are difficult to replicate, implying fungibility and scalability. “I mean if you think about kind of the infrastructure that we have, the ability to operate fleets at scale own and finance vehicles, trying to replicate all that would take a lot of time and a lot of money.”

HTZ

Hertz Global Holdings (HTZ) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 6, 2026

Source: earnings call transcript

Executive summary

Hertz Global Holdings Q2 FY26 — Strong RPD and Oro Growth Despite Recall Headwinds

Hertz delivered strong Q2 FY26 results, driven by robust RPD and RPU performance, despite significant headwinds from elevated vehicle recalls. The company is making tangible progress in its transformation, focusing on core rental car business improvements, strategic expansion of franchising, and scaling its Oro mobility platform. Management expressed confidence in the business trajectory, aiming for $1 billion in adjusted corporate EBITDA and positive free cash flow by 2027, while acknowledging investor concerns regarding capital structure and debt maturities.

Highlights

Revenue increased 10% year-over-year to $2.4 billion with a 1% smaller fleet.
RPD (Revenue Per Day) was up 9% year-over-year, reaching the highest Q2 on record (excluding 2022).
RPU (Revenue Per Unit) reached $1,542, up 8% year-over-year, exceeding the North Star target.
Adjusted corporate EBITDA improved by $63 million year-over-year to $81 million, with margin expanding 260 basis points to 3.4%.
Oro, the mobility platform, is expected to generate over $600 million in total revenue this year.

Concerns

Recalls increased 300% year-over-year in Q2, impacting an average of 15,000 vehicles per month and resulting in a $30 million EBITDA headwind.
Net DPU (Depreciation Per Unit) was $302, slightly above the target of $300, due to a more pronounced seasonal decline and suboptimal disposition channels for older vehicles.
Liquidity guidance for year-end was lowered from in excess of $1.5 billion to $1.0 billion-$1.4 billion due to the removal of ATM program proceeds from the forecast.

Guidance & targets

Category	Target	Timeline	Confidence
Adjusted Corporate EBITDA	$275M-$325M high materiality	Q3 · FY26	High
EPS	positive medium materiality	Q3 · FY26	High
Transaction Days Growth	up approximately 1% year-over-year medium materiality	Q3 · FY26	High
Net DPU	$285-$295 per unit per month high materiality	Q3 · FY26	High
RPU	trend above our North-South target of $1,500 high materiality	Full Year FY26	High
Adjusted Corporate EBITDA	$225M-$275M high materiality	Full Year FY26	High
Net DPU	approximately $300 high materiality	Full Year FY26	High
Transaction Days Growth	up approximately 2% year-over-year medium materiality	Full Year FY26	High
Liquidity	$1.0B-$1.4B high materiality	Year-end FY26	High
Oro Total Revenue	more than $600 million high materiality	Full Year FY26	High
Adjusted Corporate EBITDA	$1 billion high materiality	FY27	Medium
Net Income	profitability high materiality	Full Year FY27	High
Free Cash Flow	positive high materiality	Full Year FY27	High
Adjusted Corporate EBITDA Improvement	more than $500 million year-over-year high materiality	Full Year FY26	High
Adjusted Corporate EBITDA Margin	positive high materiality	Full Year FY26	High

Deals & partnerships

Uber Oro active on Uber platform for rideshare

Oro is active on the Uber platform in 4 markets: Atlanta, Los Angeles, San Francisco and Northern New Jersey. Expanded into Uber Black in New Jersey and Uber team in San Francisco and Los Angeles.

Uber's robotaxi program (Nuro autonomous technology) AV partnership for autonomous vehicle operations

First AV partnership supporting Lucid vehicles equipped with Nuro autonomous technology. Operations are on track to begin later this year in the San Francisco Bay Area.

Various AAA partnership

Achieved strongest year-over-year performance in the AAA partnership in more than 4 years.

Various Strategic relationships with leading used car companies

Exploring strategic relationships to move additional car sales volume through higher-yielding channels and structurally reduce cost of sale.

Various Partnerships with best-in-class retailers

Working on new partnerships with best-in-class retailers to enhance used car disposition channels.

Various Exchangeable senior first lien secured notes offering $350M

Completed an offering for a total of $350 million in June 2026.

Various Additional notes offering (green shoe) $30M

Added another $30 million of notes offering in July 2026 as part of exercising the green shoe option.

Risks & headwinds

Elevated Vehicle Recalls Q2 FY26 and H1 FY26

up 300% in Q2 year-over-year; impacted an average of 15,000 vehicles per month across H1 2026; $55 million impact on revenue and $30 million impact on EBITDA in Q2

Mitigation:pursuing regulatory, operational, and contractual solutions to address the issue

Seasonal Decline in Used Car Market Q2 FY26

more pronounced than anticipated, as wholesale volume temporarily outpaced demand

Mitigation:expect DPU to benefit as vehicles rotate out over coming quarters; used car market is showing signs of stability with Manheim index recovering

Suboptimal Disposition Channels for Used Cars Q2 FY26

temporarily drove down proceeds from sale, resulting in lower gain on sale

Mitigation:working to expand ability to move additional car sales volume through higher-yielding channels (direct retail, strategic partnerships); aiming to shift from 70-80% wholesale to 70-80% lucrative channels

Market Valuation Disconnect Q2 FY26

market cap dropped to approximately 1/3 of Q1 end ($1.5B) prior to Q2 earnings announcement

Mitigation:focused on executing strategies, confident stock price will take care of itself as business fundamentals improve and strategic initiatives progress

What to watch in Q3 FY26

Q3 Adjusted Corporate EBITDA

Q3 FY26

Current $81M (Q2 FY26)

Target $275M-$325M

Why it matters

This is a key profitability metric and a significant step towards the FY26 and FY27 EBITDA targets.

For profitability, we expect Q3 adjusted corporate EBITDA production to be between $275 million and $325 million, with positive earnings per share for the quarter.

Find out whether HTZ delivers this. Inve re-checks your case every morning.

Q&A highlights

Why is the market cap dropping despite strong operational trends and management's confidence? Are franchise deals necessary for liquidity, and what are the main liquidity risks?

CEO Gil West acknowledged the valuation disconnect, highlighting strong Q2 performance, improved liquidity, and strategic initiatives like franchising and Oro as undervalued. CFO Scott Haralson reiterated that the business fundamentals are stronger, and franchising is a strategic capital allocation decision, not a liquidity necessity. They are confident in current liquidity and managing debt maturities, with macro deterioration being a potential external risk.

“Candidly, the valuation of the business today is tough to understand. It's hard not to be distracted by the stock price. And of course, we remain focused on the long game, but there really does appear to be a disconnect between how the equity markets view hurts over the last quarter.”

asked by Stephanie Benjamin Moore · answered by Wayne West

3 min read 6 chapters

Detailed narrative

Core Rental Business Performance and Strategy

Hertz's core rental car business continues to improve, demonstrating strong commercial momentum. The company achieved a 10% year-over-year revenue increase to $2.4 billion in Q2 FY26, despite operating with a 1% smaller fleet. This was driven by a 9% rise in RPD and an 8% increase in RPU to $1,542, which exceeded the North Star target.

Management attributes this to disciplined execution, including improved customer experience, demand generation from higher-margin channels, refined pricing tactics, and better monetization of high-RPU assets.

Fleet Management and Depreciation

The company's 'buy right, hold right, sell right' strategy aims to optimize fleet economics. Net DPU for Q2 was $302, slightly above target due to a more pronounced seasonal decline in wholesale volume and suboptimal disposition channels for older vehicles.

However, the Manheim rental index increased 3.5% month-over-month in July, indicating market recovery. Hertz's fleet is its youngest in over a decade, at just under 9 months, with 94% of the U.S. core fleet being model year '25 and '26, positioning it for better economics in coming quarters.

Franchising as a Growth and Capital Allocation Lever

Hertz is re-evaluating and expanding its franchising strategy, which currently accounts for over 25% of its branded revenue. This asset-light, capital-efficient model is seen as a significant opportunity to generate consistent earnings, strengthen free cash flow, unlock liquidity for growth initiatives, and improve the balance sheet.

The company is exploring white space expansion and conversion activities globally, aiming for higher quality earnings and more durable shareholder returns, viewing it as a capital allocation decision rather than a capital structure necessity.

Oro Mobility Platform Expansion

Oro, Hertz's mobility platform, is gaining significant momentum and is expected to generate over $600 million in total revenue this year. It extends Hertz's fleet management capabilities to driver-led and autonomous fleets, operating on rideshare platforms like Uber in four markets (Atlanta, Los Angeles, San Francisco, Northern New Jersey).

Oro drivers have logged over 6 million miles. The platform is also on track to begin operations with Uber's robotaxi program, utilizing Lucid vehicles with Nuro autonomous technology, in the San Francisco Bay Area later this year.

Cost Management and Operational Efficiency

Despite a slight increase in adjusted BOE per transaction day to $37.49, core operating costs improved approximately 2% year-over-year when normalizing for revenue-related variable costs and recall impacts. The RPD to DOE per day spread expanded 17% year-over-year to $24.36, marking the third consecutive quarter of improvement.

Productivity initiatives, including a new labor planning model supported by Palantir, AI-driven data insights for vehicle turnaround time, and supply chain network optimization, are driving these efficiencies.

Liquidity and Capital Structure

Hertz ended Q2 with $984 million in liquidity, in line with guidance, and expects to end FY26 with $1.0 billion-$1.4 billion. The company completed a $350 million exchangeable senior first lien secured notes offering in June, with an additional $30 million in July, bringing pro forma liquidity to over $1 billion.

Management plans to pay the remaining $200 million portion of its December 2026 maturity in cash and is confident in addressing upcoming debt maturities in 2028 and 2029, emphasizing the improved underlying business economics.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.