Hertz Global 2025 Q1 Earnings Misses Targets as Net Income Widens 138.2%

Hertz Global (HTZ) reported its fiscal 2025 Q1 earnings on May 13th, 2025. The results missed market expectations, with a notable decline in overall financial performance compared to the prior year. Hertz Global's Q1 earnings undershot predictions, reflecting a wider loss per share than anticipated. The company has maintained its guidance for the year, targeting a low single-digit EBITDA margin.

Revenue
Hertz Global reported a total revenue decrease of 12.8% to $1.81 billion in Q1 2025 from $2.08 billion in Q1 2024. Operating lease income from vehicle rentals contributed $1.63 billion, while variable operating lease income added $122 million. Revenue accounted for under Topic 606 amounted to $57 million, culminating in the total revenue of $1.81 billion.

Earnings/Net Income
The company's losses deepened, with an EPS loss of $1.44 per share in Q1 2025, widening from the $0.61 per share loss in Q1 2024. The net loss expanded to $443 million, marking a 138.2% increase from the previous year's loss of $186 million. The wider EPS loss indicates ongoing financial challenges.

Price Action
Hertz Global's stock price declined by 7.24% during the latest trading day, fell 6.11% over the most recent full trading week, but surged 39.25% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing HTZ shares following a revenue miss and holding for 30 days resulted in disappointing returns. The backtest revealed a substantial loss of 71.99%, with an excess return of -90.39% and a Sharpe ratio of -0.39, suggesting high risk and negative returns. This approach underscores the volatility and unpredictability inherent in attempting to capitalize on earnings misses, as evidenced by the poor outcomes in this scenario. The historical data indicates that this strategy has consistently underperformed, highlighting the need for investors to exercise caution and consider alternative strategies when faced with revenue shortfalls. The negative Sharpe ratio further emphasizes the unfavorable risk-return profile associated with this method, prompting a reconsideration of investment tactics.

CEO Commentary
Mark Fields, CEO of Hertz Global Holdings, highlighted the company's emphasis on disciplined fleet management and revenue optimization as key performance drivers. Despite macroeconomic uncertainties and pricing pressures, Fields expressed optimism about technological partnerships enhancing operational efficiency and customer experience, positioning Hertz favorably for future growth.

Guidance
Hertz Global Holdings aims for a full-year EBITDA margin in the low single digits and targets over $1 billion EBITDA by 2027. The company is focused on achieving a depreciation per unit below $300, rental per unit above $1,500, and direct operating expense per day in the low $30s, reflecting its commitment to disciplined cost management and revenue optimization.

Additional News
In recent developments, Hertz Global Holdings has partnered with UVeye to modernize its vehicle maintenance using AI technology, deploying systems across major U.S. airports. This strategic collaboration aims to enhance vehicle inspection processes, elevating maintenance efficiency and customer satisfaction. Additionally, Hertz has strengthened its financial foundation by completing amendments to its credit facilities, extending commitments under its revolving credit facility and HVF III U.S. Vehicle Variable Funding Notes. These moves are part of the company's efforts to improve capital structure and de-risk the balance sheet. Furthermore, Hertz launched a new ad campaign featuring comedian Mikey Day, offering travel tips in a humorous manner to promote Dollar Car Rental, one of its subsidiary brands.