Avis faced a challenging second quarter, with the market reacting sharply to lower-than-expected non-GAAP profit despite stable revenue. Management attributed the underperformance to significant headwinds from auto recalls and delays in new vehicle deliveries, which disrupted fleet rotation and added unexpected costs. CEO Brian Choi described the recall situation as “a gut punch,” noting it affected a key segment of the fleet and created operational hurdles. Uncertainty in the used car market and tariffs also weighed on execution during the quarter.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Avis Budget Group’s Q2 Earnings Call

• Adam Michael Jonas (Morgan Stanley) asked about the competitive process behind the Waymo partnership; CEO Brian Choi said both parties conducted thorough due diligence and emphasized Avis’s unique global fleet management capabilities.
• Chris Jon Woronka (Deutsche Bank) inquired about Avis’s ability to scale additional partnerships like Waymo; Choi responded that the company has the bandwidth for further expansion, but will approach new partnerships with a focus on deep integration and long-term value.
• Dan Meir Levy (Barclays) questioned the impact of tariffs and recalls on fleet rotation and the resulting margin pressures; Choi explained the operational challenges, including delays from OEMs and the inability to sell recalled vehicles, and reaffirmed conservative fleet management.
• Elizabeth Dove (Goldman Sachs) asked about week-to-week rental price dynamics and competitive behavior; Choi noted slight recent improvements in pricing due to industry-wide supply constraints and described the current environment as “competitive as always.”
• Stephanie Lynn Benjamin Moore (Jefferies) sought details on measuring the success of new initiatives like Avis First; Choi highlighted metrics such as free cash flow, customer experience, and uptake rates, emphasizing a disciplined approach to scaling premium services.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) the pace and profitability of the Avis First rollout across new markets, (2) progress on resolving vehicle recalls and normalizing fleet rotation, and (3) initial revenue and operational outcomes from the Waymo partnership in Dallas. Developments in OEM negotiations and tariff impacts will also be important factors in assessing future performance.

Avis Budget Group currently trades at $152.90, down from $203.45 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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