Avis Budget: Commercial, Inbound Int’l Led Q1 Results

Avis Budget Group recorded the highest first-quarter revenue and number of transactions in company history, CEO Joe Ferraro reported Tuesday during an earnings call. 

“We saw a terrific growth in rental transactions,” Ferrero said. “Demand was strong with growth coming from commercial activity as well as international inbound travel.”

Ferrero added that both segments started growing in mid-2022, and “the momentum continued to build into 2023.” With the first half of Q1 2022 hampered by omicron and the absence of new Covid-19 variants in 2023, the company expected first-quarter demand to be significantly stronger year over year.

Commercial transactions were up nearly 20 percent year over year—a comparison affected by the 2022 spread of the omicron variant of Covid-19—and international inbound transactions were up more than 25 percent, Ferraro said. “It is clear these two segments will be the drivers of our continued success throughout the year,” he said, pointing to particular success in the aerospace and defense contracting, technology, and professional and financial services verticals.

Ferrero also noted a continued return to seasonality, which means “in the commercial months there’s more commercial, and in the leisure months obviously there will be more leisure,” he said. The rebound in commercial “helped to fill the first quarter and will help to bridge the activity towards the summer season. We’ve seen gains in a good number of accounts that we do business with that are traveling more frequently than they had the prior year.”

Technology Enhancements

Avis customers currently can choose a vehicle on their phone or exchange it upon arrival while being sent a digital rental agreement and exiting through an automated gate, Ferraro said. The company is rolling out facial recognition technology that “will allow all our first-time Avis preferred customers to quickly and conveniently bypass our current counter verification process,” he added.

In addition, after a successful pilot, the company is beginning to roll out an improvement to its Budget Choice application, Ferraro said. Customers upon arrival at a Budget facility will be able to choose their vehicle from their reserve zone, take a picture of the license plate, which is then uploaded to the digital rental agreement, allowing the customer to use a phone to exit from an unmanned exit gate.

Avis Budget Q1 Metrics

Avis Budget reported nearly $2.6 billion in first-quarter revenue, a 5 percent increase year over year. Americas revenue was more than $2.0 billion, a 1 percent increase from a year prior, with international at $541 million, a 25 percent increase. Quarterly net income was $312 million, down from $527 million in Q1 2022.

The Americas had 28.3 million rental days in the quarter, up 3 percent, with $71.30 revenue per day, down 2 percent year over year. Average rental fleet size was more than 452,500 vehicles, up 2 percent from more than 443,300 a year prior. Vehicle utilization was 69.4 percent compared with 68.9 percent in Q1 2022.

International had 10 million rental days, a 16 percent jump from 8.6 million a year earlier. Revenue per day increased 8 percent to $54.28 from $50.42. Average rental fleet size was up 12 percent to nearly 168,300 vehicles, from nearly 150,800 a year ago. Vehicle utilization was 65.8 percent compared with 63.2 percent in Q1 2022.

RELATED: Avis Budget Q4 performance