Avis Budget Group, Inc. (CAR) Earnings Call Transcript & Summary

Greetings. Welcome to the Avis Budget Group Second Quarter 2026 Earnings Call. Please note that this conference is being recorded. I will now turn the conference over to David Calabria, Treasurer and Senior Vice President, Corporate Finance. Thank you, David. You may begin.

Good morning, everyone, and thank you for joining us. On the call with me are Brian Choi, our Chief Executive Officer; and Daniel Cunha, our Chief Financial Officer. Before we begin, I would like to remind everyone that we will be discussing forward-looking information, including potential future financial performance, which is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from such forward-looking statements and information. Such risks and assumptions, uncertainties and other factors are identified in our earnings release and other periodic filings with the SEC as well as the Investor Relations section of our website. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results, and any or all of our forward-looking statements may prove to be inaccurate, and we can make no guarantees about our future performance. We undertake no obligation to update or revise our forward-looking statements. On this call, we will discuss certain non-GAAP financial measures. Please refer to our earnings press release, which is available on our website for how we define these measures and reconciliations to the closest comparable GAAP measures. With that, I'd like to turn the call over to Brian.

Thanks, David, and thank you all for joining us. I want to start this discussion not with the results themselves, but with the decisions that led to those results. Last quarter, we spoke about fleet reduction and supply discipline. This quarter, we put that operating philosophy into practice. The month of April started with summer bookings in the outer months holding at mid-single-digit growth. By early May, that momentum began to change. The strength we have been seeing in forward bookings started to erode and that deceleration appeared in the booking data before it fully worked its way into reported volumes. Once we saw it, we did not wait for the trend to become more pronounced. We moved quickly. We accelerated vehicle dispositions well beyond our original plan, taking advantage of a window in April and early May when the used vehicle market was still seasonally strong. That allowed us to monetize favorable residual values while realigning supply to a different demand environment. The result was a fleet position that looks different from what we would typically expect in the second quarter. In a normal year, this is the period when we would be building fleet ahead of the summer peak. Instead, our Americas fleet finished the quarter down 5% year-over-year, the lowest second quarter fleet size since the COVID environment of 2Q '21. That was a meaningful departure from our original plan, which contemplated growth tied to World Cup activity, America 250 and a more constructive summer travel environment. But the data changed, against the backdrop of broader consumer uncertainty, higher travel costs and geopolitical volatility, year-over-year TSA check-ins decelerated from flat in April to negative 70 basis points in May to negative 1.3% in June. Overseas visitors to the U.S. based on the CBP I-94 data were down 8% in the second quarter. When it became clear that demand was not developing in line with our original plan, we treated that as new information and resized the fleet accordingly. Quarter after quarter, we have said that we would rather run this fleet slightly under demand than slightly over it. This quarter, we did just that. Importantly, a 5% smaller fleet did not translate into a 5% decline in rental days. Rental days in the Americas were down only 2% due to improved utilization. Vehicle utilization finished the quarter at 73.2% in the Americas, our highest second quarter utilization level in company history. This improvement was made possible by the technology deployments, operating discipline and asset management mindset we have been building into the network over the past several quarters. It also reflects a different operating model for the business. We are treating fleet not simply as capacity to meet demand, but as capital at risk. When the data changes, the fleet plan has to change with it. In the second quarter, given the demand environment and the strength of the used vehicle market, we leaned deliberately into the asset manager side of the business and prioritize profitability and returns over rental days or market share. We believe this was the right decision, and we made it knowing it would affect the shape of our second quarter. Most notably, with fleet as a scarce resource this quarter, we made the deliberate choice to optimize for revenue per transaction versus revenue per day. Put simply, we accepted fewer 1-day rentals, which carry an RPD premium in order to fulfill more weekly business. When supply is tight, longer duration rentals create better overall transaction economics because they reduce turns, handling costs and operational complexity. If we had maintained the same length of rental mix as 2Q '25, RPD would have been up nearly 3% year-over-year. Instead, RPD was essentially flat. That was a deliberate trade-off and the economics showed up in revenue per transaction, which was up 6% year-over-year. Last quarter, we said that our expectation was for the World Cup to be a clear travel tailwind, particularly in host cities. That expectation was broadly shared across the travel industry, but it did not play out the way we expected. That is not in our control. What we can control is how quickly we adapt and our teams did that well this quarter. Our adjusted EBITDA outcome was in line with our initial expectations, but the path to get there was very different than we anticipated. That has implications for how we will manage the third quarter and the same principles will apply. We will stay disciplined on fleet, protect utilization and prioritize returns over volume. I'll elaborate on that later in the call. Before I turn it over to Daniel, I want to briefly touch on 3 additional items that are important to shareholder value and the strategic direction of the company. First, on Pentwater. You'll recall that last quarter, I spent time addressing the volatility in our stock price and the trading dynamics involving our second largest shareholder. We are pleased to report that Avis and Pentwater have reached a settlement agreement related to short-swing profits under which Pentwater agreed to pay Avis $650 million in cash. We believe the settlement represents a fair resolution of the dispute and a meaningful recovery for our shareholders. The settlement remains subject to final court approval, but we expect this matter to be resolved by year-end. Second, our partnership with Waymo reached an important milestone with the launch of autonomous ride-hail operations in Dallas. Our teams assumed operational responsibility on July 1. And since then, we have delivered thousands of trips while steadily scaling both operation and the fleet. I want to recognize our AV team for the work they have done to build this capability the right way with the right people, processes and resources. We are now taking the early lessons from Dallas and applying them to a repeatable operating model, one built around uncompromising safety, world-class customer experience and operational excellence. Third, Avis First, our premium first-class rental offering, continues to gain traction. Since our last update, we expanded the program to additional major airport locations, including Orlando, Washington Dulles, London Heathrow, and Paris Charles de Gaulle. We also broadened the vehicle portfolio with high-demand models, including select Mercedes and BMW vehicles. Customer satisfaction remains strong with an average rating of 4.9 out of 5 stars, underscoring the value proposition and the momentum we continue to see in this segment. Each of these items is important in its own way, but they all support the same broader goal, creating better value for shareholders through disciplined execution, stronger customer experiences and new capabilities that can scale over time. With that, let me turn it over to Daniel, who will provide additional detail on the quarter.

Thanks, Brian. Before I discuss the results in detail, I want to highlight a few key takeaways from the quarter. The second quarter demonstrated the operating leverage of the actions Brian described. Despite a softer-than-expected demand environment and fewer rental days, adjusted EBITDA grew year-over-year, and we delivered our highest second quarter adjusted EBITDA margin in the last 3 years. We also achieved record second quarter utilization globally with both the Americas and International improving sequentially and year-over-year. Importantly, we delivered 2 consecutive quarters of positive global RPD growth for the first time in 12 quarters. With that context, let's review each of our segments, starting with the Americas. In the Americas, adjusted EBITDA grew 7.7% year-over-year on revenue that declined 1.9%, resulting in approximately 100 basis points of margin expansion. That performance underscores the fact that disciplined fleet execution can support profitability even in a softer demand environment. As demand built during the first quarter, we observed encouraging signals across both RPD and rental days, particularly in World Cup markets. That dynamic changed quickly early in the second quarter. As Brian outlined, we made a strategic decision to proactively rightsize the fleet in response rather than wait for conditions to deteriorate further. The revenue decline was driven primarily by a 2.1% decline in rental days, which reflected our intentional decision to operate with a fleet that was 5.4% smaller year-over-year. Rental day pressure was most pronounced in our inbound segment, which declined 5%. Importantly, the decline in rental days was significantly less than the reduction in fleet. That gap was driven by a 250 basis point improvement in utilization, reflecting stronger operating execution across the network. Even with continued no-fix recall constraints, Americas utilization reached 73.2%, our highest second quarter utilization level in company history. The utilization improvement validates the investments we have made in technology and the changes we have made to operating processes. It also demonstrates that our fleet discipline is delivering measurable operational returns. RPD, excluding exchange rate effects, increased 0.2% year-over-year. While that was more modest than the growth we delivered in the first quarter, the underlying drivers are important. With fleet as a scarce resource, we deliberately shifted mix toward longer duration, higher contribution transactions. Absent that length of rental and other shift in mix, Americas RPD would have increased approximately 3% year-over-year. This marks the first time in 12 quarters that the company has delivered 2 consecutive quarters of positive global RPD growth, and the inflection is even more pronounced in the Americas, where we had not achieved consecutive quarterly RPD growth in 16 quarters. We view that as significant because it suggests that the RPD erosion experienced since the post-pandemic peak in 2022 has stabilized. The industry appears to have adjusted to the realities of higher interest rates and elevated vehicle costs contributing to more normalized pricing dynamics. At the same time, RPD is only one measure of transaction economics. RPD has long been used as a proxy for profitability. And all else equal, higher pricing supports higher EBITDA margins. But across segments and channels, all else is not equal. Commission rates, miles driven, accident propensity, transaction length, handling costs and depreciation all affect the ultimate profitability of the transaction. As we continue to evolve our asset management approach, we are increasingly focused on optimizing contribution and return on assets rather than simply maximizing headline RPD. Ultimately, we are solving for EBITDA, contribution and return on assets, not simply RPD in isolation. This quarter, we also continued to manage through significant recall-related constraints. Like the broader industry, we were impacted by extensive recall campaigns in July 2025, which grounded approximately 4.6% of our fleet at peak impact. While we expected to have cycled through most of that pressure by the second quarter, we were notified in April 2026 of additional recalls from 3 different OEMs, resulting in a total of approximately 18,000 grounded vehicles that exceeded the approximately 15,000 grounded vehicles we exited 2025 with. Year-to-date, recalls have represented more than $50 million of directly attributable costs before considering lost profit. This was a material headwind in the first half and will continue to affect the business in the second half. That said, utilization improvement we delivered despite those constraints reinforces the strength of the operational execution in the quarter. Our decision to accelerate dispositions early in the quarter also proved important from a residual value perspective. Rental demand began to soften while we were still in the seasonally strongest period of the used car market. We leaned into that market strength, accelerated disposition and reduced exposure to residual value risk. While that decision affected revenue, we believe it ultimately protected shareholder value. Because of the elevated sales activity in the quarter, per unit depreciation was unusually low at $301 per unit. Under a more normalized sales pattern, we estimate per unit depreciation would have been approximately $320. Now let's turn to our International segment. Our International segment faced a more challenging operating environment in the first half than the Americas. Revenues, excluding exchange rate effects, declined 2.5% year-over-year and adjusted EBITDA declined 11% year-over-year, further pressured by higher variable costs associated with our mix shift. Rental days declined 2.9% year-over-year, which was a 100 basis point improvement from the first quarter, but still below our expectations. We anticipated weakness in commercial segments as we cycled through the structural mix shift actions executed in the second half of 2025. However, the weakness was more pronounced than planned with strategic accounts declining 10% year-over-year. Geopolitical developments, particularly Middle East tensions also pressured inbound travel to Europe with flight capacity down as much as 38% in April and May. RPD, excluding exchange rate effects, increased 0.4% year-over-year or plus 2.2%, excluding the impact of Zipcar U.K. whose operations we suspended. RPD growth decelerated sequentially, reflecting a less constructive rate environment than in the Americas. Elevated fleet supply in several key international markets created additional industry capacity and placed pressure on pricing. Vehicle registration grew more than 10% in several of our largest European markets. We remain committed to our mix shift strategy toward higher return leisure demand. At the same time, we recognize that leisure demand can carry higher selling costs. Our focus is to continue improving mix while reducing the cost to acquire that demand over time, which reinforces the importance of further developing our own digital channels. With that, I'll turn to our leverage, liquidity and outlook. As of June 30, we had more than $1 billion in available liquidity and approximately $1.9 billion of fleet funding capacity. Our net corporate leverage ratio of 7.4x is down 100 basis points since year-end in 2025. We remain focused on deleveraging towards normalized levels during the balance of the year and expect to reduce leverage by at least a full turn of adjusted EBITDA by the end of 2026. This quarter, we have successfully addressed our near-term debt maturity profile, executing several refinancing transactions that strengthened our financial position and extend our debt maturity ladder. On May 29, we issued $300 million of senior notes due in 2031. The proceeds were used to partially redeem our senior notes due in 2027, reducing that maturity from $650 million to $350 million and providing meaningful flexibility heading into year-end. On June 29, we extended the maturity of our $2 billion revolving credit facility from December 2028 to June 2031 and added a temporary $200 million facility through June 2028 or upon receipt of the Pentwater settlement proceeds, further strengthening our liquidity position. Beyond the corporate debt refinancing, -- we also executed tactical refinancings across our vehicle financing programs. In June, we issued $650 million of AESOP term ABS debt, $200 million of Canadian term ABS debt and renewed our CAD 580 million Canadian bank facility. The term transactions were oversubscribed and closed at the tighter spread levels than the next most recent transactions, demonstrating continued capital markets confidence in Avis Budget Group. Most significantly, we expect to receive $650 million in proceeds from the Pentwater short-swing profit settlement. While this settlement is contingent on court approval, making the timing of payments uncertain, we expect to receive the funds by year-end and plan to deploy a portion of the proceeds towards retiring by year-end the remaining $350 million senior notes due in 2027. Our debt profile includes several attractively priced tranches maturing in the near and medium term. Rather than retire these low-cost obligations early, which would not be economical given current refinancing rates, we intend to take an opportunistic approach. We may refinance these lower-cost tranches closer to them becoming current, provided we have the liquidity on our balance sheet and a clear path to refinancing. In summary, we are pleased with how the second quarter turned out and how our team reacted to the changing market conditions. During the first half of 2026, we exceeded our adjusted EBITDA plan, and we entered Q3 our peak season demand with strong operational fundamentals. As a result, we are reiterating our full year guidance of $850 million to $1 billion in adjusted EBITDA. With that, I'll turn it back to Brian.

Thanks, Daniel. In summary, the business environment has changed, but our operating principles remain consistent. We are pleased with how our team has navigated the second quarter, and we are managing the third quarter with those implications in mind. Because we accelerated fleet dispositions in April and May, our third quarter availability will also be lower than our original plan. We expect fleet in the Americas to remain down by a similar amount year-over-year with utilization efficiencies offsetting a portion of that impact on rental days. Given that we are in our peak demand period, we will not have the same opportunity to generate gains from incremental fleet sales that we had in the second quarter. And with the fleet remaining tight, we expect to continue prioritizing longer duration, higher-value transactions over shorter rentals that may carry a higher RPD but create less attractive overall economics. As a result, we expect the third quarter to look similar to the second quarter in several respects, lower fleet, strong utilization, disciplined transaction mix and an RPD that is roughly flat year-over-year. Overall, we are entering the quarter with better operating discipline than a year ago. We have a tighter fleet, stronger utilization and a cleaner cost base and sharper focus on returns over volume. Those are the factors that give us confidence in year-over-year adjusted EBITDA growth in the third quarter and support our full year adjusted EBITDA guidance of $850 million to $1 billion. The environment remains dynamic, and our outlook does not depend on a broad demand recovery. We are managing the business based on the same principles we demonstrated this quarter. When the facts change, the plans have to change with them. We will stay disciplined on fleet, protect utilization, prioritize profitability and returns and continue building a business that can deliver across different demand environments. With that, operator, we'd be happy to take questions.

[Operator Instructions] And our first question comes from the line of Chris Woronka with Deutsche Bank.

So Brian, I think I understand the rationale for cutting fleet. The demand picture clearly changed. But I guess the question is, given that you have a fairly high fixed cost structure on the operating side, is there anything you can do if this is going to -- if this lower demand situation is going to persist, is there anything you can do to start or further attack costs on the DOE side? And then I have a follow-up.

Chris, so from our perspective, cost discipline is foundational to everything we do. We understand the makeup of our business. And as a levered company with a lot of operating leverage around the business as well, we need to control that which we can control, which is cost. So starting from the beginning of the year, that was an area of focus for us. So from a cost basis, we think that actually is what helped contribute to our profitability growth this quarter despite a lower revenue. We expect that to continue going forward. What I will say is that there are core operating costs, which we have really tightened our belts on. Then there are costs that flow into DOE that have to do with investments into our, kind of, future growth, yes, in terms of technology and new resources for our operations and improved processes. We are continuing to make those investments. And the way that we think about it is that the cost discipline around our everyday expenses is what helps fund the investments that we're making. So we think we're taking a balanced approach to this while monitoring what's happening in the overall revenue environment.

Okay. And then shifting gears a little bit on AV. I know you guys have rolled out Dallas. But as we see some of the rideshare companies, at least one of them start to invest in AVs, does it ever reach a point where you guys have to kind of make a decision on in terms of ownership of these and placing orders for autonomous? I mean, does it feel like that decision-making process is being sped up at all for you guys?

Chris, sorry, before I answer your question, one thing to note. I robbed our AV operators by a month of operations. I think in the prepared remarks, I said that we took over operations for Waymo in Dallas in July, we actually took over in June. So I just wanted to clear that up. In terms of your question about purchasing the fleet, I don't think that anything is being accelerated right now in terms of having to make that decision. The environment in the ecosystem is still evolving currently. I think what we're trying to do right now is make sure that we develop the relationships directly with both the AV providers and the vehicle providers to give ourselves both options, whether that is kind of just managing a fleet on someone else's balance sheet or purchasing the vehicles ourselves. At this point, it's too early to make a call one way or another, but we are keeping both options open.

The next question comes from the line of John Healy with Northcoast Research.

Brian, I wanted to ask just a little bit more about the decision to kind of realign fleet in Q2 and kind of how that plays out in Q3. You made a point of calling out the 3% kind of like-for-like pricing that would have been achieved. Now that the fleet is kind of, I would assume, rightsized, do we get back to kind of a normal RPD contribution of the company in Q3 relative to like the market? And I guess my thought process is if the fleet is down and the market is still okay, like, should we expect a positive RPD development here in Q3? Or are investors kind of getting ahead of themselves thinking about that for the quarter?

John, from our perspective, listen, the demand environment weakened, let's say, I wouldn't say that the travel demand is weak, though. So what we're seeing in TSA is down roughly 2% month-to-date in terms of emplanements. That's off from what we had expected, but I wouldn't characterize that as, like, a foundational weakness over here, and you're seeing strength in different pockets of the travel ecosystem. The 2% decline in the TSA employments is different from our 5% decline in fleet. So -- and we said that in the prepared remarks that you should expect kind of similar-ish decline year-over-year in fleet. So we expect to be kind of in that mid-single-digit range, which is lower than what we think the overall kind of demand environment is. Given that, the dynamics of Q3 will still kind of look like the dynamics of Q2 where fleet is constrained. So given that, we are going to prioritize longer duration rentals in the third quarter as well. We think that this is having a positive contribution to our overall EBITDA margin. And even though the headline RPD number is higher for these shorter duration 1-day rentals, given the fact that we are going to be fleet constrained in Q3 and we are managing towards profitability, we need to take some of these longer length rentals. So I think that the dynamics that you're seeing in Q3 will look like what they see in -- but overall, like I said, if we were not making these shifts in terms of length of rental mix, the overall environment is up 3% for us in terms of like-for-like segmentation. So overall, it does seem like a fairly stable environment. It's just a little bit of noise given the changes that we're making to our fleet mix given the supply.

Understood. That's helpful. And then just kind of one financing-related question. You guys are always very active on both the fleet side and the corporate side. And I'm just trying to think about some of the moving parts for 2027. Any way you could kind of think about kind of the headwind or tailwinds of kind of some of these financings just kind of on the interest expense line, both corporate and fleet, maybe hypothetically for next year?

John, this is Daniel. A lot of the refinancings are going to come due in the medium term have been put in place quite a while, and they are predominantly fixed rate. So the refinancing cost is likely going to be higher than what we have. It will depend a bit on the tranche, but 100, 125 bps is probably our expectation. And so that's why I was mentioning in prepared remarks that as those come due, we're going to potentially stretch a little bit how long we hold on to them and just delay that transition. But that's the new environment we operate with. And I think it's not impacting us only. And as I was mentioning, we do think that it's playing to some extent an effect in the price environment in the 2 quarters of sequential RPD growth that we've had and that we have not seen in a long time as a result of higher interest rates, higher legal costs and so on.

John, I would just add that we're very well aware that the next maturity we have after paying down the $350 million is 4.75%. And hence, why we were putting the funds in the fleet for now, right, as Daniel was saying, and taking as long as we can to pay that piece down. So we're managing that interest as best we can. And -- but what's foundational for us is to make sure that our debt maturity ladder does not stack up like, that is something that I think is really important, and we'll make sure that we're doing things at the right time at the right moment at the right cost.

Okay. And just a clarification, you said that 125 bps would maybe be an expectation? Or I wasn't sure. I wasn't clear on that.

Yes. It will depend a bit on the tranche, but that's generally what we're seeing for the near term.

The next question comes from the line of Dan Levy with Barclays.

So in this environment where demand is a bit weaker and you've made the strategic move to tighten the fleet. Maybe you can just talk to what your competitors are doing as well as far as operating with certain fleet levels? And maybe if you could just talk to the broader competitive environment that you're seeing, especially given one of your competitors is going through some questions on liquidity.

Yes. Let me answer some of that -- answer what I can at a high level and then Daniel, you jump in. from our perspective, I think if you had told me that international inbound travelers was going to be down 8% in the second quarter, yes, with the World Cup happening, right? I don't think anyone planned on that. The -- and from our perspective, given that we are a rental car company that does the majority of its business on airports, like the ground truth that we follow is those TSA check-ins and the international travel data, like that can't be argued. So what we saw happening, we were keeping a close eye on. And I think that we made the call fairly early that demand was not playing out the way that we thought. It was also a situation where like you could choose like the used car market was constructive in the seasonally strong period of April and May. We had a bird in hand over there. And we thought that given the volatility that we've seen in terms of earnings like with the fleet write-downs that have happened over the last 2 years, playing with a bit of margin of safety was the right decision. So what we did was, as this was developing, we made the decision that we're going to take fleet down and harvest some of those residual gains. Again, like I said, I think this is something that we caught earlier when we saw this demand shift. Overall, I think some of our competitors have seen this -- have taken a similar approach as the months progressed. And after the 4th of July, we're seeing industry supply begin to rationalize a little as well. So I think the supply-demand dynamics are better aligned today going into August than they were going into May. For us, there's still several important weeks of summer left. We're focused on optimizing every day of that demand. And what I would imagine -- what I would say is that given the stability we're seeing in the pricing environment, we think that the industry is rationalizing as well.

I would just add then a little international perspective where some of the dynamics Brian described are also present, but we saw in some of our key markets, a significant increase in new vehicle registration by rental car companies, something in the order of 10%. We acknowledge that this is not a full picture, we don't have visibility of the deletes, right, that may be offsetting some of that. But we do see the inflow of new vehicles. That paired with significant declines from inbound travel, especially from the Middle East. I think it's creating a scenario market there that is a little bit more competitive than we have experienced in North America. We also expect that to continue in Q3.

Okay. Great. As a follow-up, there's been a lot of questions about one of your technology vendors that I think you had discontinued the relationship with them and then there was a press release last night that there was an agreement. And I think there was -- I think a lot of excitement on the potential profit benefit. I think some people were putting out upwards of $100 million a year. So maybe you could just talk to -- I mean, now that they have a press release, I don't know if you can comment on the potential benefit that you see on pricing or what approach you're taking? And then more broadly, are you taking a different look at your broader use of vendors and spend and what that could do on the DOE line?

I'll take that one. After we submitted a termination notice, management of reengaged, right? We had for conversation. We were able to find a path forward, as you saw in their announcements, right? The position was generally pretty simple, right? We wanted to have control over the customer journey. We wanted to have more flexibility in the operating model. that we had and a better customer experience around tolling and the related products. With this new management, we're able to reach in terms of preserve those vehicles, allowing vendor to remain a provider of ours. And we think it's a pretty constructive outcome for ABG. It gives us continuity, and it allows us to manage the economics in a way that's aligned with our long-term objectives.

Is there something you can talk to as far as that and broader initiatives to streamline spend? Could this lead to material profit benefit?

The effort here on tolls, I think, is representative of other efforts that we are undertaking across the P&L. So major programs around vehicle damage, insurance, licensing and registration. I mean those are substantial line items for us. And just like with those, we had a very disciplined approach of reevaluating the entirety of our operations, how we perform those services internally, externally with one vendor, multiple vendors. Those are all conversations we're having across the board. In terms of expectations here, I would just point out that those are relatively complex parts of our operations. So we intend to chip at them very consistently over the quarters, but those are not simple fixes. Those are not changes that happen overnight.

Yes. And I can just add also that given the new technology that's available to us, we are taking a broad-based look at where we can improve the products that we're delivering to our customers. So yes, cost efficiencies are important, and we want to make sure that we get the best deal possible out there. But ensuring that we are delivering better products for our customer and delivering a better customer experience and being more efficient as a company is also, I think, something that we're evaluating on a regular basis.

And the next question comes from the line of Rajat Gupta with JPMorgan.

Just had a question on -- just a couple here. But the first one, just on the Waymo partnership, 2 months into the operation in Dallas. I'm wondering if you could double-click on what role you're playing as a fleet manager and maybe highlight some of key early innings learnings? And are you already making any incremental investments for autonomous vehicle fleet management in other regions ahead of potential contract conversions?