v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Under U.S. GAAP, entities are allowed to measure certain financial instruments and other items at fair value. The Company has not elected the fair value measurement option for any of its assets or liabilities that meet the criteria for this option. Irrespective of the fair value option previously described, U.S. GAAP requires certain financial and non-financial assets and liabilities of the Company to be measured on either a recurring basis or on a nonrecurring basis.

Fair Value Disclosures

The fair value of cash, restricted cash, accounts receivable, accounts payable and accrued liabilities, to the extent the underlying liability will be settled in cash, approximates the carrying values because of the short-term nature of these instruments.
Debt Obligations

The fair value of the debt facilities is estimated based on quoted market rates as well as borrowing rates currently available to the Company for loans with similar terms and average maturities (i.e., Level 2 inputs).
June 30, 2026December 31, 2025
(In millions)Nominal Unpaid Principal BalanceAggregate Fair ValueNominal Unpaid Principal BalanceAggregate Fair Value
Other Non-Vehicle Debt$5,246 $3,729 $4,828 $4,187 
Exchangeable Notes Due 2029
282 127 271 311 
Exchangeable Notes Due 2030
425 136 425 324 
Exchangeable First Lien Notes Due 2030
350 305 — — 
Total Non-Vehicle Debt6,303 4,297 5,524 4,822 
Vehicle Debt12,777 12,812 11,679 11,662 
Total$19,080 $17,109 $17,203 $16,484 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the Company's assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy as follows:
June 30, 2026December 31, 2025
(In millions)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:
Cash equivalents and restricted cash equivalents$138 $— $— $138 $287 $— $— $287 
Capped Call Transactions 2030
— — 8 8 — — 21 21 
Liabilities:
Public Warrants$90 $— $— $90 $222 $— $— $222 
Exchange Features 2029
— — 26 26 — — 78 78 
Exchange Feature 2030
— — 21 21 — — 54 54 
First Lien Exchangeable Feature 2030— — 110 110 — — — — 

Cash Equivalents and Restricted Cash Equivalents

The Company’s cash equivalents and restricted cash equivalents primarily consist of investments in money market funds and bank money market and interest-bearing accounts. The Company determines the fair value of cash equivalents and restricted cash equivalents using a market approach based on quoted prices in active markets (i.e., Level 1 inputs).

Public Warrants – Hertz Global

Hertz Global's Public Warrants are classified as liabilities and recorded at fair value in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025 in accordance with the provisions of ASC 480, Distinguishing Liabilities from Equity. See Note 8, "Public Warrants, Equity and Earnings (Loss) Per Common Share – Hertz Global," for additional information. The Company calculates the fair value based on the end-of-day quoted market price (i.e., a Level 1 input). For the three and six months ended June 30, 2026, the
fair value adjustments included gains of $98 million and $131 million, respectively. For the three and six months ended June 30, 2025, the fair value adjustments included losses of $115 million and $124 million, respectively. These amounts are recorded in Change in fair value of Public Warrants in the accompanying unaudited condensed consolidated statements of operations for Hertz Global for the three and six months ended June 30, 2026 and 2025.

Exchangeable Notes Due 2029 – Bifurcated Derivatives

The Exchangeable Notes Due 2029 contain an embedded conversion feature (the "Exchange Feature 2029") that was required to be bifurcated and accounted for separately from the Exchangeable Notes Due 2029 as a derivative liability at fair value. Upon issuance in June 2024, the Company recognized a debt discount within non-vehicle debt representing the initial fair value of the Exchange Feature 2029.

As disclosed in Note 5, "Debt," the Exchangeable Notes Due 2029 bear PIK interest payable semi-annually on January 15 and July 15. Upon the Semi-annual PIK Event in the first quarter of 2026, the Company bifurcated the Exchange Feature 2029 PIK and recognized a debt discount of $4 million within non-vehicle debt, representing the initial fair value.

As of June 30, 2026, the fair value of the Exchange Feature 2029 and the Exchange Feature 2029 PIK (collectively, the "Exchange Features 2029") was $26 million. Refer also to Note 10, "Financial Instruments," for further information.

The fair value of the Exchange Features 2029 was determined using a lattice model and a “with-and-without” valuation methodology. The inputs used to estimate the fair value of the Exchange Features 2029 include the probability of potential settlement scenarios, the expected timing of such settlement and an expected volatility. Expected volatility is based on historical and company-specific implied equity volatility data and adjusted to reflect market participant expectations observed in arm's length trading. As the expected volatility input is considered unobservable, the Company has categorized the Exchange Features 2029 as Level 3 in the fair value hierarchy.

The estimated fair values of the Exchange Features 2029 were computed using the following key inputs as of June 30, 2026 and December 31, 2025:
June 30, 2026December 31, 2025
Hertz Global common share price$2.27 $5.14 
Expected term (years)3.043.54
Risk-free interest rate4.15 %3.60 %
Credit spread40.90 %11.26 %
Expected volatility70.00 %35.00 %

The significant unobservable input used in the fair value measurement of the Exchange Features 2029 is expected volatility. Holding other inputs constant, an increase (decrease) in expected volatility would have resulted in a higher (lower) fair value measurement, respectively.
The following table summarizes the activity related to the Exchange Features 2029 measured at fair value utilizing significant unobservable inputs (Level 3):
(In millions)
Exchange Features 2029
Balance as of December 31, 2024$61 
Initial recognition of derivative liability(1)
11 
(Gain) loss in fair value recognized in earnings6 
Balance as of December 31, 202578 
Initial recognition of derivative liability(2)
4 
(Gain) loss in fair value recognized in earnings(3)
(19)
Balance as of March 31, 202663 
(Gain) loss in fair value recognized in earnings(4)
(37)
Balance as of June 30, 2026
$26 
(1)    Represents the initial debt discounts recognized in association with the Semi-Annual PIK events occurring in the first and third quarters of 2025.
(2)    Represents the initial debt discount recognized in association with the Semi-Annual PIK event occurring in the first quarter of 2026. See Note 5, "Debt," for further details.
(3)    Included in Non-vehicle interest expense, net in the accompanying unaudited condensed consolidated statements of operations for the six months ended June 30, 2026.
(4)    Included in Non-vehicle interest expense, net in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2026.

Exchangeable Notes Due 2030 – Bifurcated Derivative

The Exchangeable Notes Due 2030 contain an embedded conversion feature (the "Exchange Feature 2030") that was required to be bifurcated and accounted for separately from the Exchangeable Notes Due 2030 as a derivative liability at fair value. Upon issuance in September 2025, the Company recognized a debt discount within non-vehicle debt representing the initial fair value of the Exchange Feature 2030.

As of June 30, 2026, the fair value of the Exchange Feature 2030 was $21 million. Refer also to Note 10, "Financial Instruments," for further information.

The fair value of the Exchange Feature 2030 was determined using a lattice model and a “with-and-without” valuation methodology. The inputs used to estimate the fair value of the Exchange Feature 2030 include the probability of potential settlement scenarios, the expected timing of such settlement and an expected volatility. Expected volatility is based on historical and company-specific implied equity volatility data and adjusted to reflect market participant expectations observed in arm's length trading. As the expected volatility input is considered unobservable, the Company has categorized the Exchange Feature 2030 as Level 3 in the fair value hierarchy.

The estimated fair value of the Exchange Feature 2030 was computed using the following key inputs as of June 30, 2026 and December 31, 2025:
June 30, 2026December 31, 2025
Hertz Global common share price$2.27 $5.14 
Expected term (years)4.254.75
Risk-free interest rate4.18 %3.71 %
Credit spread40.67 %12.45 %
Expected volatility70.00 %35.00 %
The significant unobservable input used in the fair value measurement of the Exchange Feature 2030 is expected volatility. Holding other inputs constant, an increase (decrease) in expected volatility would have resulted in a higher (lower) fair value measurement, respectively.

The following table summarizes the activity related to the Exchange Feature 2030 measured at fair value utilizing significant unobservable inputs (Level 3):
(In millions)Exchange Feature 2030
Balance as of December 31, 2024$— 
Initial recognition of derivative liability103 
(Gain) loss in fair value recognized in earnings(49)
Balance as of December 31, 202554 
(Gain) loss in fair value recognized in earnings(1)
(14)
Balance as of March 31, 202640 
(Gain) loss in fair value recognized in earnings(2)
(19)
Balance as of June 30, 2026$21 
(1)    Included in Non-vehicle interest expense, net in the accompanying unaudited condensed consolidated statements of operations for the six months ended June 30, 2026.
(2)    Included in Non-vehicle interest expense, net in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2026.

Exchangeable First Lien Notes Due 2030 - Bifurcated Derivative

The Exchangeable First Lien Notes Due 2030 contain an embedded conversion feature, the First Lien Exchangeable Feature 2030, that is required to be bifurcated and accounted for separately from the Exchangeable First Lien Notes Due 2030 as a derivative liability at fair value. Refer to Note 5, "Debt," and Note 10, "Financial Instruments," for further information.

As of June 30, 2026, the fair value of the First Lien Exchangeable Feature 2030 was $110 million. Refer also to Note 10, "Financial Instruments," for further information.

The fair value of the First Lien Exchangeable Feature 2030 was determined using a lattice model and a “with-and-without” valuation methodology. The inputs used to estimate the fair value of the First Lien Exchangeable Feature 2030 include the probability of potential settlement scenarios, the expected timing of such settlement and an expected volatility. Expected volatility is based on historical and company-specific implied equity volatility data and adjusted to reflect market participant expectations observed in arm's length trading. As the expected volatility input is considered unobservable, the Company has categorized the First Lien Exchangeable Feature 2030 as Level 3 in the fair value hierarchy.

The estimated fair value of the First Lien Exchangeable Feature 2030 was computed using the following key inputs as of June 30, 2026 and upon issuance:
June 30, 2026Issuance
Hertz Global common share price$2.27 $2.30 
Expected term (years)4.004.01
Risk-free interest rate4.17 %4.12 %
Credit spread16.35 %13.91 %
Expected volatility70.00 %70.00 %
The following table summarizes the activity related to the First Lien Exchangeable Feature 2030 measured at fair value utilizing significant unobservable inputs (Level 3):
(In millions)Exchangeable Feature 2030
Balance as of December 31, 2025$— 
Initial recognition of derivative liability115 
(Gain) loss in fair value recognized in earnings(1)
(5)
Balance as of June 30, 2026$110 
(1)    Included in Non-vehicle interest expense, net in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2026.

Capped Call Transactions 2030

The fair value of the Capped Call Transactions 2030 was determined using a Monte Carlo simulation model. The key inputs used to estimate the fair value of the Capped Call Transactions 2030 include the share price of Hertz Global common stock, remaining contractual term, risk-free interest rate and an expected volatility. Expected volatility is based on historical and company-specific implied equity volatility data and adjusted to reflect market participant expectations observed in arm's length trading. As the expected volatility input is considered unobservable, the Company has categorized the Capped Call Transactions 2030 as Level 3 in the fair value hierarchy.

As of June 30, 2026, the fair value of the Capped Call Transactions 2030 was $8 million. Refer also to Note 10, "Financial Instruments," for further information.

The estimated fair value of the Capped Call Transactions 2030 was computed using the following key inputs as of June 30, 2026 and December 31, 2025:
June 30, 2026December 31, 2025
Hertz Global common share price$2.27 $5.14 
Expected term (years)4.254.75
Risk-free interest rate4.18 %3.71 %
Dividend yield— %— %
Expected volatility70.00 %36.00 %

The significant unobservable input used in the fair value measurement of the Capped Call Transactions 2030 is expected volatility. Holding other inputs constant, an increase (decrease) in expected volatility would have resulted in a higher (lower) fair value measurement, respectively.
The following table summarizes the activity related to the Capped Call Transactions 2030 measured at fair value utilizing significant unobservable inputs (Level 3):
(In millions)Capped Call Transactions 2030
Balance as of December 31, 2024$— 
Initial recognition of derivative asset37 
Gain (loss) in fair value recognized in earnings(16)
Balance as of December 31, 202521 
Gain (loss) in fair value recognized in earnings(1)
(5)
Balance as of March 31, 202616 
Gain (loss) in fair value recognized in earnings(2)
(8)
Balance as of June 30, 2026
$8 
(1)    Included in Non-vehicle interest expense, net in the accompanying unaudited condensed consolidated statements of operations for the six months ended June 30, 2026.
(2)    Included in Non-vehicle interest expense, net in the accompanying unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2026.
Financial Instruments

The fair value of the Company's financial instruments as of June 30, 2026 and December 31, 2025 are disclosed in Note 10, "Financial Instruments." The Company's financial instruments are priced using quoted market prices for similar assets or liabilities in active markets (i.e., Level 2 inputs), excluding the Exchange Features 2029, the Exchange Feature 2030, First Lien Exchangeable Feature 2030 and the Capped Call Transactions 2030, each as disclosed above, which are categorized as Level 3 in the fair value hierarchy.
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
Concurrently with the issuance of the Exchangeable First Lien Notes Due 2030, Hertz Global lent the Borrowed Shares pursuant to the Share Lending Agreement, as disclosed in Note 5, "Debt." The Share Lending Agreement had an initial fair value of $85 million, as determined by the market value (i.e., a Level 1 input) of the Borrowed Shares as of the closing date of the Share Lending Agreement. As of June 30, 2026, the fair value of the Share Lending Agreement was $84 million, as determined by the market value (i.e., a Level 1 input) of the Borrowed Shares as of such date.