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What were the key takeaways from Verra Mobility’s earnings call?

What guidance did Verra Mobility's management provide for the next earnings period?

- **Revenue Beat**: Q3 2025 revenue of $262 million (+16% YoY) exceeded expectations, driven by $17 million from New York City red-light cameras.
- **NYC Contract Value**: $963 million 5-year deal with $165-$185 million annual service revenue by 2027, plus $20-$30 million product revenue in 2026-2027.
- **Margin Impact**: 2026 adjusted EBITDA margin decline of 250-300 bps due to $20-$25 million annual subcontractor costs.
- **Stock Buyback**: $150 million authorized, bringing total to $250 million, to commence soon.
- **California Expansion**: Legislative reforms could add $140 million to the addressable market, with Verra winning all recent RFPs.

**【Management Opening Remarks】**
- Mark Zindler provided an overview of the call, emphasizing forward-looking statements and non-GAAP financial measures. He highlighted the importance of the New York City contract and its impact on future financial performance.

**【CEO Commentary】**
- **Revenue Growth**: Total revenue for Q3 2025 increased 16% YoY to $262 million, driven by the New York City red-light camera expansion ($17 million in Q3). Government Solutions revenue grew 28% YoY, while Commercial Services grew 7% YoY.
- **New York City Contract**: The new 5-year contract with a 5-year renewal option has a total value of $963 million. Annual service revenue is expected to grow from $135 million in 2024 to $165-$185 million by 2027, with product revenue additions in 2026-2027.
- **2026 Outlook**: Mid-single-digit revenue growth is expected, with Government Solutions leading at high single to low double digits. Adjusted EBITDA margins are anticipated to decline 250-300 basis points due to contract repricing and subcontractor costs.

**【CFO Commentary】**
- **Financial Highlights**: Q3 2025 GAAP net income was $47 million, with adjusted EPS of $0.37 (16% YoY growth). Free cash flow was $49 million, and the trailing 12-month adjusted EBITDA margin was 44%.
- **New York City Impact**: The contract will generate $30 million of incremental 2025 revenue but requires $20-$25 million annual costs for minority/women-owned subcontractors, reducing margins.
- **Capital Allocation**: A $150 million stock buyback program was announced, bringing total authorization to $250 million.

**【Q&A Highlights】**
- **Margins and Costs**: Craig Conti clarified that $5-$10 million of one-time readiness costs in 2025 will be offset by $20-$25 million annual recurring costs for subcontractors. MOSAIC platform consolidation is expected to drive margin expansion by 2028.
- **Camera Installations**: 1,000 new cameras will be installed over 2-3 years, with no impact on CapEx as NYC purchases equipment directly.
- **California Growth**: Legislative reforms in California could add $140 million to the addressable market, with Verra winning 100% of recent RFPs.


Verra Mobility Corporation (VRRM) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

VRRM

VRRM fundamentals

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