Verra Mobility — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for Q3 2026 was $258.9 million, a 1% decrease compared to $261.9 million in Q3 2025.
• Net income was $40.4 million ($0.27 per diluted share) in Q3 2026, down from $46.8 million ($0.29 per diluted share) in Q3 2025.
• Adjusted EPS was $0.36 per share in Q3 2026, compared to $0.37 per share in Q3 2025.
• Adjusted EBITDA was $103.9 million in Q3 2026, down from $113.3 million in Q3 2025; Adjusted EBITDA margin was 40% in 2026 versus 43% in 2025.
• Net cash provided by operating activities increased to $114.5 million in Q3 2026 from $77.7 million in Q3 2025.
• Free Cash Flow was $89.4 million in Q3 2026, up from $49.0 million in Q3 2025.
• Cash and cash equivalents were $137.0 million as of September 30, 2026.
• Total debt, net was $1,033 million as of September 30, 2026.
• Net Debt was $903.3 million as of September 30, 2026, down from $971.8 million as of December 31, 2025.
• Net Leverage was 2.2x as of September 30, 2026, down from 2.3x as of December 31, 2025.
• Deferred revenue was $28.9 million as of September 30, 2026, up from $26.7 million as of December 31, 2025.

Guidance and Future Outlook:

• Reaffirmed full-year 2026 guidance provided on August 5, 2026.
• Full-year 2026 Total Revenue guidance: $945 million to $965 million.
• Full-year 2026 Adjusted EBITDA guidance: $360 million to $370 million.
• Full-year 2026 Adjusted EPS guidance: $1.11 to $1.17.
• Full-year 2026 Free Cash Flow guidance: $105 million to $115 million.
• Underlying assumptions for 2026 include a TSA volume decline of over 1% compared to 2025.
• Expected weighted average fully diluted share count for 2026 is approximately 153 million.
• Expected effective tax rate for 2026 is 28.0% to 29.0%, with approximately $30 million in total cash taxes expected.
• Expected depreciation and amortization expense for 2026 is approximately $120 million.
• Expected total interest expense, net for 2026 is approximately $62 million.
• Expected capital expenditures for 2026 are approximately $125 million.

Business Segments and Product Lines:

• Commercial Services segment revenue was $100.3 million, a 14% decrease from $117.3 million in Q3 2025; segment profit was $61.3 million, a 22% decrease from $78.3 million.
• Government Solutions segment revenue was $136.8 million, a 12% increase from $122.6 million in Q3 2025; segment profit was $39.1 million, up from $31.3 million, with margins improving to 29% from 26%.
• Parking Solutions segment revenue was $21.7 million, a 2% decrease from $22.1 million in Q3 2025; segment profit was $3.5 million, down from $3.8 million.
• Commercial Services revenue decline was driven by a $16.1 million (20%) reduction in rental car companies (RAC) tolling revenue due to less favorable contract terms and fleet volume fluctuations.
• Government Solutions growth was driven by an $8.6 million increase in service revenue from expansion in safety services and $5.6 million in NYCDOT installation revenue.
• Parking Solutions revenue decrease was primarily due to lower professional and subscription services, partially offset by SaaS product growth.

Market and Competitive Landscape:

• U.S. Transportation Security Administration (TSA) passenger volume was approximately 3% lower in Q3 2026 compared to the prior year period.
• Fleet management company revenue decreased $2.2 million (13%) in Q3 2026 due to a one-time operational adjustment and churn; normalized growth would have been 4%.
• The company noted it is following Enterprise's procurement process for the upcoming contract renewal expiring September 30, 2027.
• The company is a leading provider of smart mobility technology solutions operating in the United States, Australia, Europe, and Canada.

Risks and Challenges:

• Commercial Services segment profit margin declined 6 percentage points (from 67% to 61%) due to reduced RAC tolling revenue, increased credit loss expense, and decreased volume rebates.
• The company recorded a $64.0 million goodwill impairment and a $40.4 million intangible asset impairment in the Parking Solutions segment during the nine months ended September 30, 2026.
• The company terminated its agreement with Avis Budget Group (ABG) effective January 30, 2027, due to significant fleet volume reductions and misaligned interests, engaging legal counsel to protect intellectual property.
• The ABG contract extension entered in July 2026 was on materially less favorable terms than the prior agreement.
• The Hertz contract extension is also on materially less favorable terms and contains fleet volume modulation rights.
• Risks include potential further impairments of goodwill and intangible assets, customer concentration, legislative changes affecting photo enforcement, and leadership transitions.

Management Commentary and Tone:

• The Board appointed Jon Newhard as President and CEO effective November 1, 2026, succeeding Jon Keyser, who will serve as Special Advisor through 2026.
• Craig Conti stepped down as CFO effective November 4, 2026; Matthew Kvarda was appointed Interim CFO effective November 5, 2026.
• Management stated the new leadership will support the execution of strategy and position the business for long-term growth.
• The company will not hold a conference call for Q3 2026 results due to pending leadership transitions; calls will resume with Q4 results.
• Management indicated it will evaluate future segment reporting following the pending executive leadership transition.

Other Key Points:

• Q3 2026 was a record bookings quarter for Government Solutions, excluding the quarter in which the NYCDOT contract renewal was booked.
• The company renewed its agreement with Hertz for five years, extending a partnership of over 20 years.
• The company engaged Quinn Emanuel Urquhart & Sullivan, LLP to protect intellectual property following the ABG contract termination.
• The Board retained Spencer Stuart to conduct a comprehensive search for a permanent CFO.
• Share repurchases and retirement totaled $51.6 million for the nine months ended September 30, 2026.
• The company recorded a $64.0 million goodwill impairment and $40.4 million intangible asset impairment in the Parking Solutions segment for the nine months ended September 30, 2026.