Company Overview
Verra Mobility Corporation (VRRM) is a leading provider of integrated technology solutions that make transportation safer, smarter, and more connected. The company operates across three key segments: Commercial Services, Government Solutions, and Parking Solutions, serving a diverse customer base that includes commercial fleet owners, government entities, and parking operators.
History and Growth
Founded in 1988 and headquartered in Mesa, Arizona, Verra Mobility has a rich history of innovation and growth. Initially focused on providing automated toll and violation management solutions for rental car companies, fleet management companies, and other large fleet owners in North America, the company has evolved over the years to offer a comprehensive suite of smart mobility solutions. Through strategic acquisitions and continuous investment in R&D, Verra Mobility has expanded its capabilities to include automated safety and traffic enforcement, title and registration services, and integrated parking management software and hardware.
In 2018, Verra Mobility went public through a merger with Gores Holdings II, Inc., allowing the company to accelerate its growth strategy and expand into new market segments. A significant milestone in the company's expansion came in 2021 with the acquisition of Redflex Holdings Limited, a leading provider of traffic safety cameras and related technologies. This acquisition substantially strengthened Verra Mobility's Government Solutions segment, extending its reach to Canada and Australia in addition to its existing U.S. operations.
Challenges and Expansion
The company's growth trajectory has not been without challenges. In 2020, Verra Mobility discovered issues in its system installation practices under its agreement with the New York City Department of Transportation (NYCDOT), leading to an investigation and subsequent remediation efforts. Additionally, the company faced legal challenges, including involvement in a class action lawsuit against the City of Gretna, Louisiana, and its safety camera vendor, Redflex Traffic Systems, Inc., which Verra Mobility acquired as part of the Redflex Holdings purchase.
Despite these obstacles, Verra Mobility has continued to pursue strategic growth opportunities. In 2021, the company expanded its European presence and capabilities in the commercial fleet management market through the acquisition of Pagatelia S.L.U., a leading provider of European tolling and violations processing services. This move has positioned Verra Mobility to better serve its global customer base and capitalize on the growing demand for smart mobility solutions in Europe.
Business Segments
Commercial Services
Verra Mobility's Commercial Services segment is a dominant player in the toll and violations management industry, serving over 50 individual tolling authorities across the United States. The company's strong relationships with major rental car companies, fleet management firms, and direct commercial fleet operators have enabled it to provide a seamless, automated solution for managing toll payments and violations on behalf of its customers. In 2024, the Commercial Services segment generated $408 million in revenue, representing a 9% year-over-year increase, driven by resilient travel demand and continued product adoption.
This segment offers a full-service solution, enrolling the license plates of its customers' vehicles and transponders with tolling authority accounts, paying tolls and violations on the customers' behalf, and integrating with customer data to match the toll or violation to the driver and then bill the driver or the customer, as applicable. This end-to-end service provides convenience and efficiency for the fleet operators, while also benefiting the tolling authorities through improved toll collection and violation processing.
Government Solutions
The Government Solutions segment is a critical partner to state and local governments, implementing and administering traffic safety programs designed to reduce collisions, injuries, and fatalities. Verra Mobility's photo enforcement solutions, which include speed, red-light, school bus stop arm, and bus lane enforcement, are in high demand as municipalities seek to enhance road safety. In 2024, the Government Solutions segment reported $391 million in total revenue, a 9% increase over the prior year, fueled by a 12% rise in service revenue outside of the company's largest customer, the New York City Department of Transportation (NYCDOT).
This segment provides customers with the installation, maintenance, and management of automated safety solution hardware and software that processes event data, applies customer-specific rules, and connects traffic violations to the responsible driver or vehicle owner. For customers of the end-to-end solutions, the company automatically sends captured events to the designated enforcement agency, where an authorized individual determines if a violation occurred. Upon the agency's determination, Verra Mobility manages the citation mailing, billing, and other administrative tasks on behalf of its customers.
Internationally, the Government Solutions segment designs, engineers, and maintains roadside photo enforcement technology, including both hardware and software, which is sold or licensed to government agencies and often maintained with maintenance contracts to support the technology.
Parking Solutions
Verra Mobility's Parking Solutions segment, acquired in 2021, provides an integrated suite of software, transaction processing, and hardware solutions to universities, municipalities, healthcare facilities, and commercial parking operators. While this segment faced some operational challenges in 2024, leading to a $97 million goodwill impairment charge, the company remains confident in the long-term growth potential of the parking management market, which is driven by the ongoing need for cities and institutions to effectively manage access, permit issuance, and enforcement.
The Parking Solutions segment develops specialized hardware and parking management software that provides a platform for the issuance of parking permits, enforcement, gateless vehicle counting, event parking, and citation services. It also produces and markets its proprietary software-as-a-service to its customers throughout the United States and Canada. In 2024, this segment generated $66 million in service revenue, representing 7.5% of the company's total revenue, with a slight decrease of 1% from the prior year due to a decrease in professional services related to parking management solutions, offset by increased revenue from SaaS product offerings.
Financial Performance
Financials
Financially, Verra Mobility has demonstrated a strong track record of revenue growth and cash flow generation. In 2024, the company reported total revenue of $879 million, a 7.6% increase from the previous year, and generated $224 million in net cash from operating activities. The company's adjusted EBITDA margin for the year was 46%, reflecting the scalability and profitability of its business model.
For the fourth quarter of 2024, Verra Mobility reported quarterly revenue of $222 million, a 5% increase year-over-year, driven by continued strength in the Commercial Services and Government Solutions segments, partially offset by a decline in the Parking Solutions segment. However, the company recorded a net loss of $67 million for the quarter, primarily due to a $97 million non-cash goodwill impairment charge in the Parking Solutions segment.
The company's annual net income for 2024 was $31 million, with annual free cash flow of $153 million. Verra Mobility operates primarily in the United States, with some international operations in Australia, Canada, Europe, and other regions.
Liquidity
Verra Mobility has also been proactive in managing its capital structure, taking advantage of favorable interest rate environments to refinance its debt twice in 2024. These actions lowered the company's weighted average cost of debt to just over 6%, providing more flexibility to pursue strategic initiatives and return capital to shareholders. In 2024, Verra Mobility deployed $200 million to repurchase over 7 million shares, demonstrating its confidence in the long-term prospects of the business.
As of December 31, 2024, the company's debt-to-equity ratio stood at 0.10, with $78 million in cash on hand. Verra Mobility maintains a $75 million revolving credit facility, with $74 million available (net of $1 million in outstanding letters of credit). The company's current ratio is 1.97, and its quick ratio is 1.89, indicating a strong liquidity position.
Future Outlook
Looking ahead, Verra Mobility has provided guidance for fiscal year 2025, expecting revenue in the range of $925 million to $935 million, representing approximately 6% growth at the midpoint compared to 2024. Adjusted EBITDA is projected to be between $410 million and $420 million, indicating about 3% growth at the midpoint over 2024. This implies an adjusted EBITDA margin of around 45%, down about 100 basis points compared to 2024.
The company anticipates non-GAAP adjusted EPS to be in the range of $1.30 to $1.35 per share for 2025. Free cash flow is expected to be between $175 million and $185 million, representing a conversion rate in the low to mid-40 percentile of adjusted EBITDA. Capital expenditures are projected to increase to around $90 million in 2025, up about $20 million from 2024, with the majority allocated to the Government Solutions segment.
Verra Mobility aims to reduce its net leverage to around 2x by the end of 2025, excluding capital allocation investments. The slightly slower adjusted EBITDA growth compared to revenue growth is attributed to investments in sales, product installations, and financial infrastructure.
The company remains optimistic about the long-term trends driving demand for its solutions, including the continued expansion of toll road networks, the increasing prevalence of automated traffic enforcement, and the growing need for comprehensive parking management in urban and institutional settings. The overall market for these solutions is estimated to have a compound annual growth rate of 6-8% over the next 5 years.
Verra Mobility's diverse portfolio of smart mobility solutions, strong customer relationships, and proven ability to execute on growth opportunities position the company well to capitalize on the ongoing digital transformation of the transportation industry. As municipalities, fleet operators, and parking providers seek to enhance safety, efficiency, and connectivity, Verra Mobility's innovative technology and domain expertise make it a trusted partner in delivering the smart mobility solutions of the future.