- Total Revenue Growth: Increased 6% YoY to $236 million, driven by all three business segments.
- Adjusted EPS Growth: Rose 10% to $0.34 per share, aided by operating performance and share repurchases.
- Government Solutions Performance: Revenue grew 10% to $3 million in product sales with 28% margins.
- Full-Year Guidance Reaffirmed: EBITDA of $410–420 million (3% growth) and EPS of $1.30–1.35 per share.
- CapEx Strategy: Government Solutions CapEx to reach $60–80 million, supporting 12% compounding growth.
Commercial Services Segment Performance
The Commercial Services segment, which includes RAC tolling and FMC, saw a 5% revenue increase year-over-year. RAC tolling revenue grew 4%, while FMC revenue declined 2%. This FMC decline was attributed to customer churn and the ongoing weak macroeconomic environment, although the company anticipates stabilization and growth in the second half of 2025.
Government Solutions: Continued Growth
Verra Mobility's Government Solutions segment demonstrated robust 10% revenue growth, driven by a 7% increase in service revenue, largely outside of New York City. The inclusion of $3 million in product sales further boosted total revenue. Segment profit reached $30 million, highlighting the segment's profitability.
T2 Systems: Stable Performance
The T2 Systems segment, focused on parking enforcement solutions, experienced flat revenue growth year-over-year. However, it maintained a consistent segment profit of $3 million, demonstrating the segment's stability.
Outlook and Key Drivers
For the full year 2025, Verra Mobility is reaffirming its guidance, projecting total revenue between $925 million and $935 million, adjusted EBITDA between $410 million and $420 million, and adjusted EPS between $1.30 and $1.35 per share. Travel demand, currently stabilizing but potentially vulnerable to further weakening, is a key factor influencing the lower end of the guidance range. The company anticipates high single-digit growth in Government Solutions, barring any significant changes in New York City service revenue. Parking Solutions revenue is expected to remain flat year-over-year.
Valuation Considerations
Verra Mobility's current valuation metrics reflect investor optimism about the company's growth prospects. With a P/E ratio of 96.08 and a P/S ratio of 4.13, the market is clearly pricing in significant future earnings growth. However, the company's strong free cash flow yield of 5.04% suggests that investors are also recognizing the potential for strong cash generation in the coming years.