Shefali Tamaskar

Shefali Tamaskar asked about the trade-offs Verra Mobility considers between building AI technology internally versus partnering or potentially acquiring targets with AI capabilities.

Answer

David Roberts, Chief Executive Officer, stated that their approach is 'both and not either/or.' He anticipates a slower trend for AI's impact on autonomous vehicles over the next decade or two. Verra Mobility is open to partnering, citing the Stellantis collaboration for connected vehicle software as an example. He emphasized that they will use internal capital and innovation, as well as acquisitions and partnerships, to solve customer problems and identify key use cases.

Shefali Tamaskar, on behalf of James Faucette, asked about Verra Mobility's strategy regarding AI technology development, specifically the trade-offs between building capabilities internally versus partnering or acquiring targets with AI expertise.

Answer

David Roberts, CEO, stated that their approach is 'both and not either/or.' He anticipates AI impacting autonomous vehicles over the next decade or two, and Verra Mobility is focused on identifying use cases and problems most impacting current customers. He emphasized solving these through internal innovation, potential acquisitions, and partnerships, citing the Stellantis collaboration for software-delivered solutions in connected vehicles as an example.

Shefali Tamaskar, on for James Faucette, asked about trends in cashless toll adoption in Europe and visibility for 2025. She also inquired about demand trends for 'purpose-built' enforcement in Government Solutions and any changes to the associated economics.

Answer

CEO David Roberts noted positive momentum in Europe, with new cashless roads in France and Italy and successful customer renewals, though the overall trend remains slow. He confirmed that demand in Government Solutions is still strongest around schools and school buses, which he termed 'precious cargo,' and stated that the economics for these programs remain effectively the same.

Shefali Tamaskar, on behalf of James Faucette, asked whether the company's distribution strategy is more focused on penetrating existing partners or adding new ones, and which verticals are of primary interest.

Answer

CEO John Morris stated the strategy is "both," aiming to increase penetration with existing partners while also adding new ones, particularly enterprise software platforms where payments can be embedded. CFO Tim Murphy noted that penetration is still low (under 10% for some partners), representing a significant opportunity. Morris highlighted the multi-year opportunity in B2B payables within enterprise software platforms.

Shefali Tamaskar, on behalf of James Faucette at Morgan Stanley, asked for a more detailed breakdown of the drivers for the high single-digit organic growth guidance, including the mix of new versus existing business. She also asked for confirmation on the expected annual pace of acquisitions.

Answer

Executive Clay Whitson broke down the growth drivers, starting with their 100% net dollar retention figure. He noted that including payments would likely add 2-3%, potential price increases could add 1-2% in the future, and the remainder would come from new logos. CEO Gregory Daily confirmed that an expectation of 3 to 5 acquisitions per year remains appropriate, though he cautioned that the timing is opportunistic and can be lumpy.

Shefali Tamaskar, on for James Faucette, inquired about the macroeconomic outlook for 2025, the general health of customers, and the company's confidence in achieving its high single-digit organic growth target.

Answer

An executive noted very consistent and increasing demand in the public sector for modern, web-native applications, driven by clients' own staffing constraints. Executive Clay Whitson expressed confidence in the high single-digit organic growth for FY25, attributing it to the reversal of several FY24 headwinds, including the Manitoba project delay, a $5 million impact from the SaaS transition, and lapping state subsidies in the education vertical.