Executive Summary

Q1 2025 delivered above-plan results: revenue $223.3M (+6% YoY), Adjusted EPS $0.30 (+11% YoY), and Adjusted EBITDA $95.4M (43% margin), while GAAP diluted EPS was $0.20 .
The company reaffirmed full-year 2025 guidance (Revenue $925–$935M, Adjusted EBITDA $410–$420M, Adjusted EPS $1.30–$1.35, FCF $175–$185M), but flagged macro uncertainty and possible drift to the lower end if travel softens .
Key positive catalysts: NYCDOT identified VRRM as the vendor for NYC’s automated enforcement camera programs (expected five-year term post-Dec 2025) and a robust Government Solutions bookings pipeline; management will withhold further details until contract finalization .
Risk watch: commercial travel demand showed modest deceleration exiting April/into May; management now assumes flattish-to-slightly lower TSA volumes through 2H25, which would bias Commercial Services growth lower and guidance toward the low end .

What Went Well and What Went Wrong

What Went Well

Broad-based growth: total revenue +6% YoY to $223.3M, with Commercial Services +6% and Government Solutions +8%; Parking Solutions +2% on stronger product sales .
Strong profitability and cash conversion: Adjusted EPS up to $0.30; Adjusted EBITDA $95.4M (43% margin); Free Cash Flow $41.7M more than doubled YoY, aided by improved working capital dynamics .
Pipeline/strategic positioning: “We delivered a strong first quarter with all key financial measures ahead of our internal expectations,” and NYC DOT identified VRRM as vendor for a five-year automated enforcement program; bookings added ~$6M incremental ARR in Q1, $52M TTM, with ~97–98% renewal rates .

What Went Wrong

Macro exposure: management highlighted uncertainty in travel demand and consumer confidence; TSA volumes were ~+1% in Q1, flattish in early Q2, and trending “a bit lower” in May; guidance reaffirmed but skewed to the lower end if travel softens further .
Segment margin pressure: Government Solutions margins fell to ~29% (vs 31% prior year) on increased marketing/business development, project implementation, and ERP implementation costs .
Credit expense and ERP costs in Commercial Services: segment profit +4% lagged revenue +6%, reflecting ERP-related expense and a nonrecurring write-down of aged receivables .

Financial Results

Quarterly Trend (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$225.6	$221.5	$223.254
Diluted EPS (GAAP)	$0.21	$(0.41)	$0.20
Adjusted EPS ($)	$0.32	$0.33	$0.30
Adjusted EBITDA ($USD Millions)	$104.697	$101.988	$95.440
Adjusted EBITDA Margin (%)	46%	46%	43%
Free Cash Flow ($USD Millions)	$85.111	$21.640	$41.722

Q1 YoY Comparison

Metric	Q1 2024	Q1 2025
Revenue ($USD Millions)	$209.730	$223.254
Service Revenue ($USD Millions)	$202.721	$211.902
Product Sales ($USD Millions)	$7.009	$11.352
Net Income ($USD Millions)	$29.149	$32.339
Diluted EPS (GAAP) ($)	$0.17	$0.20
Adjusted EPS ($)	$0.27	$0.30
Adjusted EBITDA ($USD Millions)	$92.778	$95.440
Adjusted EBITDA Margin (%)	44%	43%
Cash from Operations ($USD Millions)	$34.332	$62.965
Free Cash Flow ($USD Millions)	$20.053	$41.722

Consensus vs Actual (Q1 2025)

Values retrieved from S&P Global.

Metric	Consensus	Actual	Surprise
Primary EPS (S&P normalized)* ($)	0.1868*	0.30*	+60.6%*
Revenue ($USD Millions)*	216.941*	223.254	+2.9%*

Segment Breakdown (Q1 2025 vs Q1 2024)

Segment	Rev Q1 2024 ($M)	Rev Q1 2025 ($M)	YoY %	Segment Profit Q1 2024 ($M)	Segment Profit Q1 2025 ($M)	Margin Q1 2024	Margin Q1 2025
Commercial Services	95.9	101.4	+6%	60.8	63.1	63%	62%
Government Solutions	94.2	101.8	+8%	29.2	29.4	31%	29%
Parking Solutions	19.7	20.0	+2%	2.8	2.9	14%	15%

KPIs / Balance Sheet

Metric	Q4 2024	Q1 2025
Cash and Equivalents ($USD Millions)	$77.560	$108.453
Net Debt ($USD Millions)	$968.008	$934.861
Net Leverage (x)	2.4x	2.3x
Cash from Operations ($USD Millions)	$40.487	$62.965
Capex (Install/Service Parts + PPE, $USD Millions)	$18.847	$21.243

Guidance Changes

Metric	Period	Previous Guidance (Feb 27, 2025)	Current Guidance (May 7, 2025)	Change
Total Revenue	FY 2025	$925M–$935M	$925M–$935M	Maintained
Adjusted EBITDA	FY 2025	$410M–$420M	$410M–$420M	Maintained
Adjusted EPS	FY 2025	$1.30–$1.35	$1.30–$1.35	Maintained
Free Cash Flow	FY 2025	$175M–$185M	$175M–$185M	Maintained
Net Leverage	FY 2025	≈2.0x	Not reiterated	Not reiterated

Underlying assumptions remain unchanged: weighted avg diluted shares ~163M; effective tax rate 28.5–29.5%; D&A ~$110M; total interest expense ~~$70M (~~$65M cash interest); working capital use ~$15M; capex ~$90M .

Earnings Call Themes & Trends

Topic	Q3 2024 (10/31)	Q4 2024 (2/27)	Q1 2025 (5/7)	Trend
Travel demand & Commercial Services	Strong travel demand; CS +11% YoY; preliminary 2025 outlook at low end of long-term growth	Resilient travel demand supported Q4; debt repriced, interest lower	TSA +1% in Q1; flattish early Q2; modest deceleration assumed for 2H25; CS guide could slip below high-single-digit if travel weakens	Cautious near-term
NYCDOT contract	NYC contract expiring 12/31/24; risk/extension noted	NYC extended through 12/31/25; RFP competitive risk	NYCDOT identified VRRM as vendor for expected 5-year term; negotiations ongoing; 60–90 day timeline for more clarity	Positive positioning
Government Solutions pipeline/ARR	Robust bid pipeline; GS +6% revenue; margins ~29%	Bookings strong; GS +10% revenue in Q4	~$6M ARR booked in Q1; $52M TTM; ~97–98% renewals; GS service revenue +4% YoY, product sales +$3.9M	Strengthening
Parking Solutions (T2)	Turnaround underway; segment profit +6%	Goodwill impairment $97.1M; exits 2025 on strong run-rate expected	Q1 revenue +2%; SaaS growth offset by lower professional services; management change improving execution	Gradual improvement
Tariffs/Macro	N/A	N/A	Direct tariff impact expected immaterial; indirect impact via consumer/business spend could affect travel	Watchlist
ERP implementation	N/A	N/A	ERP mostly live; on schedule/on budget; some costs impacted segments	Near completion

Management Commentary

“We delivered a strong first quarter with all key financial measures ahead of our internal expectations… we are maintaining our Full-Year 2025 financial guidance; however… there is risk of trending towards the lower-end of the ranges” — David Roberts, CEO .
“NYCDOT identified Verra Mobility as the vendor to manage New York City's automated enforcement safety programs for what is expected to be a 5-year period… negotiations… ongoing.” — David Roberts .
“Our Q1 performance exceeded internal expectations… Adjusted EPS… growth was driven by an increase in adjusted EBITDA, a sustained reduction in interest expense… and share repurchases.” — Craig Conti, CFO .
“We are experiencing a broader pullback in consumer confidence… TSA volume increased about 1%… second quarter to date is about 100%… we’ve incorporated a modest deceleration of travel volumes in the second half of 2025.” — David Roberts .

Q&A Highlights

NYCDOT timeline: management expects the contract to be finalized with greater clarity within 60–90 days; will refrain from additional disclosures until executed .
Travel demand softness: TSA volumes flattish-to-slightly lower as of May; guidance assumes flattish or 1–2 points worse; would reassess if a material drop occurs (e.g., recession) .
RAC tolling vs TSA: performance depends on travel in toll-heavy states (5 states account for two-thirds to ~80% of revenue), so TSA isn’t a perfect proxy .
Government Solutions margin trajectory: near-term costs (marketing/BD, implementations, ERP) weigh on margins, but legislative tailwinds and expanding TAM (including California) support multi-year opportunity .
Parking Solutions (T2) execution: new leadership, tighter KPIs/cadence driving early improvement; SaaS recurring up ~5% YoY despite lower installation/pro services .
Leverage philosophy: long-term target ~3.0x net leverage (reduced from 3.5x in 2022), flexible to macro conditions .

Estimates Context

Q1 2025 beat vs S&P Global consensus: Revenue $223.254M vs $216.941M (+2.9%); Primary EPS (normalized/adjusted) $0.30 vs $0.1868 (+60.6%). This reflects robust Commercial Services activity and stronger product sales, alongside lower interest expense post debt repricing *.
Outlook on revisions: Management reaffirmed FY25 guidance but signaled macro risk to the lower end if travel softens, which may temper upward estimate revisions for Commercial Services; Government Solutions’ ARR/bookings strength supports stability or upside in recurring revenue forecasts .

Values retrieved from S&P Global.*

Key Takeaways for Investors

Q1 print was clean and above plan: revenue and Adjusted EPS both beat consensus; free cash flow strength supports deleveraging, buybacks (ASR settled in Q1), and flexibility *.
Guidance maintained, but management is openly cautious on travel; positioning suggests limited downside if TSA is flattish and Government Solutions executes its backlog .
Strategic contract with NYCDOT is a potential multi-year visibility catalyst; near-term news flow (next 60–90 days) could be stock-moving .
Government Solutions has legislative tailwinds (California programs, high renewals) and growing ARR; watch conversion to revenue over 12–18 months .
Parking Solutions (T2) operational improvements and SaaS momentum help offset professional services pressure; 2024 goodwill impairment is behind them .
Lower interest expense post-refinancing is visible in EPS; ERP implementation nearing completion should remove a cost headwind in 2026 planning .
Near-term trading: strength on NYC and bookings headlines; weakness likely on macro travel downticks; medium-term thesis anchored by recurring revenue growth, disciplined leverage, and strong cash generation .

VERRA MOBILITY Corp (VRRM)·Q1 2025 Earnings Summary