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VERRA MOBILITY Corp (VRRM)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue grew 5% YoY to $221.5M; Adjusted EBITDA rose 12% to $102.0M (46% margin), while GAAP EPS was a loss of $(0.41) due to a $97.1M non-cash goodwill impairment in Parking Solutions; Adjusted EPS increased to $0.33 .
  • 2025 guidance formalized: revenue $925–$935M, Adjusted EBITDA $410–$420M, Adjusted EPS $1.30–$1.35, FCF $175–$185M, net leverage ~2.0x; assumptions include ~163M diluted shares, 28.5–29.5% ETR, ~$110M D&A, ~$70M net interest, ~$90M capex, and ~$15M working capital use .
  • Government Solutions momentum continued with $56M of 2024 ARR wins and an expanding legislative TAM ($185M, with potential to >$300M if CA expands), while San Francisco’s speed program is slated to be fully operational in early 2025, supporting 2025 install cadence .
  • Capital allocation and balance sheet de-risking: $200M of 2024 share repurchases (including a Q4 ASR) and two term loan repricings (cumulative 100 bps spread reduction), with swap cancellation and weighted average cost of debt a little over 6% at current SOFR; net leverage ended 2024 at 2.4x .

What Went Well and What Went Wrong

  • What Went Well
    • Strength in core units: Government Solutions revenue +10% YoY (segment margin 34% vs. 26% last year) driven by product sales and lower credit loss expense; Commercial Services steady with +4% revenue and 65% margin .
    • Pipeline/TAM expansion: “30 bills” across states in 2024 expanded automated enforcement TAM (~$185M; potential >$300M with CA), with $56M incremental ARR booked in 2024; CA’s first speed program (San Francisco) targeted fully operational early 2025 .
    • Cash flow/returns: Q4 FCF $21.6M; FY24 FCF $152.8M; $200M 2024 buybacks; net leverage 2.4x with guidance to ~2.0x by YE25; debt repriced (SOFR + 2.25%) cutting spread 100 bps through 2024 .
  • What Went Wrong
    • Parking Solutions (T2) challenged: Q4 revenue down 13% YoY and margin compressed (14% vs. 22%); segment incurred a $97.1M goodwill impairment reflecting carrying value vs. current environment .
    • NYC flat in 2025 base case: largest GS customer modeled flat pending competitive RFP outcome; introduces forecasting uncertainty and defers growth leverage in a ~40% sub-segment (NYC + product) .
    • Mix and investment headwinds: 2025 margin guide ~45% (down 100 bps) from TAM execution costs (pre-revenue installs), ERP/HRIS costs ($5M non-capitalized in 1H25), and mix (CS growth tempered by TSA normalization) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$222.4 $225.6 $221.5
GAAP Diluted EPS ($)$0.20 $0.21 $(0.41)
Adjusted EPS ($)$0.31 $0.32 $0.33
Adjusted EBITDA ($M)$102.151 $104.697 $101.988
Adjusted EBITDA Margin (%)46% 46% 46%
Operating Cash Flow ($M)$40.0 $108.8 $40.5
Free Cash Flow ($M)$26.0 $85.1 $21.6

Segment performance (Revenue $M, Segment Profit $M, Margin %):

SegmentQ4 2023Q3 2024Q4 2024
Commercial Services – Revenue$94.5 $109.1 $98.7
Commercial Services – Segment Profit (Margin)$62.2 (66%) $72.9 (67%) $64.6 (65%)
Government Solutions – Revenue$94.0 $95.9 $103.2
Government Solutions – Segment Profit (Margin)$24.1 (26%) $28.1 (29%) $34.6 (34%)
Parking Solutions – Revenue$22.5 $20.6 $19.7
Parking Solutions – Segment Profit (Margin)$5.0 (22%) $3.7 (18%) $2.8 (14%)

Balance sheet and leverage:

KPIQ3 2024Q4 2024
Cash & Equivalents ($M)$206.1 $77.6
Net Debt ($M)$844.0 $968.0
Net Leverage (x)2.2x 2.4x
Share Repurchases (FY)$51.5M through 6/6; $48.5M remaining 9/30 $200.0M in FY24; ASR initiated 12/11/24

Vs. estimates: S&P Global consensus data was unavailable at query time due to API rate limits; as a result, we cannot present revenue/EPS vs. consensus for Q4 2024. We note 2025 guidance implies mid-single-digit revenue growth and modest margin compression vs. 2024 (see Guidance) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025Preliminary: growth at low end of long-term 6–8% (no range) $925–$935M Formalized numeric range
Adjusted EBITDAFY 2025Preliminary: low-to-mid single-digit $ growth vs. 2024 $410–$420M Formalized numeric range
Adjusted EPSFY 2025Not previously quantified $1.30–$1.35 New
Free Cash FlowFY 2025Not previously quantified $175–$185M New
Net LeverageFY 2025 YE“~2.0x” (2024 view) ~2.0x YE25 Maintained
Diluted Share CountFY 2025—~163M New assumption disclosed
Effective Tax RateFY 2025—28.5–29.5%; ~$65M cash taxes New assumption disclosed
D&AFY 2025—~$110M New assumption disclosed
Net Interest ExpenseFY 2025—$70M ($65M cash) New assumption disclosed
Working Capital ChangeFY 2025—Use of cash of ~$15M New assumption disclosed
CapexFY 2025—~$90M New assumption disclosed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Travel/TSA demand (CS)Robust travel; CS +10–11% revenue growth in Q2/Q3 Modeling FY25 TSA ~102.5% vs 2024; volatile start from weather/wildfires; CS seasonal cadence outlined Normalizing growth; resilient backdrop
GS legislative TAM & bookingsStrong/maturing pipeline for automated enforcement 30 bills enacted in 2024; TAM +$185M (potential >$300M with CA); 2024 ARR bookings ~$56M Strengthening TAM; execution ramp
California speed programSF approval announced (Oct) with early 2025 target SF warnings by end Q1’25; other CA city RFPs (e.g., San Jose responded) Programs transitioning into install/execution
NYC exposure2024 guide assumed NYC contract expiring 12/31/24 and extension risk 2025 model: NYC service revenue flat pending RFP outcome (40% of GS incl. product) Outcome pending; growth deferred in NYC
Parking Solutions (T2)Modest YoY declines in Q2/Q3 Q4 impairment $97.1M; 2025 revenue flat; targeting re-acceleration exiting 2025 Stabilization in 2025; rebuild for 2026
Margin outlook & investments2025 prelim: low-to-mid single-digit EBITDA growth FY25 margin guide ~45% (-100 bps) from TAM execution, ERP/HRIS ($5M), and mix Temporary pressure in 2025
Capital allocation & leverageBuybacks and refinancing activity disclosed through Q3 $200M buybacks in FY24; second repricing (-50 bps in Q4; cumulative -100 bps in 2024); YE24 net leverage 2.4x Enhanced FCF-to-buys; lower interest

Management Commentary

  • CEO framing: “We delivered a solid fourth quarter with consolidated revenue growth of 5%, adjusted EBITDA increased 12% and adjusted EPS increased 38% over the prior year period… we ended the year with net leverage of 2.4x while investing nearly $150 million to repurchase about 5 million shares in the fourth quarter.”
  • On Commercial Services growth mix: three pillars now evenly split in 2025—GDP/TSA, secular tolling penetration, and “other” (fleet, titling/registration, Europe)—vs. last year’s 50/25/25 .
  • On Government Solutions: “In the fourth quarter, we won contract awards representing about $11 million of incremental annual recurring revenue… bringing the full year incremental ARR total to $56 million.”
  • On T2 strategy: “Our goals for 2025 are to stabilize the business… rejuvenating the sales engine… anticipate flat revenue in 2025… exit '25 with strong velocity, with the goal of getting back to growth in '26.”
  • CFO on debt and interest: “Repricing… achieved a 50 bp reduction… lowering it to SOFR + 2.25%. This repricing will yield about $10M in cash savings, net of fees, over the remaining life of the debt… cumulative reduction… 100 bps over the course of 2024.”

Q&A Highlights

  • Commercial Services cadence: FY25 TSA modeled ~102.5% YoY (Q1 ~101% pace YTD through mid-Feb); CS expected to be down sequentially in Q1 vs Q4’24, then up in Q2/Q3, normal seasonality .
  • GS bookings/TAM conversion: revenue from 2024 ARR wins typically materializes over 12–18 months; service revenue outside NYC expected to grow low double digits in 2025 with sequential ramp; product revenue episodic but roughly flat YoY .
  • California pilots: RFP responded for San Jose; expecting additional RFPs (Oakland, L.A., Long Beach) over next 3–6 months .
  • NYC RFP: outcome timing is city-dependent; Q2 2025 is a “reasonable guess,” but not company-controlled .
  • GS margins: FY24 at ~31%; expecting 150–200 bps pressure in 2025 from pre-revenue installs and ERP costs; long-term “30% margin business” view reiterated .
  • Capital allocation: buybacks remain opportunistic relative to M&A valuation/discipline; strategy unchanged .
  • International tolling: positive momentum with cashless conversions in France/Italy; renewals in Spain/Portugal; trend “up and to the right” albeit slow .

Estimates Context

  • S&P Global consensus (revenue/EPS) for Q4 2024 was unavailable at query time due to API rate limits; therefore, we cannot present beat/miss vs. consensus for the quarter. Based on company guidance, 2025 revenue implies ~5–6% growth vs. 2024 ($879.2M), Adjusted EBITDA ~3% growth, and Adjusted EPS up to $1.30–$1.35 from $1.23 in 2024, suggesting modest upward revisions to EPS and FCF for 2025 as installs convert and buyback effects flow through .

Key Takeaways for Investors

  • Core health intact: CS remains resilient on travel and secular tolling penetration; GS growth broadening outside NYC with sizable legislative tailwinds; however, 2025 modeled margin dip reflects pre-revenue installs and one-time systems investments—positioning for 2026 re-acceleration .
  • Watch NYC RFP and CA pilots: NYC outcome (potential Q2 decision) is the critical swing factor; San Francisco launch and additional CA RFPs are near-term catalysts driving install activity and 2H25/2026 revenue ramps .
  • T2 stabilization narrative: 2025 is a rebuild year with flat revenue and exit-rate momentum; continued monitoring of churn, SaaS growth, and professional services pipeline is warranted .
  • Capital returns and cost of capital: 2024’s $200M buybacks and 100 bps spread reduction lower share count and interest burden; 2025 guide embeds ~$70M net interest and ~163M diluted shares—EPS leverage should continue if FCF tracks to $175–$185M and net leverage moves toward ~2.0x .
  • Near-term trading lens: Any clarity/positive surprise on NYC, stronger-than-modeled TSA, or faster CA/other installs could drive estimate revisions and stock momentum; conversely, delays in installs or NYC outcomes below expectations could pressure the multiple and 2025 margin narrative .
  • Model notes: Incorporate FY25 capex ~$90M, working capital use ~$15M, and ERP non-capitalized ~$5M 1H25; GS revenue outside NYC guided to low double-digit growth; CS seasonality normalizes with Q2/Q3 peaks .

Appendix: Additional Relevant Q4 2024 Press Releases

  • San Francisco speed safety program (first in CA): 33 camera locations; program targeted fully operational early 2025, underpinning 2025 GS installs and revenue conversion .

Source Citations

  • Q4 2024 press release and financials: .
  • 8-K (Item 2.02) including exhibits and reconciliations: .
  • Q4 2024 earnings call transcript: .
  • Prior quarters’ press releases for trend analysis: Q3 2024 ; Q2 2024 .
  • Other Q4 2024-relevant press release (San Francisco speed program): .