Q4 2025 Verra Mobility Corp Earnings Call

February 24, 2026

Reference call my name is Michelle and I will be your conference operator. Today at this time, all participants are in a listen-only mode.

Operator: Good afternoon, ladies and gentlemen, and welcome to Verra Mobility's Q4 and year-end 2025 Earnings Conference Call. My name is Michelle, and I will be your conference operator today. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like to turn the presentation over now to your host for today's call, Mark Zindler, Vice President of Investor Relations for Verra Mobility. Please go ahead, Mr. Zindler.

After the speaker's presentation, there will be a question and answer session to ask a question during the session. You will need to press star 1 on your telephone. You will then hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 1 again, please be advised. That today's conference is being recorded.

I would like to turn the presentation over now to your host. For today's call Mark zindler. Vice president of investor relations for verra Mobility. Please, go ahead, Mr. Zindler,

Thank you. Good afternoon and welcome to verm mobilities, fourth quarter and full year 2025 earnings call.

Today, we'll be discussing the results announced in our press release issued after the market closed along, with our earnings presentation, which is available on the investor relations section of our website at Irv mobility.com.

With me on the call or David Roberts, there are Mobility is chief executive officer and Craig Conti our Chief Financial Officer.

David will begin with prepared remarks. Followed by Craig, and then we'll open up the call for Q&A.

Mark Zindler: Thank you. Good afternoon, and welcome to Verra Mobility's Q4 and full year 2025 Earnings Call. Today, we'll be discussing the results announced in our press release, issued after the market closed, along with our earnings presentation, which is available on the investor relations section of our website at ir.verramobility.com. With me on the call are David Roberts, Verra Mobility's Chief Executive Officer, and Craig Conti, our Chief Financial Officer. David will begin with prepared remarks, followed by Craig. Then we'll open up the call for Q&A. Management may make forward-looking statements during the call regarding future events and expectations, anticipated future trends and the anticipated future performance of the company. We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.

Management may make forward-looking statements during the call regarding future events and expectations. Anticipated future Trends in the anticipated future performance of the company.

We caution you that such statements are not guarantees of future performance. And involve risks and uncertainties that are difficult to predict.

Actual results May differ materially from those projected in the forward-looking statements due to a variety of risk factors. These factors are described in our SEC filings.

Please refer to our earnings press release and investor presentation for our cautionary. Note on forward-looking statements.

Any forward-looking statements that we make on this. Call are based on our beliefs and assumptions today and we do not undertake any obligation to update for lithium statements.

Mark Zindler: Actual results may differ materially from those projected in the forward-looking statements due to a variety of risk factors. These factors are described in our SEC filings. Please refer to our earnings press release and investor presentation for our cautionary note on forward-looking statements. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, and we do not undertake any obligation to update forward-looking statements. Finally, during today's call, we'll refer to certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in our earnings release, quarterly earnings presentation, and investor presentation, all of which can be found on our website at ir.verramobility.com. With that, I'll turn the call over to David.

Finally, during today's call, we'll refer to certain non-gaap Financial measures. A Reconciliation of these non-gaap measures to the most directly comparable. Gaap measure is including our earnings, release quarterly, earnings presentation and investor presentation. All of which can be found on our website at Irv mobility.com.

With that, I'll turn the call over to David.

Thank you, Mark. And thanks everyone for joining us. We closed 2025 with strong execution and momentum across our 3 business segments.

Total revenue for the fourth quarter, increased 16% from the fourth quarter of 2024.

Exceeding. Our internal expectations, while adjusted ibida and adjusted EPS were generally in line with our internal expectations.

David Roberts: Thank you, Mark, and thanks everyone for joining us. We closed 2025 with strong execution and momentum across our three business segments. Total revenue for Q4 increased 16% from Q4 2024, exceeding our internal expectations, while adjusted EBITDA and adjusted EPS were generally in line with our internal expectations. Looking ahead to 2026 and beyond, we are executing against a focused value creation strategy designed to strengthen our core, enhance profitability, and position Verra Mobility for durable long-term growth. In the near term, we are driving operational discipline, sharpening our portfolio focus, and anticipate expanding margins in 2027 and beyond. We are allocating capital and prioritizing resources against the highest return opportunities. Our priorities are clear: deliver predictable, profitable growth while strengthening margin performance over the long term.

Looking at 2026 and Beyond. We are executing against a focused value. Creation strategy, designed to strengthen our core and enhance profitability and position bear Mobility for durable long-term growth.

In the near term, we are driving operational discipline, sharpening our portfolio. Focus and anticipate expanding margins in 2027 and Beyond.

We are allocating capital and prioritizing resources against the highest return opportunities.

Our priorities are clear deliver predictable profitable growth, while strengthening margin performance over the long term.

At the same time we are investing with intent to extend our leadership and unlock long-term value. We are modernizing our technology platforms, including advancing Mosaic our secure cloud-based end-to-end automated enforcement solution in Government Solutions and accelerating development of our connected vehicle platform in Commercial Services.

The future of Mobility is safe, smart and connected cities and fleets are moving in that direction and we are building the capabilities to lead that transition.

These Investments are disciplined aligned with customer demand and design to drive durable, competitive advantage and sustained shareholder value.

David Roberts: At the same time, we are investing with intent to extend our leadership and unlock long-term value. We are modernizing our technology platforms, including advancing Mosaic, our secure, cloud-based, end-to-end automated enforcement solution in Government Solutions, and accelerating development of our connected vehicle platform in Commercial Services. The future of mobility is safe, smart, and connected. Cities and fleets are moving in that direction, we are building the capabilities to lead that transition. These investments are disciplined, aligned with customer demand, and designed to drive durable competitive advantage and sustained shareholder value. Before I transition to our operating results, I'll start with an update on our automated photo enforcement contract with the city, excuse me, with New York City Department of Transportation. I'm pleased to report that we signed and registered our contract at the end of December 2025.

Before I transition to our operating results, I'll start with an update on our automated quote, unfortunate contract with the city. Excuse me, with New York City Department of Transportation. I'm pleased to report that we signed and registered our contract at the end of 2025 at the end of December 2025.

The total contract value. Now stands at 900 and 998 million over a 5-year period and includes an option for a 5-year renewal

Under our, then existing contract that's in, uh, New York City Department of Transportation. We generated 22 million of Revenue attributable to the red light camera installations in the fourth quarter of 2025 of which approximately 14 million was installation, services revenue, and about 8 million was product Revenue.

David Roberts: The total contract value now stands at $998 million over a 5-year period and includes an option for a 5-year renewal. Under our then existing contract with New York City Department of Transportation, we generated $22 million of revenue attributable to the red light camera installations in Q4 2025, of which approximately $14 million was installation services revenue and about $8 million was product revenue. Next, I'll move on to a macro view of each of our segments, starting with Government Solutions, which we consider our primary value creation engine due to the expanding addressable market and our competitive positioning. Moreover, we are poised for margin expansion in 2027 and beyond via the deployment of the Mosaic platform to support the event processing requirements of our global enforcement programs.

To a macro view of each of our segments, starting with Government Solutions, which we consider our primary value creation engine, due to the expanding addressable market. And our competitive positioning, We are continuing to deliver strong growth and high win rates. Moreover, we are poised for margin expansion in 2027 and Beyond via the deployment of the Mosaic platform to support the event processing requirements of our Global enforcement programs.

Under our then-existing contract, in, uh, New York City Department of Transportation, we generated $22 million of revenue attributable to the red light camera installations in the fourth quarter of 2025, of which approximately $14 million was installation services revenue, and about $8 million was product revenue.

Starting with growth and high win rates in the fourth quarter of 2025 Government Solutions. Total revenue. Increased 25% over the fourth quarter of 2024 driven primarily by the New York City, red light expansion.

Additionally, we entered into bookings of about 23 million of incremental, annual recurring Revenue based on a full run rate.

Bringing the full year 2025 total to about 64 million dollars in bookings.

Next, I'll move on to a macro view of each of our segments, starting with Government Solutions, which we consider our primary value creation engine, due to the expanding addressable market and our competitive positioning. We are continuing to deliver strong growth and high win rates. Moreover, we are positioned for margin expansion in 2027 and beyond via the deployment of the Mosaic platform to support the event processing requirements of our global enforcement programs.

David Roberts: Starting with growth and high win rates in Q4 2025, Government Solutions' total revenue increased 25% over Q4 2024, driven primarily by the New York City red light expansion. Additionally, we entered into bookings of about $23 million of incremental annual recurring revenue based on a full run rate, bringing the full year 2025 total to about $64 million in bookings. Notable Q4 bookings include a school zone speed program in Orlando, Florida, a red light enforcement program in Pittsburgh, Pennsylvania, and a speed enforcement program across the state of Hawaii. These recent wins reinforce our structural advantage serving cities and public sector partners.

Notable fourth quarter bookings. Include a school zone speed program, in Orlando, Florida, our red light enforcement program in Pittsburgh Pennsylvania and the speed enforcement program across the state of Hawaii.

These recent ones, reinforced, our structural Advantage, serving cities and public sector partners.

Starting with growth and high win rates in the fourth quarter of 2025 Government Solutions. Total revenue increased 25% over the fourth quarter of 2024, driven primarily by the New York City red light expansion.

Additionally, we entered into bookings of about 23 million of incremental, annual recurring Revenue based on a full run rate.

Bringing the full year 2025 total to about 64 million in bookings.

Moreover, our adjustable Market in the US is expanded by approximately 365 million due to new enabling legislation over the past 3 years with the potential to expand to about 500 million dollars. If California passes additional enabling legislation for the Statewide deployment of speed enforcement,

Notable fourth quarter bookings include a school zone speed program in Orlando, Florida; our red light enforcement program in Pittsburgh, Pennsylvania; and a speed enforcement program across the state of Hawaii.

These recent wins reinforced our structural advantage serving cities and public sector partners.

David Roberts: Moreover, our adjustable market in the US has expanded by approximately $365 million due to new enabling legislation over the past three years, with the potential to expand to about $500 million if California passes additional enabling legislation for the statewide deployment of speed enforcement. That said, we recognize there continues to be legislative activity and ongoing public debate about automated enforcement programs, including new state and local laws enabling speed and stop arm camera programs, and ongoing discussion over the role of automated tools in traffic safety. We remain confident in our business, given the wide body of evidence showing these systems successfully change driver behavior and improve safety. Speed cameras contribute to significant declines in violations, as well as a 14% reduction in crashes in major cities.

That said we recognize there continues to be a legislative activity and ongoing public debate about automated enforcement programs, including new state and local laws enabling speed and stop arm camera programs and ongoing discussion over the role of automated tools and traffic safety. But we remain confident in our business given the wide body of evidence showing these systems successfully change, driver behavior, and improve safety.

Speed cameras, contribute to a significant decline in violations, as well as a 14% reduction in crashes in major cities.

That said, we recognize that there continues to be legislative activity and ongoing public debate about automated enforcement programs, including new state and local laws enabling speed and stop arm camera programs and ongoing discussion over the role of automated tools in traffic safety. But we remain confident in our business given the wide body of evidence showing these systems successfully change driver behavior and improve safety.

David Roberts: National safety authorities, including the United States Department of Transportation's Federal Highway Administration and the National Highway Traffic Safety Administration, recognize that automated speed enforcement is a proven safety countermeasure that can reduce fatalities and serious injuries by meaningful margins. Moreover, the vast majority of automated enforcement programs are cost-neutral to our customers, as we incur the costs of the cameras and installation costs in most deployments, and remaining cash outlays are paid for via self-funding mechanisms. We also prioritize data privacy, compliance, and transparency in every implementation, and we will continue partnering with local authorities to create safer streets and better outcomes for the communities with which we serve. Our School Bus Stop Arm Safety Program is a standout example. Clear safety outcomes, coupled with strong customer adoption and durable long-term demand, as well as public acceptance.

Speed cameras, contribute to a significant decline in violations, as well as a 14% reduction in crashes and major cities.

National Safety authorities, including the United States Department of transportation's Federal Highway Administration and the national highway traffic safety administration. Recognized that automated speed enforcement is a proven safety countermeasure that can reduce fatalities and serious injuries by meaningful margins. Moreover, the vast majority of automated enforcement programs are cost-neutral to our customers as we incur the cost of the cameras and installation costs in most Employments and remaining cash allies are paid for via cell funding mechanisms. We also prioritize data privacy compliance, and transparency, in every implementation, and we will continue partnering with local authorities to create safer streets and better outcomes for the communities with which we serve

Our school bus stop arm. Safety program is a standout example player, safety outcomes, coupled with strong customer, adoption, and durable. Long-term demand as well as public Acceptance. In fact, we recently shared the results of a consumer survey. We conducted late last year, we showed 82% of respondents supported safety cameras to Monitor, and penalize drivers, who illegally, pass stopped school buses and 70% of respondents favor automated enforcement in school zones,

automated enforcement Reigns, a core Catalyst for driver safety which continues to be a top public priority.

National Safety authorities, including the United States Department of Transportation Federal Highway Administration and the national highway traffic safety administration. Recognized that automated speed enforcement is a proven safety countermeasure that can reduce fatalities and serious injuries by meaningful margins. Moreover, the vast majority of automated enforcement programs are cost neutral to our customers as we incur the cost of the cameras and installation costs in most Employments and remaining cash alleys are paid for Via self-funding mechanisms. We also prioritize data privacy compliance, and transparency, in every implementation. And we will continue partnering with local authorities to create safer streets and better outcomes for the communities with which we serve

Next, I will turn to our Parking Solutions business for T2 systems in summary. T2 is stable improving and being invested in thoughtfully.

David Roberts: In fact, we recently shared the results of a consumer survey we conducted late last year, which showed 82% of respondents supported safety cameras to monitor and penalize drivers who illegally pass stopped school buses, and 70% of respondents favor automated enforcement in school zones. Automated enforcement remains a core catalyst for driver safety, which continues to be a top public priority. Next, I will turn to our Parking Solutions business, or T2 Systems. In summary, T2 is stable, improving, and being invested in thoughtfully. Q4 total revenue increased 5% over the year, prior year quarter, in line with our internal expectations. In 2025, T2 performed in line with its internal plan, along with an improving outlook.

Fourth quarter, total revenue. Increased 5% over the year prior year quarter in line with our internal expectations.

Our school bus stop arm. Safety program is a standout example player, safety outcomes, coupled with strong customer, adoption, and durable. Long-term demand as well as public Acceptance. In fact, we recently shared the results of our consumer survey. We conducted late last year, we showed 82% of respondents supported safety cameras to Monitor, and penalize drivers, who illegally, pass stopped school buses and 70% of respondents favor automated enforcement in school zones,

In 2025 T2 performed in line with its internal plan, along with an improving Outlook. We are seeing early signs of momentum primarily in the context of decreasing customer churn. While growth is primarily driven by SAS bookings and investment in the transaction based business area.

Automated enforcement Reigns, a core Catalyst for driver safety which continues to be a top public priority.

Our operational focus is twofold and pre improving utilization and monetization of our SAS and transaction. Based Revenue model coupled with disciplines self-funded growth.

Next, I will turn to our Parking Solutions business for T2 systems in summary. T2 is stable improving and being invested in thoughtfully.

Fourth quarter, total revenue. Increased 5% over the year prior year quarter in line with our internal expectations.

Moving on to Commercial Services, fourth quarter revenue, and segment profit increase about 10% and 7% respectively, over the prior year period.

David Roberts: We are seeing early signs of momentum, primarily in the context of decreasing customer churn, while growth is primarily driven by SaaS bookings and investment in the transaction-based business area. Our operational focus is twofold: improving utilization and monetization of our SaaS and transaction-based revenue model, coupled with disciplined self-funded growth. Moving on to Commercial Services, Q4 revenue and segment profit increased about 10% and 7%, respectively, over the prior year period. Rental car or rack tolling increased 16% over the prior year period, driven by increased travel volume and product adoption, as well as higher tolling activity compared to the Q4 of last year.

In 2025, C2 performed in line with its internal plan along with an improving Outlook. We are seeing early signs of momentum primarily in the context of decreasing customer churn. While growth is primarily driven by SAS bookings and investment in the transaction based business area.

Rental car or rack telling increased 16% over the prior year period driven by increased travel volume and product adoption as well as higher tolling activity compared to the fourth quarter of last year. The growth in rack tooling was partially offset by a decline in Fleet Management revenue of about 8% compared to the fourth quarter of 2024 due to the prior period. Customer turn. We had discussed in our second quarter earnings call.

Our operational focus is twofold and pre improving utilization and monetization of our SAS and transaction based Revenue model coupled with disciplined self-funded growth.

Percent respectively over the prior year period.

Strategically Commercial Services remains a durable cash Center to business with clear competitive advantage, while the operating environment is more normalized. Relative to recent years. We believe that the fundamentals of the business remains solid

David Roberts: The growth in rack tolling was partially offset by a decline in fleet management revenue of about 8% compared to Q4 2024, due to the prior period customer churn we had discussed in our Q2 earnings call. Strategically, Commercial Services remains a durable cash generative business with clear competitive advantage. While the operating environment is more normalized relative to recent years, we believe that the fundamentals of the business remain solid. For 2026, we expect mid-single-digit revenue growth. We expect TSA volumes to grow modestly compared to 2025 levels, and FMC revenue is expected to grow mid-single digits, reflecting the impact of prior year period churn in the first half of 2025. Importantly, the segment continues to generate significant free cash flow to support reinvestment and capital return.

25.

Importantly, the segment continues to generate significant free cash flow to support reinvestment in capital return.

Rental car or rack tolling increased 16% over the prior year period, driven by increased travel volume and product adoption, as well as higher tolling activity compared to the fourth quarter of last year. The growth in rack tolling was partially offset by a decline in Fleet Management revenue of about 8% compared to the fourth quarter of 2024, due to the prior period customer churn we had discussed in our second quarter earnings call.

Strategically Commercial Services remains a durable Cash, Generator to business with clear competitive advantage, while the operating environment is more normalized. Relative to recent years. We believe that the fundamentals of the business remains solid

While long-term growth, expectations are more moderate than prior outlooks. We see a clear and achievable path to sustained. Mid single-digit growth. The drivers remain balanced and resilient roughly 1/3 from travel volume growth. 1/3 from structural secular Tailwinds, and 1/3 from focused growth initiatives. Expand our value proposition

Or part. We're particularly excited about the future of connected payments through our partnership with Selena, which we believe will improve the driving experience and simplify and vehicle payment processes.

For 2026 we expect mid single digit, Revenue growth. We expect TSA volumes to grow modestly compared to 2025 levels and FMC revenues, expected to grow, mid single digits reflecting, the impact of Prior year period churn. In the first half of 2025, importantly, the segment continues to generate significant free cash flow to support. Reinvestment in capital return.

David Roberts: While long-term growth expectations are more moderate than prior outlooks, we see a clear and achievable path to sustained mid-single-digit growth. The drivers remain balanced and resilient, roughly one-third from travel volume growth, one-third from structural secular tailwinds, and one-third from focused growth initiatives that expand our value proposition. We're particularly excited about the future of connected payments through our partnership with Stellantis, which we believe will improve the driving experience and simplify in-vehicle payment processes. In the near term, especially over the next 2 years, we are taking a more cautious view due to softer anticipated travel volumes, reduced European travel to the United States, and expected fleet reductions among our rental car customers. Should macro conditions improve and fleet levels recover faster than expected, there remains potential to perform above this baseline.

In the near term, especially over the next 2 years. We are taking a more cautious view. Due to software. Anticipated travel volumes reduced European travel to the United States and expected Fleet reductions among our rental car. Customers should macro conditions improve and Fleet levels recover faster than expected. There remains potential to perform above this. This Baseline.

While long-term growth expectations are more moderate than prior outlooks, we see a clear and achievable path to sustained mid single-digit growth. The drivers remain balanced and resilient—roughly one-third from travel volume growth, one-third from structural secular tailwinds, and one-third from focused growth initiatives that expand our value proposition.

And Commercial Services. We are sharpening our execution serving customers at their highest point of need and reinforcing cost discipline and prioritizing profitability and cash generation. We are positioning the business to deliver consistent high-quality earnings over time.

Or partial or particularly excited about the future of connected payments, through our partnership with stellantis, which we believe will improve the driving experience and simplify and vehicle payment processes.

In the near term, especially over the next two years, we are taking a more cautious view due to software, anticipated travel volumes, reduced European travel to the United States, and expected fleet reductions among our rental car customers.

Moving on to Capital deployments and portfolio focus, our approach to Capital employment remains disciplined. And clearly prioritized, first, we continue to allocate Capital toward areas of the business where we see the strongest growth and returns including programs like school, bus, stop arm enforcement or demand, safety outcomes, and long-term economics are compelling

David Roberts: In Commercial Services, we are sharpening our execution, serving customers at their highest point of need, and reinforcing cost discipline and prioritizing profitability and cash generation. We're positioned to best deliver consistent, high-quality earnings over time. Moving on to capital deployment and portfolio focus. Our approach to capital deployment remains disciplined and clearly prioritized. First, we continue to allocate capital toward areas of the business where we see the strongest growth in returns, including programs like School Bus Stop Arm Enforcement, where demand, safety outcomes, and long-term economics are compelling. Second, we are actively evaluating M&A opportunities that can accelerate growth or advance our capabilities in key areas, along with safe, smart, and connected themes, with a strong focus on strategic fit and return on invested capital.

Should macro conditions improve and Fleet levels recover faster than expected. There remains potential to perform above this thing. Just Baseline

Second, we are actively evaluating m&a opportunities that can accelerate growth or Advance our capabilities in key areas along with safe smart and connected themes with a strong focus on strategic fit and return on invested capital.

in Commercial Services, we are sharpening our execution serving customers at their highest point of need and reinforcing cost discipline and prioritizing profitability and cash generation. We are positioned to business delivered. Consistent high-quality earnings over time

Moving on to Capital deployment and portfolio Focus.

Our approach to capital employment remains disciplined, and clearly prioritized. First, we continue to allocate capital toward areas of the business where we see the strongest growth and returns, including programs like school bus, stop arm enforcement, where demand, safety outcomes, and long-term economics are compelling.

Third share repurchases remain an available tool within our Capital, allocation framework. And we have returned over 650 million dollars to shareholders through BuyBacks over the past 5 years across all capital deployment decisions. We are sharpening our portfolio to maximize performance and businesses that are already growing and to improve Returns on invested Capital allocating Capital with greater focus and selectivity. We believe this discipline supports both near-term margin performance and long-term strategic flexibility.

David Roberts: Third, share repurchases remain an available tool within our capital allocation framework. We have returned over $650 million to shareholders through buybacks over the past five years. Across all capital deployment decisions, we are sharpening our portfolio to maximize performance in businesses that are already growing and to improve returns on invested capital, allocating capital with greater focus and selectivity. We believe this discipline supports both near-term margin performance and long-term strategic flexibility. As we look ahead, particularly around AI and autonomous vehicles and the evolving fleet landscape, we're focused less on defining specific products today and more about the problem spaces where we believe we are structurally advantaged.

Second, we are actively evaluating M&A opportunities that can accelerate growth or advance our capabilities in key areas, along with Safe, Smart, and Connected themes, with a strong focus on strategic fit and return on invested capital.

As we look ahead particularly around Ai and autonomous vehicles and the evolving Fleet landscape, we're focused Less on defining specific products today and more about the problem spaces where we believe we are. Structurally advantaged, as Mobility becomes more autonomous connected and data driven cities and police alike will face fundamental changes in how safety compliance enforcement governance and transactions are managed in. And those are areas where already operating at scale with trusted relationships.

Sir share repurchases remain and available tool within our Capital, allocation framework. And we have returned over 650 million dollars of shareholders through BuyBacks over the past 5 years across all capital deployment decisions, we are sharpening our portfolio to maximize performance and businesses that are already growing and to improve Returns on invested Capital allocating Capital with greater focus and selectivity. We believe this discipline supports both near-term margin performance and long-term strategic flexibility.

David Roberts: As mobility becomes more autonomous, connected, and data-driven, cities and fleets alike will face fundamental changes in how safety, compliance, enforcement, governance, and transactions are managed. Those are areas where we're already operating at scale with trusted relationships. We're taking an intentional but very disciplined approach, building capabilities, working closely with cities and fleet operators, and investing in learning before committing significant capital. As mobility transitions from individually driven vehicles to software-directed vehicles, value accrues to the systems that enable safe, efficient, and compliant access to the road. These are exactly the environments in which Verra Mobility operates today, which we believe creates a long-term structural tailwind as autonomy continues to advance. In conjunction with these trends, we're expecting to increase R&D spending in these areas. The financial guidance that Craig will discuss incorporates the spending.

We're taking an intentional but very disciplined approach. Building capabilities, working closely with cities and Fleet operators and investing in learning before committing significant Capital as Mobility transitions from individually driven vehicles to software directed Vehicles value. Crews to the systems that enable safe, efficient and compliant access to the road.

As we look particularly around AI and autonomous vehicles and the evolving fleet landscape, our focus is less on defining specific products today and more about the problem spaces where we believe we are structurally advantaged. As mobility becomes more autonomous, connected, and data-driven, cities and fleets alike will face fundamental changes in how safety, compliance, enforcement, governance, and transactions are managed in. And those are areas where we are already operating at scale with trusted relationships.

These are exactly the environments in which their Mobility operates today, which we believe creates a long-term structural Tailwind as autonomy continues to advance in conjunction with these Trends. We're expecting to increase R&D spending in these areas and the financial guidance, that Craig will discuss incorporates the spending. Craig, I'll turn over you to guide us through our financial results, Capital deployment, and 2026 guides.

Thank you, David and hello everyone, we appreciate you joining us on the call today, let's turn this slide forward which outlines the key financial measures for the Consolidated Business Report order.

Our Q, our Q4 Revenue performance, which included 14% service Revenue growth in 16% total revenue, growth year-over-year exceeded. Our internal expectations.

David Roberts: Craig, I'll turn it over to you to guide us through our financial results, capital deployment, and 2026 guidance.

These are exactly the environments in which their Mobility operates today, which we believe creates a long-term structural Tailwind as autonomy continues to advance in conjunction with these Trends. We're expecting to increase R&D spending in these areas and the financial guidance. That Craig will discuss incorporates the spending

Credit alternative view to guide us through our financial results, Capital deployment in 2026 guides.

Craig Conti: Thank you, David, and hello, everyone. We appreciate you joining us on the call today. Let's turn to slide 4, which outlines the key financial measures for the consolidated business for Q4. Our Q4 revenue performance, which included 14% service revenue growth and 16% total revenue growth year-over-year, exceeded our internal expectations. Service revenue growth, which consists primarily of recurring revenue, was driven by the change order for the New York City Red Light Expansion Program and service revenue growth outside of New York City in the Government Solutions business, as well as increased revenue from rack tolling in European operations in the Commercial Services business. At the segment level, Government Solutions service revenue grew 21% year-over-year.

Service Revenue growth which consists primarily of recurring Revenue. Was driven by the change order for the New York City red light expansion program and service Revenue growth outside of New York City in the Government Solutions business, as well as increased revenue from rack tolling in European operations in the commercial services.

Thank you, David and hello everyone, we appreciate you joining us on the call today, let's turn this slide forward which outlines the key financial measures to the Consolidated business. For the fourth quarter, our Q, our Q4 Revenue performance, which included 14% service Revenue growth in 16% total revenue, growth year-over-year exceeded. Our internal expectations.

At the segment level Government Solutions, service Revenue, grew 21%, year-over-year, Commercial Services, Revenue increased by 10% over the prior year and Parking Solutions SASS and services Revenue increased 2% compared to the fourth quarter of 2024.

Total product Revenue was about 18 million for the quarter. Government Solutions. Contributed roughly 14 million with 8 million coming from New York City, red light expansion and 6 million from International product sales.

P2 delivered about 4 million in product sales, overall, for the quarter.

Service Revenue growth which consists primarily of recurring Revenue. Was driven by the change order for the New York City red light expansion program and service Revenue growth outside of New York City. In the Government Solutions business, as well as increased revenue for Iraq, tolling in European operations in the commercial Services service.

Craig Conti: Commercial Services revenue increased by 10% over the prior year. Parking Solutions SaaS and services revenue increased 2% compared to Q4 2024. Total product revenue was about $18 million for the quarter. Government Solutions contributed roughly $14 million, with $8 million coming from New York City red light expansion and $6 million from international product sales. T2 Systems delivered about $4 million in product sales overall for the quarter. On the profitability side, our consolidated Adjusted EBITDA for the quarter was $102 million, roughly flat compared to the same period last year, largely due to the investments made in New York City.

On the profitability side, our Consolidated adjusted Eva for the quarter was 102 million. Roughly flat compared to the same period. Last year largely due to the Investments made in New York City.

Level Government Solutions, service Revenue, grew 21%, year-over-year, Commercial Services, Revenue increased by 10% over the prior year, and Parking Solutions SAS and services Revenue increased 2% compared to the fourth quarter of 2024.

To a loss of 41 cents per share for the prior year period.

P2 delivered above 4 million in product sales, overall quarter.

Gap results included approximately 16 million dollars of non-recurring expenses about 6 million related to our fourth quarter debt, refinancing and 10 million related to fixed asset rate on expenses, due to our exit from Ontario Canada.

On the profitability side, our Consolidated adjusted Eva for the quarter was 102 million. Roughly flat compared to the same period. Last year largely due to the Investments made in New York City.

Craig Conti: We reported net income of $19 million for the quarter. GAAP diluted EPS was $0.12 per share for Q4 2025, compared to a loss of $0.41 per share for the prior year period. GAAP results included approximately $16 million of non-recurring expenses, about $6 million related to our Q4 debt refinancing and $10 million related to fixed asset write-down expenses due to our exit from Ontario, Canada. Adjusted EPS, which excludes amortization, stock-based compensation, and other non-recurring items, was $0.30 per share for Q4 of this year, compared to $0.33 per share in Q4 2024. The adjusted EPS decline was primarily driven by New York City readiness costs.

Adjusted EPS which excludes amortization stock-based compensation and other non-recurring items was 30 cents per share for the fourth quarter. This year, compared to 333 cents per share per per per share of the fourth quarter of 2024, the adjusted EPS decline was primarily driven by New York City ready, discusses?

We reported net income of 19 million for the quarter and GAP. Diluted EPS was 12 cents per share for the fourth quarter of 2025 compared to a loss of 41 cents per share for the prior year period.

For the full year. We had reported a net income of 137 billion including a tax provision of 58 million. Representing a full year of effective tax rate of about 30%.

Gap diluted EPS was 85 cents per share in 2025 compared to 19 cents in 2024.

Full year 2025 adjusted EPS was 1.32 cents per share. Compared to 1. 2 3 4.

Adjusted EPS which excludes amortization stock-based compensation and other non-recurring items was 30 cents per share for the fourth quarter. This year compared to 33 cents per share per per share of the fourth quarter of 2024, the adjusted EPS decline was primarily driven by New York City Readiness costs.

Craig Conti: For the full year, we reported net income of $137 million, including a tax provision of $58 million, representing a full-year effective tax rate of about 30%. GAAP diluted EPS was $0.85 per share in 2025, compared to $0.19 in 2024. Full year 2025 adjusted EPS was $1.32 per share, compared to $1.23 per share in 2024. Cash flows provided by operating activities totaled $40 million, and we delivered $6 million of free cash flow for the quarter. Free cash flow was negatively impacted by the timing of cash collections. As of today's call, we have collected approximately $22 million that we originally anticipated collecting in Q4 2025. Turning to slide 5.

Cash flows provided by operating activities total of 40 million and we delivered 6 million of free cash flow for the quarter.

For the full year, we reported net income of $137 million.

Free cash flow was negatively impacted by the timing of cash collections.

Including a tax provision of 58 million.

Representing a full year effective tax rate of about 30%.

as of today's call, we have collected approximately 22 million that we originally anticipated, collecting in fourth quarter 2025,

Starting this 55.

GAAP diluted EPS was $0.85 per share in 2025 compared to $0.19 in 2024.

Full year 2025 adjusted EPS was $1.32 per share, compared to $1.23 per share in 2024.

We generated 416 million of adjusted Ava on approximately 979 million of revenue for the trailing. 12 months, representing a 42% adjusted even in March.

Cash flows provided by operating activities, total 40 million and we delivered 6 million of free cash flow for the quarter.

Additionally, we generated 137 million of free cash flow or 33% conversion of adjusted Eva over the trailing 12 months.

Free cash flow was negatively impacted by the timing of cash collections.

As of today's call, we have collected approximately $22 million that we originally anticipated collecting in the fourth quarter of 2025.

Craig Conti: We generated $416 million of Adjusted EBITDA on approximately $979 million of revenue for the trailing twelve months, representing a 42% Adjusted EBITDA margin. Additionally, we generated $137 million of free cash flow or a 33% conversion of Adjusted EBITDA over the trailing twelve months. Adjusting for the cash in the Q1 of 2026 that we anticipated collecting in the Q4 of 2025, free cash flow conversions would have been greater than 38% in 2025. Next, I'll walk through the Q4 performance in each of our three business segments, beginning with Commercial Services on slide 6. CS year-over-year revenue growth was 10% in the Q4.

Starting this slide 5.

Adjusted for the cash, adjusting for the cash in the first quarter of 2026 that we anticipated collecting in the fourth quarter of 2025 free. Cash flow conversion would have been greater than 38% in 2025.

Next I'll walk through the fourth quarter performance in each of our 3, business segments, beginning with Commercial Services, on slide 6.

We generated 416 million of adjusted ibida on approximately 979 million of revenue for the trailing. 12 months, representing a 42% adjusted even in March.

CS year-over-year. Revenue growth was 10% in the fourth quarter.

Additionally, we generated 137 million of free cash flow or 33% conversion of adjusted Eva over the trailing 12 months.

Rack tolling in Revenue increased 16% or about 10 million over the same period last year driven by increased product adoption and tolling activity, which benefited from 1% increase in US Travel. Volume over the prior year quarter.

Next, I'll walk through the fourth quarter performance in each of our three business segments, beginning with Commercial Services, on slide 6.

Our FMC business decline. 8% for about 1.6 million eurover year, primarily driven, by prior period, customer churn, additionally, our European operations, contributed just shy of 1 billion dollars of growth compared to the fourth quarter of 2024.

Craig Conti: Rack tolling revenue increased 16% or about $10 million over the same period last year, driven by increased product adoption and tolling activity, which benefited from a 1% increase in US travel volume over the prior year Q. Our FMC business declined 8%, or about $1.6 million year-over-year, primarily driven by prior period customer churn. Our European operations contributed just shy of $1 billion of growth compared to the Q4 of 2024. Commercial Services segment profit increased 7% over the prior year, representing a 64% segment profit margin. The margin decline compared to the prior year Q was largely driven by a modest increase in credit loss expense and one-time selling general and administrative costs. For the full year, Commercial Services generated $436 million of revenue, or 7% growth over last year.

CS year-over-year. Revenue growth was 10% in the fourth quarter.

Rack tolling Revenue increased 16% for about 10 million over the same period last year driven by increased product adoption and tolling activity, which benefited from a 1% increase in US Travel. Volume over the prior year quarter.

Commercial Services segment profit, increased 7% over the prior year. Representing a 64% segment, profit, margin declined, compared to the prior year quarter was largely driven by a modest increase in credit loss expense and 1 time selling General and administrative costs.

Our FMC business decline. 8% or about 1.6 million EUR over a year primarily driven by prior period, customer churn. Additionally, our European operations, contributed just shy of 1 billion dollars of growth compared to the fourth quarter of 2024.

For the full year, Commercial Services generated 436 million of Revenue, or 7% growth, over last year, segment, profit of 283 million resulted in margins of about 65% and 85 basis points. Decline over the prior year, driven by Erp implementation costs and moderately moderate modestly. Increased credit loss expense

Commercial Services, segment property increased 7% over the prior year. Representing a 64% segment, profit, margin margin, declined, compared to the prior year quarter was largely driven by a modest increase in credit loss expense and 1 time selling General and administrative costs.

Turning the slide 7 Government Solutions. Saw a strong Revenue growth in the quarter driven by 14 million of installation service for the new red light, camera expansion in New York City as well as 11% service growth outside of New York City.

Craig Conti: Segment profit of $283 million resulted in margins of about 65%, an 85 basis point decline over the prior year, driven by ERP implementation costs and modestly increased credit loss expense. Turning to slide seven. Government Solutions saw strong revenue growth in the quarter, driven by $14 million of installation service for the new red light camera expansion in New York City, as well as 11% service growth outside of New York City. The growth was broad-based across all customer use cases, with particular strength in speed, bus lane, and school bus stop arm enforcement programs. Total revenue grew 25% over the prior year quarter, benefiting from about $14 million in product sales, of which $8 million were generated from New York City red light camera sales and $6 million from international product sales.

The growth was broad-based across all customer use cases with particular strength and speed bus lane and school bus, stop arm enforcement programs.

For the full year, Commercial Services generated 436 million of Revenue, or 7% growth, over last year, segment, profit of 283 million resulted in March of about 65% and 85 basis points. Decline over the prior year, driven by Erp implementation costs and moderately, modder modestly increased credit loss expense

Total revenue grew 25% over the prior year quarter benefiting from about 14 million in product sales of which 8 million were generated from New York City, red light camera, sales and 6 million from International products.

In total product sales increased by 6 million over the same period last year.

Turning to slide 7, Government Solutions. We saw strong revenue growth in the quarter, driven by $14 million of installation service for the new red light camera expansion in New York City, as well as 11% service growth outside of New York City.

Government Solutions, segment profit was 31 million for the quarter representing margins of approximately 24% compared to 34% in the prior year period.

The growth was broad-based across all customer use cases with particular strength and speed bus lane and school bus, stop arm enforcement programs.

The reduction in margins versus prior year was primarily due to Readiness Investments made to prepare the company for execution on the New York City contract.

As well as lower credit loss, expense with prior year quarter.

Craig Conti: In total, product sales increased by $6 million over the same period last year. Government Solutions segment profit was $31 million for the quarter, representing margins of approximately 24% compared to 34% in the prior year period. The reduction in margins versus prior year was primarily due to readiness investments made to prepare the company for execution on the New York City contract, as well as lower credit loss expense in the prior year quarter. For the full year, Government Solutions generated $461 million of total revenue, an 18% increase over 2024, driven primarily by New York City installation services revenue, as well as 10% service revenue growth outside of New York City. Segment profit was $122 million, which was roughly flat prior year. Let's turn to slide 8 for a view of the results of Parking Solutions.

And were generated from New York City, red light camera, sales and 6 million from International products sales.

In total product sales, increase by 6 million over the same period last year.

For the full year Government Solutions, generated 461 million of total revenues and 18%. Increase over 2024 driven primarily by New York City installation services Revenue as well as 10% service Revenue growth outside of New York City.

Segment profit was 122 million, which was roughly flat prior year.

Government Solutions, segment profit was 31 million for the quarter representing margins of approximately 24% compared to 34% in the prior year period.

Let's try to slide 8 for a view of the results of Parking Solutions.

We generated revenue of 21 million in segment profit of approximately 2 million for the quarter.

The reduction in margins versus prior year was primarily due to Readiness Investments made to prepare the company for execution on the New York City contract, as well as lower credit losses prior to your quarter.

SAS and services sales increased 2% compared to the prior year. While product Revenue increased 17% or about 1 billion dollars compared to the fourth quarter of 2024

For the full year Government Solutions, generated 461 million of total revenue and 18%. Increase over 2024 driven primarily by New York City installation services Revenue as well as 10% service Revenue growth outside of New York City.

Segment profit was $122 million, which was roughly flat to the prior year.

for the full year sparking Solutions, delivered revenue of 83 million and increase of approximately 2% versus last year and segment profit of 11 million dollars. SAS Revenue in 2%, over 2024

Craig Conti: We generated revenue of $21 million and segment profit of approximately $2 million for the Q4. SaaS and services sales increased 2% compared to the prior year, while product revenue increased 17% or about $1 billion compared to the Q4 2024. For the full year, Parking Solutions delivered revenue of $83 million, an increase of approximately 2% versus last year, and segment profit of $11 million. SaaS revenue grew 2% over 2024. Okay, let's turn to slide nine for review of the balance sheet and take a look at net leverage. Our gross debt balance at year-end was about $1 billion, of which approximately $690 million was floating rate debt. We ended the Q4 with a net debt balance of $972 million, which was elevated sequentially due to Q4 share repurchases.

Let's turn to slide 8 for a view of the results of Parking Solutions.

Okay, let's try to slide 9 for review of the balance sheet and take a look at net. Net Leverage.

We generated revenue of $21 million and segment profit of approximately $2 million from the court.

Our gross debt balance at year end was about 1 billion dollars of which approximately 690 million was floating rate debt.

SaaS and services sales increased 2% compared to the prior year, while product revenue increased 17%, or about $1 billion, compared to the fourth quarter of 2024.

We ended the quarter with a net debt, balance of 972 million which was elevated sequentially. Due to fourth quarter, share repurchases,

Net leverage landed at 2.3 times and we've maintained significant liquidity, with our recently expanded 150 million on Drawn credit. Revolvers,

for the full year Parking Solutions, delivered revenue of 83 million and increase of approximately 2% versus last year and segment profit of 11 million SAS revenue from 2% over 2024,

Let me give you some detail on our share repurchase plan.

Okay, let's turn to slide 9 for review of the balance sheet and take a look at net. Net Leverage.

Our Board of previously, authorized the expansion of our existing buyback, plan by an incremental, 150 million bringing the total authorization up to 250 million dollars.

Our gross debt balance at year end was about $1 billion, of which approximately $690 million was floating rate debt.

In the fourth quarter, we purchased approximately 6 million shares for about 133 million through open market transactions.

Craig Conti: Net leverage landed at 2.3 times. We've maintained significant liquidity with our recently expanded $150 million undrawn credit revolver. Let me give you some detail on our share repurchase plan. Our board had previously authorized the expansion of our existing buyback plan by an incremental $150 million, bringing the total authorization up to $250 million. In Q4, we purchased approximately 6 million shares for about $133 million through open market transactions. Let's switch gears and talk about the future. Let's turn to slide 10 for a discussion on how we think 2026 is gonna shape up.

We ended the quarter with a net debt, balance of 900772 million which was elevated sequentially due to fourth quarter, share repurchases.

Now, let's switch gears and talk about the future.

Let's let's turn the slide, 10 for a discussion on how we think. So at 2026 is going to shape up.

Net leverage landed at 2.3 times and we've maintained significant liquidity with our recently expanded 150 million dollar on Drawn credit revolver.

Let me give you some detail on our share repurchase plan.

Our Board of previously, authorized the expansion of our existing buyback, plan by an incremental, 150 million bringing the total authorization up to 250 million dollars.

We expect total revenue in the range of 1.02 to 1.03 billion representing approximately 5% growth at the midpoint of guidance over 2025 consistent with the preliminary Outlook, we provided on our third quarter earnings call

In the fourth quarter, we purchased approximately 6 million shares for about 133 million through open market transactions.

Now, let's switch gears and talk about the future. Let's turn the slide, 10 for a discussion on how we think. So at 2026 is going to shape up.

Craig Conti: We expect total revenue in the range of $1.02 to 1.03 billion, representing approximately 5% growth at the midpoint of guidance over 2025, consistent with the preliminary outlook we provided on our Q3 earnings call. We expect Adjusted EBITDA in the range of $405 to 415 million, or an Adjusted EBITDA margin percent of about 40%, representing a 250 basis point decline compared to 2025. Again, consistent with the preliminary outlook provided on our Q3 call. As we previously discussed, the combination of portfolio mix and the New York City renewal contract, partially offset by a year-over-year reduction in ERP implementation costs, are expected to drive the temporary reduction in margins.

We expected just an EA in the range of 405 to 415 million or an adjusted. Eva margin percent of about 40% representing a 250 basis point decline compared to 2025 again, consistent with the preliminary Outlook provided under 23 calls.

As we previously discussed the accommodation of portfolio mix and the New York City renewal contract.

Partially offset by a year-over-year reduction in Erp, implementation costs are expected to drive, the temporary reduction of margin.

we expect total revenue in the range of 1.02 to 1.03 billion representing approximately 5% growth at the midpoint of guidance over 2025 consistent with the preliminary Outlook, we provided on our third quarter earnings call

We expect 2026 9 Gap. Adjusted EPS to be in the range of 1.32 to $1.38 per share representing low single-digit growth over 2025, consistent with the Outlook. We provided on our Q3 earnings call.

We expect adjusted Ava in the range of 405 to 415 million or an adjusted. Eva margin percent of about 40% representing a 250 basis point decline compared to 2025 again, consistent with the preliminary Outlook provided under Q3 call.

As we previously discussed the combination of portfolio, mix and the New York City renewal contract.

And lastly, free cash flow is expected to be in the range of 150 to 160 million for 2026, representing a conversion rate in high 30th percentile of adjusted evidence.

Partially offset by a year-over-year reduction in Erp. Implementation costs.

Are expected to drive the temporary reduction in margin.

Craig Conti: We expect 2026 non-GAAP adjusted EPS to be in the range of $1.32 to $1.38 per share, representing low single-digit growth over 2025, consistent with the outlook we provided on our Q3 earnings call. Lastly, free cash flow is expected to be in the range of $150 to $160 million for 2026, representing a conversion rate in the high 30th percentile of Adjusted EBITDA. We expect to spend approximately $125 million of CapEx in 2026, roughly flat with 2025. The vast majority will be spent in Government Solutions to implement newly awarded photo enforcement programs. Turning back to the Adjusted EBITDA margin, let me provide a quick refresher on each of those key drivers. The portfolio mix is simply Government Solutions growing faster than Commercial Services.

We expect to spend approximately 125 million of capex in 2026, roughly flat with 2025. The vast majority will be spent in Government Solutions to implement newly awarded photo enforcement programs.

Turning back to the adjusted. Even the margins, let me provide a quick refresher on each of those key drivers.

We expect 2026 non-gaap adjusted, EPS to be in the range of 1.32 to $1.38 per share representing low single-digit growth over 2025, consistent with the Outlook. We provided on our 2 3 earnings call.

The portfolio, mix is simply Government Solutions growing faster than Commercial Services. This represents about 25 basis points of year-over-year, decline in the total company level.

And lastly, free cash flow is expected to be in the range of $150 to $160 million for 2026, representing a conversion rate in the high 30th percentile of adjusted EBITDA.

We expect to spend approximately 125 million of capex in 2026, roughly flat with 2025. The vast majority will be spent in Government Solutions to implement newly awarded photo enforcement programs.

Secondly, in Government Solutions margins will be negatively impacted by Surface by Service. Pricing changes established through the competitive wreck procurement process for New York City and incremental operating costs associated with minority- and women-owned subcontractor requirements. Under the renewal contract

Turning back to the adjusted. Even in margin, let me provide a quick refresher on each of those key drivers.

These factors combine to represent about 250 to 300 basis points of margin of time at the total company level.

Craig Conti: This represents about 25 basis points of year-over-year decline at the total company level. Secondly, in Government Solutions, margins will be negatively impacted by service pricing changes established through the competitive re-procurement process for New York City, and incremental operating costs associated with minority and women-owned subcontractor requirements under the renewal contract. These factors combine to represent about 250 to 300 basis points of margin decline at the total company level. Third, in partially offsetting the first two drivers, we expect Commercial Services segment profit margins to expand 25 to 50 basis points due to volume leverage and the absence of 2025 ERP spending. Moving on to the segment level. In Commercial Services, we expect mid-single-digit revenue growth. We are modeling TSA volume growing about 100 basis points for the full year.

The portfolio, mix is simply Government Solutions growing faster than Commercial Services. This represents about 25 basis points of year-over-year. Decline of total company level

Third in partially, offsetting the first 2 drivers. We expect Commercial Services segment profit. Margins to expand, 25 to 50 basis points due to volume leverage and the absence of 2025 Erp spending.

Moving on to the segment level and Commercial Services. We expect mid single digit Revenue growth. We are modeling PSA. Volume growing about 100 basis points for the full year in addition. We're expecting FMC Revenue to grow mid single digits over the prior year.

These factors combine to represent about 250 to 300 basis points of margin of time at the total company level.

Down high single digits in the first half of the year due to the prior period, turn and growing low, double digits in the back, half of the year due to the easier comps.

Services segment profit, margins to expand, 25 to 50 basis points due to volume leverage and the absence of 2025 Erp spending.

For the combined CS business. We expect the first quarter to be our lowest Revenue generating quarter, likely flat compared to the first quarter of 2025, followed by sequential Revenue, increases in second and third quarters, and then a modest sequential Revenue decline in the fourth.

Craig Conti: In addition, we're expecting FMC revenue to grow mid-single digits over the prior year, down in high single digits in the first half of the year due to the prior period churn and growing low double digits in the back half of the year due to the easier comps. For the combined CS business, we expect the Q1 to be our lowest revenue generating quarter, likely flat compared to the Q1 of 2025, followed by sequential revenue increases in the Q2 and Q3, a modest sequential revenue decline in the Q4. Adjusted EBITDA margins are expected to follow the same cadence as sequential revenue. Government Solutions is expected to generate the high end of mid-single digit total revenue growth in 2026. There are a few components influencing this growth.

To follow the same Cadence as sequential Revenue.

Moving on to the segment level in Commercial Services. We expect mid single digit, Revenue growth. We are modeling. TSA, volume growing about 100 basis points for the full year in addition. We're expecting FMC Revenue to grow mid single digits over the prior year.

Government Solutions is expected to generate the high-end of mid single-digit, total revenue growth in 2026.

There are a few components influencing this growth.

Down high single digits in the first half of the year due to the prior period turn, and growing low double digits in the back half of the year due to the easier comps.

The expansion under the updated. New York. City contract is expected to drive 11 million service Revenue growth and non New York City. Revenue is expected to grow 8% or roughly 20 million.

In total, we expect GS service Revenue to grow High single digits.

For the combined CS business. We expect the first quarter to be our lowest Revenue generating quarter, likely flat, compared to the first quarter of 2025, followed by sequential Revenue, increases in the second and third quarters and then a modest sequential Revenue decline in the fourth.

Adjusted even of margins are expected to follow the same Cadence as sequential Revenue.

Additionally, product Revenue will be basically flat year-over-year, as the New York City. Product sales will be offset by a decline in international product Revenue.

Craig Conti: The expansion under the updated New York City contract is expected to drive $11 million in service revenue growth. Non-New York City revenue is expected to grow 8% or roughly $20 million. In total, we expect GS service revenue to grow high single digits. Additionally, product revenue will be basically flat year-over-year, as New York City product sales will be offset by a decline in international product revenue. We expect GS margins to be down about 450 and 500 basis points compared to 2025, consistent with the outlook we provided on our Q3 earnings call. This is driven by the New York City renewal contract, specifically service pricing changes established through the competitive procurement process and the minority and women-owned subcontractor requirements.

We expect GS margins to be down about 450 and 500 basis points compared to 2025 consistent with the Outlook we provided on our Q3 earnings call.

Government Solutions is expected to generate the high end of mid single-digit total revenue growth in 2026. There are a few components influencing this growth. The expansion under the updated New York City contract is expected to drive $11 million in service revenue growth, and non-New York City revenue is expected to grow 8%, or roughly $20 million.

This is driven by the New York City renewal contract specifically Service, pricing changes establishment, established through the competitive procurement process and the minority and women-owned subcontractor requires us.

In total, we expect GS service Revenue to grow High single digits.

Additionally, product revenue will be basically flat year-over-year, as the New York City product sales will be offset by a decline in international product revenue.

Margins are expected to ramp up over the course of the Year from mid to high teams in q1 2026. As we incur the impact of the New York City Service pricing change up to the mid 20s by Q4 2026. Fueled by volume Mosaic cost, savings and School Bus. Stop Pharmacy.

We expect GS margins to be down about 450 to 500 basis points compared to 2025, consistent with the outlook we provided on our Q3 earnings call.

Before I move on to the Parking Solutions, I'll provide a brief synopsis on Government Solutions historical and anticipated future cost drivers.

This is driven by the New York City renewal contract, specifically service and pricing changes established through the competitive procurement process, and the minority- and women-owned subcontractor requirements.

Craig Conti: Margins are expected to ramp up over the course of the year, from mid to high teens in Q1 2026, as we incur the impact of the New York City service pricing change, up to the mid-twenties by Q4 2026, fueled by volume, Mosaic cost savings, and school bus stop arm seasonality. Before I move on to Parking Solutions, I'll provide a brief synopsis on Government Solutions' historical and anticipated future cost drivers. For the full year 2025, we absorbed approximately $15 million of non-recurring operating expenses to support a combination of New York City Resi- Readiness and Mosaic development costs. In 2026, we anticipate that the investment in Mosaic will be cost neutral, as remaining investment operating expenses will be offset by second half 2026 operating expense savings.

for the full year 2025, we absorbed approximately 15 million of non-recurring, operating expenses to support, to support a combination of New York City resident Readiness and Mosaic development costs,

In 2026, we anticipate that the investment in Mosaic will be cost neutral.

As remaining investment, operating expenses will be offset by second. Half 2026 operating expense savings.

Before I move on to the Parking Solutions, I'll provide a brief synopsis on Government Solutions historical and anticipated future cost drivers.

Thereafter starting in 2027 and driven primarily from the Mosaic implementation along with volume leverage. We expect to be in a position of operating, expense Savings of 10, to 20 million per year, relative to the 2026 run rate.

Lastly and separate from the Mosaic implementation.

In 2026, we anticipate that the investment in Mosaic will be cost-neutral.

We expect to incur approximately 22 to 24 million of costs annually, beginning in 2026 that we expect to be split amongst cost of service revenue and operating expenses.

Craig Conti: Thereafter, starting in 2027 and driven primarily from the Mosaic implementation along with volume leverage, we expect to be in a position of operating expense savings of $10 to $20 million per year relative to the 2026 run rate. Lastly, separate from the Mosaic implementation, we expect to incur approximately $22 to $24 million of costs annually beginning in 2026, that we expect to be split amongst cost of service revenue and operating expense to support the New York City minority and women-owned business subcontractor requirements, as we discussed on our Q3 earnings call. For Parking Solutions, we expect to deliver mid-single-digit revenue growth over 2025 levels. We expect SaaS revenue to grow low single digits and subscription to professional services along with product revenue to grow high single digits. We expect Parking Solutions margins to be slightly increased in 2025.

To support the New York City, minority and women-owned business subcontractor requirements. As we discussed on our third quarter, earnings call,

As remaining investment, operating expenses will be offset by second, half 2026, operating expense savings thereafter. Starting in 2027 and driven primarily from the Mosaic implementation along with volume leverage. We expect to be in a position of operating, expense Savings of 10, to 20 million per year, relative to the 2026 run rate.

We expect Parking Solutions, margins to be slightly appreciated for 2025.

Lastly and separate from the Mosaic implementation, we expect to incur approximately 22 to 24 million of costs annually, beginning in 2026 that we expect to be split amongst cost of service revenue and operating expenses.

before we close out today, I'd like to provide some perspective on how we expect 2026 revenue and earnings to Pace out quarterly,

For the company as a whole.

To support the New York City, minority and women-owned business subcontractor requirements. As we discussed on our third quarter, earnings call,

We expect first quarter 2026, total revenue to be about flat compared to the first quarter of 2025.

Followed by high single-digit year-over-year growth in the second quarter, followed by Miss single digit growth in the third and fourth quarters of 2026.

for Parking Solutions, we expect to deliver mid single-digit Revenue growth over 2025 levels, we expect SAS Revenue to grow low, single digits, and subscription and Professional Services along with product Revenue to grow High, signatures,

We expect Parking Solutions, margins to be slightly appreciated to 2025.

Craig Conti: Before we close out today, I'd like to provide some perspective on how we expect 2026 revenue and earnings to pace out quarterly. For the company as a whole, we expect Q1 2026 total revenue to be about flat compared to Q1 2025, followed by high single-digit year-over-year growth in Q2, followed by mid-single-digit growth in Q3 and Q4 2026. We expect Adjusted EBITDA margins to land in the mid 30% range in Q1, due to the factors I've discussed, and then trend up to the high thirties to the low forties for the balance of the year, resulting in an expected 40% margin for the full year 2026. Other key assumptions supporting our adjusted EPS and free cash flow outlook can be found on slide 11. This concludes our prepared remarks.

Before we close out today, I'd like to provide some perspective on how we expect 2026 revenue and earnings to pace out quarterly.

For the company as a whole.

We expected just an even emergence to land in the mid 30% range in q1 during the factors I've discussed. And then Trends up to the high 30s to the low 40s for the balance of the Year. Resulting in an expected. 40% margin for the full year 2026.

Other key assumptions supporting our adjusted EPS in free cash flow Outlook can be found on slide 11.

We expect first quarter 2026, total revenue to be about SWAT compared to the first quarter of 2025.

This concludes our prepared remarks, thank you for your time and attention today. At this time, I'd like to invite Michelle to open the line for any questions over to you Michelle.

Followed by high single-digit year-over-year growth in the second quarter, followed by mid single-digit growth in the third and fourth quarters of 2026.

Thank you as a reminder, to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced and to withdraw your question. Please press star 1 1 again.

We expected just to even margins to land in the mid 30% range in q1. During the factors, I've discussed. And then Trend up to the high 30s to the low 400s for the balance of the Year. Resulting in an expected. 40% margin for the full year 2026.

And our first question comes from fisa, all we with Deutsche Bank, your line is open.

Other key assumptions supporting our adjusted EPS and free cash flow outlook can be found on slide 11.

Craig Conti: Thank you for your time and attention today. At this time, I'd like to invite Michelle to open the line for any questions. Over to you, Michelle.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Faiza Alwy with Deutsche Bank. Your line is open.

This concludes our prepared remarks, thank you for your time and attention today. At this time, I'd like to invite Michelle to open the line for any questions over to you Michelle.

Yes. Hi thank you so much. Um I guess first just to follow up for Craig on the quarterly Cadence uh that you mentioned. I think you said first quarter, You're Expecting flat revenue and then it kind of builds up from there. So it would be really helpful just to address kind of what's driving that and what's going to drive the you know, improving Revenue through the course of the year.

Please press star 1-1 on your telephone, and wait for your name to be announced and to withdraw your question. Please press star 1-1 again.

And our first question comes from fisa all we would dorchi Bank, your line is open.

[Analyst] (Deutsche Bank): Yes, hi, thank you so much. I guess first, just a follow-up for Craig on the quarterly cadence that you mentioned. I think you said Q1, you're expecting flat revenue, and then it kind of builds up from there. It would be really helpful just to address kind of what's driving that and what's gonna drive the, you know, improving revenue through the course of the year.

Faiza Alwy: Yes, hi, thank you so much. I guess first, just a follow-up for Craig on the quarterly cadence that you mentioned. I think you said Q1, you're expecting flat revenue, and then it kind of builds up from there. It would be really helpful just to address kind of what's driving that and what's gonna drive the, you know, improving revenue through the course of the year.

Craig Conti: Yeah, great. Well, thanks for the question, Faiza Alwy. Let me just recap at the beginning what the kind of the guide was. If we talk about it from a revenue perspective, to your question, we expect it to be flat. We expect on a year-over-year basis to be up high single digits in Q2 standalone, then mid-single digits in Q3 and Q4 standalone. That gets you to mid-single digits for the year. On the margin side, we expect to be, again, for the total company, in Q1, in the mid-30s, getting up around 40% in Q2 and a little north of 40% in Q3 and Q4 to get you to 40% for the year. Here's the why, I think myopically on Q1.

Craig Conti: Some of it's the weather, some of it's some other things that are, that are going on, but I'll break it down by business. On the commercial side, we expect commercial to be relatively flat. A big piece of that is the FMC churn. This is what we talked about in the Q2 of last year. It's particularly acute in the Q1 because we had a strong Q1 in 2024. That churn is a, is a big piece of it. The other piece in Commercial Services is the pacing of travel and some of the inclement weather that we've seen. I know you live in New York, Faiza Alwy, so you probably know this outside your window that we've seen kind of for the last seven weeks.

To be of high single digits in Q2 Standalone and then mid single digits in Q3 and Q4 stand alone that gets you to Mid single digits for the year. And then on the margin side, we expect to be again for the total company in the first quarter, in the mid-30s getting up around, 40% in the second quarter and a little north of 40% in the third and fourth quarter to get to the 40 for the year. So and here's here's the why I think myopically on the first quarter. Um some of its the weather, some of its some other things that are that are going on, but I'll break it down by business. So on the commercial side, we expect commercials to be relatively flat, a big piece of that is the FMC churns, and this is what we talked about in the second quarter of last year. Um, it's particularly acute in the first quarter because we had a strong first quarter in 2024. Um, so that churn is, is a big piece of it. The other piece the other piece in in Commercial Services is the pacing of travel and some of the Implement weather. Um, that we've seen. I know you live in, in New York fisa. So you probably know this outside your window. Um, that we've seen kind of for the last 7.

Weeks if we think about today.

Yeah, great. Well, thanks for the question, fisa. So let me let me just recap at the beginning. What what the kind of the guide was? So we talked about it from a revenue perspective to your question, we expect it to be flat. Then we expect on a year-over-year basis to be up, high single digits and Q2 Standalone and then mid single digits in Q3. And Q4 stay on the line that gets you to the mid single digits, for the year. And then on the margin side, we expect to be again for the total company in the first quarter, in the mid-30s getting up around, 40% in the second quarter and a little north of 40% in the third and fourth quarter to get you the 40 for the year. So and here's here's the why I think myopically on the first quarter. Um some of its the weather, some of its some other things that are that are going on but I'll break it down to my business. So on the commercial side, we expect commercials to be relatively flat.

The quarter day, PSA throughput went down. Uh, about 80 basis points last night, just based on, um, the Northeast kind of being snowed in. So, if I combine those 2 things, the pacing of the increase in travel year-over-year, which I expect to be back in weighted. Anyway,

I think being a little bit slower here, starting off the first quarter in the FMC churn, gets me to roughly flattish, on the commercial side of the house. Now let me go to the government side.

Craig Conti: If we think about today, the Q1 to date, TSA throughput went down about 80 basis points last night, just based on the Northeast kind of being snowed in. If I combine those two things, the pacing of the increase in travel year-over-year, which I expect to be back-end weighted anyway, I think being a little bit slower here, starting off the Q1 in the FMC churn, gets me to roughly flattish on the commercial side of the house. Let me go to the government side. Also flattish there. The first piece of this is the price normalization. We talked about this in the competitive procurement that we did for the contract. That hits us starting on 1 January 2026.

A big piece of that is the FMC churns, and this is what we talked about in the second quarter of last year. Um, it's particularly acute in the first quarter because we had a strong first quarter in 2024. Um, so that churn is, is a big piece of it. The other piece the other piece in in Commercial Services is the pacing of travel and some of the Implement weather. Um, that we've seen. I know you live in, in New York fisa. So you probably know this outside your window. Um, that we've seen kind of for the last 7 weeks if we think about today.

The quarter today. PSA throughput went down, uh, about 80 basis points last night, just based on, um, the Northeast kind of being snowed in. So if I combine those 2 things, the pacing of the increase in travel year-over-year, which I expect to be back in weighted. Anyway,

I think being a little bit slower here, starting off the first quarter in the FMC churn, gets me to roughly flattish, on the commercial side of the house.

Now, let me go to the government side.

Craig Conti: We'd expected that to be offset by some volume, but again, going back to inclement weather, we can't set concrete unless it's been above freezing for 24 hours. In New York City, we've had a lot more days underneath freezing than we anticipated at this point. I still think that all of that install volume is safely within 2026. It's just gonna be a little bit more bunched up in the back 3 quarters. If I look at FMC, the pricing and then the weather, those three things kind of come together to give us a flattish Q1. That's my best view as of today, Faiza.

Also flattish there. The first piece of this is the price normalization, um, that we talked about this in the competitive re, uh, the, the competitive procurement that we did for the contract that hits us starting on 11 of 2026. Now, we had expected that to be offset by some volume. But again, going back to inclement weather, we can't set concrete, unless it's been above freezing for 24 hours, and New York City. We've had a lot more days underneath freezing than we anticipated at this point. So, I still think that all of that install volume is safely within 2026. Is just going to be a little bit more bunched up in the back 3 quarters. So if I look at FMC the pricing and then the weather, those 3 things kind of um, come together to give us a flattish q1. That's my best view as of today. Bye.

Also flattish. There. The first piece of this is the price normalization, um, that we talked about—this and the competitive re-, uh, the—the competitive procurement that we did for the contract that hits us starting on 1/1 of 2026. Now, we had expected that to be offset by some volume. But again, going back to inclement weather, we can't set concrete unless it's been above freezing for 24 hours in New York City. We've had a lot more days underneath freezing than we anticipated at this point. So I still think that all of that install volume is safely within 2026.

Understood makes sense, thanks for that. And then I just wanted to ask about, you know, the political environment around automated photo traffic enforcement, I think David you touched on this just a little bit in your prepared commentary. I know there's been some you know noise coming out of DC and the Trump Administration and just curious like what you're seeing on the ground in terms of, you know, new rfps coming out, just would love to hear more more perspective. Your perspective around that

Is just going to be a little bit more bunched up in the back 3 quarters. So if I look at FMC the pricing and then the weather, those 3 things kind of um come together to give us a flattish q1. That's my best view as of today, 57.

[Analyst] (Deutsche Bank): Understood. Makes sense. Thanks for that. I just wanted to ask about, you know, the political environment around automated photo traffic enforcement. I think, David, you touched on this just a little bit in your prepared commentary. I know there's been some, you know, noise coming out of DC and the Trump administration.

Faiza Alwy: Understood. Makes sense. Thanks for that. I just wanted to ask about, you know, the political environment around automated photo traffic enforcement. I think, David, you touched on this just a little bit in your prepared commentary. I know there's been some, you know, noise coming out of DC and the Trump administration.

[Analyst] (CJS Securities): Just curious, like what you're seeing on the ground in terms of, you know, new RFPs coming out. Just would love to hear more perspective, your perspective around that.

Daniel Moore: Just curious, like what you're seeing on the ground in terms of, you know, new RFPs coming out. Just would love to hear more perspective, your perspective around that.

Craig Conti: Yeah, great question. I think one point to start is, as I say, there's nothing new under the sun. That includes any sort of comments in the press related to automated enforcement that's been going on for 18 years. That's something very normal, it has moments where it's a little higher volume like it is right now. I would just point to the state legislatures that have opened up the $350 million of TAM that we talked about the last 3 years. I think we continue to be in a really good place.

Mark Zindler: Yeah, great question. I think one point to start is, as I say, there's nothing new under the sun. That includes any sort of comments in the press related to automated enforcement that's been going on for 18 years. That's something very normal, it has moments where it's a little higher volume like it is right now. I would just point to the state legislatures that have opened up the $350 million of TAM that we talked about the last 3 years. I think we continue to be in a really good place.

Yeah, great question. I think 1 1 point to start is uh, as they say, there's nothing new Under the Sun and that includes any sort of comments in the Press related to automated enforcement that's been going on for 18 years. So that's something very normal has has moments, where it's a little higher volume, like it is right now, but then I would just point to the state legislators that have opened up the 350 million dollars of tan that we talked about the last 3 years. So I think that's where the market stands. Um, and so I think we continue to be in a really good place. I think because the industry has done a really good job of pivoting to very specific. What we call purpose-built use cases in places, like school zones and work zones and school buses. Those are, um, what I would just consider, you know, quote unquote more popular, and I think draw less, um, sort of feedback. So, overall, I feel like we're in a good place. This is nothing that is new to, uh, variability or to the industry. And it's something that we just handle uh, as it comes.

All right. Thank you.

Craig Conti: I think because the industry has done a really good job of pivoting to very specific, what we call purpose-built use cases, in places like school zones and work zones and school buses, those are, what I would just consider, you know, quote, unquote, "more popular," and I think draw less, sort of feedback. Overall, I feel like we're in a good place. This is nothing that is new to Verra Mobility or to the industry, and it's something that we just handle as it comes.

Mark Zindler: I think because the industry has done a really good job of pivoting to very specific, what we call purpose-built use cases, in places like school zones and work zones and school buses, those are, what I would just consider, you know, quote, unquote, "more popular," and I think draw less, sort of feedback. Overall, I feel like we're in a good place. This is nothing that is new to Verra Mobility or to the industry, and it's something that we just handle as it comes.

Thank you. And our next question will come from tommo Sano with JP Morgan your lines open.

Hello everyone.

Hey.

Yeah, great question. I think one point to start is, as they say, there's nothing new under the sun, and that includes any sort of comments in the press related to automated enforcement—that's been going on for 18 years. So that's something very normal. It has moments where it's a little higher volume, like it is right now, but then I would just point to the state legislators that have opened up the $350 million of TAN that we talked about over the last three years. So I think that's where the market stands. And so I think we continue to be in a really good place. I think because the industry has done a really good job of pivoting to very specific, what we call purpose-built use cases in places like school zones and work zones and school buses. Those are

What I would just consider, you know, quote unquote more popular, and I think draw less, um, sort of feedback. So, overall, I feel like we're in a good place. This is nothing that is new to, uh, variability or to the industry. And it's something that we just handle uh, as it comes.

[Analyst] (CJS Securities): All right. Thank you.

Daniel Moore: All right. Thank you.

All right. Thank you.

Operator: Thank you. Our next question will come from Tomohiko Sano with JP Morgan. Your line's open.

Thank you for taking my questions. Um, could you talk about the, what the new New York City contract? Finalized, would you be able to quantify the impacts of price normalization and mwbe requirements or margins? And if, if you could discuss your expectations for the pace of margin normalization from 2027 or uh, please thank you.

Tomohiko Sano: Hello, everyone.

Tomo Sano: Hello, everyone.

Thank you. And our next question will come from Tomo Sano with JP Morgan your lines open.

Craig Conti: Hey, Tomo.

Tomohiko Sano: Thank you for taking my questions. Could you talk about with the new New York City contract finalized, would you be able to quantify the impact of price normalization and MWBE requirements on margins? If you could discuss your expectations for the pace of margin normalization from 2027 onward, please. Thank you.

Tomo Sano: Thank you for taking my questions. Could you talk about with the new New York City contract finalized, would you be able to quantify the impact of price normalization and MWBE requirements on margins? If you could discuss your expectations for the pace of margin normalization from 2027 onward, please. Thank you.

1, it's almost

Yeah, the, the best way to I, I could think to answer that. Um, I I got to be careful, um, from a competitive standpoint, of course, but if, if you compare the new contract with the old contract, right? So as you know, Tomo we've had this contract in some form or fashion for, for quite some time, this is uh the the latest iteration of that significantly expanded.

I like to talk about it in terms of uh margin dollars.

Thank you for taking my questions. Um, could you talk about the with the new New York City contract? Finalized, would you be able to quantify the impact of price normalization and mwbe requirements or margins? And if, if you could discuss your expectations for the pace of margin, normalization from 2027 onward? Uh, please. Thank you.

Craig Conti: Yeah, the best way, Tomo, I could think to answer that, I got to be careful from a competitive standpoint, of course. If you compare the new contract with the old contract, right? As you know, Tomo, we've had this contract in some form or fashion for quite some time. This is the latest iteration of that, significantly expanded. I like to talk about it in terms of margin dollars. There's a couple things going on in this contract. The first thing is, there's 3, several thousand camera expansion, okay? Depending on use cases. That's margin dollars in this contract. There's also new scope in the contract that we're doing things we didn't do before for the city. That's margin dollars into the contract.

First thing is, there's 3 uh several thousand camera um, expansion, okay? Depending on the use cases, that's margin dollars in this contract.

There's also new scope in the contract that we're doing things we didn't do before for the city, that's margin dollars into the contract.

and then there are things that we used to do, kind of call it at at

Yeah, the, the best way to I, I could think to answer that. Um, I I got to be careful, um, from a competitive standpoint of course, but if, if you compare the new contract with the old contract, right? So as you know, Tom we've had this contract in some form or fashion for for quite some time, this is uh the the latest iteration of that significantly expanded, I like to talk about it in terms of uh margin dollars.

So, it's a couple things going on in this contract. The first thing is, there's 3, uh, several thousand camera, um, expansion, okay? Depending on the use cases, that's margin dollars in this contract.

Craig Conti: There are things that we used to do, kind of, call it at breakeven, that now we do at a slight margin, so that's margin dollars into the contract. You've got the price, which is the modernization, I would say, of the revenue per approach. As you combine all of those things over the life of this deal, which is a 10-year deal, 5-year with an renewable term, so let's say 5-year deal, you get to roughly even margin dollars. That's the way to think about it. The investment that Verra is making into the project or what's causing that, and the $22 to 24 million I mentioned in my script, that is us using the minority and women-owned subcontractors in the state of New York.

There's also new scope in the contract, that we're doing things we didn't do before for the city. That's margin dollars into the contract.

And then there are things that we used to do, kind of call it at-at.

Break even that now we do in a slight margin. So, that's margin dollars into the contract and then you've got the price which is the the modernization, I would say of the, uh, of the revenue per approach, as you combine all of those things over the life of this deal, which is a 10-year deal 5 year with an original. For, let's say 5 year deal, you get to roughly even margin dollars. That's the way to think about it. The investment that there is making into the that making into the project or what's causing that and the 22 to 24 million dollars. I mentioned in my script that is US using the minority and women-owned subcontractors in the state of New York. So the way to think about that, that's work that we used to do in-house that now we're subcontracting out to those folks that are based in the 5 Buren, in the contract.

Does that make sense from a margin standpoint?

Craig Conti: The way to think about that's work that we used to do in-house, that now we're subcontracting out to those folks that are based in the five boroughs. That's the investment in the contract. Does that make sense from a margin standpoint?

Yep. It's clear, thank you and just wanted to get a follow-up on the AI questions from a long-term perspective. How do you the evolves the risk and opportunity that advances in AI present for your business model? Including the potential for rental car companies to develop their own AI driven Solutions and your own efforts differentiate and create the value through AI please?

Break even that now we do in a slight margin. So, that's margin dollars into the contract and then you've got the price which is the the modernization, I would say of the, uh, of the revenue per approach, as you combine all of those things over the life of this deal, which is a 10 year deal 5 year with an original proof. So let's say, 5 year deal, you get to roughly even margin dollars. That's the way to think about it. The investment that they're making into the is that making into the project or what's causing that and the 22 to 24 million dollars. I mentioned in my script that is using the minority and women owned subcontractors in the state of New York. So, the way to think about that, that's work that we used to do in-house that now, we're subcontracting out to those folks that are based in the 5, b, that's the investment in the contract.

Tomohiko Sano: Yep, it's clear. Thank you. Just wanted to get a follow-up on the AI questions. From a long-term perspectives, how do you view both the risk and opportunities that advances in AI present for your business model, including the potential for rental car companies to develop their own AI-driven solutions and your own efforts to differentiate and create the value through AI, please?

Tomo Sano: Yep, it's clear. Thank you. Just wanted to get a follow-up on the AI questions. From a long-term perspectives, how do you view both the risk and opportunities that advances in AI present for your business model, including the potential for rental car companies to develop their own AI-driven solutions and your own efforts to differentiate and create the value through AI, please?

Does that make sense from a margin standpoint?

Yep. It's Claire, thank you and just wanted to get a follow-up on the AI questions from a long-term perspective. How do you divorce the risk and opportunities that advances in AI present for your business model? Including the potential for rental car companies to develop their own AI driven Solutions and your own efforts to differentiate and create the value through AI, please?

Craig Conti: Yeah, I mean, I don't think there's a public company CEO that wouldn't say, yes, AI is gonna have some impact on their business on some point. What I would say is, we're gonna be on offense on this, not on defense, which is we've already deployed AI into some of the technology we've deployed today. We're using it regular in our software development, as I mentioned in the closing part of my remarks, we really feel that AI and autonomous vehicles create a really great lane of potential future growth for us. Specifically, as you go back to your specific question is, the AI also, we still continue to work with tolling authorities and some technology that's probably a little less AI-oriented.

Mark Zindler: Yeah, I mean, I don't think there's a public company CEO that wouldn't say, yes, AI is gonna have some impact on their business on some point. What I would say is, we're gonna be on offense on this, not on defense, which is we've already deployed AI into some of the technology we've deployed today. We're using it regular in our software development, as I mentioned in the closing part of my remarks, we really feel that AI and autonomous vehicles create a really great lane of potential future growth for us. Specifically, as you go back to your specific question is, the AI also, we still continue to work with tolling authorities and some technology that's probably a little less AI-oriented.

Yeah, I mean I think I don't think there's a public company CEO that wouldn't say yes, AI is going to have some some impact on their business. So uh, some point what I would say is, uh, we're going to be on offense on this, not on defense, which is where I've already deployed AI into some of the technology we've deployed. Today, we're using a regular nurse software development, and as I mentioned in the closing, part of my remarks, we really feel that Ai and autonomous vehicles, create a really great Lane of potential future growth for us. Um specifically. But as you go back to your specific, question is, um, their AI. Also, we, we still continue to work with tolling authorities and some technology. That's probably a little less AI oriented. Um, so we continue to find new ways to integrate with them, as well. As we're always pushing on with our customers, how can we add more value? What are new products and services that we can deploy? Uh, and you see that in our connected vehicle platform which I think is sort of where the next generation of tooling will occur, which is inside of the connected vehicle. It's still a ways away. I don't think if any

Anytime soon, but we've already made inroads with folks, like stellantis to help, create that platform. So I think we feel pretty good about where we sit today.

Thank you very helpful.

Craig Conti: We continue to find new ways to integrate with them, as well as we're always pushing on with our customers, how can we add more value? What are new products and services that we can deploy? You see that in our connected vehicle platform, which I think is sort of where the next generation of tolling will occur, which is inside of a connected vehicle. It's still a ways away. I don't think it's anytime soon, but we've already made inroads with folks like Stellantis to help create that platform. I think we feel pretty good about where we sit today.

Mark Zindler: We continue to find new ways to integrate with them, as well as we're always pushing on with our customers, how can we add more value? What are new products and services that we can deploy? You see that in our connected vehicle platform, which I think is sort of where the next generation of tolling will occur, which is inside of a connected vehicle. It's still a ways away. I don't think it's anytime soon, but we've already made inroads with folks like Stellantis to help create that platform. I think we feel pretty good about where we sit today.

Thank you. And the next question is going to come from Daniel Moore with CJs security your lines open?

Yeah, I mean I think I don't think there's a public company CEO that wouldn't say yes, AI is going to have some some impact on their business. So uh, some point what I would say is, uh, we're going to be on offense on this, not on defense, which is where I've already deployed AI into some of the technology we've deployed. Today, we're using regular in our software development and as I mentioned in the closing, part of my remarks, we really feel that Ai and autonomous vehicles, create a really great Lane of potential future growth for us. Um specifically. But as you go back to your specific, question is, um, their AI. Also, we, we so continue to work with tolling authorities and some technology. That's probably a little less AI oriented. Um, so we continue to find new ways to integrate with them, as well. As we're always pushing on with our customers, how can we add more value? What are new products and services that we can deploy? Uh, and you see that in our connected vehicle platform? Which I think, is where the next generation of tolling will occur, which is inside of the connected vehicle. It's still a ways away. I don't think it's any time.

Soon. But we've already made inroads with folks like Stellantis to help create that platform. So I think we feel pretty good about where we sit today.

Tomohiko Sano: Thank you. Very helpful.

Tomo Sano: Thank you. Very helpful.

Thank you very helpful.

Operator: Thank you. The next question is gonna come from Daniel Moore with CJS Securities. Your line's open.

Yes. Thanks for the caller and take the questions, David and Craig. Um, just wanted to ask on cash flow. Just I think your capex expectations 125 million. Um, the the guidance includes 22 million of collections that kind of spilled over. So just wondering kind of what the working capital embedded in the guidance. And, um, you know, when we might get back to a more normalized level of conversions, when you sort of,

Thank you. And the next question is going to come from Daniel Moore with CJs security your lines open?

[Analyst] (CJS Securities): Yes, thanks for the color and taking the questions, David and Craig. Just wanted to ask on the cash flow. Just I think your CapEx expectation is $125 million. The guidance includes $22 million of collections that kind of spilled over.

Daniel Moore: Yes, thanks for the color and taking the questions, David and Craig. Just wanted to ask on the cash flow. Just I think your CapEx expectation is $125 million. The guidance includes $22 million of collections that kind of spilled over.

Craig Conti: Yep

[Analyst] (CJS Securities): ... just wondering kind of what the working capital embedded in the guidance and, you know, when we might get back to a more normalized level of conversions when you sort of factor that good guy in to, you know, that's helping the guidance in 2026.

Craig Conti: Yep

Daniel Moore: ... just wondering kind of what the working capital embedded in the guidance and, you know, when we might get back to a more normalized level of conversions when you sort of factor that good guy in to, you know, that's helping the guidance in 2026.

Factor that, that, that good guy in to, you know, that. That's helping the guidance in 26? Yeah, yeah. No, you bet? Yeah, great question. Um, so I, I would say that that this is closed, uh, close to normal. Um, when so working capital, let me answer your question. Directly is 20 million dollar investment year-over-year that I think that sounds slide 11 so that'll be there to to look at for your model later. Um, and that is what I always call A righteous use of working capital. The vast majority of that is, as we grow our Commercial Services business, which is the expected single digit growth this year, that's more funds on deposit that we put

Craig Conti: Yeah, yeah. No, you bet, Dan. Great question. I would say that this is close to normal. Working capital, let me answer your question directly, is 20 million dollar investment year-over-year. I think that's on slide 11, that'll be there to look at for your model later. That is what I always call a righteous use of working capital. The vast majority of that is as we grow our Commercial Services business, which is, we expect mid-single-digit growth this year, that's more funds on deposit that we put with the 54 plus toll authorities in the United States. As that business grows, working capital should always be a little bit more of a use.

Uh, with the 54 plus total authorities in, in the United States. So as that business grows working capital should always be, uh, a little bit more of of a use. I think as you paste that out and you you picked out exactly the right. The right pieces. The reason why that 22 million, um, that I got in 26 that I expected in 25, didn't push that number North is because capex is a little higher than I thought.

Craig Conti: I think as you pace that out, and you picked out exactly the right pieces. The reason why that $22 million that I got in 26, that I expected in 25, didn't push that number north, is because CapEx is a little higher than I thought. If we go back a couple quarters, I don't know if it was you that asked it, Dan, but someone did, said, you know, what do you think about for 2026 CapEx? The number I had was not as high as the 125 that we've got in the box and in the guide today. Had that number been the lower number I thought a few months ago, we would have had higher conversion. Now, that's kind of the bad news on conversion.

Digit growth this year, that's more funds on deposit that we put uh, with the 54 plus total authorities in in the United States. So as that business grows working capital should always be, uh, a little bit more of of a use. I think as you paste that out and you you picked out exactly the right. The right pieces. The reason why that 22 million, um, that I got in 26 that I expected in 25, didn't push that number North is because capex is a little higher than I thought.

Just because we continue to win on the government solution side of the house. I'm sure you saw the, uh, the Hawaiian announcement that went out not too long ago, and we've got a few more in the late funnel that I can't quite talk about yet that we expect to go here, um, in in the year. So what I think about our, our government Solutions business on a non-. New York City basis, service Revenue growing High, single digits approaching double digits, free cash, flow conversion, getting around. 40% is probably the right level for like that.

Craig Conti: The good news is, the reason why it's higher is because we continue to win on the Government Solutions side of the house. I'm sure you saw the Hawaii announcement that went out not too long ago, and we've got a few more in the late funnel that I can't quite talk about yet, that we expect to go here in the year. When I think about our Government Solutions business on a non-New York City basis, service revenue growing high single digits, approaching double digits, free cash flow conversion, getting around 40% is probably the right level to look at.

All right, that's helpful. Okay. Um, and then you actually just touched on it. Uh, the Hawaii contract, um, just talk a little bit about uh, you know, kind of the Cadence of Revenue. How you think about the ramp and that 160 million over the next few years?

So if we go back a couple quarters, I don't know if it was you that asked that and if someone did said, you know what is, what do you think about for 2026, uh, capex? And then the number I had was not as high as the 125 that we've got in the box and then the guy today, so had that number been the lower number. I thought a few months ago we would have had higher conversion. Now, that's kind of the bad news on, on conversions. The good news is the reason why it's higher is because we continue to win on the government solution side of the house. I'm sure you saw the, uh, the Hawaiian announcement that went out not too long ago, and we've got a few more in the late funnel that I can't quite talk about yet that we expect to go here. Um, in in the year. So what I think about our our government Solutions business on a non New York City basis, service Revenue growing High, single digits approaching double digits, free cash, flow conversion, getting around. 40% is probably the right level of like that.

Shefali Tamaskar: All right. That's helpful, Craig. Then you actually just touched on it, the Hawaii contract. Just talk a little bit about, you know, kind of the cadence of revenue, how we should think about the ramp in that $160 million over the next few years.

Daniel Moore: All right. That's helpful, Craig. Then you actually just touched on it, the Hawaii contract. Just talk a little bit about, you know, kind of the cadence of revenue, how we should think about the ramp in that $160 million over the next few years.

All right, that's helpful. Craig. Um, and then you actually just touched on it. Uh, the Hawaii contract, um, just talk a little bit about uh, you know, kind of the Cadence of Revenue. How you think about the ramp and that 160 million over the next few years?

Craig Conti: Yeah, this is a big, a big deployment in a small area. You'd think it'd go fast, but actually it's kind of the opposite. I expect to see this over the next several years. All right? This is typically, I'd say 12 to 18 months. I think this one is probably more 36 months, maybe a little bit north of that. You know, we've got a pretty big geographical area to cover here, even though there's not a lot of landmass. It's very exciting win for us. Great partnership with the state. We're super pleased about it. It's gonna be a little slower on the rollout, but good news. Good news all around.

Yeah this 1 is this is a a big, a big deployment um in in a small area. Uh so you think it'd go fast but actually it's kind of the opposite I expect to see this over the next several years. All right, so this is typically I say 12 to 18 months. I think this 1 is probably more 36 months, maybe a little bit north of that and you know we've got a pretty big geographical area to cover here even though there's not a lot of land mass so it very exciting win for us, great partnership with the state for super pleased about it. It's going to be a little slower on the roll out, but, uh, good news. Good news all around.

All right. I'll talk to the follow-up. Thank you.

Thank you, thank you. As a reminder, to ask a question. Please press star, 1 1 on your telephone. The next question comes from, David koning with Bayer. Your line is open.

Yeah this 1 is this is a a big, a big deployment um in a small area. So you think it'd go fast but actually it's kind of the opposite I expect to see this over the next several years. All right so this is typically I say 12 to 18 months I think this 1 is probably more 36 months, maybe a little bit north of that and you know we've got a pretty big geographical area to cover here even though there's not a lot of land mass so it very exciting win for us, great partnership with the state for super pleased about it. It's going to be a little slower on the roll out, but, uh, good news. Good news all around.

Shefali Tamaskar: All right. I'll stick back with the follow-ups. Thank you.

Daniel Moore: All right. I'll stick back with the follow-ups. Thank you.

Craig Conti: Thank you.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. The next question comes from David Koning with Baird. Your line is open.

Thank you, thanks.

Yeah. Hey guys, thanks, nice job. Um, I guess my question is around the government business, a, a ARR growth, the backlog really good again and I guess my question is, is that better than you expected and do you still feel like the 27, 2829 expectations, you gave for government revenue. Hold, uh, the ones you gave last quarter. Do those still hold? Are those even a little better now, with some of the new signings

David Koning: Yeah. Hey, guys. Thanks. Nice, nice job. I guess my question is around the government business, AI, ARR growth, the backlog. really good again. I guess my question is that better than you expected? Do you still feel like the 2027, 2028, 2029 expectations you gave for government revenue hold, the ones you gave last Q? Do those still hold, or are those even a little better now with some of the new signings?

Thank you as a reminder, to ask a question. Please press star, 1 1 1 on your telephone. The next question comes from, David kooning with Bayer, your line is open.

Yeah, I I would say, uh, thanks for the question, Dave. I I, I would say hold the. Those are they still hold what we talked about last time and the 1 that we talked about last time, specifically was the 2027 feel like, uh, you know, um, double digits and and I, I still see a path to that today. So,

Craig Conti: Yeah, I would say. Thanks for the question, Dave. I would say hold. Those still hold to what we talked about last time, and the one that we talked about last time specifically was does 2027 feel like, you know, double digits? I still see a path to that today. Maybe just one more level of detail on that. When we talked last quarter, and we gave that view out to 2028, I believe that we had non-New York City growing in the high single digits, which is from an organic perspective, which is exactly what we've got in the guide today.

Yeah. Hey guys, thanks. Nice job. Um, I guess my question is around the government business, AI, ARR growth, the backlog really good again, and I guess my question is, is that better than you expected? And do you still feel like the 2728, 29 expectations you gave for government revenue? Hold, uh, the ones you gave last quarter. Do those still hold? Are those even a little better now with some of the new signings

Maybe just 1 more level of detail on that when we talked last quarter and we gave that view out to 2028. I, I believe that we had not New York City growing in the high single digits, which is it from, uh, from an organic perspective. Which is exactly what we've got in the guide today. So, I don't

I I'm a little closer to it and I still am as confident as when I said it. Last quarter that uh 27 looks uh looks especially good.

Okay, thanks for that. And then as a follow-up, it sounds like you're going to exit this year in the mid 20s margin within the government segment is, is that a fair kind of starting point, you know as we think in the out years that we we know you can get back to at least the mid 20s and hopefully get back to 30% over time.

Craig Conti: I'm a little closer to it, and I still am as confident as what I said at last quarter, that, 27 looks especially good.

Maybe just 1 more level of detail on that when we talked last quarter and we gave that view out to 2028. I, I believe that we had non New York City growing in the high single digits, um, which is from uh, from an organic perspective, which is exactly what we've gotten the guy in today. So I don't

I'm a little closer to it and I still am as confident as what I said at last quarter that uh 27 looks uh looks especially good.

David Koning: Okay, thanks for that. As a follow-up, it sounds like you're gonna exit this year in the mid-twenties margin within the government segment. Is that a fair kind of starting point, you know, as we think in the out years, that we know you can get back to at least the mid-twenties and hopefully get back to 30% over time?

Craig Conti: Yeah, I think we're gonna exit. I'm gonna consult my notes here. Give me one second to make sure. Yeah, we're gonna exit with GS, I think, a little lower than the mid-20s this year. We should be on the lower end of the 20s, which is, again, consistent with last quarter. But does that path still exist to get up to the mid to high 20s by 2028, going into 2029? The answer is yes. The path to that is volume leverage, first of all, and second of all, is Mosaic.

Yeah, I think we're going to exit. I'm going to check I'm going to consult my notes here. Give me 1 second. Make sure. Yeah, we're we're going to exit uh with GS. I think a little lower than uh than than the mid 20s this year. We should be on the lower end of the of the 20s, which is again, consistent with last quarter. Um, but does that path? Still exist to get up to the mid to high 20s, by 2028 going into 2029, and the answer is is yes. And and the path to that is volume leverage. And first of all, and second of all the is mosaic

All right, so great guys. Thank you.

Thank you, and our next in our next question will come from James faucet with Morgan Stanley. Your line is open

David Koning: All right. Sounds great, guys. Thank you.

All right, so great guys. Thank you.

Hi, this is shavali tamaskar on for James. Thank you for taking my question. So you have some really helpful commentary around AI specifically around increasing R&D and how you view AI as a lane for potential future growth. So I wanted to better understand how you think about the trade-offs between building out technology related to AI internally versus partnering or potentially acquiring targets with AI capabilities.

Operator: Thank you.

Craig Conti: Thank you.

Operator: Our next question will come from James Faucette with Morgan Stanley. Your line is open.

Thank you, and our next.

I'm from James faucet with Morgan Stanley. Your line is open.

Shefali Tamaskar: Hi, this is Shefali Tamaskar on for James. Thank you for taking my question. You gave some really helpful commentary around AI, specifically around increasing R&D and how you view AI as a lane for potential future growth. I wanted to better understand how you think about the trade-offs between building out technology related to AI internally versus partnering or potentially acquiring targets with AI capabilities.

Craig Conti: Yeah, great question. I think, the way I would describe my answer is it's both and not either or. Meaning, we probably see that, relative to AI impacting transportation, it's gonna be showing up in autonomous vehicles, and there's gonna be a slightly slower bend toward that over the next decade or two as more autonomous fleets get proliferated, the legislation gets set. There's a lot to be worked out, there's both a arms and legs component of that, and then there's also an AI and software development side. I would say that we're open to partnering and have already started conversations. Actually, the Stellantis conversation is a really good one, where we're partnering with them. That's not explicitly AI, but it is software delivered in a connected vehicle case, which is good.

Mark Zindler: Yeah, great question. I think, the way I would describe my answer is it's both and not either or. Meaning, we probably see that, relative to AI impacting transportation, it's gonna be showing up in autonomous vehicles, and there's gonna be a slightly slower bend toward that over the next decade or two as more autonomous fleets get proliferated, the legislation gets set. There's a lot to be worked out, there's both a arms and legs component of that, and then there's also an AI and software development side. I would say that we're open to partnering and have already started conversations. Actually, the Stellantis conversation is a really good one, where we're partnering with them. That's not explicitly AI, but it is software delivered in a connected vehicle case, which is good.

There's a lot to be worked out and so there's a there's both a uh, arms and legs component of that. And then there's also an AI and software development side. So I would say that we're open to partnering and have already started conversations. And actually the solantis conversations are really good 1 where we're partnering with them. That's not explicitly AI, but it is software software delivered in uh in a connected vehicle case, which is good. So I would say we will be more than open to partnering with but first and foremost, we want to find the use cases and the problems that are most impacting, the current customers we have, and really go hard at the Hard of the hoop to solve those and we'll do that with our own Capital. Our own, you know, Innovation, we can do it through potentially capabilities through acquisition and or partnership.

Great. Thank you.

Craig Conti: I would say we will be more than open to partnering with, but first and foremost, we wanna find the use cases and the problems that are most impacting the current customers we have, and really go hard at the hoop to solve those. We'll do that with our own capital, our own, you know, innovation. We can do it through potentially capabilities, through acquisition and/or partnership.

Mark Zindler: I would say we will be more than open to partnering with, but first and foremost, we wanna find the use cases and the problems that are most impacting the current customers we have, and really go hard at the hoop to solve those. We'll do that with our own capital, our own, you know, innovation. We can do it through potentially capabilities, through acquisition and/or partnership.

Thank you. And I am showing no further questions in the queue.

This concludes today's conference call and thank you for participating and you may now disconnect

Yeah, great question. I think. Um, the way I would describe my answer is it's both and and not either or meaning. Um, we probably see that uh, relative to AI impacting Transportation. It's going to be showing up and on Thomas vehicles and there's going to be a a slightly slower Bend toward that over the next decade or 2 is more autonomous fleets, get proliferated the legislation gets set, there's a lot to be worked out and so there's a there's both a uh arms and legs component of that. And then there's also an AI and software development side. So I would say that we're open to partnering and have already started conversations and actually the solantis conversations are really good 1 where we're partnering with them. That's not explicitly AI, but it is software software delivered in uh in a connected vehicle case, which is good. So I would say we will be more than open to partnering with but first and foremost, we want to find the use cases and the problems that are most impacting, the current customers we have, and really go hard at the Hard

The hope is to solve those, and we'll do that with our own capital—our own, you know, innovation. We can do it through, potentially, capabilities through acquisition and/or partnership.

Shefali Tamaskar: Great. Thank you.

Great. Thank you.

Craig Conti: Yeah.

Mark Zindler: Yeah.

Operator: Thank you. I am showing no further questions in the queue. This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you. And I am showing no further questions in the queue.

This concludes today's conference call and thank you for participating and you may now disconnect

Craig Conti: Thank you. Thank you.

Mark Zindler: Thank you.

Craig Conti: Thank you.

Thank you. Thank you.

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