Verra Mobility (NASDAQ:VRRM) reported fourth-quarter and full-year 2025 results that management said reflected “strong execution and momentum” across its three segments, led by growth in Government Solutions and higher rental car tolling activity in Commercial Services. The company also provided 2026 guidance that calls for mid-single-digit revenue growth but lower consolidated adjusted EBITDA margin, largely tied to the updated New York City contract economics and portfolio mix.
Fourth-quarter performance and profitability
Chief Executive Officer David Roberts said total revenue in the fourth quarter rose 16% year-over-year, exceeding internal expectations, while adjusted EBITDA and adjusted EPS were generally in line with what management had planned.
The company reported net income of $19 million and GAAP diluted EPS of $0.12, compared with a GAAP loss of $0.41 per share in the prior-year period. Conti said GAAP results included about $16 million of non-recurring expenses, including roughly $6 million related to a fourth-quarter debt refinancing and $10 million related to fixed asset write-downs tied to an exit from Ontario, Canada. Adjusted EPS was $0.30, down from $0.33 a year ago, which management attributed primarily to New York City readiness costs.
New York City contract and Government Solutions momentum
Roberts said Verra Mobility signed and registered its automated photo enforcement contract with the New York City Department of Transportation at the end of December 2025. He put the total contract value at $998 million over a five-year period, with an option for a five-year renewal.
Under the company’s then-existing contract, Verra Mobility generated $22 million of revenue in the fourth quarter attributable to New York City red light camera installations, including approximately $14 million of installation services revenue and about $8 million of product revenue.
Government Solutions revenue increased 25% year-over-year in the quarter, driven primarily by the New York City red light expansion. Roberts also highlighted approximately $23 million of incremental annual recurring revenue (ARR) bookings in the fourth quarter on a full run-rate basis, bringing full-year 2025 bookings to about $64 million. He cited wins including:
- A school zone speed program in Orlando, Florida
- A red light enforcement program in Pittsburgh, Pennsylvania
- A speed enforcement program across the state of Hawaii
Roberts said the company’s U.S. addressable market has expanded by approximately $365 million due to enabling legislation over the past three years, with potential to expand to about $500 million if California passes additional enabling legislation for statewide speed enforcement. He also acknowledged ongoing legislative activity and public debate around automated enforcement, while emphasizing industry and government recognition of automated speed enforcement as a safety countermeasure.
From a margin standpoint, Conti said Government Solutions segment profit was $31 million in the quarter, with margins of about 24% versus 34% a year earlier, driven by readiness investments for New York City and a comparison to lower credit loss expense in the prior-year period. For the full year, Government Solutions generated $461 million of revenue, up 18%, while segment profit of $122 million was roughly flat year-over-year.
Commercial Services and Parking Solutions updates
Commercial Services revenue increased about 10% in the fourth quarter, while segment profit rose 7%. Roberts said rental car (RAC) tolling increased 16% year-over-year on higher travel volume and product adoption, partially offset by an 8% decline in fleet management revenue due to prior-period churn discussed earlier in 2025. Conti said Commercial Services segment profit margin was 64% in the quarter, with the margin decline driven by a modest increase in credit loss expense and one-time SG&A costs. For the full year, Commercial Services generated $436 million of revenue (7% growth) and segment profit of $283 million (about 65% margin), with the year-over-year margin decline tied to ERP implementation costs and higher credit loss expense.
In Parking Solutions (T2 Systems), Roberts described the business as “stable, improving, and being invested in thoughtfully.” Fourth-quarter total revenue increased 5% year-over-year, while Conti reported quarterly revenue of $21 million and segment profit of about $2 million. For the full year, Parking Solutions delivered $83 million of revenue (up about 2%) and $11 million of segment profit, with SaaS revenue up 2% year-over-year.
Capital allocation, balance sheet, and 2026 outlook
Conti said gross debt at year-end was about $1 billion, including approximately $690 million of floating-rate debt. Net debt ended at $972 million, elevated sequentially due to share repurchases, and net leverage was 2.3x. The company had an expanded $150 million undrawn revolving credit facility. During the fourth quarter, Verra Mobility repurchased about 6 million shares for approximately $133 million; Conti said the board expanded the buyback authorization by $150 million, bringing the total authorization to $250 million.
For 2026, management guided to:
- Total revenue of $1.02 billion to $1.03 billion (about 5% growth at the midpoint)
- Adjusted EBITDA of $405 million to $415 million (about 40% margin, down about 250 basis points year-over-year)
- Adjusted EPS of $1.32 to $1.38
- Free cash flow of $150 million to $160 million
Conti said the expected margin decline reflects a combination of portfolio mix (Government Solutions growing faster than Commercial Services), as well as pricing changes and incremental operating costs under the New York City renewal contract, partially offset by lower ERP implementation costs and modest margin expansion in Commercial Services.
Management also provided commentary on quarterly pacing: Conti said first-quarter 2026 revenue is expected to be roughly flat year-over-year, with improvement in subsequent quarters. In response to analyst questions, he cited factors such as weather affecting installation activity in New York City and travel pacing, as well as the impact of fleet management churn comparisons early in the year.
Within Government Solutions, Conti said 2026 service revenue growth would be driven by $11 million from the updated New York City contract expansion and roughly $20 million (about 8%) growth outside New York City, while product revenue is expected to be roughly flat as New York City product sales are offset by lower international product revenue. Government Solutions margins are expected to be down 450 to 500 basis points year-over-year in 2026, with margins ramping through the year as volume builds and Mosaic-related cost savings begin to contribute.
Roberts and Conti also discussed longer-term technology initiatives, including modernizing platforms such as Mosaic in Government Solutions and accelerating development of a connected vehicle platform in Commercial Services, including work tied to a partnership with Stellantis. On the call, management emphasized a disciplined approach to AI-related investment, including internal development as well as partnerships and potential acquisitions, while focusing on use cases relevant to its current customer base.
About Verra Mobility (NASDAQ:VRRM)
Verra Mobility, traded on the Nasdaq under the ticker VRRM, is a leading provider of smart mobility solutions designed to improve safety, efficiency and compliance for transportation authorities and commercial fleets. The company develops and operates automated traffic enforcement systems, toll and violation management platforms, and connected-vehicle services. Through its technology offerings, Verra Mobility helps public agencies enhance road safety, reduce congestion and streamline revenue collection for tolling and parking.
Verra Mobility’s core products include red-light and speed-camera enforcement programs, license plate recognition systems, and cloud-based violation processing software.
