VERRA MOBILITY Corp: Form 10-Q for the period ended Sep 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read together with our Annual Report, and our financial statements and the related notes included in Part I, Item 1 “Financial Statements” of this Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Please refer to the section in this Report entitled “Cautionary Note Regarding Forward-Looking Statements.”

Overview

We are a leading provider of smart mobility technology solutions, principally operating throughout the United States, Australia, Europe, and Canada. We make transportation safer, smarter, and more connected through our integrated, data-driven solutions, including toll and violations management, title and registration services, automated safety and traffic enforcement, and commercial parking management. We bring together vehicles, hardware, software, data, and people to solve transportation challenges for customers around the world, including commercial fleet owners such as rental car companies (“RACs”), direct commercial fleet owner-operators (“Direct Fleets”), and fleet management companies (“FMCs”), as well as governments, universities, parking operators, healthcare facilities, transportation hubs, and violation-issuing authorities. Our vision is to continue to develop and use technology and data intelligence to make transportation safer, smarter, and more connected globally.

Our Segments

We have three operating and reportable segments, Commercial Services, Government Solutions, and Parking Solutions:

• Our Commercial Services segment offers toll and violation management solutions and title and registration services for commercial fleet customers, including RACs and FMCs in North America. In Europe, we provide tolling and violations processing services.
• Our Government Solutions segment offers photo enforcement solutions and services to its customers. We provide complete, end-to-end speed, red-light, school bus stop arm, and bus lane enforcement solutions. Our international operations primarily involve the sale of traffic enforcement products and recurring maintenance services related to the equipment and software.
• Our Parking Solutions segment provides an integrated suite of parking software, transaction processing, and hardware solutions to universities, municipalities, commercial parking operators, and health care facilities in the United States and Canada.

Segment performance is based on revenues and income from operations before depreciation, amortization, and stock-based compensation. The measure also excludes interest expense, net, income taxes and certain other transactions and is inclusive of other income, net.

Executive Summary

We operate under long-term contracts and a reoccurring service revenue model. We continue to execute our strategy to grow revenue organically year-over-year and focus on initiatives that support our long-term strategy. During the periods presented, we:

• Increased total revenue by $63.5 million, or 9.7%, from $657.7 million in the nine months ended September 30, 2024 to $721.2 million in the same period in 2025. The increase was mainly due to service revenue resulting from increased travel volume in the Commercial Services segment and installation revenue from the New York City program, the growth from bus lane and school bus stop arm enforcement programs, back-office software-as-a-service (“SaaS”) programs and higher product sales in the Government Solutions segment.
• Generated cash flows from operating activities of $215.8 million and $183.2 million for the nine months ended September 30, 2025 and 2024, respectively. Our cash on hand was $196.1 million as of September 30, 2025.
• Lowered interest expense by $7.6 million for the nine months ended September 30, 2025 compared to the same period in 2024 due to debt refinancing in fiscal year 2024, further discussed below.

Recent Events

New York City Department of Transportation (“NYCDOT”) Red-Light Camera Expansion

NYCDOT instructed us through a change order to our existing contract with NYCDOT to install up to 250 red-light cameras by year-end 2025 as part of a legislatively authorized expansion. We installed 130 red-light cameras during the third quarter of 2025, which contributed approximately $17.0 million of revenue for the three months ended September 30, 2025, of which, approximately $6.3 million was product revenue and approximately $10.7 million was installation services revenue.

NYCDOT Contract

On March 31, 2025, NYCDOT announced that it identified us as the vendor to manage New York City’s automated enforcement camera safety programs for an expected five-year period after our current contract expires in December 2025, with an option for the parties to extend for an additional five years. The New York City automated enforcement program remains an active procurement. We are currently engaged in contract negotiations with NYCDOT and if the contract terms and pricing are materially different from our current contract, or if the parties ultimately fail to consummate a new agreement, it could have a material adverse effect on our business, financial condition, and results of operations.

Refinancing

On October 17, 2025, (i) certain of our direct and indirect wholly owned subsidiaries, including VM Consolidated, Inc. (“VM Consolidated”), entered into an Amended and Restated Revolving Credit Agreement (the “Amended and Restated Revolving Credit Agreement”) which provides for a $150 million senior secured asset-based revolving credit facility with a $35 million sublimit for the issuance of letters of credit, and matures on October 17, 2030 (subject to an earlier maturity date in certain circumstances) (the “Amended Revolver”), and (ii) VM Consolidated and certain of our subsidiaries entered into the Amendment and Restatement Agreement No. 2 to the Amended and Restated First Lien Term Loan Credit Agreement dated as of March 26, 2021 (such agreement amended and restated, the “Amended and Restated Term Loan Agreement”), to refinance the existing senior secured term loans in an aggregate outstanding principal amount of approximately $688.8 million with a new senior secured term loan of the same principal amount maturing on October 15, 2032 (the “Amended Term Loan”). For more information on the refinancing, see Note 15, Subsequent Events, to the Condensed Consolidated Financial Statements.

Share Repurchase Program

In May 2025, our Board of Directors authorized a share repurchase program for up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock over an 18-month period. On October 23, 2025, our Board of Directors authorized the repurchase of up to an additional $150.0 million of our outstanding shares of Class A Common Stock under the existing May 2025 program, providing us with $250.0 million available for repurchases. Under the repurchase program, we may purchase shares of Class A Common Stock until November 13, 2026 through open market purchases, in privately negotiated transactions or by other means, including trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and accelerated share repurchase (“ASR”) agreements, each as permitted under applicable rules and regulations. The amount and timing of repurchases will be determined at our discretion and will depend on a variety of factors, including price, general business and market conditions, applicable legal requirements, and alternative investment opportunities. The repurchase program does not obligate us to acquire any particular amount of Class A Common Stock or at any specific time intervals and may be modified, suspended, or terminated at any time at our discretion. We have not yet repurchased shares of Class A Common Stock under this program.

Key Factors Affecting Our Results of Operations

We believe that our performance and future success depends on a number of factors that present opportunities for us but also pose risks and challenges, including those discussed below and in Part I, Item 1A. “Risk Factors” of our Annual Report and in Part II, Item 1A. “Risk Factors” of this Quarterly Report.

Macroeconomic Conditions

Our business is susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: the inflationary impact on items such as wages and travel-related costs, future travel demand, legislation regarding the adoption, expansion, or prohibition of automated enforcement and traffic safety technology by local, state, or national governments, and the impact of the government regulations and actions, including tariffs, trade protection measures, or a prolonged government shutdown. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, financial condition, and results of operations.

Travel Demand

Our Commercial Services segment is largely impacted by its customer demand which in turn is impacted by a variety of factors including seasonality, demand for business and leisure travel, reductions in the level of air travel, higher airfare costs, increases in energy prices, general international, national, and local economic conditions and cycles, and consumer confidence, as well as other factors affecting travel levels, such as military conflicts, terrorist incidents, natural disasters, epidemic diseases, or a prolonged government shutdown.

We monitor the U.S. Transportation and Security Administration (the “TSA”) passenger volume (“TSA Passenger Volume”) as one of several measures for Commercial Services revenue growth. TSA Passenger Volume measures the number of passengers screened by the TSA at United States airports, which correlates to the number of vehicles rented by travelers and toll road usage. TSA Passenger Volume in the third quarter of 2025 was about 1% greater than TSA Passenger Volume for the same period in 2024.

Electronic Tolling Penetration

Our Commercial Services segment, which offers automated toll and violations management solutions to fleet customers, is impacted by the number of toll roads in the United States and Europe and the geographic concentration of such roads. We monitor the expansion and penetration of toll roadways across the United States and Europe and the percentage of toll roads that rely on cashless or all-electronic infrastructure.

Enabling Legislation

Our Government Solutions segment is positively impacted, in significant part, by enabling legislation that permits photo enforcement programs at the federal, state, and local level in the United States. Accordingly, we depend on national, state, and local governments authorizing the use of automated photo enforcement and not otherwise materially restricting its use.

Primary Components of Our Operating Results

Revenues

Service Revenue. Our Commercial Services segment generates service revenue primarily through the operation and management of tolling programs and processing violations for RACs, FMCs, and other large fleet customers. These solutions are full-service offerings by which we enroll the license plates of our customers’ vehicles and transponders with tolling authority accounts, pay tolls and violations on the customers’ behalf, and, through proprietary technology, integrate with customer data to match the toll or violation to the driver and then bill the driver (or our customer, as applicable) for use of the service. The cost of certain tolls, violations, and our customers’ share of administration fees are netted against revenue. We also generate service revenue in our Commercial Services segment through processing titles and registrations.

Our Government Solutions segment generates service revenue through the operation and maintenance of photo enforcement systems and certain hardware installation and relocation activities. Revenue drivers in this segment include the number of systems installed and the monthly revenue per system. Ancillary service revenue is generated in our Government Solutions segment from payment processing, pass-through fees for collection expense, and other fees.

Our Parking Solutions segment generates service revenue mainly from offering SaaS, subscription fees, professional services, and citation processing services related to parking management solutions to its customers.

Product Sales. Product sales are generated by the sale of photo enforcement equipment in the Government Solutions segment and specialized hardware in the Parking Solutions segment. Customer buying patterns vary greatly from period to period related to product sales.

Costs and Expenses

Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization consists of recurring service costs, certain hardware installation and relocation costs, collection and other third-party costs in our segments.

Cost of Product Sales. Cost of product sales consists of the cost to acquire photo enforcement equipment purchased by Government Solutions customers, certain hardware installation costs, and costs to develop hardware sold to Parking Solutions customers.

Operating Expenses. Operating expenses primarily include payroll and payroll-related costs (including stock-based compensation), subcontractor costs, payment processing, and other operational costs, including print, postage, and communication costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses include payroll and payroll-related costs (including stock-based compensation), real estate lease expense, insurance costs, professional services fees, and general corporate expenses.

Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net includes depreciation on property, plant and equipment, and amortization of definite-lived intangible assets. This line item also includes any one-time gains or losses incurred in connection with the disposal of certain assets.

Interest Expense, Net. This includes interest expense and amortization of deferred financing costs and discounts and is net of interest income.

Loss on Interest Rate Swap. Loss on interest rate swap related to the changes associated with the derivative instrument re-measured to fair value at the end of the reporting period and the related periodic cash receipts or payments.

Loss on Extinguishment of Debt. Loss on extinguishment of debt consists of the write-off of pre-existing original issue discounts and deferred financing costs associated with debt extinguishment.

Other Income, Net. Other income, net primarily consists of volume rebates earned from total spend on credit card transactions, gains or losses on foreign currency transactions, and other non-operating expenses.

Results of Operations

Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024

The following table sets forth our statements of operations data and expresses each item as a percentage of total revenue for the periods presented as well as the changes between periods. The tables and information provided in this section were derived from exact numbers and may have immaterial rounding differences.

($ in thousands)

Service Revenue. Service revenue increased by $26.0 million, or 11.9%, to $243.2 million for the three months ended September 30, 2025 from $217.3 million for the three months ended September 30, 2024, representing 92.9% and 96.3% of total revenue, respectively. The following table depicts service revenue by segment:

($ in thousands)

Commercial Services service revenue increased by $8.2 million, or 7.5%, from $109.1 million for the three months ended September 30, 2024 to $117.3 million for the three months ended September 30, 2025. The increase was primarily due to increased product adoption and tolling activity compared to the prior year which contributed to a $5.4 million growth in RAC tolling revenue during the three months ended September 30, 2025, compared to the same period in 2024. In addition, we derived $2.2 million of increased revenue from our European operations, partially offset by lower revenue generated from our FMC customers due to customer churn.

Government Solutions service revenue increased by $17.3 million, or 19.0%, from $91.0 million for the three months ended September 30, 2024, to $108.3 million for the three months ended September 30, 2025. The increase was primarily driven by a $10.7 million increase from installation service revenue driven by the NYCDOT red-light expansion program and $3.2 million from the expansion of bus lane and school bus stop arm enforcement programs, with the remaining increase driven primarily by speed and red-light enforcement programs.

Parking Solutions service revenue increased to $17.6 million for the three months ended September 30, 2025, from $17.1 million for the three months ended September 30, 2024. The increased revenue from SaaS product offerings and professional services revenue was partially offset by a decrease in subscription services revenue related to parking management solutions.

Product Sales. Product sales were $18.7 million and $8.3 million for the three months ended September 30, 2025 and 2024, respectively. Product sales increased by $10.4 million, which was due to a $9.4 million increase in product sales in the Government Solutions segment driven by international product sales and red-light camera sales to NYCDOT as well as a $1.0 million increase in product sales from the Parking Solutions segment. Customer buying patterns vary greatly from period to period related to product sales.

Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization increased from $5.4 million for the three months ended September 30, 2024 to $9.2 million for the same period in 2025, mainly due to costs of NYCDOT camera sales and increased recurring service costs.

Cost of Product Sales. Cost of product sales increased by $7.2 million from $5.6 million in the three months ended September 30, 2024 to $12.8 million in the three months ended September 30, 2025, which was in line with the increase in product sales discussed above.

Operating Expenses. Operating expenses increased by $12.0 million, or 15.8%, from $76.0 million for the three months ended September 30, 2024 to $88.0 million for the three months ended September 30, 2025. The increase in 2025 compared to the prior period was primarily in the Government Solutions segment for approximately $9.8 million due to increases in wages and subcontractor costs. Operating expenses as a percentage of total revenue decreased from 33.7% to 33.6% for the three months ended September 30, 2024 and 2025, respectively. The following table presents operating expenses by segment:

($ in thousands)

31

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased slightly to $47.8 million for the three months ended September 30, 2025 compared to $47.9 million for the same period in 2024. This is primarily due to a $4.7 million decrease in transaction, restructuring, and other expenses partially offset by a $2.4 million increase in credit loss expense and a $2.2 million increase in wages and benefits expense compared to the same period in the prior year. Selling, general and administrative expenses as a percentage of total revenue decreased from 21.2% to 18.2% for the three months ended September 30, 2024 and 2025, respectively. The following table presents selling, general and administrative expenses by segment:

($ in thousands)

Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net, increased by $2.6 million to $29.3 million for the three months ended September 30, 2025 from $26.7 million for the same period in 2024. This was primarily due to an increase in depreciation expense for the Government Solutions segment and Commercial Services segment in the 2025 period.

Interest Expense, Net. Interest expense, net decreased by approximately $2.3 million from $18.7 million for the three months ended September 30, 2024 to $16.4 million for the same period in 2025. This was primarily attributable to an additional 50 basis-point reduction in the interest rate from refinancing our debt in October 2024 coupled with decreasing SOFR rates. See “Liquidity and Capital Resources” below.

Loss on Interest Rate Swap. We recorded a loss of $0.9 million during the three months ended September 30, 2024, of which $1.2 million was associated with the derivative instrument re-measured to fair value at the end of the reporting period, offset by $0.3 million related to the monthly cash proceeds on the interest rate swap. We exercised our option to cancel the interest rate swap agreement effective the end of the third quarter of 2024.

Loss on Extinguishment of Debt. We recorded less than $0.1 million of loss on extinguishment of debt during both the three months ended September 30, 2025 and 2024 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayment on the Amendment and Restatement Agreement No.1 to the First Lien Term Loan Credit Agreement (the “2021 Term Loan”).

Other Income, Net. Other income, net was $6.3 million for the three months ended September 30, 2025 compared to $4.3 million for the three months ended September 30, 2024. The increase was primarily from increases

in volume rebates earned from total spend on credit card transactions due to increased tolling and travel activity.

Income Tax Provision. Income tax provision was $17.8 million representing an effective tax rate of 27.6% for the three months ended September 30, 2025 compared to a tax provision of $13.8 million, with an effective tax rate of 28.4% for the same period in 2024.

Net Income. We had net income of $46.8 million for the three months ended September 30, 2025, as compared to a net income of $34.7 million for the three months ended September 30, 2024. The $12.1 million increase in net income was primarily due to the increase in service revenue and product sales, a decrease in interest expense, and the other statement of operations activity discussed above.

Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024

The following table sets forth our statements of operations data and expresses each item as a percentage of total revenue for the periods presented as well as the changes between periods. The tables and information provided in this section were derived from exact numbers and may have immaterial rounding differences.

($ in thousands)

Service Revenue. Service revenue increased by $46.6 million, or 7.4%, to $678.6 million for the nine months ended September 30, 2025 from $632.0 million for the nine months ended September 30, 2024, representing 94.1% and 96.1% of total revenue, respectively. The following table depicts service revenue by segment:

($ in thousands)

33

Commercial Services service revenue increased by $18.7 million, or 6.1%, from $309.0 million for the nine months ended September 30, 2024 to $327.7 million for the nine months ended September 30, 2025. The increase was primarily due to increased product adoption and tolling activity compared to the prior year. These factors contributed to a $12.3 million growth in RAC tolling revenue and the remaining increase was driven mainly by an increase of $4.1 million from European operations during the nine months ended September 30, 2025, compared to the same period in 2024.

Government Solutions service revenue increased by $27.5 million, or 10.1%, from $272.7 million for the nine months ended September 30, 2024, to $300.2 million for the nine months ended September 30, 2025. The increase was primarily driven by $11.7 million from the expansion of bus lane and school bus stop arm enforcement programs, $10.1 million from installation service revenue driven by the NYCDOT red-light expansion program, and the remaining increase is mainly from speed and red-light enforcement programs.

Parking Solutions service revenue increased to $50.6 million for the nine months ended September 30, 2025, from $50.2 million for the nine months ended September 30, 2024. The increased revenue from SaaS product offerings and professional services was offset by a decrease in subscription services related to parking management solutions.

Product Sales. Product sales were $42.6 million and $25.7 million for the nine months ended September 30, 2025 and 2024, respectively. Product sales increased by $16.9 million due to a $16.2 million increase in product sales in the Government Solutions segment driven by international product sales and red-light camera sales to NYCDOT. Customer buying patterns vary greatly from period to period related to product sales.

Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization increased from $14.3 million for the nine months ended September 30, 2024 to $18.7 million for the nine months ended September 30, 2025, mainly due to costs of NYCDOT camera sales and increased recurring service costs.

Cost of Product Sales. Cost of product sales increased by approximately $11.0 million from $18.8 million in the nine months ended September 30, 2024 to $29.8 million in the nine months ended September 30, 2025, which was in line with the increase in product sales discussed above.

Operating Expenses. Operating expenses increased by $21.5 million, or 9.7%, from $221.6 million for the nine months ended September 30, 2024 to approximately $243.1 million for the nine months ended September 30, 2025. The increase in 2025 compared to the prior year was primarily in the Government Solutions segment for approximately $19.4 million due to increases in wages and subcontractor and operational equipment costs, partially offset by a decrease in wage expense in the Parking Solutions segment. Operating expenses as a percentage of total revenue remained flat at 33.7% for both the nine months ended September 30, 2024 and 2025. The following table presents operating expenses by segment:

($ in thousands)

34

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $147.7 million for the nine months ended September 30, 2025 compared to $142.4 million for the same period in 2024. This is primarily due to a $7.0 million increase in credit loss expense and $4.6 million in increased professional services fees, partially offset by a decrease in transaction and restructuring expenses compared to the same period in 2024. Selling, general and administrative expenses as a percentage of total revenue decreased from 21.7% to 20.5% for the nine months ended September 30, 2024 and 2025, respectively. The following table presents selling, general and administrative expenses by segment:

($ in thousands)

Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net, increased by $5.4 million to $86.6 million for the nine months ended September 30, 2025 from $81.2 million for the same period in 2024. This was primarily due to an increase in depreciation expense related to equipment and software in the 2025 period compared to the 2024 period.

Interest Expense, Net. Interest expense, net decreased by $7.6 million from $57.2 million for the nine months ended September 30, 2024 to $49.6 million for the same period in 2025. This was primarily attributable to an additional 50 basis-point reduction in the interest rate from refinancing our debt in October 2024 coupled with decreasing SOFR rates. See “Liquidity and Capital Resources” below.

Loss on Interest Rate Swap. We recorded a $0.5 million loss during the nine months ended September 30, 2024, of which $1.3 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period offset by $(0.8) million related to the monthly cash proceeds. We exercised our option to cancel the interest rate swap agreement effective the end of the third quarter of 2024.

Loss on Extinguishment of Debt. We recorded less than $0.1 million of loss on extinguishment of debt during the nine months ended September 30, 2025 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments on the 2021 Term Loan. We recorded a $0.6 million loss on extinguishment of debt during the nine months ended September 30, 2024 related to the write-off of pre-existing deferred financing costs and discounts in connection with the refinancing of the 2021 Term Loan in February 2024.

Other Income, Net. Other income, net was $16.4 million for the nine months ended September 30, 2025 compared to approximately $14.0 million for the nine months ended September 30, 2024. The increase was mainly from increases

in volume rebates earned from total spend on credit card transactions due to increased tolling and travel activity as well as non-operating income from foreign currency transactions in the 2025 period.

Income Tax Provision. Income tax provision was $44.3 million representing an effective tax rate of 27.4% for the nine months ended September 30, 2025 compared to a tax provision of $37.0 million, with an effective tax rate of 27.4% for the same period in 2024.

Net Income. We had net income of $117.8 million for the nine months ended September 30, 2025, as compared to a net income of $98.1 million for the nine months ended September 30, 2024. The $19.6 million increase in net income was primarily due to the increase in service revenue and product sales, a decrease in interest expense, and the other statement of operations activity discussed above.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows from operations and the available borrowing under our Revolver.

We believe that our existing cash and cash equivalents, cash flows provided by operating activities, and our ability to borrow under our Revolver will be sufficient to meet operating cash requirements, service debt obligations, and fund potential share repurchases for at least the next 12 months and thereafter for the foreseeable future. Our ability to generate sufficient cash from our operating activities depends on our future performance, which is subject to general economic, political, financial, competitive, and other factors beyond our control. In addition, our future capital expenditures and other cash requirements could be higher than currently expected due to various factors, including any expansion of our business or strategic acquisitions.

We have incurred significant long-term debt as a result of acquisitions completed in prior years. Should we pursue strategic acquisitions, we may need to raise additional capital, which may be in the form of additional long-term debt, borrowings on our Revolver, or equity financings, all of which may not be available to us on favorable terms or at all. We have the ability to borrow under our Revolver to meet obligations as they come due.

We entered into the Revolver in March 2018. On May 15, 2025, we exercised our option to increase the commitments under the terms of the Revolver and entered into a fourth amendment to the Revolver which increased the existing commitment from $75.0 million to $125.0 million available for loans and letters of credit. As of September 30, 2025, we had no outstanding borrowings and $123.2 million available for borrowing, net of letters of credit, under our Revolver. Our cash on hand was $196.1 million as of September 30, 2025.

On October 17, 2025, VM Consolidated amended and restated the Revolver and entered into the Amended and Restated Revolving Credit Agreement governing the Amended Revolver which increased commitments from $125.0 million to $150.0 million and extended the maturity date to October 17, 2030. See Note 15, Subsequent Events, to the Condensed Consolidated Financial Statements for additional information.

In fiscal year 2024, we refinanced the 2021 Term Loan which reduced the interest rate by an aggregate 1.00% and eliminated the applicable credit spread adjustment. We made early repayments of approximately $2.3 million and $6.8 million on our 2021 Term Loan during the three and nine months ended September 30, 2025, and as a result, the total principal outstanding on the 2021 Term Loan was $688.8 million as of September 30, 2025.

On October 17, 2025, we refinanced the existing senior secured term loans under the 2021 Term Loan in an aggregate outstanding principal amount of approximately $688.8 million with the Amended Term Loan of the same principal amount maturing on October 15, 2032. See Note 15, Subsequent Events, to the Condensed Consolidated Financial Statements for additional information.

At September 30, 2025, the tax receivable agreement liability was approximately $43.1 million. During the second quarter of 2025, we made an estimated payment of $5.0 million related to the 2024 tax year. We expect to make payments of approximately $5.3 million per year for the next eight years and approximately $1.1 million in the final year.

Share Repurchases and Retirement

In October 2023, our Board of Directors authorized a share repurchase program for up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock over an 18-month period. After we repurchased an aggregate 3.5 million shares for approximately $87.3 million in fiscal year 2024, in December 2024, our Board of Directors authorized the repurchase of up to an additional $100.0 million of our outstanding shares under the then-existing program, providing us with approximately $112.7 million available for repurchases. On December 11, 2024, we entered into an ASR agreement with a third-party financial institution and paid $112.7 million to receive an initial delivery of 3,821,958 shares of our Class A Common Stock. The final settlement occurred on March 3, 2025, at which time, we received an additional 685,934 shares calculated using a volume-weighted average price over the term of the ASR agreement. All repurchased shares were subsequently retired. The authorization under this repurchase program ended on April 30, 2025.

During the nine months ended September 30, 2025, we paid approximately $1.7 million for excise taxes related to 2024 net share repurchases.

On May 17, 2025, our Board of Directors authorized a new share repurchase program for up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock. On October 23, 2025, our Board of Directors authorized a $150.0 million increase to the size of the share repurchase program, authorizing share repurchases up to an aggregate $250.0 million. Under the repurchase program, we may purchase shares of Class A Common Stock until November 13, 2026 through open market purchases, in privately negotiated transactions or by other means, including trading plans intended to qualify under Rule 10b5-1 of the Exchange Act, and ASR agreements, each as permitted under applicable rules and regulations. The amount and timing of repurchases will be determined at our discretion and will depend on a variety of factors, including price, general business and market conditions, applicable legal requirements, and alternative investment opportunities. The repurchase program does not obligate us to acquire any particular amount of Class A Common Stock or at any specific time intervals and may be modified, suspended, or terminated at any time at our discretion. We have not yet repurchased shares of Class A Common Stock under this program.

The following table sets forth certain captions indicated on our statements of cash flows for the respective periods:

($ in thousands)

Cash Flows from Operating Activities

Cash provided by operating activities increased by $32.6 million from $183.2 million for the nine months ended September 30, 2024 to $215.8 million for the nine months ended September 30, 2025. Net income year-over-year increased by $19.6 million, from $98.1 million in 2024 to $117.8 million in 2025. The aggregate adjustments to reconcile net income to net cash provided by operating activities increased $14.8 million mainly due to increased credit loss expense, deferred income tax, and depreciation expense. The aggregate changes in operating assets and liabilities decreased by $1.8 million in 2025 compared to the prior year primarily due to an increase in the net use of working capital, of which, the majority is attributable to an increase in accounts receivable partially offset by a large payment that reduced accounts payable in the first half of 2024.

Cash Flows from Investing Activities

Cash used in investing activities was $84.7 million and $51.0 million for the nine months ended September 30, 2025 and 2024, respectively. The increase in cash used was primarily driven by a $32.9 million increase for purchases of installation and service parts and property and equipment mainly for the Government Solutions segment compared to the same period in the prior year.

Cash Flows from Financing Activities

Cash used in financing activities was $13.3 million and $59.6 million for the nine months ended September 30, 2025 and 2024, respectively. The decreased use in cash from financing activities was mainly due to $51.5 million of share repurchases in 2024 and no comparable repurchases in the current year.

Long-term Debt, Net

2021 Term Loan

In March 2021, VM Consolidated, our wholly owned subsidiary, entered into the 2021 Term Loan with a syndicate of lenders. The 2021 Term Loan has an aggregate borrowing of $900.0 million, maturing on March 24, 2028. In connection with the 2021 Term Loan borrowings, we had $4.6 million of offering discount costs and $4.5 million in deferred financing costs, both of which were capitalized and are being amortized over the remaining life of the 2021 Term Loan.

In February 2024, VM Consolidated entered into a third amendment to the 2021 Term Loan (the “Third Amendment”) and in October 2024, a fourth amendment to the 2021 Term Loan (the “Fourth Amendment”) to refinance the 2021 Term Loan (the “Refinancing Transactions”). Pursuant to the Third Amendment and Fourth Amendment, the interest rate was reduced by an aggregate 1.00% to Term Secured Overnight Financing Rate (“SOFR”) plus 2.25% from SOFR plus 3.25% with the SOFR floor unchanged at 0.00%. The credit spread adjustment, ranging from 0.11448% to 0.71513%, was eliminated. In addition, the 2021 Term Loan was amended to remove a provision for principal repayments which were previously required to be paid in quarterly installments.

During the nine months ended September 30, 2025 and 2024, we made early repayments of $6.8 million and $4.5 million, respectively, on the 2021 Term Loan, and as a result the total principal outstanding was $688.8 million as of September 30, 2025.

We recorded less than $0.1 million of loss on extinguishment of debt during both the three and nine months ended September 30, 2025, related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments. We recognized less than $0.1 million and $0.6 million loss on extinguishment of debt for the three and nine months ended September 30, 2024, primarily related to the write-off of pre-existing deferred financing costs and discounts in connection with the refinancing of the 2021 Term Loan in February 2024.

The 2021 Term Loan bears interest based at our option, on either (i) SOFR plus an applicable margin of 2.25% per annum, or (ii) an alternate base rate plus an applicable margin of 1.25% per annum. As of September 30, 2025, the interest rate on the 2021 Term Loan was 6.4%.

In addition, the 2021 Term Loan requires mandatory prepayments equal to the product of the excess cash flows of the Company (as defined in the 2021 Term Loan agreement) and the applicable prepayment percentages (calculated as of the last day of the fiscal year), as set forth in the following table:

Subsequent to September 30, 2025, we refinanced the existing senior secured term loans under the 2021 Term Loan in an aggregate outstanding principal amount of approximately $688.8 million with the Amended Term Loan of the same principal amount maturing on October 15, 2032. See Note 15, Subsequent Events, to the Condensed Consolidated Financial Statements for additional information.

Senior Notes

In March 2021, VM Consolidated issued an aggregate principal amount of $350.0 million in Senior Unsecured Notes (the “Senior Notes”), due on April 15, 2029. In connection with the issuance of the Senior Notes, we incurred $5.7 million in lender and third-party costs, which were capitalized as deferred financing costs and are being amortized over the remaining life of the Senior Notes.

Interest on the Senior Notes is fixed at 5.50% per annum and is payable on April 15 and October 15 of each year. We may redeem all or a portion of the Senior Notes at the redemption prices set forth below in percentages by year, plus accrued and unpaid interest:

The Revolver

On May 15, 2025, we exercised our option to increase the commitments under the terms of the Revolver and entered into a fourth amendment to the Revolver which increased the existing commitment from $75.0 million to $125.0 million available for loans and letters of credit. The Revolver matures on December 18, 2026. Borrowing eligibility under the Revolver is subject to a monthly borrowing base calculation based on (i) certain percentages of eligible accounts receivable and inventory, less (ii) certain reserve items, including outstanding letters of credit and other reserves. The Revolver bears interest on either (1) SOFR plus an applicable margin, or (2) an alternate base rate, plus an applicable margin. The margin percentage applied to (1) SOFR is either 1.25%, 1.50%, or 1.75%, or (2) the base rate is either 0.25%, 0.50%, or 0.75%, depending on our average availability to borrow under the commitment. There is a credit spread adjustment of 0.10% for a one-month duration, 0.15% for a three-month duration, and 0.25% for a six-month duration, in addition to SOFR and the applicable margin percentages. There were no outstanding borrowings on the Revolver as of September 30, 2025 or December 31, 2024. The availability to borrow was $123.2 million, net of $1.8 million of outstanding letters of credit at September 30, 2025.

Interest on the unused portion of the Revolver is payable quarterly at 0.375% and we are also required to pay participation and fronting fees at 1.38% on $1.8 million of outstanding letters of credit as of September 30, 2025.

All borrowings and other extensions of credits under the 2021 Term Loan, Senior Notes, and the Revolver are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. Substantially all of our assets are pledged as collateral to secure our indebtedness under the 2021 Term Loan. At September 30, 2025, we were compliant with all debt covenants in our debt agreements.

Subsequent to September 30, 2025, VM Consolidated amended and restated the Revolver and entered into the Amended and Restated Revolving Credit Agreement governing the Amended Revolver which increased commitments from $125.0 million to $150.0 million and extended the maturity date to October 17, 2030. See Note 15, Subsequent Events, to the Condensed Consolidated Financial Statements for additional information.

Interest Expense, Net

We recorded interest expense, including amortization of deferred financing costs and discounts, of $16.4 million and $18.7 million for the three months ended September 30, 2025 and 2024, respectively, and $49.6 million and $57.2 million for the nine months ended September 30, 2025 and 2024, respectively.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet financing arrangements as of September 30, 2025.

Critical Accounting Policies, Estimates and Judgments

The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Please refer to our Annual Report for our critical accounting policies, estimates and judgments. We believe that our estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, refer to Note 2, Significant Accounting Policies, in Part I, Item 1, Financial Statements.

We are exposed to interest rate risk due to the variable interest rate on the 2021 Term Loan described in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.

Interest rate risk represents our exposure to fluctuations in interest rates associated with the variable rate debt represented by the 2021 Term Loan, which has an outstanding balance of $688.8 million at September 30, 2025. The 2021 Term Loan bears interest based, at our option, on either (i) SOFR plus an applicable margin of 2.25% per annum, or (ii) an alternate base rate plus an applicable margin of 1.25% per annum. As of September 30, 2025, the interest rate on the 2021 Term Loan was 6.4%.

Based on the September 30, 2025 balance outstanding, each 1% movement in interest rates will result in an approximately $6.9 million change in annual interest expense.

In December 2022, we entered into a cancelable interest rate swap agreement to hedge our exposure to interest rate fluctuations associated with the LIBOR (now transitioned to SOFR) portion of the variable interest rate on our 2021 Term Loan. We exercised our option to cancel the interest rate swap effective the end of the third quarter of 2024.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. Our Chief Executive Officer and Chief Financial Officer, with assistance from other members of management, have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025. Based upon such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of such date.

Changes in Internal Control Over Financial Reporting

There have been no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part I, Item 1A. “Risk Factors” in our Annual Report includes a discussion of our risk factors. Other than the risk factors below and the risk factor included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, which are incorporated herein by reference, there have been no material changes from the risk factors described in our Annual Report. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future SEC filings.

Negative industry and macroeconomic conditions, including the impact of government actions and regulations on our customers or us, may materially and adversely impact our business, results of operations, and financial condition.

We provide smart mobility technology solutions to customers in our Commercial Services, Government Solutions, and Parking Solutions business segments. Accordingly, the demand for our products in the past has been, and in the future may be, impacted by industry and macroeconomic trends and conditions impacting our customers, including seasonality, demand for business and leisure travel, changes to or disruptions in governmental budgeting, reductions in the level of air travel, higher airfare costs, energy shortages and cost increases, international, national, and local economic conditions and cycles, as well as other factors affecting travel levels, such as military conflicts, terrorist incidents, natural disasters, epidemic diseases, or a prolonged government shutdown. For example, our Commercial Services segment may be impacted by travel demand and extreme weather events which may impact overall travel demand in the United States. Our Government Solutions segment may be impacted to the extent our customers experience a reduction in political acceptance of or additional government restrictions on automated safety programs. Our Parking Solutions segment may be impacted to the extent our customers see an increase in usage of public transportation or rideshare, either of which may cause a decrease in parking usage. Furthermore, uncertain economic conditions may make it more difficult for us to raise funds through borrowings or private or public sales of debt or equity securities. We cannot predict the timing, strength, or duration of any economic slowdown, instability or recovery, generally or within any particular industry.

Government actions and regulations, such as tariffs and trade protection measures, may negatively impact our business. Political challenges between the United States and countries in which we operate, and changes to trade policies, including tariff rates and customs duties, trade relations between the United States and those countries, and other macroeconomic issues could adversely impact our business. The United States administration has announced tariffs on certain products imported into the United States, and some countries have imposed tariffs in response to the actions of the United States. There is also a possibility of future tariffs, trade protection measures, or other restrictions imposed by the United States or other countries.

In addition, consumer spending and activities may be materially adversely affected in response to financial market volatility, negative financial news, changes to or disruptions in governmental budgeting processes or amounts, conditions in the real estate and mortgage markets, declines in income or asset values, energy prices, labor and healthcare costs, and other economic factors, all of which may have a negative effect on our business and results of operations. Additionally, uncertainty about, or a decline in, global or regional economic conditions may have a significant impact on our suppliers, manufacturers, logistics providers, distributors, and other partners. Potential effects on our suppliers and partners include financial instability, inability to obtain credit to finance operations, and insolvency.

Negative conditions in the general economy, both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, inflation, financial and credit market fluctuations, international trade relations, government shutdowns, pandemics, political turmoil, natural catastrophes, warfare, and terrorist attacks on the United States or elsewhere, could negatively affect customer demand and the growth of our business.

Our substantial level of indebtedness could cause our business to suffer and incurring additional debt could intensify debt-related risks.

We have a substantial amount of debt, including approximately $688.8 million outstanding under our first lien term loan facility as of October 17, 2025. Additionally, pursuant to an indenture, VM Consolidated issued an aggregate principal amount of $350 million in Senior Unsecured Notes due 2029. We may also incur substantial additional debt in the future to, among other things, finance our acquisition strategy. We have the option to increase commitments under our Amended Revolver by up to $75.0 million, all of which would be secured. We also have the ability to add one or more incremental term facilities or incremental revolving facilities or increase the amount of our Amended Term Loan, in each case by an unlimited amount, subject to obtaining additional commitments from lenders and the satisfaction of a maximum first lien, secured or total net leverage ratio or minimum fixed charge coverage ratio, on a pro forma basis, all of which may be secured. Our substantial debt could have important consequences, any of which could be intensified if new debt is added to our current debt levels. For example, it could:

• increase our vulnerability to adverse economic and industry conditions;
• limit our ability to obtain additional financing for future working capital, capital expenditures, strategic acquisitions, and other general corporate requirements;
• expose us to interest rate fluctuations because the interest rate on certain of our debt is variable;
• require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow for operations and other purposes;
• make it more difficult for us to satisfy our general business obligations, including our obligations to our lenders, resulting in possible defaults on and acceleration of such indebtedness;
• limit our ability to refinance indebtedness or increase the associated costs;
• require us to sell assets to reduce debt or influence our decision about whether to do so;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate or prevent us from carrying out capital spending that is necessary or important to our growth strategy and efforts to improve operating margins; and
• place us at a competitive disadvantage compared to any competitors that have less debt or comparable debt at more favorable interest rates and that, as a result, may be better positioned to withstand economic downturns.

Restrictive covenants in the agreements governing our indebtedness could restrict our operating flexibility.

The agreements governing our indebtedness limit our ability to take certain actions. These restrictions may limit our ability to operate our businesses, prohibit or limit our ability to enhance our operations or take advantage of potential business opportunities as they arise, and cause us to take actions that are not favorable to stockholders.

The agreements governing our indebtedness restrict, among other things and subject to certain exceptions, our and our restricted subsidiaries’ ability to incur additional indebtedness, pay dividends or other payments on capital stock, guarantee other obligations, grant liens on assets, make loans, acquisitions, or other investments, transfer or dispose of assets, make optional payments or modify certain debt instruments, engage in transactions with affiliates, amend organizational documents, engage in mergers or consolidations, enter into arrangements that restrict the ability to pay dividends, engage in business activities that are materially different from existing business activities, and change the nature of the business we conduct.

Under our Amended Term Loan, we could be required to make periodic prepayments based on excess cash flow (as defined by the Amended and Restated Term Loan Agreement) thereby limiting the amount of cash flow that can be reinvested in our business. Under our Amended Revolver, if availability goes below a certain threshold, we will be required to comply with a minimum “consolidated fixed charge coverage ratio” financial covenant as calculated therein. Moreover, if availability falls below a certain threshold for a specified number of business days, we could be required to remit our cash funds to a dominion account maintained by the administrative agent to the Amended Revolver, which under certain circumstances could require daily review and approval of operating disbursements by the administrative agent.

Our ability to comply with the covenants and restrictions contained in agreements governing our indebtedness may be affected by economic conditions and by financial, market and competitive factors, many of which are beyond our control. Our ability to comply with these covenants in future periods will also depend substantially on the pricing and sales volume of our products and services and our ability to successfully implement our overall business strategy. The breach of any of these covenants or restrictions could result in a default under one or more of the agreements governing our indebtedness that would permit the applicable lenders to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. In that case, we may be unable to borrow under our Amended and Restated Revolving Credit Agreement or otherwise, may not be able to repay the amounts due under the agreements governing our indebtedness, and may not be able to make cash available by dividend, debt repayment, or otherwise. In addition, if we are unable to pay the amounts due under the Amended Term Loan, our lenders could proceed against the collateral securing the indebtedness under the Amended Term Loan, which consists of substantially all of our assets. Any of the foregoing could have material adverse effects to our financial position, results of operations, or cash flows and could cause us to become bankrupt or insolvent.

We cannot guarantee that our stock repurchase programs will enhance long-term shareholder value. Stock repurchases could also increase the volatility of the trading price of our stock and diminish our cash reserves. In addition, Congress enacted the Inflation Reduction Act in 2022, which, among other provisions, provides for a 1% excise tax on net stock repurchases.

In October 2023, our Board of Directors authorized a share repurchase program for up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock over an 18-month period in open market, ASR, or privately negotiated transactions. In June 2024, we entered into a share repurchase agreement with a stockholder, pursuant to which we repurchased, directly from the stockholder, 2.0 million shares of our Class A Common Stock for an aggregate purchase price of $51.5 million. During the fourth quarter of 2024, we repurchased approximately 1.5 million shares of our Class A Common Stock through open market transactions and paid $35.8 million.

In December 2024, our Board of Directors authorized the repurchase of up to an additional $100.0 million of our outstanding shares of Class A Common Stock under the October 2023 program, providing the Company with approximately $112.7 million available for repurchases. On December 11, 2024, we entered into an ASR agreement with a third-party financial institution to purchase $112.7 million of our Class A Common Stock. Pursuant to the terms of the ASR agreement, we received and retired 3,821,958 shares of our Class A Common Stock and paid $112.7 million. The final settlement occurred on March 3, 2025, at which time we received an additional 685,934 shares of our Class A Common Stock using a volume-weighted average price over the term of the ASR agreement. All repurchased shares were subsequently retired.

We paid a total of $200.0 million for share repurchases during the year ended December 31, 2024. In addition, we recorded approximately $1.7 million within accrued liabilities related to the excise taxes payable on net share repurchases on the consolidated balance sheets as of December 31, 2024, which has been paid as of June 30, 2025. The prior repurchase authorization expired on April 30, 2025.

On May 17, 2025, our Board of Directors authorized a new share repurchase program to repurchase up to an aggregate amount of $100.0 million of our outstanding shares of Class A Common Stock over an 18-month period in open market, ASR, or privately negotiated transactions. On October 23, 2025, our Board of Directors authorized the repurchase of up to an additional $150.0 million of our outstanding shares of Class A Common Stock under the existing share repurchase program authorized in May 2025. This additional authorization, together with the $100.0 million available under the initial authorization, provides the Company with an aggregate $250.0 million available for repurchases. We did not make any share repurchases under this program during the third quarter of 2025.

The timing, price, and quantity of purchases under the repurchase programs have been, and will continue to be, made at the discretion of our management based upon a variety of factors including share price, general and business market conditions, compliance with applicable laws and regulations, corporate and regulatory requirements, and alternative uses of capital. There is no guarantee as to the exact number of shares that we will repurchase and we cannot guarantee that share repurchase programs will enhance long-term stockholder value. Additionally, the Inflation Reduction Act of 2022 introduced a 1% excise tax on share repurchases, which has increased the costs associated with repurchasing shares of our Class A Common Stock. Our share repurchase programs could affect the trading price of our Class A Common Stock and increase volatility. In addition, our repurchases under our share repurchase programs have diminished, and could continue to diminish, our cash reserves.