- Q4 Revenue Growth: 16% year-over-year increase to $21 million in Q4, driven by Government Solutions’ 25% growth from NYC Red-Light expansion and Commercial Services’ gains in RAC tolling and Europe.
- 2025 Financial Performance: Full-year revenue of $83 million, net income of $137 million, and GAAP diluted EPS of $0.85 (up from $0.19 in 2024), with a 30% effective tax rate.
- 2026 Guidance: Total revenue of $1.02–$1.03 billion (5% growth), adjusted EBITDA of $405–$415 million (40% margin), and free cash flow of $150–$160 million, despite AI R&D headwinds.
- Government Solutions Outlook: Margins projected to rise to mid-20s by 2028 and 30% by 2029 via volume leverage and MOSAIC, with $64 million in 2025 bookings for NYC projects.
- Capital Structure: Net debt of $972 million (2.3x leverage) as of Q4, with $690 million in floating-rate debt; 2026 EBITDA margin expansion offset by $22–24 million annual MWBE compliance costs.
Segment Performance
The Government Solutions segment saw a 25% increase in total revenue, driven by the New York City Red-Light expansion. The company entered into bookings of about $23 million of incremental annual recurring revenue, bringing the full year 2025 total to about $64 million in bookings. Craig Conti noted that working capital is essential for growth, and the higher CapEx is due to winning contracts on the Government Solutions side, particularly the Hawaii announcement.
Guidance and Outlook
For 2026, Verra Mobility expects total revenue to be $1.02 billion to $1.03 billion, a 5% increase over 2025. Adjusted EBITDA is expected to be $405 million to $415 million, with a margin of 40%. The company expects non-GAAP adjusted EPS to be $1.32 to $1.38 per share, representing low single-digit growth over 2025. Analysts estimate next year's revenue growth at 7.3%, slightly higher than the company's guidance.
Valuation
With a P/E Ratio of 18.64 and an EV/EBITDA of 6.8, the market appears to be pricing in a reasonable growth trajectory for Verra Mobility. The company's ROE of 40.55% and ROIC of 11.59% indicate strong profitability. The Net Debt / EBITDA ratio of -0.07 suggests a relatively healthy debt position. Actual EPS came out at $0.85 for the full year, slightly above estimates, while the Q4 EPS of $0.12 was below estimates of $0.14, however the full year actual was above estimates.