Q3 2024 Verra Mobility Corp Earnings Call Transcript
Key Points
- Verra Mobility Corp (VRRM) reaffirmed its full-year 2024 revenue, adjusted EBITDA, and adjusted EPS guidance while increasing the adjusted free cash flow guidance to the upper end of the range.
- The company reported strong third-quarter results with a revenue increase of 11% year-over-year in the Commercial Services segment, driven by robust RAC tolling and fleet management performance.
- Government Solutions service revenue, which is primarily recurring, grew by 7% over the same period last year, supported by program expansion and new city implementations.
- Verra Mobility Corp (VRRM) won significant contract awards in the third quarter, representing about $22 million of incremental annual recurring revenue, including a major partnership with Hayden AI.
- The company generated a record $85 million in free cash flow for the third quarter, providing significant optionality for capital deployment, including potential M&A opportunities and share buybacks.
- Travel demand decelerated in September and October due to hurricanes, impacting short-term revenue growth, although it has since reaccelerated.
- The T2 Parking business underperformed, with third-quarter revenue slightly below internal expectations and a decline in SaaS and services revenue by 4% year-over-year.
- The parking industry is transitioning away from hardware and related services, which historically represented about 45% of revenue, impacting short-term revenue growth.
- Verra Mobility Corp (VRRM) anticipates revenue growth at the low end of its 6% to 8% long-term guide in 2025, with adjusted EBITDA growth expected to be in the low to mid-single digits.
- The company faces competitive procurement processes, particularly in New York City, which could impact future revenue and growth opportunities.
Good afternoon. Ladies and gentlemen and welcome to the Verra Mobility third quarter, 2024 earnings conference call at this time. (Operator Instructions) I would now like to turn the conference over to Mark Zindler, Vice President, Investor Relations. Please go ahead.
(technical difficulty) demonstrating what we view as the predictable strength of our portfolio of businesses. Based on our year-to-date financial performance and our outlook for the remainder of the year, we are reaffirming full year 2024 revenue, adjusted EBITDA and adjusted EPS guidance while increasing the adjusted free cash flow guide to the upper end of the range. Craig will elaborate on the details in his remarks.
Today, we'll highlight 4 value drivers underpinning our businesses. The current sentiment from the major airlines continues to suggest resilient travel demand, albeit off the first half of 2024 highlights. Second, the demand for automated photo enforcement is strong and growing. Third, the
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