Verra Mobility at Baird Conference: Strategic Growth and Challenges

On Tuesday, 03 June 2025, Verra Mobility Corp (NASDAQ:VRRM) presented at the Baird Global Consumer, Technology & Services Conference 2025. The company outlined its strategic initiatives across its three main segments: Government Solutions, Commercial Services, and Parking. While emphasizing growth opportunities and strong market positions, Verra Mobility also acknowledged challenges, particularly in travel trends impacting the commercial segment.

Key Takeaways

• Verra Mobility highlighted strong growth in Government Solutions, driven by new legislation and contract renewals.
• The Commercial Services segment is focusing on expanding toll management solutions despite potential challenges from travel trends.
• A new management team is working to turn around the Parking segment, aiming to improve commercial execution.
• The company is balancing strategic acquisitions with share buybacks to drive shareholder value.
• Verra Mobility expects high 20s to 30s percentage margins in the coming year.

Financial Results

Verra Mobility’s financial outlook remains positive, with expectations of high single-digit growth in Commercial Services, driven by travel trends, increased adoption of tolling programs, and new toll road developments. The Government Solutions segment is experiencing significant growth, with non-New York City service revenue expected to grow double digits for the full year 2025. The Parking segment is undergoing a turnaround with a new management team focused on improving commercial execution. The company has fully funded CapEx, paid down over $200 million of debt, and repurchased over $500 million worth of shares in the last four years.

Operational Updates

In Commercial Services, Verra Mobility is increasing the adoption of tolling programs and expanding its European violation business. The Government Solutions segment has renewed a contract with New York City and is expanding into new markets like Florida and California, driven by new legislation. The Parking segment has a reestablished management team that is stabilizing the business and improving sales execution.

Future Outlook

Verra Mobility expects to maintain high single-digit growth in Commercial Services, with some insulation built into guidance against travel trends. The Government Solutions segment anticipates continued growth, particularly in the school zone speed camera business, with California potentially adding a $100 million opportunity. The Parking segment is focused on growing the recurring revenue base. The company continues to evaluate strategic acquisitions and share buybacks to enhance shareholder value.

Q&A Highlights

During the Q&A, Verra Mobility discussed the complexity of tolling due to proprietary integrations with 54 toll authorities. The company’s system provides interoperability for rental car companies, enabling customers to access toll roads across different authorities. In Government Solutions, Verra Mobility’s relationship with New York City and investment in technology were key factors in winning the renewal contract. The company emphasized its strategic approach to capital allocation, prioritizing fair value and strategic fit in acquisitions.

For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - Baird Global Consumer, Technology & Services Conference 2025:

Dave Koning, Senior Research Analyst, Baird: Good morning everyone. My name is Dave Koning. I’m a Senior Research Analyst at Baird covering payments and services. Thrilled to introduce Vera Mobility today, a leader in safety solutions in speed cameras and school zones etcetera and in tolling rental car tolling, the clear leader in that. We have CEO Dave Roberts, we have CFO Craig Conti and then have the government solutions business, John Baldwin.

And maybe what we’ll do here is Dave will step up and do a couple slides, and then we’ll we’ll jump into q and a.

David Roberts, CEO, Vera Mobility: You may stand on. Okay. Here we go. Not working. There we go.

There we go. Alright. Whoops. There we go. Okay, great.

I’ll stand up over here just for just a couple of slides. Good morning. My name is David Roberts. I’m the CEO. Thanks for coming here today.

Just want to introduce you very briefly to who Bear Mobility is in case you’re not familiar with our business. We are a global leader in smart mobility. We operate across three different segments. One is we’re the number one in what we call government solutions, commercial services and parking. You can see just on the far left here gives you sort of a view of the size and scale of the business, strong revenue growth over the last several years.

You can see really strong margins and I’m sure there’ll be some questions we can answer related to that. We have 1,900 employees and we have expanded over about 17 countries globally. And then let me give you a sense of kind of what we do. So in commercial services, we are the number one provider of toll management solution for commercial fleets in The United States. So for any of you that have ever rented a car from Hertz or Avis or Enterprise and run a toll, that is us.

Everything related to the deployment of that capability from the transponder and the windshield to the billing of your credit card at the end with the cost of the tolls is performed by Veramobility. We also work with commercial fleet management companies. So these are companies that procure vehicles for a large fleet. So think of a Johnson and Johnson and they have a they need to buy 3,000 Toyota Camrys for their salespeople. We equip our capabilities of tolling violations and registrations to those vehicles.

Government Solutions and John here is the leader of that business. We’re the number one provider of automated enforcement in North America. That means red light cameras, speed cameras and school bus stop arm cameras. We operate that business not only here in The United States but globally in Canada, Australia and New Zealand. And I’m sure you’ll be asking about the New York program if you have questions, and John will be able to address those later.

And then finally, we also operate in a parking business where we provide software as well as hardware to universities and municipalities around the permits and enforcements and access and payment related to parking. So principally, we are Probably 90% of the business is recurring revenue. We’ve had really, really strong growth over the last several years and looking forward to talking more about the business. So thank you for your time. We can take questions now.

I’ll leave this up here for you.

Dave Koning, Senior Research Analyst, Baird: All right. Thank you. And maybe we can kind of kick off with the commercial segment, the tolling segment, and just maybe talk about the market position a little bit and what prevents the rental car companies from developing their own system or the states developing their own systems, etcetera?

David Roberts, CEO, Vera Mobility: Yeah. So while tolling on the face of it probably doesn’t seem like a very complicated proposition, it actually is. And the reason is is that there are over 54 toll authorities that we have proprietary integrations with that allow us to register vehicles on our behalf and then make payment to that specific toll authority. That is not something that can there’s no one stop shop to do that. You actually have to have the integration with the individual toll authority.

And as a rental car customer, what you realize is that becomes really important because those vehicles move around. Those vehicles start in Florida, they end up in Texas, they then go to California, and then they go back to Illinois. Running tolls all along the way in different toll authorities that have to have separate integrations. What we provide is a system of interoperability for the rental car systems to provide to their customers so they can access those toll roads to make their journey a little bit easier. But those have been built those integrations have been built over a decade of relationships and technology.

So that’s part one. Part two is then the integration with the rental car companies. So we’ve been working with these customers for again well over a decade and highly customized integrations into their rental car billing system so that we can bill customers on their behalf.

Dave Koning, Senior Research Analyst, Baird: Yeah. Thank you. And what do you think happens over time when the car manufacturers start putting transponders right into cars? Because currently you work with the big rental car companies and you have people that actually put those transponders in I believe. So what happens when they’re already in the cars?

Are you still involved?

David Roberts, CEO, Vera Mobility: Yeah. Absolutely. So one, that that won’t happen very quickly. Certainly but what we call is that is a connected vehicle. So the way we think about our technology that exists within transponders support the technology that we deploy, but we also work where there are no transponders today.

We can use video images as well as GPS signaling from the vehicle itself. In addition to that, we actually are in the process of packaging our software so that we could embed that into the head unit of a vehicle working with an OEM manufacturer so that, that tolling will just be enabled inside the vehicle without having to have a transponder. I would just say, again, having worked with OEMs for a while now, that’s not something that’s going to be it’s not the most important thing they’re working on right now, so it’s going to take some time for that to get fully deployed.

Dave Koning, Senior Research Analyst, Baird: Yes. Okay.

David Roberts, CEO, Vera Mobility: So we feel, I guess, maybe better said, we feel very well ahead of the curve when that trend starts to take place.

Dave Koning, Senior Research Analyst, Baird: Yes. No, that sounds great. And you talk about high single digit growth in commercial. We often just think it’s highly correlated with travel data, the TSA data we track. And over time that usually grows kind of mid single digits.

How do you grow high single digits? Are there other products other than just the consumer tolling? And we talked about fleet. Like what else are you doing to drive the better than mid single digit growth?

David Roberts, CEO, Vera Mobility: Yes. So the way to think about it is, obviously, travel is people traveling on airplanes and renting cars is a big part of our business. It’s also very specific to the locations. There’s very specific locations in The United States where the toll density is. So that’s places here in New York, Illinois, Texas, Florida and California.

So that’s where we want the travel to occur. Two is we have multiple products that we can use with rental cars to help increase the adoption of the program. So even if the units of travel is flat, we can have a higher level of adoption, which increases the revenue uptake, things like an all inclusive program. Two is there’s more toll roads being built. Each and every year, there’s more toll roads.

And the toll roads that are here are also converting to cashless. And when cashless when toll roads go cashless, that increases the adoption automatically because there’s no more renters no longer have an option to pay cash or pull over and have a boom go up or not. In addition, we have an FMC business that I referenced. That’s a business where we sell tolling and violations and registration to. That business continues to grow.

We also have a European violation business. So we have kind of multiple ways of winning related to getting to that high single digit growth rate.

Craig Conti, CFO, Vera Mobility: And maybe just to contextualize that in terms of quantifying it a bit. The way we think about that growth is a third, a third, a third, right? So how do you go from zero to high single digit growth? Roughly a third of that is GDP type travel growth. And I think that will be important as we talk about what’s going to happen in the back half of the year.

Sure. We’ll get to that, right. And then you’ve got the secular tailwinds and the way that we contract commercially that David just walked through which is a second third of the growth and the remaining third of that growth are the organic growth initiatives things like penetrating the fleets what David mentioned that we do in Europe and also connected vehicle, right. So that’s how you get from a travel growth environment that looks like GDP to a high single digit growth business. And the only thing I would put a finer point on that Dave is that’s been durable over many years.

Dave Koning, Senior Research Analyst, Baird: Yes. Okay. And maybe then if we think about just trends through May, I think when we look at TSA data, it’s very close to Q1, maybe just a touch of deceleration. Are we tracking pretty much to what you expect? And how are you seeing trends?

Craig Conti, CFO, Vera Mobility: Yes. I think you kind of hit it right on. If we look at it year to date, I think as of yesterday morning, we’re slightly better than last year, about half percentage better. If I look at it on a quarter to date basis, we’re about half a percentage lower than last year. So in terms of is that what we expect, when we laid out guidance for the year, we expected travel to grow along with GDP 2%, two point five %.

Clearly, that’s going to be a little bit lower. On our last earnings call, we kind of laid out and said, hey, look, we’re going to keep our guide intact. As we look at the back half of the year, as long as travel is somewhere in the flattish to down a handful of percentage points, we could still maintain, albeit towards the lower end of the range that we kicked out at the beginning of the year. So as far as expectations, I think as you would hear from an airline or certainly our customers the Raxids, we have to see how that plays out, right? So we’re watching it in real time.

But I do think we have some insulation in our guide to a little bit of worsening where we are today.

Dave Koning, Senior Research Analyst, Baird: Yes. Okay. That’s great. And maybe the last thing on the commercial business. The three big clients, you give some detail in the filings.

In each of their growth is a little bit volatile. Like it’s not like they’re all the same. They collectively get to write about what the travel data says, but some are up, some are down. Why is there the variance and, you know, is it just how each company is doing specifically? Is that all it is?

David Roberts, CEO, Vera Mobility: It’s fleet size is a big part of it. So enterprises fleets probably double what some of the others are. That would be number one. And two, as and and really, it’s just it’s effectively their fleet size related to the locations where they’re operating at the airports. That’s kind from our perspective, that’s what matters.

And that’s that’s kinda that’s kinda the ballgame. You’ve obviously all the articles around certain rental car companies trying to dispose of vehicles, and others are trying to add vehicles. So that’s kind of the that’s what how the demand floats between the three.

Dave Koning, Senior Research Analyst, Baird: Yeah. Okay. And EVs and stuff, that doesn’t matter, right, because whether an EV or a motorized vehicle Car, yeah.

David Roberts, CEO, Vera Mobility: It doesn’t matter. It could be a car or a scooter. As long as it’s got a transponder or a license plate, it doesn’t make a difference to us.

Dave Koning, Senior Research Analyst, Baird: Yeah. Gotcha. Okay, good. And maybe if we move to the government business, New York is your biggest client across everything, though. It’s like what 15% to 17% of revenue.

John Baldwin, Leader of Government Solutions Business, Vera Mobility: That’s right.

Dave Koning, Senior Research Analyst, Baird: New York just chose you to renew their contract. Maybe just talk about how did they choose you and maybe what are some of the potential revenue drivers with the new contract?

John Baldwin, Leader of Government Solutions Business, Vera Mobility: Okay. So to answer your first question, we’ve been operating in New York for almost twenty years. So we are the incumbent. Part of what we do in operating these programs for our clients is really listen to them and what they’re giving us feedback on. So we’re constantly evolving our programs to meet the needs and meet their future needs.

So they were very explicit in terms of the new procurement, some of the changes that they wanted to see. And so we invested ahead of the curve to make sure that we had a program that could meet their future demands of the

Dave Koning, Senior Research Analyst, Baird: new

John Baldwin, Leader of Government Solutions Business, Vera Mobility: procurement. We stood up a large team to make sure that we put our best foot forward. And we’re deploying brand new state of the art technology in New York that’s kind of the first of its kind in the world. So I mean there’s some kind of a combination of great customer relationship, you know, really experienced service team, and then new technology deployed is kind of the tipping point that got us the the win here.

Dave Koning, Senior Research Analyst, Baird: And if we think about how many cameras are in New York today and maybe what I think there’s been, you know, chatter that maybe 450 red lights that they’re thinking about adding. Like, would that go on to your program? Or maybe talk just about where we’re at today and maybe how many cameras you could have.

John Baldwin, Leader of Government Solutions Business, Vera Mobility: So when when New York announced the award in March, they they also announced the intent to install 450 additional intersections for red light camera. And so that, like, clear indication that they want to expand the program because they see how successful the program has been at protecting the lives of New Yorkers. You know, so that obviously is a constant conversation that we have with our client about kind of the timing and the location of those expansions.

Dave Koning, Senior Research Analyst, Baird: Yeah. And have you said how many cameras you have in New York today?

John Baldwin, Leader of Government Solutions Business, Vera Mobility: We have, let’s see, a little bit less than 3,000.

Dave Koning, Senior Research Analyst, Baird: Yeah. So that’s a pretty meaningful thing.

John Baldwin, Leader of Government Solutions Business, Vera Mobility: It’s a scale program. It’s the biggest in the world.

Dave Koning, Senior Research Analyst, Baird: Yeah. Yeah. Okay. In the non New York has been ramping very aggressively. I mean, the non New York business, you’re growing, like, what, 10 to 15% every quarter.

Double digits.

Craig Conti, CFO, Vera Mobility: Yeah. It was double digits in the fourth quarter. It was 12%. I think we closed the first quarter maybe slightly underneath that. But for total year, 2025, we will grow non New York City service revenue on the p and l double digits.

Dave Koning, Senior Research Analyst, Baird: Yeah. That’s that’s great. And what’s driving the non New York business to grow so fast?

John Baldwin, Leader of Government Solutions Business, Vera Mobility: So there’s two main things. Number one is market expansion. So we’re seeing, you know, Florida, Massachusetts, Colorado, and California have all enacted legislation over the past eighteen months. They have significantly expanded our market by I think our last estimate was about $200,000,000 over the last two years of increased TAM. And the other one is increased win rate.

We’re winning more than we’d expected at the start of the year. And part of that’s just a combination of the type of procurements that are coming out and also kind of a modification of how we go to market in a much more strategic approach. We’re not relying on a salesperson. We have a team of people set up to go install these programs and partner with the cities so that we can install these programs in a way that they’re gonna be off and running and deliver the expectations of the program.

Dave Koning, Senior Research Analyst, Baird: Mhmm. And what it felt like to me five years ago, felt like municipalities, state governments were were kinda like, well, constituents don’t like paying speed tickets, and they don’t like the cameras and stuff. But what’s changed in the last two or three years, all of a sudden, it’s like, well, wait a minute. School zones would be a great place to put cameras, so we wanna keep the kids safe. Maybe what’s the path?

Because it does take a while. What’s the path for, like, a municipality has to agree to it, then a school has to agree to it, then it has to be bought? Like, it seems like there’s a long path, but what are the steps?

John Baldwin, Leader of Government Solutions Business, Vera Mobility: So it all starts with state legislature. So at the state level, we have to enact legislation that allows us to set up a program. Every state operates these slightly differently. And so we’ve got a team of people. Obviously, they’re really well versed in the law in the state, so we understand what’s required in these programs to make them successful.

Then we would go into kind of a city. We’d help educate them about the options available to them. In some cases, we’ll do a speed study. In some cases, we’ll do a pilot so we can actually see kind of what the problems are on their streets to help them sell their constituents that, hey, this is a very useful program for us. And then lastly, these programs are violator funded.

So it’s not a big budget lift to ask for the city. It really is a commitment on the safety protocols. So if they’re committed to the safety and they believe that the programs will work based on the testimonials we have from all the other customers that are are seeing the benefits, there’s not a big lift for them to go do the work because we invest the capital to go deploy the the technology.

Dave Koning, Senior Research Analyst, Baird: And what’s maybe what’s the time frame from, you know, the state legislator says, yeah, this is a good idea to you starting to actually get paid revenue?

John Baldwin, Leader of Government Solutions Business, Vera Mobility: It it’s anywhere from twelve to eighteen months. Yeah. But the mass adoption, you can imagine, is really gonna vary depending upon the state. You know, Florida has moved very quickly for school bus stop arm and school zone speed. California took a more deliberate approach with just six pilot programs in six cities.

Mhmm. So it really depends on what’s allowed at the state level and then how fast do the cities really wanna move.

Dave Koning, Senior Research Analyst, Baird: And you’ve you have a very strong backlog. I think it’s about 13% of your revenue base. Does that mean at some point, we’re gonna have a quarter here where that annualized revenue is starting to really hit and you grow 13% for the total segment? Like, is there any reason that couldn’t happen?

Craig Conti, CFO, Vera Mobility: It could happen. It could happen. And just on the term backlog, the number that we kick out is an ARR number. So it’s not if you were to look at a units business, it’s not exactly for anybody in the audience is trying to say backlog, book to bill. It’s a little different from variability for a myriad of reasons.

So let me contextualize that with numbers. We talked about on our earnings call that on a TTM basis, we have $52,000,000 worth of ARR that hit. If you compare that $52,000,000 to a $400,000,000 that’s the basis of your question. So for for for sure. But, you know, the the one thing you gotta think about there is these these are pretty chunky.

Right? And that’s why I don’t like talking about ARR on a ninety day basis. I like it more on a TTM basis. So there could be a quarter in the future where that would happen. I wouldn’t think that that would be the permanent state of affairs.

I still think about this business today as the high end of mid single digit growth, but certainly trending more positive to that as we continue to build that ARR.

Dave Koning, Senior Research Analyst, Baird: And maybe what what should we think about how big is the school business as a percent of your total right now? And maybe what five, ten years or what’s like the TAM if we, you know, add Florida and California and just all the the markets?

David Roberts, CEO, Vera Mobility: We don’t don’t call it the school business separately.

Craig Conti, CFO, Vera Mobility: No. No. We don’t.

David Roberts, CEO, Vera Mobility: We can talk about the TAM related to that.

John Baldwin, Leader of Government Solutions Business, Vera Mobility: It it’s tricky because a lot of the speed programs we have are actually schools on speed. Mhmm. Yeah. You know, the the speeding programs are authorized within a certain distance or radius from the school because in many ways it’s to protect speeding around around children. But you can imagine a high population density area like New York, the school’s own speed can be give a school every one kilometer, every 500 meters even, you can get a very high camera density even in school zones.

David Roberts, CEO, Vera Mobility: I mean, the way to think about it is I’ve been with the company now almost eleven years, and we’ve opened up more TAM for government solutions in the last two years than we did in the previous eight. I mean, we just have there has been a real sea change in the adoption of these programs, whether that be purpose built speeds of school zones, work zones, school bus, or red light. Mhmm.

Dave Koning, Senior Research Analyst, Baird: And but but, like, what could be you know, if if we look at all the states or all the realistic school zones that could how how big could that just speed camera business be in, you know, ten years?

David Roberts, CEO, Vera Mobility: It’s hard to say because right now, it’s I mean, look. We what we’ve said is we’ve opened up about $200,000,000 of TAM in the last couple years. If California chooses to go to right now, it’s in a pilot phase where it’s named cities. And if it moves to a full state rollout, that would be another incremental one hundred million So we’re sort of looking at a $300,000,000 opportunity expansion for a business that’s around $400,000,000 in revenue. So pretty good place to be.

Dave Koning, Senior Research Analyst, Baird: It’s a very good place.

David Roberts, CEO, Vera Mobility: And our market share is 70% in The United States. So if you just said that our win rate was anywhere close to that, then you would feel pretty good about the opportunity for the business.

Dave Koning, Senior Research Analyst, Baird: Yeah. That’s amazing, your win ratemarket share. What has put you in that position in, you know, in a school zone like a bake off? Like, how do you get chosen relative to a competitor?

John Baldwin, Leader of Government Solutions Business, Vera Mobility: So so if you think about if you’re in a government agency and you want to secure something that’s not core to your mission, so your your school board or your superintendent, you’re not well versed in how do you run the streets around your school. And so they need a vendor that can come in and do all that work for them, plan the program, show them what’s gonna make an effective program, and be that trusted partner as we stand these programs up. It’s not trivial. It’s not a SaaS offering. It is a pure technology enabled service.

So we have to go in, plan the sites, we have to dig holes in the ground, we have to run power, we have to pull all the permits. Once we get the camera up and running, we have to integrate it with the back office, have to integrate with the police department to actually review the citations before they’re sent to a violator, then we get involved in the billing on the back end. If you think about all that thing from all those things I said from a school district’s perspective, none of that has anything to do with their mission at running the school. And so they really wanna outsource that purely to a technology partner who’s got scale and proven ability to support the complexity of the program.

Dave Koning, Senior Research Analyst, Baird: And once a school has a camera up and running, a, the municipality’s getting ticket revenue, and b, you’re probably proving out like, oh, there’s 30% less accidents through here now. Right? That seems very compelling. Once once you have that in place, is it like 99% retention for the next ten years plus?

John Baldwin, Leader of Government Solutions Business, Vera Mobility: That is pretty much how these programs operate. Yeah. We have very little churn in this business because once they’re up and running, revenue generating, saving lives. Know, one of the one of the big growth factors we haven’t talked about is expansion from current clients, but half of our growth in any given year is gonna come from our current clients. We’ll add more cameras to the program.

Mhmm. Right? And we see that as a as a great upside. It’s a two things. One is it’s it’s a reinforcement how effective the programs are.

Number two, that’s the lowest cost way for us to grow revenue on the top line because we don’t have to go build a new back office or do a lot of new investment aside from just putting the new camera on the

David Roberts, CEO, Vera Mobility: Yeah.

Dave Koning, Senior Research Analyst, Baird: Yeah. No. That’s that’s great. And maybe if we talk a little bit about margins. I know the government margins have come down a little bit.

Right. You know, how do you see that playing out? I guess, next year, you had some onetime stuff happen kind of this year. How do you see that play out into next year? And over time, is incremental margin of new cameras, like, accretive to margins?

Craig Conti, CFO, Vera Mobility: Yeah. I so at at the this year, we’ve put in some money into the platform. We talked about setup costs. When you’re When you look at the other side of the non New York City business growing at double digits is there’s one time cost you need to do that’s not necessarily capitalizable that you need to incur. So to the degree that that strong growth occurs, we will be putting some dollars in.

If I roll it forward, I have to take anything that’s going on with New York City. We’ll see where that shakes out. But I do expect this to be a very high 20s business getting towards 30%. And if I roll it back to what we said at Investor Day, the overall business is going to accrete margins of 50 basis points a year and GS will be a contributor to that.

Dave Koning, Senior Research Analyst, Baird: Yes. Okay. That’s good. And we have about five minutes left. We’ll touch maybe on the parking business.

I know you’ve made the acquisition It was ’3 late late twenty twenty two maybe or yeah. ’21.

David Roberts, CEO, Vera Mobility: Yeah.

Dave Koning, Senior Research Analyst, Baird: ’21. ’20 ’1. Yeah. Maybe that’s that’s grown a little slower than we’ve expected. It’s pretty close, but just a little slower.

In margins have been it’s it’s the lowest margin unit. Maybe touch on those two, like, what you think revenue growth, the margins can be over time.

David Roberts, CEO, Vera Mobility: Yes. We as we’ve talked about on some of our calls, we’ve reestablished a new management team, and they have done an exceptional job of kind of stabilizing. We we we got off the rails a little bit, what I would just call commercially, And they are back on plan relative to what the plan is for the year in terms of sales execution, salespeople hitting quota, going out winning with customers, renewing customers, all the things that you would call sort of commercial execution 101, which they had sort of fallen off on a little bit. So they’re doing really well. I look at the business right now is how we think about exit rate velocity for the end of the year, which is how is our recurring revenue base.

That’s a principally, there’s two aspects. One, we sell hardware, so think of access control, so the booms that come down when you get in and out of a parking lot as well as pay stations for municipalities. There’s that chunk. And then there’s the kind of an ERP for parking management. That’s the software SaaS business.

So I look at the exit rate on that as sort of the what we’ll judge how the next year is gonna be for the company.

Dave Koning, Senior Research Analyst, Baird: Yeah. And is there is there sort of a a synergy between all three businesses at all?

David Roberts, CEO, Vera Mobility: There’s probably a little bit between parking and government. But really, we run more as a portfolio play just because of the customer sets are so unique. While both parking and government do serve some municipalities, John’s business tends to be much larger, and the parking business tends to be much smaller. So they’re not necessarily overlapping. Maybe maybe just a little bit, but not much.

They’re totally different solutions and platforms. So

Craig Conti, CFO, Vera Mobility: The overlap is really the common

David Roberts, CEO, Vera Mobility: Yeah.

Craig Conti, CFO, Vera Mobility: That we got through with the company.

Dave Koning, Senior Research Analyst, Baird: Yeah. My daughter recently got a a ticket from t two up at a university she’s at, and she was all a little depressed about it. And I looked and I saw t two. I’m like, oh, I was super excited. There you go.

This is great.

David Roberts, CEO, Vera Mobility: Good.

Dave Koning, Senior Research Analyst, Baird: Great. Alright. And, you know, I guess over time well, you know, one thing, use of cash, you’ve done a really nice job deploying in either buybacks or acquisitions over time. It’s been a nice, you know, factor of accretion. You’ve recently done another buyback.

Is maybe talk through, like, what’s what’s kind of the goal over time with the the cash flow?

David Roberts, CEO, Vera Mobility: Yeah. I mean, ultimately, we we’ve kind of run the same playbook since we went public, which is that, you know, we want to drive value for our shareholders. And but we always and we feel like that is both growth and stewardship of the capital. So we’re always looking for growth first. We’ve bought several companies.

We haven’t bought in a while because we’ve been trying to be what I would just say, the pricing in the market still doesn’t come back to what we would consider fair value for some of the assets. So we’ve been a little more conservative looking for the right opportunities. But we’re also not in a hurry because we do generate a fair amount of cash flow. We can readily deploy that back to shareholders through buybacks, which we’ve done pretty significantly over the last couple of years. We’re able to because of the cash flow, we’re able to almost look at that in a real time view, and we can make those decisions based upon what’s in the pipeline from M and A or do we want to do buybacks.

So Mhmm. It’s kind of a nice place to be because we have that flexibility.

Craig Conti, CFO, Vera Mobility: And to put some to put some numbers on what David said, when when we’re in front of this crowd, it’s something I always I always like to say is that, you know, it’s not lost on us. We we compete for investor dollars. Right?

David Roberts, CEO, Vera Mobility: Mhmm.

Craig Conti, CFO, Vera Mobility: That it’s what we’re here doing today. And I think a piece of that is you have to demonstrate your ability to allocate capital. With a business like ours that will generate anywhere from 40 percent to 50% free cash flow conversion on adjusted EBITDA, that’s something you want to see the company be really good at. So if you think about the last four years, we haven’t done a deal since the end of twenty twenty one. That doesn’t mean we haven’t been very active in processes.

That means we’ve been very selective. But in that same amount of time, we fully funded our CapEx. We paid down over $200,000,000 of debt and bought back over $500,000,000 worth of shares. So the final piece I like to say on this, Dave, probably heard me say it before is, I can’t tell you what’s going to happen in six months, but I’m going tell you exactly the screen that we’re going to use to deploy our capital. And it’s the same play that we’ve been running.

Dave Koning, Senior Research Analyst, Baird: Yeah. Yeah. And maybe just final question. We’ve got a minute to go here. I guess what you look at is is the bigger risks.

Like, I I look at your guidance. You you kind of derisked it by building in some deceleration already from travel just assuming the market could actually get a little worse. You’re fine with that. You have highly recurring government camera business. Like, it seems like you’re very well insulated, but, like, what what do you look at as some of the the risk?

David Roberts, CEO, Vera Mobility: It’s I mean, for us, it’s really travel. If travel were you know, we had when when COVID happened, we had months that we had 99% fall off. I mean, we just that’s that’s we are connected to those big rental cars. For sure. If travel has a significant like a significant debt, $10.12 percent, something like that, that’s that’s our biggest risk because John’s business is literally going the other direction with growth.

Yeah. And the parking business is recovering. So we’re really in a great spot right now.

Dave Koning, Senior Research Analyst, Baird: Yeah. I think you have 27% EBITDA margins in 2020 when COVID was out. I mean, even with that, even with the travel, you still had massive margins.

David Roberts, CEO, Vera Mobility: Yeah. Even though that drop, we still generated 20,000,000 for cash flow. I mean, so we it’s a great business.

Craig Conti, CFO, Vera Mobility: Yeah.

Dave Koning, Senior Research Analyst, Baird: Well, Thanks so much. Please

David Roberts, CEO, Vera Mobility: join me Thanks for

Dave Koning, Senior Research Analyst, Baird: having us.

David Roberts, CEO, Vera Mobility: Thanks everyone.

Craig Conti, CFO, Vera Mobility: Thank you.

Dave Koning, Senior Research Analyst, Baird: Appreciate it.

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