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☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30,
2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.
Commission File Number:
001-37979
VERRA MOBILITY CORPORATION
(
Exact name of registrant as specified in its charter
)
Delaware
81-3563824
(
State or other jurisdiction of
(
I.R.S. Employer
incorporation or organization
)
Identification No.
)
1150 North Alma School Road
85201
Mesa
,
Arizona
(
Zip Code
)
(
Address of Principal Executive Offices
)
(
480
)
443-7000
(
Registrant’s Telephone Number, Including Area Code
)
Securities registered pursuant to Section 12(b) of the Act:
(Title of Each Class)
(Trading Symbol)
(Name of Each Exchange on Which Registered)
Class A Common Stock, par value $0.0001 per share
VRRM
Nasdaq
Capital Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES
☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YES
☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act:
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). YES ☐ NO
☒
As of August 1, 2025, there were
159,540,820
shar
es of the Company’s Class A Common Stock, par value $0.0001 per share, issued and outstanding.
This Quarterly Report on Form 10-Q (this “
Report
”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “
Securities Act
”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”). All statements contained in this Report other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, products, services, technology offerings, market conditions, growth and trends, expansion plans and opportunities, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely” and similar expressions, and the negative of these expressions, are intended to identify forward-looking statements.
The future events and trends discussed in this Report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Factors that could cause actual results to differ include the risks and uncertainties described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024 (our “
Annual Report
”), Part II, Item 1A. of this Quarterly Report, and in other filings with the Securities and Exchange Commission (the “
SEC
”) which highlight, among other risks:
•
the impact of negative industry and macroeconomic conditions, including the impact of government actions and regulations, such as tariffs and trade protection measures, on our customers or us may materially and adversely impact our business, financial condition and results of operations;
•
customer concentration in our Commercial Services and Government Solutions segments, including risks impacting these segments such as travel demand and legislation, and risks relating to our contract with NYCDOT (defined below), which comprises a material portion of our revenue. We extended our current contract with NYCDOT through December 31, 2025 to allow NYCDOT to continue to operate its automated enforcement program. On March 31, 2025, NYCDOT announced that it identified the Company as the vendor to manage New York City’s automated enforcement camera safety programs for an expected five-year period after the Company’s current contract expires in December 2025. 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;
•
our reliance on specialized third-party providers;
•
risks and uncertainties related to our government contracts, including legislative changes, termination rights, delays in payments, audits and investigations;
•
decreases in the prevalence or political acceptance of, or an increase in governmental restrictions regarding, automated and other similar methods of photo enforcement, parking solutions or the use of tolling;
•
our ability to successfully implement our acquisition strategy or integrate acquisitions;
•
our ability to compete in a highly competitive and rapidly evolving market, including our ability to keep up with technological developments and changing customer preferences;
•
our ability to maintain effective internal controls over financial reporting;
•
failure in or breaches of our networks or systems, including as a result of cyber-attacks or other incidents;
•
risks and uncertainties related to our international operations;
•
our failure to acquire necessary intellectual property or adequately protect our intellectual property;
•
risks and uncertainties related to litigation and other disputes and regulatory investigations; and
•
our ability to manage our substantial level of indebtedness.
You should not rely on forward-looking statements as predictions of future events. We operate in a very competitive and rapidly changing environment and new risks emerge from time to time. The forward-looking statements in this Report represent our views as of the date hereof. Except as may be required by law, we undertake no obligation to update any of these forward-looking statements for any reason or to conform these statements to actual results or revised expectations.
3
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, are available free of charge on our website, verramobility.com, under the heading “Investors” immediately after they are filed with, or furnished to, the SEC. We use our investor relations website, ir.verramobility.com, as a means of disclosing information, which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our investor relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media. Information contained on or accessible through, including any reports available on, our website is not a part of, and is not incorporated by reference into, this Report or any other report or document we file with the SEC. Any reference to our website in this Report is intended to be an inactive textual reference only.
Unless the context indicates otherwise, the terms “Verra Mobility,” the “Company,” “we,” “us,” and “our” as used in this Report refer to Verra Mobility Corporation, a Delaware corporation, and its subsidiaries taken as a whole.
4
Part I—Financial Information
Item 1. Financi
al Statements
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDA
TED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
June 30,
2025
December 31,
2024
Assets
Current assets:
Cash and cash equivalents
$
147,651
$
77,560
Restricted cash
6,274
3,594
Accounts receivable (net of allowance for credit losses of $
21.7
million and
$
17.0
million at June 30, 2025 and December 31, 2024, respectively)
217,359
206,503
Unbilled receivables
51,426
48,193
Inventory
16,090
15,502
Prepaid expenses and other current assets
36,335
42,647
Total current assets
475,135
393,999
Installation and service parts, net
34,571
36,631
Property and equipment, net
177,804
141,601
Operating lease assets
20,226
29,895
Intangible assets, net
200,917
232,297
Goodwill
742,390
735,615
Other non-current assets
44,389
44,451
Total assets
$
1,695,432
$
1,614,489
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
111,448
$
91,224
Deferred revenue
29,808
29,374
Accrued liabilities
61,586
73,980
Tax receivable agreement liability, current portion
5,163
5,163
Total current liabilities
208,005
199,741
Long-term debt, net
1,031,430
1,034,211
Operating lease liabilities, net of current portion
14,291
25,757
Tax receivable agreement liability, net of current portion
37,977
42,977
Asset retirement obligations
17,178
15,493
Deferred tax liabilities, net
15,670
14,699
Other long-term liabilities
18,779
16,486
Total liabilities
1,343,330
1,349,364
Commitments and contingencies (Note 13)
Stockholders' equity
Preferred stock, $
0.0001
par value,
1,000
shares authorized with
no
shares issued and outstanding at June 30, 2025 and December 31, 2024
—
—
Common stock, $
0.0001
par value,
260,000
shares authorized with
159,532
and
159,594
shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively
16
16
Additional paid-in capital
557,169
551,955
Accumulated deficit
(
196,037
)
(
269,287
)
Accumulated other comprehensive loss
(
9,046
)
(
17,559
)
Total stockholders' equity
352,102
265,125
Total liabilities and stockholders' equity
$
1,695,432
$
1,614,489
See accompanying Notes to the Condensed Consolidated Financial Statements.
5
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED ST
ATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
(In thousands, except per share data)
2025
2024
2025
2024
Service revenue
$
223,477
$
212,017
$
435,379
$
414,738
Product sales
12,548
10,409
23,900
17,418
Total revenue
236,025
222,426
459,279
432,156
Cost of service revenue, excluding depreciation and amortization
4,629
4,641
9,412
8,946
Cost of product sales
8,946
7,848
16,978
13,134
Operating expenses
81,317
74,903
155,056
145,543
Selling, general and administrative expenses
48,466
46,343
99,967
94,514
Depreciation, amortization and (gain) loss on disposal of assets, net
29,473
27,522
57,287
54,497
Total costs and expenses
172,831
161,257
338,700
316,634
Income from operations
63,194
61,169
120,579
115,522
Interest expense, net
16,572
18,845
33,208
38,480
Gain on interest rate swap
—
(
23
)
—
(
419
)
Loss on extinguishment of debt
23
—
48
595
Other income, net
(
6,003
)
(
5,245
)
(
10,112
)
(
9,698
)
Total other expenses
10,592
13,577
23,144
28,958
Income before income taxes
52,602
47,592
97,435
86,564
Income tax provision
14,027
13,369
26,521
23,192
Net income
$
38,575
$
34,223
$
70,914
$
63,372
Other comprehensive income (loss):
Change in foreign currency translation adjustment
6,386
1,434
8,513
(
1,826
)
Total comprehensive income
$
44,961
$
35,657
$
79,427
$
61,546
Net income per share:
Basic
$
0.24
$
0.21
$
0.44
$
0.38
Diluted
$
0.24
$
0.20
$
0.44
$
0.38
Weighted average shares outstanding:
Basic
159,478
166,064
159,511
166,152
Diluted
161,543
168,615
161,804
168,670
See accompanying Notes to the Condensed Consolidated Financial Statements.
6
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEM
ENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
For the Three and Six Months Ended June 30, 2025
Common
Stock
Additional
Paid-in
Accumulated
Accumulated
Other
Comprehensive
Total
Stockholders'
(In thousands)
Shares
Amount
Capital
Deficit
Loss
Equity
Balance as of December 31, 2024
159,594
$
16
$
551,955
$
(
269,287
)
$
(
17,559
)
$
265,125
Net income
—
—
—
32,339
—
32,339
Share repurchases and retirement
(
686
)
—
(
2,372
)
2,336
—
(
36
)
Vesting of restricted stock units ("
RSU
s") and performance share units ("
PSU
s")
501
—
—
—
—
—
Exercise of stock options
13
—
170
—
—
170
Payment of employee tax withholding related to RSUs and PSUs vesting
—
—
(
6,606
)
—
—
(
6,606
)
Stock-based compensation
—
—
6,456
—
—
6,456
Other comprehensive income, net of tax
—
—
—
—
2,127
2,127
Balance as of March 31, 2025
159,422
16
549,603
(
234,612
)
(
15,432
)
299,575
Net income
—
—
—
38,575
—
38,575
Vesting of RSUs and PSUs
65
—
—
—
—
—
Exercise of stock options
45
—
671
—
—
671
Payment of employee tax withholding related to RSUs and PSUs vesting
—
—
(
384
)
—
—
(
384
)
Stock-based compensation
—
—
7,279
—
—
7,279
Other comprehensive income, net of tax
—
—
—
—
6,386
6,386
Balance as of June 30, 2025
159,532
$
16
$
557,169
$
(
196,037
)
$
(
9,046
)
$
352,102
For the Three and Six Months Ended June 30, 2024
Common
Stock
Additional
Paid-in
Accumulated
Accumulated
Other
Comprehensive
Total
Stockholders'
(In thousands)
Shares
Amount
Capital
Deficit
Loss
Equity
Balance as of December 31, 2023
166,555
$
17
$
557,513
$
(
125,887
)
$
(
10,176
)
$
421,467
Net income
—
—
—
29,149
—
29,149
Share repurchases and retirement
(
534
)
—
(
1,789
)
1,789
—
—
Vesting of RSUs and PSUs
445
—
—
—
—
—
Exercise of stock options
50
—
689
—
—
689
Payment of employee tax withholding related to RSUs and PSUs vesting
—
—
(
4,608
)
—
—
(
4,608
)
Stock-based compensation
—
—
5,558
—
—
5,558
Other comprehensive loss, net of tax
—
—
—
—
(
3,260
)
(
3,260
)
Balance as of March 31, 2024
166,516
17
557,363
(
94,949
)
(
13,436
)
448,995
Net income
—
—
—
34,223
—
34,223
Share repurchases and retirement
(
2,000
)
(
1
)
(
6,694
)
(
45,155
)
—
(
51,850
)
Vesting of RSUs and PSUs
120
—
—
—
—
—
Exercise of stock options
22
—
285
—
—
285
Payment of employee tax withholding related to RSUs and PSUs vesting
—
—
(
1,050
)
—
—
(
1,050
)
Stock-based compensation
—
—
6,590
—
—
6,590
Other comprehensive income, net of tax
—
—
—
—
1,434
1,434
Balance as of June 30, 2024
164,658
$
16
$
556,494
$
(
105,881
)
$
(
12,002
)
$
438,627
See accompanying Notes to the Condensed Consolidated Financial Statements.
7
VERRA MOBILITY CORPORATION
condensed consolidated S
tatements of Cash Flows
(Unaudited)
Six Months Ended June 30,
($ in thousands)
2025
2024
Cash Flows from Operating Activities:
Net income
$
70,914
$
63,372
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
56,645
54,351
Amortization of deferred financing costs and discounts
1,903
2,394
Change in fair value of interest rate swap
—
147
Loss on extinguishment of debt
48
595
Credit loss expense
13,856
9,306
Deferred income taxes
(
4,467
)
(
699
)
Stock-based compensation
13,735
12,148
UTP reserve release
(
1,682
)
—
Other
1,227
465
Changes in operating assets and liabilities:
Accounts receivable
(
23,674
)
(
21,968
)
Unbilled receivables
(
2,710
)
(
7,231
)
Inventory
182
653
Prepaid expenses and other assets
5,975
(
4,192
)
Deferred revenue
(
56
)
(
2,208
)
Accounts payable and other current liabilities
7,900
(
31,170
)
Other liabilities
(
1,683
)
(
1,595
)
Net cash provided by operating activities
138,113
74,368
Cash Flows from Investing Activities:
Cash receipts for interest rate swap
—
566
Purchases of installation and service parts and property and equipment
(
56,118
)
(
28,333
)
Cash proceeds from the sale of assets
99
90
Net cash used in investing activities
(
56,019
)
(
27,677
)
Cash Flows from Financing Activities:
Repayment of long-term debt
(
4,509
)
(
4,509
)
Payment of debt issuance costs
(
262
)
(
224
)
Share repurchases and retirement
—
(
51,500
)
Proceeds from the exercise of stock options
841
974
Payment of employee tax withholding related to RSUs and PSUs vesting
(
6,990
)
(
5,658
)
Net cash used in financing activities
(
10,920
)
(
60,917
)
Effect of exchange rate changes on cash and cash equivalents
1,597
(
98
)
Net increase (decrease) in cash, cash equivalents and restricted cash
72,771
(
14,324
)
Cash, cash equivalents and restricted cash - beginning of period
81,154
139,722
Cash, cash equivalents and restricted cash - end of period
$
153,925
$
125,398
See accompanying Notes to the Condensed Consolidated Financial Statements.
8
VERRA MOBILITY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended June 30,
Reconciliation of cash, cash equivalents, and restricted cash
to the condensed consolidated balance sheets
2025
2024
Cash and cash equivalents
$
147,651
$
122,020
Restricted cash
6,274
3,378
Total cash, cash equivalents and restricted cash
$
153,925
$
125,398
Supplemental cash flow information:
Interest paid
$
32,782
$
39,009
Income taxes paid, net of refunds
26,011
27,199
Supplemental non-cash information:
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end
8,570
7,864
See accompanying Notes to the Condensed Consolidated Financial Statements.
9
VERRA MOBILITY CORPORATION
Notes to the CONDENSED CONSO
LIDATED FINANCIAL STATEMENTS
(Unaudited)
1.
Description of Business
We are a leading provider of smart mobility technology solutions, principally operating throughout the United States, Australia, Europe and Canada. Our goal is to 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. T
he Company is organized into
three
operating segments: Commercial Services, Government Solutions and Parking Solutions (see Note
14,
Segment Reporting
).
The Commercial Services segment offers automated toll and violations management and title and registration solutions to rental car companies (“
RACs
”), direct commercial fleet owner-operators (“
Direct Fleets
”) and fleet management companies (“
FMCs
”) and other large fleet owners in North America. Through its established relationships with individual tolling authorities throughout the United States, the segment provides an automated and outsourced administrative solution for its customers while also providing a value-added convenience for vehicle drivers and benefits to tolling and issuing authorities. The toll and violations management solutions help ensure timely payment of tolls and violations incurred by the customers’ vehicles and perform timely transfers of liability on the customers’ behalf, and driver billing and collections, as applicable. It also manages regional toll transponder installation and vehicle association—a critical and highly complex process for RAC, Direct Fleet and FMC customers—to ensure that the transponders (and corresponding toll transactions) are associated with the correct vehicle. In Europe, the Commercial Services segment provides violations processing through Euro Parking Collection plc and consumer tolling services through Pagatelia S.L.U.
The Government Solutions segment offers photo enforcement solutions and services to its customers which include complete, end-to-end speed, red-light, school bus stop arm and bus lane enforcement solutions. These programs are designed to reduce traffic violations and resulting collisions, injuries and fatalities. The Company implements and administers traffic safety programs for municipalities, counties, school districts and law enforcement agencies of all sizes. The international operations for this segment primarily involve the sale of traffic enforcement products and recurring maintenance services related to the equipment and software.
The Parking Solutions segment offers an integrated suite of parking software, transaction processing and hardware solutions to its customers, which include universities, municipalities, healthcare facilities and commercial parking operators. This segment develops specialized hardware and parking management software that provides a platform for the issuance of parking permits, enforcement, gateless vehicle counting, event parking and citation services. It also produces and markets its proprietary software as a service to its customers throughout the United States and Canada.
2.
Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company prepared in accordance with generally accepted accounting principles in the United States of America (“
GAAP
”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.
Use of Estimates
The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. There have been no material changes in the Company’s significant accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024.
10
Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.
Concentration of Credit Risk
Significant customers are those
which represent more than
10
% of the Company’s total revenue or accounts receivable, net.
Revenue from a single Government Solutions customer exceeded
10
% of total revenue. The City of New York Department of Transportation (“
NYCDOT
”) represented
14.7
% and
15.6
% of total revenue for the three months ended June 30, 2025 and 2024, respectively, and
15.0
% and
16.1
% of total revenue for the six months ended June 30, 2025 and 2024, respectively. NYCDOT represented
16.5
% and
17.2
% of total accounts receivable, net as of June 30, 2025 and December 31, 2024, respectively. There is no material reserve related to NYCDOT open receivables as amounts are deemed collectible based on current conditions and expectations. No other Government Solutions customer exceeded 10% of total accounts receivable, net.
Significant customer revenues were generated through three of the Company’s Commercial Services customers, with each exceeding
10
% of total revenue. Commercial Services Customer A represented
14.7
% and
13.9
% of total revenue for the three months ended June 30, 2025 and 2024, respectively, and
15.2
% and
13.5
% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Commercial Services Customer B represented
11.2
% of total revenue for both the three months ended June 30, 2025 and 2024, respectively, and
11.5
% and
11.3
% of total revenue for the six months ended June 30, 2025 and 2024, respectively. Commercial Services Customer C represented
11.0
% and
10.6
% of total revenue for the three months ended June 30, 2025 and 2024, respectively, and
10.6
% and
11.2
% of total revenue for the six months ended June 30, 2025 and 2024, respectively.
No
Commercial Services customer exceeded
10
% of total accounts receivable, net as of June 30, 2025 or December 31, 2024.
There were
no
significant customer concentrations that exceeded 10% of total revenue or accounts receivable, net for the Parking Solutions segment as of or for any period presented.
Allowance for Credit Losses
The Company reviews historical credit losses and customer payment trends on receivables and develops loss estimates as of the balance sheet date, which includes adjustments for current and future expectations. It identifies pools of receivables based on the type of business, industry in which the customer operates and historical credit loss patterns. The Company uses collection assumptions (typically at the customer level) to estimate expected credit losses. Receivables are written off against the allowance for credit losses when it is probable that amounts will not be collected based on the terms of the customer contracts, and subsequent recoveries reverse the previous write-off and apply to the receivable in the period recovered. No interest or late fees are charged on delinquent accounts. The Company periodically evaluates the adequacy of its allowance for expected credit losses and adjusts appropriately.
The following presents the activity in the allowance for credit losses by reportable segment for the six months ended June 30, 2025 and 2024, respect
ively:
Commercial
Government
Parking
($ in thousands)
Services
(1)
Solutions
Solutions
Total
Balance at January 1, 2025
$
16,038
$
332
$
648
$
17,018
Credit loss expense
12,938
49
869
13,856
Write-offs, net of recoveries
(
8,857
)
5
(
324
)
(
9,176
)
Balance at June 30, 2025
$
20,119
$
386
$
1,193
$
21,698
Commercial
Government
Parking
($ in thousands)
Services
(1)
Solutions
Solutions
Total
Balance at January 1, 2024
$
15,661
$
2,426
$
426
$
18,513
Credit loss expense
9,158
106
42
9,306
Write-offs, net of recoveries
(
6,221
)
(
2
)
(
29
)
(
6,252
)
Balance at June 30, 2024
$
18,598
$
2,530
$
439
$
21,567
11
(1)
This primarily consists of receivables from drivers of rental cars for which the Company bills on behalf of its customers. Receivables not collected from drivers within a defined number of days are transferred to customers subject to applicable bad debt sharing agreements. The allowance for credit losses for driver-billed receivables was
85
%
and
93
% of the total Commercial Services allowance for credit losses as of June 30, 2025 and 2024, respectively.
Remaining Performance Obligations
Deferred revenue represents amounts that have been invoiced in advance and are expected to be recognized as revenue in future periods, and it primarily relates to Government Solutions and Parking Solutions customers. As of June 30, 2025 and December 31, 2024, the Company had approximately $
12.5
million and $
11.8
million of deferred revenue in the Government Solutions segment, respectively. The Company recognized $
1.4
million and $
2.4
million of revenue excluding exchange rate impact during the three months ended June 30, 2025 and 2024, respectively, and $
5.6
million and $
5.4
million, of revenue excluding exchange rate impact during the six months ended June 30, 2025 and 2024, respectively, related to amounts that were included in deferred revenue as of December 31, 2024 and 2023. As of June 30, 2025 and December 31, 2024 the Company had approximately $
21.8
million and $
21.7
million of deferred revenue in the Parking Solutions segment, respectively. The Company recognized $
7.8
million and $
6.8
million of revenue during the three months ended June 30, 2025 and 2024, respectively, and $
17.8
million and $
15.4
million, of revenue during the six months ended June 30, 2025 and 2024, respectively, related to amounts that were included in deferred revenue as of December 31, 2024 and 2023.
Remaining performance obligations represent the amount of contracted future revenue not yet recognized as the amounts relate to undelivered performance obligations, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods. The Company elected the practical expedients to omit disclosure for the amount of the transaction price allocated to remaining performance obligations with original expected contract length of one year or less and the amount that relates to variable consideration allocated to a wholly unsatisfied performance obligation to transfer a distinct good or service within a series of distinct goods or services that form a single performance obligation. As of June 30, 2025, total transaction price allocated to performance obligations in the Government Solutions segment that were unsatisfied or partially unsatisfied was $
169.5
million, of which $
75.9
million is expected to be recognized as revenue in the next twelve months and the rest over the remaining performance obligation period.
Interest Rate Swap
In December 2022, the Company entered into a cancellable interest rate swap agreement to hedge its exposure to interest rate fluctuations associated with the LIBOR (now transitioned to Term Secured Overnight Financing Rate, “
SOFR
”) portion of the variable interest rate on its 2021 Term Loan (as defined below). Under the interest rate swap agreement, the Company paid a fixed rate of 5.17% and the counterparty paid a variable interest rate. The Company entered into an International Swaps and Derivatives Association, Inc. Master Agreement with the counterparty which provided for the net settlement of all, or a specified group, of derivative transactions through a single payment. The notional amount on the interest rate swap was $
675.0
million. The Company had the option to effectively terminate the interest rate swap agreement starting in December 2023, and monthly thereafter until December 2025. The Company treated the interest rate swap as an economic hedge for accounting purposes and any changes in the fair value of the derivative instrument (including accrued interest) and related cash receipts or payments were recorded in the condensed consolidated statements of operations within the gain on interest rate swap line item. The Company exercised its option to cancel the interest rate swap agreement during the third quarter of fiscal year 2024.
The following details the components of the gain on interest rate swap for the respective periods:
Three Months Ended
Six Months Ended
($ in thousands)
June 30, 2024
June 30, 2024
Change in fair value
$
249
$
147
Cash receipts
(
272
)
(
566
)
Total gain on interest rate swap
$
(
23
)
$
(
419
)
The effect of remeasurement to fair value was recorded within the operating activities section and the monthly cash proceeds received were recorded within the investing activities section in the condensed consolidated statements of cash flows. See Note 7,
Fair Value of Financial Instruments
, for further discussion on the fair value measurement of the interest rate swap.
12
Recent Accounting Pronouncements
Accounting Standards Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (the “
FASB
”) issued Accounting Standards Update (“
ASU
”) 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
. The ASU requires companies to disclose specific categories in the rate reconciliation, provide additional disclosure for reconciling items that exceed proscribed thresholds, and enhance disclosure regarding income taxes paid and sources of income (loss) from continuing operations including the tax expense (or benefit) disaggregated by federal, state and foreign taxes. The guidance is effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on its financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03,
Income Statement- Reporting Comprehensive Income- Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
. The ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period at a disaggregated level. The guidance is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its financial statements and disclosures.
3.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following at:
($ in thousands)
June 30,
2025
December 31,
2024
Prepaid services
$
18,581
$
17,359
Prepaid tolls
7,709
8,751
Costs to fulfill a customer contract
3,005
3,710
Deposits
2,787
3,057
Other
4,253
9,770
Total prepaid expenses and other current assets
$
36,335
$
42,647
4.
Goodwill and Intangible Assets
The following table presents the changes in the car
rying amount of goodwill by reportable segment:
Commercial
Government
Parking
($ in thousands)
Services
Solutions
Solutions
Total
Balance at December 31, 2024
$
420,167
$
213,382
$
102,066
$
735,615
Foreign currency translation adjustment
5,994
781
—
6,775
Balance at June 30, 2025
$
426,161
$
214,163
$
102,066
$
742,390
Intangible assets consist of the following as of the respective period-ends:
June 30, 2025
December 31, 2024
Gross
Gross
Carrying
Accumulated
Carrying
Accumulated
($ in thousands)
Amount
Amortization
Amount
Amortization
Trademarks
$
4,815
$
2,334
$
4,667
$
1,972
Patent
500
167
500
117
Customer relationships
560,817
379,855
557,958
348,138
Developed technology
40,215
23,074
38,659
19,260
Gross carrying value of intangible assets
606,347
$
405,430
601,784
$
369,487
Less: accumulated amortization
(
405,430
)
(
369,487
)
Intangible assets, net
$
200,917
$
232,297
13
Amortization expense
was $
16.4
m
illion and $
16.7
million for the three months ended June 30, 2025 and 2024, respectively, and was
$
33.1
million and $
33.5
million for the six months ended June 30, 2025 and 2024, respectively
.
Estimated amortization expense in future years is expected to be:
($ in thousands)
Remainder of 2025
$
31,450
2026
57,818
2027
28,573
2028
22,519
2029
21,526
Thereafter
39,031
Total
$
200,917
5.
Accrued Liabilities
Accrued liabilities consist of the following at:
($ in thousands)
June 30,
2025
December 31,
2024
Accrued salaries and wages
$
26,103
$
34,310
Current portion of operating lease liabilities
6,912
6,925
Restricted cash due to customers
5,883
2,858
Accrued interest payable
4,225
4,211
Advanced deposits
3,762
2,993
Income taxes payable
2,807
662
Other
11,894
22,021
Total accrued liabilities
$
61,586
$
73,980
6.
Long-term Debt, Net
The following table provides a summary of the Compan
y’s long-term debt, net at:
($ in thousands)
June 30,
2025
December 31,
2024
2021 Term Loan, due
2028
$
691,059
$
695,568
Senior Notes, due
2029
350,000
350,000
Less: original issue discounts
(
1,950
)
(
2,322
)
Less: unamortized deferred financing costs
(
7,679
)
(
9,035
)
Total long-term debt, net
$
1,031,430
$
1,034,211
2021 Term Loan
In March 2021, VM Consolidated, Inc. (“
VM Consolidated
”), the Company’s wholly owned subsidiary, entered into an Amendment and Restatement Agreement No.1 to the First Lien Term Loan Credit Agreement (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, the Company 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.
14
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 and Fourth Amendments,
the interest rate was reduced by an aggregate
1.00
% to 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. The Company evaluated the Refinancing Transactions on a lender-by-lender basis and accounted accordingly for debt extinguishment and
debt modification costs (for the portion of the transactions that did not meet the accounting criteria for debt extinguishment).
During each of the six months ended June 30, 2025 and 2024, the Company made early repayments of $
4.5
m
illion on the 2021 Term Loan, and as a result the total principal
outstanding was $
691.1
million a
s of June 30, 2025.
The Company recorde
d less than $
0.1
million of loss on extinguishment of debt during both the three and six months ended June 30, 2025, related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments. It recognized a $
0.6
million loss on extinguishment of debt for the six months ended June 30, 2024, related to the write-off of pre-existing deferred fina
ncing costs and discounts in connection with the refinancing of the 2021 Term Loan in February 2024.
The 2021 Term Loan bears
interest based at the Company’s 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 June 30, 2025, the interest rate on the 2021 Term Loan was
6.6
%.
In addition, the 2021 Term Loan requires mand
atory 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:
Consolidated First Lien Net Leverage Ratio (As Defined by the 2021 Term Loan Agreement)
Applicable
Prepayment
Percentage
> 3.70:1.00
50
%
<
3.70:1.00 and > 3.20:1.00
25
%
<
3.20:1.00
0
%
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, the Company 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
.
The Company 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:
Year
Percentage
2025
101.375
%
2026 and thereafter
100.000
%
15
The Revolver
The Company has a Revolving Credit Agreement (the “
Revolver
”). On May 15, 2025, the Company exercised its 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 l
etters 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 the Company’s 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 June 30, 2025 or December 31, 2024. The availability to borrow was $
123.9
million, net of $
1.1
million
of outstanding letters of credit at June 30, 2025.
Interest on the unused portion of the Revolver is payable quarterly at
0.375
% and the Company is also required to pay participation and fronting fees at
1.38
% on $
1.1
millio
n of outstanding letters of credit as of June 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 the Company’s assets are pledged as collateral to secure the Company’s indebtedness under the 2021 Term Loan. At June 30, 2025, the Company was compliant with all debt covenants in its debt agreements.
Interest Expense, Net
The Company recorded intere
st expense, including amortization of deferred financing costs and discounts, of $
16.6
million and $
18.8
million for the three months ended June 30, 2025 and 2024, respectively, and $
33.2
million and $
38.5
million for the six months ended June 30, 2025 and 2024, respectively.
The weighted average effective interest rate on the Company’s outstanding borrowings was
6.2
% as of June 30, 2025 and as of
December 31, 2024.
7. Fair Value of Financial Instruments
Accounting Standards Codification Topic 820,
Fair Value Measurement,
includes a single definition of fair value to be used for financial reporting purposes, provides a framework for applying this definition and for measuring fair value under GAAP, and establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are summarized as follows:
Level 1 –
Fair value is based on observable inputs such as quoted prices for identical assets or liabilities in active markets.
Level 2
– Fair value is determined using quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are directly or indirectly observable.
Level 3
– Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.
The carrying amounts reported in the Company’s condensed consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the immediate to short-term maturity of these financial instruments. The estimated fair value of the Company’s long-term debt, net was calculated based upon available market information.
The carrying value and the
estimated fair value of long-term debt, net are as follows:
Level in
June 30, 2025
December 31, 2024
Fair Value
Carrying
Estimated
Carrying
Estimated
($ in thousands)
Hierarchy
Amount
Fair Value
Amount
Fair Value
2021 Term Loan
2
$
684,076
$
696,242
$
687,203
$
699,916
Senior Notes
2
347,354
345,625
347,008
341,250
16
The Company has an equity investment measured at cost with a carrying value of
$
2.0
million and $
1.9
million as of June 30, 2025 and December 31, 2024, respectively, and is only adjusted to fair value if there are identified events that would indicate a need for an upward or downward adjustment or changes in circumstances that may indicate impairment. The estimation of fair value requires the use of significant unobservable inputs, such as voting
rights and obligations in the securities held, and is therefore classified within Level 3 of the fair value hierarchy. There were no identified events that required a fair value adjustment during the six months ended June 30, 2025 and 2024.
The recurring fair value measurement of the interest rate swap was valued based on observable inputs for similar assets and liabilities including swaption values and other observable inputs for interest rates and yield curves and was classified within Level 2 of the fair value hierarchy.
The following presents the changes in the fair value of the interest rate swap in the gross balances within the below line items for the three and six months ended June 30, 2024:
Three Months Ended June 30,
Six Months Ended June 30,
($ in thousands)
2024
2024
Prepaid expenses and other current assets
Beginning balance
$
841
$
689
Change in fair value of interest rate swap
(
42
)
110
Ending balance
$
799
$
799
Other non-current assets
Beginning balance
$
577
$
627
Change in fair value of interest rate swap
(
207
)
(
257
)
Ending balance
$
370
$
370
The Company separately classified the current and non-current components based on the value of settlements due within 12 months (current) and greater than 12 months (non-current). The Company exercised its option to cancel the interest rate swap during the third quarter of fiscal year 2024.
8.
Net Income Per Share
Basic net income per share is calculated by dividing net income by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net income per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.
The components of basic and diluted net income per s
hare are as follows:
Three Months Ended June 30,
Six Months Ended June 30,
(In thousands, except per share data)
2025
2024
2025
2024
Numerator:
Net income
$
38,575
$
34,223
$
70,914
$
63,372
Denominator:
Weighted average shares - basic
159,478
166,064
159,511
166,152
Common stock equivalents
2,065
2,551
2,293
2,518
Weighted average shares - diluted
161,543
168,615
161,804
168,670
Net income per share - basic
$
0.24
$
0.21
$
0.44
$
0.38
Net income per share - diluted
$
0.24
$
0.20
$
0.44
$
0.38
Antidilutive shares excluded from diluted net income per share:
Performance share units
325
11
325
13
Restricted stock units
20
—
6
80
Total antidilutive shares excluded
345
11
331
93
17
9.
Income Taxes
The Company’s interim income tax provision is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that period. The estimated annual effective tax rate requires judgment and is dependent upon several factors. The Company provides for income taxes under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the financial statements.
The Company provides a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before the Company is able to realize their benefit. The Company calculates the valuation allowance in accordance with the authoritative guidance relating to income taxes, which requires an assessment of both positive and negative evidence regarding the realizability of these deferred tax assets, when measuring the need for a valuation allowance. Significant judgment is required in determining any valuation allowance against deferred tax assets.
The Company’s effective income
tax rate was
26.7
% and
28.1
% for the three months ended June 30, 2025 and 2024, respectively, and
27.2
% and
26.8
% for the six months ended
June 30, 2025 and 2024, respectively.
New Legislation
On July 4, 2025, the One Big Beautiful Bill Act (“
OBBBA
”) was enacted in the U.S. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. The Company is currently evaluating the impact of this legislation but is expecting a reduction to the U.S. income tax liability and net deferred tax assets. The results of this evaluation will be reflected in the Company's Form 10-Q for the quarter ended September 30, 2025.
1
0. Stockholders’ Equity
Share Repurchases and Retirement
In November 2022, the Company’s Board of Directors authorized a share repurchase program for up to an aggregate amount of $
100.0
million of the Company
’
s outstanding shares of Class A common stock, par value $
0.0001
(the “
Class A Common Stock
”), over an 18-month period.
The Company paid $
8.1
million to repurchase
449,432
shares of its Class A Common Stock through open market transactions during fiscal year 2023. On September 5, 2023, the Company used the remaining availability under the share repurchase program for an accelerated share repurchase (“
ASR
”) and paid approximately $
91.9
million to receive an initial delivery of
4,131,551
shares of its Class A Common Stock in accordance with an ASR agreement with a third-party financial institution. The final settlement occurred on January 12, 2024, at which time, the Company received an additional
534,499
shares of Class A Common Stock calculated using a volume-weighted average price over the term of the ASR agreement. In connection with the settlement, the Company reduced the par value from common stock and $
1.8
million from additional paid-in capital calculated using an average share price, with an offset of $
1.8
million to accumulated deficit on the condensed consolidated statements of stockholders
’ equity.
In October 2023, the Company’s Board of Directors authorized a share repurchase program for up to an aggregate amount of $
100.0
million of its outstanding shares of Class A Common Stock over an 18-month period. In June 2024, the Company entered into a share repurc
hase agreement with a stockholder, pursuant to which it repurchased, directly from the stockholder,
2.0
million shares for an aggregate purchase price of $
51.5
million. The repurchased shares were subsequently retired. In addition, the Company recorded approximately $
0.4
million for direct costs related to the excise tax payable on net share repurchases. In connection with this repurchase, the Company reduced the par value from common stock and $
6.7
million from additional paid-in capital calculated using an
average share price, with an offset of $
45.2
million to accumulated deficit on the condensed consolidated statements of stockholders
’ equity.
18
After the Company repurchased an aggregate
3.5
million shares for approximately $
87.3
million in fiscal year 2024, in December 2024, the Company
’
s Board of Directors authorized the repurchase of up to an additional $
100.0
million of its outstanding shares under the then-existing program, providing the Company with approximately $
112.7
million available for repurchases.
On December 11, 2024, the Company 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 its Class A Common Stock. The final settlement occurred on March 3, 2025, at which time, the Company received an additional
685,934
shares of Class A Common Stock calculated using a volume-weighted average price over the term of the ASR agreement. In connection with the settlement, the Company reduced the par value from common stock and $
2.4
million from additional paid-in capital calculated using an average share price, with an offset of $
2.4
million to accumulated deficit on the condensed consolidated statements of stockholders
’
equity. In addition, the Company recorded less than $
0.1
million within accrued liabilities related to the excise taxes payable on net share repurchases on the condensed consolidated balance sheets as of June 30, 2025. All repurchased shares were
subsequently retired. The prior repurchase authorization expired on April 30, 2025.
New Share Purchase Program
On May 17, 2025, the Company’
s Board of Directors authorized a new share repurchase program for up to an aggregate amount of $
100.0
million of the Company
’
s outstanding shares of Class A Common Stock. Under the repurchase program, the Company may purchase shares of Class A Common Stock until
November 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,
and ASR agreements, each as permitted under applicable rules and regulations. The amount and timing of repurchases will be determined at the Company’s 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 the Company 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 the Company’s discretion. The Company
has not yet repurchased shares of Class A Common Stock under this program.
11.
Stock-Based Compensation
The following details the components of stock-based compensation for the respective periods:
Three Months Ended June 30,
Six Months Ended June 30,
($ in thousands)
2025
2024
2025
2024
Operating expenses
$
1,503
$
1,073
$
2,601
$
2,139
Selling, general and administrative expenses
5,776
5,517
11,134
10,009
Total stock-based compensation expense
$
7,279
$
6,590
$
13,735
$
12,148
12.
Tax Receivable Agreement
In October 2018, the Company entered into a Tax Receivable Agreement (“
TRA
”) with PE Greenlight Holdings, LLC. On August 3, 2022, PE Greenlight Holdings, LLC sold and transferred to Lakeside Smart Holdco L.P (“
Lakeside
”), all of its rights, remaining interests and obligations as of that date under the TRA.
The TRA provides for the payment to Lakeside of
50.0
% of the net cash savings, if any, in U.S. federal, state and local income tax that the Company actually realizes (or is deemed to realize in certain circumstances) under the agreement. The Company generally retains the benefit of the remaining
50.0
% of these cash savings. The Company estimated the potential maximum benefit to be paid will be approximately $
70.0
million, and recorded an initial liability and corresponding charge to equity at the inception of the TRA.
At June 30, 2025, the TRA liability wa
s $
43.2
million of which approximate
ly $
5.2
million was the current portion and $
38.0
million was the non-current portion, both of which are included in the respective tax
receivable agreement liability line items on the condensed consolidated balance sheets.
During the second quarter of 2025, the Company made an estimated payment of $
5.0
million related to the 2024 tax year.
13.
Commitments and Contingencies
The Company has issued various letters of credit under contractual arrangements with certain of its domestic and international vendors and customers. Outstanding letters of credit under these arrangements totaled $
1.1
million at June 30, 2025. Additionally, t
he Company ha
d $
2.4
m
illion of bank guarantees at June 30, 2025 required to support bids and contracts with certain international customers.
19
The Company is subject to tax audits in the normal course of business and does not have material contingencies recorded related to such audits.
The Company accrues for claims and contingencies when losses become probable and reasonably estimable. As of the end of each applicable reporting period, the Company reviews each of its matters and, where it is probable that a liability has been or will be incurred, the Company accrues for all probable and reasonably estimable losses. Where the Company can reasonably estimate a range of loss it may incur regarding such a matter, the Company records an accrual for the amount within the range that constitutes its best estimate. If the Company can reasonably estimate a range but no amount within the range appears to be a better estimate than any other, the Company uses the amount that is the low end of such range.
Legal Proceedings
The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The Company records a liability when it believes it is probable a loss will be incurred, and the amount of loss or range of loss can be reasonably estimated. The assessment as to whether a loss is probable, reasonably possible or remote, and as to whether a loss or a range of such loss is estimable, often involves significant judgment about future events. The Company has accrued estimated amounts related to legal proceedings as of June 30, 2025 and December 31, 2024 within accrued liabilities on the condensed consolidated balance sheets. The ultimate cost of litigation or settlement could be materially different than the amount of the current estimates and accruals and could have a material adverse impact on the Company’s consolidated financial position, results of operations, or cash flows.
Brantley v. City of Gretna
is a class action lawsuit filed in the 24th Judicial District Court of Jefferson Parish, Louisiana against the City of Gretna (the “
City
”) and its safety camera vendor, Redflex Traffic Systems, Inc. in April 2016. The Company acquired Redflex Traffic Systems, Inc. as part of its June 2021 purchase of Redflex Holdings Limited. The plaintiff class, which was certified on March 30, 2021, alleges that the City’s safety camera program was implemented and operated in violation of local ordinances and the state constitution, including that the City’s hearing process violated the plaintiffs’ due process rights for lack of a “neutral” arbiter of liability for traffic infractions. Plaintiffs seek recovery of traffic infraction fines paid. The City and Redflex Traffic Systems, Inc. appealed the trial court’s ruling granting class certification, which was denied, and their petition for discretionary review of the certification ruling by the Louisiana Supreme Court was declined.
The parties entered into a settlement agreement and preliminary approval was granted by the court in April 2025. A final settlement amount has not yet been determined and requires final approval from the court.
14.
Segment Reporting
The Company has
three
operating and reportable segments, Commercial Services, Government Solutions and Parking Solutions. Commercial Services offers toll and violation management solutions and title and registration services to RACs, Direct Fleets, FMCs and violation-issuing authorities. Government Solutions implements and administers traffic safety programs and products for municipalities and government agencies of all sizes. Parking Solutions provides an integrated suite of parking software and hardware solutions to its customers.
The operating and reportable segments were determined based on how the Company’s Chief Operating Decision Maker (“
CODM
”) regularly reviews the operating results of the various components of the Company for which discrete financial information is available, including based on the nature of the products and services and the type of customer. The Company defines the CODM as its Chief Executive Officer. The Company’s CODM primarily uses actual revenues and segment profit (defined below) as compared to previously budgeted amounts to evaluate the operating performance, allocate resources and deploy capital to the segments.
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. The tables below refer to this measure as segment profit. The aforementioned items are not indicative of operating performance, and, as a result are not included in the measures that are reviewed by the CODM for the segments. Other income, net included in segment profit below consists primarily of credit card rebates earned on the prepayment of tolling transactions and gains or losses on foreign currency transactions, and excludes certain non-operating expenses inapplicable to segments.
The Company adopted ASU 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
in the fourth quarter of fiscal year 2024, and as a result, updated the presentation of financial information by reportable segment. In addition, the CODM does not use discrete asset information to evaluate operating performance at the segment level, as such, the Company has not reported assets disaggregated by reportable segment.
20
The following tables set forth financial information by segment for the respective periods:
For the Three Months Ended June 30, 2025
Commercial
Government
Parking
($ in thousands)
Services
Solutions
Solutions
Total
Service revenue
$
109,050
$
97,971
$
16,456
$
223,477
Product sales
—
9,129
3,419
12,548
Total revenue
109,050
107,100
19,875
236,025
Cost of service revenue, excluding depreciation and amortization
638
348
3,643
4,629
Cost of product sales
—
6,300
2,646
8,946
Operating expenses
23,501
52,415
3,898
79,814
Selling, general and administrative expenses
18,823
17,660
6,500
42,983
Loss on disposal of assets, net
—
318
—
318
Other income, net
(
5,954
)
(
21
)
(
11
)
(
5,986
)
Segment profit
$
72,042
$
30,080
$
3,199
$
105,321
Interest expense, net
16,572
Loss on extinguishment of debt
23
Other reconciling items
(1)
36,124
Income before income taxes
$
52,602
(1)
This consists of depreciation and amortization expense, stock-based compensation and other costs to reconcile to total income before income taxes.
21
For the Three Months Ended June 30, 2024
Commercial
Government
Parking
($ in thousands)
Services
Solutions
Solutions
Total
Service revenue
$
103,985
$
91,469
$
16,563
$
212,017
Product sales
—
6,246
4,163
10,409
Total revenue
103,985
97,715
20,726
222,426
Cost of service revenue, excluding depreciation and amortization
679
473
3,489
4,641
Cost of product sales
—
4,473
3,375
7,848
Operating expenses
23,189
46,153
4,488
73,830
Selling, general and administrative expenses
15,757
16,743
6,644
39,144
Loss on disposal of assets, net
—
53
4
57
Other income, net
(
5,126
)
(
37
)
(
82
)
(
5,245
)
Segment profit
$
69,486
$
29,857
$
2,808
$
102,151
Interest expense, net
18,845
Gain on interest rate swap
(
23
)
Other reconciling items
(1)
35,737
Income before income taxes
$
47,592
(1)
This consists of depreciation and amortization expense, stock-based compensation and other costs to reconcile to total income before income taxes.
For the Six Months Ended June 30, 2025
Commercial
Government
Parking
($ in thousands)
Services
Solutions
Solutions
Total
Service revenue
$
210,439
$
191,953
$
32,987
$
435,379
Product sales
—
16,969
6,931
23,900
Total revenue
210,439
208,922
39,918
459,279
Cost of service revenue, excluding depreciation and amortization
1,238
1,036
7,138
9,412
Cost of product sales
—
11,563
5,415
16,978
Operating expenses
45,579
99,376
7,500
152,455
Selling, general and administrative expenses
38,405
36,963
13,758
89,126
Loss on disposal of assets, net
—
642
—
642
Other income, net
(
9,922
)
(
158
)
(
15
)
(
10,095
)
Segment profit
$
135,139
$
59,500
$
6,122
$
200,761
Interest expense, net
33,208
Loss on extinguishment of debt
48
Other reconciling items
(1)
70,070
Income before income taxes
$
97,435
(1)
This consists of depreciation and amortization expense, stock-based compensation and other costs to reconcile to total income before income taxes.
22
For the Six Months Ended June 30, 2024
Commercial
Government
Parking
($ in thousands)
Services
Solutions
Solutions
Total
Service revenue
$
199,874
$
181,744
$
33,120
$
414,738
Product sales
—
10,158
7,260
17,418
Total revenue
199,874
191,902
40,380
432,156
Cost of service revenue, excluding depreciation and amortization
1,150
1,032
6,764
8,946
Cost of product sales
—
7,052
6,082
13,134
Operating expenses
44,668
89,755
8,981
143,404
Selling, general and administrative expenses
33,254
34,971
13,070
81,295
Loss on disposal of assets, net
—
140
6
146
Other income, net
(
9,496
)
(
87
)
(
115
)
(
9,698
)
Segment profit
$
130,298
$
59,039
$
5,592
$
194,929
Interest expense, net
38,480
Gain on interest rate swap
(
419
)
Loss on extinguishment of debt
595
Other reconciling items
(1)
69,709
Income before income taxes
$
86,564
(1)
This consists of depreciation and amortization expense, stock-based compensation and other costs to reconcile to total income before income taxes.
The Company provides information on credit loss expense by reportable segment, refer to Note 2,
Significant Accounting Policies
, for additional details.
The Company primarily operates within the United States, Australia, Canada, United Kingdom and in various other countr
ies in Europe and Asia.
The following table details the revenues from international operations for the respective periods:
Three Months Ended June 30,
Six Months Ended June 30,
($ in thousands)
2025
2024
2025
2024
Australia
$
16,129
$
14,956
$
32,577
$
27,433
Canada
7,112
8,675
15,270
16,739
United Kingdom
8,066
4,218
13,897
9,377
All other
1,854
1,006
2,864
1,673
Total international revenues
$
33,161
$
28,855
$
64,608
$
55,222
23
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
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 $27.1 million, or 6.3%, from $432.2 million in the six months ended June 30, 2024 to $459.3 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 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 $138.1 million and $74.4 million for the six months ended June 30, 2025 and 2024, respectively. Our cash on hand was $147.7 million as of June 30, 2025.
•
Lowered interest expense by $5.3 million for the six months ended June 30, 2025 compared to the same period in 2024 due to debt refinancing in fiscal year 2024, further discussed below.
24
Recent Events
NYCDOT Contract
On March 31, 2025, the City of New York Department of Transportation (“
NYCDOT
”) announced that it identified the Company 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. 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.
Amendment to the Revolving Credit Agreement
On May 15, 2025, we entered into a fourth amendment to the Revolving Credit Agreement (the “
Revolver
”) which increased the existing commitment from $75.0 million to $125.0 million available for loans and letters of credit. The remaining terms of the Revolver were unchanged including the maturity date of December 18, 2026. There were no outstanding borrowings on the Revolver as of June 30, 2025 or December 31, 2024. The availability to borrow was $123.9 million, net of $1.1 million of outstanding letters of credit at June 30, 2025.
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, par value $0.0001 (the “
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 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 accelerated share repurchase (“
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 share repurchase program ended on April 30, 2025.
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. Under the repurchase program, we may purchase shares of Class A Common Stock until November 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, 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.
New Corporate Headquarters Lease
On May 29, 2025, we entered into a lease agreement for our new corporate headquarters building in Mesa, Arizona and began recording lease expense when we obtained access to the building to begin tenant improvements. Accordingly, we modified our existing corporate headquarters lease term to end in early 2026 when we expect to relocate to the new building.
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 our Annual Report on Form 10-K titled “Risk Factors” and in Part II, Item 1A of this Quarterly Report.
25
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 and trade protection measures. 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 and epidemic diseases.
We monitor the Transportation and Security Administration 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 second quarter of 2025 was about 1% less 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. 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 software as a service (“
SaaS
”), subscription fees, professional services and citation processing services related to parking management solutions to its customers.
26
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, collection and other third-party costs in our segments.
Cost of Product Sales.
Cost of product sales consists of the cost to acquire and install photo enforcement equipment purchased by Government Solutions customers 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.
Gain on Interest Rate Swap.
Gain 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.
27
Results of Operations
Three Months Ended June 30, 2025 Compared to Three Months Ended June 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.
Three Months Ended June 30,
Percentage of Revenue
Increase (Decrease)
2025 vs 2024
($ in thousands)
2025
2024
2025
2024
$
%
Service revenue
$
223,477
$
212,017
94.7
%
95.3
%
$
11,460
5.4
%
Product sales
12,548
10,409
5.3
%
4.7
%
2,139
20.5
%
Total revenue
236,025
222,426
100.0
%
100.0
%
13,599
6.1
%
Cost of service revenue, excluding depreciation and amortization
4,629
4,641
2.0
%
2.1
%
(12
)
(0.3
)%
Cost of product sales
8,946
7,848
3.8
%
3.5
%
1,098
14.0
%
Operating expenses
81,317
74,903
34.5
%
33.7
%
6,414
8.6
%
Selling, general and administrative expenses
48,466
46,343
20.5
%
20.8
%
2,123
4.6
%
Depreciation, amortization and (gain) loss on disposal of assets, net
29,473
27,522
12.4
%
12.4
%
1,951
7.1
%
Total costs and expenses
172,831
161,257
73.2
%
72.5
%
11,574
7.2
%
Income from operations
63,194
61,169
26.8
%
27.5
%
2,025
3.3
%
Interest expense, net
16,572
18,845
7.0
%
8.5
%
(2,273
)
(12.1
)%
Gain on interest rate swap
—
(23
)
—
(0.0
)%
23
(100.0
)%
Loss on extinguishment of debt
23
—
0.0
%
—
23
n/a
Other income, net
(6,003
)
(5,245
)
(2.5
)%
(2.4
)%
(758
)
14.5
%
Total other expenses
10,592
13,577
4.5
%
6.1
%
(2,985
)
(22.0
)%
Income before income taxes
52,602
47,592
22.3
%
21.4
%
5,010
10.5
%
Income tax provision
14,027
13,369
6.0
%
6.0
%
658
4.9
%
Net income
$
38,575
$
34,223
16.3
%
15.4
%
$
4,352
12.7
%
Service Revenue.
Service revenue increased by $11.5 million, or 5.4%, to $223.5 million for the three months ended June 30, 2025 from $212.0 million for the three months ended June 30, 2024, representing 94.7% and 95.3% of total revenue, respectively. The following table depicts service revenue by segment:
Three Months Ended June 30,
Percentage of Revenue
Increase (Decrease)
2025 vs 2024
($ in thousands)
2025
2024
2025
2024
$
%
Service revenue
Commercial Services
$
109,050
$
103,985
46.2
%
46.8
%
$
5,065
4.9
%
Government Solutions
97,971
91,469
41.5
%
41.1
%
6,502
7.1
%
Parking Solutions
16,456
16,563
7.0
%
7.4
%
(107
)
(0.6
)%
Total service revenue
$
223,477
$
212,017
94.7
%
95.3
%
$
11,460
5.4
%
Commercial Services service revenue increased by $5.1 million, or 4.9%, from $104.0 million for the three months ended June 30, 2024 to $109.1 million for the three months ended June 30, 2025. The increase was primarily due to increased product adoption and tolling activity compared to the prior year which contributed to a $2.7 million growth in RAC tolling revenue during the three months ended June 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 and modest weakness attributable to macroeconomic factors compared to the same period in 2024.
28
Government Solutions service revenue increased by $6.5 million, or 7.1%, from $91.5 million for the three months ended June 30, 2024, to $98.0 million for the three months ended June 30, 2025. The increase was primarily driven by the expansion of bus lane and school bus stop arm enforcement programs contributing $4.6 million, with the remaining increase driven primarily by speed and red-light enforcement programs.
Parking Solutions service revenue decreased slightly to $16.5 million for the three months ended June 30, 2025, from $16.6 million for the three months ended June 30, 2024. The increased revenue from SaaS product offerings was offset by a decrease in subscription and professional services revenue related to parking management solutions.
Product Sales.
Product sales were $12.5 million and $10.4 million for the three months ended June 30, 2025 and 2024, respectively. Product sales increased by $2.1 million, which was due to a $2.9 million increase in product sales to international customers in the Government Solutions segment which was partially offset by a decrease 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 remained flat at $4.6 million for both the three months ended June 30, 2025 and 2024.
Cost of Product Sales.
Cost of product sales increased by $1.1 million from $7.8 million in the three months ended June 30, 2024 to $8.9 million in the three months ended June 30, 2025, which was in line with the increase in product sales discussed above.
Operating Expenses.
Operating expenses increased by $6.4 million, or 8.6%, from $74.9 million for the three months ended June 30, 2024 to $81.3 million for the three months ended June 30, 2025. The increase in 2025 compared to the prior period was primarily in the Government Solutions business for approximately $6.3 million due to increases in subcontractor costs, wages and operational equipment, partially offset by a decrease in operating expenses in the Parking Solutions business. Operating expenses as a percentage of total revenue increased from 33.7% to 34.5% for the three months ended June 30, 2024 and 2025, respectively. The following table presents operating expenses by segment:
Three Months Ended June 30,
Percentage of Revenue
Increase (Decrease)
2025 vs 2024
($ in thousands)
2025
2024
2025
2024
$
%
Operating expenses
Commercial Services
$
23,501
$
23,189
10.0
%
10.4
%
$
312
1.3
%
Government Solutions
52,415
46,153
22.2
%
20.7
%
6,262
13.6
%
Parking Solutions
3,898
4,488
1.7
%
2.1
%
(590
)
(13.1
)%
Operating expenses by segment
79,814
73,830
33.9
%
33.2
%
5,984
8.1
%
Other expenses
1,503
1,073
0.6
%
0.5
%
430
40.1
%
Total operating expenses
$
81,317
$
74,903
34.5
%
33.7
%
$
6,414
8.6
%
29
Selling, General and Administrative Expenses.
Selling, general and administrative expenses increased to $48.5 million for the three months ended June 30, 2025 compared to $46.3 million for the same period in 2024. This is primarily due to a $2.0 million increase in professional services and $1.7 million increase in credit loss expense, partially offset by a decrease in restructuring expenses compared to the same period in the prior year. Selling, general and administrative expenses as a percentage of total revenue decreased from 20.8% to 20.5% for the three months ended June 30, 2024 and 2025, respectively.
The following table presents selling, general and administrative expenses by segment:
Three Months Ended June 30,
Percentage of Revenue
Increase (Decrease)
2025 vs 2024
($ in thousands)
2025
2024
2025
2024
$
%
Selling, general and administrative expenses
Commercial Services
$
18,823
$
15,757
8.0
%
7.1
%
$
3,066
19.5
%
Government Solutions
17,660
16,743
7.5
%
7.5
%
917
5.5
%
Parking Solutions
6,500
6,644
2.7
%
3.0
%
(144
)
(2.2
)%
Selling, general and administrative expenses by segment
42,983
39,144
18.2
%
17.6
%
3,839
9.8
%
Other expenses
5,483
7,199
2.3
%
3.2
%
(1,716
)
(23.8
)%
Total selling, general and administrative expenses
$
48,466
$
46,343
20.5
%
20.8
%
$
2,123
4.6
%
Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net.
Depreciation, amortization and (gain) loss on disposal of assets, net, increased by $2.0 million to $29.5 million for the three months ended June 30, 2025 from $27.5 million for the same period in 2024. This was primarily due to an increase in depreciation expense for the Commercial Services and Government Solutions businesses in the 2025 period.
Interest Expense, Net.
Interest expense, net decreased by approximately $2.2 million from $18.8 million for the three months ended June 30, 2024 to $16.6 million for the same period in 2025. This was primarily attributable to voluntary principal prepayments made during 2024 and 2025 reducing the balance of the 2021 Term Loan (as defined below) and a 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.
Gain on Interest Rate Swap.
We recorded a gain of less than $(0.1) million during the three months ended June 30, 2024, of which $0.2 million is 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 the three months ended June 30, 2025 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayment on the 2021 Term Loan.
Other Income, Net.
Other income, net was $6.0 million for the three months ended June 30, 2025 compared to $5.2 million for the three months ended June 30, 2024. The increase was primarily from non-operating income from foreign currency transactions mainly in the Commercial Services business.
30
Income Tax Provision.
Income tax provision was $14.0 million representing an effective tax rate of 26.7% for the three months ended June 30, 2025 compared to a tax provision of $13.4 million, with an effective tax rate of 28.1% for the same period in 2024.
Net Income.
We had net income of $38.6 million for the three months ended June 30, 2025, as compared to a net income of $34.2 million for the three months ended June 30, 2024. The $4.4 million increase in net income was primarily due to the decrease in interest expense and the other statement of operations activity discussed above.
Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024
The following table sets forth our statements of operations data and expresses each item as a percentage of total revenue for the periods presented as well as the changes between periods. The tables and information provided in this section were derived from exact numbers and may have immaterial rounding differences.
Six Months Ended June 30,
Percentage of Revenue
Increase (Decrease)
2025 vs 2024
($ in thousands)
2025
2024
2025
2024
$
%
Service revenue
$
435,379
$
414,738
94.8
%
96.0
%
$
20,641
5.0
%
Product sales
23,900
17,418
5.2
%
4.0
%
6,482
37.2
%
Total revenue
459,279
432,156
100.0
%
100.0
%
27,123
6.3
%
Cost of service revenue, excluding depreciation and amortization
9,412
8,946
2.0
%
2.1
%
466
5.2
%
Cost of product sales
16,978
13,134
3.7
%
3.0
%
3,844
29.3
%
Operating expenses
155,056
145,543
33.8
%
33.7
%
9,513
6.5
%
Selling, general and administrative expenses
99,967
94,514
21.8
%
21.9
%
5,453
5.8
%
Depreciation, amortization and (gain) loss on disposal of assets, net
57,287
54,497
12.5
%
12.6
%
2,790
5.1
%
Total costs and expenses
338,700
316,634
73.8
%
73.3
%
22,066
7.0
%
Income from operations
120,579
115,522
26.2
%
26.7
%
5,057
4.4
%
Interest expense, net
33,208
38,480
7.2
%
8.9
%
(5,272
)
(13.7
)%
Gain on interest rate swap
—
(419
)
—
(0.1
)%
419
(100.0
)%
Loss on extinguishment of debt
48
595
0.0
%
0.1
%
(547
)
(91.9
)%
Other income, net
(10,112
)
(9,698
)
(2.2
)%
(2.2
)%
(414
)
4.3
%
Total other expenses
23,144
28,958
5.0
%
6.7
%
(5,814
)
(20.1
)%
Income before income taxes
97,435
86,564
21.2
%
20.0
%
10,871
12.6
%
Income tax provision
26,521
23,192
5.8
%
5.3
%
3,329
14.4
%
Net income
$
70,914
$
63,372
15.4
%
14.7
%
$
7,542
11.9
%
Service Revenue.
Service revenue increased by $20.6 million, or 5.0%, to $435.4 million for the six months ended June 30, 2025 from $414.7 million for the six months ended June 30, 2024, representing 94.8% and 96.0% of total revenue, respectively. The following table depicts service revenue by segment:
Six Months Ended June 30,
Percentage of Revenue
Increase (Decrease)
2025 vs 2024
($ in thousands)
2025
2024
2025
2024
$
%
Service revenue
Commercial Services
$
210,439
$
199,874
45.8
%
46.3
%
$
10,565
5.3
%
Government Solutions
191,953
181,744
41.8
%
42.1
%
10,209
5.6
%
Parking Solutions
32,987
33,120
7.2
%
7.6
%
(133
)
(0.4
)%
Total service revenue
$
435,379
$
414,738
94.8
%
96.0
%
$
20,641
5.0
%
31
Commercial Services service revenue increased by $10.6 million, or 5.3%, from $199.9 million for the six months ended June 30, 2024 to $210.4 million for the six months ended June 30, 2025. The increase was primarily due to increased product adoption and tolling activity compared to the prior year. These factors contributed to a $6.9 million growth in RAC tolling revenue and the remaining increase was driven mainly by an increase of $2.0 million from European operations during the six months ended June 30, 2025, compared to the same period in 2024.
Government Solutions service revenue increased by $10.2 million, or 5.6%, from $181.7 million for the six months ended June 30, 2024, to $192.0 million for the six months ended June 30, 2025. The increase was primarily driven by $8.4 million from the expansion of bus lane and school bus stop arm enforcement programs and the remaining increase is mainly from speed and red-light enforcement programs.
Parking Solutions service revenue decreased slightly to $33.0 million for the six months ended June 30, 2025, from $33.1 million for the six months ended June 30, 2024. The increased revenue from SaaS product offerings was offset by a decrease in subscription and professional services related to parking management solutions.
Product Sales.
Product sales were $23.9 million and $17.4 million for the six months ended June 30, 2025 and 2024, respectively. Product sales increased by $6.5 million due to a $6.8 million increase in product sales to international customers in the Government Solutions segment which was partially offset by a decrease 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 $8.9 million for the six months ended June 30, 2024 to $9.4 million for the six months ended June 30, 2025, mainly due to increased recurring service and third-party costs for our segments.
Cost of Product Sales.
Cost of product sales increased by approximately $3.9 million from $13.1 million in the six months ended June 30, 2024 to $17.0 million in the six months ended June 30, 2025, which was in line with the increase in product sales discussed above.
Operating Expenses.
Operating expenses increased by $9.5 million, or 6.5%, from $145.5 million for the six months ended June 30, 2024 to approximately $155.1 million for the six months ended June 30, 2025. The increase in 2025 compared to the prior year was primarily in the Government Solutions business for approximately $9.6 million due to increases in subcontractor and operational equipment costs, partially offset by a decrease in operating expenses in the Parking Solutions business. Operating expenses as a percentage of total revenue increased slightly from 33.7% to 33.8% for the six months ended June 30, 2024 and 2025, respectively. The following table presents operating expenses by segment:
Six Months Ended June 30,
Percentage of Revenue
Increase (Decrease)
2025 vs 2024
($ in thousands)
2025
2024
2025
2024
$
%
Operating expenses
Commercial Services
$
45,579
$
44,668
9.9
%
10.3
%
$
911
2.0
%
Government Solutions
99,376
89,755
21.6
%
20.8
%
9,621
10.7
%
Parking Solutions
7,500
8,981
1.7
%
2.1
%
(1,481
)
(16.5
)%
Operating expenses by segment
152,455
143,404
33.2
%
33.2
%
9,051
6.3
%
Other expenses
2,601
2,139
0.6
%
0.5
%
462
21.6
%
Total operating expenses
$
155,056
$
145,543
33.8
%
33.7
%
$
9,513
6.5
%
32
Selling, General and Administrative Expenses.
Selling, general and administrative expenses increased to $100.0 million for the six months ended June 30, 2025 compared to $94.5 million for the same period in 2024. This is primarily due to a $4.6 million increase in credit loss expense and $3.6 million in increased professional services fees, partially offset by a decrease in restructuring expenses compared to the same period in 2024. Selling, general and administrative expenses as a percentage of total revenue decreased slightly from 21.9% to 21.8% for the six months ended June 30, 2024 and 2025, respectively.
The following table presents selling, general and administrative expenses by segment:
Six Months Ended June 30,
Percentage of Revenue
Increase (Decrease)
2025 vs 2024
($ in thousands)
2025
2024
2025
2024
$
%
Selling, general and administrative expenses
Commercial Services
$
38,405
$
33,254
8.4
%
7.7
%
$
5,151
15.5
%
Government Solutions
36,963
34,971
8.0
%
8.1
%
1,992
5.7
%
Parking Solutions
13,758
13,070
3.0
%
3.0
%
688
5.3
%
Selling, general and administrative expenses by segment
89,126
81,295
19.4
%
18.8
%
7,831
9.6
%
Other expenses
10,841
13,219
2.4
%
3.1
%
(2,378
)
(18.0
)%
Total selling, general and administrative expenses
$
99,967
$
94,514
21.8
%
21.9
%
$
5,453
5.8
%
Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net.
Depreciation, amortization and (gain) loss on disposal of assets, net, increased by $2.8 million to $57.3 million for the six months ended June 30, 2025 from $54.5 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 $5.3 million from $38.5 million for the six months ended June 30, 2024 to $33.2 million for the same period in 2025. This was primarily attributable to voluntary principal prepayments made during 2024 and 2025 reducing the balance of the 2021 Term Loan and a 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.
Gain on Interest Rate Swap.
We recorded a $(0.4) million gain during the six months ended June 30, 2024, of which $0.2 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period offset by $(0.6) 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 the six months ended June 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 six months ended June 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 $10.1 million for the six months ended June 30, 2025 compared to approximately $9.7 million for the six months ended June 30, 2024. The increase was mainly from non-operating income from foreign currency transactions in the 2025 period.
Income Tax Provision.
Income tax provision was $26.5 million representing an effective tax rate of 27.2% for the six months ended June 30, 2025 compared to a tax provision of $23.2 million, with an effective tax rate of 26.8% for the same period in 2024.
Net Income.
We had net income of $70.9 million for the six months ended June 30, 2025, as compared to a net income of $63.4 million for the six months ended June 30, 2024. The $7.5 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.
33
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. 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 June 30, 2025, we had no outstanding borrowings and $123.9 million available for borrowing, net of letters of credit, under our Revolver. Our cash on hand was $147.7 million as of June 30, 2025.
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 $4.5 million on our 2021 Term Loan during the three and six months ended June 30, 2025, and as a result, the total principal outstanding on the 2021 Term Loan was $691.1 million as of June 30, 2025.
At June 30, 2025, the Tax Receivable Agreement liability was approximately $43.2 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 $5.2 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 second quarter of 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 $100.0 million of our outstanding shares of Class A Common Stock. Under the repurchase program, we may purchase shares of Class A Common Stock until November 2026 through open market purchases, in privately negotiated transactions or by other means, including trading plans intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, and ASR agreements, each as permitted under applicable rules and regulations. The amount and timing of repurchases will be determined at our discretion and will depend on a variety of factors, including price, general business and market conditions, applicable legal requirements, and alternative investment opportunities. The repurchase program does not obligate us to acquire any particular amount of Class A Common Stock or at any specific time intervals and may be modified, suspended or terminated at any time at our discretion. We have not yet repurchased shares of Class A Common Stock under this program.
34
The following table sets forth certain captions indicated on our statements of cash flows for the respective periods:
Six Months Ended June 30,
($ in thousands)
2025
2024
Net cash provided by operating activities
$
138,113
$
74,368
Net cash used in investing activities
(56,019
)
(27,677
)
Net cash used in financing activities
(10,920
)
(60,917
)
Cash Flows from Operating Activities
Cash provided by operating activities increased by $63.7 million from $74.4 million for the six months ended June 30, 2024 to $138.1 million for the six months ended June 30, 2025. Net income year-over-year increased by $7.5 million, from $63.4 million in 2024 to $70.9 million in 2025. The aggregate adjustments to reconcile net income to net cash provided by operating activities increased $2.6 million mainly due to increased credit loss expense, depreciation expense and stock-based compensation, which were partially offset by a change in deferred income taxes. The aggregate changes in operating assets and liabilities increased by $53.6 million in 2025 compared to the prior year primarily due to a reduction in the net use of working capital, of which, the majority is attributable to a large payment that reduced accounts payable and other current liabilities in the first half of 2024. In addition, changes in prepaid and other current assets also contributed to the increase in 2025 compared to the prior year.
Cash Flows from Investing Activities
Cash used in investing activities was $56.0 million and $27.7 million for the six months ended June 30, 2025 and 2024, respectively. The increase in cash used was primarily driven by a $27.8 million increase for purchases of installation and service parts and property and equipment mainly for the Government Solutions business compared to the same period in the prior year.
Cash Flows from Financing Activities
Cash used in financing activities was $10.9 million and $60.9 million for the six months ended June 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, Inc. (“
VM Consolidated
”), our wholly owned subsidiary, entered into an Amendment and Restatement Agreement No.1 to the First Lien Term Loan Credit Agreement (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 each of the six months ended June 30, 2025 and 2024, we made early repayments of $4.5 million on the 2021 Term Loan, and as a result the total principal outstanding was $691.1 million as of June 30, 2025.
We recorded less than $0.1 million of loss on extinguishment of debt during both the three and six months ended June 30, 2025, related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments. We recognized a $0.6 million loss on extinguishment of debt for the six months ended June 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.
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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 June 30, 2025, the interest rate on the 2021 Term Loan was 6.6%.
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:
Consolidated First Lien Net Leverage Ratio (As Defined by the 2021 Term Loan Agreement)
Applicable
Prepayment
Percentage
> 3.70:1.00
50%
<
3.70:1.00 and > 3.20:1.00
25%
<
3.20:1.00
0%
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:
Year
Percentage
2025
101.375%
2026 and thereafter
100.000%
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 June 30, 2025 or December 31, 2024. The availability to borrow was $123.9 million, net of $1.1 million of outstanding letters of credit at June 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 $1.1 million of outstanding letters of credit as of June 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 June 30, 2025, we were compliant with all debt covenants in our debt agreements.
Interest Expense, Net
We recorded interest expense, including amortization of deferred financing costs and discounts, of $16.6 million and $18.8 million for the three months ended June 30, 2025 and 2024, respectively, and $33.2 million and $38.5 million for the six months ended June 30, 2025 and 2024, respectively.
36
Off-Balance Sheet Arrangements
We do not have any material off-balance sheet financing arrangements as of June 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.
Item 3. Quantitative and Qualitati
ve Disclosures About Market Risk
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 $691.1 million at June 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 June 30, 2025, the interest rate on the 2021 Term Loan was 6.6%.
Based on the June 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 cancellable 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.
Item 4. Controls
and Procedures
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 June 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.
37
Changes in Internal Control Over Financial Reporting
During the quarter ended June 30, 2025, we completed the first phase of a multi-phase implementation of a new global enterprise resource planning (“
ERP
”) system that will replace components of our existing operating and financial systems. The implementation of the new ERP system is expected to be completed in fiscal year 2026. The implementation that has been completed to date has resulted in changes to certain of our processes and internal controls, including the implementation of new applications, interfaces and reports which support our financial reporting. The new ERP system is designed to accurately maintain the flow of financial information, enhance operational functionality and accelerate information reporting to our management. The implemented portion of the new ERP system was used during the quarter ended June 30, 2025, and the new and modified processes and controls implemented were used to prepare our consolidated financial statements for the three and six months ended June 30, 2025 included in this Report.
Except as described above, 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 June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
38
Part II—Othe
r Information
Item 1. Legal
Proceedings
We are subject to legal and regulatory actions that arise from time to time in the ordinary course of business, and may be subject to similar or other claims in the future. Legal disputes and other claims and proceedings may relate to, among other things, intellectual property, commercial arrangements, negligence and fiduciary duty claims, vicarious liability based on conduct of individuals or entities outside of our control, including our third-party service providers, antitrust claims, deceptive trade practices, general fraud claims and employment law claims, including compliance with wage and hour regulations. In addition to more general litigation, at times we have also been a named party in claims made against our customers, including putative class actions challenging the legality and constitutionality of automated photo enforcement and other similar programs of our Government Solutions customers, and consumer fraud claims brought against us and our Commercial Services customers alleging faulty disclosures regarding our services. From time to time, we may also be reviewed or investigated by U.S. federal, state or local regulators or regulators in the foreign jurisdictions in which we operate regarding these and other matters, including proper licensing and tax assessments. All litigation is inherently unpredictable and we could incur judgments or enter into settlements or claims in the future that could materially impact our results.
Brantley v. City of Gretna
is a class action lawsuit filed in the 24th Judicial District Court of Jefferson Parish, Louisiana against the City of Gretna (the “
City
”) and its safety camera vendor, Redflex Traffic Systems, Inc. in April 2016. The Company acquired Redflex Traffic Systems, Inc. as part of its June 2021 purchase of Redflex Holdings Limited. The plaintiff class, which was certified on March 30, 2021, alleges that the City’s safety camera program was implemented and operated in violation of local ordinances and the state constitution, including that the City’s hearing process violated the plaintiffs’ due process rights for lack of a “neutral” arbiter of liability for traffic infractions. Plaintiffs seek recovery of traffic infraction fines paid. The City and Redflex Traffic Systems, Inc. appealed the trial court’s ruling granting class certification, which was denied, and their petition for discretionary review of the certification ruling by the Louisiana Supreme Court was declined. The parties entered into a settlement agreement and preliminary approval was granted by the court in April 2025. A final settlement amount has not yet been determined and requires final approval from the court.
We have accrued estimated amounts related to legal proceedings as of June 30, 2025 and December 31, 2024 within accrued liabilities on the condensed consolidated balance sheets. The information contained in Note 13,
Commitments and Contingencies
, included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated herein by reference.
It
em 1A.
Risks Factors
Part I, Item 1A. “Risk Factors” in our Annual Report includes a discussion of our risk factors. Other than the risk factor below and the risk factor included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, 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.
We cannot guarantee that our share repurchase programs will enhance long-term shareholder value. Share repurchases could also increase the volatility of the trading price of our stock and could diminish our cash reserves. In addition, Congress enacted the Inflation Reduction Act in 2022, which (among other provisions) provided for a 1% excise tax on net share repurchases. This provision applies to share repurchases initiated after January 1, 2023.
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, accelerated share repurchase (“
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.
39
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. We did not make any share repurchases under this program during the second 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.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
Purchases of Equity Securities
We did not have any purchases of our Class A Common Stock during the three months ended June 30, 2025.
Sales of Unregistered Securities
We did not have any sales of unregistered equity securities during the three months ended June 30, 2025.
Item 3. Defaults Upo
n Senior Securities
None.
Item 4. Mine Saf
ety Disclosures
Not Applicable.
Item 5. Other
Information
Insider Trading Arrangements
During the three months ended June 30, 2025, none of our directors or executive officers
adopted
or
terminated
a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408 of Regulation S-K).
40
Item 6.
Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Report.
Inline XBRL Instance Document (the instance does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
X
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
X
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
X
# Management contract or compensatory plan or arrangement.
* This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.
41
Signa
tures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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