Verra Mobility (VRRM) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue was $224 million, flat year-over-year, with profitability exceeding expectations due to strong execution and operational efficiency, and net income of $26.7 million.

• Government Solutions was the standout segment, with $13 million in new bookings, 4% service revenue growth, and strong recurring contract momentum, driven by NYC camera installations and expansion outside NYC.

• Commercial Services revenue declined 4% year-over-year, mainly from prior period fleet management churn, with segment profit margin up 100 bps and RAC tolling up 1%.

• Parking Solutions revenue and profit margins slightly exceeded expectations, with revenue up 2–6% and SaaS/services growth, margin up 210 bps.

• Workforce reduced by 5% in Q1, generating $10 million in annualized cost savings, redeployed into strategic investments and transformation initiatives.

Financial highlights

• Adjusted EBITDA for Q1 was $86 million (38–39% margin), down 10% year-over-year, with margins supported by improved camera installations and lower bad debt.

• Net income was $26.7 million, with an effective tax rate of 33.9–34% for the quarter, expected to normalize to 28–29% for the year.

• Adjusted EPS was $0.25, down from $0.30 in Q1 2025, reflecting lower adjusted EBITDA and higher depreciation.

• Free cash flow was $9.6–10 million, below expectations due to temporary inventory and receivable timing, with full-year outlook reaffirmed.

• Cash and cash equivalents stood at $46.9–47 million; net leverage at 2.5x, with $1,017–1,064 million in debt.

Outlook and guidance

• Full-year 2026 guidance reaffirmed: revenue $1.02–$1.03 billion (5% growth), adjusted EBITDA $405–$415 million (40% margin), adjusted EPS $1.32–$1.38, and free cash flow $150–$160 million.

• CapEx expected at $125 million, focused on Government Solutions implementations and MOSAIC platform.

• Guidance assumes successful renewal with a major Commercial Services customer; effective tax rate projected at 28–29%.

• Government Solutions to deliver high end of mid-single-digit revenue growth, with low double-digit growth outside NYC.

• Commercial Services revenue growth to accelerate post-Q2 as fleet churn sunsets; Parking Solutions to grow mid-single digits.