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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ 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 October 24, 2025, there were 159,564,447 shares of the Company’s Class A Common Stock, par value $0.0001 per share, issued and outstanding.

VERRA MOBILITY CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2025

TABLE OF CONTENTS


PART I—FINANCIAL INFORMATION		5
Item 1. Financial Statements		5
Condensed Consolidated Balance Sheets		5
Condensed Consolidated Statements of Operations and Comprehensive Income		6
Condensed Consolidated Statements of Stockholders’ Equity		7
Condensed Consolidated Statements of Cash Flows		9
Notes to the Condensed Consolidated Financial Statements		11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures About Market Risk		39
Item 4. Controls and Procedures		40
PART II—OTHER INFORMATION		41
Item 1. Legal Proceedings		41
Item 1A. Risk Factors		41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		44
Item 3. Defaults Upon Senior Securities		44
Item 4. Mine Safety Disclosures		44
Item 5. Other Information		44
Item 6. Exhibits		45
SIGNATURES		46

Cautionary Note Regarding Forward-Looking Statements

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. “Risk Factors” of this 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, trade protection measures or a prolonged government shutdown, 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.

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.

Part I—Financial Information

Item 1. Financial Statements

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands, except per share data)	September 30, 2025			December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	196,096		$	77,560
Restricted cash		4,203			3,594
Accounts receivable (net of allowance for credit losses of $23.1 million and $17.0 million at September 30, 2025 and December 31, 2024, respectively)		228,756			206,503
Unbilled receivables		59,205			48,193
Inventory		21,695			15,502
Prepaid expenses and other current assets		47,873			42,647
Total current assets		557,828			393,999
Installation and service parts, net		27,590			36,631
Property and equipment, net		195,793			141,601
Operating lease assets		35,813			29,895
Intangible assets, net		185,205			232,297
Goodwill		741,450			735,615
Other non-current assets		34,662			44,451
Total assets	$	1,778,341		$	1,614,489
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	122,033		$	91,224
Deferred revenue		29,299			29,374
Accrued liabilities		71,222			73,980
Tax receivable agreement liability, current portion		5,340			5,163
Total current liabilities		227,894			199,741
Long-term debt, net		1,029,938			1,034,211
Operating lease liabilities, net of current portion		29,987			25,757
Tax receivable agreement liability, net of current portion		37,800			42,977
Asset retirement obligations		17,453			15,493
Deferred tax liabilities, net		14,081			14,699
Other long-term liabilities		18,040			16,486
Total liabilities		1,375,193			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 September 30, 2025 and December 31, 2024		—			—
Common stock, $0.0001 par value, 260,000 shares authorized with 159,564 and 159,594 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		16			16
Additional paid-in capital		562,172			551,955
Accumulated deficit		(149,204	)		(269,287	)
Accumulated other comprehensive loss		(9,836	)		(17,559	)
Total stockholders' equity		403,148			265,125
Total liabilities and stockholders' equity	$	1,778,341		$	1,614,489

See accompanying Notes to the Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands, except per share data)	2025			2024			2025			2024
Service revenue	$	243,219		$	217,267		$	678,598		$	632,005
Product sales		18,719			8,284			42,619			25,702
Total revenue		261,938			225,551			721,217			657,707
Cost of service revenue, excluding depreciation and amortization		9,246			5,378			18,658			14,324
Cost of product sales		12,826			5,621			29,804			18,755
Operating expenses		88,036			76,026			243,092			221,569
Selling, general and administrative expenses		47,757			47,918			147,724			142,432
Depreciation, amortization and (gain) loss on disposal of assets, net		29,264			26,718			86,551			81,215
Total costs and expenses		187,129			161,661			525,829			478,295
Income from operations		74,809			63,890			195,388			179,412
Interest expense, net		16,421			18,723			49,629			57,203
Loss on interest rate swap		—			913			—			494
Loss on extinguishment of debt		21			33			69			628
Other income, net		(6,298	)		(4,272	)		(16,410	)		(13,970	)
Total other expenses		10,144			15,397			33,288			44,355
Income before income taxes		64,665			48,493			162,100			135,057
Income tax provision		17,826			13,761			44,347			36,953
Net income	$	46,839		$	34,732		$	117,753		$	98,104
Other comprehensive (loss) income:
Change in foreign currency translation adjustment		(790	)		5,190			7,723			3,364
Total comprehensive income	$	46,049		$	39,922		$	125,476		$	101,468
Net income per share:
Basic	$	0.29		$	0.21		$	0.74		$	0.59
Diluted	$	0.29		$	0.21		$	0.73		$	0.58
Weighted average shares outstanding:
Basic		159,552			164,735			159,525			165,676
Diluted		161,861			167,624			161,824			168,318

See accompanying Notes to the Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


For the Three and Nine Months Ended September 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 ("RSUs") and performance share units ("PSUs")		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
Net income		—			—		—			46,839			—			46,839
Vesting of RSUs and PSUs		17			—		—			—			—			—
Exercise of stock options		15			—		213			—			—			213
Payment of employee tax withholding related to RSUs and PSUs vesting		—			—		(171	)		—			—			(171	)
Stock-based compensation		—			—		4,961			—			—			4,961
Other comprehensive loss, net of tax		—			—		—			—			(790	)		(790	)
Other adjustments		—			—		—			(6	)		—			(6	)
Balance as of September 30, 2025	$	159,564		$	16	$	562,172		$	(149,204	)	$	(9,836	)	$	403,148

See accompanying Notes to the Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)

(Unaudited)


For the Three and Nine Months Ended September 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
Net income		—			—			—			34,732			—			34,732
Vesting of RSUs and PSUs		16			—			—			—			—			—
Exercise of stock options		130			—			1,727			—			—			1,727
Payment of employee tax withholding related to RSUs and PSUs vesting		—			—			(168	)		—			—			(168	)
Stock-based compensation		—			—			6,438			—			—			6,438
Other comprehensive income, net of tax		—			—			—			—			5,190			5,190
Balance as of September 30, 2024		164,804		$	16		$	564,491		$	(71,149	)	$	(6,812	)	$	486,546

See accompanying Notes to the Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

condensed consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
($ in thousands)	2025			2024
Cash Flows from Operating Activities:
Net income	$	117,753		$	98,104
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		85,179			80,982
Amortization of deferred financing costs and discounts		2,856			3,437
Change in fair value of interest rate swap		—			1,316
Loss on extinguishment of debt		69			628
Credit loss expense		18,377			11,425
Deferred income taxes		4,706			(1,684	)
Stock-based compensation		18,696			18,586
UTP reserve release		(1,682	)		—
Other		2,097			749
Changes in operating assets and liabilities:
Accounts receivable		(39,635	)		(7,891	)
Unbilled receivables		(10,441	)		(13,912	)
Inventory		3,762			511
Prepaid expenses and other assets		(5,144	)		(3,423	)
Deferred revenue		(498	)		1,401
Accounts payable and other current liabilities		28,285			(6,600	)
Other liabilities		(8,552	)		(474	)
Net cash provided by operating activities		215,828			183,155
Cash Flows from Investing Activities:
Cash receipts for interest rate swap		—			822
Purchases of installation and service parts and property and equipment		(84,868	)		(52,009	)
Cash proceeds from the sale of assets		215			156
Net cash used in investing activities		(84,653	)		(51,031	)
Cash Flows from Financing Activities:
Repayment of long-term debt		(6,764	)		(4,509	)
Payment of debt issuance costs		(449	)		(440	)
Share repurchases and retirement		—			(51,500	)
Proceeds from the exercise of stock options		1,054			2,701
Payment of employee tax withholding related to RSUs and PSUs vesting		(7,161	)		(5,826	)
Net cash used in financing activities		(13,320	)		(59,574	)
Effect of exchange rate changes on cash and cash equivalents		1,290			941
Net increase in cash, cash equivalents and restricted cash		119,145			73,491
Cash, cash equivalents and restricted cash - beginning of period		81,154			139,722
Cash, cash equivalents and restricted cash - end of period	$	200,299		$	213,213

See accompanying Notes to the Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)


	Nine Months Ended September 30,
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets	2025		2024
Cash and cash equivalents	$	196,096	$	206,088
Restricted cash		4,203		7,125
Total cash, cash equivalents and restricted cash	$	200,299	$	213,213


Supplemental cash flow information:
Interest paid	$	44,508	$	53,821
Income taxes paid, net of refunds		32,493		38,018
Supplemental non-cash information:
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end		11,241		3,998

See accompanying Notes to the Condensed Consolidated Financial Statements.

VERRA MOBILITY CORPORATION

Notes to the CONDENSED CONSOLIDATED 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. The 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, perform timely transfers of liability on the customers’ behalf, and facilitate 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.

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 19.5% and 15.5% of total revenue for the three months ended September 30, 2025 and 2024, respectively, and 16.7% and 15.9% of total revenue for the nine months ended September 30, 2025 and 2024, respectively. NYCDOT represented 22.6% and 17.2% of total accounts receivable, net as of September 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 as of September 30, 2025 or December 31, 2024.

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 16.2% and 14.2% of total revenue for the three months ended September 30, 2025 and 2024, respectively, and 15.6% and 13.7% of total revenue for the nine months ended September 30, 2025 and 2024, respectively. Commercial Services Customer B represented 11.4% and 12.2% of total revenue for the three months ended September 30, 2025 and 2024, respectively, and 11.5% and 11.6% of total revenue for the nine months ended September 30, 2025 and 2024, respectively. Commercial Services Customer C represented 10.4% and 10.5% of total revenue for the three months ended September 30, 2025 and 2024, respectively, and 10.6% and 10.9% of total revenue for the nine months ended September 30, 2025 and 2024, respectively. No Commercial Services customer exceeded 10% of total accounts receivable, net as of September 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 nine months ended September 30, 2025 and 2024, respectively:


	Commercial			Government			Parking
($ in thousands)	Services(1)			Solutions			Solutions			Total
Balance at January 1, 2025	$	16,038		$	332		$	648		$	17,018
Credit loss expense		17,280			186			911			18,377
Write-offs, net of recoveries		(11,812	)		(133	)		(369	)		(12,314	)
Balance at September 30, 2025	$	21,506		$	385		$	1,190		$	23,081

	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 (income)		11,599			(226	)		52			11,425
Write-offs, net of recoveries		(10,240	)		(107	)		(16	)		(10,363	)
Balance at September 30, 2024	$	17,020		$	2,093		$	462		$	19,575

(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 82% of the total Commercial Services allowance for credit losses as of September 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 September 30, 2025 and December 31, 2024, the Company had approximately $9.6 million and $11.8 million of deferred revenue in the Government Solutions segment, respectively. The Company recognized $0.9 million and $1.1 million of revenue excluding exchange rate impact during the three months ended September 30, 2025 and 2024, respectively, and $6.5 million and $7.0 million, of revenue excluding exchange rate impact during the nine months ended September 30, 2025 and 2024, respectively, related to amounts that were included in deferred revenue as of December 31, 2024 and 2023. As of September 30, 2025 and December 31, 2024 the Company had approximately $23.2 million and $21.7 million of deferred revenue in the Parking Solutions segment, respectively. The Company recognized $1.1 million and $2.6 million of revenue during the three months ended September 30, 2025 and 2024, respectively, and $18.9 million and $18.0 million, of revenue during the nine months ended September 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 September 30, 2025, total transaction price allocated to performance obligations in the Government Solutions segment that were unsatisfied or partially unsatisfied was $159.6 million, of which $67.7 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 cancelable 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 loss 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 loss on interest rate swap for the respective periods:


	Three Months Ended			Nine Months Ended
($ in thousands)	September 30, 2024			September 30, 2024
Change in fair value	$	1,169		$	1,316
Cash receipts		(256	)		(822	)
Total loss on interest rate swap	$	913		$	494

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.

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.

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU removes all references to prescriptive and sequential software development stages. The ASU requires entities to begin capitalizing software costs when management authorizes and commits to funding the software project and it is probable that the project will be completed and the software will be used for its intended purpose. The guidance is effective for annual periods beginning after December 15, 2027 and interim periods within fiscal years beginning after December 15, 2027. The guidance can be applied on a prospective basis, a modified basis for in-process projects or on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting 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)	September 30, 2025		December 31, 2024
Prepaid services	$	29,435	$	17,359
Prepaid tolls		8,378		8,751
Costs to fulfill a customer contract		3,136		3,710
Deposits		2,720		3,057
Other		4,204		9,770
Total prepaid expenses and other current assets	$	47,873	$	42,647

4. Goodwill and Intangible Assets

The following table presents the changes in the carrying 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		5,012		823		—		5,835
Balance at September 30, 2025	$	425,179	$	214,205	$	102,066	$	741,450

Intangible assets consist of the following as of the respective period-ends:


	September 30, 2025					December 31, 2024

	Gross					Gross
	Carrying			Accumulated		Carrying			Accumulated
($ in thousands)	Amount			Amortization		Amount			Amortization
Trademarks	$	4,815		$	2,463	$	4,667		$	1,972
Patent		500			192		500			117
Customer relationships		560,429			393,582		557,958			348,138
Developed technology		40,278			24,580		38,659			19,260
Gross carrying value of intangible assets		606,022		$	420,817		601,784		$	369,487
Less: accumulated amortization		(420,817	)				(369,487	)
Intangible assets, net	$	185,205				$	232,297

Amortization expense was $15.6 million and $16.8 million for the three months ended September 30, 2025 and 2024, respectively, and was $48.7 million and $50.3 million for the nine months ended September 30, 2025 and 2024, respectively.

Estimated amortization expense in future years is expected to be:


($ in thousands)
Remainder of 2025	$	15,745
2026		57,904
2027		28,524
2028		22,500
2029		21,519
Thereafter		39,013
Total	$	185,205

5. Accrued Liabilities

Accrued liabilities consist of the following at:


($ in thousands)	September 30, 2025		December 31, 2024
Accrued salaries and wages	$	32,406	$	34,310
Accrued interest payable		9,197		4,211
Current portion of operating lease liabilities		6,812		6,925
Income taxes payable		4,543		662
Advanced deposits		4,128		2,993
Restricted cash due to customers		3,449		2,858
Other		10,687		22,021
Total accrued liabilities	$	71,222	$	73,980

6. Long-term Debt, Net

The following table provides a summary of the Company’s long-term debt, net at:


($ in thousands)	September 30, 2025			December 31, 2024
2021 Term Loan, due 2028	$	688,804		$	695,568
Senior Notes, due 2029		350,000			350,000
Less: original issue discounts		(1,759	)		(2,322	)
Less: unamortized deferred financing costs		(7,107	)		(9,035	)
Total long-term debt, net	$	1,029,938		$	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.

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 the nine months ended September 30, 2025 and 2024, the Company made early repayments of $6.8 million and $4.5 million, respectively, on the 2021 Term Loan, and as a result the total principal outstanding was $688.8 million as of September 30, 2025.

The Company recorded less than $0.1 million of loss on extinguishment of debt during both the three and nine months ended September 30, 2025, related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayments. It recognized less than $0.1 million and $0.6 million loss on extinguishment of debt for the three and nine months ended September 30, 2024, primarily 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.

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 September 30, 2025, the interest rate on the 2021 Term Loan was 6.4%.

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%

Subsequent to September 30, 2025, the Company amended and restated the 2021 Term Loan agreement to refinance the entire outstanding amount under the 2021 Term Loan with a new senior secured term loan of the same principal amount and maturing on October 15, 2032. See Note 15, Subsequent Events, for additional information.

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%

The Revolver

The Company entered into a Revolving Credit Agreement in March 2018 (as amended, 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 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 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 September 30, 2025 or December 31, 2024. The availability to borrow was $123.2 million, net of $1.8 million of outstanding letters of credit at September 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 $1.8 million of outstanding letters of credit as of September 30, 2025.

Subsequent to September 30, 2025, the Company amended and restated the Revolver, which increased commitments from $125.0 million to $150.0 million and extended the maturity date to October 17, 2030. See Note 15, Subsequent Events, for additional information.

All borrowings, indebtedness 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 September 30, 2025, the Company was compliant with all debt covenants in its debt agreements.

Interest Expense, Net

The Company recorded interest expense, including amortization of deferred financing costs and discounts, of $16.4 million and $18.7 million for the three months ended September 30, 2025 and 2024, respectively, and $49.6 million and $57.2 million for the nine months ended September 30, 2025 and 2024, respectively.

The weighted average effective interest rate on the Company’s outstanding borrowings was 6.1% and 6.2% as of September 30, 2025 and December 31, 2024, respectively.

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	September 30, 2025				December 31, 2024
	Fair Value	Carrying		Estimated		Carrying		Estimated
($ in thousands)	Hierarchy	Amount		Fair Value		Amount		Fair Value
2021 Term Loan	2	$	682,422	$	693,109	$	687,203	$	699,916
Senior Notes	2		347,516		349,125		347,008		341,250

The Company has an equity investment measured at cost with a carrying value of $2.0 million and $1.9 million as of September 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 nine months ended September 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 nine months ended September 30, 2024:


	Three Months Ended September 30,			Nine Months Ended September 30,
($ in thousands)	2024			2024
Prepaid expenses and other current assets
Beginning balance	$	799		$	689
Change in fair value of interest rate swap		(799	)		(689	)
Ending balance	$	—		$	—

Other non-current assets
Beginning balance	$	370		$	627
Change in fair value of interest rate swap		(370	)		(627	)
Ending balance	$	—		$	—

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 share are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2025		2024		2025		2024
Numerator:
Net income	$	46,839	$	34,732	$	117,753	$

VERRA MOBILITY Corp 10-Q