Verra Mobility Corporation Class A Common Stock 2026 Q2 Earnings Call

Good afternoon, welcome to Verra Mobility's second quarter 2026 earnings call. Today, we'll be discussing the results announced in our press release issued after the market close, along with our earnings presentation, which is available on the investor relations section of our website at ir.verramobility.com. With me on the call are Jon Keyser, Verra Mobility's Interim Chief Executive Officer, and Craig Conti, our Chief Financial Officer. Jon will begin with prepared remarks, followed by Craig, then we'll open up the call for Q&A. Management may make forward-looking statements during the call regarding future events and expectations, anticipated future trends, and the anticipated future performance of the company. We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.

Actual results may differ materially from those projected in the forward-looking statements due to a variety of risk factors. These factors are described in our SEC filings. Please refer to our earnings press release and earnings presentation for our cautionary note on forward-looking statements. Any forward-looking statements that we make on this call are based on our beliefs and assumptions today, we do not undertake any obligation to update forward-looking statements. Finally, during today's call, we'll refer to certain non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in our earnings release and quarterly earnings presentation, both of which can be found on our website at ir.verramobility.com. With that, I'll turn the call over to Jon.

Thanks, Mark, good afternoon, everyone. This is my first earnings call as Interim CEO of Verra Mobility. I want to start by saying thank you to our shareholders. I appreciate the opportunity to speak with you today. Having served Verra Mobility in several leadership roles, I know our business, our people, and the value we provide to our customers. I also recognize the responsibility that comes with leading the company at this important moment. My approach to leading Verra Mobility is straightforward: establish clear priorities, act decisively, communicate candidly, and deliver on our commitments.

These principles have guided me throughout my career, from my service as a military officer, in which I served in combat in wars in Iraq and Afghanistan, through my extensive legal career as a mergers and acquisitions attorney in roles at large multinational corporations, my time as Verra Mobility's Chief Legal Officer, also leading market expansion for our government safety business via our government relations function, and my experience as Verra Mobility's Chief Transformation Officer. My leadership has been developed and battle-tested in times of crisis when the stakes are high. Although the ultimate stakes in business are clearly not the same as they are in war, some leadership principles transcend military service and leadership in business. On my first day as CEO, I set up a series of leadership principles, I discussed them with our employees.

Those included integrity first, customer centricity, acting with urgency, and the belief that technology, like AI, is a force multiplier. I shared these principles as a guide to how our leaders will lead, how we will make decisions, and how we will hold ourselves accountable. I'm very pleased to say that over the last few months, we have been building momentum. We've achieved great wins, and we've been putting those principles into action. So I have three immediate priorities for our company. First, we're working hard to broaden and deepen our customer relationships. Second, we're spending a lot of time realigning our cost structure and improving how we operate. Third, we're positioning Verra Mobility for future growth and long-term value creation. We've already made tangible progress against each of these priorities since I stepped into the interim CEO role at the end of May.

Let me first start with customer relationships, beginning with our tolling and large fleet customers. Verra Mobility operates at the center of a complicated multi-jurisdictional mobility ecosystem. We connect rental car companies, large fleet operators, governmental tolling authorities, and millions of drivers. We manage vehicle identification, toll transactions, violations, payments, data, and customer service across a large number of locations. That capability has been developed over decades, and we believe it is very difficult to replicate at scale. The clearest example of our focus on customer relationships is our new agreement with Avis Budget Group. Following ABG's termination notice in May, we listened carefully to their concerns and strategic priorities, we rapidly deployed teams from across our organization to develop a path forward.

I am pleased to report, as we said in our press release on July 28th, that we've reached an agreement with ABG on the key contractual terms for a new seven-year tolling and violation services contract, extending a relationship that had already spanned nearly two decades. I believe this is a really important outcome for Verra Mobility. It demonstrates the value of our technology for our customers and our ability to listen to our customers and adapt to their needs. I want to say thank you to Avis Budget Group for their renewed faith in us and the new relationship we're building together, including at the most senior levels of both companies.

I also realize there have been many questions about the approaching expiration date from our contract with Hertz. Today, I'm also pleased to announce that we have entered into a new five-year agreement with Hertz that provides long-term visibility for both companies and establishes a strong foundation for the next phase of our relationship. Hertz is an important and longstanding customer with highly engaged and a very talented team that is modernizing, strengthening, and building Hertz's business. I'm honored that they have chosen to extend their relationship with us, I believe this is a vote of confidence in Verra Mobility's technology, operating capabilities, integrations, and scale, as well as the work that our teams have done to develop a more flexible and customer-focused partnership.

I want to thank the senior leadership at Hertz for their collaboration and trust in Verra Mobility as a technology partner for years to come. Together, the ABG and Hertz agreements represent meaningful progress towards stabilizing our Commercial Services customer base. We're thrilled to continue to provide Verra Mobility's capabilities and expertise at scale to help our customers mitigate risk and achieve success. With respect to some key developments in our Government Solutions business, I'd like to highlight that we announced that we were recently selected as the automated speed safety vendor for the City of Los Angeles, California. As we zoom out for a moment, we are negotiating and hope to finalize that contractual agreement.

Once completed, I'll be proud to say that with the passage of Assembly Bill 645 in California, which authorized speed enforcement in the state, Verra Mobility will have been selected as the technology partner for six out of the six cities that were authorized by that legislation. Verra Mobility is honored to serve these customers and help them achieve their goals for safer, more efficient transportation and our shared mission of saving lives. As we discussed in our National Stop on Red press release on Monday, one of the most important, rewarding aspects of our work is seeing the real-world impact of our technology.

Across the communities we serve, we're seeing measurable improvements in driver behavior and roadway safety, including a 28% reduction in red light violations within the first 60 days of San José's program, a nearly 50% decline in traffic fatalities in Merced, reinforcing that automated safety enforcement is one of the most effective tools available to make roads safer and to help save lives. Our focus on customers extends well beyond individual contract negotiations. In June, we appointed Stacey Moser as Chief Customer Officer and unified our sales, account management, and marketing leadership across our largest commercial and government businesses. This change creates a stronger, more consistent voice of the customer within Verra Mobility and allows us to identify issues earlier, respond more quickly, and bring the full breadth and capabilities of our company to every customer relationship.

To me, customer centricity also requires that our leaders responsible for product and engineering operations and our unified customer-facing organization be as close as possible to the CEO. We're dramatically improving our customer centricity, and that's going to be one of the primary measures of success for this new organization and our structure going forward. Over the past several months, our board's transformation advisory committee has also worked with management on a review of our organization, our operating model, and strategic priorities. That work reinforced an important conclusion. While Verra Mobility has historically been organized around separate business units, we increasingly operate as one integrated mobility technology company, and doing so is a far more efficient way to operate. Our customers don't think in terms of reporting segments.

They come to Verra Mobility to help solve problems related to regardless of whatever product, technology, or service delivers the solution. Increasingly, our competitive advantage comes from a combination of our technologies, our customer relationships, and our operational capabilities, and not from individual business lines. That reality is reflected in how we are managing the company. We are confident in our continued transformation and that it will enable faster decision-making, greater operational leverage, and an even stronger customer experience. After increasing our customer focus, the second major priority we identified in our leadership transition has been furthering our transformation efforts by realigning our cost structure and improving how we operate. Consistent with the leadership principle I discussed earlier, our organization acted with urgency.