Verra Mobility Corporation
2023
ANNUAL REPORT
1150 N. Alma School Road | Mesa, AZ 85201
www.verramobility.com
VERRA MOBILITY CORPORATE INFORMATION
Corporate Headquarters
1150 N. Alma School Road
Mesa, AZ 85201
Telephone: (480) 443-7000
Website: www.verramobility.com
Email: IR@verramobility.com
Transfer Agent
Equiniti Trust Company, LLC
48 Wall St., Floor 23
New York, NY 10005
Website: https://equiniti.com/us/ast-access
Email: helpAST@equiniti.com
Financial Information
For financial and corporate governance information about Verra Mobility,
please visit ir.verramobility.com, where you can also find all of our filings
with the Securities and Exchange Commission.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
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
(State of Incorporation)
1150 North Alma School Road
Mesa, Arizona
(Address of Principal Executive Offices)
81-3563824
(I.R.S. Employer Identification No.)
85201
(Zip Code)
(480) 443-7000
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
(Title of Each Class)
Class A Common Stock, par value $0.0001 per share
(Trading Symbol)
VRRM
(Name of Each Exchange on Which Registered)
Nasdaq Capital Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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
Non-accelerated filer
☒
☐
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 has filed a report on attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2023, computed by
reference to the closing price reported on the Nasdaq Capital Market on such date was $3,271,177,915 (165,881,233 shares at a closing price per
share of $19.72).
As of February 23, 2024, the registrant had 166,020,564 shares of Class A Common Stock, par value $0.0001 per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement to be filed in connection with its annual meeting of stockholders to be held May 21, 2024 are
incorporated by reference into Part III of this Form 10-K.
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VERRA MOBILITY CORPORATION
FORM 10-K
For the Fiscal Year Ended December 31, 2023
INDEX
PART I.................................................................................................................................................................
Item 1. Business....................................................................................................................................................
Item 1A. Risk Factors ...........................................................................................................................................
Item 1B. Unresolved Staff Comments..................................................................................................................
Item 1C. Cybersecurity.........................................................................................................................................
Item 2. Properties..................................................................................................................................................
Item 3. Legal Proceedings ....................................................................................................................................
Item 4. Mine Safety Disclosures...........................................................................................................................
PART II ...............................................................................................................................................................
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities...................................................................................................................................................
Item 6. [Reserved] ................................................................................................................................................
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ..................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ..............................................................
Item 8. Financial Statements and Supplementary Data ........................................................................................
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..................
Item 9A. Controls and Procedures........................................................................................................................
Item 9B. Other Information ..................................................................................................................................
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ..................................................
PART III..............................................................................................................................................................
Item 10. Directors, Executive Officers and Corporate Governance.....................................................................
Item 11. Executive Compensation........................................................................................................................
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters ..................................................................................................................................................................
Item 13. Certain Relationships and Related Transactions, and Director Independence.......................................
Item 14. Principal Accountant Fees and Services ................................................................................................
PART IV ..............................................................................................................................................................
Item 15. Exhibit and Financial Statement Schedules ...........................................................................................
Item 16. Form 10-K Summary..............................................................................................................................
SIGNATURES .....................................................................................................................................................
POWER OF ATTORNEY....................................................................................................................................
Appendix A, Schedule II ......................................................................................................................................
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As used in this Annual Report on Form 10-K (“Annual Report”), the terms “Verra Mobility,” the
“Company,” “we,” “us,” or “our” refer to Verra Mobility Corporation and its consolidated subsidiaries.
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PART I
Item 1. Business
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 other violation-issuing authorities.
Segments
Our solutions are offered through three segments: (i) Commercial Services, (ii) Government Solutions and (iii)
Parking Solutions.
Commercial Services
Our Commercial Services segment generated approximately $372.8 million in revenue for 2023, or
approximately 45.6% of our total revenue. We believe that our Commercial Services segment is a market-leading
provider of automated toll and violations management and title and registration solutions to RACs, Direct Fleets,
FMCs and other large fleet owners in North America. In Europe, our Commercial Services segment provides
violations processing through Euro Parking Collection plc and consumer tolling services through Pagatelia S.L.U. We
have long-standing relationships with, among others, the three largest RACs in the United States, Avis Budget Group,
Enterprise Mobility and The Hertz Corporation. We also have relationships with key European RACs and the five
largest FMCs in the United States. Through our established relationships with individual tolling authorities throughout
the United States, we provide an automated and outsourced administrative solution for our customers while also
providing a value-added convenience for vehicle drivers and benefits to tolling and issuing authorities. Our toll and
violations management solutions help ensure timely payment of tolls and violations incurred by our customers’
vehicles and perform timely transfers of liability on our customers’ behalf, and driver billing and collections, as
applicable. We also manage 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.
Government Solutions
Our Government Solutions segment generated approximately $358.4 million in revenue for 2023, or
approximately 43.9% of our total revenue. We believe our Government Solutions segment is a market-leading provider
of automated safety solutions in the United States, Canada and Australia to state and local governments. In the United
States, we provide government agencies with road safety cameras to detect and process traffic violations for red-light,
speed, school bus, work zone and city bus lanes. Our proprietary hardware and software technologies provide
government agencies the information, data and automated end-to-end administrative capabilities to enforce traffic
violations through photo enforcement. On behalf of our customers, we install, maintain and manage automated safety
solution hardware and software that processes event data, applies customer specific rules and connects a traffic
violation to the responsible driver or vehicle owner. Additionally, upon law enforcement’s determination that a
violation has occurred, we offer an “end-to-end” solution to manage the citation mailing, billing and other
administrative tasks on behalf of our customers. For many international customers, we design, engineer and maintain
roadside photo enforcement technology, including both hardware and software, which is sold or licensed to
government agencies and often maintained with maintenance contracts to support the technology.
Parking Solutions
Our Parking Solutions segment, formed after our acquisition of T2 Systems Parent Corporation (“T2 Systems”)
in December 2021, generated approximately $86.1 million in revenue for 2023, or approximately 10.5% of our total
revenue. T2 Systems is a North American leader of end-to-end commercial parking management solutions. This
segment serves approximately 2,000 customers in the university, municipal, healthcare and commercial operator
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markets. Our proprietary software, transaction processing and hardware technologies provide our customers with
solutions to manage and monetize their parking and enforcement operations. In 2023, we processed over 162 million
transactions using our various parking solutions systems, including parking access and revenue control, single- and
multi-space pay stations, integrated physical and mobile payments, back-office parking rate management, permit
issuance and management, online citation payment, event parking, and back-office management of violations.
Markets and Competition
Although we face strong competition in all of the markets in which we operate, there is no single competitor
that provides a similarly broad suite of solutions across our business segments. In our Government Solutions segment,
we face competition in certain automated safety solutions from other vendors in red-light, school bus, speed and bus
lane photo enforcement. In our Commercial Services segment, we face competition from both our own customers,
who may choose to invest in their own internal solutions, and vendors offering or seeking to offer new technologies
or financial models. In Parking Solutions, we face competition from a variety of competitors in our markets in the
United States and Canada.
Automated Safety
As cities and municipalities wrestle with the evolving challenges of managing traffic congestion, road safety
and accessible transportation networks, automated enforcement solutions continue to serve as an effective tool for
comprehensive safety and mobility initiatives. In 2022, the Governors Highway Safety Association concluded that the
expanded use of automated enforcement is essential to reversing the tragic increase in deaths and injuries on the
nation’s roadways, and found automated enforcement to be an effective tool for law enforcement and other agencies.
Furthermore, the U.S. Department of Transportation issued a report in 2022 stating that automated enforcement can
provide significant safety benefits and save lives. Programs like Vision Zero, a collaborative campaign helping
communities towards their goals of eliminating all traffic fatalities and severe injuries across most major U.S. cities
and around the world, are driving capital investment to make meaningful strides in traffic safety. In New York City,
fixed camera locations yielded a 73% average reduction in dangerous speeding, according to the New York City’s
Automated Speed Enforcement Program 2022 Report.
Public attention given to traffic safety issues for drivers, pedestrians, children, bicyclists and law enforcement
is increasing and smart technology solutions have emerged as an effective and cost-neutral method to address traffic
safety issues. Furthermore, automated safety systems have the potential to free up law enforcement resources to allow
law enforcement to address other pressing community issues. We believe that as public focus intensifies, the demand
for our Government Solutions offerings will grow as well, and that we are positioned to take advantage of these
opportunities.
Tolling
The tolling industry is highly fragmented and complex, as it is comprised of more than 130 tolling operators
with specific coverage regions and disparate technology platforms, processing requirements and business rules. We
believe that as state and local governments fund a growing list of infrastructure, maintenance and construction projects,
there will be an increase in the number of toll roads, including new express and high occupancy lanes in urban areas.
We expect this trend will also increase utilization of dynamic tolling, which allows toll rates to fluctuate based on
traffic trends and real-time congestion. In addition, approximately 67% of toll roads in the United States are cashless
or all-electronic payment. We believe that these trends create sizable opportunities for us to expand our tolling market
presence while developing relationships with tolling authorities.
Commercial Fleet
Our Commercial Services customers consist of RACs, Direct Fleets, FMCs and other large fleet owners. The
approximately $38.3 billion United States RAC industry is highly consolidated, with three companies—with which
we have long-standing relationships—accounting for a significant majority of United States RAC revenues in 2023.
We believe that the above-mentioned trends toward the use of toll roads additionally create significant opportunities
for us to expand our fleet market presence while developing relationships with both new and existing RACs, Direct
Fleets, FMCs, and other fleet consumers.
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Parking
The parking industry consists of a highly fragmented mix of end customers,
including universities,
municipalities, private operators, healthcare providers and airports, among other industries. These customers each
have different parking needs such as off-street parking, on-street parking, permits, transaction processing, enforcement
and consumer engagement. T2 Systems has customer relationships with approximately 35% of higher education
institutions in its target tiers, according to internal analysis. The broader parking market in which T2 System’s
operates—North American municipalities, universities and healthcare providers—represents up to a $4 billion market
according to a 2021 market estimate. Parking Solutions market participants are struggling to attract and retain labor
and consumers are increasingly willing to adopt mobile solutions to simplify their transportation needs, creating
market opportunities to advance self-service options. We believe that technology solutions that provide mobile-first,
self-service offerings improve operational efficiency by reducing reliance on parking-related labor. Such commercial
models reduce up-front costs to address market needs and establish a long-term operating model.
Products
Commercial Services
Toll management solutions
We provide fully outsourced toll management solutions for our fleet owner customers, including RACs, Direct
Fleets and FMCs, while also providing a value-added convenience for vehicle drivers via our established relationships
and integrations with more than 50 individual tolling authorities throughout the United States. This comprehensive
network provides RAC, Direct Fleet and FMC drivers the convenience of using cashless and all-electronic tolls.
Additionally, this service helps prevent the liability and business disruption of costly toll violations incurred by
vehicles owned by RAC, Direct Fleet and FMC customers and eliminates their need to manage a nationwide program
internally. Our proprietary software technology and hardware allow us to effectively match a toll to the specific RAC,
Direct Fleet or FMC vehicle and driver so that the toll can accurately and reliably be billed and collected on behalf of,
or directly from, the RAC, Direct Fleet or FMC. Toll management solutions accounted for approximately 40.4% of
our 2023 total revenues.
Violations management solutions
Our violations management solutions process violations incurred by the drivers of RAC, Direct Fleet and FMC
vehicles by working with more than 8,700 domestic violation-issuing authorities (more than 400 of which we are
directly integrated with) to either pay the fine on behalf of the vehicle owner (for which we are able to bill the driver)
or to transfer liability directly to the vehicle driver. Vehicle-issued violations include parking and photo enforcement
violations. In Europe, we specialize in the identification, notification and collection of unpaid traffic, parking and
public transport related fees, charges and penalties issued to foreign registered vehicles or persons on behalf of issuing
authorities in 18 European countries. Violation management solutions accounted for approximately 4.6% of our 2023
total revenues.
Title and registration solutions
Our title and registration solutions provide RAC, Direct Fleet and FMC customers with an integrated, end-to-
end solution for managing vehicle titles and registrations and annual renewals. We provide automated title and
registration solutions by leveraging connections with individual departments of motor vehicles for title and registration
processing in 19 states. Title and registration solutions accounted for approximately 0.6% of our 2023 total revenues.
Government Solutions
We serve as a value-add partner to government agencies by providing photo enforcement solutions that promote
road safety and help reduce traffic violations. We work with our customers to identify problematic traffic areas and
install, maintain and manage the technology platform needed to capture images or videos of drivers committing traffic
violations. Red-light cameras are placed at intersections to capture vehicles illegally running red lights. Similarly,
speed safety cameras are used to capture vehicles exceeding posted speed limits, either on a fixed basis or in a mobile
platform, and often in school zones or work zones. School bus safety cameras are fixed to the side of buses to capture
vehicles passing school buses with extended stop arms. Finally, bus lane cameras are designed to capture vehicles
illegally driving or parking in restricted bus lanes.
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For customers of our end-to-end solutions, we automatically send captured events to the designated enforcement
agency of the customer, where an authorized individual determines if a violation occurred. Direct service revenue
from red-light cameras, speed cameras, school bus cameras and city bus lane cameras accounted for approximately
39.6% of our 2023 total revenues. Other segment service revenue consists primarily of ancillary revenue streams,
which comprised 2.5% of total revenue. Product sales to customers are not recurring and are dependent on our
customers’ needs, and account for 1.8% of total revenue for 2023.
Parking Solutions
Parking Access and Revenue Control
Our Parking Access and Revenue Control (“PARCS”) technology solutions include both software and hardware
offerings which work in concert to help our customers manage their gated, gateless and license plate recognition-
based parking lot and parking garage needs. As of December 31, 2023, we installed over 2,800 PARCS lanes. Our
related software is the industry’s original hosted parking management software, which allows management of our
customers’ PARCS solutions from a computer or mobile device.
UNIFI Mobile
Our UNIFI Mobile offering was launched in December 2023 to enhance the efficiency of processing parking-
related transactions for parking operators and end-users. UNIFI Mobile is a unified, mobile-first and web-enabled
platform for various parking-related transactions, including parking session payments, permit purchases, citation
payments and account management. The first two offerings as part of UNIFI Mobile’s suite of apps included Scan &
Pay and Tempo, both of which were launched in December 2023. Scan & Pay allows operators to print a QR code on
parking citations for end-users to scan and pay, and Tempo is an application for end-users to efficiently and
conveniently purchase parking sessions from parking operators.
Pay Stations
Our pay stations hardware technology has interoperability with over 155 third-party systems, as well as our
PARCS and parking enforcement solutions. They are powered by a highly configurable and data driven software
technology which supports the enforcement, mobile payments, and back-office and accounting needs of our
customers. Our fleet of pay stations hardware exceeded 15,600 units at December 31, 2023.
Permits & Enforcement
Our Permits & Enforcement software technology solutions allow our customers to control who is parking in
their facilities and when and where drivers can park using physical or virtual permits, allowing customers to control
traffic and maximize their parking-related revenues. This technology also provides enforcement officers with real-
time information and custom notifications on their enforcement devices. Citations management features also help to
organize fine escalations and notification letters to parking violators.
Intellectual Property
We rely on a combination of patents, trademarks, trade secrets, copyrights and confidentiality agreements to
protect our intellectual property. We take steps to protect new intellectual property to safeguard our ongoing
technological innovations and strengthen our brand, and believe we take appropriate action against infringement or
misappropriation of our intellectual property rights by others. We regularly review third-party intellectual property
rights to help avoid infringement, and to identify strategic opportunities.
Our general policy is to seek patent protection for our inventions likely to be incorporated into our products and
services or where obtaining such proprietary rights will improve our competitive position. We own approximately 88
U.S.- and foreign-issued patents and pending patent applications, including patents and rights to patent applications
acquired through strategic transactions, which relate to various aspects of our products and technology. Our patent
portfolio evolves as new patents are awarded to us and as older patents expire. Patents expire at various dates, generally
20 years from their original filing dates. While we believe that our portfolio of patents and applications has value, in
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general no single patent is essential to our business or any individual segment. In addition, any of our proprietary
rights could be challenged, invalidated or circumvented, or may not provide significant competitive advantages.
Our business relies on both internally developed and externally licensed software, as well as internally,
externally and co-developed hardware, to operate and provide our systems and deliver our services. We claim
copyright on all internally developed software. We generally rely on common law protection for our copyrighted
works. In addition, we rely on maintaining source code confidentiality to assure our market competitiveness. With
respect to externally sourced software and hardware, we rely on contracts to retain our continued access for our
business usage. From time to time, these agreements may expire or be subject to renegotiation.
We have approximately 220 registrations and pending applications in the United States and foreign jurisdictions
for trademarks and service marks, reflecting our many products and services. These registrations and applications
include our historic and acquired brands, as well as “Verra Mobility.” These marks may have a perpetual life, subject
to periodic renewal and may be subject to cancellation or invalidation based on certain use requirements and third-
party challenges, or on other grounds. We vigorously enforce and protect our marks.
Government Regulation
We are subject to various local, state and national laws, regulations and administrative practices regulating
matters such as data privacy, photo enforcement, consumer protection, procurement, licensing requirements, anti-
corruption, equal employment, minimum wages, workplace health and safety, human rights and the environment,
among others. Our operations are subject to regulation by various U.S. federal agencies, including the U.S. Department
of Transportation, (“USDOT”), the Federal Trade Commission, (“FTC”), the Federal Communications Commission,
the Consumer Product Safety Commission and the Environmental Protection Agency. We are also subject to laws,
regulations and administrative practices addressing many of these same matters in Europe, Australia, Canada and New
Zealand, including those specifically relating to accessing and use of information obtained from vehicle licensing
authorities, traffic enforcement and collections and financial and banking regulations.
Privacy and Data Security
As part of our business, we collect, receive, process, use, transmit, disclose, and retain information relating to
identifiable individuals (“personal information”) and, therefore, are subject to various laws protecting privacy and
security of personal information, including but not limited to the U.S. Driver Privacy Protection Act, the General Data
Protection Regulation (the “GDPR”) in the European Union (the “E.U.”), the Data Protection Act of 2018 and the
GDPR in the United Kingdom, the Canadian Personal Information Protection and Electronic Documents Act, the
Australia Privacy Act of 1988, New Zealand’s Privacy Act of 2020, the California Consumer Privacy Act, as amended
(the “CCPA”), and other national and state privacy laws. We are also subject to similar restrictions and audit
requirements pursuant to our contracts with the organizations from which we gain access to personal information,
such as departments of motor vehicles and the National Law Enforcement Telecommunications System. Privacy laws
and regulations are constantly evolving and changing, are subject to differing interpretations and may be inconsistent
among countries and state and local jurisdictions, or conflict with other rules.
As we expand our operations in foreign countries, or as U.S. federal or state law changes, our liability exposure
and the complexity and cost of compliance with data and privacy requirements will increase. Laws and practices
regarding handling and use of personal and other information by companies have also come under increased public
scrutiny, and governmental authorities, consumer agencies and consumer advocacy groups have called for increased
regulation and changes in industry practices.
Photo Enforcement
Automated photo enforcement camera programs in the United States are typically regulated at the state and local
level. In 2023, 21 bills were enacted at the state-level to authorize, expand or positively reform automated photo
enforcement programs. In general, photo enforcement is administrated by state, provincial or local government
agencies, under either state enabling legislation or under home rule authority established under the relevant state
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constitution. Where enabling legislation is not required, local ordinances impose further restrictions within a given
jurisdiction.
In connection with the installation of photo enforcement systems, we or our customers routinely obtain permits
from various permitting authorities. As a government contractor providing photo enforcement services directly or
through subcontractors (including design, engineering, construction, installation, and maintenance) in various
locations throughout the United States and internationally, we are at times required to obtain licenses regarding general
contracting, performance of engineering services, performance of electrical work, performance of private investigative
work and processing license plate and related personal information. We periodically receive notices from regulatory
authorities regarding these matters and inquiring as to our compliance with the applicable state, local and foreign laws
and regulations. In addition, our foreign photo enforcement programs are subject to regulation in the various countries
in which we operate.
Tolling
We are also subject to state and local regulations with respect to tolling. Over the past few years, bills have been
introduced in multiple states to limit whether and how much RACs can charge their customers for the use of a toll
transponder, limit the administrative penalties and fees that can be assessed for processing tolls, and/or impose
increased disclosure requirements on RACs with respect to tolling or violation processing fees. In addition, there has
been an increase in interest and greater focus on RAC tolling programs from state Attorneys General related to tolling
issues from a consumer protection perspective.
Government Contracting
Our Government Solutions customers are typically government agencies, and our operations within this segment
are therefore subject to various laws pertaining to procurement, gifts and entertainment, payments of commissions
and contingency fees, conflicts of interest, licensing and permitting requirements and other matters. These laws are
overseen by different government agencies, depending on the jurisdiction, including departments of procurements
services, contracting offices and offices of inspector general.
To successfully navigate this complex statutory and regulatory landscape, we have a dedicated government
relations team that works with national, state and local policymakers, often with the help of lobbyists and consultants,
to track and help support favorable camera-enforcement safety and toll-related legislative outcomes. Through this
network, we have a presence in most states in which our Government Solutions and Commercial Services segments
do business. These lobbying activities are subject to state and local regulations and registration requirements.
We believe we are in substantial compliance with the laws and regulations that regulate our business. There are,
however, significant uncertainties involving the application of various legal requirements, the violation of which could
result in, among other things, fines, penalties, revocation of permits or licenses, cessation of operations in a given
jurisdiction and other adverse consequences. See “Risk Factors” for a discussion of our regulatory risks.
Human Capital Management
Our employees are critical to our success as a leading provider of smart mobility solutions. To continue
delivering high-quality solutions to our customers and succeed in our highly competitive and rapidly evolving market,
it is critical that we continue to attract, retain and develop diverse groups of talented individuals at all levels of our
organization.
As of December 31, 2023, we had 1,788 employees, comprised of 1,581 full-time employees and 207 part-time
employees. Of our full-time employees, 1,187 were located in the United States and 394 were located internationally.
None of our employees are represented by a labor union or covered by a collective bargaining agreement, except for
our 26 employees in Staten Island, New York. We believe our relations with our employees are good, and we have
not experienced a strike or other significant work stoppage.
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Talent Acquisition and Development
Our success depends upon attracting, retaining and developing a diverse group of talented individuals who
possess the knowledge and skills necessary to support our business objectives, assist in the achievement of our
strategic goals, contribute their own unique perspective and skill set and create long-term value for our stockholders.
We have implemented purposeful hiring strategies that include opportunities for internal mobility and promotion and
an employee referral program, both of which we believe will further strengthen our growing employee base and
promote retention. We have a multifaceted talent development framework that
training,
management training and targeted development programs. We also develop our employees through an annual
performance review and assessment process that incorporates a dual-performance rating system and provides each
employee with concrete, actionable feedback that will enable them to succeed.
includes functional
Compensation and Benefits
Our compensation programs are designed to align the compensation of our employees with the performance of
the Company and the individual employee, and to provide a compensation package that will attract, retain, motivate
and reward employees to achieve superior results. The structure of our compensation programs balances incentives
for both short-term and long-term performance. In addition to cash compensation, we offer employees benefits such
as health (medical, dental and vision) insurance, health savings accounts, flexible spending accounts, life insurance,
accident insurance, paid time off, paid parental leave and a company-sponsored 401(k) plan, and related benefits for
non-U.S. employees. For key leadership positions, we also provide compensation packages that include annual
incentive bonuses and long-term equity awards.
Employee Engagement
We seek employees who collaborate and value differences, think and act globally, foster an engaging climate,
and recognize and develop others. We engage and survey our employee population to gather insight, feedback, and
data about employees’ engagement, workplace experiences, and manager effectiveness. Survey results inform and
support corporate, business unit, department, and team action plans, with the goal of enhancing workplace satisfaction
and overall employee well-being and effectiveness.
Corporate Information
We were originally incorporated in Delaware on August 15, 2016, under the name “Gores Holdings II, Inc.”
(“Gores”) as a special purpose acquisition company. On January 19, 2017, Gores consummated its initial public
offering (the “IPO”), following which its shares began trading on the Nasdaq Capital Market (“Nasdaq”). On June
21, 2018, Gores entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with
Greenlight Holding II Corporation, PE Greenlight Holdings, LLC (the “Platinum Stockholder”), AM Merger Sub I,
Inc., a direct, wholly owned subsidiary of Gores, and AM Merger Sub II, LLC, a direct, wholly owned subsidiary of
Gores. On October 17, 2018, we consummated the transactions contemplated by the Merger Agreement (the “Business
Combination”) and we changed our name to “Verra Mobility Corporation.” As a result of the Business Combination,
Verra Mobility Corporation became the owner, directly or indirectly, of all of the equity interests of Verra Mobility
Holdings, LLC and its subsidiaries.
Our principal executive office is located at 1150 North Alma School Road, Mesa, AZ 85201. Our telephone
number is (480) 443-7000. Our website address is www.verramobility.com. The information on, or accessible through,
our website does not constitute part of, and is not incorporated into, this Annual Report.
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The trade names, trademarks, and service marks appearing in this Annual Report include registered marks and
marks in which we claim common law rights, such as Verra Mobility and the Verra Mobility logo, all of which are
our intellectual property. This Annual Report contains additional trade names, trademarks, and service marks of other
companies that are the property of their respective owners. We do not intend our use or display of other companies’
trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us, by these
companies. We have omitted the ® and ™ designations, as applicable, for the trademarks used in this Annual Report.
Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and
amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), are filed with the SEC. We are subject to the informational requirements of the Exchange Act,
and we file or furnish reports, proxy statements and other information with the SEC. Such reports and other
information we file with the Securities and Exchange Commission (the “SEC”) are available free of charge at
http://ir.verramobility.com/financial-information/sec-filings when such reports become available on the SEC’s
website. The SEC maintains a website that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC at www.sec.gov. We periodically provide other information for
investors on our corporate website, www.verramobility.com, and our investor relations website, ir.verramobility.com.
This includes press releases and other information about financial performance, information on corporate governance
and details related to our annual meeting of stockholders. The information contained on the websites referenced in
this Annual Report is not incorporated by reference into this filing. Further, our references to website URLs are
intended to be inactive textual references only.
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Cautionary Note Regarding Forward-Looking Statements
The discussions in this Annual Report, as well as in our other filings with the SEC and other written and oral
information we release, contain forward-looking statements within the meaning of federal securities laws. These
forward-looking statements include, but are not limited to, statements concerning our future operating results and
financial position, our strategy, expectations regarding demand and acceptance for our products, services and
technologies, growth opportunities and trends in the markets in which we operate, future impacts to our business as a
result of economic and market conditions, expected cost reductions, benefits and synergies related to our acquisitions
and management’s plans and objectives. The words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “project,” and “will,” and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying words.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements
and you should not place undue reliance on them. Actual events or results could differ materially from the plans,
intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking
statements involve risks and uncertainties that could cause our actual results to differ materially from those in the
forward-looking statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in this
Annual Report and in our other filings with the SEC. Forward-looking statements speak only as of the date they are
made, and we do not undertake to update these statements other than as required by law.
Item 1A. Risk Factors
Risk Factor Summary
Investing in our common stock involves a high degree of risk. In addition to the other information set forth in
this Annual Report, you should carefully consider the following factors, which could materially affect our business,
financial condition and results of operations in future periods. The risks described below are not the only risks we
face. Additional risks not currently known to us may adversely affect our business, financial condition or results of
operations in future periods.
Risks Related to Our Customers, Industry and Competition
• Our Commercial Services and Government Solutions segments have customer concentration that could
have a material adverse effect on our business.
• Our government contracts are subject to unique risks and uncertainties, including termination rights,
delays in payment, audits and investigations, any of which could have a material adverse effect on our
business.
• Any decreases in the prevalence or political acceptance of, or an increase in governmental restrictions
regarding, automated and other similar methods of photo enforcement, the use of third-party tolling and
violations processing service providers, the ability to charge service or other fees to customers for
services provided, could have a material adverse effect on our business.
Risks Related to Our Acquisitions
• Our inability to successfully implement our acquisition strategy could have a material adverse effect on
our business.
Risks Related to Data Privacy and Cybersecurity
• A failure in or breach of our networks or systems, including as a result of cyber-attacks, could have a
material adverse effect on our business.
Risks Related to our International Operations
• Our international operations expose us to additional risks, and failure to manage those risks could have
a material adverse effect on our business.
Risks Related to Our Intellectual Property
•
Failure to acquire necessary intellectual property or adequately protect our intellectual property could
have a material adverse effect on our business.
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Risks Related to Our Indebtedness
• Our substantial level of indebtedness could cause our business to suffer and incurring additional debt
could intensify debt-related risks.
Risks Related to Our Vendors
• Our reliance on specialized third-party providers could have a material adverse effect on our business.
Due to the risk factors discussed below, as well as other factors affecting our business, operating results,
financial condition, financial performance or prospects, our past financial performance should not be considered to be
a reliable indicator of our future performance, and investors should not use historical trends to anticipate results or
trends in future periods.
Risks Related to Our Customers, Industry and Competition
Our Commercial Services and Government Solutions segments have customer concentration that could have a
material adverse effect on our business.
Our business experiences varying levels of customer concentration. For example, our Commercial Services
segment is dependent on certain key customers, including those in the RAC industry, such as Avis Budget Group,
Inc., Enterprise Mobility and The Hertz Corporation. The health of the RAC industry is impacted by a variety of
factors, including seasonality, increases in energy prices, general international, national and local economic conditions
and cycles, as well as other factors affecting travel levels, such as military conflicts, terrorist incidents, natural disasters
and epidemic diseases.
We also experience customer concentration in our Government Solutions segment. The New York City
Department of Transportation (“NYCDOT”) represented approximately 16.9% of our total revenues during fiscal
2023, and our contract with NYCDOT, like many other contracts, is subject to unique risks and uncertainties, including
termination rights, delays in payment and audits and investigations, any of which could have a material adverse effect
on our business. Unless extended, our contract with NYCDOT expires December 31, 2024, and we anticipate that the
next contract for the NYCDOT photo safety program will be subject to competitive procurement. In the future, a small
number of customers in our Government Solutions segment may continue to represent a significant portion of our
total revenues in any given period. The loss of any of our top Government Solutions customers could have a material
adverse effect on our business, financial condition and results of operations.
Our government contracts are subject to unique risks and uncertainties, including termination rights, delays in
payment, audits and investigations, any of which could have a material adverse effect on our business.
We enter into government contracts from time to time with customers that are subject to various uncertainties,
restrictions and regulations, which could result in withholding or delay of payments to us. For example, as of
December 31, 2023, NYCDOT had an open receivable balance of $36.1 million, which represented 18.0% of our total
accounts receivable, net.
Government entities typically finance projects through appropriated funds. While these projects are often
planned and executed as multi-year projects, government entities usually reserve the right to change the scope of or
terminate these projects for lack of approved funding or at their convenience. Furthermore, we may be required to
perform work under expired or terminated government contracts and may be restricted from recognizing revenue from
such contracts. Changes in government or political developments, including administrative hurdles, budget deficits,
shortfalls or uncertainties, government spending reductions or other debt or funding constraints, could result in our
government contracts being reduced in price or scope or terminated altogether, as well as limit our ability to win new
government work in the future.
Moreover,
if a government customer does not follow the requisite procurement or ordinance-specific
administrative procedures, the contract may be subject to protest or voidable regardless of whether we bear any
responsibility for the error. Our government contracts are subject to underlying laws and regulations related to
government contractors, and often include other one-sided, customer-friendly provisions and certifications, including
broad indemnification provisions and uncapped exposure or liquidated damages for certain liabilities, which can
impose obligations, requirements and liabilities on us that are beyond those associated with a typical commercial
arrangement.
In addition, government contracts are generally subject to audits and investigations by government agencies or
higher-tier government contractors. If improper or illegal activities or contractual non-compliance are identified,
including improper billing or vendor non-compliance, we may be subject to various civil and criminal penalties and
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administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments,
the imposition of fines, penalties and sanctions, and suspensions or debarment from doing business for or on behalf
of the government in the future. If penalties or other restrictions are imposed in one jurisdiction, they could also
implicate similar provisions of contracts with other government customers in other jurisdictions. Further, the negative
publicity related to these penalties, sanctions or findings in government audits or investigations could harm our
reputation and hinder our ability to compete for new contracts with government customers and in the private sector.
Any of the foregoing or any other reduction in revenue from government customers could have a material adverse
effect on our business, financial condition and results of operations.
Any decreases in the prevalence or political acceptance of, or an increase in governmental restrictions regarding,
automated and other similar methods of photo enforcement, the use of third-party tolling service providers or the
ability to charge service or other fees to customers for services provided, could have a material adverse effect on
our business.
Our Government Solutions segment provides automated safety solutions to national, state and local government
agencies, generating revenues through automated photo enforcement of red-light, school bus, speed limit and bus lane
laws. We sometimes make significant capital and other investments to attract and retain these contracts, such as the
cost of purchasing information technology equipment, constructing and installing photo enforcement systems and
developing and implementing software and labor resources. In 2023, revenues from this segment represented
approximately 43.9% of our total revenues. Therefore, we depend on national, state and local governments authorizing
the use of automated photo enforcement and not otherwise materially restricting its use. In states that have enabling
legislation, if that legislation is amended, not renewed or is otherwise repealed, use of automated enforcement
technology can be suspended until new legislation is passed. For example, in 2022, a North Carolina court of appeals
issued a ruling limiting the ability of local authorities to make certain decisions with respect to funding automated
enforcement programs, impacting the viability of automated enforcement in impacted jurisdictions.
Ballot initiatives, referendums, opinions of attorneys general and legal challenges can also be used to restrict
the use of automated enforcement or to impose additional licensing requirements on its use. For example, the Attorneys
General in the states of Arizona, Tennessee and Virginia have issued opinions that had the effect of limiting the use
of these enforcement technologies or impacting the manner in which photo enforcement programs operate. Usage may
also be affected if there is an unfavorable shift in political support for, or public sentiment towards, automated
enforcement, or as a result of one or more scandals related to its use.
Similarly, our Commercial Services business may be materially impacted if there is an unfavorable shift in
political support for or public sentiment towards tolling or its use is materially restricted or limited, including through
the imposition of limits on the fees RAC companies can charge their customers for tolling or violation processing
services. Any material restriction or limitation on the use of automated enforcement or material reduction in its use in
the markets we serve, or any similar changes with respect to tolling, could have a material adverse effect on our ability
to recoup our investments, and negatively impact our business, financial condition and results of operations. Further,
our relationships and commercial account agreements with tolling authorities, issuing authorities, motor vehicle
departments and other governmental agencies significantly enhances and enables our service offerings, and changes
in those relationship or agreements could significantly adversely impact our business.
We face intense competition and any failure to keep up with technological developments, changing customer
preferences and new laws and policies could have a material adverse effect on our business.
The markets for our solutions are increasingly competitive, rapidly evolving and fragmented, and are subject to
changing technology, shifting customer needs, contract renewals and new laws and policies. A number of vendors
develop and market products and services that compete to varying extents with our offerings, and we expect this
competition to intensify. The rapid rate of technological change in our industry could increase the chances that we
will face competition from new products or services designed by companies that we do not currently compete with.
Moreover, we face competition from our own customers as they may choose to invest in developing their own internal
solutions.
Some of our existing competitors and potential new competitors have longer operating histories, greater name
recognition, less debt, more established customer bases and significantly greater financial, technical, research and
development, marketing and other resources than we do. As a result, our competitors may be able to respond more
quickly and effectively than we can to new or changing opportunities, technologies, standards or customer
requirements. In some cases, our competitors may be better positioned to initiate or withstand substantial price
competition, and we may have to reduce our pricing to retain existing business or obtain new business. If we are not
able to maintain favorable pricing for our solutions, our profit margin and profitability could suffer. In addition, if a
prospective customer is currently using a competing solution, the customer may be unwilling to switch to our solution
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without setup support services or other incentives. Certain existing and new competitors may be better positioned to
acquire competitive solutions, develop new solutions, modify existing solutions, effectively negotiate third-party
licenses and other strategic relationships, and take advantage of acquisition or other similar expansion opportunities.
Any failure to achieve our target pricing levels, maintain existing customer relationships, generate additional customer
wins or otherwise successfully compete would have a material adverse effect on our business, financial condition and
results of operations.
Our new products and services and changes to existing products and services may not succeed.
Our ability to retain, increase and engage our customer base and to increase our revenue depends, in large part,
on our ability to continue to evolve existing solutions and to create successful new solutions. We may introduce
significant changes to our existing solutions or acquire or introduce new and unproven products and services, including
using technologies or entering markets or industries in which we have little or no experience. For example, as
Government Solutions customers increase their requirements related to data security, privacy and IT architecture, we
may be unable to develop new solutions to keep up with increasing requirements. The failure of any new or enhanced
solution to achieve customer adoption or our failure to otherwise successfully monetize our development efforts could
have a material adverse effect on our business, financial condition and results of operations. Further, changes to the
hardware solutions we offer to our government customers may require certification by a government agency, and
failure to achieve such certification may result in an inability to operate photo enforcement systems in a particular
jurisdiction. Any failure to evolve existing solutions or create new successful solutions could have a material adverse
effect on our business, financial condition and results of operations.
We regularly pursue contracts and contract renewals that require competitive bidding, which can involve
substantial costs and could have a material adverse effect on our business.
Many of the contracts and renewals for which we bid, particularly those for certain larger government customers,
are extremely complex and require the investment for significant resources in order to prepare accurate bids and
proposals. Further, a significant percentage of new customer growth opportunities and contract renewals or extensions
in our business segments are only accessible through competitive bidding. Competitive bidding imposes substantial
costs and presents several risks, including significant time and effort and the commitment of resources, regardless of
whether the job is ultimately won. We may also be unable to meet the requirements of a solicitation or may have to
incur substantial costs to be able to do so. These and other unanticipated costs related to the competitive bidding
process, including advancing or defending bid protests, and any failure to win renewals or new customer accounts
through the competitive bidding process, could have a material adverse effect on our business, financial condition and
results of operations.
Risks Related to Our Acquisitions
Our inability to successfully implement our acquisition strategy could have a material adverse effect on our
business.
We have grown in large part as a result of our acquisitions, and we anticipate continuing to grow in this manner.
Although we expect to regularly consider additional strategic transactions in the future, we may not identify suitable
opportunities or, if we do identify prospects, it may not be possible to consummate a transaction on acceptable terms.
Antitrust or other competition laws may also limit our ability to acquire or work collaboratively with certain businesses
or to fully realize the benefits of a prospective or completed acquisition. Furthermore, a significant change in our
business or the economy, an unexpected decrease in our cash flows or any restrictions imposed by our indebtedness
may limit our ability to obtain the necessary capital or otherwise impede our ability to complete a transaction.
Regularly considering strategic transactions can also divert management’s attention and lead to significant due
diligence and other expenses regardless of whether we pursue or consummate any transaction. Failure to identify
suitable transaction partners and to consummate transactions on acceptable terms, as well as the commitment of time
and resources in connection with such transactions, could have a material adverse effect on our business, financial
condition and results of operations.
The inability to successfully integrate our recent or future acquisitions could have a material adverse effect on our
business.
We have integrated, and may in the future integrate, certain acquired businesses into our existing operations,
which requires significant time and exposes us to significant risks and additional costs. Further, we may have difficulty
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integrating the operations, systems, controls, procedures or products of such acquired businesses and may not be able
to do so in a timely, efficient and cost-effective manner.
These difficulties could include:
•
•
•
•
•
•
combining management teams, strategies and philosophies;
merging or linking different accounting and financial reporting systems and systems of internal controls;
assimilating personnel, human resources and other administrative departments and potentially contrasting
corporate cultures;
merging computer, technology and other information networks and systems;
disrupting our relationship with or losing key customers, suppliers or personnel; and
interference with, or loss of momentum in, our ongoing business or that of the acquired business.
Any integration-related issues could cause significant disruption to our business, divert the attention of
management and lead to substantial additional costs and delays. For example, between February 2022 and April 2022,
our Audit Committee devoted significant time and resources into an accounting investigation of Redflex Holdings
Limited, a recently acquired subsidiary, and we were unable to timely file our Annual Report on Form 10-K for the
fiscal year ended December 31, 2021. Our inability to successfully integrate acquired businesses could have a material
adverse effect on our business, financial condition and results of operations.
Any failure to realize the anticipated benefits of an acquisition, including unanticipated expenses and liabilities
related to acquisitions, could have a material adverse effect on our business.
We pursue each acquisition with the expectation that the transaction will result in various benefits, including
growth opportunities and synergies from increased efficiencies. However, we may not realize some or all of the
anticipated benefits of our acquisitions within our anticipated timeframes or at all. Furthermore, we may experience
increased competition that limits our ability to expand our business, we may not be able to capitalize on expected
business opportunities, and general industry and business conditions may deteriorate. Acquisitions also expose us to
significant risks and costs, and business and operational overlaps may lead to hidden costs. These costs can include
unforeseen pre-acquisition liabilities, the impairment of customer relationships or acquired assets such as goodwill,
or exposure to oversight, operational and business control risks associated with a newly acquired business. We may
also incur costs and inefficiencies to the extent an acquisition expands the industries, markets or geographies in which
we operate due to our limited exposure to and experience in a given industry, market or region. Significant acquisitions
may also require us to incur additional debt to finance the transactions, which could limit our flexibility in using our
cash flow from operations for other purposes. Acquisitions often involve post-transaction disputes with the
counterparty regarding a number of matters, including disagreements over the amount of a purchase price or other
working capital adjustment or disputes regarding whether certain liabilities are covered by the indemnification
provisions of the transaction agreement. We may underestimate the level of certain costs or the exposure we may face
as a result of acquired liabilities. If any of these or other factors limit our ability to achieve the anticipated benefits of
a transaction, or we encounter other unexpected transaction-related costs and liabilities, our business, financial
condition and results of operations could be materially and adversely affected.
Risks Related to Data Privacy and Cybersecurity
A failure in or breach of our networks or systems, including as a result of cyber-attacks, could have a material
adverse effect on our business.
We act as a trusted business partner in both front office and back office platforms, interacting with our customers
and other third parties. Our customers include large, multinational corporations and government agencies who depend
upon our operational efficiency, non-interruption of service, and accuracy and security of information. We receive,
process, transmit and store substantial volumes of information relating to identifiable individuals, both in our role as
a back-end or direct-to-consumer service provider and as an employer, and receive, process and implement financial
transactions, and disburse funds, which requires us to receive debit and credit card information. We also use third-
party providers such as subcontractors, software vendors, utility providers and network providers, upon whom we rely
to offer our products, services and solutions. As a result of these and other aspects of our business, the integrity,
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security and accuracy of our systems and information technology, and that of the third parties with which we interact,
including our customers and other government agencies with which we work, are extremely important.
Our cybersecurity and processing systems, as well as those of the third parties with which we interact, may be
damaged, disrupted or otherwise breached for a number of reasons, including power outages, computer and
telecommunication failures, computer viruses, malware or other destructive software, internal design, manual or usage
errors, cyber-attacks, terrorism, workplace violence or wrongdoing, catastrophic events, natural disasters and severe
weather conditions. Our visibility and role as a processor of transactions containing personally identifiable information
may also put us at a greater risk of being targeted by hackers. In the normal course of our business, we have been the
target of malicious cyber-attack attempts.
In addition, numerous and evolving cybersecurity threats, including advanced and persistent cyber-attacks,
phishing and social engineering schemes could compromise our systems and the confidentiality, availability and
integrity of data in our systems, as well as the systems and data of the third parties with which we interact. The security
measures and procedures we and the third parties with which we interact have in place to protect sensitive consumer
data and other information may not be successful or sufficient to counter all data breaches, cyber-attacks, or system
failures. Further, employee error or malfeasance, faulty password management or other irregularities may result in a
defeat of security measures or a system breach. Although we devote significant resources to our cybersecurity
programs and have implemented security measures to protect our systems and data, and to prevent, detect and respond
to data security incidents, in each case that we believe are reasonable and appropriate, these efforts, and the efforts of
third parties with which we interact, may not prevent these or other threats.
Moreover, because the techniques used to obtain unauthorized access, or to disable or degrade systems change
frequently, have become increasingly more complex and sophisticated, and may be difficult to detect for periods of
time, we and the third parties with which we interact may not anticipate these acts or respond adequately or timely.
As these threats continue to evolve and increase, we may be required to devote significant additional resources in
order to modify and enhance our security controls and to identify and remediate any security vulnerabilities or
diligencing those of third parties.
If we are sued in connection with any data security breach or system failure, we could be involved in protracted
litigation. In addition, a breach could lead to unfavorable publicity and significant damage to our brand, the loss of
existing and potential customers, allegations by customers that we have not performed or have breached our
contractual obligations, or decreased use and acceptance of our solutions. A breach or failure may also subject us to
additional regulations or governmental or regulatory scrutiny, which could result in significant compliance costs, fines
or enforcement actions, or potential restrictions imposed by regulators on our ability to operate our business. A security
breach would also likely require us to devote significant management and other resources to address the problems
created by the security breach. Any of the foregoing could have a material adverse effect on our business, financial
condition and results of operations.
We are subject to laws and regulations of the United States and foreign jurisdictions relating to personal
information, privacy and data security, and failure to comply with these laws and regulations, whether or not
inadvertent, could have a material adverse effect on our business.
Personal information is used both as part of our business and in our role as an employer. In addition, as part of
our Government Solutions, Commercial Services and Parking Solutions businesses, we process other data which may
be considered personal information or sensitive personal information in certain jurisdictions, such as photographs and
video recordings. As a result, we are subject to various laws and regulations regarding personal information, privacy
and data security, including those promulgated by the United States federal government and its agencies, and state,
local and foreign governments, agencies, and public authorities. Our personal information handling also is subject to
our published privacy policies and notices, contractual obligations and industry standards.
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Laws, regulations and industry standards relating to privacy are rapidly evolving, can be subject to significant
change and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and
sanctions. These laws and regulations may also be subject to new or different interpretations. For example, in June
2018, California enacted the CCPA, which took effect on January 1, 2020. The CCPA was amended and expanded
(including to apply to employee and business-to-business data) by the California Privacy Rights Act, which took effect
on January 1, 2023. The CCPA created several new obligations for companies which process personal information. It
also gives California residents expanded rights to access, delete and obtain a copy of their personal information; opt
out of certain personal information disclosures; and receive detailed information about how their personal data is
processed. The law provides for civil penalties against companies that fail to comply.
Several other states have enacted privacy laws, including Virginia (effective January 1, 2023); Colorado and
Connecticut (both effective July 1, 2023); Utah (effective December 31, 2023); Oregon, Texas, and Florida (all
effective July 1, 2024); Montana (effective October 1, 2024); Delaware and Iowa (both effective January 1, 2025);
New Jersey (effective January 16, 2025); Tennessee (effective July 1, 2025); and Indiana (effective January 1, 2026).
Additional states have introduced privacy bills, and Congress has considered several privacy bills at the federal level.
Regulations implementing the CCPA and Colorado have also been published, though many questions remain as to
how all of the new statutes will be interpreted and enforced. In addition, the FTC uses its consumer protection authority
to initiate enforcement actions against companies relating to their use and disclosure of personal information,
particularly in response to actual or perceived unfair or deceptive acts or practices.
Various U.S. state laws and regulations may also require us to notify affected individuals and state agencies in
the event of a data breach involving personal information. Penalties for failure to adequately protect personal
information, notify as required, or provide timely notice vary by jurisdiction. In the United States, most state data
breach notification laws consider violations to be unfair or deceptive trade practices and give the relevant state
attorneys general the authority to levy fines or bring enforcement actions. Some laws, such as the CCPA, also grant
affected individuals a private right of action for certain data breaches. Class action lawsuits against companies which
experience a data breach involving personal information are also common. Foreign laws concerning personal
information, privacy and data security may be more restrictive and burdensome than those of the United States. Given
that data is highly mobile and transferable, many data protection and privacy laws of foreign nations seek to have wide
extraterritorial jurisdiction over conduct occurring outside geographical boundaries of the relevant jurisdiction. For
example, on May 25, 2018, the GDPR replaced the 1995 Data Protection Directive. The GDPR extends the scope of
E.U. data protection law to non-E.U. companies processing data of E.U. residents when certain conditions are satisfied.
The GDPR contains numerous, more stringent requirements and changes from prior E.U. law, including more robust
privacy and compliance obligations for both companies and their service providers, greater rights for individuals,
heavier documentation requirements for data protection compliance programs, restrictions on transfers of personal
data to non-E.U. countries, and prompt notice of data breaches to data subjects and supervisory authorities in certain
circumstances. The GDPR fine framework can be up to 20 million Euros, or up to 4% of the company’s total global
turnover of the preceding fiscal year, whichever is higher. Further, our customers, through contractual requirements,
could require us to comply with certain of these stringent requirements regardless of whether our business is actually
subject to the GDPR.
The costs could be high and deadlines short for compliance with these privacy- and data security-related laws,
regulations, contractual requirements and industry standards, each of which may limit our ability to compete for new
business, do business with certain government agencies, including our existing customers, or continue to access certain
data, and may limit the use or adoption of our smart mobility technology solutions and services, reduce overall demand
for our solutions and services, slow the pace at which we generate revenue, subject us to fines or penalties, or cause
us to breach contractual commitments to our customers. As these laws, regulations, and standards continue to develop
in the United States and internationally, we may be required to expend significant time and resources in order to update
existing processes or implement additional mechanisms as necessary to ensure compliance. Moreover, if our policies,
procedures or measures relating to these issues fail to comply, or regulators assert we have failed to comply, with
applicable laws, regulations or industry standards, we may be subject to governmental enforcement actions, litigation,
regulatory investigations, fines, algorithmic disgorgement,
the inability to use previously-collected personal
information or the inability to collect new personal information, other penalties and negative publicity, and our
application providers, customers and partners may lose trust in or stop doing business with us entirely. We expect that
there will continue to be new proposed laws, regulations and industry standards concerning personal information,
privacy and data retention in the United States, the E.U. and other jurisdictions, and we cannot yet determine the
impact of such future laws, regulations and industry standards may have on our business. Any of the foregoing could
have a material adverse effect on our business, financial condition and results of operations.
17
We are subject to domestic and foreign laws relating to processing certain financial transactions, including debit
or credit card transactions, and failure to comply with those laws, even if inadvertent, could have a material adverse
effect on our business.
We process, support and execute financial transactions as part of our business and disburse funds on behalf of
certain of our customers. This activity includes receiving debit and credit card information, processing payments for
and due to our customers and disbursing funds on payment or debit cards to payees of our customers. As a result, we
may be subject to numerous U.S. federal and state and foreign jurisdiction laws and regulations, including the
Electronic Fund Transfer Act, the Currency and Foreign Transactions Reporting Act of 1970 (commonly known as
the Bank Secrecy Act) and the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”).
We have implemented policies and procedures to preserve and protect credit card and other payment data against
loss, corruption, misappropriation caused by systems failures, unauthorized access or misuse. Notwithstanding these
policies and procedures, we could be subject to liability claims by individuals and customers whose data resides in
our databases for the misuse of that information. If we fail to meet appropriate compliance levels, this could negatively
impact our ability to utilize credit cards as a method of payment, or collect and store credit card information, which
could disrupt our business. Failure to comply with these laws may subject us to, among other things, additional costs
or changes to our business practices, liability for monetary damages, fines or criminal prosecution, unfavorable
publicity, restrictions on our ability to process and support financial transactions and allegations by customers that we
have not performed our contractual obligations, any of which could have a material adverse effect on our business,
financial condition and results of operations.
Risks Related to Human Capital Management
We depend on the services of key executives and any inability to attract and retain key management personnel
could have a material adverse effect on our business.
Our future success depends upon the continued services of our executive officers, including our Chief Executive
Officer and Chief Financial Officer, who have critical experience and relationships that we rely on to implement our
business plan and growth strategy. Additionally, as our business grows, we may need to attract and hire additional
management personnel. We have employment agreements with some members of senior management that include
non-competition provisions; however, we cannot prevent our executives from terminating their employment and may
not be able to fully enforce non-competition provisions limiting former executives or key personnel from competing
with us following any departure. Moreover, we do not carry “key-man” life insurance on the lives of our executive
officers, employees or advisors. Our ability to retain our key management personnel or to identify and attract additional
management personnel or suitable replacements should any members of the management team leave or be terminated
is dependent on a number of factors, including the competitive nature of the employment market and our industry.
Any failure to retain key management personnel or to attract additional or suitable replacement personnel could cause
uncertainty among investors, employees, customers and others concerning our future direction and performance and
could have a material adverse effect on our business, financial condition and results of operations.
A failure to attract and retain necessary skilled personnel and qualified subcontractors could have a material
adverse effect on our business.
Our business depends on highly skilled technical, managerial, engineering, sales, marketing and customer
support personnel and qualified and competent subcontractors. Competition for these personnel is intense. Any failure
to attract, hire, assimilate in a timely manner and retain and motivate key qualified personnel, particularly software
development, product development, analytics and other technical personnel, or inability to contract with qualified,
competent subcontractors, could impair our success. Additionally, certain portions of our Government Solutions
operations are dependent on employees and subcontractors who are subject to a collective bargaining agreement.
When the collective bargaining agreement becomes subject to renegotiation or if we face union organizing drives, any
disagreement between us and the union on important issues may lead to a strike, work slowdown or other job actions
in one or more locations we serve. A strike, work slowdown or other job action could disrupt our services, resulting
in reduced revenues or contract cancellations. State or local law in some jurisdictions requires that subcontractors for
our Government Solutions segment are certified by the jurisdiction, and the failure on the part of our subcontractors
to obtain and maintain such certification could impact their ability to perform services for us. Further, some
jurisdictions require that we subcontract a certain percentage of our work to certified businesses and failure to do so
may decrease our competitiveness in the marketplace, lead to breach of contract claims or result in having to refund
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fees paid for failing to achieve committed targets. Additionally, our acquisition activity could increase the challenge
of retaining our key employees and subcontractors and those of the acquired businesses. The loss of any key technical
employee or the termination of a key subcontractor relationship, and any inability to identify suitable replacements or
offer reasonable terms to these candidates, could have a material adverse effect on our business, financial condition
and results of operations.
Risks Related to our International Operations
Our operations in international markets expose us to additional risks, and failure to manage those risks could have
a material adverse effect on our business.
We have subsidiaries in various international markets that include but are not limited to the United Kingdom,
the Netherlands, France, Ireland, Spain, Australia, Canada, Hungary and India. The success of our business depends,
in part, on our ability to successfully manage these foreign operations. Our international operations subject us to risks
that could increase expenses, restrict our ability to operate, result in lost revenues or otherwise materially and adversely
affect our business, including:
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political, social, and economic instability, including European sovereign debt issues and tightening of
government budgets;
wars, civil unrest, acts of terrorism and other conflicts;
increased complexity and costs of managing or overseeing foreign operations, including adapting and
localizing our services to specific regions and countries and relying on different third-party service
providers;
complying with tariffs, trade restrictions, and trade agreements and any changes thereto;
foreign exchange and other restrictions and limitations on the transfer or repatriation of funds;
adverse tax consequences;
fluctuations in currency exchange rates;
complying with varying legal and regulatory environments, and managing public perception, in multiple
foreign jurisdictions, including with respect to data and consumer privacy and payment processing, labor
matters and VAT, and unexpected changes in these laws, regulatory requirements, and the enforcement
thereof; and
limited protection of our intellectual property and other assets as compared to the laws of the United
States.
We have limited or no control over these and other factors related to international operations and our strategies
to address these risks may not correctly anticipate any problems that arise or be successful in expanding our solutions
from the United States into new markets. Any failure to successfully manage these and other similar risks could have
a material adverse effect on our business, financial condition and results of operations.
Our growth strategy is, in part, dependent on successfully implementing our international expansion strategy.
Our growth strategy includes expanding our global footprint, which may involve moving into regions and
countries beyond those in which we currently operate. In order to achieve widespread acceptance in new markets we
may enter, we may need to develop new products and services or tailor our existing products and services to that
market’s unique customs, cultures and standards. Management of these and any future international subsidiaries may
divert our resources and require significant attention from management. In addition to the risks inherent in conducting
international business, expanding internationally with new and existing customers poses additional risks, including:
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lack of acceptance of our products and services;
tax issues, including administration of value-added tax, restrictions on repatriating earnings, and with
respect to our corporate operating structure and intercompany arrangements;
our ability to adapt our marketing and selling efforts to different cultures and customers;
a different competitive environment, including a number of smaller competitors and a more fragmented
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business model, as well as competition from other market participants;
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our ability to obtain and protect intellectual property rights to operate successfully in each territory due to
pre-existing third-party intellectual property rights; and
an unfamiliar regulatory environment, including different local, provincial and national regulations.
If we are unable to effectively manage these risks, our relationships with our existing and prospective customers,
strategic partners and employees and our operations outside the United States may be adversely affected.
In many cases, we will have limited or no experience in a particular region or country where we intend to launch
operations. Moreover, learning the customs and cultures, particularly with respect to consumer preferences, differing
technology standards and language barriers, is a difficult task. Our failure to do so effectively could slow our growth
in those regions or countries. In many of these markets, long-standing relationships between potential customers and
their local partners and protective regulations, including local content requirements and approvals, and disparate
networks and systems used by each country, will create barriers to entry. Difficulties in foreign financial markets and
economies and of foreign financial institutions, particularly in emerging markets, could also adversely affect demand
in the affected areas. For this strategy to be successful, we must generate sufficient revenues and margins from the
new markets to offset the expense of the expansion. Moreover, as the scale of our international operations increases,
we will be more susceptible to the general risks related to our existing international operations discussed above. If we
are unable to further expand internationally or if we are unable to effectively and efficiently manage the complexity
of our expanded operations and compete in these new regions and countries, our business, financial condition and
results of operations could be adversely affected.
Failure to comply with anticorruption and anti-money laundering laws, including the U.S. Foreign Corrupt
Practices Act and similar laws associated with our activities outside of the United States, could have a material
adverse effect on our business.
Our operations subject us to anticorruption and other similar laws and regulations of multiple jurisdictions, both
within the United States and internationally, which are often evolving, including the Foreign Corrupt Practices Act
(the “FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the Patriot Act,
and comparable foreign anti-bribery and anti-money laundering laws and regulations, including the United Kingdom
Bribery Act of 2010. Our Government Solutions business is subject to a number of international, federal, state and
local laws and regulations regarding similar matters. These laws and regulations prohibit companies and their
employees and third-party intermediaries from authorizing, offering or providing, directly or indirectly, improper
payments or other benefits to government officials, political parties and private-sector recipients for the purpose of
obtaining or retaining business, directing business to any person or securing any advantage.
We use various third parties to conduct our business, both domestically and abroad, and we can be held liable
for the corrupt or illegal activities of our employees, representatives, contractors or subcontractors, partners, and
agents, those of the third parties with which we do business or those of any businesses we acquire, even if we do not
explicitly authorize such activities or if they occurred prior to our acquisition of the relevant business. Safeguards we
implement to discourage these practices may prove to be ineffective and any internal investigations may not uncover
any such practices that may exist. Violations of the FCPA or other applicable anti-bribery, anti-corruption, and anti-
money laundering laws by us or any of these third parties can result in severe criminal or civil sanctions, or other
liabilities or proceedings against us, including class action lawsuits, whistleblower complaints, enforcement actions
by the SEC, Department of Justice, and U.S. state and local and foreign regulators, adverse media coverage, non-
responsibility determinations by procuring agencies, and suspension or debarment from government contracts, any of
which could have a material adverse effect on our business, financial condition and results of operations.
Numerous countries, including a number of those in which we do business, have agreed to a statement in support
of Economic Co-operation and Development (“OECD”) model rules that propose a global minimum tax, which if
adopted, may increase and negatively impact our provision for income taxes.
Numerous countries, including a number of those in which we do business, have agreed to a statement in
support of the OECD model rules that propose a global minimum tax rate of 15% that would apply to multinational
companies with consolidated revenue above €750 million. Certain countries, including European Union member
states, have enacted or are expected to enact legislation to be effective as early as 2024, with widespread
implementation of a global minimum tax expected by 2025. As the legislation becomes effective in countries in which
we do business, our taxes could increase and negatively impact our provision for income taxes. We will continue to
monitor pending legislation and implementation by individual countries and evaluate the potential impact on our
business in future periods.
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Risks Related to Our Intellectual Property
Failure to acquire necessary intellectual property or adequately protect our intellectual property could have a
material adverse effect on our business.
Our success depends, in part, on our ability to protect and defend our intellectual property against infringement,
misappropriation and dilution. To protect our intellectual property rights, we rely on a combination of patent,
trademark, copyright, trade secret and unfair competition laws of the United States and other countries, as well as
contract provisions. We have registered certain patents and trademarks and have applications pending in the United
States and foreign jurisdictions for some inventions and trademarks, including the Verra Mobility word mark and
logo, for which some registrations have been granted and some applications are pending. However, not all of the
trademarks and inventions we currently use have been registered in all of the countries in which we do business, and
they may never be registered in all of those countries, and the applications we submit for these protections may not be
granted. While we make efforts to acquire rights to intellectual property necessary for our operations, these measures
may not adequately protect our rights in any given case, particularly in those countries where the laws do not protect
proprietary rights as fully as in the United States.
If we fail to acquire necessary intellectual property rights or adequately protect or assert our intellectual property
rights, competitors may manufacture and market similar products and services, or dilute our brands, which could
adversely affect our market share. It may be possible for third parties to reverse engineer, otherwise obtain, copy, and
use software or information that we regard as proprietary. In addition, our competitors may avoid application of our
existing or future intellectual property rights. Further, patent rights, copyrights and contractual provisions may not
prevent our competitors from developing, using or selling products or services that are similar to or address the same
market as, our products and services. Failure to obtain registrations for the Verra Mobility word mark or logo may
have a significant adverse impact on our brand. Moreover, some of our trademarks and services are descriptive or
include descriptive elements, which may make it difficult to enforce our rights or prevent others from adopting and
using similar marks. Competitive products and services could reduce the market value of our brands, products and
services, inhibit attracting new customers or maintaining existing customers, lower our profits, and could have a
material adverse effect on our business, financial condition and results of operations.
Our measures to monitor and protect our intellectual property may not be adequate to maintain or enforce our
patents, trademarks or other intellectual property rights.
Despite our efforts to monitor and protect our intellectual property, we may not be able to maintain or enforce
our patents, trademarks or other intellectual property rights. Unauthorized third parties may use our trademarks and
service marks, or marks that are similar thereto, to impinge on our goodwill, cause consumer confusion or dilute our
rights in the marks. We are aware of products, software and marks similar to our intellectual property being used by
other persons. Although we believe that such uses will not adversely affect us, further or currently unknown
unauthorized uses or other infringement of our trademarks or service marks could diminish the value of our intellectual
property and may adversely affect our business. Even where we have effectively secured protection for our intellectual
property, our competitors may challenge, infringe, misappropriate or dilute our intellectual property and our
employees, consultants, contractors, customers and suppliers may breach their contractual obligations not to reveal or
use our confidential information, including trade secrets. Additionally, defending or enforcing our intellectual property
rights and agreements, and seeking an injunction or compensation for infringements or misappropriations, could result
in expending significant resources and diverting management attention, which in turn may have a material adverse
effect on our business, financial condition and results of operations.
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We have been and may become subject to third-party infringement claims or challenges to the validity of our
intellectual property that could have a material adverse effect on our business.
We have faced, and may in the future face, claims for infringement, misappropriation or other violations of
intellectual property rights from intellectual property owners in areas where we operate or intend to operate, including
in foreign jurisdictions. Such claims may or may not be unfounded. Regardless of whether such claims have merit,
our image, brands, competitive position and ability to expand our operations into other jurisdictions may be harmed
and we may incur significant costs related to defense or settlement. If such claims were decided against us or a third
party we indemnify pursuant to license terms, we could be required to pay damages, develop or adopt non-infringing
products or services, or acquire a license to the intellectual property that is the subject of the asserted claim, which
license may not be available on acceptable terms or at all.
Defending or settling claims would require the expenditure of additional capital, and negative publicity could
arise, even if the matter was ultimately decided in our favor. Any of the foregoing could have a material adverse effect
on our business, financial condition and results of operations.
Risks Related to Our Indebtedness
Our substantial level of indebtedness could cause our business to suffer and incurring additional debt could
intensify debt-related risks.
We have a substantial amount of debt, including approximately $704.6 million outstanding under our first lien
term loan facility as of December 31, 2023. Additionally, pursuant to an indenture, VM Consolidated, Inc. (“VM
Consolidated”) issued an aggregate principal amount of $350 million in Senior Unsecured Notes (the “Senior Notes”)
due 2029. We may also incur substantial additional debt in the future to, among other things, finance our acquisition
strategy. We have the option to increase commitments under our revolving credit agreement by up to $50.0 million,
all of which would be secured. We also have the ability to draw an unlimited amount from our first lien term loan
facility, subject to the satisfaction of a maximum total net leverage ratio or minimum fixed charge coverage ratio, on
a pro forma basis, all of which will be secured. Our substantial debt could have important consequences, any of which
could be intensified if new debt is added to our current debt levels. For example, it could:
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increase our vulnerability to adverse economic and industry conditions;
limit our ability to obtain additional financing for future working capital, capital expenditures, strategic
acquisitions and other general corporate requirements;
expose us to interest rate fluctuations because the interest rate on certain of our debt is variable;
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt,
thereby reducing the availability of our cash flow for operations and other purposes;
make it more difficult for us to satisfy our general business obligations, including our obligations to our
lenders, resulting in possible defaults on and acceleration of such indebtedness;
limit our ability to refinance indebtedness or increase the associated costs;
require us to sell assets to reduce debt or influence our decision about whether to do so;
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate or prevent us from carrying out capital spending that is necessary or important to our growth
strategy and efforts to improve operating margins; and
place us at a competitive disadvantage compared to any competitors that have less debt or comparable
debt at more favorable interest rates and that, as a result, may be better positioned to withstand economic
downturns.
Restrictive covenants in the agreements governing our indebtedness could restrict our operating flexibility.
The agreements governing our indebtedness limit our ability to take certain actions. These restrictions may limit
our ability to operate our businesses, prohibit or limit our ability to enhance our operations or take advantage of
potential business opportunities as they arise and cause us to take actions that are not favorable to stockholders.
The agreements governing our indebtedness restrict, among other things and subject to certain exceptions, our
and our restricted subsidiaries’ ability to:
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pay dividends or other payments on capital stock;
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guarantee other obligations;
grant liens on assets;
make loans, acquisitions or other investments;
transfer or dispose of assets;
make optional payments or modify certain debt instruments;
engage in transactions with affiliates;
amend organizational documents;
engage in mergers or consolidations;
enter into arrangements that restrict the ability to pay dividends;
engage in business activities that are materially different from existing business activities;
change the nature of the business we conduct; and
designate subsidiaries as unrestricted subsidiaries.
Under our first lien term loan facility, we could be required to make periodic prepayments based on excess cash
flow (as defined by the first lien term loan agreement) thereby limiting the amount of cash flow that can be reinvested
in our business. For example, under our revolving credit facility, if availability goes below a certain threshold, we will
be required to comply with a minimum “consolidated fixed charge coverage ratio” financial covenant as calculated
therein. Moreover, if availability falls below a certain threshold for a specified number of business days, we could be
required to remit our cash funds to a dominion account maintained by the administrative agent to the revolving credit
facility, which would require daily review and approval of operating disbursements by the administrative agent.
Our ability to comply with the covenants and restrictions contained in agreements governing our indebtedness
may be affected by economic conditions and by financial, market and competitive factors, many of which are beyond
our control. Our ability to comply with these covenants in future periods will also depend substantially on the pricing
and sales volume of our products, our success at implementing cost reduction initiatives and our ability to successfully
implement our overall business strategy. The breach of any of these covenants or restrictions could result in a default
under one or more of the agreements governing our indebtedness that would permit the applicable lenders to declare
all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest. In that case, we
may be unable to borrow under our revolving credit agreement or otherwise, may not be able to repay the amounts
due under the agreements governing our indebtedness, and may not be able to make cash available by dividend, debt
repayment or otherwise. In addition, our lenders could proceed against the collateral securing that indebtedness. Any
of the foregoing could have serious consequences to our financial position, results of operations or cash flows and
could cause us to become bankrupt or insolvent.
The agreements governing our indebtedness contain cross default or cross acceleration provisions that may cause
all of the debt issued under those instruments to become immediately due and payable because of a default under
an unrelated debt instrument.
The agreements governing our indebtedness contain numerous covenants and require us, if availability goes
below a certain threshold, to comply with a minimum “consolidated fixed charge coverage ratio” financial covenant
as calculated in the revolving credit agreement. Our failure to comply with the obligations contained in these
agreements or other instruments governing our indebtedness could result in an event of default under the applicable
instrument, which could result in the related debt and the debt issued under other instruments (together with accrued
and unpaid interest and other fees) becoming immediately due and payable. In such event, we would need to raise
funds from alternative sources, which funds may not be available to us on favorable terms, on a timely basis or at all.
Alternatively, such a default could require us to sell assets and otherwise curtail our operations in order to pay our
creditors. These alternative measures could have a material adverse effect on our business, financial position, results
of operations or cash flows.
If we do not generate sufficient cash flows, we may not be able to service all of our indebtedness.
To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash, make
scheduled payments or to refinance our debt obligations depends on our successful financial and operating
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performance, which will be affected by a range of economic, competitive and business factors, many of which are
outside of our control.
If our cash flow and capital resources are insufficient to fund our debt service obligations or to repay
indebtedness when it matures, we may have to undertake alternative financing plans, such as refinancing or
restructuring our debt, selling assets or operations, reducing or delaying capital investments or seeking to raise
additional capital. We may not be able to refinance our debt and any refinancing of our debt could be at higher interest
rates and may require us to comply with more restrictive covenants that could further restrict our business operations
and our ability to make cash available for dividends and distributions and payments on our other debt obligations (if
any). Our ability to implement successfully any such alternative financing plans will be dependent on a range of
factors, including general economic conditions, the level of activity in mergers and acquisitions and capital markets
generally, and the terms of our various debt instruments then in effect. In addition, a significant portion of our
outstanding indebtedness is secured by substantially all of our assets including our subsidiaries’ assets, and any
successor credit facilities are likely to be secured on a similar basis. As such, our ability to seek additional financing
or our ability to make cash available for dividends and distributions and payments on our other debt obligations (if
any) could be impaired as a result of such security interests and the agreements governing such security interests.
Moreover, as a result of these security interests, the underlying assets would only be available to satisfy claims of our
general creditors or holders of our equity securities if we were to become insolvent to the extent the value of such
assets exceeded the amount of our indebtedness and other obligations.
Our inability to generate sufficient cash flow to satisfy our debt obligations or to refinance our obligations on
commercially reasonable terms could have a material adverse effect on our business, including our financial condition
and results of operations.
We may be unable to obtain additional financing to fund operations and growth.
We may require additional financing to fund our operations or growth, whether organic or through acquisitions.
Our failure to secure additional financing could have a material adverse effect on our continued development or
growth.
Risks Related to Our Class A Common Stock, Related Party Transactions and Organizational Documents
We cannot guarantee that our stock repurchase programs will enhance long-term shareholder value. Stock
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 stock repurchases. This provision applied to stock repurchases initiated after January 1, 2023.
In May 2022, our Board of Directors (our “Board”) authorized a share repurchase program for up to an aggregate
amount of $125 million of our outstanding shares of Class A Common Stock. We subsequently paid $50.0 million in
May 2022 to repurchase outstanding shares of our Class A Common Stock through an accelerated share repurchase
(“ASR”), and received an initial delivery of 2,739,726 shares. The final settlement occurred in August 2022, at which
time we received 445,086 additional shares. In addition, during the second and third quarters, we paid $6.9 million
and repurchased 445,791 shares of our Class A Common Stock through open market transactions. During the third
quarter of 2022, we discontinued open market repurchases and our Board authorized a second ASR for the remaining
availability under the share repurchase program. In August 2022, we paid $68.1 million for the second ASR, and
received an initial delivery of 3,300,000 shares of our Class A Common Stock. The final settlement of the ASR
resulted in the receipt of 943,361 additional shares.
In November 2022, 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 over an 18-month period in open
market transactions, ASRs or privately negotiated transactions. We paid $8.1 million to repurchase 449,432 shares of
our Class A Common Stock through open market transactions during the third quarter of fiscal year 2023, which we
subsequently retired. In September 2023, we used the remaining availability under the share repurchase program for
an ASR and paid approximately $91.9 million to receive an initial delivery of 4,131,551 shares of our Class A
Common Stock. The final settlement of the ASR resulted in the receipt of 534,499 additional shares.
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In October 2023, our Board authorized another 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
transactions, ASRs or privately negotiated transactions. The Company has not yet repurchased shares under this
repurchase program.
The timing, price, and quantity of purchases under the program 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 the program will enhance long-term stockholder value. These share repurchase program could affect the trading
price of our common stock and increase volatility. In addition, our repurchases under our share repurchase program
have diminished, and could continue to diminish, our cash reserves.
Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware
law, could impair a takeover attempt.
Our certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. We are also subject to anti-takeover provisions under Delaware
law, which could delay or prevent a change of control. Together, these provisions may make the removal of
management more difficult and may discourage transactions that otherwise could involve payment of a premium over
prevailing market prices for our securities. These provisions include:
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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect
director candidates;
a classified board of directors with three-year staggered terms, which could delay the ability of
stockholders to change the membership of a majority of our Board;
the requirement that directors may only be removed from the Board for cause;
the right of our Board to elect a director to fill a vacancy created by the expansion of our Board or the
resignation, death or removal of a director in certain circumstances, which prevents stockholders from
being able to fill vacancies on our Board;
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an
annual or special meeting of our stockholders;
a prohibition on stockholders calling a special meeting and the requirement that a meeting of stockholders
may only be called by members of our Board or our Chief Executive Officer, which may delay the ability
of our stockholders to force consideration of a proposal or to take action, including the removal of
directors;
the requirement that changes or amendments to certain provisions of our certificate of incorporation or
bylaws must be approved by holders of at least two-thirds of our Common Stock; and
advance notice procedures that stockholders must comply with in order to nominate candidates to our
Board or to propose matters to be acted upon at a meeting of stockholders, which may discourage or deter
a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors
or otherwise attempting to obtain control of us.
Our bylaws include a forum selection clause, which may impact the ability of our stockholders to bring actions
against us.
Subject to certain limitations, our bylaws provide that, unless we consent in writing to the selection of an
alternative forum, the Court of Chancery in the State of Delaware will be the sole and exclusive forum for any
stockholder (including a beneficial owner) to bring: (a) any derivative action or proceeding brought on our behalf; (b)
any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees or
our stockholders; (c) any action asserting a claim arising pursuant to any provision of the Delaware General Corporate
Law or our certificate of incorporation or bylaws; or (d) any action asserting a claim governed by the internal affairs
doctrine. In addition, our bylaws provide that unless we consent in writing to the selection of an alternative forum, the
federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause
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of action arising under the federal securities laws of the United States against us, our officers, directors, employees or
underwriters. These limitations on the forum in which stockholders may initiate action against us could create costs
or, inconvenience or otherwise adversely affect our stockholders’ ability to seek legal redress. If a court were to find
the forum-selection provisions contained in our bylaws to be unenforceable, we may incur additional costs associated
with resolving proceedings in forums other than the Court of Chancery in the State of Delaware and the federal district
courts of the United States.
Our only significant asset is our ownership interest in our operating subsidiaries and such ownership may not be
sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our Class A Common
Stock or satisfy our other financial obligations.
We have no direct operations and no significant assets other than our ownership interest in our operating
subsidiaries. We depend on our operating subsidiaries for distributions, loans and other payments to generate the funds
necessary to meet our financial obligations, including our expenses as a publicly traded company, to pay any dividends
with respect to our Class A Common Stock. The financial condition and operating requirements of our operating
subsidiaries may limit our ability to obtain cash from our operating subsidiaries. The earnings from, or other available
assets of, our operating subsidiaries may not be sufficient to pay dividends or make distributions or loans to enable us
to pay any dividends on our Common Stock or satisfy our other financial obligations.
The ability of our operating subsidiaries (other than subsidiaries which have been designated as unrestricted
pursuant to our ability to do so in certain limited circumstances) to make distributions, loans and other payments to us
for the purposes described above and for any other purpose is governed by the terms of the Debt Agreements and will
be subject to the negative covenants set forth therein. Any loans or other extensions of credit will be subject to the
investment covenants under 2021 Term Loan and the Revolver (each as defined below). The “Debt Agreements”
means, collectively: (i) the Amendment and Restatement Agreement No. 1 to First Lien Term Loan Credit Agreement,
dated as of March 26, 2021, among Greenlight Acquisition Corporation, a Delaware corporation; VM Consolidated,
Inc. (formerly known as ATS Consolidated, Inc.), a Delaware corporation; American Traffic Solutions, Inc., a Kansas
corporation; and Lasercraft, Inc., the subsidiary guarantors party thereto, a Georgia corporation; the lenders party
thereto from time to time; and Bank of America, N.A. as Administrative Agent and Collateral Agent; and (ii) the
Revolving Credit Agreement, dated as of March 1, 2018, among Greenlight Acquisition Corporation, a Delaware
corporation; VM Consolidated, Inc., a Delaware corporation; the other Borrowers (for this purpose only, as defined
therein) party thereto from time to time; the lenders party thereto from time to time; and Bank of America, as the
administrative agent and the collateral agent; and (iii) the Indenture governing VM Consolidated, Inc.’s 5.50% Senior
Notes Due 2029, among VM Consolidated, Inc., Wilmington Trust, National Association, and the Guarantors named
therein, dated as of March 26, 2021, in the case of each of the foregoing (i) and (ii), as amended or otherwise modified
from time to time.
Our failure to be current in our SEC filings could pose significant risks to our business, each of which could
materially and adversely affect our financial condition and results of operations.
Under the Exchange Act, the Company, as reporting company, is required to provide investors on a regular basis
with periodic reports that contain important financial and business information. Examples of these reports include the
annually filed Form 10-K and the quarterly filed Form 10-Q. The timely and complete submission of periodic reports
provides investors with information to help them make informed investment decisions. Our inability to timely file our
periodic reports with the SEC, as occurred with our Annual Report on Form 10-K for the fiscal year ended December
31, 2021, could have an adverse impact on our ability to, among other things, (i) access our credit facilities, (ii) attract
and retain key employees, and (iii) raise funds in the public markets, any of which could materially and adversely
affect our financial condition and results of operations.
26
If our Class A Common Stock is delisted from Nasdaq, a market for our securities may not continue, which would
adversely affect the liquidity and price of our securities.
The price of our securities may vary due to general economic conditions and forecasts, our general business
condition and the release of our financial reports. Additionally, if our securities are not listed on, or become delisted
from, Nasdaq for any reason, including for failure to maintain compliance with rules for continued listing on Nasdaq,
and are quoted on the OTC Bulletin Board or OTC Pink, an inter-dealer automated quotation system for equity
securities that is not a national securities exchange, the liquidity and price of our securities may be more limited than
if we were quoted or listed on Nasdaq or another national securities exchange.
Our business could be negatively affected as a result of actions of activist stockholders or others.
We may be subject to actions or proposals from stockholders or others that may not align with our business
strategies or the interests of our other stockholders. Responding to such actions can be costly and time-consuming,
disrupt our business and operations, and divert the attention of our Board, management, and employees from the
pursuit of our business strategies. Such activities could interfere with our ability to execute our strategic plan. Activist
stockholders or others may create perceived uncertainties as to the future direction of our business or strategy which
may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel and
potential guests, and may affect our relationships with current guests, vendors, investors, and other third parties. In
addition, a proxy contest for the election of directors at our annual meeting would require us to incur significant legal
fees and proxy solicitation expenses and require significant time and attention by management and our Board. The
perceived uncertainties as to our future direction also could affect the market price and volatility of our securities.
Risks Related to Our Vendors
Our reliance on third-party providers could have a material adverse effect on our business.
We rely heavily on third-party providers, including subcontractors, manufacturers, software vendors, software
application developers, and utility and network providers, to meet their obligations to us in a timely and high-quality
manner. For example, we rely on third parties such as the National Law Enforcement Telecommunications System,
Polk, DMVDesk, CVR and Dealertrack to provide a direct connection to state departments of motor vehicles (and
their European equivalents) and other governmental agencies with which we do not have direct relationships for the
driver and other information we use in our business. Our ability to offer our solutions would be materially affected if
this access was unavailable or materially restricted, or if the price we pay increased significantly. Our Government
Solutions business also relies on a number of third-party manufacturers, including camera manufacturers and
automated license plate recognition providers, and outsources some engineering, construction, maintenance, printing
and mailing, call center, image review and event processing work. Further, if one or more tolling authorities cancels
our accounts, or stops providing transponders and we are unable to obtain transponders through other sources, our
Commercial Services business would be affected. Our Parking Solutions business also relies on a number of domestic
and foreign third-party manufacturers in the production of our Pay Station, PARCS and PE hardware solutions, and
our inability to access third-party providers could have a material adverse effect on our business.
We also outsource a meaningful percentage of our software development work to third parties. Some of our
agreements with these third parties include termination rights, allowing the third party to terminate the arrangement
in certain circumstances. For example, the agreements with our third-party payment processors give them the right to
terminate the relationship if we fail to keep credit card chargeback and retrieval rates below certain thresholds. If any
of our third-party providers are unable or unwilling to meet their obligations to us, fail to satisfy our expectations or
those of our customers, including those imposed through flow-down provisions in prime contracts, or if they terminate
or refuse to renew their relationships with us on substantially similar terms, we may be unable to find adequate
replacements within a reasonable time frame, on favorable commercial terms or at all, and our business, financial
condition and results of operations could be materially and adversely affected.
While we perform some due diligence on these third parties and take measures to ensure that they comply with
applicable laws and regulations, we do not have an extensive screening or review process and ultimately cannot
guarantee our third-party providers will comply with applicable laws, the terms of their agreements or flow-down
requirements from our customers. Misconduct or performance deficiencies by any of our third-party providers may
be perceived as misconduct or poor performance by us, cause us to fall short on our contractual obligations to our
customers or harm our reputation, any of which could have a material adverse effect on our business, financial
condition and results of operations.
27
We rely on communications networks and information systems and any interruption could have a material adverse
effect on our business.
We rely heavily on the satisfactory performance and availability of our information technology infrastructure
and systems, including our websites and network infrastructure, to conduct our business. We rely on third-party
communications service and system providers to provide technology services and link our systems with our customers’
networks and systems, including a reliable network backbone with the necessary speed, data capacity and security.
We also rely on third-party vendors, including data center, bandwidth and telecommunications equipment providers.
A failure or interruption that results in the unavailability of any of our information systems or a major disruption of
communications between a system and the customers we serve could disrupt the effective operation of our solutions
and otherwise adversely impact our ability to manage our business effectively. We may experience system and service
interruptions or disruptions for a variety of reasons, including as the result of network failures, power outages, cyber-
attacks, employee errors, software errors, an unusually high volume of transactions, or localized conditions such as
fire, explosions or power outages or broader geographic events such as earthquakes, storms, floods, epidemics, strikes,
acts of war, civil unrest or terrorist acts. We have taken steps to mitigate our exposure to certain service disruptions
by investing in redundant or blended circuits, although the redundant or blended circuits may also suffer disruption.
Because we are dependent in part on independent third parties for the implementation and maintenance of certain
aspects of our systems and because some of the causes of system interruptions may be outside of our control, we may
not be able to remedy such interruptions in a timely manner, or at all. Any interruption or delay in or cessation of these
services and systems could significantly disrupt operations, impact customers, damage our reputation, result in
litigation, decrease the overall use and acceptance of our solutions, result in lost data and be costly, time consuming
and difficult to remedy, any of which could have a material adverse effect on our business, financial condition and
results of operations.
General Risk Factors
Uncertainty about current and future economic conditions and other adverse changes in general political
conditions.
Adverse and uncertain macroeconomic conditions, including higher interest rates, inflation, slower growth or
recession, barriers to trade, changes to fiscal and monetary policy, tighter credit, high unemployment, currency
fluctuations, and other events beyond our control, such as economic sanctions, natural disasters, pandemics,
epidemics, political instability, armed conflicts and wars, can materially adversely affect demand for our products and
services. In addition, consumer spending and activities may be materially adversely affected in response to financial
market volatility, negative financial news, conditions in the real estate and mortgage markets, declines in income or
asset values, energy shortages and cost increases, labor and healthcare costs and other economic factors, all of which
may have a negative affect on our business and results of operations.
Additionally, uncertainty about, or a decline in, global or regional economic conditions may have a significant
impact on our suppliers, manufacturers, logistics providers, distributors and other partners. Potential effects on our
suppliers and partners include financial instability, inability to obtain credit to finance operations, and insolvency. A
downturn in the economic environment can also lead to increased credit and collectability risk on our trade receivables,
the failure of derivative counterparties and other financial institutions, limitations on our ability to issue new debt,
reduced liquidity, and declines in the fair value of our financial instruments. These and other economic factors can
materially adversely affect our business, results of operations, financial condition and stock price.
If we fail to maintain an effective system of internal controls or identify a material weakness or significant
deficiency in our internal control over financial reporting, our ability to report our financial condition and results
of operations in a timely and accurate manner could be adversely affected, investor confidence in our company
could diminish, and the value of our securities may decline.
As a public company, we are required to comply with Section 404 of the Sarbanes Oxley Act of 2002 (“SOX”),
which requires, among other things, that companies maintain disclosure controls and procedures to ensure timely
disclosure of material information, and that management reviews the effectiveness of those controls on a quarterly
basis.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements
will not be prevented or detected on a timely basis. While we continually undertake steps to improve our internal
28
control over financial reporting as our business changes, we may not be successful in making the improvements and
changes necessary to be able to identify and remediate control deficiencies or material weaknesses on a timely basis.
During fiscal year 2023, we identified a material weakness in our internal controls over financial reporting
related to the lack of information technology general controls to prevent the risk of management override, which we
are currently working to remediate as further discussed in “Controls and Procedures” in Part II, Item 9A of this Annual
Report.
Additionally, during fiscal year 2021, we identified material weaknesses in our internal controls over financial
reporting related to: (i) the monitoring and control activities over the acquisition of Redflex Holdings Pty Ltd. due to
the lack of sufficient qualified accounting resources to timely identify and assess accounting implications of revenue
arrangements assumed as part of the acquisition and to provide adequate controls over the completeness and accuracy
of inputs used in accounting for the business combination; and (ii) the design and maintenance of certain revenue and
reporting controls related to a third-party application utilized in performing certain control activities and used in the
preparation of our consolidated financial statements. As a result of these material weaknesses, management concluded
that our internal control over financial reporting was not effective as of December 31, 2021.
During fiscal year 2021, we also identified a material weakness in our internal control over the operation of
certain controls over the review of the accounting for our warrants originally issued to Gores Sponsor II, LLC in a
private placement in connection with the IPO (the “Private Placement Warrants”) related to the April 12, 2021 SEC
Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition
Companies. This material weakness resulted in a material misstatement of our private placement warrant liability,
change in fair value of private placement warrant liability, additional paid-in capital and accumulated deficit as of
December 31, 2020 and 2019 and for years ended December 31, 2020, 2019 and 2018. We restated our consolidated
financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018
upon completing our management’s evaluation of the SEC Staff statement as a part of our remediation measures. As
a result of these material weaknesses, management concluded that our internal control over financial reporting was
not effective as of December 31, 2020. We completed the remediation measures related to the material weakness
relating to the accounting for warrants during fiscal year 2021.
We cannot be certain that we will be able to maintain adequate controls over our financial processes and
reporting in the future or that we will be able to comply with our obligations under Section 404 of SOX. If we fail to
maintain the adequacy of our internal controls, we cannot assure our stockholders that we will be able to conclude in
the future that we have effective internal control over financial reporting, and/or we may encounter difficulties in
implementing or improving our internal controls, which could harm our operating results or cause us to fail to meet
our reporting obligations. If we fail to maintain effective internal controls, investors may lose confidence in the
accuracy and completeness of our financial reports, the market price of our securities may be negatively affected, and
we could be subject to sanctions or investigation by regulatory authorities, such as the SEC or Nasdaq.
Continued changes in corporate governance requirements, policies and practices may impact our business.
Corporate governance, public disclosure and compliance practices continue to evolve based upon continuing
legislative action, SEC rulemaking and policy positions taken by large institutional stockholders and proxy advisors.
As a result, the number of rules, regulations and standards applicable to us may become more burdensome to comply
with, could increase scrutiny of our practices and policies by these or other groups and increase our legal and financial
compliance costs and the amount of time management must devote to governance and compliance activities. For
example, the SEC has recently adopted rules requiring that issuers provide significantly increased disclosures
concerning cybersecurity risk management, strategy, governance and incident reporting and adopt more stringent
executive compensation clawback policies. Increasing regulatory burdens and corporate governance requirements
could make it more difficult for us to attract and retain qualified members of our Board and qualified executive officers.
Litigation and other disputes and regulatory investigations could have a material adverse effect on our business.
From time to time, and as more discussed in the section entitled “Legal Proceedings,” we may be involved in
litigation and other disputes or regulatory investigations that arise in and outside the ordinary course of business. We
expect that the number, frequency and significance of these matters may increase as our business expands and we
grow as a company. Litigation, disputes, or regulatory investigations may relate to, among other things, intellectual
property, antitrust claims, commercial arrangements, negligence and fiduciary duty claims, vicarious liability based
29
upon conduct of individuals or entities outside of our control, including our third-party service providers, deceptive
trade practices, claims related to invoicing, personal injury claims, claims related to licensing, general fraud claims
and employment law claims, including compliance with wage and hour regulations and contractual requirements. An
adverse determination may result in liability to us for the claim and may also result in the imposition of penalties
and/or fines. Like other companies that handle sensitive personal and payment information, we also face the possibility
of allegations regarding employee fraud or misconduct. In addition to more general litigation, at times we are also 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 our RAC customers alleging faulty disclosures regarding our services.
As a public company, we may also be subject to securities class action and stockholder derivative lawsuits.
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 similar and other matters, including tax assessments.
These investigations can be commenced at the initiative of the governmental authority or as a result of
complaints by private citizens, regardless of whether the complaint has any merit. At times, we are also required to
obtain licensing and permitting, including with respect to matters such as general contracting, performance of
engineering services, performance of electrical work and performance of private investigative work. Although we
carry general liability insurance coverage, our insurance may not cover all potential claims to which we are exposed,
whether as a result of a dispute, litigation or governmental investigation, and it may not adequately indemnify us for
all liability that may be imposed.
Any potential claims against us or investigation into our business and activities, whether meritorious or not,
could be time consuming, result in significant legal and other expenses, require significant amounts of management
time and result in the diversion of significant operational resources. Class action lawsuits can often be particularly
burdensome given the breadth of claims, large potential damages and significant costs of defense. In the case of
intellectual property litigation and proceedings, adverse outcomes could include the cancellation, invalidation or other
loss of material intellectual property rights used in our business and injunctions prohibiting our use of business
processes or technology that is subject to third-party patents or other third-party intellectual property rights. Legal or
regulatory matters involving our directors, officers or employees in their individual capacities can also create exposure
for us because we may be obligated or may choose to indemnify the affected individuals against liabilities and
expenses they incur in connection with such matters. Regulatory investigations, including with respect to proper
licensing, payment of wages, procurement practices or permitting, can also lead to enforcement actions, fines and
penalties, the loss of a license or permit or the assertion of private litigation claims. Risks associated with these
liabilities are often difficult to assess or quantify and their existence and magnitude can remain unknown for significant
periods of time, making the amount of any legal reserves related to these legal liabilities difficult to determine and, if
a reserve is established, subject to future revision. Future results of operations could be adversely affected if any
reserve that we establish for a legal liability is increased or the underlying legal proceeding, investigation or other
contingency is resolved for an amount in excess of established reserves. Because litigation and other disputes and
regulatory investigations are inherently unpredictable, the results of any of these matters may have a material adverse
effect on our business, financial condition and results of operations.
Risks related to laws and regulations and any changes in those laws could have a material adverse effect on our
business.
We are subject to multiple, and sometimes conflicting, laws and regulations in the countries, states and localities
in which we operate. We are required to comply with certain SEC, Nasdaq and other legal or regulatory requirements.
Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and
costly.
In addition to the laws and regulations discussed elsewhere in these risk factors regarding data privacy, foreign
to laws regarding transportation safety, consumer protection,
operations and other matters, we are subject
procurement, anti-kickback,
labor and employment matters, competition and antitrust, payment processing,
intellectual property, environmental matters, and other trade-related laws and regulations. Certain of our operations
are also subject to oversight by the USDOT, the Federal Communications Commission, the U.S. Consumer Product
Safety Commission, and the Environmental Protection Agency, as well as comparable state and local agencies,
including departments of transportation, departments of motor vehicles, professional licensing authorities and offices
of inspector general. Our Government Solutions segment is also subject to laws related to the use of automated traffic
enforcement, the capture, access and retention of data and matters related to government contracting.
Recent years have seen a substantial increase in the number of new laws and regulations and the rate of change
and enforcement of many of these types of laws and regulations. We cannot predict the nature, scope or impact of
future laws, regulatory requirements or similar standards may have on our business, whether implemented through
changes to existing laws or the way they are administered or interpreted, or through entirely new regulations. Future
30
laws, regulations, and standards or any changed interpretation or administration of existing laws or regulations could
limit the continued use or adoption of one or more of our solutions, require us to incur additional costs, impact our
ability to develop and market new solutions or impact our ability to retain existing business and secure new business.
We may not be able to respond in a reasonable or cost-effective manner, or at all. Even if we make what we believe
are appropriate changes, there is no certainty those actions will comply.
Any alleged or actual violations of any law or regulation, change in law or regulation or changes in the
interpretation of existing laws or regulations may subject us to government scrutiny, including government or
regulatory investigations and enforcement actions, civil and criminal fines and penalties, and negative publicly, or
otherwise have a material adverse effect on our business, financial condition and results of operations.
Our failure to properly perform under our contracts or otherwise satisfy our customers could have a material
adverse effect on our business.
Our business model depends in large part on our ability to retain existing work and attract new work from
existing customers. If a customer is not satisfied with our products, services or solutions or the timeliness or quality
of our work, we may incur additional costs to address the problem, the profitability of that contract may be impaired,
we may experience payment delays, it could do harm to our reputation and hinder our ability to win new work from
prospective customers. Failure to properly transition new customers to our systems or existing customers to our
different systems, properly budget transition costs or accurately estimate contract costs could also result in delays and
general customer dissatisfaction. Many of our contracts may be terminated by the customer upon specified advance
notice without cause. Any failure to properly perform under our contracts or meet our customers’ expectations could
have a material adverse effect on our business, financial condition and results of operations.
Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or
other tax returns could adversely affect our financial condition and results of operations.
We are subject to income taxes in numerous countries, and our domestic tax liabilities are subject to the
allocation of expenses in differing jurisdictions. Our future effective tax rates could be subject to volatility or adversely
affected by a number of factors, including:
•
•
•
•
•
•
changes in the valuation of our deferred tax assets and liabilities;
expected timing and amount of the release of any tax valuation allowances;
tax effects of stock-based compensation;
costs related to intercompany restructurings;
changes in tax laws, regulations or interpretations thereof; or
lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and
higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.
In addition, we are subject to audits of our income, sales and other transaction taxes by U.S. federal and state
authorities, as well as foreign tax authorities. Outcomes from these audits could have an adverse effect on our financial
condition and results of operations.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Our Board recognizes the importance of maintaining the trust and confidence of our customers, clients, business
partners and employees. Our Board, through the Audit Committee, oversees our cybersecurity program as part of our
enterprise-wide approach to risk management. Our cybersecurity policies, standards, processes and practices are fully
integrated into our risk management approach and are based on recognized frameworks established by the National
Institute of Standards and Technology, the International Organization for Standardization and other applicable
industry standards. In general, we seek to address cybersecurity risks through a comprehensive, cross-functional
31
approach that is focused on preserving the confidentiality, security and availability of the information that we collect
and store by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity
incidents when they occur.
Risk Management and Strategy
As one of the critical elements of enterprise-wide approach to risk management, our cybersecurity program is focused
on the following key areas:
Governance: As discussed in more detail under the heading “Governance” below, our cybersecurity program is
led by our Vice President of Cybersecurity, who reports to our Chief Technology Officer, and is responsible for
risk assessments and maintaining our
publishing cybersecurity policies and standards, conducting annual
compliance. Our Chief Technology Officer leads our cybersecurity team and regularly reports to our Audit
Committee.
Collaboration: We have implemented a comprehensive, cross-functional approach to identifying, preventing
and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for
the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting
of such incidents can be made by management in a timely manner. We work with third-party firms to monitor our
cybersecurity environment and report findings to executive leadership, internal audit and the Audit Committee
regularly.
Technical Safeguards: We deploy technical safeguards that are designed to protect our information systems
from cybersecurity threats, including firewalls, intrusion prevention and detection systems, antimalware functionality
and access controls, which are evaluated and improved through vulnerability assessments, certifications, audits and
cybersecurity threat intelligence.
Incident Response and Recovery Planning: We have established and maintained comprehensive incident
response and recovery plans that fully address our response to a cybersecurity incident, and such plans are tested and
evaluated on a regular basis.
Third-Party Risk Management: We maintain a comprehensive, risk-based approach to identifying and
overseeing cybersecurity risks presented by third parties, including vendors, service providers and other external users
of our systems, as well as the systems of third parties that could adversely impact our business in the event of a
cybersecurity incident affecting those third-party systems. Additionally, we have in place insurance coverage designed
to provide coverage in connection with cybersecurity breaches, provided, however, that such insurance coverage may
be insufficient to cover all insured losses or all types of claims that may arise.
Education and Awareness: We provide regular, mandatory training for personnel regarding cybersecurity
threats as a means to equip our personnel with effective tools to address cybersecurity threats, and to communicate
our evolving information security policies, standards, processes and practices.
We engage in the periodic assessment and testing of our policies, standards, processes and practices that are
designed to address cybersecurity threats and incidents. These efforts include a wide range of activities, including
audits, assessments, tabletop exercises, threat modeling, vulnerability testing and other exercises focused on
evaluating the effectiveness of our cybersecurity measures and planning. We regularly engage third parties to perform
assessments on our cybersecurity measures,
including information security maturity assessments, audits and
independent reviews of our information security control environment and operating effectiveness. The results of such
assessments, audits and reviews are reported to our Board and Audit Committee by our Chief Technology Officer
based on materiality. We adjust our cybersecurity policies, standards, processes and practices as necessary based on
the information provided by these assessments, audits and reviews.
32
Governance
Our Board, through the Audit Committee, oversees our enterprise-wide approach to risk management, including
the risks arising from cybersecurity threats. Our Audit Committee regularly receives presentations and reports on
cybersecurity risks, which address a wide range of topics, including recent developments, evolving standards,
vulnerability assessments, third-party and independent reviews, the threat environment, technological trends and
information security considerations arising with respect to our peers and third parties. Our Audit Committee also
receives prompt and timely information regarding any cybersecurity incident that meets established reporting
thresholds, as well as ongoing updates regarding any such incident until it has been addressed. On an annual basis,
our Audit Committee discusses our Company’s approach to cybersecurity risk management with management.
Our Audit Committee, in connection with management led by our Chief Technology Officer and Vice President
of Cybersecurity, works collaboratively across our Company to implement a program designed to protect our
information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance
with our incident response and recovery plans. To facilitate the success of our cybersecurity risk management program,
multidisciplinary teams are deployed to address cybersecurity threats and respond to cybersecurity incidents. Through
ongoing communications with these teams, our Audit Committee monitors the prevention, detection, mitigation, and
remediation of cybersecurity threats and incidents in real-time and report such threats and incidents to management
when appropriate.
Our Vice President of Cybersecurity has served in various roles in technology leadership and cybersecurity for
over 20 years. Our Chief Technology Officer has served in various roles in technology and business leadership for
more than 29 years, including leading research and development for a division of 3M, a leader in designing and
developing innovative products. Our Chief Executive Officer, Chief Financial Officer and Chief Legal Officer each
hold undergraduate and/or graduate degrees in their respective fields, and each has experience managing risks at our
Company and at similar companies including risks arising from cybersecurity threats.
Cybersecurity Threats
As of the date of this Annual Report on Form 10-K, we do not believe that any risks from cybersecurity threats,
including as a result of previous cybersecurity incidents, are reasonably likely to have a material effect on us, our
condition.
business
operations,
financial
strategy,
results
flows
cash
of
or
Item 2. Properties
We lease all of the properties used in our business, including 108,956 square feet of office space for our
corporate headquarters in Mesa, Arizona. In addition to the corporate headquarters, we lease office space in various
locations for corporate and administrative purposes and multiple small warehouse locations. We do not consider any
of these properties to be material to our overall business.
33
Item 3. 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.
On November 2, 2020, PlusPass, Inc. (“PlusPass”) commenced an action in the United States District Court,
Central District of California, against Verra Mobility, The Gores Group LLC, Platinum Equity LLC and ATS
Processing Services, Inc., alleging civil violations of Section 7 of the Clayton Antitrust Act of 1914 and Sections 1
and 2 of the Sherman Act. In February 2024, Verra Mobility and PlusPass entered into a confidential business
arrangement pursuant to which Verra Mobility (i) acquired certain assets from PlusPass and (ii) fully and finally
resolved all litigation and disputes between the parties. Verra Mobility accrued $31.5 million for this matter at
December 31, 2023, which is presented within selling, general and administrative expenses in the consolidated
statements of operations for the year ended December 31, 2023. For more information, please refer to Note 18,
Subsequent Events, in “Item 8, Financial Statements and Supplementary Data.”
Item 4. Mine Safety Disclosures
Not applicable.
34
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Information
Our Class A Common Stock is currently quoted on Nasdaq under the symbol “VRRM”.
The following table sets forth the high and low sales prices per share of our Class A Common Stock as reported
on Nasdaq for the two most recent fiscal years:
Fiscal Year 2023
High
Low
Fiscal Year 2022
High
Low
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
$
$
$
$
17.87
19.82
21.54
23.29
$
$
$
$
13.48
16.22
17.04
18.62
$
$
$
$
18.13
16.73
17.31
17.60
$
$
$
$
14.10
12.70
14.92
12.76
Holders of Record
As of February 23, 2024, we had eight holders of record of our Class A Common Stock. Because many of our
shares of Class A Common Stock are held by brokers and other institutions on behalf of stockholders, we are unable
to estimate the total number of stockholders represented by these record holders.
Warrants
As of December 31, 2022, there were warrants outstanding to acquire 19,999,967 shares of our Class A Common
Stock including: (i) 6,666,666 Private Placement Warrants; and (ii) 13,333,301 warrants issued in connection with the
IPO (the “Public Warrants” and, together with the Private Placement Warrants, the “Warrants”). The Warrants had
a five-year term and expired in October 2023, unless they were redeemed or exercised prior to expiration.
During the fiscal year ended December 31, 2023, we processed the exercise of 19,999,333 Warrants in exchange
for the issuance of 16,273,406 shares of Class A Common Stock. There were 14,035,449 shares issued in exchange
for cash-basis warrant exercises resulting in the receipt of $161.4 million in cash proceeds as of December 31, 2023.
The remaining Warrant exercises were completed on a cashless basis. In addition, we redeemed 634 Public Warrants
at a price of $0.01 per warrant, as the last sale price of the Class A Common Stock was equal to or exceeded $18.00 per
share for 20 trading days within a 30 trading-day period before we sent the notice of redemption to the Warrant
holders. As of December 31, 2023, all Warrants were either exercised by the holder or redeemed by the Company.
Dividends
We have not paid any cash dividends on our Class A Common Stock to date. The payment of cash dividends in
the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial
condition. The payment of any cash dividends is within the discretion of our Board. In addition, our Board is not
currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Further, our
ability to declare dividends is limited by restrictive covenants in the agreements governing our indebtedness.
Securities Authorized for Issuance Under Equity Compensation Plans
The information required by this item with respect to our equity compensation plans is incorporated by reference
to our proxy statement for the 2024 annual meeting of stockholders.
35
Stock Performance Graph
Comparison of Cumulative Total Return
$250
$200
$150
$100
$50
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
Verra Mobility Corporation
S&P 500 Index
S&P Composite 1500 Data Processing & Outsourced Services Index
Russell 2000 Index
The graph above compares the cumulative total return on our Class A Common Stock with that of the S&P 500
Index, the S&P Composite 1500 Data Processing & Outsourced Services Index and the Russell 2000 Index. The period
shown commences on December 31, 2018 and ends on December 31, 2023, the end of our last fiscal year. The graph
assumes an investment of $100 in each of the above on the close of market on December 31, 2018. We did not declare
or pay any dividends on our Class A Common Stock during the comparison period. The stock performance graph is
not necessarily indicative of future price performance.
This performance graph is not deemed to be incorporated by reference into any of our other filings under the
Exchange Act, or the Securities Act, except to the extent we specifically incorporate it by reference into such filings.
Recent Sales of Unregistered Securities and Use of Proceeds
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
In November 2022, 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, ASR
or privately negotiated transactions, each as permitted under applicable rules and regulations, any of which may use
pre-arranged trading plans that are designed to meet the requirements of Rule 10b5-1 of the Exchange Act.
We paid $8.1 million to repurchase 449,432 shares of our Class A Common Stock through open market
transactions during the third quarter of fiscal year 2023, which we subsequently retired. On September 5, 2023, we
used the remaining availability under the share repurchase program for an ASR and paid approximately $91.9 million
to receive an initial delivery of 4,131,551 shares of our 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, we received
534,499 additional shares calculated using a volume-weighted average price over the term of the ASR agreement.
36
There were no repurchases of our Class A Common Stock during the three months ended December 31, 2023. We
paid a total of $100.0 million for share repurchases during the twelve months ended December 31, 2023.
On October 30, 2023, 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 over an 18-month period, in open
market, ASR or privately negotiated transactions. The level at which we repurchase depends on a number of factors,
including our financial condition, capital requirements, cash flows, results of operations, future business prospects and
other factors that our management may deem relevant. The timing, volume and nature of repurchases are subject to
market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any
time. We have not yet repurchased shares under this program.
Earn-Out under Merger Agreement
Under the Merger Agreement, the Platinum Stockholder was entitled to receive additional shares of Class A
Common Stock (the “Earn-Out Shares”) if the volume weighted average closing sale price of one share of Class A
Common Stock on the Nasdaq exceeded certain thresholds for a period of at least 10 days out of 20 consecutive trading
days at any time during the five-year period following the closing of the Business Combination (the “Common Stock
Price”).
The Earn-Out Shares were issued by the Company to the Platinum Stockholder upon meeting the below
Common Stock Price Thresholds (each, a “Triggering Event”):
Common Stock Price Thresholds
> $13.00 (a)
> $15.50 (a)
> $18.00 (a)
> $20.50 (a)
One-time Issuance of Shares
2,500,000
2,500,000
2,500,000
2,500,000
(a)All four tranches of Earn-Out Shares have been issued, as discussed below.
We estimated the original fair value of the contingently issuable shares to be $73.15 million, which was not
subject to future revisions during the five-year period discussed above. We used a Monte Carlo simulation option-
pricing model to arrive at our original estimate. Each tranche was valued separately giving specific consideration to
the tranche’s price target. The simulation considered volatility and risk-free rates utilizing a peer group based on a
five-year term. This was initially recorded as a distribution to shareholders and was presented as common stock
contingent consideration. Upon the occurrence of each Triggering Event, any issuable shares were transferred from
common stock contingent consideration to common stock and additional paid-in capital accounts.
On April 26, 2019, January 27, 2020, June 14, 2023, and July 26, 2023, the Triggering Events for the issuance
of the first, second, third, and fourth tranches of Earn-Out Shares occurred, as the volume weighted average closing
sale price per share of our Class A Common Stock as of that date had been greater than $13.00, $15.50, $18.00, and
$20.50, respectively, for 10 out of 20 consecutive trading days. These Triggering Events resulted in the issuance of an
aggregate 10,000,000 shares of our Class A Common Stock to the Platinum Stockholder and an increase in our
common stock and additional paid-in capital accounts of $73.15 million, with a corresponding decrease to the common
stock contingent consideration account. At December 31, 2023, there are no shares that remain contingently issuable
under the earn-out provided by the Merger Agreement.
Item 6. [Reserved]
37
Item 7. 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 the consolidated financial statements and the related notes that are included in Item 8 of Part II of this
Annual Report. This Item generally discusses fiscal years 2023 and 2022 items and year-to-year comparisons between
2023 and 2022. Discussions of 2021 items and year-to-year comparisons between fiscal years 2022 and 2021 are not
included, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2022, which specific discussions and comparisons are incorporated herein by reference.
Business 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 RACs, Direct Fleets and FMCs, as well as governments, universities, parking operators, healthcare facilities,
transportation hubs and other 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.
Executive Summary
We operate under long-term contracts and a highly 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 vision.
During the periods presented, we:
•
Increased total revenue by $75.7 million, or 10%, from $741.6 million in fiscal year 2022 to $817.3
million in fiscal year 2023. The increase was mainly due to service revenue resulting from increased
travel volume and higher adoption of the all-inclusive product offering in the Commercial Services
segment and expansion of speed programs in the Government Solutions segment.
• Generated cash flows from operating activities of $206.1 million and $218.3 million for fiscal years 2023
and 2022, respectively. Our cash on hand was $136.3 million as of December 31, 2023.
• Used existing cash on hand of $100.0 million during fiscal year 2023 to repurchase shares authorized
under a 2022 repurchase program, and authorized a new share repurchase program for $100.0 million
during October 2023. No shares have been repurchased under the new program.
•
Continued to focus on debt management and lowering our exposure to higher interest rates, and as a
result, made early repayments totaling $172.5 million on our 2021 Term Loan during fiscal year 2023.
Recent Events
Share Repurchases
We paid $8.1 million to repurchase 449,432 shares of our Class A Common Stock through open market
transactions during the third quarter of fiscal year 2023, which we subsequently retired. On September 5, 2023, we
used the remaining availability under the share repurchase program for an ASR and paid approximately $91.9 million
to receive an initial delivery of 4,131,551 shares of our 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, we received
534,499 additional shares calculated using a volume-weighted average price over the term of the ASR agreement. We
paid a total of $100.0 million for share repurchases during the twelve months ended December 31, 2023.
On October 30, 2023, 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 over the next eighteen months. The
level at which we repurchase depends on a number of factors, including our financial condition, capital requirements,
38
cash flows, results of operations, future business prospects and other factors that our management may deem relevant.
The timing, volume and nature of repurchases are subject to market conditions, applicable securities laws and other
factors and may be amended, suspended or discontinued at any time. We have not yet repurchased shares under this
program.
Warrants
During fiscal year 2023, we processed the exercise of 19,999,333 Warrants in exchange for the issuance of
16,273,406 shares of Class A Common Stock. There were 14,035,449 shares issued in exchange for cash-basis warrant
exercises resulting in the receipt of $161.4 million in cash proceeds in fiscal year 2023, and the remaining Warrant
exercises were completed on a cashless basis. In addition, there were 634 Public Warrants that were redeemed and as
a result, there are no outstanding Warrants as of the date hereof.
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, Direct Fleets 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, principally within the United States and Canada. Our international operations primarily
involve the sale of traffic enforcement products and related maintenance services.
• Our Parking Solutions segment provides an integrated suite of parking software, transaction processing
and hardware solutions to universities, municipalities, healthcare facilities and commercial parking
operators 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.
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,
subscription fees, professional services and citation processing services related to parking management solutions to
its customers.
39
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, acquisition costs 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.
Change in Fair Value of Private Placement Warrants. Change in fair value of private placement warrants
consists of liability adjustments related to the Private Placement Warrants originally issued to Gores Sponsor II, LLC
re-measured to fair value at the end of each reporting period, and the final re-measurement upon their exercise.
Tax Receivable Agreement Liability Adjustment. This consists of adjustments made to our tax receivable
agreement liability due to changes in estimates.
Loss (Gain) on Interest Rate Swap. Loss (gain) on interest rate swap relates to the changes associated with the
derivative instrument re-measured to fair value at the end of each reporting period and the related periodic cash
payments.
Loss (Gain) on Extinguishment of Debt. Loss (gain) on extinguishment of debt consists of losses from the write-
off of pre-existing original issue discounts and deferred financing costs associated with debt extinguishment, and any
gains recognized as a result of loan forgiveness.
Other Income, Net. Other income, net primarily consists of volume rebates earned from total spend on
purchasing cards, gains or losses on foreign currency transactions and other non-operating expenses.
40
Results of Operations
Fiscal Year 2023 Compared to Fiscal Year 2022
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.
($ in thousands)
Service revenue
Product sales
Total revenue
Cost of service revenue, excluding
depreciation and amortization
Cost of product sales
Operating expenses
Selling, general and administrative
expenses
Depreciation, amortization and
(gain) loss on disposal of assets, net
Total costs and expenses
Income from operations
Interest expense, net
Change in fair value of private
placement warrants
Tax receivable agreement liability
adjustment
Loss (gain) on interest rate swap
Loss (gain) on extinguishment of
debt
Other income, net
Total other expenses
Income before income taxes
Income tax provision
Net income
2023
$ 783,595
33,715
817,310
2022
$ 695,218
46,380
741,598
18,232
25,231
273,288
16,330
30,932
226,324
Year Ended December 31,
Percentage of Revenue
2022
2023
95.9%
4.1%
100.0%
2.2%
3.1%
33.4%
93.7% $
6.3%
100.0%
2.2%
4.2%
30.5%
Increase (Decrease)
2023 vs 2022
$
88,377
(12,665)
75,712
1,902
(5,701)
46,964
%
12.7%
(27.3)%
10.2%
11.6%
(18.4)%
20.8%
198,550
163,133
24.3%
22.0%
35,417
21.7%
113,195
628,496
188,814
86,701
140,174
576,893
164,705
69,372
13.9%
76.9%
23.1%
10.6%
18.9%
77.8%
22.2%
9.4%
(26,979)
51,603
24,109
17,329
(19.2)%
8.9%
14.6%
25.0%
24,966
(14,400)
3.1%
(2.0)%
39,366
(273.4)%
(3,077)
817
3,533
(11,123)
101,817
86,997
29,982
57,015
(720)
(996)
(3,005)
(12,654)
37,597
127,108
34,633
92,475
$
$
(0.4)%
0.1%
0.4%
(1.3)%
12.5%
10.6%
3.6%
7.0%
(0.1)%
(0.1)%
(2,357)
1,813
327.4%
(182.0)%
6,538
(0.4)%
1,531
(1.7)%
64,220
5.1%
(40,111)
17.1%
4.6%
(4,651)
12.5% $ (35,460)
(217.6)%
(12.1)%
170.8%
(31.6)%
(13.4)%
(38.3)%
Service Revenue. Service revenue increased by $88.4 million, or 12.7%, to $783.6 million for fiscal year 2023
from $695.2 million in fiscal year 2022, representing 95.9% and 93.7% of total revenue, respectively. The following
table depicts service revenue by segment:
($ in thousands)
Service revenue
Commercial Services
Government Solutions
Parking Solutions
Total service revenue
2023
2022
$ 372,786
344,034
66,775
$ 783,595
$ 325,971
307,639
61,608
$ 695,218
Year Ended December 31,
Percentage of Revenue
2022
2023
Increase (Decrease)
2023 vs 2022
$
%
45.6%
42.1%
8.2%
95.9%
44.0% $
41.4%
8.3%
93.7% $
46,815
36,395
5,167
88,377
14.4%
11.8%
8.4%
12.7%
Commercial Services service revenue includes mainly toll and violation management revenues from RACs and
FMCs. Commercial Services service revenue increased by $46.8 million, or 14.4%, from $326.0 million in fiscal year
2022 to $372.8 million in fiscal year 2023. This increase was primarily due to increased travel volume and related
tolling activity compared to the prior year which was still recovering from the COVID-19 pandemic, especially during
January and February of 2022. An increase in the volume of tolls incurred by RAC vehicles along with the continued
adoption of the all-inclusive fee structure, shifting from an incidental or daily usage rate by our large RAC customers,
41
contributed to a $41.7 million growth in revenue. In addition, the increase in enrolled vehicles as well as higher tolling
activity for our FMC customers contributed to a $9.9 million growth in revenue during the year ended December 31,
2023, compared to the same period in 2022. These increases were partially offset by lower revenue generated from
processing titles and registrations compared to the prior year.
Government Solutions service revenue includes revenue from speed, red-light, school bus stop arm and bus lane
photo enforcement systems. Service revenue increased by $36.4 million to $344.0 million in fiscal year 2023 compared
to $307.6 million in fiscal year 2022. The increase was primarily driven by the expansion of speed programs, as speed
is the largest product in this segment and contributed approximately $29.9 million to the service revenue increase this
year. The remaining increase is attributable to expansions across red-light, school bus stop arm and bus lane programs.
Parking Solutions service revenue increased by $5.2 million to $66.8 million in fiscal year 2023 compared to
$61.6 million in fiscal year 2022. The increase was primarily due to increased revenue from professional services,
software as a service product offerings and citation processing services related to parking management solutions.
Product Sales. Product sales decreased approximately $12.7 million year over year and were $33.7 million and
$46.4 million for fiscal years 2023 and 2022, respectively. The decrease was primarily due to a $14.7 million decrease
in product sales to Government Solutions customers, offset by a $2.0 million growth in 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 $16.3 million for fiscal year 2022 to $18.2 million for fiscal year 2023.
The $1.9 million increase was mainly due to increased recurring service costs in the Parking Solutions segment.
Cost of Product Sales. Cost of product sales decreased year over year and was $25.2 million and $30.9 million
for the fiscal years 2023 and 2022, respectively. The decrease was in line with the decrease in product sales in the
Government Solutions segment offset by an increase in cost in the Parking Solutions segment.
Operating Expenses. Operating expenses increased by $47.0 million, or 20.8%, from $226.3 million for fiscal
year 2022 to $273.3 million in fiscal year 2023. The increase in 2023 was primarily attributable to increases of $25.3
million in wages expense, $5.2 million for subcontractor costs, $5.2 million of recurring service costs, $4.8 million of
operational equipment costs and $4.1 million of information technology costs compared to the prior period. Operating
expenses as a percentage of total revenue increased from 30.5% to 33.4% in fiscal years 2022 and 2023, respectively.
The following table presents operating expenses by segment:
($ in thousands)
Operating expenses
Commercial Services
Government Solutions
Parking Solutions
Total operating expenses
before stock-based compensation
Stock-based compensation
Total operating expenses
2023
2022
$
83,828
168,736
18,236
$
72,328
139,961
12,905
270,800
2,488
$ 273,288
225,194
1,130
$ 226,324
Year Ended December 31,
Percentage of Revenue
2022
2023
Increase (Decrease)
2023 vs 2022
$
%
10.3%
20.6%
2.2%
33.1%
0.3%
33.4%
9.8% $
18.9%
1.7%
11,500
28,775
5,331
30.4%
0.1%
30.5% $
45,606
1,358
46,964
15.9%
20.6%
41.3%
20.3%
120.2%
20.8%
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $35.4
million to approximately $198.6 million for fiscal year 2023 compared to $163.1 million for fiscal year 2022. The
increase is primarily due to a $31.5 million legal settlement, $5.1 million in higher wage expenses, and increases in
other general expenses, which are partially offset by a decrease in $5.4 million of credit loss expense based on
customer payment trends in the last 12 months and lower stock-based compensation expense compared to prior year.
Selling, general and administrative expenses as a percentage of total revenue increased from 22.0% to 24.3% in fiscal
42
years 2022 and 2023, respectively. The following table presents selling, general and administrative expenses by
segment:
($ in thousands)
Selling, general and
administrative expenses
Commercial Services
Government Solutions
Parking Solutions
Corporate and other
Total selling, general and
administrative
expenses before stock-
based compensation
Stock-based compensation
Total selling, general and
administrative expenses
2023
2022
Year Ended December 31,
Percentage of Revenue
2022
2023
Increase (Decrease)
2023 vs 2022
$
%
$
61,607
62,597
23,988
35,370
$
56,105
61,235
27,104
3,156
7.5%
7.7%
2.9%
4.4%
7.5% $
8.3%
3.7%
0.4%
5,502
1,362
(3,116)
32,214
9.8%
2.2%
(11.5)%
1020.7%
183,562
14,988
147,600
15,533
22.5%
1.8%
19.9%
2.1%
35,962
(545)
24.4%
(3.5)%
$ 198,550
$ 163,133
24.3%
22.0% $
35,417
21.7%
Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain)
loss on disposal of assets, net, decreased by $27.0 million to $113.2 million for 2023 from $140.2 million for 2022.
This was mainly due to certain non-compete and developed technology intangible assets being fully amortized in
fiscal year 2023 as compared to the prior year. This decrease was partially offset by an increase in depreciation expense
in fiscal year 2023.
Interest Expense, Net. Interest expense, net increased by $17.3 million from $69.4 million in fiscal year 2022
to $86.7 million in fiscal year 2023. This increase is primarily attributable to higher interest rates in 2023 compared
to 2022. The average variable interest rate on the 2021 Term Loan was approximately 350 basis points higher for the
twelve months ended December 31, 2023 compared to the prior period. See “Liquidity and Capital Resources” below.
Change in Fair Value of Private Placement Warrants. We recorded a loss of $25.0 million and a gain of $14.4
million in fiscal years 2023 and 2022, respectively, related to the changes in fair value of our Private Placement
Warrants which were accounted for as liabilities on our consolidated balance sheets. The change in fair value was the
result of re-measurement of the liability at the end of each reporting period, and the final re-measurement upon their
exercise.
Tax Receivable Agreement Liability Adjustment. We recorded a gain of approximately $3.1 million in fiscal
year 2023 as a result of tax settlement adjustments related to a previous acquisition. We recorded a gain of $0.7 million
in fiscal year 2022 as a result of lower estimated state tax rates due to changes in apportionment.
Loss (Gain) on Interest Rate Swap. We recorded a $0.8 million loss in fiscal year 2023 of which approximately
$1.1 million related to the monthly cash payments on the interest rate swap net of $(0.3) million associated with the
derivative instrument re-measured to fair value at the end of the reporting period. We recorded a $1.0 million gain in
fiscal year 2022 associated with the derivative instrument re-measured to fair value at the end of the reporting period.
Loss (Gain) on Extinguishment of Debt. We recorded a $3.5 million loss on extinguishment of debt during the
year ended December 31, 2023 related to the write-off of pre-existing deferred financing costs and discounts in
connection with the early repayment of $172.5 million on the 2021 Term Loan. Gain on extinguishment of debt was
$3.0 million for the year ended December 31, 2022 related to the forgiveness of the PPP loan, discussed below.
Other Income, Net. Other income, net was $11.1 million in fiscal year 2023 compared to $12.7 million in fiscal
year 2022. The decrease was primarily due to a $5.6 million tax settlement payment related to a prior year acquisition,
partially offset by an increase in volume rebates earned from total spend on purchasing cards from increased tolling
and travel activity.
43
Income Tax Provision. Income tax provision was $30.0 million representing an effective tax rate of 34.5% for
fiscal year 2023 compared to $34.6 million, representing an effective tax rate of 27.2% for fiscal year 2022. Our
effective tax rate for 2023 was higher compared to 2022 primarily due to a decrease in pre-tax income in 2023
combined with the impact of permanent differences related to the mark-to-market adjustment on the Private Placement
Warrants and the adjustments to the carrying value of our tax receivable agreement liability.
Net Income. We had net income of $57.0 million for fiscal year 2023 compared to a net income of $92.5 million
for 2022. The $35.5 million decrease in net income was primarily due to the change in the fair value of the Private
Placement Warrants liability, legal settlement and higher interest expenses recorded in fiscal year 2023 and the other
statement of operations activity discussed above.
Liquidity and Capital Resources
Our principal sources of liquidity are cash flows from operations and the available borrowing under our
Revolver (defined below).
We believe that our existing cash and cash equivalents, cash flows provided by operating activities and our
ability to borrow under our Revolver (as defined below) 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. Should we pursue strategic acquisitions, we may
need to raise additional capital, which may be in the form of additional long-term debt, borrowing 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. As of December 31,
2023, we had $74.8 million available for borrowing, net of letters of credit, under our Revolver. Our cash on hand was
$136.3 million as of December 31, 2023.
We have incurred significant long-term debt as a result of acquisitions completed in prior years. We made early
repayments totaling $172.5 million on our 2021 Term Loan during the fiscal year ended December 31, 2023.
Subsequent to December 31, 2023, we amended the 2021 Term Loan agreement to refinance the entire outstanding
amount under the 2021 Term Loan. In connection with the amended 2021 Term Loan agreement, the interest rate was
reduced and the credit spread adjustment was eliminated. See Note 18, Subsequent Events, in Item 8, Financial
Statements and Supplementary Data, for additional information.
At December 31, 2023, the tax receivable agreement liability was approximately $53.5 million. We expect to
make payments of approximately $5.0 million per year for the next 11 years.
Share Repurchases
In November 2022, 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, ASR
or privately negotiated transactions, each as permitted under applicable rules and regulations, any of which may use
pre-arranged trading plans that are designed to meet the requirements of Rule 10b5-1 of the Exchange Act.
We paid $8.1 million to repurchase 449,432 shares of our Class A Common Stock through open market
transactions during the third quarter of fiscal year 2023, which we subsequently retired. On September 5, 2023, we
used the remaining availability under the share repurchase program for an ASR and paid approximately $91.9 million
to receive an initial delivery of 4,131,551 shares of our 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, we received
534,499 additional shares calculated using a volume-weighted average price over the term of the ASR agreement. We
paid a total of $100.0 million for share repurchases during the twelve months ended December 31, 2023.
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On October 30, 2023, 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 over an 18-month period in open
market, ASR or privately negotiated transactions. The level at which we repurchase depends on a number of factors,
including our financial condition, capital requirements, cash flows, results of operations, future business prospects and
other factors that our management may deem relevant. The timing, volume and nature of repurchases are subject to
market conditions, applicable securities laws and other factors and may be amended, suspended or discontinued at any
time. We have not yet repurchased shares under this program.
Warrants
During fiscal year 2023, we processed the exercise of 19,999,333 Warrants in exchange for the issuance of
16,273,406 shares of Class A Common Stock. There were 14,035,449 shares issued in exchange for cash-basis warrant
exercises resulting in the receipt of $161.4 million in cash proceeds in fiscal year 2023, and the remaining Warrant
exercises were completed on a cashless basis. In addition, there were 634 Public Warrants that were redeemed and as
a result, there are no outstanding Warrants as of the date hereof.
Concentration of Credit Risk
The NYCDOT represented 18% and 22% of total accounts receivable, net as of December 31, 2023 and 2022,
respectively. There is no material reserve related to NYCDOT open receivables as amounts are deemed collectible
based on current conditions and expectations. The NYCDOT represented 16.9% and 19.5% of total revenue for the
years ended December 31, 2023 and 2022, respectively. Our contract with NYCDOT expires December 31, 2024 and
we anticipate the next contract will be subject to a competitive procurement process. The loss of this contract or the
renewed contract at significantly reduced pricing could have a material adverse impact on our business.
The following table sets forth certain captions on our statements of cash flows for the respective periods:
($ in thousands)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Cash Flows from Operating Activities
$
For the Year Ended December 31,
2022
2023
$
206,101
(58,290)
(117,793)
218,337
(48,592)
(164,932)
Cash provided by operating activities decreased by $12.2 million, from $218.3 million in 2022 to $206.1 million
in 2023. Net income decreased $35.5 million from $92.5 million in 2022 compared to $57.0 million in 2023 primarily
due to an increase in interest expense year over year. The adjustments to net income included increases of $50.2
million from changes in the fair value of private placement warrants, loss (gain) on extinguishment of debt and
impairment of long-lived assets and ROU assets year over year, partially offset by decreases of $40.7 million from
lower amortization, credit loss expense and changes in deferred income taxes year over year. The aggregate changes
in operating assets and liabilities increased by $18.1 million in 2023 primarily due to a legal settlement accrual and
increase in other current liabilities, partially offset by an increase in accounts receivable balances mainly in our
Commercial Services business.
Cash Flows from Investing Activities
Cash used in investing activities in 2023 and 2022 was primarily related to purchases of installation and service
parts and property and equipment mainly in our Government Solutions business of $57.0 million and $48.2 million,
respectively.
Cash Flows from Financing Activities
Cash used in financing activities was $117.8 million in 2023 mainly due to early repayments totaling $172.5
million on our 2021 Term Loan and $100.0 million of share repurchases, which were partially offset by $161.4 million
of proceeds from the exercise of warrants issued in connection with the IPO.
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Cash used in financing activities was $164.9 million in 2022 mainly due to share repurchases for $125.1 million
in the second and third quarters of 2022, the repayment of $25.0 million of borrowing on the Revolver (defined below)
in January 2022 and the quarterly principal payments on the 2021 Term Loan.
Long-term Debt
2021 Term Loan
In March 2021, 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, which includes the
incremental borrowing of $250.0 million in December 2021 as a result of exercising the accordion feature available
under the agreement. 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.
During fiscal year 2023, we made early repayments of $172.5 million on the 2021 Term Loan and as a result,
the total principal outstanding was $704.6 million as of December 31, 2023. We recognized losses on extinguishment
of debt of $3.5 million and $5.3 million for fiscal years 2023 and 2021, respectively, related to the write-off of pre-
existing deferred financing costs and discounts, and lender and third-party costs.
The 2021 Term Loan is repayable at 1.0% per annum of the amount initially borrowed, paid in quarterly
installments. It bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.25% per annum,
or (2) an alternate base rate plus an applicable margin of 2.25% per annum. In March 2023, we amended our 2021
Term Loan agreement (the “Second Amendment”) to transition away from LIBOR to Term SOFR with the cessation
of LIBOR in June 2023. To compensate for the differences in reference rates utilized, the Second Amendment also
includes a credit spread adjustment of 0.11448% for an interest period of one-month duration, 0.26161% for a three-
month duration, 0.42826% for a six-month duration, and 0.71513% for twelve-months duration in addition to Term
SOFR and the applicable margin. As of December 31, 2023, the new all-in interest rate on the 2021 Term Loan was
8.7%.
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)
> 3.70:1.00
< 3.70:1.00 and > 3.20:1.00
< 3.20:1.00
Applicable
Prepayment
Percentage
50%
25%
0%
We did not have mandatory prepayments of excess cash flows for the fiscal years ended December 31, 2023 or
2022.
Subsequent to December 31, 2023, we amended the 2021 Term Loan agreement to refinance the entire
outstanding amount under the 2021 Term Loan. In connection with the amended 2021 Term Loan agreement, the
interest rate was reduced and the credit spread adjustment was eliminated. See Note 18, Subsequent Events, in Item 8,
Financial Statements and Supplementary Data, for additional information.
Senior Notes
In March 2021, VM Consolidated issued an aggregate principal amount of $350.0 million in 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-
46
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. On or after April 15, 2024, 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
2024
2025
2026 and thereafter
Percentage
102.750%
101.375%
100.000%
In addition, we may redeem up to 40% of the Senior Notes before April 15, 2024, with the net cash proceeds
from certain equity offerings at a redemption price of 105.50%.
PPP Loan
During fiscal year 2020, one of our wholly owned subsidiaries received a $2.9 million loan from the U.S. Small
Business Administration (“SBA”) as part of the Paycheck Protection Program (“PPP Loan”) to offset certain
employment and other allowable costs incurred as a result of the COVID-19 pandemic. In early 2021, we applied for
forgiveness of this loan, and on September 23, 2022, we were notified by the SBA that the loan, together with accrued
interest, had been fully forgiven under the provisions of the PPP Loan program. Accordingly, we recognized a $3.0
million gain on extinguishment of debt in the consolidated statements of operations for the year ended December 31,
2022.
The Revolver
We have a Revolving Credit Agreement (the “Revolver”) with a commitment of up to $75.0 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) Term SOFR plus an applicable margin, or (2) an alternate base rate, plus an applicable margin.
The margin percentage applied to (1) Term 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 Term SOFR and the applicable margin percentages. There are no outstanding borrowings on
the Revolver as of December 31, 2023 or 2022. At December 31, 2023, the availability to borrow was $74.8 million,
net of $0.2 million of outstanding letters of credit.
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 $0.2 million of outstanding letters of credit as of December 31, 2023.
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 December 31, 2023, we were compliant with all debt covenants.
Interest Expense, Net
We recorded interest expense, net of interest income, including amortization of deferred financing costs and
discounts, of $86.7 million, $69.4 million and $44.9 million for the fiscal years ended December 31, 2023, 2022 and
2021 respectively. Interest income earned was $4.2 million for the fiscal year ended December 31, 2023 and less than
$0.1 million for both fiscal years ended December 31, 2022 and 2021.
47
See Note 2, Significant Accounting Policies, in Item 8, Financial Statements and Supplementary Data for
additional information on the interest rate swap entered into in December 2022 to hedge our exposure against rising
interest rates.
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting
principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes
that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially
from those estimates.
Our significant accounting policies are described in Note 2, Significant Accounting Policies, in Item 8, Financial
Statements and Supplementary Data, of this Annual Report. We believe that the critical accounting estimates listed
below involve our more significant judgments, assumptions, and estimates and, therefore, could have the greatest
potential impact on the financial statements.
Revenue Recognition
Judgment is required for the estimation of the standalone selling price (“SSP”) and the allocation of the
transaction price by relative SSPs. Within our Government Solutions and Parking Solutions operating segments, some
customer arrangements include multiple performance obligations. Government Solutions’ customer arrangements
containing multiple performance obligations typically include the sale and installation of photo-enforcement cameras,
license of back-office software, processing payments on behalf of the customer and the performance of maintenance
services on such cameras over a contractual term. Parking Solutions’ customer arrangements containing multiple
performance obligations typically include the sale of parking access hardware systems, the licensing of SaaS products,
installation and/or the performance of maintenance services over a contractual term. In most instances, we have
determined these performance obligations qualify as distinct performance obligations, as the customer can benefit
from the service on its own or together with other resources that are readily available to the customer, and our promise
to transfer the service is separately identifiable from other promises in the contract. For arrangements that contain
multiple performance obligations, we exercise judgment in allocating the transaction price based on the relative SSP
method by comparing the SSP of each distinct performance obligation to the total value of the contract. We apply
judgment in determining the SSP for each distinct performance obligation.
See Note 2, Significant Accounting Policies, in Item 8, Financial Statements and Supplementary Data for
additional information on the Company’s policy for recognition of revenue.
Allowance for Credit Losses
We review historical credit losses and customer payment trends on receivables and develop loss rate estimates
as of the balance sheet date, which includes adjustments for current and future expectations. We periodically evaluate
the adequacy of our allowance for expected credit losses by comparing our actual historical write-offs to our previously
recorded estimates and adjust appropriately. This includes evaluation by portfolio segment the changes in expectations
based on the newest information available on customer payment trends, travel forecasts and other risk characteristics
and adjusting the probability-weighting either upward or downward that is most representative of the expected credit
losses. Administration fees charged to drivers of rented vehicles that we cannot recover from our customers represent
higher risk of credit loss compared to our other portfolio segments.
Acquisitions
We apply the acquisition method to account for business combinations. We allocate the fair value of the
purchase price consideration to assets acquired and liabilities assumed based on their estimated fair values. The excess
of the purchase consideration over the fair value of the identifiable assets and liabilities is recorded as goodwill.
48
The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based
on various assumptions and valuation methodologies requiring considerable management judgment and includes the
use of independent valuation specialists to assist us in estimating fair values of acquired tangible and intangible assets.
Fair values of acquired assets and their respective useful lives are based on, among other factors, critical estimates of
expected cash flows, customer turnover and anticipated growth from acquired customers, discount rates and royalty
cost savings. Although we believe that the assumptions applied in the determination are reasonable based on
information available at the date of acquisition, actual results may differ from estimates. Differences between estimates
and actual results may result in adjustment to goodwill and acquisition date fair values of assets and liabilities during
a measurement period or upon a final determination of asset and liability fair values, whichever occurs first.
Adjustments to fair values of assets and liabilities made after the end of the measurement period are recognized within
our consolidated statements of operations as a current period gain or loss.
Impairment of Goodwill and Long-Lived Assets
We assess goodwill for impairment annually on October 1, or more frequently if events or circumstances
indicate that the carrying amounts may not be fully recoverable. We have four reporting units for the purposes of
assessing potential impairment of goodwill which include Commercial Services, Government Solutions North
America, Government Solutions International and Parking Solutions. We first consider the option to assess qualitative
factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying
amount. If we conclude that it is more likely than not that the fair value is less than the carrying amount, we then
perform a quantitative impairment test by comparing the reporting unit’s fair value with its carrying value. An
impairment loss is recognized for the amount by which the reporting units’ carrying value exceeds its fair value, up to
the total amount of goodwill allocated to the reporting unit. No impairment is recognized if the fair value of the
reporting unit exceeds its carrying value.
The process of evaluating goodwill requires significant judgment including the identification of reporting units
and the determination of the fair value of each reporting unit. We estimate the fair value of our reporting units based
on a combination of an income approach or more specifically, a discounted cash flow method (“DCF Method”) and
a market approach employing the public company market multiple method. The DCF Method is based on projected
future cash flows and terminal value estimates discounted to their present values using a market-participant weighted
average cost of capital. Significant estimates and assumptions used in the DCF Method include forecasts of future
revenue growth rates, EBITDA margin percentages, terminal growth rates and discount rates. We apply discount rates
that are commensurate with the risks and uncertainties inherent in the respective reporting units and our internally
developed projections of future cash flows. The market approach utilizes a blend of revenue and EBITDA multiples
from guideline public companies which are comparable to us in size, profitability and other factors to estimate the fair
value of the reporting units. Significant estimates and assumptions used in the market approach include the selection
of guideline public companies, revenue and EBITDA projections, the selection of revenue and EBITDA multiples and
the application of a control premium.
In connection with our 2023 assessment of goodwill
impairment, we qualitatively concluded that our
Commercial Services, Government Solutions North America and Government Solutions International reporting units
did not have indicators of impairment. We performed a quantitative impairment test for our Parking Solutions
reporting unit as of October 1, 2023 which has goodwill of $199.1 million. The fair value of this reporting unit was
determined by equally weighting the results of the DCF and market approach methods described above. Based on the
results of our quantitative review, we concluded no impairment to goodwill was necessary because the estimated fair
value exceeded the reporting unit's carrying value by approximately 7%. A 100 basis point increase to the discount
rate or an approximate 100 basis point decrease in compounded annual revenue growth rate for the forecast period
would yield a fair value that is approximately 1% greater than the reporting unit's carrying value. The Parking
Solutions reporting unit’s fair value includes revenue growth assumptions for a new program, UNIFI Mobile, in which
the business will receive a share of transactional parking fees earned by the customer as well as fees charged for
parking citations. The fair values of our other reporting units for which a qualitative assessment was performed were
estimated by applying guideline public company multiples to EBITDA projections. To corroborate their
reasonableness, the total of our reporting units’ estimated fair values were reconciled to the Company's enterprise
value, adjusted for a control premium, as of October 1, 2023.
49
Although we believe the estimated fair value of the Parking Solutions reporting unit as of October 1, 2023 is
reasonable based on current conditions, changes in assumptions used in estimating fair value, such as the composition
of guideline public companies including the selection of revenue and EBITDA multiples, discount rates, fixed-costs,
SaaS and UNIFI Mobile revenue growth estimates and shortfalls in the financial performance relative to expectations,
may result in impairment in future periods.
We review our long-lived assets other than goodwill for impairment whenever events or circumstances indicate
that the carrying amount of an asset or asset group may not be fully recoverable. We assess recoverability by
comparing the estimated undiscounted future cash flows expected to be generated by the asset or asset group with its
carrying value. If the carrying value of the asset or asset group exceeds the estimated undiscounted future cash flows,
an impairment loss is recognized for the difference between the estimated fair value and the carrying value. Our
estimates of cash flows are subjective judgments based on past experiences adjusted for trends and future expectations,
and can be significantly impacted by changes in our business or economic conditions. The determination of asset
group' fair value is also subject to significant judgment and utilizes valuation techniques including discounting
estimated future cash flows and market-based analyses. If our estimates or underlying assumptions change in the
future, our operating results may be materially impacted. During the year ended December 31, 2023, we recorded a
$4.3 million impairment which included a $3.9 million write-down of installation and service parts that no longer have
future use within the operating expenses line item in our Government Solutions segment, and $0.4 million impairment
of an ROU asset within the selling, general and administrative expenses line item in our Parking Solutions segment.
We recorded $0.7 million of impairment related to certain photo enforcement programs that ended during the year
ended December 31, 2022 within the depreciation, amortization and (gain) loss on disposal of assets, net line item on
the consolidated statements of operations. We did not have any indicators of impairment related to long-lived assets
for the year ended December 31, 2021.
Income Taxes
The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for
the current year, and to recognize deferred tax assets and liabilities for the expected future consequences of differences
between the tax basis of assets or liabilities and their carrying amounts in the financial statements. Deferred tax assets
generally represent items that can be used as a tax deduction or credit in our tax return in future years, while deferred
tax liabilities generally represent items that generate a future tax liability for items where deductions have been
accelerated for tax purposes. We provide a valuation allowance against deferred tax assets when it is more likely than
not that some portion or all of the deferred tax asset will not be realized. We calculate 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
realization of deferred tax assets can be affected by, among other things, the nature, frequency and severity of current
and cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, our experience
with utilizing operating loss and other tax carryforwards by jurisdiction, the reversal of existing taxable temporary
differences and tax planning alternatives and strategies that may be available. We recognize the tax benefit from an
uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the
taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements
from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate settlement. Judgment is required in assessing the future tax consequences of events that have been
recognized in our financial statements or tax returns. Variation in the actual outcome of these future tax consequences
could materially impact our financial statements.
Private Placement Warrant Liabilities
We accounted for warrants as either equity-classified or liability-classified instruments based on an assessment
of the warrant’s specific terms and applicable authoritative guidance. For warrants that met all of the criteria for equity
classification, the warrants were required to be recorded as a component of additional paid-in capital at the time of
issuance. For warrants that did not meet all the criteria for equity classification, the warrants were required to be
recorded at their fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated
fair value of the warrants were recognized as a non-cash gain or loss on the statements of operations. Our Public
50
Warrants met the criteria for equity classification and accordingly, were reported as a component of shareholders’
equity while our Private Placement Warrants did not meet the criteria for equity classification and were instead
classified as a liability. The fair value of the Private Placement Warrants was estimated at period-end using a Black-
Scholes option pricing model, which was a Level 3 fair value measurement exposed to valuation risk. The risk of
exposure was estimated using a sensitivity analysis of potential changes in the significant unobservable inputs,
primarily the volatility input that was the most susceptible to valuation risk. As of December 31, 2023, all Warrants
were either exercised by the holder or redeemed by the Company.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, refer to Note 2, Significant Accounting Policies, in Item
8, Financial Statements and Supplementary Data.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to interest rate market risk due to the variable interest rate on the 2021 Term Loan described in
“Item 7. 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 $704.6 million at December 31, 2023. The
2021 Term Loan bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.25% per
annum, or (2) an alternate base rate plus an applicable margin of 2.25% per annum. In March 2023, we amended our
2021 Term Loan agreement to transition away from LIBOR to Term SOFR with the cessation of LIBOR in June 2023.
To compensate for the differences in reference rates utilized, the amended agreement also includes a credit spread
adjustment of 0.11448% for an interest period of one-month duration, 0.26161% for a three-month duration, 0.42826%
for a six-month duration, and 0.71513% for twelve-months duration in addition to Term SOFR and the applicable
margin. At December 31, 2023, the all-in interest rate on the 2021 Term Loan was 8.7%.
Based on the December 31, 2023 balance outstanding, each 1% movement in interest rates will result in an
approximately $7.0 million change in annual interest expense. Due to the limited history of the use of the new
benchmark rate, we are unable to estimate the future impact to our borrowing costs as a result of the discontinuation
of the LIBOR benchmark.
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 Term SOFR) portion of the variable interest rate on
our 2021 Term Loan. Under the interest rate swap agreement, we pay a fixed rate of 5.17% and the counterparty pays
a variable interest rate which is net settled. The notional amount on the interest rate swap is $675.0 million. We have
the option to terminate the interest rate swap agreement starting in December 2023, and monthly thereafter until
December 2025, in the event interest rates decrease. We recorded a $0.8 million loss and a $1.0 million gain on the
interest rate swap for the years ended December 31, 2023 and 2022, respectively. See Note 2, Significant Accounting
Policies, in “Item 8, Financial Statements and Supplementary Data” for additional information on the interest rate
swap.
51
VERRA MOBILITY CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Item 8. Financial Statements and Supplementary Data
Reports of Independent Registered Public Accounting Firm (PCAOB IDs: 34 and 42)
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
53
59
60
61
62
64
52
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Verra Mobility Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Verra Mobility Corporation (the "Company") as of
December 31, 2023, the related consolidated statements of operations and comprehensive income, stockholders’
equity, and cash flows for the year then ended, and the related notes and the financial statement schedule listed in the
Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and
the results of its operations and its cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated February 29, 2024, expressed an adverse opinion on the Company's
internal control over financial reporting because of a material weakness.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audit also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Goodwill — Parking Solutions Reporting Unit – Refer to Notes 2 and 5 to the financial statements
Critical Audit Matter Description
The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting
unit to its carrying value. The Company determines the fair value of its reporting units using the income approach
utilizing the discounted cash flow method and market approach employing the public company market multiple
method. The determination of the fair value using the discounted cash flow method requires management to make
53
significant estimates and assumptions related to the selection of the discount rate and forecasts of future revenue
growth rates and earnings before interest, taxes, depreciation, and amortization (EBITDA) margin percentages. The
determination of the fair value using the market approach requires management to make significant assumptions
related to market revenue and EBITDA multiples from within a peer public company group. Changes in these
assumptions could have a significant impact on either the fair value, the amount of any goodwill impairment charge,
or both. The goodwill balance was $835.8 million as of December 31, 2023, of which $199.1 million is allocated to
the Parking Solutions reporting unit (“Parking Solutions”). The fair value of the Parking Solutions reporting unit
exceeded its carrying value as of the measurement date and, therefore, no impairment was recognized. The
Company has introduced a new product line for Parking Solutions whose forecasted revenues contribute to the fair
value of Parking Solutions and for which there is limited historical data.
Given the significant judgments made by management to estimate the fair value of the Parking Solutions reporting
unit, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related
to the selection of the discount rate, forecasts of future revenue growth rates and EBITDA margin percentages,
which includes the new product line for which there is limited historical data, and the selection of multiples applied
to revenue and EBITDA, required a high degree of auditor judgment and an increased extent of effort, including the
need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the selection of the discount rate, forecasts of future revenue growth rates and
EBITDA margin percentages, and the selection of the comparable market revenue and EBITDA multiples used by
management to estimate the fair value of the Parking Solutions reporting unit included the following procedures:
•
•
•
•
•
•
We tested the effectiveness of controls over management’s goodwill impairment evaluation, including
those over the determination of the fair value of the Parking Solutions reporting unit, such as controls
related to management’s selection of the discount rate, forecasts of future revenue growth rates and
EBITDA margin percentages, and selection of revenue and EBITDA multiples.
We evaluated the reasonableness of management’s forecasted revenue growth rates and EBITDA
margin percentages by comparing the forecasts to (1) historical results of the Company, (2) internal
communications to management and the board of directors, and (3) forecasted information included in
industry reports of the Company and companies in its peer groups.
Due to the limited historical data available for the new product line, we evaluated the reasonableness of
management’s revenue forecasts of the new product line by comparing the forecasts to (1) the historical
operating results of the Company’s similar existing products, and (2) internal communications to
management and the board of directors.
We evaluated management’s ability to accurately forecast future revenue growth rates and EBITDA
margin percentages by comparing actual results to management’s historical forecasts.
With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation
methodology and (2) discount rate, including testing the source information underlying the
determination of the discount rate, testing the mathematical accuracy of the calculation, and developing
a range of independent estimates and comparing those to the discount rate selected by management.
With the assistance of our fair value specialists, we evaluated the revenue and EBITDA multiples,
including testing the underlying source information and mathematical accuracy of the calculations, and
evaluated the appropriateness of the Company’s selection of companies in its peer public company
group.
Revenue Recognition - Government Solutions Segment — Refer to Note 2 to the financial statements
Critical Audit Matter Description
The Company’s Government Solutions segment principally generates revenue by providing complete, end-to-end
speed, red-light, school bus stop arm, and bus lane enforcement solutions. Contractual promises include providing a
54
photo enforcement system to capture images contemporaneously with a suite of services (which may include
maintenance, processing images taken by the camera, forwarding eligible images to the police department and
processing payments on behalf of the municipality).Management applies judgment in determining whether
providing a photo enforcement system and a suite of services represents separate or combined performance
obligations. Management has determined that they generally represent a separate performance obligation as the
photo enforcement system and the related suite of services, individually, are capable of being distinct and are not
highly interdependent and interrelated. For customer contracts where title to the photo enforcement system does not
transfer to the customer and is bundled with the suite of services, management has determined there is a single
combined performance obligation. This is because the right to use the photo enforcement system and suite of
services are transferred to the customer concurrently over the same period of time.
Given the significant judgment required by management in determining whether the photo enforcement system and
the related suite of services should be accounted for as separate or combined performance obligations, our associated
audit procedures required a high degree of auditor judgment and an increased extent of effort. Accordingly, we
considered the determination that the photo enforcement system and related suite of services represents a separate or
combined performance obligation to be a critical audit matter.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures for the Government Solutions segment related to management’s conclusion that the photo
enforcement system and related suite of services represents a separate or combined performance obligation included
the following, among others:
•
•
•
We tested the design and operating effectiveness of certain controls over revenue recognition, including
management’s controls over the review of customer contracts. Such controls included an assessment of
the appropriate identification of performance obligations.
We evaluated management’s accounting policy papers which included their assessment of the
identification of performance obligations, including their assessment of the nature, interdependency, and
level of integration between the photo enforcement system and suite of services. This included, among
other things, gaining a detailed understanding of the nature of the Company’s system and services, how
they function, and how they are marketed to customers, and confirming our understanding with key
individuals in the Company’s sales, engineering, and product functions.
For a sample of the Company’s revenue arrangements, we read the contracts and assessed the
relationship between the photo enforcement system and suite of services within the context of the
contract, to determine whether such relationship provided supporting or contradictory evidence related
to management’s conclusion that the photo enforcement systems and related suite of services represents
a combined or separate performance obligation. We then verified that such revenue arrangements were
presented appropriately within the financial statements.
/s/ Deloitte & Touche LLP
Tempe, Arizona
February 29, 2024
We have served as the Company's auditor since 2023.
55
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Verra Mobility Corporation
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Verra Mobility Corporation (the “Company”) as of
December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, because of the
effect of the material weakness identified below on the achievement of the objectives of the control criteria, the
Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on
criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements and schedule as of and for the year ended December 31,
2023, of the Company and our report dated February 29, 2024, expressed an unqualified opinion on those financial
statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
56
Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial
statements will not be prevented or detected on a timely basis. The following material weakness has been identified
and included in management's assessment:
Management identified a material weakness in the design and operation of the Company’s internal controls over
financial reporting in the Control Activities component of the COSO framework related to a lack of information
technology general controls to prevent the risk of management override. Specifically, management identified
system limitations that do not facilitate proper segregation of duties within multiple systems and a lack of mitigating
business process level controls to address the risk of management override over the preparation and review of
manual journal entries and certain manual revenue invoices.
This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our
audit of the consolidated financial statements as of and for the year ended December 31, 2023, of the Company, and
this report does not affect our report on such financial statements.
/s/ Deloitte & Touche LLP
Tempe, Arizona
February 29, 2024
57
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Verra Mobility Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Verra Mobility Corporation (the Company) as of
December 31, 2022, and the related consolidated statements of operations and comprehensive income (loss),
stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related
notes and the financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company at December 31, 2022 and the results of its operations and its cash flows for each
of the two years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting
principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our
audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We served as the Company’s auditor from 2013 to 2023.
Phoenix, Arizona
March 1, 2023
58
VERRA MOBILITY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents
Restricted cash
Accounts receivable (net of allowance for credit losses of $18.5 million and
$15.9 million at December 31, 2023 and 2022, respectively)
Unbilled receivables
Inventory
Prepaid expenses and other current assets
Total current assets
Installation and service parts, net
Property and equipment, net
Operating lease assets
Intangible assets, net
Goodwill
Other non-current assets
Total assets
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Deferred revenue
Accrued liabilities
Tax receivable agreement liability, current portion
Current portion of long-term debt
Total current liabilities
Long-term debt, net of current portion
Operating lease liabilities, net of current portion
Tax receivable agreement liability, net of current portion
Private placement warrant liabilities
Asset retirement obligations
Deferred tax liabilities, net
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 16)
Stockholders' equity
Preferred stock, $0.0001 par value, 1,000 shares authorized with no shares
issued and outstanding at December 31, 2023 and 2022
Common stock, $0.0001 par value, 260,000 shares authorized with 166,555
and 148,962 shares issued and outstanding at December 31, 2023 and 2022,
respectively
Common stock contingent consideration
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders' equity
Total liabilities and stockholders' equity
December 31,
2023
December 31,
2022
$
136,309
3,413
$
105,204
3,911
$
$
197,824
37,065
17,966
46,961
439,538
22,895
123,248
33,523
301,025
835,835
33,919
1,789,983
78,749
28,788
93,119
5,098
9,019
214,773
1,029,113
29,124
48,369
—
14,580
18,360
14,197
1,368,516
163,786
30,782
19,307
39,604
362,594
22,923
109,775
37,593
377,420
833,480
12,484
1,756,269
79,869
31,164
48,847
4,994
21,935
186,809
1,190,045
33,362
50,900
24,066
12,993
21,149
5,875
1,525,199
—
—
17
—
557,513
(125,887)
(10,176)
421,467
1,789,983
$
15
36,575
305,423
(98,078)
(12,865)
231,070
1,756,269
$
$
$
See accompanying Notes to Consolidated Financial Statements.
59
VERRA MOBILITY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(In thousands, except per share data)
Service revenue
Product sales
Total revenue
Cost of service revenue, excluding depreciation and
amortization
Cost of product sales
Operating expenses
Selling, general and administrative expenses
Depreciation, amortization and (gain) loss on disposal of
assets, net
Total costs and expenses
Income from operations
Interest expense, net
Change in fair value of private placement warrants
Tax receivable agreement liability adjustment
Loss (gain) on interest rate swap
Loss (gain) on extinguishment of debt
Other income, net
Total other expenses
Income before income taxes
Income tax provision
Net income
Other comprehensive income (loss):
Change in foreign currency translation adjustment
Total comprehensive income
Net income per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
$
$
$
$
$
For the Year Ended December 31,
2022
695,218
46,380
741,598
2023
783,595
33,715
817,310
$
$
18,232
25,231
273,288
198,550
113,195
628,496
188,814
86,701
24,966
(3,077)
817
3,533
(11,123)
101,817
86,997
29,982
57,015
2,689
59,704
0.36
0.36
158,777
160,017
$
$
$
$
16,330
30,932
226,324
163,133
140,174
576,893
164,705
69,372
(14,400)
(720)
(996)
(3,005)
(12,654)
37,597
127,108
34,633
92,475
(7,771)
84,704
0.61
0.50
152,848
159,026
$
$
$
$
2021
492,846
57,744
550,590
5,337
29,809
163,370
123,407
116,801
438,724
111,866
44,942
7,600
(1,016)
—
5,334
(12,895)
43,965
67,901
26,452
41,449
(5,305)
36,144
0.26
0.25
159,983
163,778
See accompanying Notes to Consolidated Financial Statements.
60
VERRA MOBILITY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common
Stock
Shares
162,269
—
(6,849)
Amount
16
$
—
—
Common
Stock
Contingent
Consideration
36,575
$
—
—
Accumulated
Deficit
$ (94,850) $
41,449
(28,015)
Accumulated
Other
Comprehensive
Income (Loss)
211
—
—
Total
Stockholders'
Equity
$ 315,572
41,449
(100,000)
(In thousands)
Balance as of December 31, 2020
Net income
Share repurchases and retirement
Vesting of restricted stock units
("RSUs")
Exercise of stock options
Payment of employee tax
withholding related to RSUs vesting
Stock-based compensation
Other comprehensive loss, net of tax
Balance as of December 31, 2021
Net income
Share repurchases and retirement
Vesting of RSUs
Exercise of stock options
Payment of employee tax
withholding related to RSUs vesting
Stock-based compensation
Other comprehensive loss, net of tax
Balance as of December 31, 2022
Net income
Earn-out shares issued to Platinum
Stockholder
Share repurchases and retirement
Vesting of RSUs and performance
share units ("PSUs")
Exercise of stock options
Payment of employee tax
withholding related to RSUs and
PSUs vesting
Exercise of warrants
Stock-based compensation
Other comprehensive gain, net of tax
Balance as of December 31, 2023
647
12
—
—
—
156,079
—
(7,874)
654
103
—
—
—
148,962
—
5,000
(4,581)
449
451
—
16,274
—
—
166,555
$
$
$
—
—
—
—
—
16
—
(1)
—
—
—
—
—
15
—
—
—
—
—
—
2
—
—
17
$
$
$
Additional
Paid-in
Capital
$ 373,620
—
(71,985)
—
155
(5,691)
13,784
—
$ 309,883
—
(15,933)
—
1,334
(6,524)
16,663
—
$ 305,423
—
—
—
—
—
—
36,575
—
—
—
—
—
—
—
36,575
—
—
—
—
—
—
$ (81,416) $
92,475
(109,137)
—
—
—
—
—
$ (98,078) $
57,015
(36,575)
—
36,575
(15,176)
—
(84,824)
—
—
—
5,919
(3,142)
—
210,438
—
17,476
—
—
—
— $ 557,513
—
—
—
—
—
—
$ (125,887) $
—
—
—
155
(5,691)
—
13,784
—
(5,305)
(5,305)
(5,094) $ 259,964
92,475
(125,071)
—
1,334
—
—
—
—
—
(6,524)
—
16,663
(7,771)
(7,771)
(12,865) $ 231,070
57,015
—
—
—
—
—
—
(100,000)
—
5,919
—
—
—
2,689
(3,142)
210,440
17,476
2,689
(10,176) $ 421,467
See accompanying Notes to Consolidated Financial Statements.
61
VERRA MOBILITY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Cash Flows from Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Amortization of deferred financing costs and discounts
Change in fair value of private placement warrants
Tax receivable agreement liability adjustment
Gain on interest rate swap
Loss (gain) on extinguishment of debt
Credit loss expense
Deferred income taxes
Stock-based compensation
Impairment of long-lived assets and ROU assets
Impairment on a privately-held equity investment
Other
Changes in operating assets and liabilities:
Accounts receivable
Unbilled receivables
Inventory
Prepaid expenses and other assets
Deferred revenue
Accounts payable and other current liabilities
Other liabilities
Net cash provided by operating activities
Cash Flows from Investing Activities:
Acquisitions, net of cash and restricted cash acquired
Payment of contingent consideration
Payments for interest rate swap
Purchase of intellectual property
Purchases of installation and service parts and property and equipment
Cash proceeds from the sale of assets
Net cash used in investing activities
Cash Flows from Financing Activities:
Borrowings on revolver
Repayment on revolver
Borrowings of long-term debt
Repayment of long-term debt
Payment of debt issuance costs
Payment of debt extinguishment costs
Proceeds from the exercise of warrants
Share repurchases and retirement
Proceeds from exercise of stock options
Payment of employee tax withholding related to RSUs and PSUs vesting
Payment of contingent consideration
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash - beginning of period
Cash, cash equivalents and restricted cash - end of period
$
For the Year Ended December 31,
2022
2021
2023
$
57,015
$
92,475
$
41,449
113,067
4,679
24,966
(3,077)
(320)
3,533
9,054
(27,037)
17,476
4,280
—
359
(42,459)
(6,252)
1,148
(2,161)
(2,400)
50,512
3,718
206,101
—
—
(1,137)
(500)
(56,985)
332
(58,290)
—
—
—
(181,519)
(459)
—
161,408
(100,000)
5,919
(3,142)
—
(117,793)
589
30,607
109,115
139,722
$
138,684
5,472
(14,400)
(720)
(996)
(3,005)
14,481
(17,355)
16,663
—
1,340
1,654
(17,685)
(1,936)
(10,310)
4,306
4,591
6,513
(1,435)
218,337
—
(647)
—
—
(48,186)
241
(48,592)
—
(25,000)
—
(9,019)
(447)
—
—
(125,071)
1,334
(6,524)
(205)
(164,932)
(130)
4,683
104,432
109,115
116,753
5,170
7,600
(1,016)
—
5,334
9,588
(10,640)
13,784
—
—
308
14,946
(7,753)
2,798
(5,097)
(3,966)
8,296
(4,383)
193,171
(451,237)
—
—
—
(24,998)
265
(475,970)
25,000
—
1,245,500
(884,530)
(10,646)
(1,066)
—
(100,000)
155
(5,691)
—
268,722
(2,383)
(16,460)
120,892
104,432
$
See accompanying Notes to Consolidated Financial Statements.
62
VERRA MOBILITY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Reconciliation of cash, cash equivalents, and restricted cash to the
consolidated balance sheets
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash
Supplemental cash flow information:
Interest paid
Income taxes paid, net of refunds
Supplemental non-cash investing and financing activities:
Earn-out shares issued to Platinum Stockholder
Additions related to asset retirement obligations and property and
equipment(a)
Purchases of installation and service parts and property and equipment
in accounts payable and accrued liabilities at year-end
Increase in additional paid-in capital due to exercise of private
placement warrants
Contingent consideration related to NuPark acquisition
For the Year Ended December 31,
$
$
$
$
$
$
$
$
$
2023
136,309
3,413
139,722
86,113
54,002
36,575
1,173
5,120
49,032
—
2022
105,204
3,911
109,115
63,663
47,623
—
946
10,421
—
—
2021
101,283
3,149
104,432
35,786
35,774
—
1,397
1,714
—
1,450
(a) Asset retirement obligations of $3.9 million assumed as part of the Redflex acquisition in 2021 are excluded
from these additions.
See accompanying Notes to Consolidated Financial Statements.
63
VERRA MOBILITY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Description of Business
Verra Mobility Corporation (collectively with its subsidiaries, the “Company” or “Verra Mobility”) offers
integrated technology solutions and services to its customers who are located throughout the world, primarily within
the United States, Australia, Canada and Europe. The Company is organized into three operating segments:
Commercial Services, Government Solutions and Parking Solutions (see Note 17, Segment Reporting).
The Company’s Commercial Services segment offers toll and violation management solutions for commercial
fleet operators by partnering with the leading fleet management and rental car companies in North America. Electronic
toll payment services enable drivers of fleet vehicles and rental car customers to use high-speed cashless toll lanes or
all-electronic cashless toll roads. The service helps commercial fleets reduce toll management costs, while it provides
rental car companies with a revenue-generating, value-added service for their customers. Electronic violation
processing services reduce the cost and risk associated with vehicle-issued violations, such as toll, parking or camera-
enforced tickets. Title and registration services offer title and registration processing for individuals and commercial
fleet customers, including RACs, Direct Fleets and FMCs. In Europe, the Company provides violations processing
through Euro Parking Collection plc and consumer tolling services through Pagatelia S.L.U.
The Company’s Government Solutions segment offers photo enforcement solutions and services to its
customers. The Government Solutions segment provides complete, end-to-end speed, red-light, school bus stop arm
and bus lane enforcement solutions within the United States and Canada. 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 related
maintenance services.
The Company’s 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.
The Company was originally incorporated in Delaware on August 15, 2016, under the name “Gores Holdings
II, Inc.” (“Gores”) as a special purpose acquisition company. On January 19, 2017, Gores consummated its initial
public offering (the “IPO”), following which its shares began trading on Nasdaq. On June 21, 2018, Gores entered
into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Greenlight Holding II
Corporation, PE Greenlight Holdings, LLC (the “Platinum Stockholder”), AM Merger Sub I, Inc., a direct, wholly
owned subsidiary of Gores, and AM Merger Sub II, LLC, a direct, wholly owned subsidiary of Gores. On October 17,
2018,
the Company consummated the transactions contemplated by the Merger Agreement (the “Business
Combination”) and changed its name to “Verra Mobility Corporation.” As a result of the Business Combination,
Verra Mobility Corporation became the owner, directly or indirectly, of all of the equity interests of Verra Mobility
Holdings, LLC and its subsidiaries.
2.
Significant Accounting Policies
Principles of Consolidation
The accompanying 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 consolidated financial statements reflect all adjustments, which are normal and recurring in nature,
necessary for fair financial statement presentation.
64
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying
notes. Significant estimates and assumptions include those related to the fair values assigned to net assets acquired
(including identifiable intangibles) in business combinations, allocating the transaction price for revenue recognition,
inventory valuation, allowance for credit losses, fair value of the private placement warrant liabilities, fair value of
the interest rate swap, self-insurance liability, valuation allowance on deferred tax assets, uncertain tax positions,
apportionment for state income taxes, the tax receivable agreement liability, fair value of privately-held securities,
impairment assessments of goodwill, intangible assets and other long-lived assets, asset retirement obligations,
contingent consideration and the recognition and measurement of loss contingencies.
Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual
results could differ materially from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a remaining maturity of three months or
less when acquired to be cash equivalents.
Restricted Cash
The Company collects cash on behalf of customers under certain contracts which it deposits daily into Company
bank accounts and transfers regularly to customer bank accounts. Restricted cash primarily represents customer cash
collected but not yet remitted to the customer. Restricted cash is classified as a current asset and the corresponding
liability for amounts due to customers is within current liabilities.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash
and cash equivalents, accounts receivable and unbilled receivables. The Company limits cash and cash equivalents to
highly rated financial institutions.
Significant customers are those which represent more than 10% of the Company’s total revenue or accounts
receivable, net. Revenue from the single Government Solutions customer exceeding 10% of total revenue is presented
below:
City of New York Department of Transportation
For the Year Ended December 31,
2022
2021
2023
16.9%
19.5%
26.6%
The City of New York Department of Transportation (“NYCDOT”) represented 18% and 22% of total accounts
receivable, net as of December 31, 2023 and 2022, 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 any period presented.
Significant customer revenue concentrations generated through the Company’s Commercial Services partners
as a percent of total revenue are presented below:
Hertz Corporation
Avis Budget Group, Inc.
Enterprise Mobility
For the Year Ended December 31,
2022
2021
2023
11.8%
13.6%
10.4%
11.1%
13.0%
9.3%
12.6%
12.3%
11.4%
The Avis Budget Group, Inc. was 10% of total accounts receivable, net as of December 31, 2022. No
Commercial Services customer exceeded 10% of total accounts receivable, net as of December 31, 2023.
65
There were no significant customer concentrations that exceeded 10% of total revenue or accounts
receivables, net for the Parking Solutions segment as of or for any period presented.
Allowance for Credit Losses
Accounts receivable and unbilled receivables are uncollateralized customer obligations arising from the sale of
products or services. Accounts receivable and unbilled receivables have normal trade terms of less than one year and
are initially stated at the amounts billed to the customers and subsequently measured at amortized cost net of allowance
for credit losses. Unbilled receivables are recorded when revenues have been earned but have not been included on a
customer invoice through the end of the current period. Unbilled receivables were $37.1 million and $30.8 million as
of December 31, 2023 and 2022, respectively.
The Company reviews historical credit losses and customer payment trends on receivables and develops loss
rate estimates as of the balance sheet date, which includes adjustments for current and future expectations using
probability-weighted assumptions about potential outcomes. Receivables are written off against the allowance for
credit losses when it is probable that amounts will not be collected based on the terms of the customer contracts, and
subsequent recoveries reverse the previous write-off and apply to the receivable in the period recovered. No interest
or late fees are charged on delinquent accounts. The Company evaluates the adequacy of its allowance for expected
credit losses by comparing its actual write-offs to its previously recorded estimates and adjusts appropriately.
The Company identified portfolio segments based on the type of business, industry in which the customer
operates and historical credit loss patterns. The following presents the activity in the allowance for credit losses for
the years ended December 31, 2022 and 2023, respectively:
($ in thousands)
Balance at January 1, 2022
Credit loss expense
Write-offs, net of recoveries
Balance at December 31, 2022
Credit loss expense (income)
Write-offs, net of recoveries
Balance at December 31, 2023
Commercial
Services
(Driver-billed) (1)
$
Commercial
Services
(All other)
Government
Solutions
Parking
Solutions
Total
3,092 $
1,307
(2,822)
1,577 $
87
271
1,935 $
3,649 $
950
(26)
4,573 $
(1,953)
(194)
2,426 $
— $
485
(328)
157 $
(146)
415
426 $
12,138
14,481
(10,712)
15,907
9,054
(6,448)
18,513
5,397 $
11,739
(7,536)
9,600 $
11,066
(6,940)
13,726 $
$
$
(1) Driver-billed 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.
Inventory
Inventories consist of parts and electronic components used in the production of parking management related
hardware sold to certain Parking Solutions customers and photo enforcement systems sold to certain Government
Solutions customers. Inventories for the Parking Solutions business were stated at cost on a first-in, first-out basis and
the total carrying value was approximately $10.0 million and $11.1 million as of December 31, 2023 and 2022,
respectively. Inventories for the Government Solutions international business were stated at a weighted average cost
and the total carrying value was $8.0 million and $8.2 million as of December 31, 2023 and 2022, respectively. The
Company assesses the value of its inventory and writes down the cost to net realizable value upon evaluation of
historical experience and assumptions regarding future usage, and any such write down establishes a new cost basis
for the items. Total finished goods were approximately $3.4 million and $5.1 million as of December 31, 2023 and
2022, respectively.
Installation and Service Parts
Installation and service parts consist of components used in the construction and maintenance of the Company's
photo enforcement systems. Installation and service parts are stated at cost and are reclassified to property and
66
equipment upon initiation of construction and subsequently placed in service. Installation and service parts used in
repairs and maintenance are recorded as operating expenses.
During the year ended December 31, 2023, the Company recorded a $3.9 million write-down of installation and
service parts that no longer have future use within the operating expenses line item on the consolidated statement of
operations.
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. All repairs and maintenance costs are
expensed as incurred. Depreciation is recorded on a straight-line basis over the estimated useful lives of the related
assets as follows:
Equipment installed at customer sites
Computer equipment
Furniture
Automobiles
Software
Leasehold improvements
3-7 years
3-5 years
3-10 years
3-7 years
3-7 years
Shorter of lease term or estimated useful life
Equipment installed at customer sites includes certain installation costs that qualify for capitalization. Software
costs include certain internal and external costs associated with the development of software that are incurred during
the application development stage. In addition, a modification or upgrade to existing software is capitalized only to
the extent it results in additional functionality to existing software. Software maintenance and training costs are
expensed as incurred.
Investment in Privately-held Securities
The Company holds an investment in privately-held equity securities which is recorded at cost and adjusted
based on observable transactions for same or similar investments or for impairment. Investment gains and losses are
recorded in other income, net.
Valuation of privately-held securities requires judgment due to the lack of readily available observable market
data. The carrying value is not adjusted if there are no identified events that would indicate a need for upward or
downward adjustments or changes in circumstances that may indicate impairment. In determining the estimated fair
value of its investment, the Company utilizes the most recent data available. The Company assesses its investment for
impairment quarterly using both qualitative and quantitative factors. If an investment is considered impaired, an
impairment loss is recognized and a new carrying value is established for the investment.
There were no indicators of impairment during the years ended December 31, 2023 or December 31, 2021. The
Company recorded a $1.3 million impairment during the year ended December 31, 2022 within other income, net on
the consolidated statements of operations.
Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of net tangible and identifiable
intangible assets acquired in business combinations. Goodwill is assessed for impairment at least annually at the
reporting unit level or more frequently if events or changes in circumstances indicate the carrying value may not be
recoverable. If, based on a qualitative analysis, it is determined more-likely-than-not that the fair value of the reporting
unit is less than its carrying amount, a quantitative impairment test is performed. Reporting units are identified by
assessing whether the components of the Company’s operating segments constitute businesses for which discrete
financial information is available and if segment management regularly reviews the operating results of those
components. Application of the goodwill impairment test requires judgment, including the identification of reporting
units, the assignment of assets (including goodwill) to those reporting units and the determination of the fair value of
each reporting unit. The date of the Company’s annual impairment analysis is October 1. The Company has four
reporting units for the purposes of assessing potential impairment of goodwill which include Commercial Services,
Government Solutions North America, Government Solutions International and Parking Solutions.
67
The Company estimates the fair value of its reporting units based on a combination of an income approach or
more specifically, a discounted cash flow method (“DCF Method”) and a market approach employing the public
company market multiple method. The DCF Method is based on projected future cash flows and terminal value
estimates discounted to their present values using a market-participant weighted average cost of capital. Significant
estimates and assumptions used in the DCF Method include forecasts of future revenue growth rates, EBITDA margin
percentages, terminal growth rates and discount rates. The Company applies discount rates that are commensurate
with the risks and uncertainties inherent in the respective reporting units and its internally developed projections of
future cash flows. The market approach utilizes a blend of revenue and EBITDA multiples from guideline public
companies which are comparable to it in size, profitability and other factors to estimate the fair value of the reporting
units. Significant estimates and assumptions used in the market approach include the selection of guideline public
companies, revenue and EBITDA projections, the selection of revenue and EBITDA multiples and the application of
a control premium.
In connection with its 2023 assessment of goodwill impairment, the Company qualitatively concluded that its
Commercial Services, Government Solutions North America and Government Solutions International reporting units
did not have indicators of impairment. It performed a quantitative impairment test for the Parking Solutions reporting
unit as of October 1, 2023 which has goodwill of $199.1 million. The fair value of this reporting unit was determined
by equally weighting the results of the DCF and market approach methods described above. Based on the results of
its quantitative review, it concluded no impairment to goodwill was necessary because the estimated fair value
exceeded the reporting unit's carrying value by approximately 7%. The Parking Solutions reporting unit's fair value
includes revenue growth assumptions for a new program, UNIFI Mobile, in which the business will receive a share of
transactional parking fees earned by the customer as well as fees charged for parking citations. The fair values of the
Company's other reporting units for which a qualitative assessment was performed were estimated by applying
guideline public company multiples to EBITDA projections. To corroborate their reasonableness, the total of the
reporting units' estimated fair values were reconciled to the Company's enterprise value, adjusted for a control
premium, as of October 1, 2023.
Although the Company believes the estimated fair value of the Parking Solutions reporting unit as of October
1, 2023 is reasonable based on current conditions, changes in assumptions used in estimating fair value, such as the
composition of guideline public companies including the selection of revenue and EBITDA multiples, discount rates,
fixed-costs, SaaS and UNIFI Mobile revenue growth estimates and shortfalls in the financial performance relative to
expectations, may result in impairment in future periods.
Intangible Assets
Intangible assets represent existing customer relationships,
trademarks, patents, developed technology
(hardware and software) and non-compete agreements. Intangible assets are amortized over their respective estimated
useful lives on a straight-line basis, which approximates the utilization of their expected future benefits. Amortization
of intangible assets is included in depreciation, amortization and (gain) loss on disposal of assets, net in the
consolidated statements of operations.
The Company annually evaluates the estimated remaining useful lives of its intangible assets to determine
whether events or changes in circumstances warrant a revision to the remaining period of amortization.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets (including intangible assets with finite useful lives and installation
and service parts) for impairment whenever events or circumstances indicate that the carrying amount of an asset or
an asset group may not be fully recoverable. The Company assesses recoverability by comparing the estimated
undiscounted future cash flows expected to be generated by the asset or asset group with its carrying value. If the
carrying value of the asset or asset group exceeds the estimated undiscounted future cash flows, an impairment loss is
recognized for the difference between the estimated fair value and the carrying value.
During the year ended December 31, 2023, the Company recorded a $4.3 million impairment which included a
$3.9 million write-down of installation and service parts that no longer have future use within the operating expenses
line item in our Government Solutions segment (discussed above), and $0.4 million impairment of an ROU asset
within the selling, general and administrative expenses line item in our Parking Solutions segment. The Company had
$0.7 million of impairment related to certain photo enforcement programs that ended during the year ended December
68
31, 2022 within the depreciation, amortization and (gain) loss on disposal of assets, net line item on the consolidated
statements of operations. There were no indicators of impairment related to long-lived assets for the year ended
December 31, 2021.
Self-Insurance
The Company is self-insured for medical costs and has stop-loss insurance policies to limit its exposure to
individual and aggregate claims made. Liabilities for these programs are estimated based on outstanding claims and
claims estimated to be incurred but not yet reported using historical loss experience. These estimates are subject to
variability due to changes in trends of losses for outstanding claims and incurred but not reported claims, including
external factors such as the number, and cost of claims, benefit level changes and claim settlement patterns.
Warrants
As of December 31, 2022, there were warrants outstanding to acquire 19,999,967 shares of the Company’s Class
A Common Stock including: (i) 6,666,666 Private Placement Warrants and (ii) 13,333,301 warrants issued in
connection with the IPO (the “Public Warrants” and, together with the Private Placement Warrants, the “Warrants”).
The Warrants had a five-year term and expired in October 2023, unless they were redeemed or exercised prior to
expiration. As of December 31, 2023, all Warrants were either exercised by the holder or redeemed by the Company.
See Note 12, Shareholders' Equity, for additional details on warrant exercises.
The Company accounted for warrants as either equity-classified or liability-classified instruments based on an
assessment of the warrant’s specific terms and applicable authoritative guidance under Financial Accounting
Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives
and Hedging (“ASC 815”). The assessment considered whether the warrants were freestanding financial instruments
pursuant to ASC 480, met the definition of a liability pursuant to ASC 480, and whether the warrants met all of the
requirements for equity classification under ASC 815, including whether the warrants were indexed to the Company’s
own common shares, among other conditions for equity classification.
For warrants that met all of the criteria for equity classification, the warrants were required to be recorded as a
component of additional paid-in capital at the time of issuance. Warrants that did not meet all the criteria for equity
classification were recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the warrants were recognized as a non-cash gain or loss on the consolidated
statements of operations. The Company’s Public Warrants met the criteria for equity classification and accordingly,
were reported as a component of stockholders’ equity while the Company’s Private Placement Warrants were
classified as a liability. The fair value of the Private Placement Warrants was estimated at period-end using a Black-
Scholes option pricing model. Shares issuable under the Warrants were considered for inclusion in the diluted share
count in accordance with GAAP.
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,” as discussed below) portion of the variable interest rate on its 2021 Term Loan. Under the interest rate swap
agreement, the Company pays a fixed rate of 5.17% and the counterparty pays a variable interest rate. The Company
entered into an International Swaps and Derivatives Association, Inc. Master Agreement with the counterparty which
provides 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 is $675.0 million. The Company has the option to terminate the interest rate
swap agreement starting in December 2023, and monthly thereafter until December 2025. The Company is treating
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 payments are recorded in the consolidated statements of
operations within the loss (gain) on interest rate swap line item.
The Company recorded a $0.8 million loss for the year ended December 31, 2023, of which $(0.3) million is
associated with the derivative instrument re-measured to fair value at the end of the reporting period, netted by $1.1
million related to the monthly cash payments. The Company recorded a $1.0 million gain for the year ended December
69
31, 2022 associated with the derivative instrument re-measured to fair value at the end of the reporting period. The
effect of remeasurement to fair value is recorded within the operating activities section and the monthly cash payments
are recorded within the investing activities section in the consolidated statements of cash flows. See below for further
discussion on the fair value measurement of the interest rate swap, and Note 8, Long-term Debt, for additional
information on the Company's mix of fixed and variable debt.
Fair Value of Financial Instruments
ASC 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 consolidated balance sheets for cash, accounts receivable,
accounts payable and accrued liabilities 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 was calculated based upon available
market information. The carrying value and the estimated fair value of long-term debt are as follows:
($ in thousands)
2021 Term Loan
Senior Notes
Level in
Fair Value
Hierarchy
2
2
December 31, 2023
December 31, 2022
Carrying
Amount
$ 691,821
346,311
Estimated
Fair Value
$ 709,872
335,125
Carrying
Amount
$ 866,365
345,615
Estimated
Fair Value
$ 883,891
313,250
The Company had issued Private Placement Warrants in connection with the IPO to acquire shares of the
Company's Class A Common Stock which had a five-year term and expired in October 2023. As of December 31,
2023, all Private Placement Warrants were exercised by the warrant holders. The fair value of the Private Placement
Warrant liabilities was measured on a recurring basis and was estimated using the Black-Scholes option pricing model
using significant unobservable inputs, primarily related to estimated volatility, and was therefore classified within
level 3 of the fair value hierarchy. The key assumptions used were as follows:
Stock price
Strike price
Volatility
Remaining life (in years)
Risk-free interest rate
Expected dividend yield
Estimated fair value
December 31, 2022
13.83
11.50
44.0%
0.8
4.74%
0.0%
3.61
$
$
$
The following summarizes the changes in fair value of Private Placement Warrant liabilities included in net
income and the impact of exercises for the respective periods:
70
($ in thousands)
Beginning balance
Change in fair value of private placement warrants
Exercise of warrants
Ending balance
December 31, 2023
December 31, 2022
$
$
$
24,066
24,966
(49,032)
— $
38,466
(14,400)
—
24,066
Change in fair value of private placement warrants consists of adjustments related to the Private Placement
Warrants liabilities re-measured to fair value at the end of each reporting period and the final mark-to-market
adjustments for exercised warrants. During the year ended December 31, 2023, 6.7 million Private Placement Warrants
were exercised, which reduced our Private Placement Warrants liabilities by $49.0 million with an offset to common
stock at par value and the remaining to additional paid in capital.
The Company has an equity investment measured at cost with a carrying value of $2.1 million as of both
December 31, 2023 and 2022, 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 year ended December 31, 2023. The Company recorded a $1.3 million
impairment during the year ended December 31, 2022.
The recurring fair value measurement of the interest rate swap was valued based on observable inputs for similar
assets and liabilities including swaption values and other observable inputs for interest rates and yield curves and is
classified within level 2 of the fair value hierarchy. The following presents the changes in the fair value of the interest
rate swap in the gross balances within the below line items for the respective periods:
($ in thousands)
Prepaid expenses and other current assets
Beginning balance
Change in fair value of interest rate swap
Ending balance
Other non-current assets
Beginning balance
Change in fair value of interest rate swap
Ending balance
Accrued liabilities
Beginning balance
Change in fair value of interest rate swap
Ending balance
December 31, 2023
December 31, 2022
$
$
$
$
$
$
— $
689
689 $
1,973 $
(1,346)
627 $
977 $
(977)
— $
—
—
—
—
1,973
1,973
—
977
977
The Company separately classifies the current and non-current components based on the value of settlements
due within 12 months (current) and greater than 12 months (non-current).
Asset Retirement Obligations
The Company records obligations to perform certain retirement activities on camera and speed enforcement
systems in the period that the related assets are placed in service. Asset retirement obligations are contractual
obligations to restore property to its initial state. These obligations, which are initially estimated based on discounted
cash flow estimates, are accreted to full value over time through charges to operating expenses in the consolidated
statements of operations. The associated asset retirement obligation is capitalized as part of the related asset’s carrying
value and is depreciated over the asset’s estimated remaining useful life. When events and circumstances indicate that
the original estimates used for asset retirement obligations may need revision, the Company reassesses the assumptions
used and adjusts the liability appropriately.
71
Deferred Financing Costs
Deferred financing costs consist of the costs incurred to obtain long-term financing, including the Company’s
credit facilities (see Note 8, Long-Term Debt). These costs, which are a reduction to long-term debt on the consolidated
balance sheets, are amortized over the term of the related debt, using the effective interest method for term debt and
the straight-line method for revolving credit facilities. Amortization of deferred financing costs for fiscal years 2023,
2022 and 2021 was $4.7 million, $5.5 million and $5.2 million respectively.
Income Taxes
Income tax expense includes U.S and international current and deferred income taxes and interest and penalties
on uncertain tax positions. Certain income and expenses are not reported in tax returns and financial statements in the
same year. The tax effect of these temporary differences is reported as deferred income taxes. Deferred tax assets are
reported net of a valuation allowance when it is more likely than not that a tax benefit will not be realized. All deferred
income taxes are classified as long-term on our consolidated balance sheets.
Stock-based Compensation
In October 2018, the Company established the Verra Mobility 2018 Equity Incentive Plan which provides for a
variety of stock-based awards for issuance to employees and directors. In May 2023, the Company's stockholders
approved the Verra Mobility Corporation Amended and Restated 2018 Equity Incentive Plan (the “2018 Plan”),
which, among other things, increased the maximum number of shares available for awards by 5,000,000 shares. The
Company grants RSUs, stock options and PSUs.
The Company recognizes the fair value of RSUs based on the Company’s common stock price at market close
on the date of the grant. The Company uses the Black-Scholes option pricing model to determine the fair value of
stock options, and uses the Monte Carlo simulation model to determine the fair value of PSUs containing market
conditions. The Black-Scholes model requires an assumption regarding the expected life of the stock option, which
the Company estimated to be 6.25 years by applying the short-cut method permitted under SEC Staff Accounting
Bulletin No. 110. PSUs granted vest at the end of a three-year period (or ratably over three years for certain grants),
which matches the awards’ performance period. RSUs and stock options vest based on the continued service of the
recipient. PSUs are issued upon continued service along with the relative satisfaction of a market condition that
measures the Company’s total stockholder return relative to a comparably calculated return for a peer group during
the performance period or to the Company's absolute total stockholder return. In addition, the Black-Scholes and the
Monte Carlo models require assumptions to be made regarding the expected volatility of the Company’s stock price.
Stock price volatility is determined by averaging an implied volatility with the measure of historical volatility for
stock options and using the historical volatility for PSUs.
The following represents our weighted average assumptions for stock options and PSUs granted for the
respective periods:
Stock options
Weighted average expected volatility
Weighted average risk-free interest rate
PSUs
Weighted average expected volatility
Weighted average risk-free interest rate
For the Year Ended December 31,
2022
2021
2023
38.5%
4.28%
43.8%
4.29%
45.1%
2.94%
48.0%
2.78%
47.7%
0.94%
50.4%
0.33%
Compensation expense for share-based awards is determined based on the grant date fair value. The Company
recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is
generally the vesting term of the share-based award. The compensation expense for the PSUs is recognized over the
requisite service period regardless of whether the market condition is satisfied. Forfeitures are accounted for as they
occur. See Note 13, Equity Incentive Plan, for more information on the Company’s share-based awards.
72
Revenue Recognition
Nature of Goods and Services
The following is a description of principal activities, separated by reportable segments, from which the
Company generates revenue:
Commercial Services. The Commercial Services segment offers toll and violation management solutions for
commercial fleet operators, including RACs, Direct Fleets and FMCs. The Company determined its performance
obligation is a distinct stand-ready obligation, as there is an unspecified quantity of services provided that does not
diminish, and the customer is being charged only when it uses the Company’s services, such as toll payment, title and
registration, etc. Payment terms for contracts with commercial fleet and rental car companies vary, but are usually
billed as services are performed. The Company recognizes revenue over time based on the number of transactions
processed on behalf of customers during the period. It recognizes revenue on a net basis when it acts as an agent in
the transaction.
Government Solutions.
The Government Solutions segment principally generates revenue by providing
complete, end-to-end speed, red-light, school bus stop arm, and bus lane enforcement solutions. Products, when sold,
are typically sold together with the services in a bundle for a majority of customers. The average initial term of a
contract is three to five years. Payment terms for contracts with government agencies vary depending on whether the
consideration is fixed or variable. Payment terms for contracts with fixed consideration are usually based on equal
installments over the duration of the contract. Payment terms for contracts with variable consideration are usually
billed and collected as citations are issued or paid. Certain mobile speed programs are billed per camera system
deployed. In instances when the consideration expected from the customer is subject to variation, any variable
consideration affecting revenue recognition is allocated to the distinct period (the monthly period) that it relates to.
•
•
Product sales (sale of camera systems and installation) – the camera systems and related installation
services are an integrated solution and are accounted for as a single performance obligation. The revenues
for this performance obligation are generally recognized at a point in time when the installation process
is completed and the camera system is ready to perform the services as expected by the customer.
Generally, this occurs at site acceptance.
Service revenue – the Company provides a suite of services which may include camera maintenance,
processing images taken by the camera, forwarding eligible images to the police department and
processing payments on behalf of the municipality. The Company concluded that the suite of services as
a whole represents one service offering and is a single performance obligation. The service offering is
accounted for as a single continuous service. The Company applies the series guidance for those services
as it stands ready to deliver those services over the contract period. The Company recognizes revenue
from services over time, as they are performed.
Many of the Company’s customer contracts include both product sales and service revenue. The Company
applies judgment when determining whether the product sales and service offering are accounted for as combined
performance obligation or distinct performance obligations. In contracts where title to the camera system does not
transfer to the customer, the Company accounts for the contract as a single, combined performance obligation. This is
because the customer receives the right to use the photo enforcement system and the service offering concurrently.
For other contracts, the Company accounts for the products and services as distinct performance obligations because
the camera systems and the related service solution are both capable of being distinct and are not highly interdependent
and interrelated.
In contracts with multiple performance obligations, consideration is allocated between separate products and
services in a bundle based on their stand-alone selling prices (“SSP”). The Company estimates the SSP for its product
sales using expected cost plus margin. The Company is unable to establish the SSP for its service offering based on
observable prices as the services are sold for a wide range of amounts (the selling price is highly variable). As such,
the SSP for service offerings included in these contracts is generally determined by applying a residual approach.
Parking Solutions.
The T2 Systems business offers an integrated suite of parking software, transaction
processing and hardware solutions to its customers. Revenue is derived primarily from the sale of software as a service
(“SaaS”) and specialized hardware. For bundled offerings, the Company accounts for individual products and services
separately if they are distinct and allocates the transaction price based on the relative SSP. The Company is able to
73
establish the SSP for its product sales based on the observable prices of products sold separately in comparable
transactions. For professional services, the Company’s estimate of the standalone selling price is comprised of multiple
factors which include a cost plus margin approach and the historical sales price of similar services. The Company is
unable to establish the SSP for its software licenses based on observable prices given the same products are sold at a
broad range of prices and a representative SSP is not discernible from past transactions or other observable evidence,
as such, the SSP for software licenses included in a contract with multiple performance obligations is generally
determined by applying a residual approach. The Company’s estimates of SSP are reassessed on a periodic basis or
when facts and circumstances change.
•
•
•
The Company’s hosted parking management software products provide customers the ability to manage
access to their parking lots and garages, issue physical or virtual parking permits and manage citations
issued through enforcement devices. Revenue derived from these SaaS products is recognized ratably
over the contractual service period beginning on the date the service is made available to the customer.
Service revenue derived from the Company’s professional services are recognized over time as the
services are performed. Revenues for fixed-price service projects are generally recognized over time
applying input methods to estimate progress to completion.
Revenue from product sales is recognized at a point in time when a customer takes control of the hardware,
which typically occurs when the product is delivered to the customer and ownership is transferred to the
customer.
Remaining Performance Obligations
Deferred revenue represents amounts that have been invoiced in advance which are expected to be recognized
as revenue in future periods, and it primarily relates to the Government Solutions and Parking Solutions customers.
As of December 31, 2023 and 2022, the Company had approximately $13.1 million and $12.2 million of deferred
revenue in the Government Solutions segment, respectively. During the twelve months ended December 31, 2023 and
2022, the Company recognized $5.2 million and $3.7 million, respectively, of revenue related to amounts that were
included in deferred revenue as of December 31, 2022 and 2021, respectively. As of December 31, 2023 and 2022,
the Company had approximately $19.7 million and $21.2 million of deferred revenue in the Parking Solutions
segment, respectively. During the twelve months ended December 31, 2023 and 2022, the Company recognized $20.7
million and $20.1 million, respectively, of revenue related to amounts that were included in deferred revenue as of
December 31, 2022 and 2021, respectively.
Transaction price allocated to the remaining performance obligations includes deferred revenue above and
unbilled amounts that are expected to be recognized as revenue in future periods. As of December 31, 2023, total
transaction price allocated to performance obligations in the Government Solutions segment that were unsatisfied or
partially unsatisfied was $317.6 million, of which $204.3 million is expected to be recognized as revenue in the next
twelve months and the rest over the remaining performance obligation period. 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.
Credit Card Rebates
The Company earns volume rebates from total spend on purchasing cards and recognizes the income in other
income, net in the consolidated statements of operations. For the fiscal years ended December 31, 2023, 2022 and
2021, the Company recorded $17.8 million, $14.5 million, and $11.3 million respectively, related to rebates.
74
Advertising Costs
The Company expenses advertising costs as incurred. Advertising costs for the fiscal years ended December 31,
2023, 2022 and 2021, were $1.1 million, $1.0 million and $0.7 million, respectively, and were included in selling,
general, and administrative expenses in the consolidated statements of operations.
Foreign Currency
Assets and liabilities denominated in foreign currencies that differ from their functional currencies are re-
measured at the exchange rate on the balance sheet date. The foreign currency effect of the re-measurement is included
in other income, net in the consolidated statements of operations. The impact of foreign currency re-measurement was
losses of $1.7 million, $0.7 million and $0.2 million for the fiscal years ended December 31, 2023, 2022 and 2021,
respectively.
The assets and liabilities of our foreign subsidiaries whose functional currency is not the U.S. dollar are
translated into U.S. dollars at current exchange rates while revenue and expenses are translated from functional
currencies at average monthly exchange rates. The resulting translation adjustments are recorded in accumulated other
comprehensive loss in stockholders’ equity.
Acquisitions
The Company applies the acquisition method to account for business combinations. The Company allocates the
fair value of the purchase price consideration to assets acquired and liabilities assumed based on their estimated fair
values. The excess of the purchase consideration over the fair value of the identifiable assets and liabilities is recorded
as goodwill. The Company includes the results of operations of businesses acquired from the date of the respective
acquisition. Any transaction costs associated with acquisitions are expensed as incurred.
Measurement period adjustments to preliminary purchase price allocations are recognized in the period in which
they are determined, with the effect on earnings of any changes in depreciation, amortization or other income resulting
from such changes calculated as if the accounting had been completed at the acquisition date. If applicable, we estimate
the fair value of contingent consideration payments in determining the purchase price. Contingent consideration is
adjusted to fair value in subsequent periods as an increase or decrease in selling, general and administrative expenses.
The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based
on various assumptions and valuation methodologies requiring considerable management judgment, and includes the
use of independent valuation specialists to assist the Company in estimating fair values of acquired tangible and
intangible assets. Although the Company believes that the assumptions applied in the determination are reasonable
based on information available at the date of acquisition, actual results may differ from estimates.
Recent Accounting Pronouncements
Accounting Standards Adopted
In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform
(Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provided
temporary optional guidance to ease the potential burden in accounting for reference rate reform. It provided optional
expedients and exceptions for applying GAAP to contract modifications, subject to meeting certain criteria, that
reference LIBOR or another reference rate that is discontinued. In January 2021, the FASB issued ASU 2021-01,
Reference Rate Reform (Topic 848): Scope, which clarifies that certain optional expedients and exceptions in Topic
848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting
transition.
In March 2023, the Company amended its 2021 Term Loan agreement to transition away from LIBOR to Term
SOFR with the cessation of LIBOR in June 2023. As a result, the Company adopted the standard and elected to apply
the optional expedients which enabled it to consider the change in the benchmark interest rate as a continuation of the
existing loan agreement and account for it prospectively. The adoption of this standard did not have a material impact
to the consolidated financial statements.
75
Accounting Standards Not Yet Adopted
On June 30, 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value
Measurement of Equity Securities Subject to Contractual Sale Restrictions. The ASU clarifies that a contractual
restriction on the sale of an equity security is not considered part of the unit of account of the equity security and,
therefore, is not considered in measuring fair value. It also requires entities with investments in equity securities
subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.
The guidance is effective for fiscal years, including interim periods beginning after December 15, 2023. The Company
does not expect this standard to have a material impact on its consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):
Improvements to
Reportable Segment Disclosures. The ASU intends to enhance disclosure related to significant segment expenses
regularly provided to the CODM, amounts presented as “other” within segment profit (loss), require that all annual
disclosures are also reported for interim periods, further define the CODM and how they use segment profit (loss) to
allocate resources, and require that entities with only a single reportable segment provide all required segment
disclosures. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within
fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the
impact of this standard on its financial statements.
In December 2023, the FASB issued 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. Early
adoption is permitted. The Company is currently evaluating the impact of this standard on its financial statements.
3.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following at December 31:
($ in thousands)
Prepaid services
Prepaid tolls
Prepaid income taxes
Prepaid computer maintenance
Costs to fulfill a customer contract
Deposits
Prepaid insurance
Other
Total prepaid expenses and other current assets
4.
Property and Equipment, Net
Property and equipment, net, consists of the following at December 31:
($ in thousands)
Equipment
Software
Leasehold improvements
Computer equipment
Furniture
Automobiles
Construction in progress
Property and equipment
Less: accumulated depreciation
Property and equipment, net
76
2023
2022
$
$
$
$
10,496
9,174
9,830
6,775
5,852
2,322
1,755
757
46,961
2023
159,151
37,415
10,031
21,415
2,651
14,422
17,781
262,866
(139,618)
123,248
$
$
$
$
9,171
9,978
4,629
5,492
3,193
2,057
3,112
1,972
39,604
2022
122,507
30,288
9,806
20,274
2,648
12,933
19,357
217,813
(108,038)
109,775
Depreciation expense was $35.2 million, $32.2 million and $26.8 million for the fiscal years ended December
31, 2023, 2022 and 2021, respectively.
5.
Goodwill and Intangible Assets
The following table presents the changes in the carrying amount of goodwill by reportable segment:
($ in thousands)
Balance at December 31, 2021
Measurement period adjustment (a)
Foreign currency translation adjustment
Balance at December 31, 2022
Foreign currency translation adjustment
Balance at December 31, 2023
Commercial
Services
Government
Solutions
Parking
Solutions
$
$
425,081
—
(5,361)
419,720
2,371
422,091
$
$
215,400
—
(782)
214,618
(16)
214,602
$
$
198,386
756
—
199,142
—
199,142
$
$
Total
838,867
756
(6,143)
833,480
2,355
835,835
(a) The measurement period adjustment is related to the T2 Systems acquisition completed in December 2021.
Intangible assets consist of the following as of the respective period-ends:
At December 31, 2023
Gross
Carrying
Amount
Accumulated
Amortization
32,882
$
17
62,540
288,065
175,159
558,663
$
($ in thousands)
Trademarks
Patent
Non-compete agreements
Customer relationships
Developed technology
Gross carrying value of intangible assets
Less: accumulated amortization
Intangible assets, net
($ in thousands)
Trademarks
Non-compete agreements
Customer relationships
Developed technology
Gross carrying value of intangible assets
Less: accumulated amortization
Intangible assets, net
Weighted
Average
Remaining
Useful Life
0.3 years
4.8 years
0.0 years
4.5 years
0.8 years
Weighted
Average
Amortization
Period
3.7 years
5.0 years
5.0 years
9.3 years
5.8 years
Weighted
Average
Remaining
Useful Life
0.4 years
0.1 years
5.5 years
1.2 years
Weighted
Average
Amortization
Period
3.7 years
5.0 years
9.3 years
5.8 years
$
$
$
$
36,190
500
62,540
558,801
201,657
859,688
(558,663)
301,025
36,151
62,529
557,570
201,548
857,798
(480,378)
377,420
At December 31, 2022
Gross
Carrying
Amount
Accumulated
Amortization
32,233
$
60,926
227,102
160,117
480,378
$
Amortization expense was $77.6 million, $106.2 million and $89.9 million for fiscal years ended December 31,
2023, 2022 and 2021, respectively.
77
Estimated amortization expense in future years is expected to be:
($ in thousands)
2024
2025
2026
2027
2028
Thereafter
Total
6.
Accrued Liabilities
Accrued liabilities consist of the following at December 31:
($ in thousands)
Accrued legal settlement
Accrued salaries and wages
Current deferred tax liabilities
Current portion of operating lease liabilities
Accrued interest payable
Payroll liabilities
Restricted cash due to customers
Advanced deposits
Self-insurance liability
Current portion of interest rate swap liability
Other
Total accrued liabilities
7.
Asset Retirement Obligations
$
$
67,131
64,433
57,431
28,523
22,580
60,927
301,025
2023
2022
$
$
31,500
27,905
7,574
7,133
4,594
3,214
2,835
2,308
1,802
—
4,254
93,119
$
$
—
19,109
7,559
6,355
4,459
2,136
3,541
1,029
858
977
2,824
48,847
The following summarizes the changes in the Company’s asset retirement obligations for the years ended
December 31:
($ in thousands)
Asset retirement obligations, beginning balance
Liabilities incurred (a)
Accretion expense
Liabilities settled
Asset retirement obligations, ending balance
2023
2022
$
$
12,993
1,176
760
(349)
14,580
$
$
11,824
944
445
(220)
12,993
(a) For the year ended December 31, 2022, this included $0.4 million increase resulting from a change in
estimate for the impact of inflation.
78
8.
Long-term Debt
The following table provides a summary of the Company’s long-term debt at December 31:
($ in thousands)
2021 Term Loan, due 2028
Senior Notes, due 2029
Less: original issue discounts
Less: unamortized deferred financing costs
Total long-term debt
Less: current portion of long-term debt
Total long-term debt, net of current portion
2023
704,587
350,000
(3,646)
(12,809)
1,038,132
(9,019)
1,029,113
$
$
2022
886,106
350,000
(5,637)
(18,489)
1,211,980
(21,935)
1,190,045
$
$
The following table presents the aggregate principal and interest payments in future years on long-term debt as
of December 31, 2023:
($ in thousands)
2024
2025
2026
2027
2028
Thereafter
Total
Principal
Interest (1)
$
$
9,019
9,019
9,019
9,019
668,511
350,000
1,054,587
$
$
81,757
80,448
79,651
78,853
33,177
5,561
359,447
(1) The variable interest rate in effect as of December 31, 2023 was used to calculate interest payments for the
2021 Term Loan.
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, which includes the incremental borrowing of $250.0 million in December 2021 as a result of
exercising the accordion feature available under the agreement. 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.
During fiscal year 2023, the Company made early repayments of $172.5 million on the 2021 Term Loan and as
a result, the total principal outstanding was $704.6 million as of December 31, 2023. The Company recognized losses
on extinguishment of debt of $3.5 million and $5.3 million for fiscal years 2023 and 2021, respectively, related to the
write-off of pre-existing deferred financing costs and discounts, and lender and third party costs.
The 2021 Term Loan is repayable at 1.0% per annum of the amount initially borrowed, paid in quarterly
installments. It bears interest based, at the Company’s option, on either (1) LIBOR plus an applicable margin of 3.25%
per annum, or (2) an alternate base rate plus an applicable margin of 2.25% per annum. In March 2023, the Company
amended its 2021 Term Loan agreement (the “Second Amendment”) to transition away from LIBOR to Term SOFR
with the cessation of LIBOR in June 2023. To compensate for the differences in reference rates utilized, the Second
Amendment also includes a credit spread adjustment of 0.11448% for an interest period of one-month duration,
0.26161% for a three-month duration, 0.42826% for a six-month duration, and 0.71513% for twelve-months duration
in addition to Term SOFR and the applicable margin. The Company has applied the optional expedients in ASC 848,
Reference Rate Reform, and elected to treat the change in the benchmark interest rate to Term SOFR as a continuation
of the existing loan agreement and account for it prospectively. As of December 31, 2023, the new all-in interest rate
on the 2021 Term Loan was 8.7%.
79
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)
> 3.70:1.00
< 3.70:1.00 and > 3.20:1.00
< 3.20:1.00
Applicable
Prepayment
Percentage
50%
25%
0%
The Company did not have mandatory prepayments of excess cash flows for the fiscal years ended December
31, 2023 or 2022.
Subsequent to December 31, 2023, the Company amended the 2021 Term Loan agreement to refinance the
entire outstanding amount under the 2021 Term Loan. In connection with the amended 2021 Term Loan agreement,
the interest rate was reduced and the credit spread adjustment was eliminated. See Note 18, 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. On or after April 15, 2024, 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
2024
2025
2026 and thereafter
Percentage
102.750%
101.375%
100.000%
In addition, the Company may redeem up to 40% of the Senior Notes before April 15, 2024, with the net cash
proceeds from certain equity offerings at a redemption price of 105.50%.
PPP Loan
During fiscal year 2020, one of the Company's wholly owned subsidiaries received a $2.9 million loan from the
U.S. Small Business Administration (“SBA”) as part of the Paycheck Protection Program (“PPP Loan”) to offset
certain employment and other allowable costs incurred as a result of the COVID-19 pandemic. In early 2021, the
Company applied for forgiveness of this loan, and on September 23, 2022, it was notified by the SBA that the loan,
together with accrued interest, had been fully forgiven under the provisions of the PPP Loan program. Accordingly,
the Company recognized a $3.0 million gain on extinguishment of debt in the consolidated statements of operations
for the year ended December 31, 2022.
The Revolver
The Company has a Revolving Credit Agreement (the “Revolver”) with a commitment of up to $75.0 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) Term SOFR plus an applicable margin, or (2) an alternate base rate, plus an
applicable margin. The margin percentage applied to (1) Term SOFR is either 1.25%, 1.50%, or 1.75%, or (2) the base
80
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 Term SOFR and the applicable margin percentages. There
are no outstanding borrowings on the Revolver as of December 31, 2023 or 2022. At December 31, 2023, the
availability to borrow was $74.8 million, net of $0.2 million of outstanding letters of credit.
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 $0.2 million of outstanding letters of credit as of December 31,
2023.
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 December 31, 2023, the Company
was compliant with all debt covenants.
Interest Expense, Net
The Company recorded interest expense, net of interest income, including amortization of deferred financing
costs and discounts, of $86.7 million, $69.4 million and $44.9 million for the fiscal years ended December 31, 2023,
2022 and 2021 respectively. Interest income earned was $4.2 million for the fiscal year ended December 31, 2023 and
less than $0.1 million for both fiscal years ended December 31, 2022 and 2021.
The weighted average effective interest rates on the Company’s outstanding borrowings were 7.7% and 7.0%
at December 31, 2023 and December 31, 2022, respectively.
See Note 2, Significant Accounting Policies, for additional information on the interest rate swap entered into in
December 2022 to hedge the Company's exposure against rising interest rates.
9.
Leases
The Company’s operating leases primarily consist of office, equipment and vehicle leases expiring at various
dates through April 2035. The Company has lease agreements with lease and non-lease components and has elected
to account for such components as a single lease component. The Company measures and recognizes contracts
containing a lease and determines lease classification at commencement. Right of use operating assets and lease
liabilities are measured based on the estimated present value of lease payments over the lease term. In determining the
present value of lease payments, the Company uses its estimated incremental borrowing rate when the rate implicit in
the lease cannot be readily determined. The estimated incremental borrowing rate is based upon information available
at lease commencement including publicly available data for debt instruments. The lease term includes periods
covered by options to extend when it is reasonably certain the Company will exercise such options as well as periods
subsequent to an option to terminate the lease if it is reasonably certain the Company will not exercise the termination
option. Certain of the lease agreements have rent abatement and escalating rental payment provisions. Operating lease
costs are recognized on a straight-line basis over the lease term. Variable lease costs are recognized as incurred. The
Company’s lease agreements do not contain any material residual value guarantees or restrictive covenants. The
Company does not have material short-term leases and does not engage in material subleasing activities.
As of December 31, 2023, operating leases had a remaining weighted average lease term of 8.0 years and
operating lease liabilities were measured using a weighted average discount rate of 5.4%. The total operating lease
costs for the fiscal years ended December 31, 2023, 2022 and 2021 were $9.5 million, $8.8 million and $7.5 million,
respectively. Variable lease costs for fiscal years ended December 31, 2023, 2022 and 2021 were approximately $2.7
million, $1.5 million and $1.4 million, respectively. Finance leases for the Company are not material.
81
The following is a summary of the operating lease liabilities as of December 31:
($ in thousands)
Operating lease liabilities, net of current portion
Current portion
Total operating lease liabilities
2023
2022
$
$
29,124
7,133
36,257
$
$
The following provides future maturities of operating lease liabilities as of December 31, 2023:
($ in thousands)
2024
2025
2026
2027
2028
Thereafter
Total minimum payments
Less: amount representing interest
Total
10. Net Income Per Share
$
$
33,362
6,202
39,564
8,855
6,531
5,030
3,707
3,039
18,160
45,322
(9,065)
36,257
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:
(In thousands, except per share data)
Numerator:
Net income
Denominator:
Weighted average shares - basic
Common stock equivalents
Weighted average shares - diluted
Net income per share - basic
Net income per share - diluted
Antidilutive shares excluded from diluted net income
per share:
Contingently issuable shares (1)
ASR shares (2)
Private placement warrants
Non-qualified stock options
Performance share units
Restricted stock units
Total antidilutive shares excluded
$
$
$
2023
For the Year Ended December 31,
2022
2021
57,015
$
92,475
$
41,449
158,777
1,240
160,017
0.36
0.36
$
$
152,848
6,178
159,026
0.61
0.50
$
$
—
566
—
222
22
219
1,029
5,000
—
—
1,149
157
742
7,048
159,983
3,795
163,778
0.26
0.25
5,000
—
6,667
1,018
130
432
13,247
(1) Contingently issuable shares related to the earn-out agreement as discussed in Note 15, Other
Transactions.
82
(2) Had the accelerated share repurchase (“ASR”) initiated in the third quarter of 2023 described in Note 12,
Stockholders' Equity, been settled as of December 31, 2023, determined based on the volume-weighted average
price per share since its effective date, the counterparties would have been required to deliver these additional
estimated shares to the Company. The final settlement for the ASR occurred during the first quarter of fiscal year
2024, at which time, the Company received 534,499 additional shares.
11.
Income Taxes
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022, which was effective
January 1, 2023 and contained provisions implementing a 15% minimum corporate income tax on book income of
certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy.
The enacted provisions did not have a material impact on the Company’s consolidated financial statements for the
years ended December 31, 2023 and 2022.
Income before income taxes consisted of the following:
($ in thousands)
U.S.
Foreign
Total income before incomes taxes
For the Year Ended December 31,
2022
2021
2023
$
$
92,425
(5,428)
86,997
$
$
140,858
(13,750)
127,108
$
$
77,101
(9,200)
67,901
The income tax provision consisted of the following:
($ in thousands)
Current
Federal
State
Foreign
Total current
Deferred
Federal
State
Foreign
Total deferred
Income tax provision
For the Year Ended December 31,
2022
2021
2023
$
$
38,109
15,794
3,113
57,016
(16,522)
(6,335)
(4,177)
(27,034)
29,982
$
$
34,071
14,779
1,777
50,627
(8,069)
(4,863)
(3,062)
(15,994)
34,633
$
$
25,361
10,523
160
36,044
(7,434)
(1,627)
(531)
(9,592)
26,452
83
A reconciliation to the income tax provision from the amounts computed by applying the statutory U.S.
federal income tax rate is as follows:
($ in thousands)
Income tax provision at statutory rate
State income taxes, net of federal income tax effect
Tax rate changes/ valuation of deferred tax items
162(m) limitation
Non-deductible expenses
Stock-based compensation
Unrecognized tax benefits
Tax impact for change in fair value of warrants
Change in valuation allowance
Non-deductible transaction costs
Research and development credits
Tax receivable agreement imputed interest
Other
Total income tax provision
For the Year Ended December 31,
2022
2021
2023
$
$
18,270
7,762
—
1,000
49
796
1,831
5,243
297
—
(1,032)
(3,641)
(593)
29,982
$
$
26,693
8,588
—
1,766
30
(545)
1,215
(3,024)
1,429
—
(517)
—
(1,002)
34,633
$
$
14,259
6,748
586
1,325
174
(752)
174
1,596
1,435
1,078
(125)
—
(46)
26,452
Significant components of the Company’s deferred income tax assets and liabilities consist of the following at
December 31:
($ in thousands)
Deferred tax assets:
Accrued expenses and other
Allowance for credit losses
Net operating loss carryforward
Interest expense limitation carryforward
Federal and state income tax credits
ASC 842 operating lease liabilities
R&D Section 174 capitalization
Stock compensation
Tax receivable agreement imputed interest
Transaction costs
Other
Gross deferred tax assets
Valuation allowance
Deferred tax assets, net of valuation allowance
Deferred tax liabilities:
Intangible assets and transaction costs
Property and equipment
Financing costs
Prepaid assets
ASC 842 operating lease assets
Gross deferred tax liabilities
Total deferred tax assets (liabilities), net
2023
2022
$
$
12,649
7,894
16,489
5,656
4,446
10,005
9,235
2,655
3,641
305
1,252
74,227
(7,011)
67,216
(31,663)
(13,719)
(1,206)
(2,255)
(9,255)
(58,098)
9,118
$
$
6,255
9,108
16,476
5,108
4,965
10,986
3,248
1,995
—
458
2,026
60,625
(5,263)
55,362
(42,206)
(15,265)
(2,392)
(2,269)
(10,403)
(72,535)
(17,173)
As of December 31, 2023 and 2022, the Company presented $27.5 million and $4.0 million, respectively, of
deferred tax assets, net, to reflect U.S. entity deferred taxes within other non-current assets in the Company's
consolidated balance sheets.
84
As of December 31, 2023, the Company has provided income taxes on the earnings of foreign subsidiaries,
except to the extent such earnings are considered indefinitely reinvested. The amount of the unrecognized deferred
tax liability related to these temporary differences is approximately $0.8 million.
In accordance with ASC 740, Income Taxes, deferred tax assets are reduced by a valuation allowance if it is
more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred
tax assets can be affected by, among other things, the nature, frequency and severity of current and cumulative losses,
forecasts of future profitability, limitations on the use of acquired tax attributes due to an ownership change under IRC
section 382, the length of statutory carryforward periods, the Company’s experience with utilizing operating losses
and tax credit carryforwards by jurisdiction, and tax planning alternatives and strategies that may be available.
The Company performed an analysis of the reversal of the deferred tax assets and considered the overall business
environment, historical earnings, the outlook for future years and the impact of limitations on the use of acquired tax
attributes due to an ownership change under IRC section 382. The Company determined that it is more likely than not
that the benefit from certain foreign net operating loss carryforwards will not be realized as of the years ended
December 31, 2023 and 2022, and as such provided a valuation allowance of $7.0 million and $5.3 million,
respectively. The valuation allowance could be adjusted in future periods if estimates of future taxable income during
the carryforward period are increased or if objective negative evidence in the form of cumulative losses is no longer
present.
The net operating loss carryforwards represent $118.0 million and $124.4 million of federal, state and foreign
net operating losses at December 31, 2023 and 2022, respectively. The federal net operating loss carryforward at
December 31, 2023 consists of $17.7 million of losses that were generated after 2017 with no expiration date. The
Company also has certain tax credits of $4.2 million and $5.6 million at December 31, 2023 and 2022, respectively,
which if unused will begin to expire in 2025.
The following table summarizes the activity related to the Company’s unrecognized tax benefits as of December
31:
($ in thousands)
Balance at the beginning of the year
Increases/(decreases) related to current year tax positions
Increases/(decreases) related to prior year tax positions
Expiration due to statute of limitations
Balance at the end of the year
2023
2022
$
$
10,675
5,401
592
(511)
16,157
$
$
2,878
8,076
(132)
(147)
10,675
Included in the balance of unrecognized tax benefits as of December 31, 2023 were $8.7 million of tax benefits
that, if recognized, would impact the effective tax rate. The Company does not expect its unrecognized tax benefits to
change significantly over the next 12 months.
The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. The
Company recognized $0.7 million for fiscal year 2023 and $0.5 million for fiscal year 2022 in interest and penalties.
The Company had accrued interest and penalties of $1.2 million and $0.5 million at December 31, 2023 and 2022,
respectively. The Company accounts for uncertain tax positions by recognizing the financial statement effects of a tax
position only when, based on technical merits, it is more likely than not that the tax position will be sustained under
examination.
85
The Company is subject to examination by the Internal Revenue Service and taxing authorities in various
jurisdictions. The Company files U.S. federal and various foreign income tax returns which are subject to examination
by the taxing authorities in the respective jurisdictions, generally for three or four years after they are filed. The
Company’s state income tax returns are generally no longer subject to income tax examination by tax authorities prior
to 2019; however, the Company’s net operating loss carryforwards and research credit carryforwards arising prior to
that year are subject to adjustment. The Company is currently under audit by various state tax jurisdictions for the
years 2018 through 2020; however, no material adjustments are anticipated. The Company regularly assesses the
likelihood of tax deficiencies in each of the tax jurisdictions and, accordingly, makes appropriate adjustments to the
tax provision as deemed necessary.
12.
Stockholders’ Equity
The Company’s Amended and Restated Certificate of Incorporation authorizes the issuance of 261,000,000
shares of capital stock, consisting of (i) 260,000,000 shares of Class A Common Stock, and (ii) 1,000,000 shares of
preferred stock, each at par value of $0.0001 per share. The outstanding shares of the Company’s common stock are
duly authorized, validly issued, fully paid and non-assessable.
Warrants
As of December 31, 2022, there were 19,999,967 warrants outstanding to acquire shares of the Company’s Class
A Common Stock, including (i) 6,666,666 Private Placement Warrants and (ii) the remaining Public Warrants. The
Warrants had a five-year term and expired in October 2023, unless they were redeemed or exercised prior to expiration.
As of December 31, 2023, all Warrants were either exercised by the holder or redeemed by the Company.
During the fiscal year ended December 31, 2023, the Company processed the exercise of 19,999,333 Warrants
in exchange for the issuance of 16,273,406 shares of Class A Common Stock. There were 14,035,449 shares issued
in exchange for cash-basis warrant exercises resulting in the receipt of $161.4 million in cash proceeds as of December
31, 2023. The remaining Warrant exercises were completed on a cashless basis. In addition, the Company redeemed
634 Public Warrants at a price of $0.01 per warrant, as the last sale price of the Class A Common Stock was equal to
or exceeded $18.00 per share for 20 trading days within a 30 trading-day period before the Company sent the notice
of redemption to the Warrant holders.
For details on the Private Placement Warrants liabilities as a result of the Warrant exercises and the changes in
fair value of the liabilities recorded in the consolidated statements of operations, refer to the respective section within
Note 2, Significant Accounting Policies.
Share Repurchases and Retirement - 2023
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 over an 18-month
period in open market, ASR or privately negotiated transactions, each as permitted under applicable rules and
regulations, any of which may use pre-arranged trading plans that are designed to meet the requirements of Rule 10b5-
1 of the Exchange Act.
The Company paid $8.1 million to repurchase 449,432 shares of its Class A Common Stock through open
market transactions during the third quarter of fiscal year 2023, which it subsequently retired. On September 5, 2023,
the Company used the remaining availability under the share repurchase program for an 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 534,499 additional shares calculated using a volume-weighted average price over the
term of the ASR agreement. The Company accounted for the ASR as a common stock repurchase and a forward
contract indexed to its own common stock. The Company determined that the equity classification criteria was met
for the forward contract, therefore, it did not account for it as a derivative instrument.
The Company paid a total of $100.0 million for share repurchases during the year ended December 31, 2023,
and accounted for the transactions by deducting the par value from common stock, reducing $15.2 million from
additional paid-in capital calculated using an average share price, and by increasing accumulated deficit for the
remaining cost of $84.8 million.
86
On October 30, 2023, the Company’s Board of Directors authorized a new 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 open market, ASR or privately negotiated transactions. The level at which the Company repurchases depends on a
number of factors, including its financial condition, capital requirements, cash flows, results of operations, future
business prospects and other factors its management may deem relevant. The timing, volume and nature of repurchases
are subject to market conditions, applicable securities laws and other factors and may be amended, suspended or
discontinued at any time. The Company has not yet repurchased shares under this repurchase program.
Share Repurchases and Retirement - 2022
In May 2022, the Company’s Board of Directors authorized a share repurchase program for up to an aggregate
amount of $125.0 million of its outstanding shares of Class A Common Stock over a twelve-month period.
On May 12, 2022, the Company paid $50.0 million for an ASR and received an initial delivery of 2,739,726
shares of its Class A Common Stock in accordance with an ASR agreement with a third-party financial institution.
The final settlement occurred on August 3, 2022, at which time, the Company received 445,086 additional shares
calculated using a volume-weighted average price over the term of the ASR agreement. In addition, during the second
and third quarters of 2022, the Company paid $6.9 million and repurchased 445,791 shares of its Class A Common
Stock through open market transactions. The Company’s Board of Directors authorized a second ASR during the third
quarter of 2022 for the remaining availability under the share repurchase program. On August 19, 2022, the Company
paid $68.1 million for a second ASR, and received an initial delivery of 3,300,000 shares of its Class A Common
Stock in accordance with an ASR agreement with a third-party financial institution. The final settlement occurred on
November 4, 2022, at which time, the Company received 943,361 additional shares calculated using a volume-
weighted average price over the term of the ASR agreement. The Company accounted for each ASR transaction as a
common stock repurchase and a forward contract indexed to its own common stock. The Company determined that
the equity classification criteria was met for the forward contracts, therefore, it did not account for them as derivative
instruments. The Company incurred $0.1 million of direct costs in connection with share repurchase transactions
during fiscal year 2022, which it included in the cost of the shares acquired.
The Company paid a total of $125.0 million for shares repurchases and $0.1 million for direct costs during fiscal
year 2022 and accounted for the transactions by deducting the par value from the common stock, reducing $15.9
million from additional paid-in capital calculated using an average share price, and by increasing accumulated deficit
for the remaining cost of $109.1 million.
13. Equity Incentive Plan
In October 2018, the Company established the Verra Mobility 2018 Equity Incentive Plan which provides for a
variety of stock-based awards including restricted stock units (“RSUs”), performance share units (“PSUs”) and non-
qualified stock options to employees and non-employee directors. In May 2023, the stockholders approved the Verra
Mobility Corporation Amended and Restated 2018 Equity Incentive Plan (the “2018 Plan”), which, among other
things, increased the maximum number of shares available for awards by 5,000,000 shares. The maximum number of
shares of the Company’s common stock that may be subject to awards under the 2018 Plan was 15,864,000 as of
December 31, 2023, subject to adjustment in accordance with the terms of the 2018 Plan. At December 31, 2023, the
Company had an aggregate of 7,110,881 shares of common stock available for future grants under the 2018 Plan.
RSUs and PSUs
The Company’s RSUs consist of a right to receive shares on one or more vesting dates in the future. RSUs
granted to employees vest ratably over four years from their individual award dates, subject to continued employment
on the applicable vesting dates. RSUs granted to non-employee directors vest on the earlier of (a) the first anniversary
of the vesting start date, or (b) the date immediately prior to the next annual stockholders meeting held by the Company
occurring after the date of grant.
The Company grants PSUs to senior executives which consist of a right to receive shares generally at the end
of a three-year period (or ratably over three years for certain grants). PSUs are issued upon continued service along
with the relative satisfaction of a market condition that generally measures either the Company’s total stockholder
return relative to a comparably calculated return for a peer group during the performance period or to the Company's
absolute total stockholder return. The level at which the performance condition is attained upon the completion of the
87
performance period determines the actual number of shares of the Class A Common Stock into which the PSUs will
be converted. The conversion percentage ranges from 0% up to 150% of the target level.
The following table summarizes the activity of the Company’s RSUs and PSUs:
Balance at December 31, 2020
Granted
Vested
Forfeited
Balance at December 31, 2021
Granted
Vested
Forfeited
Balance at December 31, 2022
Granted
Vested
Forfeited
Balance at December 31, 2023
RSUs
PSUs
Shares
(in thousands)
Weighted Average
Grant Date
Fair Value
Shares
(in thousands)
Weighted Average
Grant Date
Fair Value
$
2,203
736
$
(1,018) $
(229) $
$
1,692
1,093
$
(1,030) $
(260) $
1,495
$
$
1,452
(523) $
(358) $
$
2,066
10.64
14.12
10.41
13.40
11.92
14.09
11.10
13.39
13.82
18.16
13.77
16.18
16.49
$
106
154
$
— $
(31) $
$
229
179
$
— $
(94) $
314
$
$
1,970
(101) $
(85) $
$
2,098
13.88
16.28
—
16.97
15.07
15.58
—
15.17
15.33
11.42
13.88
11.64
11.88
The fair value of RSUs vested during fiscal years 2023, 2022 and 2021 was $7.2 million, $11.4 million and
$10.6 million, respectively. The fair value of PSUs vested during fiscal year 2023 was $1.4 million. There were no
PSU awards that vested during fiscal years 2022 or 2021. As of December 31, 2023, the Company had $25.5 million
and $18.9 million of unrecognized stock-based compensation expense related to unvested RSUs and PSUs,
respectively, which is expected to be recognized over a weighted average period of 2.6 years and 3.1 years,
respectively.
Stock Options
Stock options granted vest ratably over four years from their individual award dates, subject to continued
employment on the applicable vesting dates, with a contractual term of ten years. The following table summarizes the
activity of the Company’s stock options:
Stock Options Outstanding
Shares
(in thousands)
Weighted Average
Exercise Price
Per Share
Weighted Average
Remaining
Contractual Term
Aggregate
Intrinsic Value
($ in thousands)
Balance at December 31, 2020
Granted
Exercised
Forfeited
Balance at December 31, 2021
Granted
Exercised
Forfeited
Balance at December 31, 2022
Granted
Exercised
Forfeited
Balance at December 31, 2023
Exercisable at December 31, 2023
12.56
13.95
12.62
14.29
13.18
13.97
12.98
13.59
13.53
17.75
13.08
13.89
13.78
13.55
$
36
8.7 years $
2,636
$
8.5 years $
$
7.7 years $
348
619
2,671
9,798
7.4 years $
2,465
$
614
731
$
(12) $
(170) $
1,163
$
$
846
(103) $
(329) $
$
1,577
$
25
(451) $
(91) $
$
1,060
260
$
88
The weighted average fair value of options granted in fiscal years 2021, 2022 and 2023 was $6.47, $6.66 and
$8.08 per share, respectively. The Company received approximately $0.2 million, $1.3 million and $5.9 million related
to stock options exercised during fiscal years 2021, 2022 and 2023, respectively. As of December 31, 2023, the
Company had $3.4 million of unrecognized stock-based compensation expense related to unvested stock options
which is expected to be recognized over a weighted average period of 1.8 years.
The following details the components of stock-based compensation for the respective periods:
($ in thousands)
Operating expenses
Selling, general and administrative expenses
Total stock-based compensation expense
For the Year Ended December 31,
2022
2021
2023
$
$
2,488
14,988
17,476
$
$
1,130
15,533
16,663
$
$
815
12,969
13,784
Tax benefits attributable to stock-based compensation represented approximately $3.3 million, $4.6 million and
$4.6 million, before limitations under section 162(m) of the Internal Revenue Code, during the years ended December
31, 2023, 2022 and 2021, respectively.
14. Employee Benefit Plan
The Company has a 401(k) plan that covers U.S. employees who meet certain eligibility requirements. Covered
employees may elect to have a portion of their compensation withheld up to the statutory limit. The 401(k) plan
includes a company match that vests immediately. The Company made employer contributions of $3.9 million, $2.5
million and $1.9 million during the fiscal years ended December 31, 2023, 2022 and 2021, respectively.
The Company also makes superannuation contributions for eligible non-U.S. based employees in accordance
with the employer contribution rate set by the applicable country. The expense related to these contributions was $1.9
million, $1.7 million and $1.1 million during the fiscal years ended December 31, 2023, 2022 and 2021, respectively.
15. Other Transactions
Tax Receivable Agreement
At the closing of the Business Combination, the Company entered into the Tax Receivable Agreement (“Tax
Receivable Agreement”) with the Platinum Stockholder. On August 3, 2022, the Platinum Stockholder sold and
transferred to Lakeside Smart Holdco L.P.(“Lakeside”), all of its rights, remaining interests and obligations as of that
date under the agreement. The Tax Receivable Agreement generally 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) in periods after the closing of the Business Combination as a result of the
increased tax basis of certain acquired intangibles prior to the Business Combination. 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
closing of the Business Combination.
At December 31, 2023, the Tax Receivable Agreement liability was approximately $53.5 million of which $5.1
million was the current portion and $48.4 million was the non-current portion, both of which are included in the
respective tax receivable agreement liability line items on the consolidated balance sheets. During the fourth quarter,
the Company made a tax settlement payment for $5.6 million recorded in other income, net related to a previous
acquisition which was partially offset by a $5.0 million reduction to the liability per the terms of the Tax Receivable
Agreement.
The Company recorded a gain of approximately $3.1 million in fiscal year 2023 as a result of tax settlement
adjustments related to a previous acquisition. The Company recorded a gain of $0.7 million in fiscal year 2022 as a
result of lower estimated state tax rates due to changes in apportionment.
89
Earn-Out Agreement
Under the Merger Agreement, the Platinum Stockholder was entitled to receive additional shares of Class A
Common Stock (the “Earn-Out Shares”) if the volume weighted average closing sale price of one share of Class A
Common Stock on the Nasdaq exceeded certain thresholds for a period of at least 10 days out of 20 consecutive trading
days at any time during the five-year period following the closing of the Business Combination (the “Common Stock
Price”).
The Earn-Out Shares were issued by the Company to the Platinum Stockholder upon meeting the below
Common Stock Price Thresholds (each, a “Triggering Event”):
Common Stock Price Thresholds
> $13.00 (a)
> $15.50 (a)
> $18.00 (a)
> $20.50 (a)
One-time Issuance of Shares
2,500,000
2,500,000
2,500,000
2,500,000
(a) All four tranches of Earn-Out Shares have been issued, as discussed below.
The Company estimated the original fair value of the contingently issuable shares to be $73.15 million, which
was not subject to future revisions during the five-year period discussed above. The Company used a Monte Carlo
simulation option-pricing model to arrive at its original estimate. Each tranche was valued separately giving specific
consideration to the tranche’s price target. The simulation considered volatility and risk-free rates utilizing a peer
group based on a five-year term. This was initially recorded as a distribution to shareholders and was presented as
common stock contingent consideration. Upon the occurrence of each Triggering Event, any issuable shares were
transferred from common stock contingent consideration to common stock and additional paid-in capital accounts.
On April 26, 2019, January 27, 2020, June 14, 2023, and July 26, 2023, the Triggering Events for the issuance
of the first, second, third and fourth tranches of Earn-Out Shares occurred, as the volume weighted average closing
sale price per share of the Company’s Class A Common Stock as of each date had been greater than $13.00, $15.50,
$18.00, and $20.50, respectively, for 10 out of 20 consecutive trading days. These Triggering Events resulted in the
issuance of an aggregate 10,000,000 shares of the Company’s Class A Common Stock to the Platinum Stockholder
and an aggregate increase in the Company’s common stock and additional paid-in capital accounts of $73.15 million,
with a corresponding decrease to the common stock contingent consideration account. At December 31, 2023, there
are no shares that remain contingently issuable under the Earn-Out agreement.
16. Commitments and Contingencies
The Company had $1.9 million of bank guarantees at December 31, 2023 required to support bids and contracts
with certain international customers.
The Company has non-cancelable purchase commitments to certain vendors. The aggregate non-cancelable
purchase commitments outstanding at December 31, 2023 were $18.0 million. The majority of these outstanding
commitments are expected to be incurred in the next twelve months and approximately $2.2 million is expected to be
incurred subsequent to December 31, 2024.
90
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. Other than the PlusPass matter discussed below, the Company has determined that resolution of the
remaining pending matters is not probable to have a material adverse impact on its consolidated results of operations,
cash flows, or financial position.
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. Merits discovery in the trial court is
underway. Trial is expected to occur in mid- to late 2025. Based on the information available to the Company at
present, the Company is unable to estimate a reasonably possible range of loss for this action and, accordingly, it has
not accrued any liability associated with this action.
PlusPass Inc. (“PlusPass”) v. Verra Mobility Corporation, et al. is a lawsuit filed in the United States District
Court, Central District of California, against Verra Mobility, The Gores Group LLC, Platinum Equity LLC and ATS
Processing Services, Inc., in November 2020. In February 2024, Verra Mobility and PlusPass entered into a
confidential business arrangement pursuant to which Verra Mobility (i) acquired certain assets from PlusPass and (ii)
fully and finally resolved all litigation and disputes between the parties. Verra Mobility accrued $31.5 million for this
matter at December 31, 2023, which is presented within selling, general and administrative expenses in the
consolidated statements of operations for the year ended December 31, 2023.
91
17.
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 commercial fleet vehicle owners, rental car companies 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, transaction processing and
hardware solutions to its customers. The Company’s Chief Operating Decision Maker function (“CODM”) is
comprised of the Company’s CEO and certain defined representatives of the Company’s executive management team.
The Company’s CODM monitors operating performance, allocates resources and deploys capital based on these three
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 allocates certain corporate expenses to the three segments using several different factors
depending on the item being allocated. These factors range from specific identification to headcount-based to allocate
proportionately between the three segments. The corporate and other columns below include items that are designated
by the CODM as corporate initiatives and are not included in segment profit.
During fiscal year 2022,
to include
loss on disposal of assets, net, and to exclude transaction and transformation expenses that were previously included
within the selling, general and administrative expenses and other income line items below. The comparable prior
period has been recast to conform to the revised presentation although the impact of this revision to previously reported
segment profit was not material.
the Company changed its measure of
segment profit
92
The following tables set forth financial information by segment for the fiscal years ended December 31, 2023,
2022 and 2021:
Services
$ 372,786
—
372,786
2,362
—
83,828
61,607
—
(17,176)
$ 242,165
$ 242,165
—
—
—
—
($ in thousands)
Service revenue
Product sales
Total revenue
Cost of service revenue, excluding depreciation
and amortization
Cost of product sales
Operating expenses
Selling, general and administrative expenses
Loss on disposal of assets, net
Other (income) expense, net
Segment profit
Segment profit
Depreciation and amortization
Transaction and other related expenses
Transformation expenses
Legal settlement
Tax settlement payment related to a prior
acquisition
Change in fair value of private placement
warrants
Tax receivable agreement liability adjustment
Loss on interest rate swap
Stock-based compensation
Loss on extinguishment of debt
Interest expense, net
Income before income taxes
Commercial Government
For the Year Ended December 31, 2023
Parking
Solutions
$ 66,775
19,330
86,105
Solutions
$ 344,034
14,385
358,419
Corporate
and Other
$
Total
— $ 783,595
33,715
—
817,310
—
2,252
9,751
168,736
62,597
128
488
$ 114,467
$ 114,467
—
—
—
—
13,618
15,480
18,236
23,988
—
(87)
$ 14,870
$ 14,870
—
—
—
—
18,232
—
25,231
—
270,800
—
148,192
—
128
—
—
(16,775)
— $ 371,502
— $ 371,502
113,067
629
3,241
31,500
113,067
629
3,241
31,500
$
$
—
—
—
5,652
5,652
—
—
—
—
—
—
$ 242,165
—
—
—
—
—
—
$ 114,467
—
—
—
—
—
—
$ 14,870
24,966
(3,077)
817
17,476
3,533
86,701
24,966
(3,077)
817
17,476
3,533
86,701
$(284,505) $ 86,997
93
Commercial Government
For the Year Ended December 31, 2022
Parking
Solutions
$ 61,608
17,352
78,960
Solutions
$ 307,639
29,028
336,667
Corporate
and Other
$
Total
— $ 695,218
46,380
—
741,598
—
2,016
17,436
139,961
61,235
931
(679)
$ 115,767
$ 115,767
—
—
—
—
—
—
—
1,340
—
—
$ 114,427
11,445
13,496
12,905
27,104
37
(266)
$ 14,239
$ 14,239
—
—
—
—
—
—
—
—
—
—
$ 14,239
16,330
—
30,932
—
225,194
—
144,444
—
1,490
—
—
(15,332)
— $ 338,540
— $ 338,540
138,684
3,381
1,113
138,684
3,381
1,113
$
$
(14,400)
(720)
(996)
16,663
—
(3,005)
69,372
(14,400)
(720)
(996)
16,663
1,340
(3,005)
69,372
$(210,092) $ 127,108
($ in thousands)
Service revenue
Product sales
Total revenue
Cost of service revenue, excluding depreciation
and amortization
Cost of product sales
Operating expenses
Selling, general and administrative expenses
Loss on disposal of assets, net
Other income, net
Segment profit
Segment profit
Depreciation and amortization
Transaction and other related expenses
Transformation expenses
Change in fair value of private placement
warrants
Tax receivable agreement liability adjustment
Gain on interest rate swap
Stock-based compensation
Impairment on a privately-held equity investment
Gain on extinguishment of debt
Interest expense, net
Income before income taxes
Services
$ 325,971
—
325,971
2,869
—
72,328
56,105
522
(14,387)
$ 208,534
$ 208,534
—
—
—
—
—
—
—
—
—
—
$ 208,534
94
Commercial Government
For the Year Ended December 31, 2021
Parking
Solutions
3,955
$
2,581
6,536
Solutions
$ 227,992
55,163
283,155
Corporate
and Other
$
Total
— $ 492,846
57,744
—
550,590
—
($ in thousands)
Service revenue
Product sales
Total revenue
Cost of service revenue, excluding depreciation
and amortization
Cost of product sales
Operating expenses
Selling, general and administrative expenses
Loss on disposal of assets, net
Other income, net
Segment profit
Segment profit
Depreciation and amortization
Transaction and other related expenses
Transformation expenses
Change in fair value of private placement
warrants
Tax receivable agreement liability adjustment
Stock-based compensation
Loss on extinguishment of debt
Interest expense, net
Income before income taxes
Services
$ 260,899
—
260,899
3,183
—
65,718
42,386
—
(10,837)
$ 160,449
$ 160,449
—
—
—
1,500
28,381
96,284
51,052
48
(2,040)
$ 107,930
$ 107,930
—
—
—
—
—
—
—
—
$ 160,449
—
—
—
—
—
$ 107,930
654
1,428
553
1,361
—
(18)
2,558
2,558
—
—
—
—
—
—
—
—
2,558
5,337
—
29,809
—
162,555
—
94,799
—
48
—
—
(12,895)
— $ 270,937
— $ 270,937
116,753
13,952
1,687
116,753
13,952
1,687
$
$
7,600
(1,016)
13,784
5,334
44,942
7,600
(1,016)
13,784
5,334
44,942
$(203,036) $ 67,901
$
$
$
The table below details the following assets by reportable segment as of the respective period-ends:
($ in thousands)
Property and equipment, net
Commercials Services
Government Solutions
Parking Solutions
Corporate and other
Total property and equipment, net
Total assets
Commercials Services
Government Solutions
Parking Solutions
Corporate and other
Total assets
December 31,
2023
December 31,
2022
$
$
$
$
9,547
98,611
13,281
1,809
123,248
721,192
523,687
404,267
140,837
1,789,983
$
$
$
$
7,993
92,600
8,942
240
109,775
758,649
534,931
408,230
54,459
1,756,269
In addition, refer to Note 5, Goodwill and Intangible Assets for goodwill balances by segment.
The Company primarily operates within the United States, Australia, Canada, United Kingdom and in various
other countries in Europe and Asia. Revenues earned from goods transferred to customers at a point in time were
approximately $33.7 million, $46.4 million and $57.7 million for the years ended December 31, 2023, 2022 and 2021,
respectively. Property and equipment, net located in foreign countries was $19.3 million as of December 31, 2023, of
which Canada represented $11.7 million and Australia represented $4.2 million. Property and equipment, net located
in foreign countries was $17.3 million as of December 31, 2022, of which Canada represented $8.9 million and
Australia represented $6.0 million.
95
The following table details the revenues from international operations for the respective periods:
($ in thousands)
Australia
Canada
United Kingdom
All other
Total international revenues
2023
For the Year Ended December 31,
2022
2021
$
$
45,879
30,826
23,794
3,071
103,570
$
$
34,356
32,413
24,017
3,532
94,318
$
$
13,948
6,874
16,346
2,809
39,977
18.
Subsequent Events
Third Amendment to 2021 Term Loan
As discussed in the Current Report on 8-K filed with the SEC on February 8, 2024, the Company amended the
2021 Term Loan agreement to refinance the entire outstanding amount under the 2021 Term Loan (the “Third
Amendment”) in February 2024 and incurred new Term B-2 Loans (the “New Term Loans”) in the aggregate principal
amount of $704.6 million. The proceeds from the New Term Loans were used in their entirety to prepay in full the
then outstanding principal amount of the existing term loan under the 2021 Term Loan agreement. In connection with
the Third Amendment, the interest rate on the approximately $704.6 million outstanding balance of the New Term
Loans was reduced by 50 basis points to SOFR + 2.75% from SOFR + 3.25% with the SOFR floor unchanged at
0.00%. In addition, the credit spread adjustment, which was priced at 0.115% was also eliminated, resulting in a total
savings of 61.5 basis points. The New Term Loans will be subject to a prepayment premium of 1.00% of the principal
amount repaid for any voluntary prepayment or mandatory prepayment with proceeds of debt that has a lower effective
yield than the New Term Loans or any amendment to the New Term Loans that reduces the interest rate thereon, in
each case, to the extent occurring within six months of the effective date of the Amendment. The maturity date for the
2021 Term Loan agreement remains March 24, 2028, and no changes were made to the financial covenants or other
debt repayment terms.
PlusPass Business Arrangement
On February 8, 2024, the Company and PlusPass entered into a confidential business arrangement (pursuant
to which the Company will pay PlusPass $31.5 million to (i) acquire certain assets from PlusPass and (ii) fully and
finally resolve the previously disclosed litigation in the United States District Court, Central District of California.
Prior developments in the PlusPass litigation are discussed in the Legal Proceedings section of this Annual Report and
in the Company’s previously filed annual reports on Form 10-K and quarterly reports on Form 10-Q.
96
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. 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 Chief Executive Officer and Chief Financial Officer, 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 December 31, 2023. Based on their
evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2023,
our disclosure controls and procedures were not effective due to the material weakness in internal control over
financial reporting described below.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting
is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with GAAP and includes those policies and procedures that (1) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our
assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial
statements.
Under the supervision and with the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting
based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations (“COSO”) of the Treadway Commission. Based on this evaluation, due to the material
weakness described below, management concluded that our system of internal control over financial reporting was
not effective as of December 31, 2023.
Deloitte & Touche LLP, an independent registered public accounting firm, has issued an attestation report on
our internal control over financial reporting as of December 31, 2023, which report appears herein.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements
will not be prevented or detected on a timely basis.
Material Weakness
We identified a material weakness in the design and operation of our internal controls over financial reporting
in the Control Activities component of the COSO framework related to a lack of information technology general
controls to prevent the risk of management override. Specifically, we identified system limitations that do not facilitate
proper segregation of duties within multiple systems and a lack of mitigating business process level controls to address
the risk of management override over the preparation and review of manual journal entries and certain manual revenue
invoices.
97
While this deficiency did not result in any material misstatements of our consolidated interim or annual financial
statements, it does represent a material weakness in our internal control over financial reporting.
Remediation Efforts to Address the Material Weakness
We are committed to maintaining a strong internal control environment and will make remediation efforts to improve
our internal controls as follows:
1. Comprehensive Assessment: We have initiated a comprehensive assessment of our internal controls
framework to precisely identify the gaps and weaknesses in our inherent system limitations, segregation of duties, and
detective business process controls.
2. Enhancing Segregation of Duties: We are revising our internal processes to ensure a clear and effective
segregation of duties within our accounting and financial reporting functions. This will help prevent errors and fraud,
thereby enhancing the integrity of our financial statements. To aid in this process, we are implementing a new software
solution that will create system-enforced segregation of duties in our accounting close process.
3. Implementing Compensating Controls: In the interim, we are developing and implementing new
compensating controls designed to mitigate the identified risks until the system limitations and segregation of duties
issues can be fully remediated.
4. Employee Training and Awareness: The effectiveness of controls is also dependent on the individuals
responsible for their operation, and we are investing in comprehensive training programs. These programs will
enhance awareness and understanding of internal controls and segregation of duties best practices among our
employees.
Commitment to Transparency and Integrity
We are committed to upholding the highest standards of transparency, integrity, and accountability. We
understand the importance of reliable financial reporting to our stakeholders and are dedicated to restoring and
maintaining your confidence in our financial processes and controls.
Notwithstanding the material weakness, management has concluded that the financial statements included in
this Annual Report present fairly, in all material respects, our financial position, results of operations and cash flows
in conformity with GAAP.
Inherent Limitations on the Effectiveness of Controls
Because of inherent limitations in all control systems, no internal control over financial reporting can prevent
or detect all misstatements, and projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Changes in Internal Control over Financing Reporting
For the quarter ended December 31, 2023, except for the identified material weakness, there were no changes
in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d)
of Rule 13a-15 or Rule 15d-15 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting. Subsequent to December 31, 2023 and in connection with the identification of the
material weakness discussed above, we are taking the remediation steps outlined herein to improve our internal control
over financial reporting.
Item 9B. Other Information
Insider Trading Arrangements and Policies.
A significant portion of the compensation of our executive officers is delivered in the form of deferred equity
awards, including performance share units, stock options and restricted stock unit awards. This compensation design
98
is intended to align our executive compensation with the interests of our stockholders by emphasizing performance-
based incentive compensation focused on objectives that our Board believes have a significant impact on stockholder
value. Following the delivery of shares of our common stock under those equity awards, once any applicable service
time or performance-based vesting standards have been satisfied, our executive officers from time to time engage in
the open-market sale of some of those shares. Our executive officers may also engage from time to time in other
transactions involving our securities.
Transactions in our securities by our executive officers are required to be made in accordance with our Insider
Trading Policy, which, among other things, requires that the transactions be in accordance with applicable U.S. federal
securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the
Exchange Act provides an affirmative defense that enables prearranged transactions in securities in a manner that
avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic
information. Our Insider Trading Policy permits our executive officers to enter into trading plans designed to comply
including possibly before,
with Rule 10b5-1. Accordingly, sales under these plans may occur at any time,
simultaneously with, or immediately after significant events involving our company.
During the three months ended December 31, 2023, none of our directors or executive officers adopted, modified
or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to
satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
99
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this Item is incorporated by reference from our proxy statement to be filed in
connection with our 2024 annual meeting of stockholders within 120 days after the end of the fiscal year ended
December 31, 2023.
Item 11. Executive Compensation
The information required by this Item is incorporated by reference from our proxy statement to be filed in
connection with our 2024 annual meeting of stockholders within 120 days after the end of the fiscal year ended
December 31, 2023.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information required by this Item is incorporated by reference from our proxy statement to be filed in
connection with our 2024 annual meeting of stockholders within 120 days after the end of the fiscal year ended
December 31, 2023.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated by reference from our proxy statement to be filed in
connection with our 2024 annual meeting of stockholders within 120 days after the end of the fiscal year ended
December 31, 2023.
Item 14. Principal Accountant Fees and Services
The information required by this Item is incorporated by reference from our proxy statement to be filed in
connection with our 2024 annual meeting of stockholders within 120 days after the end of the fiscal year ended
December 31, 2023.
100
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)
The following documents are filed as part of this Annual Report:
1.
Consolidated Financial Statements
The financial statements filed as part of this Annual Report are listed in the “Index to Consolidated
Financial Statements” under Part II, Item 8 of this Annual Report.
2.
Financial Statement Schedules
•
Appendix A, Schedule II – Consolidated Valuation and Qualifying Accounts
Schedules not listed above are omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or notes to the consolidated financial statements under
Part II, Item 8 of this Annual Report.
3.
Exhibits.
The exhibits listed below are filed as part of this Annual Report. References under the caption
“Incorporated by Reference” to exhibits or other filings indicate that the exhibit or other filing has been
filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is
incorporated by reference.
101
Exhibit
Number
2.1
2.2
3.1
3.2
4.1
4.2
4.3
10.1
10.2
10.3
EXHIBIT INDEX
Description
Form File No.
Exhibit
Filing Date
Filed
Herewith
Incorporated by Reference
Merger Agreement, dated as of June 21,
2018, by and among Gores Holdings II,
Inc., AM Merger Sub I, Inc., AM Merger
Sub II, LLC, Greenlight Holding II
Greenlight
Corporation
Holdings, LLC, in its capacity as the
Stockholder Representative.
and
PE
Amendment No. 1 to Agreement and
Plan of Merger, dated as of August 23,
2018, by and among Gores Holdings II,
Inc., AM Merger Sub I, Inc., AM Merger
Sub II, LLC, Greenlight Holding II
Corporation
Greenlight
Holdings, LLC, in its capacity as the
Stockholder Representative.
and
PE
Amended
Second
Certificate of
Mobility Corporation.
Restated
Incorporation of Verra
and
Amended and Restated Bylaws of Verra
Mobility Corporation.
Verra Mobility
of
Description
Corporation’s
Securities Registered
Pursuant to Section 12 of the Exchange
Act.
Indenture, dated as of March 26, 2021, by
and among VM Consolidated, Inc., the
Guarantors party thereto and Wilmington
Trust, National Association as Trustee.
Form of 5.5% Senior Note Due 2029
(included in E9.
Form of Indemnity Agreement.
Revolving Credit Agreement dated as of
among Greenlight
March 1, 2018,
ATS
Acquisition
Corporation,
Consolidated Inc., each of
the other
borrowers party thereto, the lenders party
thereto and Bank of America, N.A. as
Administrative Agent and Collateral
Agent.
Amendment No. 1 to Revolving Credit
Agreement, dated as of July 24, 2018,
Acquisition
among
Greenlight
Corporation, VM Consolidated,
Inc.
(formerly known as ATS Consolidated
Inc.), each of the other borrowers party
the lenders party thereto and
thereto,
8-K
001-37979
2.1
June 21, 2018
8-K
001-37979
2.2
Aug. 24, 2018
8-K
001-37979
3.1
Oct. 22, 2018
8-K
001-37979
3.1
Nov. 9, 2023
X
8-K
001-37979
4.1
Mar. 29, 2021
8-K
001-37979
4.2
Mar. 29, 2021
S-1
8-K
333-21503
001-37979
10.7
10.5
Dec. 9, 2016
Oct. 22, 2018
8-K
001-37979
10.7
Oct. 22, 2018
102
10.4
10.5
10.6
10.7
10.8
Bank of America, N.A. as Administrative
Agent and Collateral Agent.
Amendment No. 2 to Revolving Credit
Agreement, dated as of October 29, 2021,
by and among Greenlight Acquisition
Inc.,
Corporation, VM Consolidated,
each of the other borrowers party thereto,
the lenders party thereto and Bank of
America, N.A. as Administrative Agent
and Collateral Agent.
and
Amendment No. 3 to Revolving Credit
Agreement, dated as of December 20,
among Greenlight
2021,
by
VM
Acquisition
Consolidated, Inc., each of the other
borrowers party thereto, the lenders party
thereto and Bank of America, N.A. as
Administrative Agent and Collateral
Agent.
Corporation,
Amendment and Restatement Agreement
No. 1 to First Lien Term Loan Credit
Agreement, dated as of March 26, 2021,
by and among Greenlight Acquisition
Inc.,
Corporation, VM Consolidated,
American
Inc.,
Solutions,
Traffic
Lasercraft, Inc. the subsidiary guarantors
party thereto, the lenders party thereto
and Bank
as
Administrative Agent and Collateral
Agent.
of America, N.A.,
Amendment No. 1 to Amendment and
Restatement Agreement No. 1 to First
Lien Term Loan Credit Agreement, dated
as of March 26, 2021, by and among
Greenlight Acquisition Corporation, VM
Inc., American Traffic
Consolidated,
Solutions,
the
Inc., Lasercraft,
subsidiary guarantors party thereto, the
lenders party thereto and Bank of
America, N.A., as Administrative Agent
and Collateral Agent.
Inc.
Amendment No. 2 to Amendment and
Restatement Agreement No. 1 to First
Lien Term Loan Credit Agreement, dated
as of March 26, 2021, by and among
Greenlight Acquisition Corporation, VM
Consolidated,
Inc., American Traffic
the
Inc., Lasercraft,
Solutions,
subsidiary guarantors party thereto, the
lenders party thereto and Bank of
America, N.A., as Administrative Agent
and Collateral Agent.
Inc.
10-K 001-37979
10.7
April 22, 2022
8-K
001-37979
10.1
Dec. 20, 2021
8-K
001-37979
10.1
Mar. 29, 2021
8-K
001-37979
10.1
Dec. 7, 2021
X
103
10.9
10.10#
10.11#
10.12#
10.13#
10.14#
10.15#
10.16#
10.17#
10.18#
10.19#
Amendment No. 3 to Amendment and
Restatement Agreement No. 1 to First
Lien Term Loan Credit Agreement, dated
as of March 26, 2021, by and among
Greenlight Acquisition Corporation, VM
Consolidated,
Inc., American Traffic
the
Inc., Lasercraft,
Solutions,
subsidiary guarantors party thereto, the
lenders party thereto and Bank of
America, N.A., as Administrative Agent
and Collateral Agent.
Inc.
Amended
and Restated Executive
Employment Agreement, dated as of
March 25, 2021, by and between VM
Consolidated, Inc. and David Roberts.
Executive Employment Agreement by
and between VM Consolidated, Inc. and
Steven Lalla, dated as of January 31,
2021.
Executive Employment Agreement by
and between VM Consolidated, Inc. and
Craig Conti, dated as of January 29,
2022.
Verra Mobility Corporation Amended
and Restated 2018 Equity Incentive Plan.
Form of Notice of Grant of Restricted
Stock Unit and Agreement under the
Verra Mobility Corporation 2018 Equity
Incentive Plan.
Form of Notice of Grant of Restricted
Stock Unit and Agreement for Non-U.S.
Participants under the Verra Mobility
Corporation 2018 Equity Incentive Plan.
Form of Notice of Grant of Restricted
Stock Unit for Non-Employee Directors
under the Verra Mobility Corporation
2018 Equity Incentive Plan.
Form of Notice of Grant of Stock Option
and Agreement under the Verra Mobility
Corporation 2018 Equity Incentive Plan.
Form of Notice of Grant of Performance
Share Unit and Agreement under the
Verra Mobility Corporation 2018 Equity
Incentive Plan.
2020 Form of Notice of Grant of
Restricted Stock Unit and Agreement for
Non-U.S. Participants under the Verra
Mobility Corporation
2018 Equity
Incentive Plan.
8-K
001-37979
10.1
Feb. 8, 2024
10-Q 001-37979
10.3
May 17, 2021
10-K 001-37979
10.15
Mar. 1, 2021
10-K 001-37979
10.15
April 22, 2022
8-K
001-37979
10.1
May 24, 2023
8-K
001-37979
10.18
Oct. 22, 2018
8-K
001-37979
10.19
Oct. 22, 2018
10-K 001-37979
10.30 Mar. 18, 2019
10-K 001-37979
10.24
Mar. 2, 2020
10-K 001-37979
10.26
Mar. 2, 2020
10-Q 001-37979
10.1
Nov. 5, 2020
104
10.20#
10.21#
10.22#
10.23#
10.24#
10.25#
10.26#
10.27#
10.28#
10.29#
10.30#
10.31#
10.32#
Form of Notice of Grant of Stock Option
and Agreement for Non-U.S. Participants
under the Verra Mobility Corporation
2018 Equity Incentive Plan.
Amended and Restated Verra Mobility
Corporation Short-Term Incentive Plan.
Verra Mobility Corporation Non-
Employee
Compensation
Policy.
Director
Form of Notice of Grant of Performance
Share Units and Award Agreement under
the Verra mobility Corporation 2018
Equity Incentive Plan.
Executive Employment Agreement by
and between VM Consolidated, Inc. and
Jonathan Baldwin, dated as of January
16, 2022.
Amended
and Restated Executive
Employment Agreement by and between
VM Consolidated, Inc. and Adam Blake,
dated as of October 20, 2021.
Executive Employment Agreement by
and between VM Consolidated, Inc. and
Jonathan Keyser, dated as of November
8, 2022.
Form of Notice of Grant of Restricted
Stock Units (U.S. Participants) under the
Verra Mobility Corporation 2018 Equity
Incentive Plan.
Form of Notice of Grant of Restricted
Stock Units
(Non-U.S. Participants)
under the Verra Mobility Corporation
2018 Equity Incentive Plan.
Form of Notice of Grant of Stock Option
(U.S. Participants) under
the Verra
Mobility Corporation
2018 Equity
Incentive Plan.
Form of Notice of Grant of Stock Option
(Non-U.S. Participants) under the Verra
Mobility Corporation
2018 Equity
Incentive Plan.
Form of Notice of Grant of Performance
Share Units and Award Agreement (U.S.
Participants) under the Verra Mobility
Corporation 2018 Equity Incentive Plan.
Form of Notice of Grant of Performance
Share Units and Award Agreement
(Non-U.S. Participants) under the Verra
Mobility Corporation
2018 Equity
Incentive Plan.
10-Q 001-37979
10.2
Nov. 5, 2020
8-K
001-37979
10.1
April 28, 2022
10-K 001-37979
10.26 March 1, 2023
8-K
001-37979
10.1
June 1, 2022
10-K 001-37979
10.30 March 1, 2023
10-K 001-37979
10.31 March 1, 2023
10-K 001-37979
10.32 March 1, 2023
8-K
001-37979
10.1
Feb. 17, 2023
8-K
001-37979
10.2
Feb. 17, 2023
8-K
001-37979
10.3
Feb. 17, 2023
8-K
001-37979
10.4
Feb. 17, 2023
8-K
001-37979
10.5
Feb. 17, 2023
8-K
001-37979
10.6
Feb. 17, 2023
105
10.33#
10.34#
Form of Special Grant Notice of Grant of
Performance Share Units and Award
Agreement.
Verra Mobility Corporation Second
Amended and Restated Short-Term
Incentive Plan.
8-K
001-37979
10.1
Aug. 15, 2023
8-K
001-37979
10.7
Feb. 17, 2023
16.1
21.1
23.1
23.2
24.1
31.1
31.2
32.1*
32.2*
97.1
Ernst & Young LLP Consent Letter.
8-K
001-37979
16.1
Aug. 28, 2023
List of Subsidiaries.
Consent of Deloitte & Touche LLP,
Independent
Public
Accounting Firm.
Registered
Consent of Ernst & Young LLP,
Independent
Public
Accounting Firm.
Registered
Power of Attorney (included on the
signature pages herein).
Certification of Principal Executive
Officer Pursuant to Rules 13a-14(a) and
15d-14(a) under the Securities Exchange
Act of 1934, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002.
Certification
of Principal Financial
Officer Pursuant to Rules 13a-14(a) and
15d-14(a) under the Securities Exchange
Act of 1934, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Principal Executive
Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
Certification
of Principal Financial
Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
Verra Mobility Corporation Amended
and Restated Compensation Clawback
Policy.
101.INS
Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension
Schema With Embedded Linkbase
Documents.
104
Cover Page Interactive Data File
(formatted as Inline XBRL and
contained in Exhibit 101).
# Management contract or compensatory plan or arrangement.
106
X
X
X
X
X
X
X
X
X
X
X
X
* 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.
Item 16. Form 10-K Summary
None.
107
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
Date: February 29, 2024
VERRA MOBILITY CORPORATION
By:
/s/ David Roberts
David Roberts
President and Chief Executive Officer
(Principal Executive Officer)
108
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below
constitutes and appoints David Roberts and Craig Conti, and each of them, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments to this Annual Report, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or her or their substitute or
substitutes, may lawfully do or cause to be done or by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the date indicated:
Signature
Capacity in Which Signed
Date
/s/ David Roberts
David Roberts
President, Chief Executive Officer and Director
(Principal Executive Officer)
February 29, 2024
/s/ Craig Conti
Craig Conti
Chief Financial Officer
(Principal Financial and Accounting Officer)
February 29, 2024
/s/ Patrick Byrne
Patrick Byrne
/s/ Douglas Davis
Douglas Davis
/s/ Michael Huerta
Michael Huerta
/s/ Raj Ratnakar
Raj Ratnakar
/s/ John Rexford
John Rexford
/s/ Cynthia Russo
Cynthia Russo
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
109
Appendix A
Verra Mobility Corporation
Schedule II
Consolidated Valuation and Qualifying Accounts for the Years Ended December 31, 2023, 2022 and 2021
($ in thousands)
Allowance for Credit Losses
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Tax Valuation Allowance
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Beginning Charged/Credited to Charged to Other Charges Utilized/
Balance
Net Income
Write-offs
Account
Ending
Balance
$
$
15,907 $
12,138
11,471
5,263 $
3,785
3,422
9,054 $
14,481
9,588
297 $
2,438
363
— $
—
—
(6,448)$
(10,712)
(8,921)
18,513
15,907
12,138
1,451 $
63
—
— $
(1,023)
—
7,011
5,263
3,785
110
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VERRA MOBILITY CORPORATE INFORMATION
Corporate Headquarters
1150 N. Alma School Road
Mesa, AZ 85201
Telephone: (480) 443-7000
Website: www.verramobility.com
Email: IR@verramobility.com
Transfer Agent
Equiniti Trust Company, LLC
48 Wall St., Floor 23
New York, NY 10005
Website: https://equiniti.com/us/ast-access
Email: helpAST@equiniti.com
Financial Information
For financial and corporate governance information about Verra Mobility,
please visit ir.verramobility.com, where you can also find all of our filings
with the Securities and Exchange Commission.
Verra Mobility Corporation
2023
ANNUAL REPORT
1150 N. Alma School Road | Mesa, AZ 85201
www.verramobility.com