VRRM

Verra runs a recurring-revenue smart-mobility platform (Commercial Services tolling, Government Solutions photo enforcement, Parking) that has grown revenue every year from $551M in FY2021 to $979M in FY2025 (+11.4% YoY), driven organically by tolling volume, European expansion, and NYCDOT camera installs. FY2025 was an operating breakout: operating income rose 75% to $238M (24.4% margin), net income more than quadrupled to $137M, and diluted EPS hit $0.85. Cash conversion is the real story — $256M operating cash flow against $119M of (elevated, install-driven) capex leaves ~$137M free cash, which management used to buy back ~6.0M shares for $133M and shrink the count 5.2%. At the provided $4.30 price that is 5.1x earnings and 0.7x sales for a business compounding revenue double-digits with mid-20s operating margins — a valuation that discounts stagnation the numbers do not show.

The MD&A materially de-risks the central bear case. The prior NYCDOT contract, called a 'material portion of our revenue,' expired December 31, 2025 — a cliff the market would rightly fear. Instead the company signed a new five-year deal effective January 1, 2026 with a total contract value of $998M and a five-year extension option, plus the 300-camera red-light expansion that already added $38.4M in FY2025. That converts the single largest concentration risk into contracted, multi-year visibility.