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

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

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:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). YES ☐ NO ☒

As of ~~August 4,~~November 6, 2023, there were ~~169,670,795~~166,313,632 shares of the Company’s Class A Common Stock, par value $0.0001 per share, issued and outstanding.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of federal securities laws. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, products, services, and technology offerings, market conditions, growth and trends, expansion plans and opportunities, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely” and similar expressions, and the negative of these expressions, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q and in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022. In light of these risks, uncertainties, and assumptions, the

The future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Factors that could cause actual results to differ ~~materially from those expressed or implied~~include the risks and uncertainties described in ~~forward-looking statements include,~~Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, which highlight, among other ~~things:~~risks:

You should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will occur. Moreover, weWe operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, are available free of charge on our website, verramobility.com, under the heading “Investors” immediately after they are filed with, or furnished to, the SEC. We use our Investor Relations website, ir.verramobility.com, as a means of disclosing information, which may be of interest or material to our investors and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor our Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, webcasts, and social media. Information contained on or accessible through, including any reports available on, our website is not a part of, and is not incorporated by reference into, this Quarterly Report on Form 10-Q or any other report or document we file with the SEC. Any reference to our website in this Form 10-Q is intended to be an inactive textual reference only.

Unless the context indicates otherwise, the terms “Verra Mobility,” the “Company,” “we,” “us,” and “our” as used in this Quarterly Report on Form 10-Q refer to Verra Mobility Corporation, a Delaware corporation, and its subsidiaries taken as a whole.


For the Three and Six Months Ended June 30, 2023
For the Three and Nine Months Ended September 30, 2022																						For the Three and Nine Months Ended September 30, 2022

	Common Stock						Common Stock Contingent			Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Stockholders'				Common Stock						Common Stock Contingent		Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
(In thousands)	Shares			Amount			Consideration			Capital			Deficit			Loss			Equity				Shares			Amount			Consideration		Capital			Deficit			Loss			Equity
Balance as of December 31, 2022		148,962		$	15		$	36,575		$	305,423		$	(98,078	)	$	(12,865	)	$	231,070
Net income		—			—			—			—			4,577			—			4,577
Vesting of restricted stock units ("RSUs") and performance share units ("PSUs")		313			—			—			—			—			—			—
Exercise of stock options		53			—			—			699			—			—			699
Payment of employee tax withholding related to RSUs and PSUs vesting		—			—			—			(2,526	)		—			—			(2,526	)
Exercise of warrants		633			—			—			—			—			—			—
Stock-based compensation		—			—			—			3,378			—			—			3,378
Other comprehensive loss, net of tax		—			—			—			—			—			(90	)		(90	)
Balance as of March 31, 2023		149,961			15			36,575			306,974			(93,501	)		(12,955	)		237,108
Net income		—			—			—			—			19,108			—			19,108
Earn-out shares issued to Platinum Stockholder		2,500			—			(18,288	)		18,288			—			—			—
Vesting of RSUs and PSUs		121			—			—			—			—			—			—
Exercise of stock options		127			—			—			1,689			—			—			1,689
Payment of employee tax withholding related to RSUs and PSUs vesting		—			—			—			(502	)		—			—			(502	)
Exercise of warrants		14,208			2			—			202,652			—			—			202,654
Stock-based compensation		—			—			—			4,525			—			—			4,525
Other comprehensive income, net of tax		—			—			—			—			—			718			718
Balance as of June 30, 2023		166,917		$	17		$	18,287		$	533,626		$	(74,393	)	$	(12,237	)	$	465,300

For the Three and Six Months Ended June 30, 2022

Balance as of December 31, 2021		156,079		$	16		$	36,575		$	309,883		$	(81,416	)	$	(5,094	)	$	259,964				156,079		$	16		$	36,575	$	309,883		$	(81,416	)	$	(5,094	)	$	259,964
Net income		—			—			—			—			10,040			—			10,040				—			—			—		—			10,040			—			10,040
Vesting of RSUs		154			—			—			—			—			—			—				154			—			—		—			—			—			—
Exercise of stock options		7			—			—			93			—			—			93				7			—			—		93			—			—			93
Payment of employee tax withholding related to RSUs vesting		—			—			—			(1,436	)		—			—			(1,436	)			—			—			—		(1,436	)		—			—			(1,436	)
Stock-based compensation		—			—			—			4,446			—			—			4,446				—			—			—		4,446			—			—			4,446
Other comprehensive income, net of tax		—			—			—			—			—			2,708			2,708				—			—			—		—			—			2,708			2,708
Balance as of March 31, 2022		156,240			16			36,575			312,986			(71,376	)		(2,386	)		275,815				156,240			16			36,575		312,986			(71,376	)		(2,386	)		275,815
Net income		—			—			—			—			29,641			—			29,641				—			—			—		—			29,641			—			29,641
Share repurchases and retirement		(3,076	)		(1	)		—			(6,163	)		(49,117	)		—			(55,281	)			(3,076	)		(1	)		—		(6,163	)		(49,117	)		—			(55,281	)
Vesting of RSUs		51			—			—			—			—			—			—				51			—			—		—			—			—			—
Exercise of stock options		5			—			—			66			—			—			66				5			—			—		66			—			—			66
Payment of employee tax withholding related to RSUs vesting		—			—			—			(203	)		—			—			(203	)			—			—			—		(203	)		—			—			(203	)
Stock-based compensation		—			—			—			4,566			—			—			4,566				—			—			—		4,566			—			—			4,566
Other comprehensive loss, net of tax		—			—			—			—			—			(10,381	)		(10,381	)			—			—			—		—			—			(10,381	)		(10,381	)
Balance as of June 30, 2022		153,220		$	15		$	36,575		$	311,252		$	(90,852	)	$	(12,767	)	$	244,223				153,220			15			36,575		311,252			(90,852	)		(12,767	)		244,223
Net income																								—			—			—		—			24,576			—			24,576
Share repurchases and retirement																								(3,855	)		—			—		(7,830	)		(61,960	)		—			(69,790	)
Vesting of RSUs																								122			—			—		—			—			—			—
Exercise of stock options																								64			—			—		838			—			—			838
Payment of employee tax withholding related to RSUs vesting																								—			—			—		(1,433	)		—			—			(1,433	)
Stock-based compensation																								—			—			—		4,644			—			—			4,644
Other comprehensive loss, net of tax																								—			—			—		—			—			(8,167	)		(8,167	)
Balance as of September 30, 2022																								149,551		$	15		$	36,575	$	307,471		$	(128,236	)	$	(20,934	)	$	194,891

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 ~~14.~~14, Segment Reporting).

The Company’s Commercial Services segment offers toll and violation management solutions for the commercial fleet and rental car industries by partnering with the leading fleet management and rental car companies in North America. Electronic toll payment services enable fleet drivers 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, rental car companies and fleet management companies. In Europe, the Company provides violations processing through Euro Parking Collection plc and consumer tolling services through Pagatelia S.L.

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 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 unaudited condensed consolidated financial statements include the accounts of the Company prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

Use of Estimates

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates and assumptions include those related to 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.

Concentration of Credit Risk

Significant customers are those which represent more than 10% of the Company’s total revenue or accounts receivable, net. Revenue from the single Government Solutions customer exceeding 10% of total revenue is presented below:

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

City of New York Department of Transportation

16.9
%

18.6
%

17.4
%

18.9
%


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
City of New York Department of Transportation		16.5	%		20.5	%		17.1	%		19.5	%

The City of New York Department of Transportation (“NYCDOT”) represented 1713% and 22% of total accounts receivable, net as of ~~June~~September 30, 2023 and December 31, 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 revenues generated through the Company’s Commercial Services partners as a percent of total revenue are presented below:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022			2023			2022			2023			2022
Hertz Corporation		12.3	%		11.7	%		11.8	%		11.4	%		11.8	%		12.6	%		11.8	%		11.8	%
Avis Budget Group, Inc.		13.6	%		13.2	%		13.1	%		12.4	%		15.1	%		13.9	%		13.8	%		12.9	%
Enterprise Holdings, Inc.		9.7	%		9.7	%		9.9	%		9.3	%		11.6	%		10.3	%		10.5	%		9.7	%

No Commercial Services customer exceeded 10% of total accounts receivable, net as of any period presented.

There were no significant customer concentrations that exceeded 10% of total revenue or accounts ~~receivables,~~receivable, net for the Parking Solutions segment as of or for any period presented.

Allowance for Credit Losses

The Company reviews historical credit losses and customer payment trends on receivables and develops loss 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 ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively:


($ in thousands)	Commercial Services (Driver-billed) (1)			Commercial Services (All other)			Government Solutions			Parking Solutions			Total			Commercial Services (Driver-billed) (1)			Commercial Services (All other)			Government Solutions			Parking Solutions			Total
Balance at January 1, 2023	$	9,600		$	1,577		$	4,573		$	157		$	15,907		$	9,600		$	1,577		$	4,573		$	157		$	15,907
Credit loss expense		5,639			(94	)		(760	)		171			4,956			8,622			756			(1,964	)		139			7,553
Write-offs, net of recoveries		(359	)		5			(147	)		(225	)		(726	)		(5,031	)		(104	)		(185	)		(562	)		(5,882	)
Balance at June 30, 2023	$	14,880		$	1,488		$	3,666		$	103		$	20,137
Balance at September 30, 2023																$	13,191		$	2,229		$	2,424		$	(266	)	$	17,578

($ in thousands)	Commercial Services (Driver-billed) (1)			Commercial Services (All other)			Government Solutions			Parking Solutions			Total			Commercial Services (Driver-billed) (1)			Commercial Services (All other)			Government Solutions			Parking Solutions			Total
Balance at January 1, 2022	$	5,397		$	3,092		$	3,649		$	—		$	12,138		$	5,397		$	3,092		$	3,649		$	—		$	12,138
Credit loss expense		5,879			428			397			332			7,036			8,867			835			694			496			10,892
Write-offs, net of recoveries		(1,902	)		(100	)		(12	)		(68	)		(2,082	)		(2,810	)		(2,089	)		(26	)		(430	)		(5,355	)
Balance at June 30, 2022	$	9,374		$	3,420		$	4,034		$	264		$	17,092
Balance at September 30, 2022																$	11,454		$	1,838		$	4,317		$	66		$	17,675

(1)

Driver-billed consists of receivables from drivers of rental cars and fleet management companies for which the Company bills on behalf of its customers. Receivables not collected from drivers within a defined number of days are transferred to customers subject to applicable bad debt sharing agreements.

The Commercial Services (Driver-billed) portfolio segment’s credit loss estimate as of June 30, 2023 increased compared to the prior year due to increased revenue that impacted the volume of transactions year over year.

Deferred Revenue

Deferred revenue represents amounts that have been invoiced in advance and are expected to be recognized as revenue in future periods, and it primarily relates to Government Solutions and Parking Solutions customers. The Company had approximately $~~17.2~~12.9 million and $12.2 million of deferred revenue in the Government Solutions segment as of ~~June~~September 30, 2023 and December 31, 2022, respectively. The majority of the remaining performance obligations as of ~~June~~September 30, 2023 are expected to be completed and recognized as revenue in the next 12 months and $~~4.2~~4.1 million is expected to be recognized from 2024 through 2027. The Company had approximately $~~22.4~~25.6 million and $21.2 million of deferred revenue in the Parking Solutions segment as of ~~June~~September 30, 2023 and December 31, 2022, respectively. The majority of the remaining performance obligations as of ~~June~~September 30, 2023 are expected to be completed and recognized as revenue in the next 12 months and $~~1.0~~0.5 million is expected to be recognized after ~~June~~September 30, 2024.

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 effectively 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 condensed consolidated statements of operations within the ~~gain~~loss (gain) on interest rate swap line item.

The Company recorded a $~~4.8~~0.1 million ~~gain~~loss during the three months ended ~~June~~September 30, 2023, of which $~~5.1~~0.2 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period, netted by $~~0.3~~0.1 million related to the monthly cash payments. The Company recorded a $~~2.0~~1.9 million gain during the ~~six~~nine months ended ~~June~~September 30, 2023, of which ~~approximately~~ $~~3.6~~3.3 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period, netted by $~~1.6~~1.4 million related to the monthly cash payments. 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 condensed consolidated statements of cash flows. See below for further discussion on the fair value measurement of the interest rate swap, and Note 6, Long-term Debt, for additional information on the Company's mix of fixed and variable debt.

Recent Accounting Pronouncements

Accounting Standards Adopted

In March 2020, the Financial Accounting Standards Board (“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 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. It provides optional expedients and exceptions for applying GAAP to contract modifications, subject to meeting certain criteria, that reference LIBOR or another reference rate that ~~will be~~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 ~~enable~~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 condensed consolidated financial statements.

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. 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:


($ in thousands)	June 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Proceeds receivable from the exercise of warrants	$	52,747	$	—
Prepaid services		10,138		9,171	$	10,942	$	9,171
Prepaid tolls		8,435		9,978		9,005		9,978
Costs to fulfill a customer contract		6,378		3,193		5,452		3,193
Prepaid computer maintenance		5,071		5,492		4,290		5,492
Prepaid income taxes		4,483		4,629		5,814		4,629
Interest rate swap asset		2,263		—		2,266		—
Deposits		1,604		2,057		1,778		2,057
Other		1,390		5,084		1,650		5,084
Total prepaid expenses and other current assets	$	92,509	$	39,604	$	41,197	$	39,604

4. Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill by reportable segment:


	Commercial		Government			Parking				Commercial		Government			Parking
($ in thousands)	Services		Solutions			Solutions		Total		Services		Solutions			Solutions		Total
Balance at December 31, 2022	$	419,720	$	214,618		$	199,142	$	833,480	$	419,720	$	214,618		$	199,142	$	833,480
Foreign currency translation adjustment		2,141		(298	)		—		1,843		88		(751	)		—		(663	)
Balance at June 30, 2023	$	421,861	$	214,320		$	199,142	$	835,323
Balance at September 30, 2023										$	419,808	$	213,867		$	199,142	$	832,817

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


	June 30, 2023						December 31, 2022						September 30, 2023						December 31, 2022
	Weighted						Weighted						Weighted						Weighted
	Average	Gross					Average	Gross					Average	Gross					Average	Gross
	Remaining	Carrying			Accumulated		Remaining	Carrying			Accumulated		Remaining	Carrying			Accumulated		Remaining	Carrying			Accumulated
($ in thousands)	Useful Life	Amount			Amortization		Useful Life	Amount			Amortization		Useful Life	Amount			Amortization		Useful Life	Amount			Amortization
Trademarks	0.4 years	$	36,164		$	32,595	0.4 years	$	36,151		$	32,233	0.4 years	$	36,113		$	32,718	0.4 years	$	36,151		$	32,233
Non-compete agreements	zero		62,541			62,541	0.1 years		62,529			60,926	zero		62,541			62,541	0.1 years		62,529			60,926
Customer relationships	5.0 years		558,538			258,458	5.5 years		557,570			227,102	4.7 years		557,223			273,108	5.5 years		557,570			227,102
Developed technology	1.0 years		201,256			169,124	1.2 years		201,548			160,117	0.9 years		200,553			172,309	1.2 years		201,548			160,117
Gross carrying value of intangible assets			858,499		$	522,718			857,798		$	480,378			856,430		$	540,676			857,798		$	480,378
Less: accumulated amortization			(522,718	)					(480,378	)					(540,676	)					(480,378	)
Intangible assets, net		$	335,781					$	377,420					$	315,754					$	377,420

Amortization expense was $~~20.0~~18.9 million and $~~27.1~~26.6 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and was $~~42.0~~60.9 million and $~~54.4~~81.0 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

Estimated amortization expense in future years is expected to be:


($ in thousands)
Remainder of 2023	$	35,715	$	16,721
2024		67,017		66,881
2025		64,319		64,183
2026		57,332		57,229
2027		28,325		28,125
Thereafter		83,073		82,615
Total	$	335,781	$	315,754

5. Accrued Liabilities

Accrued liabilities consist of the following at:


($ in thousands)	June 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Accrued salaries and wages	$	19,110	$	19,109	$	21,690	$	19,109
Accrued interest payable						9,235		4,459
Current deferred tax liabilities		7,562		7,559		7,519		7,559
Current portion of operating lease liabilities		7,117		6,355		7,088		6,355
Accrued interest payable		4,271		4,459
Restricted cash due to customers		3,045		3,541		3,204		3,541
Payroll liabilities						3,025		2,136
Advance deposits		2,721		1,029		2,781		1,029
Payroll liabilities		2,526		2,136
Accrued self-insurance		1,283		858
Accrued commissions						1,195		857
Income tax payable		1,273		269		963		269
Other		2,734		3,532		2,759		3,533
Total accrued liabilities	$	51,642	$	48,847	$	59,459	$	48,847

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		Percentage
2024		102.750%
2025		101.375%
2026 and thereafter		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.

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 condensed consolidated statement of operations for the three and nine months ended September 30, 2022.

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 20, 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 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 ~~June~~September 30, 2023 or December 31, 2022. The availability to borrow was $74.8 million, net of $0.2 million of outstanding letters of credit at ~~June~~September 30, 2023.

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 ~~June~~September 30, 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 ~~June~~September 30, 2023, the Company was compliant with all debt covenants.

The Company recorded interest expense, including amortization of deferred financing costs and discounts, of $~~22.8~~20.4 million and $~~14.5~~20.3 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and $~~45.5~~65.8 million and $~~28.8~~49.0 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

The weighted average effective interest rates on the Company’s outstanding borrowings were 7.6% and 7.0% at ~~June~~September 30, 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.

7. 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 condensed consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the immediate to short-term maturity of these financial instruments. The estimated fair value of the Company’s long-term debt was calculated based upon available market information. The carrying value and the estimated fair value of long-term debt are as follows:


	Level in	June 30, 2023				December 31, 2022				Level in	September 30, 2023				December 31, 2022
	Fair Value	Carrying		Estimated		Carrying		Estimated		Fair Value	Carrying		Estimated		Carrying		Estimated
($ in thousands)	Hierarchy	Amount		Fair Value		Amount		Fair Value		Hierarchy	Amount		Fair Value		Amount		Fair Value
2021 Term Loan	2	$	792,752	$	812,131	$	866,365	$	883,891	2	$	693,234	$	708,609	$	866,365	$	883,891
Senior Notes	2		345,959		329,875		345,615		313,250	2		346,136		318,500		345,615		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 September 30, 2023, all Private Placement Warrants were exercised by the warrant holders. The fair value of the ~~private placement warrant~~Private Placement Warrants liabilities iswas measured on a recurring basis and iswas estimated using the Black-Scholes option pricing model using significant unobservable inputs, ~~primarily related to estimated volatility,~~ and iswas therefore classified within level 3 of the fair value hierarchy. The key assumptions used at December 31, 2022 were as follows:


	June 30, 2023			December 31, 2022			December 31, 2022
Stock price	$	19.72		$	13.83		$	13.83
Strike price	$	11.50		$	11.50		$	11.50
Volatility		43.0	%		44.0	%		44.0	%
Remaining life (in years)		0.3			0.8			0.8
Risk-free interest rate		5.43	%		4.74	%		4.74	%
Expected dividend yield		0.0	%		0.0	%		0.0	%
Estimated fair value (per warrant)	$	8.41		$	3.61		$	3.61

The following summarizes the changes in fair value of ~~private placement warrant~~Private Placement Warrant liabilities included in net income and the impact of exercises for the respective periods:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
($ in thousands)	2023			2022			2023			2022			2023			2022			2023			2022
Beginning balance	$	38,667		$	42,200		$	24,066		$	38,466		$	5,430		$	35,600		$	24,066		$	38,466
Change in fair value of private placement warrants		10,918			(6,600	)		25,519			(2,866	)		(553	)		(2,267	)		24,966			(5,133	)
Exercise of warrants		(44,155	)		—			(44,155	)		—			(4,877	)		—			(49,032	)		—
Ending balance	$	5,430		$	35,600		$	5,430		$	35,600		$	—		$	33,333		$	—		$	33,333

Change in fair value of private placement warrants consists of adjustments related to the ~~unexercised~~ 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 ~~six~~nine months ended ~~June~~September 30, 2023, there were ~~approximately~~ ~~6.0~~6.7 million exercises of Private Placement Warrants which reduced our ~~private placement warrant~~Private Placement Warrants liabilities by $~~44.2~~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 $~~2.0~~1.9 million as of ~~June~~September 30, 2023, 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 ~~six~~nine months ended ~~June~~September 30, 2023.

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)	Three Months Ended June 30, 2023			Six Months Ended June 30, 2023			Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Prepaid expenses and other current assets
Beginning balance	$	—		$	—		$	2,263		$	—
Change in fair value of interest rate swap		2,263			2,263			3			2,266
Ending balance	$	2,263		$	2,263		$	2,266		$	2,266

Other non-current assets
Beginning balance	$	857		$	1,973		$	2,296		$	1,973
Change in fair value of interest rate swap		1,439			323			(204	)		119
Ending balance	$	2,296		$	2,296		$	2,092		$	2,092

Accrued liabilities
Beginning balance	$	1,413		$	977		$	—		$	977
Change in fair value of interest rate swap		(1,413	)		(977	)		—			(977	)
Ending balance	$	—		$	—		$	—		$	—

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). For additional information on the interest rate swap, refer to Note 2.2, Significant Accounting Policies.

8. Net Income Per Share

Basic net income per share is calculated by dividing net income by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net income per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.

The components of basic and diluted net income per share are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except per share data)	2023		2022		2023		2022		2023		2022		2023		2022
Numerator:
Net income	$	19,108	$	29,641	$	23,685	$	39,681	$	30,308	$	24,576	$	53,993	$	64,257
Denominator:
Weighted average shares - basic		151,132		154,694		150,151		155,408		168,089		151,429		156,196		154,067
Common stock equivalents		1,458		5,650		1,435		6,099		1,408		6,875		937		6,366
Weighted average shares - diluted		152,590		160,344		151,586		161,507		169,497		158,304		157,133		160,433
Net income per share - basic	$	0.13	$	0.19	$	0.16	$	0.26	$	0.18	$	0.16	$	0.35	$	0.42
Net income per share - diluted	$	0.13	$	0.15	$	0.16	$	0.23	$	0.18	$	0.15	$	0.34	$	0.38
Antidilutive shares excluded from diluted net income per share:
Contingently issuable shares (1)		2,500		5,000		2,500		5,000		—		5,000		—		5,000
Private placement warrants		646		—		646		—
ASR shares (2)										985		984		985		984
Non-qualified stock options		750		1,502		789		1,502		139		1,110		761		1,224
Performance share units		329		179		329		179		12		—		341		166
Restricted stock units		—		1,007		1,204		1,007		107		51		114		1,020
Total antidilutive shares excluded		4,225		7,688		5,468		7,688		1,243		7,145		2,201		8,394

(1) Contingently issuable shares ~~relate~~related to the earn-out agreement as discussed in Note 12, Other Significant Transactions.

(2) Had the accelerated share repurchase (“ASR”) initiated in the third quarter of 2023 described in Note 10, Stockholders' Equity, been settled as of September 30, 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. However, the Company cannot predict the final number of shares to be received under the current ASR agreement until its completion, which is expected to occur during the first quarter of 2024. The final shares that were received by the Company for the August 2022 ASR were 943,361.

9. Income Taxes

The Company’s interim income tax provision is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that period. The estimated annual effective tax rate requires judgment and is dependent upon several factors. The Company provides for income taxes under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the financial statements.

The Company provides a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before the Company is able to realize their benefit. The Company calculates 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 Company’s effective income tax rate was ~~39.6~~27.5% and ~~29.9~~25.5% for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~46.2~~37.1% and ~~32.9~~30.2% for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. The primary driver for the effective tax rate variance is ~~due to~~ the permanent ~~differences~~difference related to the mark-to-market ~~adjustment~~adjustments on the Private Placement Warrants.

~~The total amount of unrecognized tax benefits increased by $0.9~~ ~~million during the six months ended June 30, 2023 primarily due to prior year tax positions. As of June 30, 2023, the total amount of unrecognized tax benefits was $12.1~~ ~~million, of which $3.6~~ million would affect our effective tax rate if recognized. The Company recognizes interest and penalties related to unrecognized tax benefits through income tax expense. As of June 30, 2023, the Company had $~~0.8~~ ~~million accrued for the payment of interest and penalties.~~

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 2018; 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~~ ~~and~~ ~~2019~~, 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.

10. Stockholders’ Equity

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 warrants originally issued to Gores Sponsor II, LLC in a private placement in connection with the IPO (the “Private Placement Warrants”) and (ii) the remaining warrants issued in connection with the IPO (the “Public Warrants” and, together with the Private Placement Warrants, the “Warrants”). The Warrants ~~have~~had a five-year term and ~~will expire~~expired in October ~~2023.~~2023, unless they were redeemed or liquidated prior to expiration. As of ~~June~~September 30, 2023, all Warrants were either exercised by the holder or redeemed by the Company.

~~2,959,609~~19

~~total Warrants remain outstanding, of which~~ ~~645,711~~ ~~were determined to be Private Placement Warrants.~~

During the ~~six~~nine months ended ~~June~~September 30, 2023, the Company processed the exercise of ~~17.0~~19,999,333 ~~million~~ Warrants in exchange for the issuance of ~~14,840,070~~16,273,406 shares of Class A Common Stock. There were ~~13,782,411~~14,035,449 shares issued in exchange for cash-basis warrant exercises resulting in the receipt of $~~105.8~~161.4 million in cash proceeds as of ~~June~~September 30, ~~2023, and $52.7~~ ~~million of cash proceeds received in July 2023 which was recorded within prepaid expenses and other current assets.~~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 condensed consolidated statement of operations, refer to Note 7.7, Fair Value of Financial Instruments.

~~Subsequent to June 30, 2023, there were an additional~~ ~~254,038~~ ~~Warrants exercised in exchange for~~ ~~253,478~~ ~~shares of Class A Common Stock resulting in $2.9~~ ~~million in cash proceeds.~~Share Repurchases and Retirement

~~Share Repurchase Programs~~Fiscal Year 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, ~~accelerated share repurchase (“~~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 has not yet repurchased shares under this program.~~

19The Company paid $

8.1 million to repurchase

~~In May 2022,~~449,432 shares of its Class A Common Stock through open market transactions during the ~~Company’s Board of Directors authorized a~~three months ended September 30, 2023, which it subsequently retired. On September 5, 2023, the Company used the remaining availability under the share repurchase program for ~~up to~~ an ~~aggregate amount of~~ASR and paid approximately $~~125.0~~91.9 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 and received~~to receive an initial delivery of ~~2,739,726~~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~~is expected to occur during the ~~third~~first quarter of fiscal year ~~2022.~~2024, at which time, a volume-weighted average price calculation over the term of the ASR agreement will be used to determine the final number and the average price of shares repurchased and retired. 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. ~~In addition, the Company paid $5.2~~ ~~million to repurchase~~ ~~336,153~~ ~~shares of its Class A Common Stock through open market transactions during the second quarter of fiscal year 2022, which it subsequently retired.~~

The Company paid a total of $~~55.3~~100.0 million for share repurchases ~~including $0.1~~ ~~million of direct costs,~~ during the ~~second quarter of fiscal year 2022 which was~~three and nine months ended September 30, 2023, and accounted for the transactions by deducting the par value from ~~the~~ common stock, ~~account,~~ reducing $~~6.2~~15.2 million from additional paid-in capital calculated using an average share price, and by increasing accumulated deficit for the remaining cost of $~~49.1~~84.8 million.

Fiscal Year 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 during the third quarter of fiscal year 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 then initiated 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 the 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 during the fourth quarter of fiscal year 2022. 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 paid a total of $125.0 million for shares repurchases and $0.1 million for direct costs during the nine months ended September 30, 2022 and accounted for the transactions by deducting the par value from common stock, reducing $14.0 million from additional paid-in capital calculated using an average share price, and by increasing accumulated deficit for the remaining cost of $111.1 million. The repurchases under the May 2022 share repurchase program were completed prior to the authorization of the November 2022 share repurchase program discussed above.

11. Stock-Based Compensation

The following details the components of stock-based compensation for the respective periods:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2023		2022		2023		2022		2023		2022		2023		2022
Operating expenses	$	547	$	284	$	879	$	498	$	628	$	331	$	1,507	$	829
Selling, general and administrative expenses		3,978		4,282		7,024		8,514		3,815		4,313		10,839		12,827
Total stock-based compensation expense	$	4,525	$	4,566	$	7,903	$	9,012	$	4,443	$	4,644	$	12,346	$	13,656

~~The decrease in stock-based compensation expense of $1.1~~ million during the six months ended June 30, 2023 as compared to the 2022 period is primarily due to the accelerated vesting of RSUs granted in 2022 to an executive officer as part of a separation agreement.

12. Other Significant Transactions

Tax Receivable Agreement

At the closing of the Business Combination, the Company entered into a Tax Receivable Agreement (“TRA”) 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 TRA. The TRA 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 ~~June~~September 30, 2023, the TRA liability was approximately $55.9 million of which $5.0 million was the current portion and $50.9 million was the non-current portion, both of which are included in the respective tax receivable agreement liability line items on the condensed consolidated balance ~~sheet.~~sheets.

There were no changes to the TRA liability for the nine months ended September 30, 2023. The Company recorded a $1.0 million benefit for the ~~three and six~~nine months ended ~~June~~September 30, 2022 which resulted from lower estimated state tax rates due to changes in apportionment.

Earn-Out Agreement

Under the Merger Agreement, the Platinum Stockholder iswas 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 ~~exceeds~~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 ~~are~~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		One-time Issuance of Shares
> $13.00 (a)		2,500,000
> $15.50 (a)		2,500,000
> $18.00 (a)		2,500,000
> $20.50 (a)		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, of which $~~18.3~~ ~~million remains contingently issuable as of June 30, 2023. The estimated value is~~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 aeach Triggering Event, any issuable shares ~~are~~were transferred from common stock contingent consideration to common stock and additional paid-in capital accounts.

On April 26, 2019, January 27, 2020, ~~and~~ June 14, 2023, and July 26, 2023, the Triggering Events for the issuance of the first, second, third and ~~third~~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 ~~that~~each date had been greater than $13.00, $15.50, $18.00, and $~~18.00~~20.50, respectively, for 10 out of 20 consecutive trading days. These Triggering Events resulted in the issuance of an aggregate ~~7,500,000~~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 $~~54.9~~73.15 million, with a corresponding decrease to the common stock contingent consideration account.

~~On July 26,~~ As of September 30, 2023, there are no shares that remain contingently issuable under the Triggering Event for the issuance of the last tranche 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 that date had been greater than $~~20.50~~ ~~for~~ 10 ~~out of~~ 20 ~~consecutive trading days. This resulted in the issuance of~~ ~~2,500,000~~ ~~shares to the Platinum Stockholder.~~Earn-Out agreement.

13. Commitments and Contingencies

The Company had $~~2.0~~1.9 million of bank guarantees at ~~June~~September 30, 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 ~~June~~September 30, 2023 were $~~21.6~~20.0 million. The majority of these outstanding commitments are expected to be incurred in ~~2023,~~the next twelve months, and approximately $~~1.7~~2.9 million is expected to be incurred ~~between 2024 and 2025.~~subsequent to September 30, 2024.

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. The Company has determined that resolution of pending matters is not probable to have a material adverse impact on its results of operations, cash flows, or financial position, and accordingly, no material contingency accruals are recorded. However, the outcome of litigation is inherently uncertain. As additional information becomes available, the Company reassesses the potential liability.

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 (“City”) and its safety camera vendor, Redflex Traffic Systems, Inc. in April 2016. 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. ~~No trial date~~Trial has been ~~set.~~scheduled for March 2025. Based on the information available to the Company at present, it cannot reasonably estimate a 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. PlusPass filed amended complaints on November 20, 2020 and April 27, 2021. PlusPass alleges that Verra Mobility violated Section 7 of the Clayton Act through a merger of Highway Toll Administration, LLC (“HTA”) and American Traffic Solutions, Inc. (“ATS”) in 2018, and that Verra Mobility violated Sections 1 and 2 of the Sherman Antitrust Act of 1890 by using exclusive agreements in restraint of trade and other allegedly anticompetitive means to acquire and maintain monopoly power in the market for the administration of electronic toll payment collection for rental cars. PlusPass seeks injunctive relief, divestiture by Verra Mobility of HTA, damages in an amount to be determined, and attorneys’ fees and costs. On May 28, 2021, Verra Mobility filed a motion to dismiss PlusPass’ second amended complaint in its entirety, which was denied in August 2021. Discovery is closed. Verra Mobility filed a motion for summary judgment on June 21, 2023, which is pending. Trial ~~has~~had been set for November ~~2023.~~2023, but was moved by the court to April 2024. Verra Mobility believes that all of PlusPass' claims are without merit and will defend itself vigorously in this litigation. Based on the information available to the Company at present, it cannot reasonably estimate a range of loss for this action and, accordingly, it has not accrued any liability associated with this action.

14. 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 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.

During the third quarter of 2022, the Company changed its measure of segment profit 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, net line items below. The comparable prior periods have been recast to conform to the revised presentation although the impact of this revision to previously reported segment profit was not material.

The following tables set forth financial information by segment for the respective periods:

For the Three Months Ended June 30, 2023

Commercial

Government

Parking

Corporate

($ in thousands)

Services

Solutions

Solutions

and Other

Total

Service revenue

$
94,455

$
84,994

$
16,601

$
—

$
196,050

Product sales

—

3,260

5,151

—

8,411

Total revenue

94,455

88,254

21,752

—

204,461

Cost of service revenue

688

681

2,969

—

4,338

Cost of product sales

—

2,011

3,951

—

5,962

Operating expenses

20,780

39,399

4,931

—

65,110

Selling, general and administrative expenses

16,131

15,926

6,441

—

38,498

Loss on disposal of assets, net

—

92

—

—

92

Other income, net

(4,237
)

(215
)

(60
)

—

(4,512
)
Segment profit

$
61,093

$
30,360

$
3,520

$
—

$
94,973

Segment profit

$
61,093

$
30,360

$
3,520

$
—

$
94,973

Depreciation and amortization

—

—

—

28,996

28,996

Transaction and other related expenses

—

—

—

64

64

Transformation expenses

—

—

—

665

665

Change in fair value of private placement warrants

—

—

—

10,918

10,918

Gain on interest rate swap

—

—

—

(4,805
)

(4,805
)
Loss on extinguishment of debt

—

—

—

209

209

Stock-based compensation

—

—

—

4,525

4,525

Interest expense, net

—

—

—

22,771

22,771

Income before income taxes

$
61,093

$
30,360

$
3,520

$
(63,343
)

$
31,630

For the Three Months Ended June 30, 2022

Commercial

Government

Parking

Corporate

($ in thousands)

Services

Solutions

Solutions

and Other

Total

Service revenue

$
84,888

$
74,672

$
14,942

$
—

$
174,502

Product sales

—

8,856

4,129

—

12,985

Total revenue

84,888

83,528

19,071

—

187,487

Cost of service revenue

496

563

2,654

—

3,713

Cost of product sales

—

4,893

3,433

—

8,326

Operating expenses

18,105

34,401

2,406

—

54,912

Selling, general and administrative expenses

13,591

14,255

7,571

—

35,417

Loss on disposal of assets, net

—

385

14

—

399

Other (income) expense, net

(3,840
)

(218
)

19

—

(4,039
)
Segment profit

$
56,536

$
29,249

$
2,974

$
—

$
88,759

Segment profit

$
56,536

$
29,249

$
2,974

$
—

$
88,759

Depreciation and amortization

—

—

—

34,540

34,540

Transaction and other related expenses

—

—

—

273

273

Transformation expenses

—

—

—

180

180

Change in fair value of private placement warrants

—

—

—

(6,600
)

(6,600
)
Tax receivable agreement liability adjustment

—

—

—

(965
)

(965
)
Stock-based compensation

—

—

—

4,566

4,566

Interest expense, net

—

—

—

14,485

14,485

Income before income taxes

$
56,536

$
29,249

$
2,974

$
(46,479
)

$
42,280


	For the Six Months Ended June 30, 2023															For the Three Months Ended September 30, 2023
	Commercial			Government			Parking			Corporate						Commercial			Government			Parking			Corporate
($ in thousands)	Services			Solutions			Solutions			and Other			Total			Services			Solutions			Solutions			and Other			Total
Service revenue	$	180,094		$	168,227		$	32,427		$	—		$	380,748		$	98,149		$	85,092		$	17,788		$	—		$	201,029
Product sales		—			5,950			9,666			—			15,616			—			5,193			3,711			—			8,904
Total revenue		180,094			174,177			42,093			—			396,364			98,149			90,285			21,499			—			209,933
Cost of service revenue		1,171			1,192			6,205			—			8,568			567			578			4,005			—			5,150
Cost of product sales		—			3,725			7,620			—			11,345			—			3,584			3,280			—			6,864
Operating expenses		40,645			77,003			8,973			—			126,621			21,174			42,395			4,676			—			68,245
Selling, general and administrative expenses		31,583			30,566			12,989			—			75,138			15,544			15,181			6,002			—			36,727
Loss on disposal of assets, net		—			116			—			—			116			—			54			13			—			67
Other income, net		(7,954	)		(250	)		(64	)		—			(8,268	)		(4,418	)		(75	)		(5	)		—			(4,498	)
Segment profit	$	114,649		$	61,825		$	6,370		$	—		$	182,844		$	65,282		$	28,568		$	3,528		$	—		$	97,378
Segment profit	$	114,649		$	61,825		$	6,370		$	—		$	182,844		$	65,282		$	28,568		$	3,528		$	—		$	97,378
Depreciation and amortization		—			—			—			59,305			59,305			—			—			—			27,530			27,530
Transaction and other related expenses		—			—			—			332			332			—			—			—			152			152
Transformation expenses		—			—			—			724			724			—			—			—			1,582			1,582
Change in fair value of private placement warrants		—			—			—			25,519			25,519			—			—			—			(553	)		(553	)
Gain on interest rate swap		—			—			—			(2,007	)		(2,007	)
Loss on interest rate swap																	—			—			—			60			60
Loss on extinguishment of debt		—			—			—			1,558			1,558			—			—			—			1,975			1,975
Stock-based compensation		—			—			—			7,903			7,903			—			—			—			4,443			4,443
Interest expense, net		—			—			—			45,458			45,458			—			—			—			20,384			20,384
Income before income taxes	$	114,649		$	61,825		$	6,370		$	(138,792	)	$	44,052		$	65,282		$	28,568		$	3,528		$	(55,573	)	$	41,805


	For the Three Months Ended September 30, 2022
	Commercial			Government			Parking		Corporate
($ in thousands)	Services			Solutions			Solutions		and Other			Total
Service revenue	$	86,056		$	77,441		$	17,120	$	—		$	180,617
Product sales		—			12,287			4,752		—			17,039
Total revenue		86,056			89,728			21,872		—			197,656
Cost of service revenue		478			481			3,185		—			4,144
Cost of product sales		—			7,496			3,821		—			11,317
Operating expenses		18,952			36,868			4,385		—			60,205
Selling, general and administrative expenses		14,126			15,034			6,218		—			35,378
(Gain) loss on disposal of assets, net		—			(54	)		10		—			(44	)
Other (income) expense, net		(3,869	)		(454	)	85			—			(4,238	)
Segment profit	$	56,369		$	30,357		$	4,168	$	—		$	90,894
Segment profit	$	56,369		$	30,357		$	4,168	$	—		$	90,894
Depreciation and amortization		—			—			—		35,079			35,079
Transaction and other related expenses		—			—			—		2,968			2,968
Transformation expenses		—			—			—		243			243
Change in fair value of private placement warrants		—			—			—		(2,267	)		(2,267	)
Gain on extinguishment of debt		—			—			—		(3,005	)		(3,005	)
Stock-based compensation		—			—			—		4,644			4,644
Interest expense, net		—			—			—		20,260			20,260
Income before income taxes	$	56,369		$	30,357		$	4,168	$	(57,922	)	$	32,972

For the Six Months Ended June 30, 2022

Commercial

Government

Parking

Corporate

($ in thousands)

Services

Solutions

Solutions

and Other

Total

Service revenue

$
158,353

$
147,896

$
29,387

$
—

$
335,636

Product sales

—

14,460

7,776

—

22,236

Total revenue

158,353

162,356

37,163

—

357,872

Cost of service revenue

1,098

1,036

5,358

—

7,492

Cost of product sales

—

8,620

5,701

—

14,321

Operating expenses

34,052

66,792

4,917

—

105,761

Selling, general and administrative expenses

26,854

30,698

14,966

—

72,518

Loss on disposal of assets, net

—

626

5

—

631

Other (income) expense, net

(6,795
)

(146
)

36

—

(6,905
)
Segment profit

$
103,144

$
54,730

$
6,180

$
—

$
164,054

Segment profit

$
103,144

$
54,730

$
6,180

$
—

$
164,054

Depreciation and amortization

—

—

—

70,215

70,215

Transaction and other related expenses

—

—

—

489

489

Transformation expenses

—

—

—

266

266

Change in fair value of private placement warrants

—

—

—

(2,866
)

(2,866
)
Tax receivable agreement liability adjustment

—

—

—

(965
)

(965
)
Stock-based compensation

—

—

—

9,012

9,012

Interest expense, net

—

—

—

28,764

28,764

Income before income taxes

$
103,144

$
54,730

$
6,180

$
(104,915
)

$
59,139


	For the Nine Months Ended September 30, 2023
	Commercial			Government			Parking			Corporate
($ in thousands)	Services			Solutions			Solutions			and Other			Total
Service revenue	$	278,243		$	253,319		$	50,215		$	—		$	581,777
Product sales		—			11,143			13,377			—			24,520
Total revenue		278,243			264,462			63,592			—			606,297
Cost of service revenue		1,738			1,770			10,210			—			13,718
Cost of product sales		—			7,309			10,900			—			18,209
Operating expenses		61,819			119,398			13,649			—			194,866
Selling, general and administrative expenses		47,127			45,747			18,991			—			111,865
Loss on disposal of assets, net		—			170			13			—			183
Other income, net		(12,372	)		(325	)		(69	)		—			(12,766	)
Segment profit	$	179,931		$	90,393		$	9,898		$	—		$	280,222
Segment profit	$	179,931		$	90,393		$	9,898		$	—		$	280,222
Depreciation and amortization		—			—			—			86,835			86,835
Transaction and other related expenses		—			—			—			484			484
Transformation expenses		—			—			—			2,306			2,306
Change in fair value of private placement warrants		—			—			—			24,966			24,966
Gain on interest rate swap		—			—			—			(1,947	)		(1,947	)
Loss on extinguishment of debt		—			—			—			3,533			3,533
Stock-based compensation		—			—			—			12,346			12,346
Interest expense, net		—			—			—			65,842			65,842
Income before income taxes	$	179,931		$	90,393		$	9,898		$	(194,365	)	$	85,857


	For the Nine Months Ended September 30, 2022
	Commercial			Government			Parking		Corporate
($ in thousands)	Services			Solutions			Solutions		and Other			Total
Service revenue	$	244,409		$	225,337		$	46,507	$	—		$	516,253
Product sales		—			26,747			12,528		—			39,275
Total revenue		244,409			252,084			59,035		—			555,528
Cost of service revenue		1,576			1,517			8,543		—			11,636
Cost of product sales		—			16,116			9,522		—			25,638
Operating expenses		53,004			103,660			9,302		—			165,966
Selling, general and administrative expenses		40,980			45,732			21,184		—			107,896
Loss on disposal of assets, net		—			572			15		—			587
Other (income) expense, net		(10,664	)		(600	)		121		—			(11,143	)
Segment profit	$	159,513		$	85,087		$	10,348	$	—		$	254,948
Segment profit	$	159,513		$	85,087		$	10,348	$	—		$	254,948
Depreciation and amortization		—			—			—		105,294			105,294
Transaction and other related expenses		—			—			—		3,457			3,457
Transformation expenses		—			—			—		509			509
Change in fair value of private placement warrants		—			—			—		(5,133	)		(5,133	)
Tax receivable agreement liability adjustment		—			—			—		(965	)		(965	)
Gain on extinguishment of debt		—			—			—		(3,005	)		(3,005	)
Stock-based compensation		—			—			—		13,656			13,656
Interest expense, net		—			—			—		49,024			49,024
Income before income taxes	$	159,513		$	85,087		$	10,348	$	(162,837	)	$	92,111

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 $~~8.4~~8.9 million and $~~13.0~~17.0 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively and were $~~15.6~~24.5 million and $~~22.2~~39.3 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

The following table details the revenues from international operations for the respective periods:

Three Months Ended June 30,

Six Months Ended June 30,

($ in thousands)

2023

2022

2023

2022

Australia

$
10,269

$
8,436

$
19,970

$
16,218

Canada

8,580

7,984

15,801

15,660

United Kingdom

5,926

4,992

12,662

11,198

All other

734

472

1,422

1,154

Total international revenues

$
25,509

$
21,884

$
49,855

$
44,230

~~15. Guarantor/Non-Guarantor Financial Information~~

VM Consolidated is the lead borrower of the 2021 Term Loan and Senior Notes. VM Consolidated is wholly owned by Greenlight Acquisition Corporation, which is wholly owned by Verra Mobility Corporation. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, including transactions with the Company’s wholly owned guarantor subsidiaries and non-guarantor subsidiaries.

The following financial information presents the condensed consolidated balance sheets as of June 30, 2023 and the related condensed consolidated statements of operations and comprehensive income for the three and six months ended June 30, 2023 and the condensed consolidated statement of cash flows for the six months ended June 30, 2023 for the Company, the combined guarantor subsidiaries and the combined non-guarantor subsidiaries.

~~Verra Mobility Corporation and Subsidiaries~~

~~Condensed Consolidated Balance Sheets~~

~~at June 30, 2023~~

~~(Unaudited)~~

($ in thousands)

Verra Mobility
Corporation
(Ultimate Parent)

Guarantor Subsidiaries

Non-
guarantor
Subsidiaries

Eliminations

Consolidated

Assets

Current assets:

Cash and cash equivalents

$
—

$
185,418

$
24,665

$
—

$
210,083

Restricted cash

—

3,378

38

—

3,416

Accounts receivable (net of allowance for credit losses of $20.1 million )

—

164,707

15,237

—

179,944

Unbilled receivables

—

32,126

4,717

—

36,843

Investment in subsidiary

296,041

130,071

—

(426,112
)

—

Inventory

—

2,408

17,383

—

19,791

Prepaid expenses and other current assets

—

82,777

9,732

—

92,509

Total current assets

296,041

600,885

71,772

(426,112
)

542,586

Installation and service parts, net

—

25,393

—

—

25,393

Property and equipment, net

—

95,760

18,707

—

114,467

Operating lease assets

—

31,129

6,041

—

37,170

Intangible assets, net

—

241,688

94,093

—

335,781

Goodwill

—

689,697

145,626

—

835,323

Due from affiliates

169,259

—

—

(169,259
)

—

Other non-current assets

—

12,823

2,617

—

15,440

Total assets

$
465,300

$
1,697,375

$
338,856

$
(595,371
)

$
1,906,160

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$
—

$
60,250

$
18,160

$
—

$
78,410

Deferred revenue

—

21,323

15,421

—

36,744

Accrued liabilities

—

39,347

12,295

—

51,642

Tax receivable agreement liability, current portion

—

4,994

—

—

4,994

Current portion of long-term debt

—

9,019

—

—

9,019

Total current liabilities

—

134,933

45,876

—

180,809

Long-term debt, net of current portion

—

1,129,692

—

—

1,129,692

Operating lease liabilities, net of current portion

—

28,655

3,676

—

32,331

Tax receivable agreement liability, net of current portion

—

50,900

—

—

50,900

Private placement warrant liabilities

—

5,430

—

—

5,430

Due to affiliates

—

31,083

138,176

(169,259
)

—

Asset retirement obligations

—

13,624

105

—

13,729

Deferred tax liabilities, net

—

(1
)

20,584

—

20,583

Other long-term liabilities

—

7,018

368

—

7,386

Total liabilities

—

1,401,334

208,785

(169,259
)

1,440,860

Total stockholders' equity

465,300

296,041

130,071

(426,112
)

465,300

Total liabilities and stockholders' equity

$
465,300

$
1,697,375

$
338,856

$
(595,371
)

$
1,906,160

~~Verra Mobility Corporation and Subsidiaries~~15. Subsequent Event

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~

~~Three Months Ended June 30, 2023~~

~~(Unaudited)~~

($ in thousands)

Verra Mobility
Corporation
(Ultimate Parent)

Guarantor Subsidiaries

Non-
guarantor
Subsidiaries

Eliminations

Consolidated

Service revenue

$
—

$
174,830

$
21,220

$
—

$
196,050

Product sales

—

4,122

4,289

—

8,411

Sales to affiliates

—

(2,668
)

2,668

—

—

Total revenue

—

176,284

28,177

—

204,461

Cost of service revenue

—

2,972

1,366

—

4,338

Cost of product sales

—

1,802

4,160

—

5,962

Cost of sales to affiliates

—

(1,211
)

1,211

—

—

Operating expenses

—

55,088

10,569

—

65,657

Selling, general and administrative expenses

—

38,189

5,016

—

43,205

Depreciation, amortization and (gain) loss on disposal of assets, net

—

23,979

5,109

—

29,088

Total costs and expenses

—

120,819

27,431

—

148,250

Income from operations

—

55,465

746

—

56,211

Income from equity investment

(19,108
)

(1,022
)

—

20,130

—

Interest expense, net

—

22,786

(15
)

—

22,771

Change in fair value of private placement warrants

—

10,918

—

—

10,918

Gain on interest rate swap

—

(4,805
)

—

—

(4,805
)
Loss on extinguishment of debt

—

209

—

—

209

Other income, net

—

(4,207
)

(305
)

—

(4,512
)
Total other (income) expenses

(19,108
)

23,879

(320
)

20,130

24,581

Income before income taxes

19,108

31,586

1,066

(20,130
)

31,630

Income tax provision

—

12,478

44

—

12,522

Net income

$
19,108

$
19,108

$
1,022

$
(20,130
)

$
19,108

Other comprehensive income:

Change in foreign currency translation adjustment

—

—

718

—

718

Total comprehensive income

$
19,108

$
19,108

$
1,740

$
(20,130
)

$
19,826

~~Verra Mobility Corporation and Subsidiaries~~

~~Condensed Consolidated Statements of Operations and Comprehensive Income~~

~~Six Months Ended June 30, 2023~~

~~(Unaudited)~~

($ in thousands)

Verra Mobility
Corporation
(Ultimate Parent)

Guarantor Subsidiaries

Non-
guarantor
Subsidiaries

Eliminations

Consolidated

Service revenue

$
—

$
339,199

$
41,549

$
—

$
380,748

Product sales

—

7,310

8,306

—

15,616

Sales to affiliates

—

(4,140
)

4,140

—

—

Total revenue

—

342,369

53,995

—

396,364

Cost of service revenue

—

6,120

2,448

—

8,568

Cost of product sales

—

3,236

8,109

—

11,345

Cost of sales to affiliates

—

(1,649
)

1,649

—

—

Operating expenses

—

106,708

20,792

—

127,500

Selling, general and administrative expenses

—

73,235

9,983

—

83,218

Depreciation, amortization and (gain) loss on disposal of assets, net

—

49,150

10,271

—

59,421

Total costs and expenses

—

236,800

53,252

—

290,052

Income from operations

—

105,569

743

—

106,312

Income from equity investment

(23,685
)

(1,439
)

—

25,124

—

Interest expense, net

—

��
45,483

(25
)

—

45,458

Change in fair value of private placement warrants

—

25,519

—

—

25,519

Gain on interest rate swap

—

(2,007
)

—

—

(2,007
)
Loss on extinguishment of debt

—

1,558

—

—

1,558

Other income, net

—

(7,673
)

(595
)

—

(8,268
)
Total other (income) expenses

(23,685
)

61,441

(620
)

25,124

62,260

Income before income taxes

23,685

44,128

1,363

(25,124
)

44,052

Income tax provision (benefit)

—

20,443

(76
)

—

20,367

Net income

$
23,685

$
23,685

$
1,439

$
(25,124
)

$
23,685

Other comprehensive income:

Change in foreign currency translation adjustment

—

—

628

—

628

Total comprehensive income

$
23,685

$
23,685

$
2,067

$
(25,124
)

$
24,313

~~Verra Mobility Corporation and Subsidiaries~~

~~Condensed Consolidated Statements of Cash Flows~~

~~Six Months Ended June 30, 2023~~

~~(Unaudited)~~

($ in thousands)

Verra Mobility
Corporation
(Ultimate Parent)

Guarantor Subsidiaries

Non-
guarantor
Subsidiaries

Eliminations

Consolidated

Cash Flows from Operating Activities:

Net income

$
23,685

$
23,685

$
1,439

$
(25,124
)

$
23,685

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

—

49,034

10,271

—

59,305

Amortization of deferred financing costs and discounts

—

2,469

—

—

2,469

Change in fair value of private placement warrants

—

25,519

—

—

25,519

Gain on interest rate swap

—

(3,563
)

—

—

(3,563
)
Loss on extinguishment of debt

—

1,558

—

—

1,558

Credit loss expense

—

4,856

100

—

4,956

Deferred income taxes

—

(3,347
)

(1,386
)

—

(4,733
)
Stock-based compensation

—

7,903

—

—

7,903

Other

—

132

2

—

134

Income from equity investment

(23,685
)

(1,439
)

—

25,124

—

Changes in operating assets and liabilities:

Accounts receivable

—

(17,682
)

(3,389
)

—

(21,071
)
Unbilled receivables

—

(6,784
)

664

—

(6,120
)
Inventory

—

194

(249
)

—

(55
)
Prepaid expenses and other assets

—

5,530

(2,530
)

—

3,000

Deferred revenue

—

969

4,799

—

5,768

Accounts payable and other current liabilities

—

11,236

(2,346
)

—

8,890

Due to affiliates

—

18,154

(18,154
)

—

—

Other liabilities

—

715

(433
)

—

282

Net cash provided by (used in) operating activities

—

119,139

(11,212
)

—

107,927

Cash Flows from Investing Activities:

Payments for interest rate swap

—

(1,556
)

—

—

(1,556
)
Purchases of installation and service parts and property and equipment

—

(25,667
)

(4,431
)

—

(30,098
)
Cash proceeds from the sale of assets

—

129

—

—

129

Net cash used in investing activities

—

(27,094
)

(4,431
)

—

(31,525
)
Cash Flows from Financing Activities:

Repayment of long-term debt

—

(77,009
)

—

—

(77,009
)
Payment of debt issuance costs

—

(192
)

—

—

(192
)
Proceeds from the exercise of warrants

—

105,750

—

—

105,750

Proceeds from the exercise of stock options

—

2,388

—

—

2,388

Payment of employee tax withholding related to RSUs and PSUs vesting

—

(3,028
)

—

—

(3,028
)
Net cash provided by financing activities

—

27,909

—

—

27,909

Effect of exchange rate changes on cash and cash equivalents

—

—

73

—

73

Net increase (decrease) in cash, cash equivalents and restricted cash

—

119,954

(15,570
)

—

104,384

Cash, cash equivalents and restricted cash - beginning of period

—

68,842

40,273

—

109,115

Cash, cash equivalents and restricted cash - end of period

$
—

$
188,796

$
24,703

$
—

$
213,499

~~Verra Mobility Corporation and Subsidiaries~~

~~Condensed Consolidated Statements of Cash Flows (Continued)~~

~~Six Months Ended June 30, 2023~~

~~(Unaudited)~~

Verra Mobility
Corporation
(Ultimate Parent)

Guarantor Subsidiaries

Non-
guarantor
Subsidiaries

Eliminations

Consolidated

Supplemental cash flow information:

Interest paid

$
—

$
43,960

$
—

$
—

$
43,960

Income taxes paid, net of refunds

—

22,188

716

—

22,904

Supplemental non-cash investing and financing activities:

Earn-out shares issued to Platinum Stockholder

18,288

—

—

—

18,288

Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end

—

4,374

—

—

4,374

Proceeds receivable from the exercise of warrants at period-end

52,747

—

—

—

52,747

Reclassification of private placement warrant liabilities to additional paid-in capital upon exercise

44,155

—

—

—

44,155

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with our Annual Report on Form 10-K for the year ended December 31, 2022, and our financial statements included in Part I, Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth ~~in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q and~~ in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. Please also refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

We are a leading provider of smart mobility technology solutions throughout the United States, Australia, Canada and Europe. 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 fleet owners such as rental car companies (“RACs”) and fleet management companies (“FMCs”), governments, universities, healthcare facilities, commercial parking operators 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.

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:

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, accelerated share repurchase (“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 is expected to occur during the first quarter of fiscal year 2024, at which time, a volume-weighted average price calculation over the term of the ASR agreement will be used to determine the final number and the average price of shares repurchased and retired. We paid a total of $100.0 million for shares repurchases during the nine months ended September 30, 2023.

We have three operating and reportable segments, Commercial Services, Government Solutions and Parking Solutions:

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.

During the third quarter of 2022, we changed our measure of segment profit 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, net line items. The comparable prior periods have been recast to conform to the revised presentation, although the impact of this revision to previously reported segment profit was not material. See Note 14, ~~Segment Reporting~~.

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.

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.

Cost of Service Revenue. Cost of service revenue 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 and install 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, ~~or a~~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.

~~Gain~~Loss (Gain) on Interest Rate Swap. ~~Gain~~Loss (gain) on interest rate swap relates to the ~~gain~~changes associated with the derivative instrument re-measured to fair value at the end of the reporting period and the related periodic cash payments.

Loss (Gain) on Extinguishment of Debt. Loss (gain) on extinguishment of debt consists of the write-off of pre-existing original issue discounts and deferred financing costs associated with debt ~~extinguishment.~~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.

Three Months Ended ~~June~~September 30, 2023 Compared to Three Months Ended ~~June~~September 30, 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.


	Three Months Ended June 30,																		Three Months Ended September 30,
							Percentage of Revenue						Increase (Decrease) 2023 vs 2022												Percentage of Revenue						Increase (Decrease) 2023 vs 2022
($ in thousands)	2023			2022			2023			2022			$			%			2023			2022			2023			2022			$			%
Service revenue	$	196,050		$	174,502			95.9	%		93.1	%	$	21,548			12.3	%	$	201,029		$	180,617			95.8	%		91.4	%	$	20,412			11.3	%
Product sales		8,411			12,985			4.1	%		6.9	%		(4,574	)		(35.2	)%		8,904			17,039			4.2	%		8.6	%		(8,135	)		(47.7	)%
Total revenue		204,461			187,487			100.0	%		100.0	%		16,974			9.1	%		209,933			197,656			100.0	%		100.0	%		12,277			6.2	%
Cost of service revenue		4,338			3,713			2.1	%		2.0	%		625			16.8	%		5,150			4,144			2.5	%		2.1	%		1,006			24.3	%
Cost of product sales		5,962			8,326			2.9	%		4.5	%		(2,364	)		(28.4	)%		6,864			11,317			3.3	%		5.7	%		(4,453	)		(39.3	)%
Operating expenses		65,657			55,196			32.1	%		29.4	%		10,461			19.0	%		68,873			60,536			32.8	%		30.6	%		8,337			13.8	%
Selling, general and administrative expenses		43,205			40,152			21.1	%		21.4	%		3,053			7.6	%		42,276			41,126			20.1	%		20.8	%		1,150			2.8	%
Depreciation, amortization and (gain) loss on disposal of assets, net		29,088			34,939			14.3	%		18.6	%		(5,851	)		(16.7	)%		27,597			35,035			13.1	%		17.7	%		(7,438	)		(21.2	)%
Total costs and expenses		148,250			142,326			72.5	%		75.9	%		5,924			4.2	%		150,760			152,158			71.8	%		76.9	%		(1,398	)		(0.9	)%
Income from operations		56,211			45,161			27.5	%		24.1	%		11,050			24.5	%		59,173			45,498			28.2	%		23.1	%		13,675			30.1	%
Interest expense, net		22,771			14,485			11.1	%		7.7	%		8,286			57.2	%		20,384			20,260			9.7	%		10.3	%		124			0.6	%
Change in fair value of private placement warrants		10,918			(6,600	)		5.3	%		(3.5	)%		17,518			(265.4	)%		(553	)		(2,267	)		(0.3	)%		(1.1	)%		1,714			(75.6	)%
Tax receivable agreement liability adjustment		—			(965	)		—			(0.5	)%		965			(100.0	)%
Gain on interest rate swap		(4,805	)		—			(2.3	)%		—			(4,805	)	n/a
Loss on extinguishment of debt		209			—			0.1	%		—			209		n/a
Loss on interest rate swap																				60			—			0.0	%		—			60		n/a
Loss (gain) on extinguishment of debt																				1,975			(3,005	)		1.0	%		(1.5	)%		4,980			(165.7	)%
Other income, net		(4,512	)		(4,039	)		(2.2	)%		(2.2	)%		(473	)		11.7	%		(4,498	)		(2,462	)		(2.1	)%		(1.2	)%		(2,036	)		82.7	%
Total other expenses		24,581			2,881			12.0	%		1.5	%		21,700			753.2	%		17,368			12,526			8.3	%		6.5	%		4,842			38.7	%
Income before income taxes		31,630			42,280			15.5	%		22.6	%		(10,650	)		(25.2	)%		41,805			32,972			19.9	%		16.6	%		8,833			26.8	%
Income tax provision		12,522			12,639			6.2	%		6.8	%		(117	)		(0.9	)%		11,497			8,396			5.5	%		4.2	%		3,101			36.9	%
Net income	$	19,108		$	29,641			9.3	%		15.8	%	$	(10,533	)		(35.5	)%	$	30,308		$	24,576			14.4	%		12.4	%	$	5,732			23.3	%

Service Revenue. Service revenue increased by ~~$21.5~~$20.4 million, or ~~12.3%~~11.3%, to ~~$196.1~~$201.0 million for the three months ended ~~June~~September 30, 2023 from ~~$174.5~~$180.6 million for the three months ended ~~June~~September 30, 2022, representing ~~95.9%~~95.8% and ~~93.1%~~91.4% of total revenue, respectively. The following table depicts service revenue by segment:

Commercial Services service revenue increased by ~~$9.6~~$12.1 million, or ~~11.3%~~14.1%, from ~~$84.9~~$86.1 million for the three months ended ~~June~~September 30, 2022 to ~~$94.5~~$98.1 million for the three months ended ~~June~~September 30, 2023, which was primarily due to increased travel volume and related tolling activity compared to the prior year. 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, contributed to a ~~$9.5~~$11.3 million growth in revenue. In addition, the increase in enrolled vehicles as well as higher tolling activity for our FMC customers contributed to a ~~$2.2~~$2.7 million growth in revenue during the three months ended ~~June~~September 30, 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 increased by ~~$10.3~~$7.7 million to ~~$85.0~~$85.1 million for the three months ended ~~June~~September 30, 2023 compared to ~~$74.7~~$77.4 million in the same period in 2022. The increase was primarily driven by the expansion of speed programs, as speed is the largest product in this segment and contributed approximately ~~$8.0~~$6.0 million to the service revenue growth. The remaining increase is attributable to expansions across red-light and bus lane ~~and school bus stop-arm~~ programs.

Parking Solutions service revenue grew by ~~$1.7~~$0.7 million to ~~$16.6~~$17.8 million for the three months ended ~~June~~September 30, 2023, from ~~$14.9~~$17.1 million for the three months ended ~~June~~September 30, 2022. The growth was primarily due to increased revenue from software as a service product offerings ~~professional services~~ and citation processing services related to parking management solutions.

Product Sales. Product sales were ~~$8.4~~$8.9 million and ~~$13.0~~$17.0 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively. Product sales decreased by approximately ~~$4.6~~$8.1 million, which was mainly due to a ~~$5.6~~$7.1 million decrease in product sales to Government Solutions customers ~~offset by growth~~and a decrease of $1.0 million in product sales in the Parking Solutions segment. Customer buying patterns vary greatly from period to period related to product sales.

Cost of Service Revenue. Cost of service revenue increased from ~~$3.7~~$4.1 million for the three months ended ~~June~~September 30, 2022 to ~~$4.3~~$5.2 million for the three months ended ~~June~~September 30, 2023. The ~~$0.6~~$1.1 million increase was mainly due to increased recurring service costs in the Parking Solutions and the Commercial Services segments.

Cost of Product Sales. Cost of product sales decreased by ~~$2.3~~$4.4 million from ~~$8.3~~$11.3 million in the three months ended ~~June~~September 30, 2022 to ~~$6.0~~$6.9 million in the three months ended ~~June~~September 30, 2023, which was ~~mainly due to a~~in line with the decrease in ~~costs~~product sales in the Government Solutions ~~segment offset by an increase in costs in the~~and Parking Solutions ~~segment.~~segments, discussed above.

Operating Expenses. Operating expenses increased by ~~$10.5~~$8.3 million, or ~~19.0%~~13.8%, from ~~$55.2~~$60.5 million for the three months ended ~~June~~September 30, 2022 to ~~$65.7~~$68.9 million for the three months ended ~~June~~September 30, 2023. The increase in 2023 was primarily attributable to increases of ~~$7.1~~$5.4 million in wages expense, ~~$1.4~~$1.1 million ~~for subcontractor~~of recurring service costs and $1.0 million ~~of recurring service costs~~for information technology expenses compared to the prior period. Operating expenses as a percentage of total revenue increased from ~~29.4%~~30.6% to ~~32.1%~~32.8% for the three months ended ~~June~~September 30, 2022 and 2023, respectively. The following table presents operating expenses by segment:

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $1.1 million to ~~$43.2~~$42.3 million for the three months ended ~~June~~September 30, 2023 compared to ~~$40.2~~$41.1 million for the same period in 2022. The increase was primarily due to ~~$1.9~~$2.3 million of higher wages expense, partially offset by decreases in professional services ~~costs~~expense and ~~$0.7 million of information technology expenses compared to~~credit loss expense based on customer payment trends in the ~~prior period.~~last 12 months. Selling, general and administrative expenses as a percentage of total revenue decreased from ~~21.4%~~20.8% to ~~21.1%~~20.1% for the three months ended ~~June~~September 30, 2022 and 2023, respectively. The following table presents selling, general and administrative expenses by segment:

Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net, decreased by ~~$5.8~~$7.4 million to ~~$29.1~~$27.6 million for the three months ended ~~June~~September 30, 2023 from ~~$34.9~~$35.0 million for the same period in 2022. This was mainly due to certain non-compete and developed technology intangible assets being fully amortized for the three-month period ended ~~June~~September 30, 2023 as compared to the prior year which included the amortization expense. This decrease was partially offset by an increase in depreciation expense in the 2023 period.

Interest Expense, Net. Interest expense, net increased by ~~$8.3~~$0.1 million from ~~$14.5~~$20.3 million for the three months ended ~~June~~September 30, 2022 to ~~$22.8~~$20.4 million for the same period in 2023 which is primarily attributable to rising interest ~~rates. The average variable interest rate on the 2021 Term Loan was 470 basis points higher for the three months ended June 30, 2023 compared to the prior period.~~rates offset by voluntary early repayments. See “Liquidity and Capital Resources.”

Change in Fair Value of Private Placement Warrants. We recorded ~~a loss~~gains of ~~$10.9~~$0.6 million and ~~a gain of $6.6~~$2.3 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively, related to the changes in fair value of our Private Placement Warrants, which ~~are~~were accounted for as liabilities on our condensed consolidated balance sheets. The change in fair value iswas the result of re-measurement of the liability at the end of each reporting period, ~~or a~~and the final re-measurement upon their exercise.

~~Tax Receivable Agreement Liability Adjustment. We recorded a $1.0 million benefit for the three months ended June 30, 2022 which arose from lower estimated state tax rates due to changes in apportionment.~~

~~Gain~~Loss on Interest Rate Swap. We recorded a ~~$4.8~~$0.1 million ~~gain~~loss during the three months ended ~~June~~September 30, 2023, of which approximately ~~$5.1~~$0.2 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period, offset by ~~$0.3~~$0.1 million related to the monthly cash payments on the interest rate swap.

Loss (Gain) on ~~extinguishment~~Extinguishment of ~~debt~~Debt. We recorded a ~~$0.2~~$2.0 million loss on extinguishment of debt during the three months ended ~~June~~September 30, 2023 related to the write-off of pre-existing deferred financing costs and discounts in connection with the

early repayment of ~~$10.0~~$100 million on the 2021 Term Loan. We recorded a $3.0 million gain on extinguishment of debt during the three months ended September 30, 2022 related to the forgiveness of the PPP loan, discussed below.

Other Income, Net. Other income, net was $4.5 million for the three months ended ~~June~~September 30, 2023 compared to ~~$4.0~~$2.5 million for the three months ended ~~June~~September 30, 2022. The increase of ~~$0.5~~$2.0 million is primarily attributable to income resulting from volume rebates earned from total spend on purchasing cards from ~~increased~~increasing tolling activity, and ~~travel activity.~~a one-time adjustment recognized in the third quarter of 2022 for a previous acquisition subsequent to the measurement period with no comparable amount in the 2023 period.

Income Tax Provision. Income tax provision was ~~$12.5~~$11.5 million representing an effective tax rate of ~~39.6%~~27.5% for the three months ended ~~June~~September 30, 2023 compared to a tax provision of ~~$12.6~~$8.4 million, representing an effective tax rate of ~~29.9%~~25.5% for the same period in 2022. The primary driver for the effective tax rate variance is due to the permanent differences related to the mark-to-market adjustment on the Private Placement ~~Warrants.~~Warrants and the PPP loan forgiveness recorded in 2022.

Net Income. We had net income of ~~$19.1~~$30.3 million for the three months ended ~~June~~September 30, 2023, as compared to a net income of ~~$29.6~~$24.6 million for the three months ended ~~June~~September 30, 2022. The ~~$10.5~~$5.7 million ~~decrease~~increase in net income was primarily due to the ~~change~~increase in ~~fair value of Private Placement Warrants, increased interest~~total revenue, decreased amortization expense and the other statement of operations activity discussed above.

~~Six~~Nine Months Ended ~~June~~September 30, 2023 Compared to ~~Six~~Nine Months Ended ~~June~~September 30, 2022


	Six Months Ended June 30,																		Nine Months Ended September 30,
							Percentage of Revenue						Increase (Decrease) 2023 vs 2022												Percentage of Revenue						Increase (Decrease) 2023 vs 2022
($ in thousands)	2023			2022			2023			2022			$			%			2023			2022			2023			2022			$			%
Service revenue	$	380,748		$	335,636			96.1	%		93.8	%	$	45,112			13.4	%	$	581,777		$	516,253			96.0	%		92.9	%	$	65,524			12.7	%
Product sales		15,616			22,236			3.9	%		6.2	%		(6,620	)		(29.8	)%		24,520			39,275			4.0	%		7.1	%		(14,755	)		(37.6	)%
Total revenue		396,364			357,872			100.0	%		100.0	%		38,492			10.8	%		606,297			555,528			100.0	%		100.0	%		50,769			9.1	%
Cost of service revenue		8,568			7,492			2.1	%		2.1	%		1,076			14.4	%		13,718			11,636			2.2	%		2.1	%		2,082			17.9	%
Cost of product sales		11,345			14,321			2.9	%		4.0	%		(2,976	)		(20.8	)%		18,209			25,638			3.0	%		4.6	%		(7,429	)		(29.0	)%
Operating expenses		127,500			106,259			32.2	%		29.7	%		21,241			20.0	%		196,373			166,795			32.4	%		30.0	%		29,578			17.7	%
Selling, general and administrative expenses		83,218			81,787			21.0	%		22.9	%		1,431			1.7	%		125,494			122,913			20.7	%		22.1	%		2,581			2.1	%
Depreciation, amortization and (gain) loss on disposal of assets, net		59,421			70,846			15.0	%		19.8	%		(11,425	)		(16.1	)%		87,018			105,881			14.4	%		19.1	%		(18,863	)		(17.8	)%
Total costs and expenses		290,052			280,705			73.2	%		78.5	%		9,347			3.3	%		440,812			432,863			72.7	%		77.9	%		7,949			1.8	%
Income from operations		106,312			77,167			26.8	%		21.5	%		29,145			37.8	%		165,485			122,665			27.3	%		22.1	%		42,820			34.9	%
Interest expense, net		45,458			28,764			11.5	%		8.0	%		16,694			58.0	%		65,842			49,024			10.9	%		8.8	%		16,818			34.3	%
Change in fair value of private placement warrants		25,519			(2,866	)		6.4	%		(0.8	)%		28,385			(990.4	)%		24,966			(5,133	)		4.1	%		(0.9	)%		30,099			(586.4	)%
Tax receivable agreement liability adjustment		—			(965	)		—			(0.3	)%		965			(100.0	)%		—			(965	)		—			(0.2	)%		965			(100.0	)%
Gain on interest rate swap		(2,007	)		—			(0.5	)%		—			(2,007	)	n/a				(1,947	)		—			(0.3	)%		—			(1,947	)	n/a
Loss on extinguishment of debt		1,558			—			0.4	%		—			1,558		n/a
Loss (gain) on extinguishment of debt																				3,533			(3,005	)		0.5	%		(0.5	)%		6,538			(217.6	)%
Other income, net		(8,268	)		(6,905	)		(2.1	)%		(1.9	)%		(1,363	)		19.7	%		(12,766	)		(9,367	)		(2.1	)%		(1.7	)%		(3,399	)		36.3	%
Total other expenses		62,260			18,028			15.7	%		5.0	%		44,232			245.4	%		79,628			30,554			13.1	%		5.5	%		49,074			160.6	%
Income before income taxes		44,052			59,139			11.1	%		16.5	%		(15,087	)		(25.5	)%		85,857			92,111			14.2	%		16.6	%		(6,254	)		(6.8	)%
Income tax provision		20,367			19,458			5.1	%		5.4	%		909			4.7	%		31,864			27,854			5.3	%		5.0	%		4,010			14.4	%
Net income	$	23,685		$	39,681			6.0	%		11.1	%	$	(15,996	)		(40.3	)%	$	53,993		$	64,257			8.9	%		11.6	%	$	(10,264	)		(16.0	)%

Service Revenue. Service revenue increased by ~~$45.1~~$65.5 million, or ~~13.4%~~12.7%, to ~~$380.7~~$581.8 million for the ~~six~~nine months ended ~~June~~September 30, 2023 from ~~$335.6~~$516.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022, representing ~~96.1%~~96.0% and ~~93.8%~~92.9% of total revenue, respectively. The following table depicts service revenue by segment:

Commercial Services service revenue increased by ~~$21.7~~$33.8 million, or ~~13.7%~~13.8%, from ~~$158.4~~$244.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022 to ~~$180.1~~$278.2 million for the ~~six~~nine months ended ~~June~~September 30, 2023. The 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, contributed to a ~~$18.3~~$29.6 million growth in revenue. In addition, the increase in enrolled vehicles as well as higher tolling activity for our FMC customers contributed to a ~~$3.8~~$6.5 million growth in revenue during the ~~six~~nine months ended ~~June~~September 30, 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 increased by ~~$20.3~~$28.0 million to ~~$168.2~~$253.3 million for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to ~~$147.9~~$225.3 million in the same period in 2022. The increase was primarily driven by the expansion of speed programs, as speed is the largest product in this segment and contributed approximately ~~$17.7~~$25.2 million to the service revenue growth. The remaining increase is attributable to expansions across red-light, ~~bus lane and~~ school bus stop-arm and bus lane programs.

Parking Solutions service revenue grew by ~~$3.0~~$3.7 million to ~~$32.4~~$50.2 million for the ~~six~~nine months ended ~~June~~September 30, 2023, from ~~$29.4~~$46.5 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The growth was primarily due to increased revenue from software as a service product offerings, professional services and citation processing services related to parking management solutions.

Product Sales. Product sales were ~~$15.6~~$24.5 million and ~~$22.2~~$39.3 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. Product sales decreased by approximately ~~$6.6~~$14.8 million, which was mainly due to a ~~$8.5~~$15.6 million decrease in product sales to Government Solutions customers, offset by a ~~$1.9~~$0.8 million growth in product sales in the Parking Solutions segment. Customer buying patterns vary greatly from period to period related to product sales.

Cost of Service Revenue. Cost of service revenue increased from ~~$7.5~~$11.6 million for the ~~six~~nine months ended ~~June~~September 30, 2022 to ~~$8.6~~$13.7 million for the ~~six~~nine months ended ~~June~~September 30, 2023. The ~~$1.1~~$2.1 million increase was mainly due to increased recurring service costs in the Parking Solutions segment.

Cost of Product Sales. Cost of product sales decreased by ~~$3.0~~$7.4 million from ~~$14.3~~$25.6 million in the ~~six~~nine months ended ~~June~~September 30, 2022 to ~~$11.3~~$18.2 million in the ~~six~~nine months ended ~~June~~September 30, 2023, which was ~~mainly due to a~~in line with the decrease in ~~costs~~product sales in the Government Solutions segment offset by an increase in costs in the Parking Solutions segment.

Operating Expenses. Operating expenses increased by ~~$21.2~~$29.6 million, or ~~20.0%~~17.7%, from ~~$106.3~~$166.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022 to ~~$127.5~~$196.4 million for the ~~six~~nine months ended ~~June~~September 30, 2023. The increase in 2023 was primarily attributable to increases of ~~$12.8~~$18.2 million in wages expense, ~~$3.0~~$3.7 million of recurring service costs, $3.4 million for subcontractor costs and ~~$2.5~~$2.4 million of ~~recurring service~~information technology costs compared to the prior period. Operating expenses as a percentage of total revenue increased from ~~29.7%~~30.0% to ~~32.2%~~32.4% for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023, respectively. The following table presents operating expenses by segment:

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to ~~$83.2~~$125.5 million for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to ~~$81.8~~$122.9 million for the same period in 2022. This is primarily due to ~~an aggregate $2.3~~$3.9 million ~~increase~~in higher wage expenses, and increases in professional services, information technology and ~~marketing~~other general expenses, which are partially offset by a decrease in $3.3 million of credit loss expense ~~due to improved economic conditions~~ based on customer payment trends in the last 12 ~~months.~~months and lower stock-based compensation expense compared to prior year. Selling, general and administrative expenses as a percentage of total revenue decreased from ~~22.9%~~22.1% to ~~21.0%~~20.7% for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023, respectively. The following table presents selling, general and administrative expenses by segment:

Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net, decreased by ~~$11.4~~$18.9 million to ~~$59.4~~$87.0 million for the ~~six~~nine months ended ~~June~~September 30, 2023 from ~~$70.8~~$105.9 million for the same period in 2022. This was mainly due to certain non-compete and developed technology intangible assets being fully amortized in the ~~six~~nine months ended ~~June~~September 30, 2023 as compared to the prior year. This decrease was partially offset by an increase in depreciation expense in the 2023 period.

Interest Expense, Net. Interest expense, net increased by ~~$16.7~~$16.8 million from ~~$28.8~~$49.0 million for the ~~six~~nine months ended ~~June~~September 30, 2022 to ~~$45.5~~$65.8 million for the same period in 2023 which is primarily attributable to rising interest rates. The average variable interest rate on the 2021 Term Loan was ~~450~~380 basis points higher for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to the prior period. See “Liquidity and Capital Resources.”

Change in Fair Value of Private Placement Warrants. We recorded a loss of ~~$25.5~~$25.0 million and a gain of ~~$2.9~~$5.1 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively, related to the changes in fair value of our Private Placement Warrants, which ~~are~~were accounted for as liabilities on our condensed consolidated balance sheets. The change in fair value iswas the result of re-measurement of the liability at the end of each reporting period, ~~or a~~and the final re-measurement upon their exercise.

Tax Receivable Agreement Liability Adjustment. We recorded a $1.0 million benefit for the ~~six~~nine months ended ~~June~~September 30, 2022 which ~~is arising~~was from lower estimated state tax rates due to changes in apportionment.

Gain on Interest Rate Swap. We recorded a ~~$2.0~~$1.9 million gain during the ~~six~~nine months ended ~~June~~September 30, 2023, of which approximately ~~$3.6~~$3.3 million is associated with the derivative instrument re-measured to fair value at the end of the reporting period and ~~$1.6~~$1.4 million related to the monthly cash payments on the interest rate swap.

Loss (Gain) on ~~extinguishment~~Extinguishment of ~~debt~~Debt. We recorded a ~~$1.6~~$3.5 million loss on extinguishment of debt during the ~~six~~nine months ended ~~June~~September 30, 2023 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayment of ~~$72.5~~$172.5 million on the 2021 Term Loan. We recorded a $3.0 million gain on extinguishment of debt during the nine months ended September 30, 2022 related to the forgiveness of the PPP loan, discussed below.

Other Income, Net. Other income, net was ~~$8.3~~$12.8 million for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to ~~$6.9~~$9.4 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The increase of ~~$1.4~~$3.4 million is primarily attributable to volume rebates earned from total spend on purchasing cards from increased tolling and travel activity.

Income Tax Provision. Income tax provision was ~~$20.4~~$31.9 million representing an effective tax rate of ~~46.2%~~37.1% for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to a tax provision of ~~$19.5~~$27.9 million, representing an effective tax rate of ~~32.9%~~30.2% for the same period in 2022. The primary driver for the effective tax rate variance is due to the permanent differences related to the mark-to-market ~~adjustment~~adjustments on the Private Placement Warrants.

Net Income. We had net income of ~~$23.7~~$54.0 million for the ~~six~~nine months ended ~~June~~September 30, 2023, as compared to a net income of ~~$39.7~~$64.3 million for the ~~six~~nine months ended ~~June~~September 30, 2022. The ~~$16.0~~$10.3 million decrease in net income was primarily due to the change in fair value of Private Placement Warrants, increased interest expense, and the other statement of operations activity discussed above.

Our principal sources of liquidity are cash flows from operations and the available borrowing under our Revolver (defined below).

We have incurred significant long-term debt as a result of acquisitions completed in prior years.

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 and service debt obligations for at least the next 12 months. 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 ~~June~~September 30, 2023, we had $74.8 million available for borrowing, net of letters of credit, under our Revolver.

We made early repayments totaling ~~$10.0~~$100.0 million and ~~$72.5~~$172.5 million on our 2021 Term Loan during the three and ~~six~~nine months ended ~~June~~September 30, ~~2023.~~2023, respectively.

During the ~~six~~nine months ended ~~June~~September 30, 2023, we processed the exercise of ~~17.0 million~~19,999,333 Warrants in exchange for the issuance of ~~14,840,070~~16,273,406 shares of Class A Common Stock. There were ~~13,782,411~~14,035,449 shares issued in exchange for cash-basis warrant exercises resulting in the receipt of ~~$105.8~~$161.4 million in cash proceeds as of ~~June~~September 30, 2023, and ~~$52.7 million of cash proceeds received in July 2023. The~~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 were no outstanding Warrants as of September 30,2023 as further discussed in Note 10, Stockholders' Equity.

negotiated transactions, each as permitted under applicable rules and regulations, any of which may use prearranged 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 is expected to occur during the first quarter of fiscal year 2024, at which time, a volume-weighted average price calculation over the term of the ASR agreement will be used to determine the final number and the average price of shares repurchased and retired. We paid a total of $100.0 million for share repurchases during the nine months ended September 30, 2023.

The City of New York Department of Transportation (“NYCDOT”) represented ~~17%~~13% and 22% of total accounts receivable, net as of ~~June~~September 30, 2023 and December 31, 2022, respectively. There is no material reserve related to NYCDOT open receivables as amounts are deemed collectible based on current conditions and expectations.

The following table sets forth certain captions indicated on our statements of cash flows for the respective periods:

Cash provided by operating activities increased by ~~$11.6~~$21.6 million from ~~$96.4~~$148.8 million for the ~~six~~nine months ended ~~June~~September 30, 2022 to ~~$107.9~~$170.4 million for the ~~six~~nine months ended ~~June~~September 30, 2023. Net income year over year decreased by approximately ~~$16.0~~$10.3 million, from ~~$39.7~~$64.3 million in 2022 to ~~$23.7~~$54.0 million in 2023. The aggregate adjustments to reconcile net income to net cash provided by operating activities increased ~~$23.4~~$20.4 million mainly due to the change in fair value of private placement warrants, ~~and~~ the change in deferred income taxes and the loss (gain) on extinguishment of debt, partially offset by decreased amortization expense year over year. The aggregate changes in operating assets and liabilities increased by ~~$4.2~~$11.5 million in 2023 compared to prior year primarily due to the timing of accrued and other payables and fluctuation in inventory levels offset by an increase in ~~prepaid~~accounts receivables and ~~other current expenses.~~unbilled receivables.

Cash used in investing activities was ~~$31.5~~$41.7 million and ~~$23.3~~$36.4 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. There was an increase in cash used in 2023 related to the purchases of installation and service parts and property and equipment compared to the prior year, and due to the monthly cash payments on the interest rate swap entered into in December 2022 to hedge our exposure to rising interest rates.

Cash ~~provided by (used in)~~used in financing activities was ~~$27.9~~$118.5 million and ~~$(86.5)~~$159.5 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively. The cash ~~provided by~~used in financing activities in 2023 was mainly due to ~~the $105.8~~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, partially offset by early repayments totaling $72.5 million on our 2021 Term Loan.~~IPO. The cash used in 2022 was mainly due to the repurchases of ~~3.1~~6.9 million shares of ~~the Company's~~our Class A Common Stock for ~~$55.3~~$125.1 million, ~~and~~ the repayment of $25.0 million of borrowing on the Revolver in January 2022 and the quarterly principal ~~payment~~payments on the 2021 Term Loan.

In March 2021, VM Consolidated, Inc. (“VM Consolidated”), ~~the Company’s~~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 26, 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~~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 the ~~six~~nine months ended ~~June~~September 30, 2023, ~~the Company~~we made early repayments of ~~$72.5~~$172.5 million on the 2021 Term Loan and as a result, the total principal outstanding was ~~$809.1~~$706.8 million as of ~~June~~September 30, 2023. ~~The Company~~We recognized a loss on extinguishment of debt of ~~$0.2~~$2.0 million and ~~$1.6~~$3.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, related to the write-off of pre-existing deferred financing costs and discounts.

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~~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, ~~the Company~~we amended ~~its~~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. As of ~~June~~September 30, 2023, the new all-in interest rate on the 2021 Term Loan was ~~8.5%~~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:

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~~we 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~~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:

In addition, ~~the Company~~we may redeem up to 40% of the Senior Notes before April 15, 2024, with the net cash proceeds from certain equity offerings.

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, 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, we recognized a $3.0 million gain on extinguishment of debt in the condensed consolidated statement of operations for the three and nine months ended September 30, 2022.

~~The Company has~~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 20, 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 ~~the Company’s~~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 ~~June~~September 30, 2023 or December 31, 2022. The availability to borrow was $74.8 million, net of $0.2 million of outstanding letters of credit at ~~June~~September 30, 2023.

Interest on the unused portion of the Revolver is payable quarterly at 0.375% and ~~the Company is~~we are also required to pay participation and fronting fees at 1.38% on $0.2 million of outstanding letters of credit as of ~~June~~September 30, 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~~our assets are pledged as collateral to secure ~~the Company’s~~our indebtedness under the 2021 Term Loan. At ~~June~~September 30, 2023, ~~the Company was~~we were compliant with all debt covenants.

~~The Company~~We recorded interest expense, including amortization of deferred financing costs and discounts, of ~~$22.8~~$20.4 million and ~~$14.5~~$20.3 million for the three months ended ~~June~~September 30, 2023 and 2022, respectively, and ~~$45.5~~$65.8 million and ~~$28.8~~$49.0 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

See Note 2, Significant Accounting Policies, in Part I, Item 1, Financial Statements, for additional information on the interest rate swap entered into in December 2022 to hedge ~~the Company's~~our exposure against rising interest rates.

We do not have any material off-balance sheet financing arrangements as of ~~June~~September 30, 2023.

The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Refer to our 2022 Annual Report on Form 10-K for our critical accounting policies, estimates and judgments. We believe that our estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.

For a discussion of our significant accounting policies, refer to Note 2, Significant Accounting Policies, in Part I, Item 1, Financial Statements.

For a discussion of recent accounting pronouncements, refer to Note 2, Significant Accounting Policies, in Part I, Item 1, Financial Statements.

We are exposed to interest rate market risk due to the variable interest rate on the 2021 Term Loan described in Part I, Item 2. 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 ~~$809.1~~$706.8 million at ~~June~~September 30, 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 ~~June~~September 30, 2023, the new all-in interest rate on the 2021 Term Loan was ~~8.5%~~8.7%.

Based on the ~~June~~September 30, 2023 balance outstanding, each 1% movement in interest rates will result in an approximately ~~$8.1~~$7.1 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 effectively 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 ~~$4.8~~$0.1 million ~~gain~~loss for the three months ended ~~June~~September 30, 2023 and a ~~$2.0~~$1.9 million gain on the interest rate swap for the ~~six~~nine months ended ~~June~~September 30, 2023. See Note 2, Significant Accounting Policies, in Part I, Item 1, Financial Statements for additional information on the interest rate swap.

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 principal executive and financial officers, to allow timely decisions regarding disclosure. Our Chief Executive Officer and Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures. Based on the results of our assessment, our management concluded that our internal control over financial reporting was effective as of ~~June~~September 30, 2023.

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the quarter ended ~~June~~September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 ~~federal antitrust statutes:~~ Section 7 of the Clayton Antitrust Act of 1914 (the “Clayton Act”), and Sections 1 and 2 of the Sherman Act. On November 20, 2020, PlusPass filed a First Amended Complaint. On February 9, 2021, the defendants filed motions to dismiss, and PlusPass subsequently abandoned various theories and claims and dismissed The Gores Group LLC, Platinum Equity LLC, and ATS Processing Services, Inc. On April 27, 2021, PlusPass filed a Second Amended Complaint (“SAC”), alleging that Verra Mobility violated Section 7 of the Clayton Act through the merger of Highway Toll Administration, LLC (“HTA”) and American Traffic Solutions, Inc. (“ATS”) in 2018, and that Verra Mobility violated Sections 1 and 2 of the Sherman Antitrust Act of 1890 by using exclusive agreements in restraint of trade and other allegedly anticompetitive means to acquire and maintain monopoly power in the market for the administration of electronic toll payment collection for rental cars. PlusPass seeks injunctive relief, divestiture by Verra Mobility of HTA, damages in an amount to be determined, and attorneys’ fees and costs. On May 28, 2021, Verra Mobility filed a motion to dismiss the SAC in its entirety, which was denied in August 2021. Discovery is closed. Verra Mobility filed a motion for summary judgment on June 21, 2023, which is pending. Trial ~~has~~had been set for November ~~2023.~~2023, but was moved by the court to April 2024. Verra Mobility believes that all of PlusPass' claims are without merit and will defend itself vigorously in this litigation.

Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 includes a discussion of our risk factors. ~~Other than the risk factor below, there~~There have been no material changes from the risk factors described in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future SEC filings.

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.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

~~None.~~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 prearranged 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 is expected to occur during the first quarter of fiscal year 2024, at which time, a volume-weighted average price calculation over the term of the ASR agreement will be used to determine the final number and the average price of shares repurchased and retired. We paid a total of $100.0 million for share repurchases during the nine months ended September 30, 2023.

The following details our purchases of our Class A Common Stock during the three months ended September 30, 2023:

(1) On September 5, 2023, we 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 is expected to occur during the first quarter of fiscal year 2024, at which time, a volume-weighted average price calculation over the term of the ASR agreement will be used to determine the final number and the average price of shares repurchased and retired.

We did not have any sales of unregistered equity securities during the three months ended September 30, 2023.

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 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 with Rule 10b5-1. Accordingly, sales under these plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving our company.

During the three months ended ~~June~~September 30, 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.”

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Pursuant to the requirements 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.


Delaware		81-3563824
(State of		(I.R.S. Employer
Incorporation)		Identification No.)

1150 North Alma School Road		85201
Mesa, Arizona		(Zip Code)
(Address of Principal Executive Offices)


(Title of Each Class)	(Trading Symbol)	(Name of Each Exchange on Which Registered)
Class A Common Stock, par value $0.0001 per share	VRRM	Nasdaq Capital Market
~~Warrants to purchase Class A Common Stock~~	~~VRRMW~~	~~OTC Pink Marketplace~~


PART I—FINANCIAL INFORMATION		54
Item 1. Financial Statements		54
Condensed Consolidated Balance Sheets		54
Condensed Consolidated Statements of Operations and Comprehensive Income		65
Condensed Consolidated Statements of Stockholders’ Equity		76
Condensed Consolidated Statements of Cash Flows		8
Notes to the Condensed Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		3128
Item 3. Quantitative and Qualitative Disclosures About Market Risk		4239
Item 4. Controls and Procedures		4340
PART II—OTHER INFORMATION		4441
Item 1. Legal Proceedings		4441
Item 1A. Risk Factors		4441
Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities		4441
Item 3. Defaults Upon Senior Securities		4542
Item 4. Mine Safety Disclosures		4542
Item 5. Other Information		4542
Item 6. Exhibits		4643
SIGNATURES		4845


($ in thousands)	June 30, 2023			December 31, 2022			September 30, 2023			December 31, 2022
2021 Term Loan, due 2028	$	809,097		$	886,106		$	706,842		$	886,106
Senior Notes, due 2029		350,000			350,000			350,000			350,000
Less: original issue discounts		(4,670	)		(5,637	)		(3,869	)		(5,637	)
Less: unamortized deferred financing costs		(15,716	)		(18,489	)		(13,603	)		(18,489	)
Total long-term debt		1,138,711			1,211,980			1,039,370			1,211,980
Less: current portion of long-term debt		(9,019	)		(21,935	)		(9,019	)		(21,935	)
Total long-term debt, net of current portion	$	1,129,692		$	1,190,045		$	1,030,351		$	1,190,045


Consolidated First Lien Net Leverage Ratio (As Defined by the 2021 Term Loan Agreement)		Applicable Prepayment Percentage
> 3.70:1.00		50%
< 3.70:1.00 and > 3.20:1.00		25%
< 3.20:1.00		0%


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


($ in thousands, except per share data)	June 30, 2023			December 31, 2022
(In thousands, except per share data)							September 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	210,083		$	105,204		$	114,379		$	105,204
Restricted cash		3,416			3,911			3,951			3,911
Accounts receivable (net of allowance for credit losses of $20.1 million and $15.9 million at June 30, 2023 and December 31, 2022, respectively)		179,944			163,786
Accounts receivable (net of allowance for credit losses of $17.6 million and $15.9 million at September 30, 2023 and December 31, 2022, respectively)								191,753			163,786
Unbilled receivables		36,843			30,782			40,069			30,782
Inventory		19,791			19,307			19,943			19,307
Prepaid expenses and other current assets		92,509			39,604			41,197			39,604
Total current assets		542,586			362,594			411,292			362,594
Installation and service parts, net		25,393			22,923			26,127			22,923
Property and equipment, net		114,467			109,775			117,827			109,775
Operating lease assets		37,170			37,593			35,299			37,593
Intangible assets, net		335,781			377,420			315,754			377,420
Goodwill		835,323			833,480			832,817			833,480
Other non-current assets		15,440			12,484			16,959			12,484
Total assets	$	1,906,160		$	1,756,269		$	1,756,075		$	1,756,269
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	78,410		$	79,869		$	89,760		$	79,869
Deferred revenue		36,744			31,164			34,322			31,164
Accrued liabilities		51,642			48,847			59,459			48,847
Tax receivable agreement liability, current portion		4,994			4,994			5,007			4,994
Current portion of long-term debt		9,019			21,935			9,019			21,935
Total current liabilities		180,809			186,809			197,567			186,809
Long-term debt, net of current portion		1,129,692			1,190,045			1,030,351			1,190,045
Operating lease liabilities, net of current portion		32,331			33,362			30,552			33,362
Tax receivable agreement liability, net of current portion		50,900			50,900			50,900			50,900
Private placement warrant liabilities		5,430			24,066			—			24,066
Asset retirement obligations		13,729			12,993			14,075			12,993
Deferred tax liabilities, net		20,583			21,149			19,015			21,149
Other long-term liabilities		7,386			5,875			9,559			5,875
Total liabilities		1,440,860			1,525,199			1,352,019			1,525,199
Commitments and contingencies (Note 13)
Stockholders' equity
Preferred stock, $0.0001 par value		—			—
Common stock, $0.0001 par value		17			15
Preferred stock, $0.0001 par value, 1,000 shares authorized with no shares issued and outstanding at September 30, 2023 and December 31, 2022								—			—
Common stock, $0.0001 par value, 260,000 shares authorized with 166,310 and 148,962 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively								17			15
Common stock contingent consideration		18,287			36,575			—			36,575
Additional paid-in capital		533,626			305,423			549,374			305,423
Accumulated deficit		(74,393	)		(98,078	)		(128,909	)		(98,078	)
Accumulated other comprehensive loss		(12,237	)		(12,865	)		(16,426	)		(12,865	)
Total stockholders' equity		465,300			231,070			404,056			231,070
Total liabilities and stockholders' equity	$	1,906,160		$	1,756,269		$	1,756,075		$	1,756,269


	For the Six Months Ended June 30, 2022
	Commercial			Government			Parking		Corporate
($ in thousands)	Services			Solutions			Solutions		and Other			Total
Service revenue	$	158,353		$	147,896		$	29,387	$	—		$	335,636
Product sales		—			14,460			7,776		—			22,236
Total revenue		158,353			162,356			37,163		—			357,872
Cost of service revenue		1,098			1,036			5,358		—			7,492
Cost of product sales		—			8,620			5,701		—			14,321
Operating expenses		34,052			66,792			4,917		—			105,761
Selling, general and administrative expenses		26,854			30,698			14,966		—			72,518
Loss on disposal of assets, net		—			626			5		—			631
Other (income) expense, net		(6,795	)		(146	)		36		—			(6,905	)
Segment profit	$	103,144		$	54,730		$	6,180	$	—		$	164,054
Segment profit	$	103,144		$	54,730		$	6,180	$	—		$	164,054
Depreciation and amortization		—			—			—		70,215			70,215
Transaction and other related expenses		—			—			—		489			489
Transformation expenses		—			—			—		266			266
Change in fair value of private placement warrants		—			—			—		(2,866	)		(2,866	)
Tax receivable agreement liability adjustment		—			—			—		(965	)		(965	)
Stock-based compensation		—			—			—		9,012			9,012
Interest expense, net		—			—			—		28,764			28,764
Income before income taxes	$	103,144		$	54,730		$	6,180	$	(104,915	)	$	59,139


($ in thousands)	Verra Mobility Corporation (Ultimate Parent)		Guarantor Subsidiaries			Non- guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	185,418		$	24,665	$	—		$	210,083
Restricted cash		—		3,378			38		—			3,416
Accounts receivable (net of allowance for credit losses of $20.1 million )		—		164,707			15,237		—			179,944
Unbilled receivables		—		32,126			4,717		—			36,843
Investment in subsidiary		296,041		130,071			—		(426,112	)		—
Inventory		—		2,408			17,383		—			19,791
Prepaid expenses and other current assets		—		82,777			9,732		—			92,509
Total current assets		296,041		600,885			71,772		(426,112	)		542,586
Installation and service parts, net		—		25,393			—		—			25,393
Property and equipment, net		—		95,760			18,707		—			114,467
Operating lease assets		—		31,129			6,041		—			37,170
Intangible assets, net		—		241,688			94,093		—			335,781
Goodwill		—		689,697			145,626		—			835,323
Due from affiliates		169,259		—			—		(169,259	)		—
Other non-current assets		—		12,823			2,617		—			15,440
Total assets	$	465,300	$	1,697,375		$	338,856	$	(595,371	)	$	1,906,160
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—	$	60,250		$	18,160	$	—		$	78,410
Deferred revenue		—		21,323			15,421		—			36,744
Accrued liabilities		—		39,347			12,295		—			51,642
Tax receivable agreement liability, current portion		—		4,994			—		—			4,994
Current portion of long-term debt		—		9,019			—		—			9,019
Total current liabilities		—		134,933			45,876		—			180,809
Long-term debt, net of current portion		—		1,129,692			—		—			1,129,692
Operating lease liabilities, net of current portion		—		28,655			3,676		—			32,331
Tax receivable agreement liability, net of current portion		—		50,900			—		—			50,900
Private placement warrant liabilities		—		5,430			—		—			5,430
Due to affiliates		—		31,083			138,176		(169,259	)		—
Asset retirement obligations		—		13,624			105		—			13,729
Deferred tax liabilities, net		—		(1	)		20,584		—			20,583
Other long-term liabilities		—		7,018			368		—			7,386
Total liabilities		—		1,401,334			208,785		(169,259	)		1,440,860
Total stockholders' equity		465,300		296,041			130,071		(426,112	)		465,300
Total liabilities and stockholders' equity	$	465,300	$	1,697,375		$	338,856	$	(595,371	)	$	1,906,160


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet be Purchased Under the Publicly Announced Plans or Programs
As of July 1, 2023		—	$	—		—	$	100,000,000
Share repurchases		—	$	—		—	$	—
As of July 31, 2023		—	$	—		—	$	100,000,000
Share repurchases		209,444	$	18.67		209,444	$	96,206,656
As of August 31, 2023		209,444	$	18.67		209,444	$	96,206,656
Share repurchases		239,988	$	18.01		239,988	$	91,875,359
Share repurchases - ASR (1)		4,131,551	$	17.79		4,131,551	$	—
As of September 30, 2023		4,580,983	$	18.36		4,580,983	$	—


		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
2.1	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 Corporation and PE Greenlight Holdings, LLC, in its capacity as the Stockholder Representative.	8-K	001-37979	2.1	June 21, 2018
2.2	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 and PE Greenlight Holdings, LLC, in its capacity as the Stockholder Representative.	8-K	001-37979	2.2	August 24, 2018
3.1	Second Amended and Restated Certificate of Incorporation of Verra Mobility Corporation.	8-K	001-37979	3.1	October 22, 2018
3.2	Amended and Restated Bylaws of Verra Mobility Corporation.	8-K	001-37979	3.2	October 22, 2018
4.1	Specimen Class A Common Stock Certificate.	S-1	333-21503	4.2	December 9, 2016
4.2	Specimen Warrant Certificate.	S-1	333-21503	4.3	December 9, 2016
4.3	Warrant Agreement, dated January 12, 2017, between the Registrant and Continental Stock Transfer & Trust Company, as warrant agent.	8-K	001-37979	4.1	January 19, 2017
4.4	First Amendment to Warrant Agreement, dated January 15, 2020, by and among the Registrant, Continental Stock Transfer & Trust Company and American Stock Transfer & Trust Company, LLC.	10-K	001-37979	4.4	March 2, 2020
4.5	Second Amendment to Warrant Agreement, dated May 11, 2023, by and between the Registrant and American Stock Transfer & Trust Company, LLC.	8-K	001-37979	4.1	May 11, 2023
10.1	Form of Notice of Grant of Restricted Stock Units (U.S. Participants) under the Verra Mobility Corporation 2018 Equity Incentive Plan.	8-K	001-37979	10.1	February 17, 2023
10.2	Form of Notice of Grant of Restricted Stock Units (Non-U.S. Participants) under the Verra Mobility Corporation 2018 Equity Incentive Plan.	8-K	001-37979	10.2	February 17, 2023
10.3	Form of Notice of Grant of Stock Option (U.S. Participants) under the Verra Mobility Corporation 2018 Equity Incentive Plan.	8-K	001-37979	10.3	February 17, 2023
10.4	Form of Notice of Grant of Stock Option (Non-U.S. Participants) under the Verra Mobility Corporation 2018 Equity Incentive Plan.	8-K	001-37979	10.4	February 17, 2023
10.5	Form of Notice of Grant of Performance Share Units and Award Agreement (U.S. Participants) under the Verra Mobility Corporation 2018 Equity Incentive Plan.	8-K	001-37979	10.5	February 17, 2023


10.6	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.	8-K	001-37979	10.6	February 17, 2023
10.7	Verra Mobility Corporation Second Amended and Restated Short-Term Incentive Plan.	8-K	001-37979	10.7	February 17, 2023
10.8	Amendment No. 2 to Amended and Restated First Lien Term Loan Credit Agreement, dated as of March 29, 2023.	10-Q	001-37979	10.8	May 4, 2023
31.1	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.					X
31.2	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.					X
32.1*	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.					X
32.2*	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.					X
101.INS	Inline XBRL Instance Document (the instance does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).					X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)					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.


	VERRA MOBILITY CORPORATION

Date: ~~August~~November 9, 2023	By:	/s/ Craig Conti
		Craig Conti
		Chief Financial Officer
		(Principal Financial Officer)