Verra Mobility secures new Avis Budget deal amid revenue headwinds
The company reported first-quarter adjusted earnings of $0.25 a share, down from $0.30 a share in the prior-year period.
Verra Mobility (VRRM) reported first-quarter results marked by a decline in profitability and a strategic restructuring of a key commercial partnership. The transportation solutions provider saw its adjusted earnings per share fall to $0.25 from $0.30 a share in the first quarter of 2025.
Total revenue for the quarter grew 0.1% year-over-year to $223.6 million. The marginal growth reflected a divergence between the company's primary business lines, as a 4% increase in Government Solutions service revenue—supported by $7.5 million in program expansions—was offset by a 4% decrease in Commercial Services revenue. The decline in the commercial segment was due to fleet management customer churn.
Financial performance was further pressured by margin compression and cash flow volatility. Adjusted EBITDA margin fell to 38% in the first quarter of 2026, compared to 43% in the same period last year. Free cash flow declined to $9.6 million from $41.7 million a year earlier, a result of lower cash from operations and higher capital expenditures within Government Solutions.
Verra Mobility reached a new seven-year framework agreement with Avis Budget Group (ABG) to replace a prior contract for which ABG had issued a termination notice in May 2026. The new agreement allows the customer to selectively perform certain activities internally, a departure from the previous relationship.
The terms of the new ABG agreement are expected to be materially less favorable financially than the prior contract. The initial termination of the ABG contract was expected to reduce Commercial Services' 2026 annualized revenue by $135 million to $145 million and annualized segment profit by $120 million to $125 million.
Following the initial termination notice, the company revised its full-year 2026 guidance downward on May 26, 2026. Verra Mobility now projects total revenue between $985 million and $995 million, with adjusted EBITDA between $380 million and $385 million and adjusted EPS between $1.19 and $1.25.