Verra Mobility Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 9, 2023

There are 8 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to the Vera Mobility Second Quarter 2023 Earnings Conference Call. At this time, all lines are in listen only mode. And following the presentation, we will conduct a question and answer session. This call is being recorded on Wednesday, On Thursday, August 9, 2023, I would now like to turn the conference call over to Mr. Mark Zindler, Vice President, Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you. Good afternoon and welcome to Vero Mobility's Q2 2023 earnings call. Today, we'll be discussing the results announced in our press release issued after the market close, along with our earnings presentation, which is available on the Investor Relations Section of our website at ir.veramobility.com. With me on the call are David Roberts, Verra Mobility's Chief Executive Officer and Craig Conti, Our Chief Financial Officer. David will begin with prepared remarks, followed by Craig, and then we'll open up the call for Q and A.

Speaker 1

During the call, we'll make statements related to our business that may be considered forward looking, including, but not limited to, Statements concerning our expected future business and financial performance, our plans to execute on our growth strategy, The benefits of our strategic acquisitions, our ability to maintain existing and acquire new customers, expectations regarding key operational metrics and other statements regarding our plans and prospects. Forward looking statements may often be identified with words Such as we expect, we anticipate or upcoming. These statements reflect our view only as of today, August 9, 2023, and should not be considered our views as of any subsequent date. We undertake no obligation to update or revise any forward looking statements. Forward looking statements are not promises or guarantees of future performance and are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations.

Speaker 1

For a discussion of material risks and other important factors that could affect our actual results, Please refer to those contained in our 2022 annual report on Form 10 ks and our 2023 quarterly reports on Form 10 Q, which are available on the Investor Relations section of our website at ir.veromobility.com and on the SEC's website atsec.gov. Finally, during today's call, we'll refer to certain non GAAP financial measures. A reconciliation of these non GAAP measures to the most directly comparable GAAP measure is included in our earnings release, which can be found on our website at ir.veramobility.com and on the SEC's website atsec.gov. With that, I'll turn the call over to David.

Speaker 2

Thank you, Mark, and thanks, everyone, for joining us. We delivered an outstanding 2nd quarter, highlighted by 9% year over year revenue growth, of which 96% was recurring service revenue. Moreover, we delivered adjusted EBITDA growth of 7% over last year and converted 54% of adjusted EBITDA to free cash flow for the quarter. Starting with Commercial Services, we delivered 11% revenue growth, driven in large part by an exceptionally strong start to the spring and summer travel season. Additionally, FMC revenue grew 17% over the same period last year aided by the growth initiatives that we have been executing in the businesses.

Speaker 2

Underpinning these strong results are several key macro drivers. 1st, travel demand remains robust with year to date TSA volume at approximately 100% of 2019 and about 115% of 2022 volume. From a qualitative standpoint, the sentiment regarding the strength of travel from the major airlines, hotel chains and rental car companies remained strong The remainder of this year aided by the continued pickup in business travel. We are also seeing continued growth in cashless U. S.

Speaker 2

Toll roads, which is an important secular tailwind for our Commercial Services business. Through the first half of twenty twenty three, Four new cashless toll roads or bridges were constructed, including the I-seventy Express Lanes in Denver, Colorado. In addition, the Virginia Dulles toll road Outside of Washington DC converted fully to cashless tolling. As you know, our enterprise agreement is up for renewal and well underway. The contract initially expired at the end of May and we are operating on 1 month extensions while the parties work on the contract renewal.

Speaker 2

I anticipate the agreement being completed this month. In addition, as I mentioned earlier, we have further strengthened our FMC and Direct Fleet business Driven by the investments we've made in expanding customer relationships with fleet management companies and the addition of a direct sales function. The team has done an outstanding job of offering a suite of our tolling, title and registration and violations management solutions to provide a customizable and value added proposition to our customers. Over the first half of this year, our focus on FMC relationships And the build out of a direct sales team has resulted in significant growth in combined vehicle solutions we deliver to our customers. Moreover, the SMC and Direct Fleet business will exit the year on a $60,000,000 run rate, a low double digit growth rate over last And going forward, we would expect the business to deliver growth consistent with the overall Commercial Services long term growth rate.

Speaker 2

Moving on to Government Solutions, our revenue grew 6% over the same period last year, of which 96% was recurring service revenue. GS sales growth is benefiting from the prior year completion of the New York City build out and the city's decision to transition to 20 fourseven monitoring as well as program expansion with existing customers and new camera installations with new customers. Looking at the big picture in Government Solutions, We are operating amidst the most favorable legislative environment I have experienced in my 9 years with Fare Mobility and states are increasingly turning toward Enhanced automated enforcement to increase traffic safety for their citizens. In the second quarter alone, significant Positive legislative actions were taken in Florida, Colorado and Connecticut. Starting with Florida, legislation authorizing automated speed enforcement in school zones School Bus Enforcement was signed by the Governor.

Speaker 2

Based on prior experience in other states, it typically takes about 6 to 12 months before RFPs are issued for bidding. In Colorado, legislation expanding and creating added efficiencies for automated speed enforcement was signed into law. Connecticut also passed legislation authorizing automated speed and red light enforcement. We expect the potential revenue opportunities We expect that potential revenue opportunities across the three states will be an approximate $50,000,000 to $60,000,000 run rate once fully implemented. It's too early to estimate the specific revenue cadence, but in our experience, these programs typically ramp up across the municipalities We choose to launch enforcement programs over a period of 1 to 3 years.

Speaker 2

In addition, although it is still early in the process, We're seeing continued positive momentum in California and Pennsylvania, and we're excited about helping governments meet their constituents' demands to help keep Children, drivers, pedestrians, cyclists and workers safer on the road. With respect to contract signings during the Q2, we renewed a top 5GuraMobility Safety Enforcement customer contract, our customer renewed their base business relationship with us for a 2 year contract term with 31 year option periods. In addition to this base business renewal, our customers selected us for additional expansion opportunities among Redlight, Speed and School Bus Stop Arm Enforcement, which has the potential to more than double our existing run rate with the customer. Additionally, we successfully rolled out the Connecticut Works on Speed program supporting their pilot program. The execution by the implementation team was And the program is driving the intended driver behavior changes Connecticut is seeking.

Speaker 2

We believe that we have hit an inflection point in automated flood enforcement Citizens are demanding safer roads and governments are responding with enhanced automated solutions. Through our technology, we are helping governments quickly And efficiently deliver tangible results for their communities. Finally speaking, these automated safety programs are highly effective. We and our customers see demonstrated lower speeds, Fewer red light running collisions and a general adherence to road safety and traffic laws. The end result being a measurable and sharp reduction in crash related fatalities and injuries.

Speaker 2

Across the board, this is a truly exciting time for our company and for all those who are passionate about public safety. Now let's discuss T2 Systems. We delivered revenue growth of 14% year over year with 76% being recurring subscription and service revenue. Importantly, the continued growth in T2 SaaS and services was a key influencing factor in our decision to acquire this business in the Q4 of 2021. And notably, T2 SaaS and service revenue grew 11% over last year, a key performance metric driving future margin expansion in the business.

Speaker 2

Moreover, we expect to see a higher rate of growth in SaaS and services during the second half of this year. T2 Systems also closed a large new customer in the university that included our Flex Enterprise software solution as well as our gated facility solution. On the municipal front, T2 closed 15 new municipal in the Tier 2 and Tier 3 municipality space and we continue to gain traction adding new logos in that segment. In summary, I'm incredibly pleased with our operating performance and are optimistic about the future industry trends. As I said previously, we have a great business with a bright future.

Speaker 2

The underlying KPIs driving our commercial services business are strong and durable, We have an incredibly favorable legislative environment with more and more cities and states gaining conviction around keeping roadways safe, which will drive the future of our Government Solutions business and the complexity surrounding university and municipality parking represent prime opportunities For the future growth and profitability of the T2 business. Greg, I'll turn it over to you to guide us through our financial results and current year outlook.

Speaker 3

Thanks, David. Good afternoon and thanks to everyone for joining us on the call. I'll start out today by providing an overview of our 2nd quarter results followed by our 2023 financial guidance. And I'll conclude with a brief discussion on capital allocation. Let's turn to slide 4, which outlines revenue and adjusted EBITDA performance for the consolidated business.

Speaker 3

Total revenue increased approximately 9% year over year to $204,000,000 for the quarter, driven by strong operating performance Excluding domestic government solutions product sales in the Q2 of last year, total revenue grew 13% year over year. Recurring service revenue grew 12% over the prior year quarter driven by strong travel demand and the expansion of the New York City School Zone Speed Program. At a segment level, commercial services revenue grew 11% year over year. Government solutions service revenue increased by 14% over the prior year And T2 system service revenue grew 11% over the Q2 of last year. Product revenue was $8,000,000 for the quarter, About $5,000,000 of this total was from T2 Systems, while $3,000,000 was from international product sales within Government Solutions.

Speaker 3

From a total profit standpoint, consolidated adjusted EBITDA of $95,000,000 increased by approximately 7% over last year. The core business defined as excluding one time domestic government solutions product sales generated adjusted EBITDA growth of approximately 10% versus the Q2 of 2022. Turning to Slide 5, we've generated about $357,000,000 of adjusted EBITDA On approximately $780,000,000 of revenue on a trailing 12 month basis, representing a 46% adjusted EBITDA margin. Over the same term, we've generated about $174,000,000 of free cash flow or 49% conversion of adjusted representing $1.13 of free cash flow per share. Moving to Commercial Services on Slide 6, We delivered revenue of $94,000,000 in the 2nd quarter, which is an 11% year over year increase.

Speaker 3

RAC tolling revenue increased 16% over the same period last year, driven by robust travel volume and increased rental volume. Additionally, our FMC business grew 17% year over year as our growth initiatives continue to produce the intended results. 2nd quarter adjusted EBITDA in commercial services was $61,000,000 representing 8% year over year growth. Adjusted EBITDA margins of about 65% reflected normal seasonality and were down slightly compared to the Q2 of last year due primarily to growth investments in our FMC business. Let's turn to Slide 7 and we'll take a look at the results of the Government Solutions business.

Speaker 3

Driven primarily by New York City's photo enforcement expansion efforts, service revenue increased by $10,000,000 or 14% Over the same period last year to $85,000,000 for the quarter. With New York City School Zone speed now fully implemented, Product revenue of about $3,000,000 was driven by international programs. Adjusted EBITDA was $30,000,000,000 for the quarter, representing margins of 34%, Essentially flat with the prior year despite the platform investments we're making. Quickly turning to Slide 8, we had a solid quarter And remain on plan for the year. Revenue of $22,000,000 and adjusted EBITDA of about $4,000,000 were directly in line with expectations.

Speaker 3

In addition, the mix of hardware, service and SaaS revenues were largely as expected. Moving to Slide 9, we'll take a look at reported income and leverage. We reported net income of $19,000,000 for the quarter, including a tax provision of about $13,000,000 representing an effective tax rate of 40%. As a reminder, our tax rate is heavily impacted by permanent differences related to mark to market adjustments for our private placement warrants. Adjusted EPS, which excludes amortization, stock based compensation and other non recurring items was $0.29 per share for the current quarter, which is $0.02 per share higher than the Q2 of 2022.

Speaker 3

On the right hand side of the page, you can see that we ended the 2nd quarter With a net debt balance of $949,000,000 resulting in net leverage of 2.7 times for the 2nd quarter. The primary drivers were strong free cash flow, debt repayments and the cash exercise of about $13,800,000 warrants, which yielded approximately $106,000,000,000 in cash proceeds during the Q2. At the end of the second quarter, we have paid down approximately $80,000,000 of floating rate term loan debt on a year to date basis. Our gross debt balance at quarter end stands at about $1,200,000,000 of which approximately $809,000,000 was floating rate debt. Moving on to cash, we generated approximately $63,000,000 in cash flow from operating activities, resulting in $51,000,000 of free cash flow for the quarter.

Speaker 3

Okay, let's turn to Slide 10 and have a look at Full year 2023 guidance. Based on our year to date results and our outlook for the remainder of the year, we are increasing our guidance for revenue to an Updated range of between $800,000,000 $810,000,000 We are guiding to the upper end of the previously communicated ranges for both adjusted EBITDA and free cash flow. And finally, we are maintaining the existing adjusted EPS range primarily driven by increased share count, which I will discuss next. As of today's call, Both the 3rd and 4th earn out share tranches, which were $2,500,000 each were issued to Platinum Equity, The company's former private equity owner. The 3rd tranche was triggered in the 2nd quarter and the 4th tranche was triggered subsequent to the end of the quarter.

Speaker 3

Our weighted average fully diluted share count of 162,000,000 shares for total year 2023 contemplates 5,000,000 newly issued shares as well as the impact of the warrant exercises I discussed earlier. In terms of cadence for the remainder of the year, we anticipate both revenue and adjusted EBITDA to increase in the Q3 with low single digit sequential growth. This is due to the dynamic in which a higher percentage of leisure travel is occurring in the 2nd quarter compared to pre COVID seasonality. Consistent with historical trends, we would then expect a modest reduction to revenue and adjusted EBITDA in the 4th quarter. Our commercial services outlook contemplates PSA volumes in the 99% of 2019 volume range for the remainder of the year.

Speaker 3

As a reminder, in Government Solutions for the second half twenty twenty three, we expect a year over year client and product sales and the service revenue comps will be tougher due to the installation timing of New York City cameras last year And the anniversary of the transition to 20 fourseven camera monitor. Our increased guidance also increased one time operating and SG and A costs in commercial services focused on growing our FMC business as well as product innovation to support new lanes of growth going forward. In addition, we anticipate increased operating cost in government solutions For engineering, staffing and technology development in the back half of the year supporting the platform investments we have discussed previously. Specifically, these investments will support enhanced compliance, data security and tools to enable onboarding new clients more efficiently. All of these investments are focused on driving future revenue growth.

Speaker 3

Moving now to our capital allocation plans for the remainder of the year. As of today's call, we have processed the exercise of approximately 17 point 3,000,000 warrants in exchange for the issuance of approximately 15,000,000 shares. Warrant holders have redeemed approximately $14,000,000 of the $17,300,000 total warrants on a cash basis, which has yielded about $161,000,000 in cash proceeds to date. As a reminder, we issued 20,000,000 warrants in conjunction with our IPO in 2018. As of today, about 87% of those warrants are now retired and Verra Mobility is Moving towards a fully de SPAC capital structure.

Speaker 3

For the remainder of 2023, we plan to pursue a balanced approach to capital Through paying down debt and executing share repurchases. To this point, we have paid down an additional $100,000,000 of floating rate debt in early August, bringing our total debt pay down for the year to about $180,000,000 As we discussed previously, We have hedged approximately $675,000,000 or about 95% of our current floating debt total with a float for fixed rate swap. This hedging instrument fixes the SOFR portion of our SOFR plus 3 25 basis point term loan B At a rate of 5.2% for 3 years with a monthly option to cancel beginning in December 2023, that we'll be able to execute in the event interest rates move in our favor. Under this balanced capital allocation approach and combined with our free cash flow estimate for the remainder of the year, We expect net leverage to land around 2.5 times by year end 2023. In summary, we are excited about where the company is currently And are confident we are well set up to execute into the future.

Speaker 3

This concludes our prepared remarks. Thank you for your time and attention today. At this time, I'd like to invite Kelsey to open the line for any questions. Kelsey?

Operator

Thank you. Ladies and gentlemen, we'll now begin the question and answer And your first question comes from Faiza Ali from Deutsche Bank, please go ahead.

Speaker 4

Yes. Thank you so much. Hi, everyone. So I wanted to ask About commercial services margins. And I'm wondering if there was any impact from The all inclusive pricing that you've talked about or is it mostly just the investments in fleet management that you mentioned?

Speaker 4

And maybe if you can disaggregate the impact from those investments and how we should think about that in the back half of this year?

Speaker 3

Yes, sure Faiza. Thank you for the question. The way I would think about it, I think the commercial services business is going to be flat Slightly up from a margin standpoint year over year. So we are certainly seeing the margin uplift both from, the strength that we continue to see coming out of TSA, As we've talked about in previous quarters and the strength of the all inclusive product, when I talk about those investments, I think it will be easier if I talk about it from a total company level. So those investments are approximately $5,000,000 to $7,000,000 in the back half of the year.

Speaker 3

And I think the easy way to think about that is If you take the increased guidance that we said for revenue and you held margin constant, what EBITDA would you get to would be a little higher than The EBITDA range that we have, the delta between those two is that one time investment. So I think I got the first part of your question. The second part of your question is Out of that $5,000,000 roughly half of that is in the commercial services business. So without that investment, we would see a low margin, of course, Year over year, we wouldn't see that great 17% growth we saw in the FMC business in the 2nd quarter.

Speaker 4

Understood. Thank you. And then just secondly, on the Government Solutions side, there's obviously been a lot of legislation that we've been Following that you've talked about, I'm curious sort of your you've talked about $50,000,000 to $60,000,000 of run rate revenue. So talk about just big picture sort of how you get there, what are some of the what do you assume in terms of market share, what's So what are the competitive dynamics like? Help us think through the revenue benefit of that as we look out over the next 2 to 3 years.

Speaker 2

Yes, thanks. Good question. The way we think about it is, one, we feel That $50,000,000 to $60,000,000 TAM is probably, as I mentioned earlier, the largest 1 year opening that I've seen in 9 years. And so We think that favorability is going to be with us for a while because more and more people are, a, getting used to enforcement as it Continues to be around year over year and 2, the benefits are just sort of unquestionable. With that being said, we certainly have competitors and Some of that is depending on the product or the use case.

Speaker 2

So, maybe different for red light versus speed versus bus enforcement. And sometimes that's geographic, but we continue to compete and win well with if you look at RFPs and our overall win rate still remains very high. And we would anticipate the way we think about is we would like to win over the next probably 3 to 5 years because it does take a little bit of time for some of these states to activate Somewhere close to our overall market share.

Speaker 4

Great. Thank you so much.

Operator

Thank you. And your next question comes from Nick Crimo from Credit Suisse. Please go ahead.

Speaker 5

Congrats on the strong quarter and thanks for taking my question. First, I just wanted to Get a little more color on what's driving the high revenue growth in the fleet management business and just Why you would expect the revenue growth to slow down next year just kind of given all the growth investments you're making this year? And then for my follow-up, I wanted to ask if you think that there's potential for the Government Solutions business overall to grow above the mid single digit Like medium term guidance you provided last year at your Investor Day, kind of maybe like through 2025 through 2027, Just given the favorable legislative backdrop that you're seeing today? Thank you.

Speaker 3

Yes, sure, Nick. Let me try to unpack that. So for The first one on the FMC business, I think the business started growing also in the back half of last year. So there's a little bit of Comp dynamic in the back half of the year. I can't continue to grow the business at 16% or 17% year over year.

Speaker 3

I think that that growth rate gets into the high single digits to approaching let's call it the high single digits in the back half of next year. And that's where I expect it to be Going sorry, the back half of this year, that's where I expected going into next year. I think the simple answer of how we got there is we resourced it. We've got some really good commercial talent that we brought in. That was Phase 1.

Speaker 3

Phase 2 is developing tools that are going to help us onboard Clients much more effectively, so effectively arming that commercial talent that we brought in with tools to grow the market. And so that's we're kind of in Phase 1, We're spending on Phase 2. I like the return on Phase 1. I'm excited about what we can accomplish in Phase 2. So I think that's fleets.

Speaker 3

When we think about government solutions, not ready to say that yet. I like and here's why financial, okay. As David went through in really good detail, I love where we are in terms of, call it, The motion and the regulation here, what we haven't yet seen is how that moves from a statewide law to an Actual RFP and there is a process that goes in between there and that tells us a couple of things. Number 1 is how much we're going to play in that area and I think the second thing is going to be at what So if I were sitting here a year ago, I would say I feel more confident about the growth than I did a year ago for sure, but I'm not ready to Kind of go up from the mid single digit organic growth just yet.

Speaker 5

Great. Thanks for all the color.

Speaker 3

You bet.

Operator

Thank you. And your next question comes from Daniel Moore from CJS Securities. Please go ahead.

Speaker 6

Thank you. Good afternoon, David and Craig. Thanks for taking the questions. Maybe we've covered a lot. Maybe drill in a little more on T2, obviously really solid growth on the SaaS side.

Speaker 6

Just talk about the opportunity funnel, what that Looks like both near term and longer term relative to maybe your initial expectations when you acquired it.

Speaker 2

Yes. Thanks, Dan, for the question. What I would say is what we're seeing right now is kind of exactly what we would want to see, which is Increasing growth in the SaaS portion of the business and that's kind of the best part of what the T2 business brings to offer. And part 2 is sort of as we're starting to see them win more within the municipality space that was kind of hypothesis number 2 behind the acquisition and they're starting to do that. They have a really, what I would call, world class platform for permits and enforcements and we're starting to see that really Catch on.

Speaker 2

When we say Tier 2 or Tier 3, that's just the size of the municipality. And so if you look at that, what I might Call more broadly the middle market municipalities. We've got a real strong program in hardware to support it as well. So I would say Right now, we're very excited about the trajectory of the business.

Speaker 6

Very helpful. And maybe one more. Appreciate the color, Craig, on obviously the progress you made not only from a cash flow perspective, but also on the warrants. Over 90 well over 90 percent of your debt now fixed or hedged and leverage ticking down toward 2.5 times. Is it Time to go on offense a little bit more and maybe talk about what the M and A pipeline might look like?

Speaker 6

Thanks.

Speaker 2

Dan, I'll take that question. Yes. We have we're not sitting on the sidelines. I can assure you that. We're definitely on offense.

Speaker 2

We continue to manage what we would consider as a very thoughtful approach. As Craig mentioned earlier, we're also making some investments in the business into Some new products and some commercial resources across the portfolio because we're seeing traction that we think we can accelerate just in the products and services that we have today, Plus some related adjacencies to those core businesses. So that's part 1. And then part 2, we continue to maintain a robust M and A pipeline, But at the same time, we also maintain high bars as to how we think about that. So I think you would still anticipate us to be very, very active in the back Half of this year, 1st part of next year, but in the meantime, we'll continue to allocate capital in a very systematic way, which is in the best use Shareholders consistent with our pattern and practice of past of the past.

Speaker 6

And the last one and I'll jump out. But on the guidance, I think you indicated that it implies about 99% TSA level relative to pre pandemic for the back half of the year. Do you expect a little bit of a tick lower or is that sort of building conservatism? Thanks.

Speaker 3

Yes. I mean, I looked at it this morning. On a year to date basis, Dan, I'll give you the exact total. It's 100.0%. I think year to date through August, it's 99%.

Speaker 3

So I don't We're not going to call it that fine. So I just think the 99% we took where we are through August, I don't have any indication, I think at a more macro level. I don't have any indication that we're going to see any softening in the near term horizon. So we're pretty confident with that number and what we see today.

Speaker 2

Okay. Thank you.

Operator

Thank you. And your last question comes from Louis Dipamov from William Blair, please go ahead.

Speaker 7

David, Craig and Mark, good afternoon.

Speaker 3

Hey, Louie.

Speaker 2

Hi, Louie.

Speaker 7

David, you referenced the legislative momentum for School Zone Speed Cameras. The New York City School Zone Speed Camera Vision 0 program, I believe began in 2020. Do the statistics overwhelmingly show that the cameras have been effective at reducing Fatalities and accidents and in general across the United States, are cities looking At the New York City program as a blueprint for success at this initiative?

Speaker 2

Yes, great question. So I think what we've been able to show not only in speed, but also in Crossing Guard as well as in red light that The cameras work. They are designed to change driver behavior and they do. If you look at the average speed in school zones, pre camera versus post camera, they go down Accidents rates go down, all of the markers that you would look for work and it's doing so in a force multiplier environment, Meaning that you're not having to use police force to go out and enforce that, we're doing it automatically. So What we're seeing is I think that New York has been a real trailblazer on this and certainly other cities look to New York and the results that they're getting.

Speaker 2

While they may deploy in a slightly different way depending on the legislation or their kind of local environment, we would say that New York has been a trendsetter in that way and we'll continue to look to them to the future as they look at other use cases for enforcement.

Speaker 7

Some cities have Shut down red light camera programs for various political reasons. But Is it possible that some of these same cities that were opposed to red light camera programs are More willing to adopt the school zone speed camera programs in Florida or other Cities that recently have the positive legislation.

Speaker 2

Yes, I totally agree with that. We've been using the terminology, Louis, as you know, called purpose built, which is, where before red light camera was the first use case of The market has really listened to what our customers were telling us and starting to say, hey, we have these very specific needs. Can you create Again, technology solutions to solve them that we have. So School Zone Speed was probably what I might call prime use case number 1, And that started with fixed and then we went to mobile and then we went to portable and then you start to look at work zones. And I would say that Cities that would want to say, hey, how do we we still have this problem, maybe we don't like red light, but these are really these are precious cargo areas in our city.

Speaker 2

We want to make sure that they are So I would say, yes, you would start to see adoption there.

Speaker 7

Great. And last one for Craig. With the expected Renewal of enterprise, is there expected to be any material changes from the prior agreement?

Speaker 3

No, we don't expect that. Louis, I don't expect that at all.

Speaker 7

Excellent. Thanks. That's it for me.

Speaker 3

Thank you.

Speaker 2

Thank you.

Operator

And there are no further questions at this time. Mr. Zindler, you may proceed.

Speaker 1

Thank you everyone for your participation today. Have a great day.

Speaker 2

Thank you, everybody.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you very much for participating and ask that Please disconnect your lines. Have a great day.

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Verra Mobility Q2 2023
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