VRRM 10-K & 10-Q changes, risk factors and insider trading

Investing in our common stock involves a high degree of risk. In addition to the other information set forth in this Annual Report, you should carefully consider the following factors, which could materially affect our business, financial conditioncondition, and results of operations in future periods. The risks described below are not the only risks we face. Additional risks not currently known to us may adversely affect our business, financial conditioncondition, or results of operations in future periods.

Risks Related to Our Customers, Industry, CompetitionCompetition, and Vendors

Negative industry and macroeconomic conditionsconditions, impactingincluding ourthe customersimpact of government actions and regulations, such as tariffs, trade protection measures, or usa government shutdown, may materially and adversely impact our business, financial conditioncondition, and results of operations.

Our Commercial Services and Government Solutions segments have customerseveral concentrationlarge customers, including NYCDOT, that account for a significant portion of our revenue, and a reduction in demand, materially different terms or pricing in new or amended agreements, or loss of one or more of such customers could have a material adverse effect on our business.

Our government contracts are subject to unique risks and uncertainties, including termination rights, delays in payment, auditsfunds appropriation requirements, audits, and investigations, any of which could have a material adverse effect on our business.

Any decreases in the prevalence or political acceptance of, or an increase in governmental restrictions regarding, automated and other similar methods of photo enforcement, the use of third-party tolling and violations processingprocessing, serviceor providers, theour ability to charge service or other fees to customers for services provided, could have a material adverse effect on our business.

A failure in or breachcompromise of our networks or systems, including as a result of cyber-attacks, could have a material adverse effect on our business.

Risks Related to Our Customers, Industry, CompetitionCompetition, and Vendors

Negative industry and macroeconomic conditionsconditions, impactingincluding the impact of government actions and regulations on our customers or usus, may materially and adversely impact our business, results of operationsoperations, and financial condition.

We provide smart mobility technology solutions to customers in our Commercial Services, Government SolutionsSolutions, and Parking Solutions business segments. Accordingly, the demand for our products in the past has been, and in the future may be, impacted by industry and macroeconomic trends and conditions impacting our customers, including seasonality, demand for business and leisure travel, changes to or disruptions in governmental budgeting, reductions in the level of air travel, higher airfare costs, energy shortagesshortages, and cost increases, international, nationalnational, and local economic conditions and cycles, as well as other factors affecting travel levels, such as military conflicts, terrorist incidents, natural disasters anddisasters, epidemic diseases.diseases, or government shutdowns. For example, our Commercial Services segment may be impacted by travel demand and extreme weather events which may impactaffect overall travel demand in the United States. Our Government Solutions segment may be impacted to the extent our customers experience a reduction in political acceptance ofof, or additional government restrictions onon, automated safety programs. Our Parking Solutions segment may be impacted to the extent our customers see an increase in usage of public transportationtransportation, rideshare, or rideshare,autonomous eithertaxi services, all of which may cause a decrease in parking usage. Furthermore, uncertain economic conditions may make it more difficult for us to raise funds through borrowings or private or public sales of debt or equity securities. We cannot predict the timing, strengthstrength, or duration of any economic slowdown, instabilityinstability, or recovery, generally or within any particular industry.

In addition, consumer spending and activities may be materially adversely affected in response to financial market volatility, negative financial news, changes to or disruptions in governmental budgeting processes or amounts, conditions in the real estate and mortgage markets, declines in income or asset values, energy prices, labor and healthcare costscosts, and other economic factors, all of which may have a negative effect on our business and results of operations. Additionally, uncertainty about, or a decline in, global or regional economic conditionsconditions, may have a significant impact on our suppliers, manufacturers, logistics providers, distributorsdistributors, and other partners. Potential effects on our suppliers and partners include financial instability, inability to obtain credit to finance operations, and insolvency.

Negative conditions in the general economyeconomy, both in the United States and abroad, including conditions resulting from changes in gross domestic product growth, inflation, financial and credit market fluctuations, international trade relations, government shutdowns, pandemics, political turmoil, natural catastrophes, warfare, and terrorist attacks on the United States or elsewhere, could negatively affect customer demand and the growth of our business.

Our Commercial Services and Government Solutions segments have several large customers, including the NYCDOT, that account for a significant portion of our revenue, and a reduction in demanddemand, materially different terms or pricing in new or amended agreements, or loss of one or more of such customers could have a material adverse effect on our business.

WeOur alsobusiness experienceexperiences varying levels of customer concentrationconcentration. For example, in our Government Solutions segment.segment, The New York City Department of Transportation (“NYCDOT”) represented approximately 15.8%17.9% and 16.9%15.8% of our total revenues duringfor the years ended December 31, 20242025 and 2023, respectively, and 17.2% and 18.3% of total accounts receivable, net as of December 31, 2024 and 2023,2024, respectively. Our contract with NYCDOT expired on December 31, 2024,2025, and we areentered presently participating in a competitive procurement for a new NYCDOT automated enforcement program contract. We extended our current contract with NYCDOT through December 31, 2025 to allow NYCDOT to continue to operate its automated enforcement program until the competitive procurement process is completed. However, there is no assurance that we will be successful in winning the competitive procurement for the new automated enforcement contract. If we are unable to win the competitive procurement forinto a new contract with NYCDOT, oreffective ifJanuary we1, win2026, to manage New York City’s automated enforcement camera safety programs for a five-year period. The terms of the competitivenew procurementcontract atare materially different termsthan our prior contract with NYCDOT, including service level agreements, service credits, liquidated damages, cybersecurity, and pricingsubcontracting asrequirements. ourIf currentwe contract,do not successfully perform the contract pursuant to its terms, it wouldcould have a material adverse effect on our business, financial conditioncondition, and results of operations. We may continue to rely on a small number of customers in our Government Solutions segment to represent a significant portion of our total revenues in any given period. The loss of any of our top Government Solutions customers could have a material adverse effect on our business, financial conditioncondition, and results of operations.

Our government contracts are subject to unique risks and uncertainties, including termination rights, delays in payment, auditsfunds appropriation requirements, audits, and investigations, any of which could have a material adverse effect on our business.

We enter into government contracts from time to time with customers that are subject to various uncertainties, restrictionsrestrictions, and regulations, which could result in withholding or delay of payments to us. For example, as of December 31, 2024,2025, NYCDOT had an open receivable balance of $35.6$72.9 million, which represented 17.2%31.1% of our total accounts receivable, net.

Government entities typically finance projects through appropriated funds. While these projects are often planned and executed as multi-year projects,initiatives, government entities usually reserve the right to change the scope ofof, delay, or terminate thesesuch projects fordue to a lack or reduction of approved funding, including as a result of reductions in federal funding that may impact the availability or attiming theirof appropriated funds, or for convenience. Furthermore, we may be required to perform work under expired or terminated government contracts and may be restricted from recognizing revenue from such contracts. Changes in government or political developments, including administrative hurdles, constitutional challenges, budget deficits, shortfalls or uncertainties, government spending reductionsreductions, or other debt or funding constraints, could result in our government contracts being reduced in price or scope or terminated altogether, as well as limit our ability to win new government work in the future. For example, in November 2025, the province of Ontario, Canada enacted legislation banning automated speed enforcement cameras, which led to our Company exiting the province.

Moreover, if a government customer does not follow the requisite procurement or ordinance-specific administrative procedures, the contract may be subject to protest or voidable regardless of whether we bear any responsibility for the error. Our government contracts are subject to underlying laws and regulations related to government contractors, and often include other one-sided, customer-friendly provisions and certifications, including termination for convenience, broad indemnification provisionsprovisions, and uncapped exposure or liquidated damages for certain liabilities, which can impose obligations, requirementsrequirements, and liabilities on us that are beyond those associated with a typical commercial arrangement. We may also be subject to differing or contrary policy preferences or requirements among our government customers which could result in a loss of government customers if we are unable to satisfy such potential differing requirements or preferences to the satisfaction of such customers.

In addition, government contracts are generally subject to audits and investigations by government agencies or higher-tier government contractors. If improper or illegal activities or contractual non-compliance are identified, including improper billing or vendor non-compliance, we may be subject to various civil and criminal penalties and administrative sanctions, which maycould include termination of contracts,termination, forfeiture of profits, suspension of payments, the imposition of fines, penalties andpenalties, sanctions, and suspensionssuspension or debarment from doing business for or on behalf of thewith government entities in the future. This includes penalties under the federal False Claims Act or similar state laws, for reasons such as, but not limited to, inaccurate billing, improper coding, or the actions of third parties acting on our behalf. For example, in 2020, after we discovered issues in our system installation practices under our agreement with NYCDOT, NYCDOT investigated the matter and we undertook significant efforts to remediate past installations. If penalties or other restrictions are imposed in one jurisdiction, they could also implicate similar provisions ofin contracts with other government customerscustomers. in other jurisdictions. Further, theFurthermore, negative publicity related to these penalties, sanctionssanctions, or findings in government audits or investigations could harm our reputation and hinder our ability to compete for new contracts with government customers and in the private sector. Any of the foregoing or any other reduction in revenue from government customers could have a material adverse effect on our business, financial conditioncondition, and results of operations.

Any decreases in the prevalence or political acceptance of, or an increase in governmental restrictions regarding, automated and other similar methods of photo enforcement, the use of third-party tolling service providersproviders, or the ability to charge service or other fees to customers for services provided, could have a material adverse effect on our business.

Our Government Solutions segment provides automated safety solutions to national, statestate, and local government agencies, generating revenues through automated photo enforcement of red-light, speed limit, school bus, speed limit and bus lane laws. WeFrom sometimestime to time, we make significant capital and other investments to attract and retain thesecustomers, contracts,including suchinvestments as the cost of purchasingin information technology equipment, constructingthe construction and installinginstallation of photo enforcement systemssystems, and developingthe development and implementingimplementation of software and labor resources. In 2024,2025, revenues from this segment represented approximately 44%47% of our total revenues. Therefore,Accordingly, weour dependbusiness depends on national, statestate, and local governments authorizing the use of automated photo enforcement and not otherwise materially restricting its use. In states that have enabling legislation, if that legislation is amended, not renewedrenewed, or is otherwise repealed, use of automated enforcement technology can be suspended until new legislation is passed. InFor 2022,example, ain NorthNovember Carolina2025, courtthe province of appealsOntario, issuedCanada aenacted rulinglegislation limitingbanning automated speed enforcement cameras, which led to our Company exiting the ability of local authorities to make certain decisions with respect to funding automated enforcement programs, impacting the viability of automated enforcement in impacted jurisdictions.province.

Ballot initiatives, referendums, opinions of attorneys generalgeneral, and legal challenges can also be used to restrict the use of automated enforcement or to impose additional licensing requirements on its use. For example, the Attorneys General in the states of Arizona, TennesseeTennessee, and Virginia have issued opinions that had the effect of limiting the use of these enforcement technologies or impacting the manner in which photo enforcement programs operate. Usage may also be affected if there is an unfavorable shift in political support for, or public sentiment towards,toward, automated enforcement, or as a result of one or more scandals related to its use.

Similarly, our Commercial Services business maycould be materially impactedadversely ifaffected there isby an unfavorable shift in political support forfor, or public sentiment towardstoward, tollingtolling, or itsby usematerial is materially restrictedrestrictions or limited,limitations on its use, including through the imposition of limits on the fees RACRACs companies canmay charge their customers for tolling or violation processing services. Any material restriction or limitation on the use of automated enforcement or material reduction in its use in the markets we serve, or any similar changes with respect to tolling, could have a material adverse effect on our ability to recoup our investments, and negatively impact our business, financial conditioncondition, and results of operations. Further, our relationships and commercial account agreements with tolling authorities, issuing authorities, motor vehicle departmentsdepartments, and other governmental agencies significantly enhances and enables our service offerings, and changes in those relationshiprelationships or agreements could significantly adversely impact our business.

We face intense competition and any failure to keep up with technological developments, changing customer preferencespreferences, and new laws and policies could have a material adverse effect on our business.

The markets for our solutions are increasingly competitive, rapidly evolvingevolving, and fragmented, and are subject to changing technology, shifting customer needs, contract renewalsrenewals, and new laws and policies. A number of vendors develop and market products and services that compete to varying extents with our offerings, and we expect this competition to intensify. The rapid rate of technological change in our industry could increase the chances that we will face competition from new products or services designed by companies thatwith whom we do not currently compete with.compete. This includes advancements in the area of self-driving carsvehicles, which may significantly reduce the frequency of vehicles illegally running red lights orlights, exceeding posted speed limits.limits, Thisor alsorequiring includesparking, AIas well as AI-enabled tools, which may allow for new or more efficient competing solutions. Moreover, we face competition from our own customers as they may choose to invest in developing their own internal solutions.

Some of our existing competitors and potential new competitors have longer operating histories, greater name recognition, less debt, more established customer basesbases, or significantly greater financial, technical, researchresearch, and development, marketingmarketing, and other resources than we do. As a result, our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies (including AI), standardsstandards, or customer requirements. In some cases, our competitors may be better positioned to initiate or withstand substantial price competition, and we may have to reduce our pricing to retain existing business or obtain new business. If we are not able to maintain favorable pricing for our solutions, our profit margin and profitability could suffer. In addition, if a prospective customer is currently using a competing solution, the customer may be unwilling to switch to our solution without setupset-up support services or other incentives. Certain existing and new competitors may be better positioned to acquire competitive solutions, develop new solutions, modify existing solutions, effectively negotiate third-party licenses and other strategic relationships, and take advantage of acquisitionacquisitions or other similar expansion opportunities. Any failure to achieve our target pricing levels, maintain existing customer relationships, generate additional customer winswins, or otherwise successfully compete would have a material adverse effect on our business, financial conditioncondition, and results of operations.

Our new products and servicesservices, and changes to existing products and servicesservices, may not succeed.

Our ability to retain, increaseexpand, and engage our customer base and to increase our revenue depends, in large part, on our ability to continue toevolving evolveour existing solutions and to createdeveloping successful new solutions. We may introduce significant changes to our existing solutions or acquireacquire, develop, or introduce new and unproven products and services, including usingthrough technologiesthe (use of emerging technologies, such as AI)AI, or by entering markets or industries in which we have little or nolimited experience. For example, as Government Solutions customers increase their requirements related to data security, privacyprivacy, and IT architecture, we have invested significant effort and expense may be required to develop new solutions to keepmeet upthese with increasingevolving requirements, and oursuch efforts may not be entirely successful. Modifications to existing solutions or developmentsthe development of new solutions can be costly, may be restrictedsubject byto regulatory requirements, involvesand require significant research,research and development, time, expenseexpense, and human capitalcapital, and may not necessarily result in the successful commercialization or adoptioncustomer by customers as expected.adoption. The failure of any new or enhanced solution to achieve customer adoptionadoption, or our failure to otherwise successfully monetize our development effortsefforts, could have a material adverse effect on our business, financial conditioncondition, and results of operations. Further, changes to the hardware solutions we offer to our government customers may require certification by a government agency, and failure to achieve such certification may result in an inability to sell or operate photo enforcement systems in a particular jurisdiction. Any failure to evolve existing solutions or create new successful solutions could have a material adverse effect on our business, financial conditioncondition, and results of operations.

Many of the contracts and renewals for which we bid, particularly those for certain larger government customers, are extremely complex and require the investment forof significant resources in order to prepare accurate bids and proposals. Further, a significant percentage of new customer growth opportunities and contract renewals or extensions in our business segments are only accessible through competitive bidding. Competitive bidding imposesinvolves substantial costs and presents several risks, including significant time and effort and the commitment of resources, regardless of whether thea contract is ultimately won.awarded. For example, we invested significant time and resources to prepare our response for the competitive procurement for the new NYCDOT automated enforcement program contract. We may also be unable to meet the requirements of a solicitation or may have to incur substantial costs to be able to do so. These and other unanticipated costs related to the competitive bidding process, including advancing or defending bid protests, and any failure to win renewals or new customer accounts through the competitive bidding process, could have a material adverse effect on our business, financial conditioncondition, and results of operations.

Our reliance on third-party providersproviders, including for access to government records of vehicle information, could have a material adverse effect on our business.

We rely heavilysignificantly on third-party providers, including subcontractors, manufacturers, software vendors, software application developers, and utility and network providers, to meet their obligations to us in a timely and high-qualityreliable manner. For example, we rely on third parties to provide data sourced from state departments of motor vehicles (and their European equivalents) and other governmental agencies with which we do not have direct relationships for the driver and other information we use in our business. Our access to such governmental data may be suspended, restricted, or terminated at any time, including as a result of changes in law or policy, contractual or licensing disputes, data-sharing moratoria, privacy or security concerns, system outages, or discretionary decisions by those agencies or their data service intermediaries. Any reduction, interruption, or loss of access to this data, or increase in prices for access to this data could materially and adversely affect our ability to offer our solutions wouldand bemeet materiallycustomer affectedexpectations ifand thiscontractual access was unavailable or materially restricted, or if the price we pay increased significantly.commitments. Our Government Solutions business also relies on a number of third-party manufacturers, including camera manufacturers and automated license plate recognition providers, and outsources some engineering, construction, maintenance, printing and mailing, call center, image reviewreview, and event processing work. Further, if one or more tolling authorities cancels our accounts, or stops providing transponderstransponders, and we are unable to obtain transponders through other sources, our Commercial Services business would be affected. Our Parking Solutions business also relies on a number of domestic and foreign third-party manufacturers in the production of our pay station, Parking Access and Revenue Control (PARCS) and parking enforcement hardware solutions, and our inability to access third-party providers could have a material adverse effect on our business.

We also outsource a meaningful percentage of our software development work to third parties. Some of our agreements with these third parties include termination rights, allowing the third party to terminate the arrangement in certain circumstances. For example, the agreements with our third-party payment processors give them the right to terminate the relationship if we fail to keep credit card chargeback and retrieval rates below certain thresholds. If any of our third-party providers are unable or unwilling to meet their obligations to us, fail to satisfy our expectations or those of our customers, including those imposed through flow-down provisions in prime contracts, or if they terminate or refuse to renew their relationships with us on substantially similar terms, we may be unable to find adequate replacements within a reasonable time frame, on favorable commercial terms or at all, and our business, financial conditioncondition, and results of operations could be materially and adversely affected.

While we perform some due diligence on these third parties and take measures to ensure that they comply with applicable laws and regulations, we do not have an extensive screening or review process and ultimately cannot guarantee our third-party providers will comply with applicable laws, the terms of their agreementsagreements, or flow-down requirements from our customers. Misconduct or performance deficiencies by any of our third-party providers may be perceived as misconduct or poor performance by us, cause us to fall short onof our contractual obligations to our customersobligations, or harm our reputation, any of which could have a material adverse effect on our business, financial conditioncondition, and results of operations.

We rely heavily on the satisfactory performance and availability of our information technology infrastructure and systems, including our websites and network infrastructure, to conduct our business. We rely on third-party communications serviceservices and system providers to provide technology services and link our systems with our customers’ networks and systems, including a reliable network backbone with the necessary speed, data capacitycapacity, and security. We also rely on third-party vendors, including data center, bandwidthbandwidth, and telecommunications equipment providers. A failure or interruption that results in the unavailability of any of our information systems or a major disruption of communications between a system and the customers we serve could disrupt the effective operation of our solutions and otherwise adversely impact our ability to manage our business effectively. We may experience system and service interruptions or disruptions for a variety of reasons, including as thea result of network failures, power outages, cyber-attacks, employee errors, software errors, an unusually high volume of transactions, or localized conditions such as fire, explosionsexplosions, or power outagesoutages, or broader geographic events such as earthquakes, storms, floods, epidemics, strikes, acts of war, civil unrestunrest, or terrorist acts. We have taken steps to mitigate our exposure to certain service disruptions by investing in redundant or blended circuits, although the redundant or blended circuits may also suffer disruption. Because we are dependent in part on independent third parties for the implementation and maintenance of certain aspects of our systems and because some of the causes of system interruptions may be outside of our control, we may not be able to remedy such interruptions in a timely manner, or at all. Any interruptioninterruption, delay, or delay in or cessationfailure of these services and systems could significantlydisrupt disruptour operations, impactadversely affect our customers, damageharm our reputation, and cause us to miss or delay contractual obligations. These impacts could also result in litigation, decrease the overallreduced use and acceptance of our solutions, resultdata in lost dataloss, and besignificant costly, time consumingcosts and difficultremediation to remedy,efforts, any of which could havematerially aadversely material adverse effect onaffect our business, financial conditioncondition, and results of operations.

Our business model dependsdepends, in large partpart, on our ability to retain existing work and attract new work from existing customers. If a customer is not satisfieddissatisfied with our products, servicesservices, or solutionssolutions, or with the timeliness or quality of our work, we may incur additional costs to address the problem, the profitability of that contract may be impaired, we mayissue, experience payment delays, itsuffer reduced contract profitability, or incur reputational harm that could do harm to our reputation and hinderimpair our ability to win new work from prospective customers.business. Failure to properly transition new customers to our systems or existing customers to our different systems, properlyaccurately budget transition costscosts, or accurately estimate contract costs could also result in delays and general customer dissatisfaction. ManyIn addition, many of our contracts may be terminated by the customer upon specified advance notice without cause. Any failure to properly perform under our contracts or meet our customers’ expectations could have a material adverse effect on our business, financial conditioncondition, and results of operations.

We have grown in large part as a result of our acquisitions, and we anticipate continuing to grow in this manner. Although we expect to regularly consider additional strategic transactions in the future, we may not identify suitable opportunities or, if we do identify prospects, it may not be possible to consummate a transaction on acceptable terms. Competition laws or foreign investment controls may also limit our ability to acquire or work collaboratively with certain businesses or to fully realize the benefits of a prospective or completed acquisition. Furthermore, a significant change in our business or the economy, an unexpected decrease in our cash flowsflows, or any restrictions imposed by our indebtedness may limit our ability to obtain the necessary capital or otherwise impede our ability to complete a transaction. Regularly considering strategic transactions can also divert management’s attention and lead to significant due diligence and other expenses regardless of whether we pursue or consummate any transaction. Failure to identify suitable transaction partners and to consummate transactions on acceptable terms, as well as the commitment of time and resources in connection with such transactions, could have a material adverse effect on our business, financial conditioncondition, and results of operations.

We have integrated, and may in the future integrate, certain acquired businesses into our existing operations, which requires significant time and exposes us to significant risks and additional costs. Further, we may have difficulty integrating the operations, systems, controls, proceduresprocedures, or products of such acquired businesses and may not be able to do so in a timely, efficientefficient, and cost-effective manner. These difficulties could include but are not limited to:

combining management teams, strategiesstrategies, and philosophies;

assimilating personnel, human resourcesresources, and other administrative departmentsdepartments, and potentially contrasting corporate cultures;

merging computer, technologytechnology, and other information networks and systems;

disrupting our relationship with or losing key customers, supplierssuppliers, or personnel; and interference with, or loss of momentum in, our ongoing business or that of the acquired business.

Any integration-related issues could cause significant disruption to our business, divert the attention of managementmanagement, and lead to substantial additional costs and delays. For example, between February 2022 and April 2022, our Audit Committee devoted significant time and resources into an accounting investigation of Redflex Holdings Limited, an acquired subsidiary, and we were unable to timely file our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Our inability to successfully integrate acquired businesses could have a material adverse effect on our business, financial conditioncondition, and results of operations.

We pursue each acquisition with the expectation that the transaction will result in various benefits, including growth opportunities and synergies from increased efficiencies. However, we may not realize some or all of the anticipated benefits of our acquisitions within our anticipated timeframes or at all. Furthermore, we may experience increased competition that limits our ability to expand our business, we may not be able to capitalize on expected business opportunities, and general industry and business conditions may deteriorate. Acquisitions also expose us to significant risks and costs, and business and operational overlaps may lead to hidden costs. These costs can include unforeseen pre-acquisition liabilities, the impairment of customer relationships, acquired assets, or goodwill, or exposure to oversight, operationaloperational, and business control risks associated with a newly acquired business. We may also incur costs and inefficiencies to the extent an acquisition expands the industries, marketsmarkets, or geographies in which we operate due to our limited exposure to and experience in a given industry, marketmarket, or region. Significant acquisitions may also require us to incur additional debt to finance the transactions, which could limit our flexibility in using our cash flow from operations for other purposes. Acquisitions often involve post-transaction disputes with the counterparty regarding a number of matters, including disagreements over the amount of a purchase price or other working capital adjustment or disputes regarding whether certain liabilities are covered by the indemnification provisions of the transaction agreement. We may underestimate the level of certain costs or the exposure we may face as a result of acquired liabilities. If any of these or other factors limit our ability to achieve the anticipated benefits of a transaction, or we encounter other unexpected transaction-related costs and liabilities, our business, financial conditioncondition, and results of operations could be materially and adversely affected.

We perform a goodwill impairment test for each reporting unit annually, or more frequently if indicators for potential impairment exist. Indicators that are considered include significant changes in performance relative to expected operating results, significant negative industry or economic trends, or a significant decline in our stock priceprice, and/or market capitalization for a sustained period of time. In addition, we assess the current and future economic outlook for our reporting units during the fiscal year. While we believe the assumptions used in determining whether there was impairment and the amount of any resulting impairment were reasonable and commensurate with the views of a market participant, changes in key assumptions in the future, including increasing the discount rate, lowering forecasts for revenue and operating margin, or lowering the long-term growth rate, could result in additional charges; similarly, one or more changes in these assumptions in future periods due to changes in circumstances could result in future impairments in one or more reporting units. We have incurred impairment charges in the current period, and we cannot predict if or when additional future goodwill impairments may occur. We recorded a $97.1 million impairment to goodwill in our Parking Solutions segment during fiscal year 2024, which is presented in a separate line item on the consolidated statements of operations. This was2024 in connection with our 2024 assessment of goodwill impairment wherethat the Parking Solutions reporting unit’s carrying value exceeded the estimated fair value.value and we cannot predict if or when additional future goodwill impairments may occur. Any future goodwill impairments could have material adverse effects on our operating income, net assets, or our cost of, or access to, capital, which could harm our business. See Note 2, Significant Accounting Policies, in Item 8, Financial Statements and Supplementary Data, for additional information.

A failure in or breachcompromise of our networks or systems, including as a result of cyber-attacks, could have a material adverse effect on our business.

We are a leading provider of smart mobility technology solutions, principally operating throughout the United States, Australia, EuropeEurope, and Canada. We make transportation safer, smartersmarter, and more connected through our integrated, data-driven solutions, including toll and violations management, title and registration services, automated safety and traffic enforcementenforcement, and commercial parking management. We bring together vehicles, hardware, software, datadata, and people to solve transportation challenges for customers around the world, including commercial fleet owners such as RACs, Direct FleetsFleets, and FMCs, as well as governments, universities, parking operators, healthcare facilities, transportation hubshubs, and violation-issuing authorities. Our vision is to continue to develop and use technology and data intelligence to make transportation safer, smartersmarter, and more connected globally.

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

Our Government Solutions segment offers photo enforcement automated safety solutions and services to itsstates, customers.municipalities, counties, school districts, and law enforcement agencies of all sizes, primarily in the United States, Canada, and Australia. We provide complete, end-to-end speed, red-light, school bus stop armarm, and city bus lane enforcement solutions. Our international operations primarily involve the sale of traffic enforcement products and recurring maintenance services related to the equipment and software.

Our Parking Solutions segment provides an integrated suite of parking software, transaction processingprocessing, and hardware solutions to universities, municipalities, commercial parking operatorsoperators, and health care facilities in the United States and Canada.

Segment performance is based on revenues and income from operations before depreciation, amortizationamortization, and stock-based compensation. The measure also excludes interest expense, net, income taxestaxes, and certain other transactions and is inclusive of other income, net.

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 strategy. During the periods presented, we:

Increased total revenue by $61.9$99.9 million, or 7.6%,11.4%, from $817.3 million in fiscal year 2023 to $879.2 million in fiscal year 2024.2024 to $979.1 million in fiscal year 2025. The increase was mainly due to service revenue resulting from increased travelproduct volumeadoption, tolling activity, and FMCsactivity penetrationin our European operations in the Commercial Services segmentsegment, and installation revenue from the NYCDOT program, the growth from speed, maintenance andcity bus lane and school bus stop arm enforcement programs, back-office software-as-a-service (“SaaS”) programs and higher product sales in the Government Solutions segment.

Continued to focus on debt management and lowering our exposure to higher interest rates, and as a result, we refinanced our debt during fiscal year 20242025 which reduced our interest rate by an aggregate 111.425 basis points. In addition, we made early repayments of approximately $9.0$8.5 million and $172.5$9.0 million on our Amended Term Loan and 2021 Term Loan (defined below) during fiscal year 20242025 and 2023,2024, respectively.

NYCDOT Contract Renewal

We believe that our performance and future success depend on a number of factors that present opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Annual Report on Form 10-K titledentitled “Risk Factors.”

Our business is susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: the inflationary impact on items such as wages and travel-related costs, future travel demand, andlegislation legislationor regulation regarding the adoption, expansionexpansion, or prohibition of automated enforcement and traffic safety technology by locallocal, state, or statenational governments.governments, and the impact of government regulations and actions, including tariffs, trade protection measures, or a government shutdown. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, and future results of operations.

Our Commercial Services segment is largely impacted by its customer demand which in turn is impacted by a variety of factors including seasonality, demand for business and leisure travel, reductions in the level of air travel, higher airfare costs, increases in energy prices, general international, nationalnational, and local economic conditions and cycles, and consumer confidence, as well as other factors affecting travel levels, such as military conflicts, terrorist incidents, natural disasters anddisasters, epidemic diseases.diseases, or a government shutdown.

We monitor the U.S. Transportation and Security Administration (the “TSA”) passenger volume (“TSA Passenger Volume”) as one of several measures for Commercial Services revenue growth. TSA Passenger Volume measures the number of passengers screened by the TSA at United States airports, which correlates to the number of vehicles rented by travelers and toll road usage. In fiscal year 2024, TSA Passenger Volume increased approximatelyby fiveless percentthan over1% in fiscal year 2023,2025 one of several factors contributingcompared to Commercialfiscal Servicesyear revenue growth.2024.

Our Commercial Services segmentsegment, which offers automated toll and violations management solutions to fleet customers, is impacted by the number of toll roads in the United States and Europe and the geographic concentration of such roads.

We monitor the expansion and penetration of toll roadways across the United States and Europe, and the percentage of toll roads that rely on cashless or all-electronic infrastructure. In fiscal year 2024,2025, approximately 70% of allnine toll roadwaysfacilities were added in the United StatesStates, reliedrepresenting onover cashless100 ormiles electronicof paymenttoll methods.roads.

Our Government Solutions segment is positively impacted, in significant part, by enabling legislation that permits photo enforcement programs at the statefederal, state, and local level in the United States. Accordingly, we depend on national, statestate, and local governments authorizing the use of automated photo enforcement and not otherwise materially restricting its use.

Service Revenue. Our Commercial Services segment generates service revenue primarily through the operation and management of tolling programs and processing violations for RACs, FMCsFMCs, 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’ behalfbehalf, 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, violationsviolations, 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.systems and certain distinct hardware installation and relocation activities. 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 ("SaaS"),SaaS, subscription fees, professional servicesservices, 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 and certain highly interdependent and interrelated installation services 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, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization consists of recurring service costs, certain distinct hardware installation and relocation 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 customerscustomers, costs of certain highly interdependent and interrelated installation services, and costs to develop hardware sold to Parking Solutions customers.

Commercial Services service revenue includes mainly toll and violation management revenues from RACs and FMCs. Commercial Services service revenue increased by $34.9$28.1 million, or 9.4%,6.9%, from $372.8 million in fiscal year 2023 to $407.7 million in fiscal year 2024.2024 to $435.8 million in fiscal year 2025. This increase was primarily due to increased travel volume, product adoption and increased tolling activity compared to the prior year. These factors contributed to a $18.1$22.5 million growth in RAC tolling revenue.revenue Anand the remaining increase inwas enrolleddriven vehiclesmainly asby wellan asincrease higherof tolling$4.9 activitymillion from ourEuropean FMC customers contributed to a $8.4 million growth in revenueoperations during the year ended December 31, 2024, compared to the same period in 2023. The remaining revenue growth was mainly generated from processing titles and registrations as well as processing violations2025, compared to the prior year.

Government Solutions service revenue includes revenue from speed, red-light, school bus stop arm and bus lane photo enforcement systems. Service revenue increased by $23.9$47.7 millionmillion, toor 13.0%, from $367.9 million in fiscal year 2024 compared to $344.0$415.6 million in fiscal year 2023.2025. The increase was primarily driven by $24.4 million from installation service revenue driven by the NYCDOT red-light expansion program, $14.2 million from the expansion of speed, maintenance andcity bus lane programsand contributingschool approximatelybus $17.1stop millionarm toenforcement programs, and the increase in service revenue this year. The remaining increase was mainly attributablefrom tospeed expansionsand acrossred-light schoolenforcement busand stopinternational armSaaS programs.

Parking Solutions service revenue decreasedincreased by $0.7$0.6 million to $66.7 million in fiscal year 2025 compared to $66.1 million in fiscal year 2024 compared to $66.8 million in fiscal year 2023.2024. The increased revenue fromwas primarily driven by SaaS product offerings wasand professional services, partially offset by a decrease in professionalsubscription services related to parking management solutions.

Product Sales. Product sales increased $3.8$23.4 million year-over-year and were $37.5$60.9 million and $33.7$37.5 million for fiscal years 20242025 and 2023,2024, respectively. The increase was primarily due to a $8.6$22.1 million increase in product sales to Government Solutions customers, offset by a $4.8 million decrease in the ParkingGovernment Solutions segment driven by ared-light structuralcamera transition from hardwaresales to softwareNYCDOT and mobileinternational paymentproduct solutions.sales. Customer buying patterns vary greatly from period to period related to product sales.

Cost of Service Revenue, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization increased from $18.2 million for fiscal year 2023 to $19.0 million for fiscal year 2024,2024 to $30.3 million for fiscal year 2025, mainly due to NYCDOT installation service costs and increased recurring service costs for the Parking Solutions segment.costs.

Operating Expenses. Operating expenses increased by $22.6$37.3 million, or 8.3%,12.6%, from $273.3$295.9 million for fiscal year 20232024 to $295.9$333.2 million in fiscal year 2024.2025. The increase in 20242025 was primarily attributable to an increase of $19.7 million in wages expense, of which, $15.7 million was in the Government Solutions segment of approximately $32.1 million which was primarily driven by increases in wages and $3.7subcontractor millionand operational equipment costs, partially offset by a decrease in wage expense in the CommercialParking ServicesSolutions segment. Operating expenses as a percentage of total revenue increased from 33.4%33.7% to 33.7%34.0% in fiscal years 20232024 and 2024,2025, respectively. The following table presents operating expenses by segment:

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreasedincreased by $3.5$20.2 million to approximately $215.3 million for fiscal year 2025 compared to $195.1 million for fiscal year 2024 compared to $198.6 million for fiscal year 2023.2024. The decreaseincrease iswas primarily due to a $23.3$10.0 million increase in credit loss expense, $6.7 million in restructuring and transaction expenses, $5.8 million in increased professional services fees, $3.0 million in increased information technology and research and development expenses, and $2.8 million in increased wage expense, partially offset by a decrease in legal expenses compared to the priorsame year, partially offset by $9.0 millionperiod in higher wages and benefits expense, of which, $3.2 million was in the Government Solutions segment and $2.7 million is the Commercial Services segment. In addition, there was a $3.9 million increase in stock-based compensation expense, $3.9 million increase in bad debt expense (mainly in the Commercial Services segment) and increases in other general expenses compared to prior year.2024. Selling, general and administrative expenses as a percentage of total revenue decreased from 24.3%22.2% to 22.2%22.0% in fiscal years 20232024 and 2024,2025, 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, decreasedincreased by $4.1$7.2 million to $116.3 million for fiscal year 2025 from $109.1 million for 2024fiscal fromyear $113.2 million for 2023.2024. This was mainlyprimarily due certain non-compete, trademark and developed technology intangible assets being fully amortized in fiscal year 2024 as compared to the prior year. This decrease was partially offset by an increase in depreciation expense related to equipment and software in fiscalthe year2025 2024.period compared to the 2024 period.

Goodwill Impairment. We recorded an impairment loss of $97.1 million in fiscal year 2024 as a result of our 2024 assessment of goodwill impairment in our Parking Solutions segment. See Note 2, Significant Accounting Policies, in Item 8, Financial Statements and Supplementary Data, of this Annual Report for additional information.

Interest Expense, Net. Interest expense, netnet, decreased by $12.8$9.3 million from $86.7 million in fiscal year 2023 to $73.9 million in fiscal year 2024.2024 to $64.6 million in fiscal year 2025. This decrease is primarily attributable to voluntary principal prepayments made during 2023 and 2024 which lowered the outstanding debt balance in 2024 coupled with a 10050 basis-point reduction in the interest rate from refinancing our debt2021 inTerm February andLoan in October of2024 fiscaland yeara 2024.25 Thebasis-point averagereduction variablefrom interestrefinancing rate on theour 2021 Term Loan wasin 44October basis2025 pointscoupled lowerwith fordecreasing theSecured twelveOvernight monthsFinancing endedRate December(“SOFR”) 31, 2024 compared to the prior period.rates. See “Liquidity and Capital Resources” below.

Tax Receivable Agreement Liability Adjustment. We recorded a loss of approximately $0.7 million in fiscal year 2025 as a result of higher estimated state tax rates due to changes in apportionment. We recorded a gain of approximately $0.3 million in fiscal year 2024 as a result of lower estimated state tax rates due to changes in apportionment. We recorded a gain of approximately $3.1 million in fiscal year 2023 as a result of tax settlement adjustments related to a previous acquisition.

Loss on Interest Rate Swap. We recorded a $0.5 million loss in fiscal year 2024 of which $1.3 million iswas associated with the derivative instrument re-measured to fair value at the end of the reporting period offset by $(0.8) million related to the monthly cash proceeds. We recorded a $0.8 million loss in fiscal year 2023 of which approximately $1.1 million related to the monthly cash payments on the interest rate swap net of $(0.3) million associated with the derivative instrument re-measured to fair value at the end of the reporting period. We exercised our option to cancel the interest rate swap agreement effective as of the end of the third quarter of 2024.

Loss on Extinguishment of Debt. We recorded a $1.3 million loss on extinguishment of debt for fiscal year 2025 related to the write-off of pre-existing deferred financing costs and discounts in connection with the October 2025 refinancing of the 2021 Term Loan. We recorded a $1.7 million loss on extinguishment of debt for fiscal year 2024 related to the write-off of pre-existing deferred financing costs and discounts in connection with the February and October 2024 refinancingrefinancings of the 2021 Term Loan. Loss on extinguishment of debt was $3.5 million for fiscal year 2023 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayment of $172.5 million on the 2021 Term Loan.

Other Income, Net. Other income, net was $23.2 million in fiscal year 2025 compared to $19.0 million in fiscal year 2024 compared to $11.1 million in fiscal year 2023.2024. The increase of approximately $7.9$4.2 million iswas primarily attributable to a $5.6 million tax settlement payment recorded in 2023 related to a prior year acquisition without a comparable amount in 2024, as well as increaseincreases in volume rebates earned from total spend on credit card transactions due to increased tolling and travel activity.activity as well as favorable impacts from fluctuations in foreign currency rates in the 2025 period.

Income Tax Provision. Income tax provision was $58.3 million, representing an effective tax rate of 29.9% for fiscal year 2025 compared to $47.7 millionmillion, representing an effective tax rate of 60.2% for fiscal year 2024 compared to $30.0 million, representing an effective tax rate of 34.5% for fiscal year 2023.2024. Our effective tax rate for 20242025 was higherlower compared to 20232024 primarily due to the impact of permanent differences related to the mark-to-market adjustment on the Private Placement Warrants and the impairment adjustments in the Parking Solutions segment.

Net Income. We had net income of $136.6 million for fiscal year 2025 compared to a net income of $31.4 million for fiscal year 20242024. comparedThe to a net income of $57.0$105.2 million for 2023. The $25.6 million decreaseincrease in net income was primarily due to the goodwill impairment recorded in fiscal year 2024, partially offset by the change in fair value of the Private Placement Warrants liability in the prior fiscal year without a comparable amount in the current year,2024 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 RevolverAmended (defined below).Revolver.

We believe that our existing cash and cash equivalents, cash flows provided by operating activitiesactivities, and our ability to borrow under our Amended Revolver will be sufficient to meet operating cash requirements, service debt obligations and fund potential share repurchases for at least the next 12 months and thereafter for the foreseeable future. Our ability to generate sufficient cash from our operating activities depends on our future performance, which is subject to general economic, political, financial, competitive and other factors beyond our control. In addition, our future capital expenditures and other cash requirements could be higher than currently expected due to various factors, including any expansion of our business or strategic acquisitions.

We have incurred significant long-term debt as a result of acquisitions completed in prior years. Should we pursue strategic acquisitions, we may need to raise additional capital, which may be in the form of additional long-term debt, borrowings on our Amended 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 Amended Revolver to meet expected obligations as they come due.

Our Commercial Services and Government Solutions segments have several large customers, including NYCDOT,customers that account for a significant portion of our revenue, and a reduction in demand, materially differentless favorable terms or pricing in new or amended agreements as compared to the current agreements, or lossthe loss, even temporarily, of one or more of such customers has and could have in the future a material adverse effect on our business.

Our business experiences varying levels of customer concentration. For example, in our Government Solutions segment, NYCDOT represented approximately 15.2%21.8% and 15.4%14.7% of our total revenues for the quarters ended MarchJune 31,30, 2026 and 2025, respectively. Our contract with NYCDOT expired on December 31, 2025, and weWe entered into a new contract with NYCDOT, effective January 1, 2026, to manage New York City’s automated enforcement camera safety programs for a five-year period. The terms of the new contract are materially different than our prior contract with NYCDOT, including service level agreements, service credits, liquidated damages, cybersecurity, and subcontracting requirements. If we do not successfully perform the contract pursuant to its terms, it could have a material adverse effect on our business, financial condition, and results of operations. We may continue to rely on a small number of customers in our Government Solutions segment to represent a significant portion of our total revenues in any given period. The loss of any of our top Government Solutions customers could have a material adverse effect on our business, financial condition, and results of operations.

We also experience customer concentration in our Commercial Services segment. Three of our Commercial Services customers collectively accounted for 35.2%34.3% and 37.9%36.9% of our total revenues for the quarters ended MarchJune 31,30, 2026 and 2025, respectively. We face risks associated with the renewal of Commercial Services customer agreements. We areannounced currently operating under a short-term contract extension and are engaged in contract negotiations withthat one of our three significant Commercial Services customers whichhad representedissued overa 10%notice ofterminating ourits totalcontract revenuewith us; that customer subsequently withdrew the notice and entered into a seven-year contract extension on terms materially less favorable to us than the prior agreement, including an option for the threecustomer monthsto endedmodulate Marchits 31,fleet 2026volume. andA second significant Commercial Services customer entered into a five-year extension, with options to extend, also on materially less favorable terms than the year ended December 31, 2025. There is no assurance that we will be successful in negotiating a renewalprior agreement and ifwith fleet volume modulation rights. Within the next twelve months, we are unableexpect to enter into a renewal agreement, or if we enterengage in a new renewal agreement and it has materially different terms and pricing that are unfavorable as compared to our current agreement, this would have a material adverse effect on our business, financial condition, and results of operations. We will enter into contractcontractual renewal discussions with oura other twothird significant Commercial Services customers over the next eighteen months, and if we are unable to renew such customer agreements, or if the terms or pricing of such agreements are materially different from the current agreements, this would have a material impact on our business, financial condition, and results of operations.customer.

Increased total revenue by $0.3$27.9 million, or 0.1%,6.1%, from $223.3$459.3 million in the threesix months ended MarchJune 31,30, 2025 to $223.6$487.2 million in the same period in 2026. The increase was mainly due to installation revenue from the New York CityNYCDOT program, and expansion in speed, bus lane, school bus, red light and busother lane programsservices in the Government Solutions segment, and increased revenue from software-as-a-service (“SaaS”) product offerings and professional services revenue in the Parking Solutions segment.

Generated cash flows from operating activities of $40.8$97.2 million and $63.0$138.1 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. Our cash on hand was $46.9$49.6 million as of MarchJune 31,30, 2026.

Our business is susceptible to a number of industry-specific and global macroeconomic factors that may cause our actual results of operations to differ from our historical results of operations or current expectations. The factors and trends that we currently believe are or will be most impactful to our results of operations and financial condition include the following: the inflationary impact on items such as wages and travel-related costs, future travel demand, legislation or regulation regarding the adoption, expansion, or prohibition of Automatic License Plate Recognition, automated enforcement and traffic safety technology by local, state, or national governments, higher interest rates and the impact of government regulations and actions, including tariffs, trade protection measures, military conflicts or a government shutdown. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, financial condition, and results of operations.

We monitor the U.S. Transportation and Security Administration (the “TSA”) passenger volume (“TSA Passenger Volume”) as one of several measures for Commercial Services revenue growth. TSA Passenger Volume measures the number of passengers screened by the TSA at United States airports, which correlates to the number of vehicles rented by travelers and toll road usage. TSA Passenger Volume in the firstsecond quarter of 2026 was approximately 1.5%1% greaterless than TSA Passenger Volume for the same period in 2025.

Our Parking Solutions segment generates service revenue mainly from offering SaaS,software-as-a-service (“SaaS”), subscription fees, professional services, and citation processing services related to parking management solutions to its customers.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Service Revenue. Service revenue increased by $1.5$23.2 million, or 0.7%,10.4%, to $213.4$246.7 million for the three months ended MarchJune 31,30, 2026 from $211.9$223.5 million for the three months ended MarchJune 31,30, 2025, representing 95.4%93.6% and 94.9%94.7% of total revenue, respectively. The following table depicts service revenue by segment:

Commercial Services service revenue decreasedincreased by $3.6$6.0 million, or 3.5%,5.5%, from $101.4$109.1 million for the three months ended MarchJune 31,30, 2025 to $97.8$115.1 million for the three months ended MarchJune 31,30, 2026. The decreaseincrease was primarily due to $3.6increased product adoption and tolling activity compared to the prior year which contributed to a $4.1 million ofgrowth lowerin revenueRAC generatedtolling fromrevenue, ourwith FMCthe customersremainder dueprimarily driven by higher violations processing compared to customerthe churn.same period in 2025.

Government Solutions service revenue increased by $4.1$17.1 million, or 4.4%,17.4%, from $94.0$98.0 million for the three months ended MarchJune 31,30, 2025, to $98.1$115.0 million for the three months ended MarchJune 31,30, 2026. The increase was primarily driven by $7.5a $12.0 million in revenue from expansionsincrease in speed,New redYork lightCity andrevenues busassociated lanewith programsnew outsidecamera of NYCDOT, partially offset by a $3.4 million decrease in revenue primarily driven by the pricing change,installations, net of installationpricing revenue from new camera installationschanges under the new NYCDOTcontract. contract.The remaining $5.1 million in growth is attributable to expansion in bus lane, speed and other services.

Parking Solutions service revenue increased to $17.5$16.6 million for the three months ended MarchJune 31,30, 2026, from $16.5 million for the three months ended MarchJune 31,30, 2025. The increased revenue was primarily driven by SaaS product offerings and professional services,offerings, partially offset by a decreasedecreases in subscription services and professional services related to parking management solutions.

Product Sales. Product sales were $10.2$16.9 million and $11.3$12.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. ProductThe sales decreased by $1.2 million, whichincrease was entirely due to aan $0.6 million decreaseincrease in product sales in the Government Solutions segment and $0.6 million decrease 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, Excluding Depreciation and Amortization. Cost of service revenue, excluding depreciation and amortization increased from $4.8$4.6 million for the three months ended MarchJune 31,30, 2025 to $7.4$14.2 million for the same period in 2026, mainly due to NYCDOT installation service costs and increased recurring service costs.

Cost of Product Sales. Cost of product sales increased by $0.3$5.1 million from $8.0$8.9 million in the three months ended MarchJune 31,30, 2025 to $8.3$14.0 million in the three months ended MarchJune 31,30, 2026, which was due to decreasedincreased marginsproduct sales primarily driven by the New York City expansion, partially offset by lower margin on product sales in the firstsecond quarter 2026 compared to the firstsecond quarter of 2025.

Operating Expenses. Operating expenses increased by $12.2$9.3 million, or 16.6%,11.4%, from $73.7$81.3 million for the three months ended MarchJune 31,30, 2025 to $85.9$90.6 million for the three months ended MarchJune 31,30, 2026. The increase in 2026 compared to the prior year period was primarily in the Government Solutions segment of approximately $9.5$7.7 million driven by increases in wages, subcontractor, information technologytechnology, rent and recurring services costs and approximately $1.5 million in the Parking Solutions segment driven by wages, subcontractor and information technology costs. Operating expenses as a percentage of total revenue increaseddecreased from 33.0%34.5% to 38.4%34.4% for the three months ended MarchJune 31,30, 2025 and 2026, respectively. The following table presents operating expenses by segment:

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased to $40.9$44.0 million for the three months ended MarchJune 31,30, 2026 compared to $51.5$48.5 million for the same period in 2025. This was primarily due to a $10.3$7.2 million decrease related to a legal settlement finalized in Februarystock-based 2026compensation and a $5.5$1.2 million decrease in credit loss expense partially offset by a $4.2$4.1 million increase in expenses related to organization restructuring expense and aexecutive $2.1transition million increase in consulting feescosts compared to the same period in the prior year. Selling, general and administrative expenses as a percentage of total revenue decreased from 23.1%20.5% to 18.3%16.7% for the three months ended MarchJune 31,30, 2025 and 2026, 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, increaseddecreased slightly by $1.5$0.3 million to $29.3$29.2 million for the three months ended MarchJune 31,30, 2026 from $27.8$29.5 million for the same period in 2025. This was primarily due to an increase in depreciation expense related to equipment, vehicles and software in the 2026 period compared to the 2025 period.

Interest Expense, Net. Interest expense, net decreased by approximately $1.2$1.1 million from $16.6 million for the three months ended MarchJune 31,30, 2025 to $15.4$15.5 million for the same period in 2026. This was primarily attributable to a 25 basis-point reduction in the interest rate as a result of refinancing our 2021 Term Loan in October 2025 coupled with decreasing SOFR rates. See “Liquidity and Capital Resources” below.

Loss on Extinguishment of Debt. We recorded less than $0.1 million of loss on extinguishment of debt during the three months ended MarchJune 31,30, 2025 related to the write-off of pre-existing deferred financing costs and discounts in connection with the early repayment on the 2021 Term Loan.

Other Income, Net. Other income, net wasremained $4.1flat at $6.0 million for both of the three months ended MarchJune 31,30, 2026 and 2025.

Income Tax Provision. Income tax provision was $13.7$6.0 million representing an effective tax rate of 33.9%(14.1)% for the three months ended MarchJune 31,30, 2026 compared to a tax provision of $12.5$14.0 million, with an effective tax rate of 27.9%26.7% for the same period in 2025. The increasedecrease in effective tax rate variance was primarily driven by taxthe deductionsgoodwill relatedimpairment torecorded stock compensation andfor the three months ended June 30, 2026, which is not deductible for tax impact of the legal settlement finalized in February 2026.purposes.

Net (Loss) Income. We had net incomeloss of $26.7$(48.2) million for the three months ended MarchJune 31,30, 2026, as compared to a net income of $32.3$38.6 million for the three months ended MarchJune 31,30, 2025. The $5.6$86.8 million decrease in net income was primarily due to impairment on goodwill and intangible assets recorded for the three months ended June 30, 2026 and an increase in operating expenses, partially offset by increased gross margin on product sales and installation services and a decrease in productselling, salesgeneral and administrative expenses and the other statement of operations activity discussed above, partially offset by the legal settlement finalized in February 2026.above.

We originally entered into the Revolver in March 2018 and increased the borrowing capacity thereunder to $125.0 million in May 2025 pursuant to an amendment thereto. In fiscal year 2025, we amended and restated the Revolver and entered into the Amended and Restated Revolving Credit Agreement which increased the existing commitment from $125.0 million to $150.0 million and extended the maturity date to October 17, 2030. As of MarchJune 31,30, 2026, we had $26.0 millionno outstanding borrowings and $78.3$115.4 million available for borrowing, net of letters of credit, under our Amended Revolver. Our cash on hand was $46.9$49.6 million as of MarchJune 31,30, 2026.

In fiscal year 2025, we refinanced the existing senior secured term loans under the 2021 Term Loan in an aggregate outstanding principal amount of approximately $688.8 million with a new senior secured term loan of the same principal amount maturing on October 15, 2032 and reduced the interest rate by 0.25%. We made a quarterly repaymentrepayments oftotaling approximately $1.7$3.4 million on our Amended Term Loan during the threesix months ended MarchJune 31,30, 2026, and as a result, the total principal outstanding on the Amended Term Loan was $685.4$683.6 million as of MarchJune 31,30, 2026.

At MarchJune 31,30, 2026, the tax receivable agreement liability was approximately $43.7$38.7 million. We expect to make payments of approximately $5.3 million per year for the next seven years and approximately $1.1 million in the final year.