Verra Mobility(VRRM) - 2019 Q4 - Annual Report

FORM 10-K Cover Page Verra Mobility Corporation filed its Annual Report on Form 10-K for FY2019, outlining its filer status and stock information - Verra Mobility Corporation filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2019[2] - Trading Information for Each Class | Title of Each Class | Trading Symbol | Name of Each Exchange On Which Registered | | :------------------ | :------------- | :---------------------------------------- | | Class A Common Stock, par value $0.0001 per share | VRRM | Nasdaq Capital Market | | Warrants to purchase Class A Common Stock | VRRMW | OTC Pink Marketplace | - The Registrant is a large accelerated filer and is not a well-known seasoned issuer, not required to file reports under Section 13 or 15(d), and is not an emerging growth company[3][4] - As of February 26, 2020, Verra Mobility Corporation had 161,650,055 shares of Class A Common Stock outstanding[5] INDEX This section provides a detailed table of contents for the Form 10-K, outlining various parts and items with corresponding page numbers - The index provides a detailed table of contents for the Form 10-K, outlining the various parts and items included in the report, with corresponding page numbers[9] Cautionary Note Regarding Forward-Looking Statements This section warns that the Annual Report contains forward-looking statements subject to risks and uncertainties, and the Company undertakes no obligation to update them - This section warns that the Annual Report contains forward-looking statements about future operating results, financial position, business strategy, market conditions, and expansion plans, subject to risks, uncertainties, and assumptions detailed in 'Risk Factors'[11] - Readers are cautioned not to rely on forward-looking statements as predictions of future events, as actual results could differ materially and adversely, and the Company undertakes no obligation to update these statements after the filing date[12] Explanatory Note This note clarifies the company's corporate history, including its formation as Gores Holdings II, Inc. and subsequent business combination with Greenlight, which is treated as the accounting acquirer - Verra Mobility Corporation was originally incorporated as Gores Holdings II, Inc. on August 15, 2016, and completed its initial public offering on January 19, 2017[16] - On October 17, 2018, Gores completed a Business Combination with Greenlight Holding II Corporation, changing its name to Verra Mobility Corporation and its Nasdaq trading symbols to 'VRRM' and 'VRRMW'[17][18] - For accounting purposes, the Business Combination is treated as a reverse acquisition and recapitalization, with Greenlight considered the accounting acquirer, and financial statements include Greenlight as 'Predecessor' for periods prior to October 17, 2018, and Verra Mobility Corporation thereafter[19] PART I Item 1. Business Verra Mobility offers smart mobility technology solutions in North America and Europe, covering toll, violations, and automated safety management Overview Verra Mobility is a leading provider of smart mobility technology solutions and services in North America and Europe, offering integrated toll, violations, and automated safety solutions to diverse customers - Verra Mobility is a leading provider of smart mobility technology solutions and services in the United States, Canada, and Europe[21] - The company offers integrated technology solutions including toll and violations management, title and registration, automated safety solutions, and other data-driven solutions[21] - Customers include rental car companies (RACs), fleet management companies (FMCs), other large fleet owners, municipalities, school districts, and violation issuing authorities[21] Segments Verra Mobility operates through Commercial Services and Government Solutions segments, with Commercial Services generating 62% of 2019 revenue and Government Solutions 38% - Verra Mobility operates through two primary segments: Commercial Services and Government Solutions[22] - 2019 Revenue by Segment | Segment | Revenue (Millions USD) | % of Total Revenue | | :------------------ | :--------------------- | :----------------- | | Commercial Services | $276.5 | 62% | | Government Solutions | $172.3 | 38% | - Commercial Services provides automated toll and violations management and title and registration solutions to RACs, FMCs, and large fleet owners in North America, and violations collection in Europe, while Government Solutions offers automated safety solutions (red-light, speed, school bus, city bus lane cameras) to local government agencies[22][23][24][26] The Industries in Which We Operate The company operates in growing tolling, rental car, and automated safety industries, benefiting from trends like cashless tolling and increased traffic enforcement - The tolling industry in the U.S. collected nearly $21 billion in 2018, with a growing trend towards cashless and all-electronic tolling, presenting opportunities due to its fragmented nature[28] - The U.S. RAC industry is highly consolidated ($32 billion in 2019), driven by increased rental days and partnerships with ride-sharing providers, while the European FMC market is estimated at over 6 million vehicles[29] - Automated safety solutions address increasing vehicle miles traveled and traffic enforcement challenges, with red-light cameras reducing fatalities by up to 21% and speed cameras by up to 39%, according to IIHS studies[30][32] Growth Strategies The company pursues growth through industry tailwinds, expanding customer relationships, new product and market development, global footprint expansion, and accretive acquisitions - The company aims to benefit from strong industry tailwinds, including increasing toll roads and cashless tolling in Commercial Services, and intensifying public attention on traffic safety in Government Solutions[33][34][35] - Growth is also driven by strengthening and expanding customer relationships, exemplified by the significant expansion of New York City's school zone speed enforcement program (720 new camera systems by 2021)[36] - Verra Mobility plans to expand its platform with new products and into new markets like ride-sharing, car-sharing, autonomous vehicles, urban enforcement, curb management, and smart parking solutions[37][38][40][41] - Global footprint expansion is a key strategy, with a European headquarters in the Netherlands, a partnership with APRR in France, and leveraging recent acquisitions of EPC and Pagatelia for pan-European tolling and violation services[42][43][44] - The company actively pursues accretive acquisitions, with a strong track record (HTA, EPC in 2018; Pagatelia in 2019) and a pipeline for future targets[45] Products Commercial Services products include toll management (52% of 2019 revenues), violations management (7%), and title/registration (3%), while Government Solutions provides road safety cameras (31%). - Commercial Services products include fully outsourced toll management solutions (52% of 2019 revenues), violations management solutions (7% of 2019 revenues), and title and registration solutions (3% of 2019 revenues)[46][48][49] - Government Solutions provides road safety cameras for red-light, speed, school bus stop arm, and city bus lane enforcement (31% of 2019 revenues), including hardware, software, and administrative tasks[50][51] Customers Verra Mobility serves a diverse customer base across North America and Europe, including major rental car companies, fleet management companies, and local government agencies - Verra Mobility serves a diverse customer base across the US, Canada, and Europe, including major RACs (Hertz, Avis Budget, Enterprise), FMCs (Element, ARI, Donlen, Wheels), and local government agencies (New York City, Seattle, Washington D.C., Austin Independent School District)[52] Competition The company faces competition in automated safety solutions and commercial services from other vendors, internal customer solutions, and new technology providers - The company faces competition in its Government Solutions segment from other automated safety solution vendors and in its Commercial Services segment from internal customer solutions and new technology providers[53] Intellectual Property Verra Mobility protects its intellectual property through patents, trademarks, trade secrets, copyrights, and confidentiality agreements - Verra Mobility protects its intellectual property through patents (approximately 65 U.S. and foreign-issued/pending), trademarks (approximately 120 registrations/pending applications), trade secrets, copyrights, and confidentiality agreements[55][56][57][58