Financial Data and Key Metrics Changes - Total revenue for Q3 2025 increased by 16% year-over-year to $262 million, exceeding internal expectations [8][19] - Adjusted EPS rose by 16% compared to the prior year, reaching $0.37 per share [21][30] - Consolidated adjusted EBITDA for the quarter was $113 million, an increase of approximately 8% year-over-year [20] Business Line Data and Key Metrics Changes - Commercial services revenue increased by 7% year-over-year, driven by higher travel volume and product adoption [9][23] - Government solutions revenue surged by 28% compared to Q3 2024, with service revenue from New York City increasing by 46% [10][24] - T2 Systems revenue grew by about 7%, with a 3% increase in SaaS and services revenue and a 30% increase in product revenue [14][25] Market Data and Key Metrics Changes - The New York City red light camera expansion program contributed $17 million in revenue for Q3 2025 [8][6] - International product sales increased by $4 million year-over-year, contributing to overall revenue growth [10] Company Strategy and Development Direction - The company is finalizing a new automated enforcement contract with the New York City Department of Transportation, expected to have a total contract value of $963 million over five years [4][32] - Legislative changes in California are anticipated to create an additional $140 million in total addressable market, enhancing growth opportunities [11][31] - The company plans to invest in its Mosaic platform to drive productivity improvements and margin expansion starting in 2027 [36][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong market for automated enforcement and stable travel demand, leading to an increase in full-year 2025 revenue guidance [15][30] - The company anticipates mid-single-digit revenue growth in 2026, with government solutions expected to grow in the high single digits [16][34] - Management highlighted the importance of the New York City contract for long-term value creation and financial predictability [8][37] Other Important Information - The company authorized a $150 million increase to its stock repurchase program, bringing the total authorization to $250 million [17][37] - The company expects to commence stock buybacks in the near term, subject to market conditions [56][37] Q&A Session Summary Question: Can you provide more detail on the margins and costs associated with the New York City contract? - Management indicated that one-time readiness costs for 2025 are estimated at $5 million to $10 million, while recurring costs related to minority and women-owned business subcontractor requirements will be $20 million to $25 million annually [39][41] Question: What is the expected cadence for camera installations in 2026? - Management stated that the installation of cameras will likely be smooth throughout the year, with most installations completed by 2027 [48][49] Question: How does the functionality of new cameras compare to previous generations? - The new cameras offer significantly improved image quality and the ability to perform multiple functions, enhancing operational efficiency [62] Question: What is the outlook for government solutions revenue growth? - Management expects strong growth driven by recent contract wins and backlog realization, with a CAGR of approximately 7% over the next three years [66] Question: What is the anticipated CAPEX for 2026? - Management indicated that CAPEX for 2026 is expected to be similar to 2025 levels, with no significant increases anticipated [60]

Financial Data and Key Metrics Changes - Total revenue for the quarter increased by 6% year-over-year to $236 million, exceeding internal expectations [6][18] - Adjusted EPS rose by 10% compared to the prior year, driven by operating performance and share repurchases [6][20] - Consolidated adjusted EBITDA for the quarter was $105 million, an increase of approximately 3% year-over-year [19] Business Segment Data and Key Metrics Changes - Commercial Services revenue grew by 5% year-over-year, with RAC tolling revenue increasing by 4% [21][22] - Government Solutions service revenue increased by 7% year-over-year, with total revenue up by 10% [10][23] - T2 Systems revenue declined by about 4% for the quarter, driven by reduced product sales and professional services revenue [14][24] Market Data and Key Metrics Changes - TSA volume declined by about 1% year-over-year, with year-to-date TSA volume remaining flat compared to last year [9] - The macroeconomic environment is stabilizing, with consumer confidence improving, although travel demand is lower than previous forecasts [9][14] Company Strategy and Development Direction - The company is focused on expanding its Government Solutions segment, particularly in automated photo enforcement, which has seen legislative support across the U.S. [11][12] - A $100 million stock repurchase program has been authorized, reflecting the company's commitment to returning value to shareholders [15] - The company is maintaining its full-year 2025 financial guidance, with expectations for growth in Government Solutions and stabilization in the parking business [14][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth prospects in the Commercial Services segment despite anticipated challenges in the third quarter [7][14] - The company is closely monitoring the airline industry as a key indicator for travel demand, which impacts the commercial services business [9][26] - Management highlighted the importance of finalizing the renewal contract with New York City, which is expected to provide clarity on future revenue [11][53] Other Important Information - The company has seen a significant increase in total addressable market (TAM) for automated photo enforcement, with recent legislation adding approximately $225 million [12] - The ongoing ERP implementation is on schedule and within budget, with the most complex portions largely complete [29] Q&A Session Summary Question: Clarification on travel trends and assumptions for the second half - Management indicated that TSA throughput is expected to remain around 99% to 100% for the second half of the year, aligning with guidance [36][37] Question: Insights on Fleet Management challenges - Management acknowledged a small decline in FMC revenue due to macroeconomic factors and customer churn, expecting further declines in Q3 before stabilization [39] Question: Government Solutions guidance improvement - Management noted broad-based strength in Government Solutions, with higher product sales and accelerated demand for photo enforcement driving the guidance increase [42][43] Question: Margins in Government Solutions - Management explained that margin pressures were due to a mix of increased international sales and ERP implementation costs, with expectations for stabilization as growth continues [48][50] Question: Update on New York City contract renewal - Management confirmed ongoing negotiations for the New York City contract, emphasizing the importance of finalizing the agreement for future revenue clarity [53] Question: CapEx and revenue relationship - Management clarified that increased CapEx is in preparation for future demand, with expectations for significant growth in the Government Solutions business [88] Question: D&A guidance for the back half of the year - Management indicated that the decrease in D&A is due to the amortization of previous deals running off, not a reduction in overall expenses [90]