10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ___________.

Commission File Number: 001-37979

VERRA MOBILITY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	81-3563824
(State of	(I.R.S. Employer
Incorporation)	Identification No.)
1150 North Alma School Road	85201
Mesa, Arizona	(Zip Code)
(Address of Principal Executive Offices)

(480) 443-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Class A Common Stock, par value $0.0001 per share	VRRM	Nasdaq Capital Market
(Title of Each Class)	(Trading Symbol)	(Name of Each Exchange on Which Registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act:

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). YES ☐ NO☒

As of July 31, 2020, there were 161,736,615 shares of the Company’s Class A Common Stock, par value $0.0001 per share, issued and outstanding.

VERRA MOBILITY CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2020

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION	5
Item 1. Financial Statements.	5
Condensed Consolidated Balance Sheets	5
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income	6
Condensed Consolidated Statements of Stockholders’ Equity	7
Condensed Consolidated Statements of Cash Flows	8
Notes to the Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
Item 4. Controls and Procedures	41
PART II—OTHER INFORMATION	42
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3. Defaults Upon Senior Securities	43
Item 4. Mine Safety Disclosures	43
Item 5. Other Information	43
Item 6. Exhibits	44
SIGNATURES	46

2

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of federal securities laws. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, products, services, and technology offerings, market conditions, growth and trends, expansion plans and opportunities, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely” and similar expressions, and the negative of these expressions, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q, Part II, Item 1A, “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2019. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the effect of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Forward-looking statements are subject to inherent risks and uncertainties. Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements include, among other things:

• disruption to our business and results of operations as a result of the novel coronavirus (“COVID-19”) pandemic;

• the impact of the COVID-19 pandemic on our revenues from key customers in the rental car industry and from photo enforcement programs;

• historical data regarding our business, results of operations, financial condition and liquidity may not reflect the impact of COVID-19;

• customer concentration in our Commercial Services and Government Solutions segments;

• decreases in the prevalence of automated and other similar methods of photo enforcement or the use of tolling;

• risks and uncertainties related to our government contracts, including legislative changes, termination rights, audits and investigations;

• decreased interest in outsourcing from our customers;

• our ability to properly perform under our contracts and otherwise satisfy our customers;

• our ability to compete in a highly competitive and rapidly evolving market;

• our ability to keep up with technological developments and changing customer preferences;

• the success of our new products and changes to existing products and services;

• our ability to successfully integrate our recent or future acquisitions; and

• failures in or breaches of our networks or systems, including as a result of cyber-attacks.

3

You should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or revised expectations.

Unless the context indicates otherwise, the terms “Verra Mobility,” the “Company,” “we,” “us,” and “our” as used in this Quarterly Report on Form 10-Q refer to Verra Mobility Corporation, a Delaware corporation, and its subsidiaries taken as a whole.

4

Part I—Financial Information

Item 1. Financial Statements.

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

($ in thousands except per share data)	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	113,239		$	131,513
Restricted cash		711			917
Accounts receivable (net of allowance for credit loss of $12.9 million at June 30, 2020)		125,252			93,514
Unbilled receivables		12,532			20,003
Prepaid expenses and other current assets		18,964			26,491
Total current assets		270,698			272,438
Installation and service parts, net		8,672			8,841
Property and equipment, net		73,604			72,266
Operating lease assets		30,933			32,177
Intangible assets, net		386,363			434,443
Goodwill		581,615			584,150
Other non-current assets		3,237			3,111
Total assets	$	1,355,122		$	1,407,426
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	36,346		$	50,825
Accrued liabilities		19,570			25,277
Current portion of long-term debt		9,104			28,779
Total current liabilities		65,020			104,881
Long-term debt, net of current portion and deferred financing costs		834,317			837,686
Operating lease liabilities, net of current portion		29,240			30,130
Payable to related party pursuant to tax receivable agreement		65,620			61,174
Asset retirement obligation		6,237			6,309
Deferred tax liabilities, net		22,691			25,716
Other long-term liabilities		247			2,183
Total liabilities		1,023,372			1,068,079
Commitments and contingencies (Note 15)
Stockholders' equity
Preferred stock, $.0001 par value		—			—
Common stock, $.0001 par value		16			16
Common stock contingent consideration		36,575			54,862
Additional paid-in capital		391,240			367,266
Accumulated deficit		(89,629	)		(80,220	)
Accumulated other comprehensive loss		(6,452	)		(2,577	)
Total stockholders' equity		331,750			339,347
Total liabilities and stockholders' equity	$	1,355,122		$	1,407,426

See accompanying Notes to the Condensed Consolidated Financial Statements.

5

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE (LOSS) INCOME

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share data)	2020			2019			2020			2019
Service revenue	$	62,815		$	103,057		$	162,312		$	201,127
Product sales		16,994			6,518			34,210			6,909
Total revenue		79,809			109,575			196,522			208,036
Cost of service revenue		1,013			1,613			2,232			3,002
Cost of product sales		9,060			2,918			17,750			3,194
Operating expenses		26,699			31,795			58,958			61,133
Selling, general and administrative expenses		20,821			20,865			46,707			41,416
Depreciation, amortization and (gain) loss on disposal of assets, net		29,166			28,850			58,412			57,791
Impairment of property and equipment		—			5,898			—			5,898
Total costs and expenses		86,759			91,939			184,059			172,434
(Loss) income from operations		(6,950	)		17,636			12,463			35,602
Interest expense, net		9,539			15,656			21,990			31,689
Loss from tax receivable agreement adjustment		4,446			—			4,446			—
Other income, net		(1,523	)		(3,345	)		(4,448	)		(5,552	)
Total other expenses		12,462			12,311			21,988			26,137
(Loss) income before income tax (benefit) provision		(19,412	)		5,325			(9,525	)		9,465
Income tax (benefit) provision		(4,024	)		1,734			(810	)		3,054
Net (loss) income	$	(15,388	)	$	3,591		$	(8,715	)	$	6,411
Other comprehensive loss:
Change in foreign currency translation adjustment		(508	)		(1,396	)		(3,875	)		(72	)
Total comprehensive (loss) income	$	(15,896	)	$	2,195		$	(12,590	)	$	6,339
Net (loss) income per share:
Basic	$	(0.10	)	$	0.02		$	(0.05	)	$	0.04
Diluted	$	(0.10	)	$	0.02		$	(0.05	)	$	0.04
Weighted average shares used in per share calculation:
Basic outstanding		161,710			157,846			161,317			156,956
Diluted outstanding		161,710			161,977			161,317			159,223

See accompanying Notes to the Condensed Consolidated Financial Statements.

6

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

For the Three and Six Months Ended June 30, 2020
	Common Stock				Common Stock Contingent			Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Stockholders'
(In thousands)	Shares		Amount		Consideration			Capital			Deficit			Loss			Equity
Balance as of December 31, 2019		159,150	$	16	$	54,862		$	367,266		$	(80,220	)	$	(2,577	)	$	339,347
Net income		—		—		—			—			6,673			—			6,673
Cumulative effect of adoption of the CECL accounting standard, net of tax		—		—		—			—			(694	)		—			(694	)
Earn-out shares issued to Platinum Stockholder		2,500		—		(18,287	)		18,287			—			—			—
Vesting of restricted stock units ("RSUs")		42		—		—			—			—			—			—
Payment of employee tax withholding related to RSU vesting		—		—		—			(327	)		—			—			(327	)
Stock-based compensation		—		—		—			2,768			—			—			2,768
Other comprehensive loss, net of tax		—		—		—			—			—			(3,367	)		(3,367	)
Balance as of March 31, 2020		161,692		16		36,575			387,994			(74,241	)		(5,944	)		344,400
Net loss		—		—		—			—			(15,388	)		—			(15,388	)
Vesting of RSUs		45		—		—			—			—			—			—
Payment of employee tax withholding related to RSU vesting		—		—		—			(25	)		—			—			(25	)
Stock-based compensation		—		—		—			3,271			—			—			3,271
Other comprehensive loss, net of tax		—		—		—			—			—			(508	)		(508	)
Balance as of June 30, 2020		161,737	$	16	$	36,575		$	391,240		$	(89,629	)	$	(6,452	)	$	331,750
For the Three and Six Months Ended June 30, 2019
Balance as of December 31, 2018		156,057	$	16	$	73,150		$	348,017		$	(113,306	)	$	(5,821	)	$	302,056
Net income		—		—		—			—			2,820			—			2,820
Cumulative effect of adoption of the new revenue accounting standard		—		—		—			—			(257	)		—			(257	)
Adjustment to equity infusion from Gores		—		—		—			(6,205	)		—			—			(6,205	)
Adjustment to tax receivable agreement liability		—		—		—			2,940			—			—			2,940
Stock-based compensation		—		—		—			2,143			—			—			2,143
Other comprehensive gain		—		—		—			—			—			1,324			1,324
Balance as of March 31, 2019		156,057		16		73,150			346,895			(110,743	)		(4,497	)		304,821
Net income		—		—		—			—			3,591			—			3,591
Earn-out shares issued to Platinum Stockholder		2,500		—		(18,288	)		18,288			—			—			—
Vesting of RSUs		53		—		—			—			—			—			—
Stock-based compensation		—		—		—			2,812			—			—			2,812
Other comprehensive loss		—		—		—			—			—			(1,396	)		(1,396	)
Balance as of June 30, 2019		158,610	$	16	$	54,862		$	367,995		$	(107,152	)	$	(5,893	)	$	309,828

See accompanying Notes to the Condensed Consolidated Financial Statements.

7

VERRA MOBILITY CORPORATION

condensed consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
($ in thousands)	2020			2019
Cash Flows from Operating Activities:
Net (loss) income	$	(8,715	)	$	6,411
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		58,409			57,804
Amortization of deferred financing costs and discounts		2,106			3,589
Impairment of property and equipment		—			5,898
Loss from tax receivable agreement adjustment		4,446			—
Credit loss expense		10,723			2,736
Deferred income taxes		(2,496	)		(11,568	)
Stock-based compensation		6,039			4,955
Installation and service parts expense		559			643
Accretion expense		129			183
Loss (gain) on disposal of assets		3			(13	)
Changes in operating assets and liabilities:
Accounts receivable, net		(43,183	)		(21,433	)
Unbilled receivables		7,476			(616	)
Prepaid expenses and other current assets		7,979			(4,199	)
Accounts payable and accrued liabilities		(17,863	)		5,224
Other liabilities		(3,069	)		(3,833	)
Net cash provided by operating activities		22,543			45,781
Cash Flows from Investing Activities:
Purchases of installation and service parts and property and equipment		(14,301	)		(14,192	)
Cash proceeds from the sale of assets		49			14
Net cash used in investing activities		(14,252	)		(14,178	)
Cash Flows from Financing Activities:
Repayment of long-term debt		(24,227	)		(4,552	)
Payment of debt issuance costs		(922	)		(152	)
Payment of employee tax withholding related to RSU vesting		(352	)		—
Net cash used in financing activities		(25,501	)		(4,704	)
Effect of exchange rate changes on cash and cash equivalents		(1,270	)		10
Net (decrease) increase in cash, cash equivalents and restricted cash		(18,480	)		26,909
Cash, cash equivalents and restricted cash - beginning of period		132,430			67,081
Cash, cash equivalents and restricted cash - end of period	$	113,950		$	93,990

See accompanying Notes to the Condensed Consolidated Financial Statements.

8

VERRA MOBILITY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

	Six Months Ended June 30,
	2020		2019
Supplemental cash flow information:
Interest paid	$	20,201	$	28,144
Income taxes paid, net		1,135		15,448
Supplemental non-cash investing and financing activities:
Reduction to tax receivable agreement liability		—		2,940
Gores equity infusion working capital adjustment payable to related party		—		6,205
Earn-out shares issued to Platinum Stockholder		18,287		18,288
Additions to ARO, property and equipment, and other		41		143
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end		3,238		4,269

See accompanying Notes to the Condensed Consolidated Financial Statements.

9

VERRA MOBILITY CORPORATION

Notes to the CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business

Verra Mobility Corporation (collectively with its subsidiaries, the “Company” or “Verra Mobility”), formerly known as Gores Holdings II, Inc. (“Gores”), was originally incorporated in Delaware on August 15, 2016, as a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more target businesses. On January 19, 2017, the Company consummated its initial public offering (the “IPO”), following which its shares began trading on the Nasdaq Capital Market (“Nasdaq”). On June 21, 2018, Gores entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Greenlight Holding II Corporation, PE Greenlight Holdings, LLC, AM Merger Sub I, Inc., a direct, wholly-owned subsidiary of Gores and AM Merger Sub II, LLC, a direct, wholly-owned subsidiary of Gores. On October 17, 2018, the transactions contemplated by the Merger Agreement (the “Business Combination”) were consummated. In connection with the closing of the Business Combination, Gores changed its name to Verra Mobility Corporation. As a result of the Business Combination, Verra Mobility Corporation became the owner, directly or indirectly, of all of the equity interests of Verra Mobility Holdings, LLC and its subsidiaries.

Verra Mobility offers integrated technology solutions and services to commercial fleets, rental car companies and state and local governments. The Company has customers located throughout the United States, Canada and Europe. The Company is organized into two operating segments: Commercial Services and Government Solutions (see Note 16).

The Commercial Services segment offers toll and violation management solutions for the commercial fleet and rental car industries by partnering with the leading fleet management and rental car companies in North America. Electronic toll payment services enable fleet drivers and rental car customers to use high-speed cashless toll lanes or all-electronic cashless toll roads. The service helps commercial fleets reduce toll management costs, while it provides rental car companies with a revenue-generating, value-added service for their customers. Electronic violation processing services reduce the cost and risk associated with vehicle-issued violations, such as toll, parking or camera-enforced tickets. Title and registration services offer title and registration processing for individuals, rental car companies and fleet management companies. In Europe, the Company provides violations processing through Euro Parking Collection plc (“EPC”) and tolling services through Pagatelia S.L (“Pagatelia”).

The Government Solutions segment provides complete, end-to-end red-light, speed, school bus stop arm and bus lane enforcement solutions. The Company’s programs are designed to reduce traffic violations and resulting collisions, injuries, and fatalities. The Company implements and administers traffic safety programs for municipalities, counties, school districts and law enforcement agencies of all sizes.

2. Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

Use of Estimates

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the fair values assigned to net assets acquired (including identifiable intangibles) in business combinations, the carrying amounts of long-lived assets and goodwill, the carrying amount of installation and service parts, the allowance for credit loss, valuation allowances on deferred tax assets, asset retirement obligations, contingent consideration and the recognition and measurement of loss contingencies.

10

Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.

Recent Accounting Pronouncements

Accounting Standards Adopted

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test. Goodwill impairment is now the amount by which a reporting unit’s carrying value exceeds its fair value limited to the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill for all reporting units, even those with zero or negative carrying amounts. The Company adopted the ASU as of January 1, 2020 and followed the one-step method in evaluating potential goodwill impairment for the first and second quarters of fiscal 2020, refer to Note 6, Goodwill and Intangible Assets. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and issued certain amendments within ASU 2019-04, ASU 2019-05 and ASU 2019-11, respectively. The guidance replaced the incurred loss impairment model and applies a new model, current expected credit losses (“CECL”), that requires entities to estimate expected credit losses measured over the contractual life of an instrument that consider supportable forecasts of future economic conditions in addition to information about past events and current conditions. An entity is required to measure and record an allowance for credit loss upon initial recognition of a financial asset, and present in-scope assets at amortized cost net of the amount expected to be collected. Under legacy GAAP, the Company recognized credit losses on trade receivables when it was probable that a loss has been incurred.

The Company adopted the CECL standard as of January 1, 2020 through a cumulative effect adjustment of $0.7 million, net of tax, to the opening balance of Accumulated deficit. The adjustment increased Accumulated deficit and increased the Allowance for credit loss accounts. Subsequent impacts to the Allowance for credit loss have been recorded through the Credit loss expense account included within Selling, general and administrative expenses in our condensed consolidated statements of operations and as an Allowance for credit loss on our condensed consolidated balance sheet. See Note 4. Accounts Receivable, Net for additional information.

Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU removes specific exceptions to the general principles in Topic 740 in U.S. GAAP including the exception to the incremental approach for intra-period tax allocation, exceptions to accounting for basis differences when there are ownership changes in foreign investments, and the exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also simplifies current guidance in relation to franchise taxes that are partially based on income, transactions with a government that result in a step-up in tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. The impact of the implementation of this standard is still being determined by the Company.

On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. It provides optional expedients and exceptions for applying GAAP to contract modifications, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is in effect for a limited time through December 31, 2022, to help stakeholders during the global market-wide reference rate transition period. The impact of the implementation of this standard is still being determined by the Company.

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3. Acquisition

Pagatelia Acquisition

On October 31, 2019, the Company completed the acquisition of all of the outstanding shares of Pagatelia S.L., (“Pagatelia”), a Spanish limited liability company that provides electronic consumer tolling and parking solutions in Spain, Portugal, France and Italy. The purchase consideration for Pagatelia was $26.6 million. Transaction costs were not material.

The allocation of the purchase consideration is summarized as follows:

($ in thousands)
Assets acquired
Cash	$	1,086
Other assets		5,047
Trademark		771
Customer relationships		5,946
Developed technology		4,624
Non-compete agreements		440
Goodwill		17,528
Total assets acquired		35,442
Liabilities assumed
Accounts payable and accrued expenses		6,045
Deferred tax liability		2,801
Total liabilities assumed		8,846
Total purchase price	$	26,596

Goodwill arising from Pagatelia was assigned to the Company’s Commercial Services segment and consists largely of the expected cash flows and future growth anticipated for the Company. The goodwill is not expected to be deductible for tax purposes. The customer relationships value was based on an excess earnings methodology utilizing projected cash flows. The trademark and the developed technology values were based on a relief-from-royalty method. The non-compete agreement values were based on the with-or-without method. The trademark, customer relationships, developed technology and non-compete agreements were assigned useful lives of 8.5 years, 9.5 years, 6.5 years and 3 years, respectively.  

The Company did not provide pro forma financial information for Pagatelia as it was not material.

4. Accounts Receivable, Net

Accounts receivable are uncollateralized customer obligations arising from the sale of products or services. Accounts receivable have normal trade terms less than one year and are initially stated at the amounts billed to the customers. Accounts receivable are subsequently measured at amortized cost net of allowance for credit loss. As part of its analysis for implementation of the CECL standard as of January 1, 2020, the Company reviewed historical loss rates, customer payment trends and collection rates on customer balances. Estimated loss rates were developed using historical credit loss experience, adjusted for future expectations using probability-weighted assumptions about potential outcomes. Receivables are written off against the allowance for credit loss when it is probable that amounts will not be collected based on terms of the customer contracts, and subsequent recoveries reverse the previous write-off and apply to the receivable in the period recovered. The Company periodically evaluates the adequacy of its allowance for expected credit losses by comparing its actual historical write-offs to its previously recorded estimates.

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The Company identified portfolio segments based on type of business, industry in which the customer operates and historical credit loss patterns. The following presents by portfolio segment Accounts receivable, net and the activity in the Allowance for credit loss for the six months ended June 30, 2020:

($ in thousands)	Commercial Services (Driver-billed) (1)			Commercial Services (All other)			Government Solutions			Total
Accounts Receivable, Net at January 1, 2020 (2)	$	9,793		$	51,158		$	31,744		$	92,695
Allowance for credit loss at January 1, 2020 (2)	$	5,272		$	1,406		$	1,778		$	8,456
Credit loss expense		2,744			6,256			1,723			10,723
Write-offs, net of recoveries		(5,449	)		(334	)		(466	)		(6,249	)
Allowance for credit loss at June 30, 2020	$	2,567		$	7,328		$	3,035		$	12,930
Accounts Receivable, Net at June 30, 2020	$	7,926		$	48,934		$	68,392		$	125,252

(1) Driver-billed consists of receivables from drivers of rental cars and fleet management companies for which the Company bills on behalf of its customers. Receivables not collected from drivers within a defined number of days are transferred to customers subject to applicable bad debt sharing agreements.

(2) This includes a $0.8 million increase to Allowance for credit loss as a result of adopting the CECL standard.

The estimated credit loss expense for the six months ended June 30, 2020 includes a specific provision of $3.5 million for accounts receivable due from one of our Commercial Services (All other) customers who filed for Chapter 11 bankruptcy.

Concentration of Credit Risk

Significant customers are those which represent more than 10% of the Company’s total revenue and accounts receivable. Revenue from one of the Government Solutions customers as a percent of total revenue is presented below for the three and six months ended June 30, 2020 and 2019, respectively:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
City of New York Department of Transportation		40.5	%		12.4	%		31.6	%		10.4	%

The City of New York Department of Transportation represents 42.2% of accounts receivable, net as of June 30, 2020. Significant customer revenue generated through the Company’s Commercial Services partners as a percent of total revenue is presented below for the three and six months ended June 30, 2020 and 2019, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020	2019			2020			2019
Hertz Corporation	(1)		19.6	%		13.0	%		19.0	%
Avis Budget Group, Inc.	(1)		16.5	%	(1)				13.1	%
Enterprise Holdings, Inc.	(1)		13.5	%	(1)				13.7	%

(1) Customer revenue for the period was below 10% of total revenue.

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5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following at:

($ in thousands)	June 30, 2020		December 31, 2019
Prepaid tolls	$	7,947	$	10,116
Deposits		3,345		3,642
Prepaid services		3,176		5,201
Prepaid computer maintenance		2,559		2,923
Prepaid insurance		841		1,485
Photo enforcement equipment held for sale		416		1,410
Prepaid income taxes		230		1,025
Other		450		689
Total prepaid expenses and other current assets	$	18,964	$	26,491

6. Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill by reportable segment:

	Commercial			Government
($ in thousands)	Services			Solutions		Total
Balance at December 31, 2019	$	424,404		$	159,746	$	584,150
Foreign currency translation adjustment		(2,535	)		—		(2,535	)
Balance at June 30, 2020	$	421,869		$	159,746	$	581,615

Intangible assets consist of the following as of the respective period-ends:

	June 30, 2020						December 31, 2019
	Weighted						Weighted
	Average	Gross					Average	Gross
	Remaining	Carrying			Accumulated		Remaining	Carrying			Accumulated
($ in thousands)	Useful Life	Amount			Amortization		Useful Life	Amount			Amortization
Trademarks	0.9 years	$	32,067		$	24,209	1.5 years	$	32,127		$	19,106
Non-compete agreements	2.5 years		62,555			31,119	3.0 years		62,549			24,834
Customer relationships	6.4 years		365,368			103,204	6.9 years		366,533			82,903
Developed technology	2.8 years		165,520			80,615	3.3 years		165,708			65,631
Gross carrying value of intangible assets			625,510		$	239,147			626,917		$	192,474
Less: accumulated amortization			(239,147	)					(192,474	)
Intangible assets, net		$	386,363					$	434,443

Amortization expense was $23.5 million and $23.1 million for the three months ended June 30, 2020 and 2019, respectively, and was $47.1 million and $46.3 million for the six months ended June 30, 2020 and 2019, respectively.

Estimated amortization expense in future years is expected to be:

($ in thousands)
Remainder of 2020	$	46,823
2021		85,379
2022		80,654
2023		52,157
2024		41,671
Thereafter		79,679
Total	$	386,363

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Interim Goodwill Impairment Review

During the fourth quarter of each fiscal year, we perform our annual goodwill impairment test for each of our reporting units. Our reporting units are the same as our two reportable segments (Government Solutions and Commercial Services). We also test goodwill for impairment whenever events or circumstances occur which, in our judgment, could more likely than not reduce the fair value of one or more reporting units below its carrying amount. Potential impairment indicators include, but are not limited to, (i) a deterioration of the business environments in which we operate; (ii) downward revisions to internal forecasts, and the magnitude thereof, if any; and (iii) declines in our market capitalization below our book value, and the magnitude and duration of those declines, if any.

During the first half of fiscal 2020, our market capitalization declined significantly compared to December 31, 2019. Over the same period, the equity value of our key Commercial Services customers, our peer group companies and the overall U.S. stock market also declined significantly amid market volatility. These declines were driven by the uncertainty surrounding the outbreak of the novel coronavirus (“COVID-19”) and other macroeconomic events. Based on these factors, we concluded that a triggering event occurred and, accordingly, an interim quantitative impairment test was performed as of March 31, 2020 and updated as of June 30, 2020.

Based upon the results of our interim impairment tests, we concluded that the fair values of the Government Solutions and Commercial Services reporting units exceeded their carrying value. The current economic conditions due to COVID-19 are still evolving and any significant adverse changes in future periods to our internal forecasts or the external market conditions, if any, could reasonably be expected to negatively affect our key assumptions and may result in a future goodwill impairment charge, which could be material.

7. Impairment of Other Long-lived Assets

The Company reviews its other long-lived assets for impairment (including intangible assets with finite useful lives) whenever events or circumstances indicate that the carrying value of an asset may not be fully recoverable. The Company assesses recoverability by comparing the estimated undiscounted future cash flows expected to be generated by the assets with their carrying value. If the carrying value of the assets exceeds the estimated undiscounted future cash flows, an impairment loss is recognized for the difference between the estimated fair value of the assets and their carrying value. At June 30, 2020, the Company performed a qualitative assessment and concluded that there is no impairment, as the fair values of the asset groups exceeded their respective carrying amounts.

The state of Texas passed legislation as of June 1, 2019 to ban red-light photo enforcement programs across the state, with certain carve-outs for some existing programs. The Company considered this event an indicator for potential impairment and, as such, evaluated the recoverability of property and equipment used in the operations of red-light photo enforcement programs in Texas. As a result, the Company recognized an impairment charge in the Government Solutions segment of $5.9 million for the three and six months ended June 30, 2019, which is included in Impairment of property and equipment in the condensed consolidated statements of operations.

8. Accrued Liabilities

Accrued liabilities consist of the following at:

($ in thousands)	June 30, 2020		December 31, 2019
Accrued salaries and wages	$	4,228	$	10,319
Current portion of related party TRA liability		4,636		5,730
Current portion of operating lease liabilities		2,933		2,970
Advanced deposits payable		2,435		2,875
Income taxes payable		1,952		348
Restricted cash due to customers		711		917
Accrued sales commissions		480		612
Accrued interest payable		173		210
Other		2,022		1,296
Total accrued liabilities	$	19,570	$	25,277

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9. Debt

The following table provides a summary of the Company’s debt at:

($ in thousands)	June 30, 2020			December 31, 2019
First Lien Term Loan, due February 28, 2025	$	870,194		$	894,421
Less: original issue discounts		(4,469	)		(4,778	)
Less: unamortized deferred financing costs		(22,304	)		(23,178	)
Total debt		843,421			866,465
Less: current portion of long-term debt		(9,104	)		(28,779	)
Total long-term debt, net of current portion	$	834,317		$	837,686

In connection with an acquisition in 2018, VM Consolidated, Inc., a wholly-owned subsidiary of the Company, entered into a First Lien Term Loan Credit Agreement (the “First Lien Term Loan”), a Second Lien Term Loan Credit Agreement (the “Second Lien Term Loan”), (collectively the “Term Loans”) and a Revolving Credit Facility Agreement (the “Revolver”) with a syndicate of lenders (collectively, the “2018 Credit Facilities”). The 2018 Credit Facilities initially provided for committed senior secured financing of $1.115 billion, consisting of the Term Loans in an aggregate principal amount of $1.04 billion and the Revolver available for loans and letters of credit with an aggregate revolving commitment of up to $75 million (subject to borrowing eligibility requirements as described below). In July 2018, the Company amended the First Lien Term Loan to expand the aggregate principal loan amount from $840 million to $910 million. The additional $70 million along with funds contributed by Platinum Equity, LLC were used to repay the $200 million Second Lien Term Loan in full contemporaneously with the close of the Business Combination on October 17, 2018.

The First Lien Term Loan is repayable at 1.0% per annum of the amount initially borrowed, paid in quarterly installments. The First Lien Term Loan matures on February 28, 2025. The Company refinanced the entire outstanding amount under the First Lien Term Loan on February 20, 2020 which reduced the previous applicable margin by 50 basis points. The First Lien Term Loan now bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.25% per annum, or (2) an alternate base rate plus an applicable margin of 2.25% per annum. As of June 30, 2020, the interest rate on the First Lien Term Loan was 3.6%.

In addition, the First Lien Term Loan requires mandatory prepayments equal to the product of the excess cash flows of the Company (as defined in the loan agreement) and the applicable prepayment percentages (calculated as of the last day of the fiscal year, beginning with the year ending December 31, 2019), as set forth in the following table:

Consolidated first lien net leverage ratio (as defined by the First Lien Term Loan agreement)	Applicable prepayment percentage
> 3.70:1.00	50%
< 3.70:1.00 and > 3.20:1.00	25%
< 3.20:1.00	0%

The Company made a $19.7 million mandatory prepayment of excess cash flow during the first quarter of fiscal 2020, which was classified as current portion of long-term debt in the condensed consolidated balance sheet at December 31, 2019.

The Revolver matures on February 28, 2023. The terms of the Revolver were not affected by the refinancing of the First Lien Term Loan discussed above. Borrowing eligibility under the Revolver is subject to a monthly borrowing base calculation based on (i) certain percentages of eligible accounts receivable and inventory, less (ii) certain reserve items, including outstanding letters of credit and other reserves. The Revolver bears interest on either (1) LIBOR plus an applicable margin, or (2) an alternate base rate, plus an applicable margin. The margin percentage applied to (1) LIBOR is either 1.25%, 1.50%, or 1.75%, or (2) the base rate is either 0.25%, 0.50%, or 0.75%, depending on the Company’s average availability to borrow under the commitment. At June 30, 2020, the Company had no outstanding borrowings on the Revolver and availability to borrow under the Revolver was $68.7 million, net of $6.3 million of outstanding letters of credit.

Interest on the unused portion of the Revolver is payable quarterly at 0.375%, and the Company is also required to pay participation and fronting fees at 1.38% on $6.3 million in outstanding letters of credit as of June 30, 2020.

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All borrowings and other extensions of credits under the 2018 Credit Facilities are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. At June 30, 2020, the Company was compliant with the 2018 Credit Facilities covenants. Substantially all of the Company’s assets are pledged as collateral to secure the Company’s indebtedness under the 2018 Credit Facilities.  

The Company recorded interest expense, including amortization of deferred financing costs and discounts, of $9.5 million and $15.7 million for the three months ended June 30, 2020 and 2019, respectively, and $22.0 million and $31.7 million for the six months ended June 30, 2020 and 2019, respectively.

In connection with the refinancing of the First Lien Term Loan in February 2020, which the Company determined was to be accounted for as a modification, the Company incurred $0.8 million of lender fees which were capitalized as deferred financing costs and amortized over the remaining life of the First Lien Term Loan, and $0.2 million of legal fees that were expensed as Selling, general and administrative expenses on the condensed consolidated statement of operations.

The weighted average effective interest rates on the Company’s outstanding borrowing under the 2018 Credit Facilities were 3.6% and 5.5% at June 30, 2020 and December 31, 2019, respectively.

10. Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurement, includes a single definition of fair value to be used for financial reporting purposes, provides a framework for applying this definition and for measuring fair value under U.S. GAAP, and establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are summarized as follows:

Level 1 – Fair value is based on observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2 – Fair value is determined using quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are directly or indirectly observable.

Level 3 – Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.

The carrying amounts reported in the Company’s condensed consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the immediate to short-term maturity of these financial instruments. The estimated fair value of the Company’s First Lien Term Loan as of June 30, 2020 and December 31, 2019 was categorized in Level 2 of the fair value hierarchy and was calculated based upon available market information. The carrying value and fair value of debt is as follows:

	Level in	June 30, 2020				December 31, 2019
	Fair Value	Carrying		Estimated		Carrying		Estimated
($ in thousands)	Hierarchy	Amount		Fair Value		Amount		Fair Value
Total debt	2	$	843,421	$	839,737	$	866,465	$	905,601

11. Net (Loss) Income Per Share

Basic net (loss) income per share is calculated by dividing net (loss) income by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net (loss) income per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.

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The components of basic and diluted net (loss) income per share are as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands, except per share data)	2020			2019		2020			2019
Numerator:
Net (loss) income	$	(15,388	)	$	3,591	$	(8,715	)	$	6,411
Denominator:
Weighted average shares - basic		161,710			157,846		161,317			156,956
Common stock equivalents		—			4,131		—			2,267
Weighted average shares - diluted		161,710			161,977		161,317			159,223
Net (loss) income per share - basic	$	(0.10	)	$	0.02	$	(0.05	)	$	0.04
Net (loss) income per share - diluted	$	(0.10	)	$	0.02	$	(0.05	)	$	0.04
Antidilutive shares excluded from diluted net (loss) income per share (1):
Contingently issuable shares (2)		5,000			8,214		5,000			9,107
Warrants		20,000			—		20,000			10,000
Non-qualified stock options		699			—		699			—
Performance share units		116			—		116			—
Restricted stock units		3,377			—		3,377			43
Total antidilutive shares excluded		29,192			8,214		29,192			19,150

(1) These amounts represent the total antidilutive shares outstanding for the three and six months ended June 30, 2020 and the weighted average antidilutive shares for the three and six months ended June 30, 2019.

(2) Contingently issuable shares relate to the earn-out agreement as discussed in Note 14, Related Party Transactions.

12. Income Taxes

Our interim income tax (benefit) provision is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that period. The estimated annual effective tax rate requires judgment and is dependent upon several factors. We provide for income taxes under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the financial statements.

We provide a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before we are able to realize their benefit. We calculate the valuation allowance in accordance with the authoritative guidance relating to income taxes, which requires an assessment of both positive and negative evidence regarding the realizability of these deferred tax assets, when measuring the need for a valuation allowance. Significant judgment is required in determining any valuation allowance against deferred tax assets.

In December 2019, COVID-19 emerged in China and has since spread throughout the world causing severe disruption to the global economy. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. There were several income tax provisions and other non-tax matters incorporated into law as a result of the enactment of the CARES Act. The Company applied certain articles of the CARES Act in the interim income tax (benefit) provision, including the increased interest deduction allowed up to 50 percent of adjusted taxable income for tax years 2019 and 2020. In addition, the Company delayed the employer-side of the FICA payments until 2021. The Company will continue to assess other aspects of the CARES Act and will account for them accordingly, if applicable.

Our effective income tax rate was 20.7% and 32.6% for the three months ended June 30, 2020 and 2019, respectively, and 8.5% and 32.3% for the six months ended June 30, 2020 and 2019, respectively. The effective tax rate change was primarily due to lower pre-tax income in the current year, resulting in the Company’s permanent book and tax differences having a proportionately greater impact on the effective tax rate in the current year.

The total amount of unrecognized tax benefits decreased by $0.9 million during fiscal 2020 primarily from the statute expiration of prior year tax positions. As of June 30, 2020, the total amount of unrecognized tax benefits was $0.8 million, of which $0.7 million would affect our effective tax rate if recognized. We recognize interest and penalties related to unrecognized

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tax benefits through income tax expense. As of June 30, 2020, we had less than $0.1 million accrued for the payment of interest and penalties.

The Company is subject to examination by the Internal Revenue Service and taxing authorities in various states. The Company’s U.S. federal income tax returns remain subject to examination by tax authorities for the years 2016 to 2019. The Company’s state income tax returns are under examination by certain states for tax years 2015 to 2017, and other state income tax returns are subject to examination for tax years 2014 to 2019. Tax returns for years prior to 2014 remain open in a number of states due to tax attributes generated but not yet utilized. The Company regularly assesses the likelihood of additional tax deficiencies in each of the tax jurisdictions and, accordingly, makes appropriate adjustments to the tax provision as deemed necessary.

13. Stock-Based Compensation

The following details the components of stock-based compensation for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2020		2019		2020		2019
Operating expenses	$	294	$	272	$	514	$	476
Selling, general and administrative expenses		2,977		2,540		5,525		4,479
Total stock-based compensation expense	$	3,271	$	2,812	$	6,039	$	4,955

14. Related Party Transactions

Tax Receivable Agreement

At the closing of the Business Combination, the Company entered into a tax receivable agreement (“TRA”) with PE Greenlight Holdings, LLC (the “Platinum Stockholder”) and Greenlight Holding II Corporation as the stockholder representative. The TRA generally provides for the payment by the post-closing company to the Platinum Stockholder of 50% of the net cash savings, if any, in U.S. federal, state and local income tax that the post-closing company actually realizes (or is deemed to realize in certain circumstances) in periods after the closing of the Business Combination as a result of the increase in the tax basis of the intangible assets which resulted from an acquisition by the Company prior to the Business Combination. The post-closing company generally will retain the benefit of the remaining 50% of these cash savings. The Company estimated the potential maximum benefit to be paid will be approximately $70.0 million, and recorded an initial liability and corresponding charge to equity at the closing of the Business Combination. Subsequently, the Company made adjustments to this amount.

At June 30, 2020, the Company recorded a $4.4 million increase to the Payable related to tax receivable agreement with an offsetting charge to Loss from tax receivable agreement adjustment in the condensed consolidated statements of operations for the three and six months ended June 30, 2020. The adjustment reflects the impact of an increase to the Company’s deferred tax rate arising from higher estimated state tax rates due to a change in apportionment. At June 30, 2020, the TRA was approximately $70.2 million of which $4.6 million was the current portion included in Accrued liabilities and $65.6 million included in Payable related to tax receivable agreement on the condensed consolidated balance sheets.

Earn-Out Agreement

Under the Merger Agreement, the Platinum Stockholder is entitled to receive additional shares of Class A Common Stock (the “Earn-Out Shares”) if the volume weighted average closing sale price of one share of Class A Common Stock on Nasdaq exceeds certain thresholds for a period of at least 10 days out of 20 consecutive trading days at any time during the five-year period following the closing of the Business Combination (the “Common Stock Price”).

The Earn-Out Shares are issued by the Company to the Platinum Stockholder as follows:

Common Stock Price thresholds	One-time issuance of shares
> $13.00 (a)		2,500,000
> $15.50 (a)		2,500,000
> $18.00		2,500,000
> $20.50		2,500,000

(a) The first and second tranches of Earn-Out Shares have been issued, as discussed below.

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If any of the Common Stock Price thresholds above (each, a “Triggering Event”) are not achieved within the five-year period following the closing of the Business Combination, the Company will not be required to issue the Earn-Out Shares in respect of such Common Stock Price threshold. In no event shall the Platinum Stockholder be entitled to receive more than an aggregate of 10,000,000 Earn-Out Shares.

If, during the earn-out period, there is a change of control (as defined in the Merger Agreement) that will result in the holders of Greenlight Acquisition Corporation (“Parent”) Class A Common Stock receiving a per share price equal to or in excess of the applicable Common Stock Price required in connection with any Triggering Event (an “Acceleration Event”), then immediately prior to the consummation of such change of control: (a) any such Triggering Event that has not previously occurred shall be deemed to have occurred; and (b) Parent shall issue the applicable Earn-Out Shares to the cash consideration stockholders (as defined in the Merger Agreement) (in accordance with their respective pro rata cash share), and the recipients of the issued Earn-Out Shares shall be eligible to participate in such change of control.

The Company estimated the original fair value of the contingently issuable shares to be $73.15 million, of which $36.6 million remains contingently issuable as of June 30, 2020. The estimated value is not subject to future revisions during the five-year period discussed above. The Company used a Monte Carlo simulation option-pricing model to arrive at its original estimate. Each tranche was valued separately giving specific consideration to the tranche’s price target. The simulation considered volatility and risk free rates utilizing a peer group based on a five year term. This was initially recorded as a distribution to shareholders and was presented as Common stock contingent consideration. Upon the occurrence of a Triggering Event, any issuable shares would be transferred from Common stock contingent consideration to Common stock and Additional paid-in capital accounts. Any contingently issuable shares not issued as a result of a Triggering Event not being attained by the end of earn-out period will be cancelled.

On April 26, 2019 and on January 27, 2020, the Triggering Events for the issuance of the first and second tranches of Earn-Out Shares occurred, as the volume weighted average closing sale price per share of the Company’s Class A Common Stock as of that date had been greater than $13.00 and $15.50, respectively, for 10 out of 20 consecutive trading days. These Triggering Events resulted in the issuance of an aggregate 5,000,000 shares of the Company’s Class A Common Stock to the Platinum Stockholder and an increase in the Company’s Common stock and Additional paid-in capital accounts of $36.6 million, with a corresponding decrease to the Common stock contingent consideration account.  

15. Commitments and Contingencies

The Company has issued various letters of credit under contractual arrangements with certain of its vendors and customers. Outstanding letters of credit under these arrangements totaled $6.3 million at June 30, 2020.

The Company has non-cancelable purchase commitments to certain vendors. The aggregate non-cancelable purchase commitments outstanding at June 30, 2020 were $16.0 million.

The Company is subject to tax audits in the normal course of business and does not have material contingencies recorded related to such audits.

Customer Guarantee

In the ordinary course of business, the Company occasionally employs contract terms that mitigate the customer’s risk of aggregate revenue decline in connection with the customer’s adoption of additional or changes to service models within its existing portfolio. These agreements require the customer to satisfy numerous conditions to trigger payment, including volume metrics and other operational requirements. The Company has one such guarantee outstanding for the one-year period ending March 31, 2021. At June 30, 2020, the Company has concluded that the likelihood of making payment under this guarantee is remote, and consequently no liability or corresponding contra revenue has been recorded in the Company’s financial statements.

Exit Activities

We commenced exit activities related to severance and other employee separation costs during the three and six months ended June 30, 2020. We accrued $0.5 million as of June 30, 2020, of which $0.4 million related to the Commercial Services segment and the remaining related to the Government Solutions segment. The Company expects to pay the amount before the end of fiscal 2020.

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Legal Proceedings

The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The Company records a liability when it believes it is probable a loss will be incurred and the amount of loss or range of loss can be reasonably estimated. The assessment as to whether a loss is probable, reasonably possible or remote, and as to whether a loss or a range of such loss is estimable, often involves significant judgment about future events. The Company has determined that resolution of pending matters is not probable to have a material adverse impact on its condensed consolidated results of operations, cash flows, or financial position, and accordingly, no material contingency accruals are recorded. However, the outcome of litigation is inherently uncertain. As additional information becomes available, the Company reassesses the potential liability.

16. Segment Reporting

The Company has two operating and reportable segments, Commercial Services and Government Solutions. Commercial Services offers toll and violation management solutions and title and registration services to commercial fleet vehicle owners, rental car companies and violation-issuing authorities. Government Solutions implements and administers traffic safety programs and products for municipalities and local government agencies of all sizes. The Company’s Chief Operating Decision Maker function (“CODM”) is comprised of the Company’s CEO and certain defined representatives of the Company’s executive management team. The Company’s CODM monitors operating performance, allocates resources and deploys capital based on these two segments.

Segment performance is based on revenues and (loss) income from operations before depreciation, amortization, gain (loss) on disposal of assets, net, and stock-based compensation. The measure also excludes interest expense, net, income taxes and is inclusive of other income, net. The tables below refer to this measure as Segment profit (loss). The aforementioned items are not indicative of operating performance, and, as a result are not included in the measures that are reviewed by the CODM for the segments. Other income, net consists primarily of credit card rebates earned on the prepayment of tolling transactions and is therefore included in Segment profit (loss). There are no significant non-cash items reported in Segment profit (loss).

The following tables set forth financial information by segment for the respective periods:

	For the Three Months Ended June 30, 2020
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	27,272		$	35,543		$	—		$	62,815
Product sales		—			16,994			—			16,994
Total revenue		27,272			52,537			—			79,809
Cost of service revenue		646			367			—			1,013
Cost of product sales		—			9,060			—			9,060
Operating expenses		10,750			15,655			—			26,405
Selling, general and administrative expenses		10,191			7,150			503			17,844
Other income, net		(1,507	)		(16	)		—			(1,523	)
Segment profit (loss)	$	7,192		$	20,321		$	(503	)	$	27,010
Segment profit (loss)	$	7,192		$	20,321		$	(503	)	$	27,010
Depreciation and amortization		—			—			29,159			29,159
Loss on disposal of assets, net		5			2			—			7
Loss from tax receivable agreement adjustment		—			—			4,446			4,446
Stock-based compensation		—			—			3,271			3,271
Interest expense, net		—			—			9,539			9,539
Income (loss) before income tax benefit	$	7,187		$	20,319		$	(46,918	)	$	(19,412	)

21

	For the Three Months Ended June 30, 2019
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	68,091		$	34,966		$	—		$	103,057
Product sales		—			6,518			—			6,518
Total revenue		68,091			41,484			—			109,575
Cost of service revenue		915			698			—			1,613
Cost of product sales		—			2,918			—			2,918
Operating expenses		16,722			14,801			—			31,523
Selling, general and administrative expenses		9,629			7,561			1,135			18,325
Other income, net		(3,308	)		(37	)		—			(3,345	)
Segment profit (loss)	$	44,133		$	15,543		$	(1,135	)	$	58,541
Segment profit (loss)	$	44,133		$	15,543		$	(1,135	)	$	58,541
Depreciation and amortization		—			—			28,865			28,865
Gain on disposal of assets, net		—			(15	)		—			(15	)
Impairment of property and equipment		—			5,898			—			5,898
Stock-based compensation		—			—			2,812			2,812
Interest expense, net		—			—			15,656			15,656
Income (loss) before income tax provision	$	44,133		$	9,660		$	(48,468	)	$	5,325

	For the Six Months Ended June 30, 2020
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	88,514		$	73,798		$	—		$	162,312
Product sales		—			34,210			—			34,210
Total revenue		88,514			108,008			—			196,522
Cost of service revenue		1,453			779			—			2,232
Cost of product sales		—			17,750			—			17,750
Operating expenses		27,280			31,164			—			58,444
Selling, general and administrative expenses		23,575			16,819			788			41,182
Other income, net		(4,396	)		(52	)		—			(4,448	)
Segment profit (loss)	$	40,602		$	41,548		$	(788	)	$	81,362
Segment profit (loss)	$	40,602		$	41,548		$	(788	)	$	81,362
Depreciation and amortization		—			—			58,409			58,409
Loss (gain) on disposal of assets, net		5			(2	)		—			3
Loss from tax receivable agreement adjustment		—			—			4,446			4,446
Stock-based compensation		—			—			6,039			6,039
Interest expense, net		—			—			21,990			21,990
Income (loss) before income tax benefit	$	40,597		$	41,550		$	(91,672	)	$	(9,525	)

22

	For the Six Months Ended June 30, 2019
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	130,679		$	70,448		$	—		$	201,127
Product sales		—			6,909			—			6,909
Total revenue		130,679			77,357			—			208,036
Cost of service revenue		1,779			1,223			—			3,002
Cost of product sales		—			3,194			—			3,194
Operating expenses		31,818			28,839			—			60,657
Selling, general and administrative expenses		20,391			15,411			1,135			36,937
Other income, net		(5,478	)		(74	)		—			(5,552	)
Segment profit (loss)	$	82,169		$	28,764		$	(1,135	)	$	109,798
Segment profit (loss)	$	82,169		$	28,764		$	(1,135	)	$	109,798
Depreciation and amortization		—			—			57,804			57,804
Gain on disposal of assets, net		—			(13	)		—			(13	)
Impairment of property and equipment		—			5,898			—			5,898
Stock-based compensation		—			—			4,955			4,955
Interest expense, net		—			—			31,689			31,689
Income (loss) before income tax provision	$	82,169		$	22,879		$	(95,583	)	$	9,465

17. Guarantor/Non-Guarantor Financial Information

VM Consolidated, Inc., a wholly-owned subsidiary of the Company, is the lead borrower of the First Lien Term Loan and the Revolver. VM Consolidated, Inc. is owned by the Company through a series of holding companies that ultimately end with the Company. VM Consolidated, Inc. is wholly-owned by Greenlight Acquisition Corporation, which is wholly-owned by Greenlight Intermediate Holding Corporation, which is wholly-owned by Greenlight Holding Corporation, which is wholly-owned by Verra Mobility Holdings, LLC, which is wholly-owned by Verra Mobility Corporation or the Company. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, including transactions with the Company’s wholly-owned subsidiary guarantors and non-guarantor subsidiaries.

The following financial information presents the condensed consolidated balance sheets as of June 30, 2020 and the related condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2020 and condensed consolidated statements of cash flows for the six months ended June 30, 2020 for the Company, combined guarantor subsidiaries and combined non-guarantor subsidiaries.

23

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

at June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)		VM Consolidated Inc. (Guarantor Subsidiary)		Non- guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	98,566	$	14,673	$	—		$	113,239
Restricted cash		—		711		—		—			711
Accounts receivable (net of allowance for credit loss of $12.9 million )		—		122,373		2,879		—			125,252
Unbilled receivables		—		12,244		288		—			12,532
Investment in subsidiary		162,491		73,069		—		(235,560	)		—
Prepaid expenses and other current assets		—		16,655		2,309		—			18,964
Total current assets		162,491		323,618		20,149		(235,560	)		270,698
Installation and service parts, net		—		8,672		—		—			8,672
Property and equipment, net		—		69,987		3,617		—			73,604
Operating lease assets		—		30,588		345		—			30,933
Intangible assets, net		—		360,280		26,083		—			386,363
Goodwill		—		524,766		56,849		—			581,615
Due from affiliates		169,259		—		—		(169,259	)		—
Other non-current assets		—		3,223		14		—			3,237
Total assets	$	331,750	$	1,321,134	$	107,057	$	(404,819	)	$	1,355,122
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—	$	26,229	$	10,117	$	—		$	36,346
Accrued liabilities		—		16,546		3,024		—			19,570
Current portion of long-term debt		—		9,104		—		—			9,104
Total current liabilities		—		51,879		13,141		—			65,020
Long-term debt, net of current portion and deferred financing costs		—		834,317		—		—			834,317
Operating lease liabilities, net of current portion		—		29,070		170		—			29,240
Payable to related party pursuant to tax receivable agreement		—		65,620		—		—			65,620
Due to affiliates		—		153,369		15,890		(169,259	)		—
Asset retirement obligation		—		6,237		—		—			6,237
Deferred tax liabilities, net		—		17,904		4,787		—			22,691
Other long-term liabilities		—		247		—		—			247
Total liabilities		—		1,158,643		33,988		(169,259	)		1,023,372
Total stockholders' equity		331,750		162,491		73,069		(235,560	)		331,750
Total liabilities and stockholders' equity	$	331,750	$	1,321,134	$	107,057	$	(404,819	)	$	1,355,122

24

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Service revenue	$	—		$	59,784		$	3,031		$	—		$	62,815
Product sales		—			16,994			—			—			16,994
Total revenue		—			76,778			3,031			—			79,809
Cost of service revenue		—			451			562			—			1,013
Cost of product sales		—			9,060			—			—			9,060
Operating expenses		—			24,926			1,773			—			26,699
Selling, general and administrative expenses		—			19,649			1,172			—			20,821
Depreciation, amortization and (gain) loss on disposal of assets, net		—			27,876			1,290			—			29,166
Total costs and expenses		—			81,962			4,797			—			86,759
Loss from operations		—			(5,184	)		(1,766	)		—			(6,950	)
Loss from equity investment		15,388			1,521			—			(16,909	)		—
Interest expense, net		—			9,540			(1	)		—			9,539
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Other income, net		—			(1,494	)		(29	)		—			(1,523	)
Total other expenses (income)		15,388			14,013			(30	)		(16,909	)		12,462
Loss before income tax benefit		(15,388	)		(19,197	)		(1,736	)		16,909			(19,412	)
Income tax benefit		—			(3,809	)		(215	)		—			(4,024	)
Net loss	$	(15,388	)	$	(15,388	)	$	(1,521	)	$	16,909		$	(15,388	)
Other comprehensive loss:
Change in foreign currency translation adjustment		—			—			(508	)		—			(508	)
Total comprehensive loss	$	(15,388	)	$	(15,388	)	$	(2,029	)	$	16,909		$	(15,896	)

25

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Six Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Service revenue	$	—		$	155,434		$	6,878		$	—		$	162,312
Product sales		—			34,210			—			—			34,210
Total revenue		—			189,644			6,878			—			196,522
Cost of service revenue		—			1,119			1,113			—			2,232
Cost of product sales		—			17,750			—			—			17,750
Operating expenses		—			55,504			3,454			—			58,958
Selling, general and administrative expenses		—			43,624			3,083			—			46,707
Depreciation, amortization and (gain) loss on disposal of assets, net		—			55,871			2,541			—			58,412
Total costs and expenses		—			173,868			10,191			—			184,059
Income (loss) from operations		—			15,776			(3,313	)		—			12,463
Loss from equity investment		8,715			2,828			—			(11,543	)		—
Interest expense, net		—			22,002			(12	)		—			21,990
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Other income, net		—			(4,381	)		(67	)		—			(4,448	)
Total other expenses (income)		8,715			24,895			(79	)		(11,543	)		21,988
Loss before income tax benefit		(8,715	)		(9,119	)		(3,234	)		11,543			(9,525	)
Income tax benefit		—			(404	)		(406	)		—			(810	)
Net loss	$	(8,715	)	$	(8,715	)	$	(2,828	)	$	11,543		$	(8,715	)
Other comprehensive loss:
Change in foreign currency translation adjustment		—			—			(3,875	)		—			(3,875	)
Total comprehensive loss	$	(8,715	)	$	(8,715	)	$	(6,703	)	$	11,543		$	(12,590	)

26

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities:
Net loss	$	(8,715	)	$	(8,715	)	$	(2,828	)	$	11,543		$	(8,715	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		—			55,873			2,536			—			58,409
Amortization of deferred financing costs and discounts		—			2,106			—			—			2,106
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Credit loss expense		—			10,723			—			—			10,723
Deferred income taxes		—			(1,869	)		(627	)		—			(2,496	)
Stock-based compensation		—			6,039			—			—			6,039
Installation and service parts expense		—			559			—			—			559
Accretion expense		—			129			—			—			129
(Gain) loss on disposal of assets		—			(2	)		5			—			3
Loss from equity investment		8,715			2,828			—			(11,543	)		—
Changes in operating assets and liabilities:
Accounts receivable, net		—			(44,969	)		1,786			—			(43,183	)
Unbilled receivables		—			7,073			403			—			7,476
Prepaid expenses and other current assets		—			8,008			(29	)		—			7,979
Accounts payable and accrued liabilities		—			(13,865	)		(3,998	)		—			(17,863	)
Due to affiliates		—			(2,027	)		2,027			—			—
Other liabilities		—			(3,069	)		—			—			(3,069	)
Net cash provided by (used in) operating activities		—			23,268			(725	)		—			22,543
Cash Flows from Investing Activities:
Purchases of installation and service parts and property and equipment		—			(12,825	)		(1,476	)		—			(14,301	)
Cash proceeds from the sale of assets		—			49			—			—			49
Net cash used in investing activities		—			(12,776	)		(1,476	)		—			(14,252	)
Cash Flows from Financing Activities:
Repayment of long-term debt		—			(24,227	)		—			—			(24,227	)
Payment of debt issuance costs		—			(922	)		—			—			(922	)
Payment of employee tax withholding related to RSU vesting		—			(352	)		—			—			(352	)
Net cash used in financing activities		—			(25,501	)		—			—			(25,501	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(1,270	)		—			(1,270	)
Net decrease in cash, cash equivalents and restricted cash		—			(15,009	)		(3,471	)		—			(18,480	)
Cash, cash equivalents and restricted cash - beginning of period		—			114,286			18,144			—			132,430
Cash, cash equivalents and restricted cash - end of period	$	—		$	99,277		$	14,673		$	—		$	113,950

27

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

Six Months Ended June 30, 2020

(Unaudited)

	Verra Mobility Corporation (Ultimate Parent)		VM Consolidated Inc. (Guarantor Subsidiary)		Non- guarantor Subsidiaries		Eliminations		Consolidated
Supplemental cash flow information:
Interest paid	$	—	$	20,201	$	—	$	—	$	20,201
Income taxes paid, net		—		826		309		—		1,135
Supplemental non-cash investing and financing activities:
Earn-out shares issued to Platinum Stockholder		18,287		—		—		—		18,287
Additions to ARO, property and equipment, and other		—		41		—		—		41
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end		—		3,238		—		—		3,238

28

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read together with our Annual Report on Form 10-K for the year ended December 31, 2019 and our financial statements included in Part I, Item 1 “Financial Statements” of this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Part II, Item IA. “Risk Factors” in this Quarterly Report on Form 10-Q and those set forth in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019. Please also refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

Recent Events Affecting Our Operating Results

In December 2019, a novel coronavirus (“COVID-19”) emerged in China and has since spread throughout the world. The World Health Organization declared COVID-19 a pandemic in March 2020, and it continues to significantly disrupt the global economy. In the United States and abroad, many federal, state and local governments have instituted travel restrictions, stay-at-home orders, social distancing orders, and border closures in order to minimize the spread of the virus. We expect that COVID-19 will continue to have a significant negative impact on the global economy and travel industry, including rental car companies (“RACs”).

Revenues from RACs in our Commercial Services segment have decreased significantly in the first half of fiscal 2020 as a result of reduced airline travel and widespread travel restrictions related to COVID-19. Our RAC customers are experiencing increased rental cancellations and declining forward bookings, and many are actively reducing fleet sizes in response to the decline in customer demand. On May 22, 2020, The Hertz Corporation (“Hertz”), one of our key Commercial Services customers, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code, as amended, in the United States Bankruptcy Court for the District of Delaware. The full extent and duration of COVID-19’s impact on the RAC industry and the financial health of our key RAC customers cannot be predicted at this time. These trends have had, and are expected to continue to have, a significant negative effect on revenues in our Commercial Services segment.

In our Government Solutions segment, school closures resulting from the COVID-19 pandemic have negatively impacted revenues from our school bus stop arm camera and school zone speed camera products. More generally, reductions in vehicle traffic as a result of stay-at-home orders in jurisdictions where we operate photo enforcement programs, as well as temporary inactivity of school zone speed cameras and payment rates for photo enforcement tickets, have negatively impacted service revenue in our Government Solutions segment. We cannot predict the duration or full impact of COVID-19 on our overall business and results of operations at this time, but we expect the impact to continue into the third quarter of 2020.

As a precautionary measure taken in response to COVID-19, we shifted most of our workforce to remote operations in March 2020 and we have implemented changes in our physical locations to ensure social distancing. We have not experienced any significant disruptions in our operations as a result of these measures.

In light of the extraordinary impact of COVID-19 and related containment measures on the global economy and our business, prior trends in our business may not be applicable to our operations for the duration of the pandemic.

Business Overview

We believe we are a leading provider of smart mobility technology solutions and services throughout the United States, Canada and Europe. These solutions and services include toll and violations management, title and registration, automated safety solutions, and other data-driven solutions, to our customers, which include RACs, fleet management companies (“FMCs”), other large fleet owners, municipalities, school districts and violation-issuing authorities. Our solutions simplify the smart mobility ecosystem by utilizing what we believe are industry-leading capabilities, information and technology expertise, and integrated hardware and software to efficiently facilitate the automated processing of tolls and violations and safety solutions for hundreds of agencies and millions of end users annually, while also making cities and roadways safer for everyone.

29

Segment Information

We have two operating and reportable segments, Commercial Services and Government Solutions:

• Our Commercial Services segment offers toll and violation management solutions, title and registration services for RACs and FMCs in North America. In Europe, we provide violations processing through Euro Parking Collection plc (“EPC”) and consumer tolling services through Pagatelia S.L (“Pagatelia”).

• Our Government Solutions segment provides complete, end-to-end red-light, speed, school bus stop arm and bus lane enforcement solutions. We implement and administer traffic safety programs and products for municipalities and local government agencies of all sizes.

Segment performance is based on revenues and (loss) income from operations before depreciation, amortization, gain (loss) on disposal of assets, net, and stock-based compensation. The measure also excludes interest expense, net, income taxes and is inclusive of other income, net.

Executive Summary

We operate with long-term customer contracts and a highly reoccurring service revenue model. We continue to execute on our strategy of growing revenues with existing customers, expanding offerings into adjacent markets through innovation or acquisition and reducing operating costs. During the periods presented, we:

• Generated total revenue of $196.5 million and $208.0 million during the six months ended June 30, 2020 and 2019, respectively. We grew product sales by $27.3 million year over year; however, due to the impact of COVID-19, our service revenue declined significantly, as discussed below.

• Generated cash flows from operating activities of $22.5 million and $45.8 million for the six months ended June 30, 2020 and 2019, respectively. Our cash on hand was $113.2 million as of June 30, 2020.

• Reduced our financing costs by refinancing our term loan in February 2020, which reduced the applicable margin on our interest rate by 50 basis points. Our interest expense, net for the six months ended June 30, 2020 was $22.0 million, a $9.7 million decrease compared to $31.7 million in the same period in 2019.

Primary Components of Our Operating Results

Revenues

Total revenue consists of service revenue generated by our Commercial Services and Government Solutions segments and product sales generated by our Government Solutions segment.

Service Revenue.  Our Commercial Services segment generates service revenue primarily through the management and operation of tolling programs for RACs, FMCs and other large fleet customers. These solutions are full service offerings by which we enroll plates of our customers’ vehicles with tolling authorities, process payments on the customers’ behalf and, through proprietary technology, integrate with customer data to match the toll to the driver and then bill the driver (or our customer, as applicable) for use of the service. The cost of certain tolls, violations and our customers’ share of administration fees are netted against revenue. We also generate service revenue in our Commercial Services segment through processing titles, registrations and violations for our customers.

Our Government Solutions segment generates service revenue through the operation and maintenance of photo enforcement systems. This revenue is generally tied to long-term contracts, and revenue is recognized either when services are performed or when citations are issued or paid, depending on the terms of the customer contract. 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.

Product Sales.  Product sales are generated by the sale of photo enforcement equipment to certain Government Solutions customers. A small number of customers purchase this equipment, and their buying patterns vary greatly from period to period. We recognize product sales revenue when the equipment is accepted or installed.

30

Cost and Expenses

Cost of Service Revenue. Cost of service revenue consists of collection and other professional services provided by third parties and associated with the delivery of certain ancillary services performed by both our Government Solutions and Commercial Services segments.

Cost of Product Sales. Cost of product sales consists of the cost to acquire and install photo enforcement equipment purchased by Government Solutions customers.

Operating Expenses. Operating expenses include payroll and payroll-related costs (including stock-based compensation), costs related to the operation of our call centers and other operational costs, including transaction processing, print, postage and communication costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses include payroll and payroll-related costs (including stock-based compensation), real estate lease expense, insurance costs, professional services fees and general corporate expenses.

Depreciation, Amortization and (Gain) Loss on Disposal of Assets, Net. Depreciation, amortization and (gain) loss on disposal of assets, net includes depreciation on property, plant and equipment, and amortization of definite-lived intangible assets. This line item also includes any one-time gains or losses incurred in connection with the disposal of certain assets.

Interest Expense, Net. Interest expense, net includes interest expense and amortization of deferred financing costs and discounts and is net of interest income.

Loss from tax receivable agreement adjustment. This consists of adjustments made to the related party TRA liability due to changes in estimates.

Other Income, Net. Other income, net primarily consists of volume rebates from total spend on purchasing cards and gain or loss on foreign currency transactions.

31

Results of Operations

Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019

The following table sets forth our statements of operations data and expresses each item as a percentage of total revenue for the periods presented as well as the changes between periods. The tables and information provided were derived from exact numbers and may have immaterial rounding differences.

	Three Months Ended June 30,
							Percentage of Revenue						Increase (Decrease) 2020 vs 2019
($ in thousands)	2020			2019			2020			2019			$			%
Service revenue	$	62,815		$	103,057			78.7	%		94.1	%	$	(40,242	)		(39.0	)%
Product sales		16,994			6,518			21.3	%		5.9	%		10,476			160.7	%
Total revenue		79,809			109,575			100.0	%		100.0	%		(29,766	)		(27.2	)%
Cost of service revenue		1,013			1,613			1.3	%		1.5	%		(600	)		(37.2	)%
Cost of product sales		9,060			2,918			11.4	%		2.7	%		6,142			210.5	%
Operating expenses		26,699			31,795			33.4	%		29.0	%		(5,096	)		(16.0	)%
Selling, general and administrative expenses		20,821			20,865			26.1	%		19.0	%		(44	)		(0.2	)%
Depreciation, amortization and (gain) loss on disposal of assets, net		29,166			28,850			36.5	%		26.3	%		316			1.1	%
Impairment of property and equipment		—			5,898			—			5.4	%		(5,898	)		(100.0	)%
Total costs and expenses		86,759			91,939			108.7	%		83.9	%		(5,180	)		(5.6	)%
(Loss) income from operations		(6,950	)		17,636			(8.7	)%		16.1	%		(24,586	)		(139.4	)%
Interest expense, net		9,539			15,656			11.9	%		14.3	%		(6,117	)		(39.1	)%
Loss from tax receivable agreement adjustment		4,446			—			5.6	%		—			4,446		n/a
Other income, net		(1,523	)		(3,345	)		(1.9	)%		(3.1	)%		1,822			(54.5	)%
Total other expenses		12,462			12,311			15.6	%		11.2	%		151			1.2	%
(Loss) income before income tax (benefit) provision		(19,412	)		5,325			(24.3	)%		4.9	%		(24,737	)		(464.5	)%
Income tax (benefit) provision		(4,024	)		1,734			(5.0	)%		1.6	%		(5,758	)		(332.1	)%
Net (loss) income	$	(15,388	)	$	3,591			(19.3	)%		3.3	%	$	(18,979	)		(528.5	)%

Service Revenue.    Service revenue decreased by $40.2 million, or 39.0%, to $62.8 million for the three months ended June 30, 2020 from $103.0 million for the three months ended June 30, 2019, representing 78.7% and 94.1% of total revenue, respectively. The following table depicts service revenue by segment:

	Three Months Ended June 30,
					Percentage of Revenue						Increase (Decrease) 2020 vs 2019
($ in thousands)	2020		2019		2020			2019			$			%
Service revenue
Commercial Services	$	27,272	$	68,091		34.2	%		62.2	%	$	(40,819	)		(59.9	)%
Government Solutions		35,543		34,966		44.5	%		31.9	%		577			1.7	%
Total service revenue	$	62,815	$	103,057		78.7	%		94.1	%	$	(40,242	)		(39.0	)%

Commercial Services service revenue decreased by $40.8 million, or 60%, from $68.1 million for the three months ended June 30, 2019 to $27.3 million for the three months ended June 30, 2020. This decrease was primarily due to the COVID-19 pandemic and related containment measures, which continue to have a significant negative impact on the RAC industry. Reduced airline travel and widespread travel restrictions beginning in March 2020 have continued in the second quarter, resulting in rental cancellations and declining forward bookings. Our revenues from RAC customers are anticipated to decrease for the remainder of fiscal 2020 as a result of COVID-19, and the full extent and duration of this impact is not yet known.

Government Solutions service revenue includes revenue from red-light, speed, school bus stop arm and bus lane photo enforcement systems. Service revenue increased by $0.6 million to $35.5 million for the three months ended June 30, 2020

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from $34.9 million for the three months ended June 30, 2019. The increase is primarily due to a $4.8 million increase in speed program revenue during the three months ended June 30, 2020 compared to the same period in 2019, resulting from the increase in the total number of camera systems installed. The increase in total installed cameras was partially offset by temporarily inactive school-zone speed cameras due to COVID-19. Our red-light photo enforcement service revenue declined $2.8 million during the three months ended June 30, 2020 compared to the same period in 2019 which was primarily due to a $1.3 million decline from the loss of certain Texas programs and the remaining from the impact of COVID-19. We also had a $1.6 million service revenue decline from the suspension of school bus stop arm cameras as school buses were not operating. Service revenue overall for the quarter was negatively impacted by COVID-19 which led to reduction in vehicle traffic as a result of widespread stay-at-home orders and early school closures. To the extent that stay-at-home orders and school closures continue, we anticipate a negative impact in future quarters from COVID-19.

There were an average of 3,293 active camera systems during the three months ended June 30, 2020 compared to an average of 4,636 for the three months ended June 30, 2019. The decline in active camera systems was primarily due to 1,920 cameras that were temporarily inactive due to COVID-19, and the loss of Texas programs noted above. These declines were partially offset by the expansion of speed enforcement systems with existing customers.

Product Sales.    Product sales of $17.0 million for the three months ended June 30, 2020 include revenue generated from Government Solutions customers who purchased their equipment. Product sales increased by $10.5 million compared to $6.5 million for the same period in 2019 which was primarily driven by sales to a single customer that is currently expanding its existing school zone speed program.

Cost of Service Revenue.    Cost of service revenue decreased from $1.6 million for the three months ended June 30, 2019 to $1.0 million for the three months ended June 30, 2020. The decrease resulted from decreased costs of collection and other third-party professional services and associated with the delivery of certain ancillary services performed by both of our segments.

Cost of Product Sales.    Cost of product sales increased by $6.1 million from $2.9 million in the three months ended June 30, 2019 to $9.0 million in the same period in 2020, and was consistent with the increase in product sales.

Operating Expenses.    Operating expenses decreased by $5.1 million, or 16.0%, from $31.8 million for the three months ended June 30, 2019 to $26.7 million for the three months ended June 30, 2020. The decrease was primarily attributable to lower employee wage expense due to furloughs and reduced hours, transaction processing and related costs in our Commercial Services segment as a result of COVID-19. Operating expenses as a percentage of total revenue increased from 29.0% to 33.4% for the three months ended June 30, 2019 and 2020, respectively. The following table presents operating expenses by segment:

	Three Months Ended June 30,
					Percentage of Revenue						Increase (Decrease) 2020 vs 2019
($ in thousands)	2020		2019		2020			2019			$			%
Operating expenses
Commercial Services	$	10,750	$	16,722		13.5	%		15.3	%	$	(5,972	)		(35.7	)%
Government Solutions		15,655		14,801		19.6	%		13.5	%		854			5.8	%
Total operating expenses before stock-based compensation		26,405		31,523		33.1	%		28.8	%		(5,118	)		(16.2	)%
Stock-based compensation		294		272		0.3	%		0.2	%		22			8.1	%
Total operating expenses	$	26,699	$	31,795		33.4	%		29.0	%	$	(5,096	)		(16.0	)%

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Selling, General and Administrative Expenses.    Selling, general and administrative expenses remained consistent at $20.8 million for the three months ended June 30, 2020 compared to $20.9 million for the same period in 2019. The current quarter includes a $5.4 million credit loss expense related to the CECL standard, which is further discussed in the notes to the condensed consolidated financial statements. The credit loss expense increased $3.9 million compared to the 2019 period, and is partially offset by an aggregate $2.7 million decrease in costs related to the bonus expense as a result of eliminating the bonus accrual, marketing and non-essential travel. Selling, general and administrative expenses as a percentage of total revenue increased from 19.0% to 26.1 % for the three months ended June 30, 2019 and 2020, respectively. The following table presents selling, general and administrative expenses by segment:

	Three Months Ended June 30,
					Percentage of Revenue						Increase (Decrease) 2020 vs 2019
($ in thousands)	2020		2019		2020			2019			$			%
Selling, general and administrative expenses
Commercial Services	$	10,191	$	9,629		12.8	%		8.8	%	$	562			5.8	%
Government Solutions		7,150		7,561		9.0	%		6.9	%		(411	)		(5.4	)%
Corporate and other		503		1,135		0.6	%		1.0	%		(632	)		(55.7	)%
Total selling, general and administrative expenses before stock-based compensation		17,844		18,325		22.4	%		16.7	%		(481	)		(2.6	)%
Stock-based compensation		2,977		2,540		3.7	%		2.3	%		437			17.2	%
Total selling, general and administrative expenses	$	20,821	$	20,865		26.1	%		19.0	%	$	(44	)		(0.2	)%

Depreciation, Amortization and Gain or Loss on Disposal of Assets, Net.    Depreciation, amortization and gain or loss on disposal of assets, net, increased slightly from $28.9 million for the three months ended June 30, 2019 to $29.2 million for the same period in 2020. The increase is primarily due to the increased amortization expense resulting from the Pagatelia acquisition included in the three months ended June 30, 2020 with no comparable amount in the prior year.

Impairment of Property and Equipment.  Impairment of property and equipment for the three months ended June 30, 2019 includes a $5.9 million impairment charge as a result of legislation that banned most red-light photo enforcement programs in Texas on June 1, 2019, which was in the Government Solutions segment.

Interest Expense, Net.    Interest expense, net decreased by $6.1 million from $15.6 million for the three months ended June 30, 2019 to $9.5 million for the same period in 2020. This decrease is primarily as a result of lower interest rates coupled with the refinancing of our First Lien Term Loan (as defined and discussed below) in February 2020, which reduced the applicable margin on the interest rate by 50 basis points. See “Liquidity and Capital Resources.”

Loss from Tax Receivable Agreement Adjustment. We recorded a $4.4 million charge to Loss from tax receivable agreement adjustment for the three months ended June 30, 2020. The adjustment reflects the impact of an increase to the Company’s deferred tax rate arising from higher estimated state tax rates due to a change in apportionment.

Other Income, Net.    We pay a high volume of tolls on behalf of our customers with purchasing cards which generate rebates based on volume, payment terms and rebate frequency. Other income, net was $1.5 million for the three months ended June 30, 2020, compared to $3.3 million for the three months ended June 30, 2019. The decrease of $1.8 million was primarily due to the decreased volume in purchasing card rebates as a result of COVID-19 impacting toll usage. We anticipate lower rebates for the remainder of 2020.

Income Tax (Benefit) Provision.    Income tax benefit was $(4.0) million representing an effective tax benefit of (20.7)% for the three months ended June 30, 2020 compared to a tax provision of $1.7 million, representing an effective tax rate of 32.6 % for the same period in 2019. The effective tax rate change was primarily due to lower pre-tax income in the current period, resulting in the Company’s permanent book and tax differences having a proportionately greater impact on the effective tax rate in the current period.

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Net (Loss) Income.    We had a net loss of $(15.4) million for the three months ended June 30, 2020, as compared to net income of $3.6 million for the three months ended June 30, 2019. The $19.0 million change in net (loss) income was primarily due to the decline in revenue related to the impact of COVID-19 on our RAC customers, credit loss expense related to the CECL standard, loss from tax receivable agreement adjustment, and increased cost related to product sales. These decreases to income were partially offset by growth in product sales revenue, decrease in interest expense, net from lower interest rates and refinancing of our First Lien Term Loan in February 2020, and due to the impairment on property and equipment in the prior year for which there is no comparable amount in the current period.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

The following table sets forth our statements of operations data and expresses each item as a percentage of total revenue for the periods presented as well as the changes between periods. The tables and information provided were derived from exact numbers and may have immaterial rounding differences.

	Six Months Ended June 30,
							Percentage of Revenue						Increase (Decrease) 2020 vs 2019
($ in thousands)	2020			2019			2020			2019			$			%
Service revenue	$	162,312		$	201,127			82.6	%		96.7	%	$	(38,815	)		(19.3	)%
Product sales		34,210			6,909			17.4	%		3.3	%		27,301			395.2	%
Total revenue		196,522			208,036			100.0	%		100.0	%		(11,514	)		(5.5	)%
Cost of service revenue		2,232			3,002			1.1	%		1.4	%		(770	)		(25.6	)%
Cost of product sales		17,750			3,194			9.1	%		1.6	%		14,556			455.7	%
Operating expenses		58,958			61,133			30.0	%		29.4	%		(2,175	)		(3.6	)%
Selling, general and administrative expenses		46,707			41,416			23.8	%		19.9	%		5,291			12.8	%
Depreciation, amortization and (gain) loss on disposal of assets, net		58,412			57,791			29.7	%		27.8	%		621			1.1	%
Impairment of property and equipment		—			5,898			—			2.8	%		(5,898	)		(100.0	)%
Total costs and expenses		184,059			172,434			93.7	%		82.9	%		11,625			6.7	%
Income from operations		12,463			35,602			6.3	%		17.1	%		(23,139	)		(65.0	)%
Interest expense, net		21,990			31,689			11.2	%		15.2	%		(9,699	)		(30.6	)%
Loss from tax receivable agreement adjustment		4,446			—			2.2	%		—			4,446		n/a
Other income, net		(4,448	)		(5,552	)		(2.3	)%		(2.6	)%		1,104			(19.9	)%
Total other expenses		21,988			26,137			11.1	%		12.6	%		(4,149	)		(15.9	)%
(Loss) income before income tax (benefit) provision		(9,525	)		9,465			(4.8	)%		4.5	%		(18,990	)		(200.6	)%
Income tax (benefit) provision		(810	)		3,054			(0.4	)%		1.4	%		(3,864	)		(126.5	)%
Net (loss) income	$	(8,715	)	$	6,411			(4.4	)%		3.1	%	$	(15,126	)		(235.9	)%

Service Revenue.    Service revenue decreased by $38.8 million, or 19.3%, to $162.3 million for the six months ended June 30, 2020 from $201.1 million for the six months ended June 30, 2019, representing 82.6% and 96.7% of total revenue, respectively. The following table depicts service revenue by segment:

	Six Months Ended June 30,
					Percentage of Revenue						Increase (Decrease) 2020 vs 2019
($ in thousands)	2020		2019		2020			2019			$			%
Service revenue
Commercial Services	$	88,514	$	130,679		45.0	%		62.8	%	$	(42,165	)		(32.3	)%
Government Solutions		73,798		70,448		37.6	%		33.9	%		3,350			4.8	%
Total service revenue	$	162,312	$	201,127		82.6	%		96.7	%	$	(38,815	)		(19.3	)%

Commercial Services service revenue decreased by $42.2 million, or 32.3%, from $130.7 million for the six months ended June 30, 2019 to $88.5 million for the six months ended June 30, 2020. This decrease was primarily due to the COVID-19 pandemic and related containment measures, which continue to have a significant negative impact on the RAC industry beginning in March 2020. Reduced airline travel and widespread travel restrictions have continued and resulted in

35

rental cancellations and declining forward bookings. We expect revenues from RAC customers to decrease in fiscal 2020 as a result of COVID-19, and the full extent and duration of its impact is not yet known.

Government Solutions service revenue includes revenue from red-light, speed, school bus stop arm and bus lane photo enforcement systems. Service revenue increased by $3.4 million to $73.8 million for the six months ended June 30, 2020 from $70.4 million for the six months ended June 30, 2019. Our red-light photo enforcement service revenue declined $5.5 million during the six months ended June 30, 2020 compared to the same period in 2019. This was primarily due to a $3.2 million decline from the loss of certain Texas programs on June 1, 2019 due to a legislative change that banned most red-light photo enforcement programs in the state. The decline was also attributed to the impact from COVID-19 discussed below and the loss of several smaller programs and lower pricing per system. We discontinued our street light maintenance offering at the end of the first quarter of 2019, which resulted in a $0.8 million decrease for the six months ended June 30, 2020 compared to the same period in 2019. The street light maintenance offering was not part of our core business and did not meet our profitability criteria. We also had a $1.6 million service revenue decline from the suspension of school bus stop arm cameras as school buses were not operating. These declines were offset by speed program revenue, which grew approximately $10.7 million in the six months ended June 30, 2020, compared to the same period in 2019, due to an increase in the total number of camera systems installed.

There were an average of 4,147 active camera systems during the six months ended June 30, 2020 compared to an average of 4,620 for the six months ended June 30, 2019. The decline in active camera systems was primarily due to 960 cameras that are temporarily inactive due to COVID-19, and the loss of Texas programs noted above. These declines were partially offset by the expansion of speed enforcement systems with existing customers.

Service revenue for the year was negatively impacted from COVID-19 beginning in March which led to reduction in vehicle traffic as a result of stay-at-home orders and early school closures in certain jurisdictions in which we operate. To the extent that stay-at-home orders and school closures continue, we anticipate a negative impact in future quarters from COVID-19.

Product Sales.    Product sales were $34.2 million for the six months ended June 30, 2020 which relate to revenue generated from Government Solutions customers who purchased their equipment. Product sales increased by $27.3 million compared to $6.9 million in 2019 which was primarily driven by sales to a single customer that is currently expanding its existing school zone speed program.

Cost of Service Revenue.    Cost of service revenue decreased year over year, from $3.0 million for the six months ended June 30, 2019 to $2.2 million for the six months ended June 30, 2020. The decrease resulted from decreased costs of collection and other third-party professional services and associated with the delivery of certain ancillary services performed by both of our segments.

Cost of Product Sales.    Cost of product sales increased by $14.6 million from $3.2 million in the six months ended June 30, 2019 to $17.8 million in the same period in 2020, and was consistent with the increase in product sales.

Operating Expenses.    Operating expenses decreased by $2.2 million, or 3.6%, from $61.1 million for the six months ended June 30, 2019 to $58.9 million for the six months ended June 30, 2020. This decrease was primarily due to decreases in employee wages, transaction processing and related costs, which were partially offset by increases in subcontractor expenses and operational equipment costs. Operating expenses as a percentage of revenue increased from 29.4% to 30% for the six months ended June 30, 2019 and 2020, respectively. The following table presents operating expenses by segment:

	Six Months Ended June 30,
					Percentage of Revenue						Increase (Decrease) 2020 vs 2019
($ in thousands)	2020		2019		2020			2019			$			%
Operating expenses
Commercial Services	$	27,280	$	31,818		13.9	%		15.3	%	$	(4,538	)		(14.3	)%
Government Solutions		31,164		28,839		15.8	%		13.9	%		2,325			8.1	%
Total operating expenses before stock-based compensation		58,444		60,657		29.7	%		29.2	%		(2,213	)		(3.6	)%
Stock-based compensation		514		476		0.3	%		0.2	%		38			8.0	%
Total operating expenses	$	58,958	$	61,133		30.0	%		29.4	%	$	(2,175	)		(3.6	)%

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Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased by $5.3 million to $46.7 million for the six months ended June 30, 2020 compared to $41.4 million for the same period in 2019. We recorded a $10.7 million credit loss expense during the year as a result of the new CECL accounting standard, discussed further in the notes to the condensed consolidated financial statements. This contributed $8.0 million to the increase, in addition to a $1.0 million increase in stock-based compensation expense. These increases were partially offset by an aggregate $3.6 million decrease in costs related to the bonus expense as a result of eliminating the bonus accrual, marketing and non-essential travel. Selling, general and administrative expenses as a percentage of revenue increased from 19.9% to 23.8% for the six months ended June 30, 2019 and 2020, respectively. The following table presents selling, general and administrative expenses by segment:

	Six Months Ended June 30,
					Percentage of Revenue						Increase (Decrease) 2020 vs 2019
($ in thousands)	2020		2019		2020			2019			$			%
Selling, general and administrative expenses
Commercial Services	$	23,575	$	20,391		12.0	%		9.8	%	$	3,184			15.6	%
Government Solutions		16,819		15,411		8.6	%		7.4	%		1,408			9.1	%
Corporate and other		788		1,135		0.4	%		0.5	%		(347	)		(30.6	)%
Total selling, general and administrative expenses before stock-based compensation		41,182		36,937		21.0	%		17.7	%		4,245			11.5	%
Stock-based compensation		5,525		4,479		2.8	%		2.2	%		1,046			23.4	%
Total selling, general and administrative expenses	$	46,707	$	41,416		23.8	%		19.9	%	$	5,291			12.8	%

Depreciation, Amortization and Gain or Loss on Disposal of Assets, Net.    Depreciation, amortization and gain or loss on disposal of assets, net, increased from $57.8 million for the six months ended June 30, 2019 to $58.4 million for the same period in 2020. The increase is primarily due to the increased amortization expense resulting from the Pagatelia acquisition included in the six months ended June 30, 2020 with no comparable amount in the prior year.

Impairment of Property and Equipment.  Impairment of property and equipment for the six months ended June 30, 2019 includes a $5.9 million impairment charge as a result of legislation that banned most red-light photo enforcement programs in Texas on June 1, 2019, which was in the Government Solutions segment.

Interest Expense, Net.    Interest expense, net decreased by $9.7 million from $31.7 million for the six months ended June 30, 2019 to $22.0 million for the same period in 2020. This decrease is primarily as a result of lower interest rates coupled with the refinancing of our First Lien Term Loan (as defined and discussed below) in February 2020, which reduced the applicable margin on the interest rate by 50 basis points. See “Liquidity and Capital Resources” below.

Loss from Tax Receivable Agreement Adjustment. We recorded a $4.4 million charge to Loss from tax receivable agreement adjustment for the six months ended June 30, 2020. The adjustment reflects the impact of an increase to the Company’s deferred tax rate arising from higher estimated state tax rates due to a change in apportionment.

Other Income, Net.    We pay a high volume of tolls on behalf of our customers with purchasing cards which generate rebates based on volume, payment terms and rebate frequency. Other income, net was $4.4 million for the six months ended June 30, 2020, compared to $5.5 million for the six months ended June 30, 2019. This decrease of $1.1 million was primarily due to the decreased volume in purchasing card rebates from the decline in tolling activity beginning in March, as a result of COVID-19 impacting the rental car industry. We anticipate lower rebates for the remainder of 2020.

Income Tax (Benefit) Provision.    Income tax benefit was $(0.8) million representing an effective tax rate of (8.5) % for the six months ended June 30, 2020 compared to a tax provision of $3.1 million, representing an effective tax rate of 32.3 % for the same period in 2019. The effective tax rate change was primarily due to lower pre-tax income in the current year, resulting in the Company’s permanent book and tax differences having a proportionately greater impact on the effective tax rate in the current year.

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Net (Loss) Income.    We had a net loss of $(8.7) million for the six months ended June 30, 2020, as compared to net income of $6.4 million for the six months ended June 30, 2019. The change in net (loss) income was primarily due to the decline in revenue related to the impact of COVID-19 on RAC customers, credit loss expense related to the CECL standard, loss from tax receivable agreement adjustment, and increased cost related to product sales. These decreases to income were partially offset by growth in product sales revenue, decrease in interest expense, net from lower interest rates and refinancing of our First Lien Term Loan in February 2020, and due to the impairment on property and equipment in the prior year for which there is no comparable amount in the current year.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flow from operations and borrowings under our 2018 Credit Facilities (as defined below).

We have incurred significant long-term debt as a result of acquisitions completed in prior years.

We believe that our existing cash and cash equivalents, cash flows provided by operating activities and our availability to borrow under our Revolver (as defined below) will be sufficient to meet operating cash requirements and service debt obligations for at least the next 12 months. 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. 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 Revolver, or equity financings, all of which may not be available to us on favorable terms or at all. See section entitled “Risk Factors.”

We have the ability to borrow under our Revolver to meet obligations as they come due. As of June 30, 2020, we had $68.7 million available for borrowing, net of letters of credit, under our Revolver.

The following table sets forth certain captions indicated on our statements of cash flows for the periods indicated:

	Six Months Ended June 30,
($ in thousands)	2020			2019
Net cash provided by operating activities	$	22,543		$	45,781
Net cash used in investing activities		(14,252	)		(14,178	)
Net cash used in financing activities		(25,501	)		(4,704	)

Cash Flows from Operating Activities

Cash provided by operating activities decreased by $23.3 million, from $45.8 million for the six months ended June 30, 2019 to $22.5 million for the six months ended June 30, 2020. Net income year over year decreased by $15.1 million, from $6.4 million in 2019 to a net loss of $(8.7) million in 2020. The aggregate adjustments to net (loss) income increased $15.7 million mainly due to a $10.7 million credit loss expense related to the CECL accounting standard and the $4.4 million loss from tax receivable agreement adjustment. This was offset by an aggregate $23.8 million decrease in changes in operating assets and liabilities, which was driven primarily by an increase in accounts receivables due to collection delays on the accounts receivable associated with our fixed speed and bus lane camera product sales, combined with a decrease in accounts payable and accrued liabilities due to the payout of the 2019 bonus accrual with no accrual for fiscal 2020 and vendor payments for the fixed speed and bus lane cameras sold to a large Government Solutions customer.

Cash Flows from Investing Activities

Cash used in investing activities was $14.3 million and $14.2 million for the six months ended June 30, 2020 and 2019, respectively, which was related to purchases of installation and service parts and property and equipment.

Cash Flows from Financing Activities

Cash used in financing activities was $25.5 million and $4.7 million for the six months ended June 30, 2020 and 2019, respectively. The cash used in financing activities in 2020 increased as a result of a $19.7 million mandatory prepayment of excess cash flows we made pursuant to the terms of the First Lien Term Loan (as defined below), and costs associated with refinancing the First Lien Term Loan in February 2020.

38

Debt

In connection with an acquisition in 2018, VM Consolidated, Inc., a wholly-owned subsidiary, entered into a First Lien Term Loan Credit Agreement (the “First Lien Term Loan”), a Second Lien Term Loan Credit Agreement (the “Second Lien Term Loan,” and together with the First Lien Term Loan, the “Term Loans”) and a Revolving Credit Facility Agreement (the “Revolver,” and together with the Term Loans, the “2018 Credit Facilities”) with a syndicate of lenders. The 2018 Credit Facilities initially provided for committed senior secured financing of $1.115 billion, consisting of an aggregate principal amount of $1.04 billion under the Term Loans and an aggregate revolving commitment of up to $75 million available for loans and letters of credit under the Revolver (subject to borrowing eligibility requirements as described below). In July 2018, we amended the First Lien Term Loan to expand the aggregate principal loan amount from $840 million to $910 million. The additional $70 million, along with funds contributed by Platinum Equity, LLC, were used to repay the $200 million Second Lien Term Loan in full contemporaneously with the closing of the Business Combination (see Note 1, Description of Business) on October 17, 2018.

On February 20, 2020, we refinanced the entire outstanding amount under the First Lien Term Loan, which reduced the previous applicable interest rate by 50 basis points. The First Lien Term Loan now bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.25% per annum, or (2) an alternate base rate plus an applicable margin of 2.25% per annum. The First Lien Term Loan is repayable at 1.0% per annum of the amount initially borrowed, paid in quarterly installments. The First Lien Term Loan matures on February 28, 2025. As of June 30, 2020, the interest rate on the First Lien Term Loan was 3.6%.

In addition, the First Lien Term Loan requires mandatory prepayments equal to the product of the excess cash flows of the Company (as defined in the loan agreement) and the applicable prepayment percentages (calculated as of the last day of the fiscal year, beginning with the year ending December 31, 2019), as set forth in the following table:

Consolidated first lien net leverage ratio (as defined by the First Lien Term Loan agreement)	Applicable prepayment percentage
> 3.70:1.00	50%
< 3.70:1.00 and > 3.20:1.00	25%
< 3.20:1.00	0%

We made a $19.7 million mandatory prepayment of excess cash flow during the first quarter of fiscal 2020, which was classified as current portion of long-term debt in the condensed consolidated balance sheet at December 31, 2019.

The Revolver matures on February 28, 2023. The terms of the Revolver were not affected by the refinancing of the First Lien Term Loan discussed above. Borrowing eligibility under the Revolver is subject to a monthly borrowing base calculation based on (i) certain percentages of eligible accounts receivable and inventory, less (ii) certain reserve items, including outstanding letters of credit and other reserves. The Revolver bears interest on either (1) LIBOR plus an applicable margin, or (2) an alternate base rate, plus an applicable margin. The margin percentage applied to (1) LIBOR is either 1.25%, 1.50%, or 1.75%, or (2) the base rate is either 0.25%, 0.50%, or 0.75%, depending on our average availability to borrow under the commitment. At June 30, 2020, we had no outstanding borrowings on the Revolver and availability to borrow under the Revolver was $68.7 million, net of $6.3 million of outstanding letters of credit.

Interest on the unused portion of the Revolver is payable quarterly at 0.375%, and we are also required to pay participation and fronting fees at 1.38% on $6.3 million in outstanding letters of credit as of June 30, 2020.

All borrowings and other extensions of credits under the 2018 Credit Facilities are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. At June 30, 2020, we were compliant with the 2018 Credit Facilities covenants. Substantially all of our assets are pledged as collateral to secure the Company’s indebtedness under the 2018 Credit Facilities.  

We recorded interest expense, including amortization of deferred financing costs and discounts, of $9.5 million and $15.7 million for the three months ended June 30, 2020 and June 30, 2019, respectively, and $22.0 million and $31.7 million for the six months ended June 30, 2020 and 2019, respectively.

In connection with the refinancing of the First Lien Term Loan in February 2020, which we determined was to be accounted for as a modification, we incurred $0.8 million of lender fees which were capitalized as deferred financing costs and

39

amortized over the remaining life of the First Lien Term Loan, and $0.2 million of legal fees that were expensed as Selling, general and administrative expenses on the condensed consolidated statement of operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as of June 30, 2020.

Critical Accounting Policies, Estimates and Judgments

The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Significant items subject to such estimates and assumptions include the fair values assigned to net assets acquired (including identifiable intangibles) in business combinations, the carrying amounts of long-lived assets, goodwill and installation and service parts, the allowance for credit loss, valuation allowances on deferred tax assets, asset retirement obligations, contingent consideration and the recognition and measurement of loss contingencies. Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.

Refer to our 2019 Annual Report on Form 10-K for our critical accounting policies, estimates and judgments.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, refer to Note 2, Significant Accounting Policies, in Item 1, Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to interest rate market risk due to the variable interest rate on the First Lien Term Loan described in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”

Interest rate risk represents our exposure to fluctuations in interest rates associated with the variable rate debt represented by the First Lien Term Loan, which has an outstanding balance of $870.2 million at June 30, 2020. We refinanced the First Lien Term Loan on February 20, 2020 which reduced the previous applicable margin by 50 basis points. The First Lien Term Loan now bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.25% per annum, or (2) an alternate base rate plus an applicable margin of 2.25% per annum. At June 30, 2020, the interest rate on the First Lien Term Loan was 3.6%. Based on the June 30, 2020 balance outstanding, each 1% movement in interest rates will result in an approximately $8.7 million change in annual interest expense.

We have not engaged in any hedging activities during the six months ended June 30, 2020. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

40

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. Our Chief Executive Officer and Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of June 30, 2020 and, based on their evaluation, have concluded the controls and procedures were not effective as of that date due to a material weakness in internal control over financial reporting that was disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Remediation

As previously described in Part II, Item 9A. “Controls and Procedures” in our Annual Report on Form 10-K for the year ended December 31, 2019, we began implementing a remediation plan to address the material weakness mentioned above. The weakness will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of our 2020 fiscal year.

41

Part II—Other Information

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Risks Related to Our Business

Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 includes a discussion of our risk factors. The information presented below supplements, and should be read in conjunction with, the risk factors and information disclosed in our Annual Report on Form 10-K. Except as presented below, there have been no material changes from the risk factors described in our Annual Report on Form 10-K. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future SEC filings.

Our business and results of operations may be adversely affected by the recent COVID-19 pandemic.

On March 11, 2020, the World Health Organization designated COVID-19 a pandemic. In the United States and abroad, many federal, state and local governments have instituted travel restrictions, stay-at-home orders, social distancing orders, and border closures in order to minimize the spread of the virus. COVID-19 has caused severe disruption to the global economy.

As a result of these restrictions, we have shifted most of our workforce to remote operations and have implemented changes in our physical locations to ensure social distancing. While we have not experienced any significant disruptions in our operations to date, these measures may result in decreases in productivity, an increased risk of information security breaches and delays in responses to our customers, which could harm customer relations and adversely impact our business. COVID-19 may also cause us to temporarily suspend or ultimately forego strategic acquisitions, business initiatives or expansions into new markets. Also, our existing customers may seek to terminate or renegotiate their contracts with us or seek pricing concessions as a result of changes in their business needs or financial condition. In addition, certain of our customers have reduced their operations during the pandemic, and government restrictions could further restrict our operations or result in supply chain interruptions. The measures implemented to contain COVID-19 have had, and we expect will continue to have, a significant negative effect on our business, financial condition, results of operations, cash flows and liquidity position, both in the near term and on a year-over-year basis.

The COVID-19 pandemic has adversely affected our revenues from key customers in the rental car industry, on which our Commercial Services segment is dependent, and from photo enforcement programs in our Government Solutions segment.

Our Commercial Services segment is dependent on certain key customers, including those in the RAC industry, such as Hertz, Avis Budget Group, Inc. and Enterprise Holdings, Inc. COVID-19 continues to have a significant negative impact on the RAC industry. Reduced airline travel and widespread travel restrictions have resulted in declining customer demand and many RACs have responded by reducing fleet sizes. In addition, in May 2020, Hertz, one of our key Commercial Services customers, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code, as amended, in the United States Bankruptcy Court for the District of Delaware. The full extent and duration of COVID-19’s impact on the RAC industry and the financial health of our key RAC customers cannot be predicted at this time. However, we expect that if our RAC customers continue to experience adversity in their businesses or file for bankruptcy, they may delay or default on their payment commitments to us or request to modify or renegotiate pre-existing contractual commitments on terms that are less favorable to us, any of which could have a material adverse effect on our business, financial condition and results of operations.

In our Government Solutions segment, school closures and reductions in vehicle traffic resulting from COVID-19 and the related containment measures have negatively impacted revenues. The COVID-19 pandemic is a highly fluid and rapidly evolving situation, and we cannot anticipate with any certainty the length, scope or severity of such impacts in the jurisdictions in which we operate. Moreover, any additional measures or changes in laws or regulations, whether in the United States or abroad, that further impair the ability or desire of individuals to gather or travel due to the risk of the spreading of COVID-19, including laws or regulations banning travel or requiring the closure of schools, may exacerbate the negative impact of the COVID-19 pandemic on our Government Solutions segment.

42

The full extent and duration of COVID-19’s impact on customers in our Commercial Services and Government Solutions segments, or the ways that COVID-19 may fundamentally alter the travel industry remains to be seen, and this ongoing impact could result in a material adverse impact on our business, financial condition, results of operations and cash flows, potentially for a prolonged period.

Historical data regarding our business, results of operations, financial condition and liquidity may not reflect the impact of the COVID-19 pandemic and related containment measures and therefore does not purport to be representative of our future performance.

The information included in this Quarterly Report on Form 10-Q and our other reports filed with the SEC includes information regarding our business, properties, results of operations, financial condition and liquidity as of dates and for periods before the impact of COVID-19 and related containment measures (including quarantines and governmental orders requiring the closure of certain businesses, limiting travel, requiring that individuals stay at home or shelter in place and closing borders). This historical information therefore may not reflect the adverse impacts of COVID-19 and the related containment measures. Accordingly, investors are cautioned not to unduly rely on historical information regarding our business, results of operations, financial condition or liquidity, as that data does not reflect the adverse impact of COVID-19 and therefore does not purport to be representative of the future results of operations, financial condition, liquidity or other financial or operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

Exhibit Index

		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
2.1	Merger Agreement, dated as of June 21, 2018, by and among Gores Holdings II, Inc., AM Merger Sub I, Inc., AM Merger Sub II, LLC, Greenlight Holding II Corporation and PE Greenlight Holdings, LLC, in its capacity as the Stockholder Representative.	8-K	001-37979	2.1	June 21, 2018
2.2	Amendment No. 1 to Agreement and Plan of Merger, dated as of August 23, 2018, by and among Gores Holdings II, Inc., AM Merger Sub I, Inc., AM Merger Sub II, LLC, Greenlight Holding II Corporation and PE Greenlight Holdings, LLC, in its capacity as the Stockholder Representative.	8-K	001-37979	2.2	Aug. 24, 2018
3.1	Second Amended and Restated Certificate of Incorporation of Verra Mobility Corporation.	8-K	001-37979	3.1	Oct. 22, 2018
3.2	Amended and Restated Bylaws of Verra Mobility Corporation.	8-K	001-37979	3.2	Oct. 22, 2018
4.1	Specimen Class A Common Stock Certificate.	S-1	333-21503	4.2	Dec. 9, 2016
4.2	Specimen Warrant Certificate.	S-1	333-21503	4.3	Dec. 9, 2016
4.3	Warrant Agreement, dated January 12, 2017, between the Registrant and Continental Stock Transfer & Trust Company, as warrant agent.	8-K	001-37979	4.1	Jan. 19, 2017
4.4	First Amendment to Warrant Agreement, dated January 15, 2020, by and among the Registrant, Continental Stock Transfer & Trust Company and American Stock Transfer & Trust Company.	10-K	001-37979	4.4	March 2, 2020
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a‑14(a) and 15d‑14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
101.INS	Inline XBRL Instance Document (the instance does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).					X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.					X

44

		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed Herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.					X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.					X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.					X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.					X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)					X
*   This certification is deemed not filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

45

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VERRA MOBILITY CORPORATION
Date: August 6, 2020	By:	/s/ David Roberts
		David Roberts
		President and Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Patricia Chiodo
		Patricia Chiodo
		Chief Financial Officer (Principal Financial and Accounting Officer)

46

EX-31.1

Exhibit 31.1

Certification of Principal Executive Officer

Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a)

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David Roberts, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Verra Mobility Corporation;

2. Based on my knowledge, this Quarterly Report on Form 10-Q does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report on Form 10-Q;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report on Form 10-Q our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q based on such evaluation; and

d) Disclosed in this Quarterly Report on Form 10-Q any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 6, 2020	By:	/s/ David Roberts
		David Roberts
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Principal Financial Officer

Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a)

as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Patricia Chiodo, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Verra Mobility Corporation;

2. Based on my knowledge, this Quarterly Report on Form 10-Q does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report on Form 10-Q;

3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Quarterly Report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report on Form 10-Q is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Quarterly Report on Form 10-Q our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 6, 2020	By:	/s/ Patricia Chiodo
		Patricia Chiodo
		Chief Financial Officer

EX-32.1

Exhibit 32.1

VERRA MOBILITY CORPORATION

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the periodic report of Verra Mobility Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission (the “Report”), I, David Roberts, President and Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Dated: August 6, 2020	By:	/s/ David Roberts
		David Roberts
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

VERRA MOBILITY CORPORATION

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the periodic report of Verra Mobility Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission (the “Report”), I, Patricia Chiodo, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Dated: August 6, 2020	By:	/s/ Patricia Chiodo
		Patricia Chiodo
		Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Jul. 31, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Registrant Name	VERRA MOBILITY CORPORATION
Entity Central Index Key	0001682745
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		161,736,615
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Title of 12(b) Security	Class A Common Stock, par value $0.0001 per share
Trading Symbol	VRRM
Security Exchange Name	NASDAQ
Entity File Number	001-37979
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-3563824
Entity Address, Address Line One	1150 North Alma School Road
Entity Address, City or Town	Mesa
Entity Address, State or Province	AZ
Entity Address, Postal Zip Code	85201
City Area Code	480
Local Phone Number	443-7000
Document Quarterly Report	true
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XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 113,239	$ 131,513
Restricted cash	711	917
Accounts receivable (net of allowance for credit loss of $12.9 million at June 30, 2020)	125,252	93,514
Unbilled receivables	12,532	20,003
Prepaid expenses and other current assets	18,964	26,491
Total current assets	270,698	272,438
Installation and service parts, net	8,672	8,841
Property and equipment, net	73,604	72,266
Operating lease assets	30,933	32,177
Intangible assets, net	386,363	434,443
Goodwill	581,615	584,150
Other non-current assets	3,237	3,111
Total assets	1,355,122	1,407,426
Current liabilities:
Accounts payable	36,346	50,825
Accrued liabilities	19,570	25,277
Current portion of long-term debt	9,104	28,779
Total current liabilities	65,020	104,881
Long-term debt, net of current portion and deferred financing costs	834,317	837,686
Operating lease liabilities, net of current portion	29,240	30,130
Payable to related party pursuant to tax receivable agreement	65,620	61,174
Asset retirement obligation	6,237	6,309
Deferred tax liabilities, net	22,691	25,716
Other long-term liabilities	247	2,183
Total liabilities	1,023,372	1,068,079
Commitments and contingencies (Note 15)
Stockholders' equity
Preferred stock, $.0001 par value
Common stock, $.0001 par value	16	16
Common stock contingent consideration	36,575	54,862
Additional paid-in capital	391,240	367,266
Accumulated deficit	(89,629)	(80,220)
Accumulated other comprehensive loss	(6,452)	(2,577)
Total stockholders' equity	331,750	339,347
Total liabilities and stockholders' equity	$ 1,355,122	$ 1,407,426

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Statement Of Financial Position [Abstract]
Allowance for credit loss	$ 12,930	$ 8,456
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Total revenue	$ 79,809		$ 109,575		$ 196,522	$ 208,036
Operating expenses	26,699		31,795		58,958	61,133
Selling, general and administrative expenses	20,821		20,865		46,707	41,416
Depreciation, amortization and (gain) loss on disposal of assets, net	29,166		28,850		58,412	57,791
Impairment of property and equipment			5,898			5,898
Total costs and expenses	86,759		91,939		184,059	172,434
(Loss) income from operations	(6,950)		17,636		12,463	35,602
Interest expense, net	9,539		15,656		21,990	31,689
Loss from tax receivable agreement adjustment	4,446				4,446
Other income, net	(1,523)		(3,345)		(4,448)	(5,552)
Total other expenses	12,462		12,311		21,988	26,137
(Loss) income before income tax (benefit) provision	(19,412)		5,325		(9,525)	9,465
Income tax (benefit) provision	(4,024)		1,734		(810)	3,054
Net (loss) income	(15,388)	$ 6,673	3,591	$ 2,820	(8,715)	6,411
Other comprehensive loss:
Change in foreign currency translation adjustment	(508)		(1,396)		(3,875)	(72)
Total comprehensive (loss) income	$ (15,896)		$ 2,195		$ (12,590)	$ 6,339
Net (loss) income per share:
Basic	$ (0.10)		$ 0.02		$ (0.05)	$ 0.04
Diluted	$ (0.10)		$ 0.02		$ (0.05)	$ 0.04
Weighted average shares used in per share calculation:
Basic outstanding	161,710		157,846		161,317	156,956
Diluted outstanding	161,710		161,977		161,317	159,223
Service Revenue
Total revenue	$ 62,815		$ 103,057		$ 162,312	$ 201,127
Cost of revenue	1,013		1,613		2,232	3,002
Product Sales
Total revenue	16,994		6,518		34,210	6,909
Cost of revenue	$ 9,060		$ 2,918		$ 17,750	$ 3,194

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Common Stock Platinum Stockholder	Common Stock Contingent Consideration	Common Stock Contingent Consideration Platinum Stockholder	Additional Paid-in Capital	Additional Paid-in Capital Platinum Stockholder	Accumulated Deficit	Accumulated Other Comprehensive Loss
Beginning Balance at Dec. 31, 2018	$ 302,056	$ 16		$ 73,150		$ 348,017		$ (113,306)	$ (5,821)
Beginning Balance (in shares) at Dec. 31, 2018		156,057
Net income (loss)	2,820							2,820
Cumulative effect of adoption of new accounting standard, net of tax | ASU 2014-09	(257)							(257)
Adjustment to equity infusion from Gores	(6,205)					(6,205)
Adjustment to tax receivable agreement liability	2,940					2,940
Stock-based compensation	2,143					2,143
Other comprehensive gain (loss),net of tax	1,324								1,324
Ending Balance at Mar. 31, 2019	304,821	$ 16		73,150		346,895		(110,743)	(4,497)
Ending Balance (in shares) at Mar. 31, 2019		156,057
Beginning Balance at Dec. 31, 2018	302,056	$ 16		73,150		348,017		(113,306)	(5,821)
Beginning Balance (in shares) at Dec. 31, 2018		156,057
Net income (loss)	6,411
Ending Balance at Jun. 30, 2019	309,828	$ 16		54,862		367,995		(107,152)	(5,893)
Ending Balance (in shares) at Jun. 30, 2019		158,610
Beginning Balance at Mar. 31, 2019	304,821	$ 16		73,150		346,895		(110,743)	(4,497)
Beginning Balance (in shares) at Mar. 31, 2019		156,057
Net income (loss)	3,591							3,591
Earn-out shares issued to Platinum Stockholder					$ (18,288)		$ 18,288
Earn-out shares issued to Platinum Stockholder (in shares)			2,500
Vesting of restricted stock units (RSUs) (in shares)		53
Stock-based compensation	2,812					2,812
Other comprehensive gain (loss),net of tax	(1,396)								(1,396)
Ending Balance at Jun. 30, 2019	309,828	$ 16		54,862		367,995		(107,152)	(5,893)
Ending Balance (in shares) at Jun. 30, 2019		158,610
Beginning Balance at Dec. 31, 2019	339,347	$ 16		54,862		367,266		(80,220)	(2,577)
Beginning Balance (in shares) at Dec. 31, 2019		159,150
Net income (loss)	6,673							6,673
Cumulative effect of adoption of new accounting standard, net of tax | ASU 2016-13	(694)							(694)
Earn-out shares issued to Platinum Stockholder					$ (18,287)		$ 18,287
Earn-out shares issued to Platinum Stockholder (in shares)			2,500
Vesting of restricted stock units (RSUs) (in shares)		42
Payment of employee tax withholding related to RSU vesting	(327)					(327)
Stock-based compensation	2,768					2,768
Other comprehensive gain (loss),net of tax	(3,367)								(3,367)
Ending Balance at Mar. 31, 2020	344,400	$ 16		36,575		387,994		(74,241)	(5,944)
Ending Balance (in shares) at Mar. 31, 2020		161,692
Beginning Balance at Dec. 31, 2019	339,347	$ 16		54,862		367,266		(80,220)	(2,577)
Beginning Balance (in shares) at Dec. 31, 2019		159,150
Net income (loss)	(8,715)
Ending Balance at Jun. 30, 2020	331,750	$ 16		36,575		391,240		(89,629)	(6,452)
Ending Balance (in shares) at Jun. 30, 2020		161,737
Beginning Balance at Mar. 31, 2020	344,400	$ 16		36,575		387,994		(74,241)	(5,944)
Beginning Balance (in shares) at Mar. 31, 2020		161,692
Net income (loss)	(15,388)							(15,388)
Vesting of restricted stock units (RSUs) (in shares)		45
Payment of employee tax withholding related to RSU vesting	(25)					(25)
Stock-based compensation	3,271					3,271
Other comprehensive gain (loss),net of tax	(508)								(508)
Ending Balance at Jun. 30, 2020	$ 331,750	$ 16		$ 36,575		$ 391,240		$ (89,629)	$ (6,452)
Ending Balance (in shares) at Jun. 30, 2020		161,737

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)
Cash Flows from Operating Activities:
Net (loss) income	$ (8,715)	$ 6,411
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	58,409	57,804
Amortization of deferred financing costs and discounts	2,106	3,589
Impairment of property and equipment		5,898
Loss from tax receivable agreement adjustment	4,446
Credit loss expense	10,723	2,736
Deferred income taxes	(2,496)	(11,568)
Stock-based compensation	6,039	4,955
Installation and service parts expense	559	643
Accretion expense	129	183
Loss (gain) on disposal of assets	3	(13)
Changes in operating assets and liabilities:
Accounts receivable, net	(43,183)	(21,433)
Unbilled receivables	7,476	(616)
Prepaid expenses and other current assets	7,979	(4,199)
Accounts payable and accrued liabilities	(17,863)	5,224
Other liabilities	(3,069)	(3,833)
Net cash provided by operating activities	22,543	45,781
Cash Flows from Investing Activities:
Purchases of installation and service parts and property and equipment	(14,301)	(14,192)
Cash proceeds from the sale of assets	49	14
Net cash used in investing activities	(14,252)	(14,178)
Cash Flows from Financing Activities:
Repayment of long-term debt	(24,227)	(4,552)
Payment of debt issuance costs	(922)	(152)
Payment of employee tax withholding related to RSU vesting	(352)
Net cash used in financing activities	(25,501)	(4,704)
Effect of exchange rate changes on cash and cash equivalents	(1,270)	10
Net (decrease) increase in cash, cash equivalents and restricted cash	(18,480)	26,909
Cash, cash equivalents and restricted cash - beginning of period	132,430	67,081
Cash, cash equivalents and restricted cash - end of period	113,950	93,990
Supplemental cash flow information:
Interest paid	20,201	28,144
Income taxes paid, net	1,135	15,448
Supplemental non-cash investing and financing activities:
Reduction to tax receivable agreement liability		2,940
Gores equity infusion working capital adjustment payable to related party		6,205
Earn-out shares issued to Platinum Stockholder	18,287	18,288
Additions to ARO, property and equipment, and other	41	143
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end	$ 3,238	$ 4,269

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Description of Business

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business

1. Description of Business

Verra Mobility Corporation (collectively with its subsidiaries, the “Company” or “Verra Mobility”), formerly known as Gores Holdings II, Inc. (“Gores”), was originally incorporated in Delaware on August 15, 2016, as a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or other similar business combination with one or more target businesses. On January 19, 2017, the Company consummated its initial public offering (the “IPO”), following which its shares began trading on the Nasdaq Capital Market (“Nasdaq”). On June 21, 2018, Gores entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Greenlight Holding II Corporation, PE Greenlight Holdings, LLC, AM Merger Sub I, Inc., a direct, wholly-owned subsidiary of Gores and AM Merger Sub II, LLC, a direct, wholly-owned subsidiary of Gores. On October 17, 2018, the transactions contemplated by the Merger Agreement (the “Business Combination”) were consummated. In connection with the closing of the Business Combination, Gores changed its name to Verra Mobility Corporation. As a result of the Business Combination, Verra Mobility Corporation became the owner, directly or indirectly, of all of the equity interests of Verra Mobility Holdings, LLC and its subsidiaries.

Verra Mobility offers integrated technology solutions and services to commercial fleets, rental car companies and state and local governments. The Company has customers located throughout the United States, Canada and Europe. The Company is organized into two operating segments: Commercial Services and Government Solutions (see Note 16).

The Commercial Services segment offers toll and violation management solutions for the commercial fleet and rental car industries by partnering with the leading fleet management and rental car companies in North America. Electronic toll payment services enable fleet drivers and rental car customers to use high-speed cashless toll lanes or all-electronic cashless toll roads. The service helps commercial fleets reduce toll management costs, while it provides rental car companies with a revenue-generating, value-added service for their customers. Electronic violation processing services reduce the cost and risk associated with vehicle-issued violations, such as toll, parking or camera-enforced tickets. Title and registration services offer title and registration processing for individuals, rental car companies and fleet management companies. In Europe, the Company provides violations processing through Euro Parking Collection plc (“EPC”) and tolling services through Pagatelia S.L (“Pagatelia”).

The Government Solutions segment provides complete, end-to-end red-light, speed, school bus stop arm and bus lane enforcement solutions. The Company’s programs are designed to reduce traffic violations and resulting collisions, injuries, and fatalities. The Company implements and administers traffic safety programs for municipalities, counties, school districts and law enforcement agencies of all sizes.

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

Use of Estimates

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the fair values assigned to net assets acquired (including identifiable intangibles) in business combinations, the carrying amounts of long-lived assets and goodwill, the carrying amount of installation and service parts, the allowance for credit loss, valuation allowances on deferred tax assets, asset retirement obligations, contingent consideration and the recognition and measurement of loss contingencies.

Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.

Recent Accounting Pronouncements

Accounting Standards Adopted

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test. Goodwill impairment is now the amount by which a reporting unit’s carrying value exceeds its fair value limited to the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill for all reporting units, even those with zero or negative carrying amounts. The Company adopted the ASU as of January 1, 2020 and followed the one-step method in evaluating potential goodwill impairment for the first and second quarters of fiscal 2020, refer to Note 6, Goodwill and Intangible Assets. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and issued certain amendments within ASU 2019-04, ASU 2019-05 and ASU 2019-11, respectively. The guidance replaced the incurred loss impairment model and applies a new model, current expected credit losses (“CECL”), that requires entities to estimate expected credit losses measured over the contractual life of an instrument that consider supportable forecasts of future economic conditions in addition to information about past events and current conditions. An entity is required to measure and record an allowance for credit loss upon initial recognition of a financial asset, and present in-scope assets at amortized cost net of the amount expected to be collected. Under legacy GAAP, the Company recognized credit losses on trade receivables when it was probable that a loss has been incurred.

The Company adopted the CECL standard as of January 1, 2020 through a cumulative effect adjustment of $0.7 million, net of tax, to the opening balance of Accumulated deficit. The adjustment increased Accumulated deficit and increased the Allowance for credit loss accounts. Subsequent impacts to the Allowance for credit loss have been recorded through the Credit loss expense account included within Selling, general and administrative expenses in our condensed consolidated statements of operations and as an Allowance for credit loss on our condensed consolidated balance sheet. See Note 4. Accounts Receivable, Net for additional information.

Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU removes specific exceptions to the general principles in Topic 740 in U.S. GAAP including the exception to the incremental approach for intra-period tax allocation, exceptions to accounting for basis differences when there are ownership changes in foreign investments, and the exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also simplifies current guidance in relation to franchise taxes that are partially based on income, transactions with a government that result in a step-up in tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. The impact of the implementation of this standard is still being determined by the Company.

On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. It provides optional expedients and exceptions for applying GAAP to contract modifications, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is in effect for a limited time through December 31, 2022, to help stakeholders during the global market-wide reference rate transition period. The impact of the implementation of this standard is still being determined by the Company.

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Acquisition

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Acquisition

3. Acquisition

Pagatelia Acquisition

On October 31, 2019, the Company completed the acquisition of all of the outstanding shares of Pagatelia S.L., (“Pagatelia”), a Spanish limited liability company that provides electronic consumer tolling and parking solutions in Spain, Portugal, France and Italy. The purchase consideration for Pagatelia was $26.6 million. Transaction costs were not material.

The allocation of the purchase consideration is summarized as follows:

($ in thousands)
Assets acquired
Cash	$	1,086
Other assets		5,047
Trademark		771
Customer relationships		5,946
Developed technology		4,624
Non-compete agreements		440
Goodwill		17,528
Total assets acquired		35,442
Liabilities assumed
Accounts payable and accrued expenses		6,045
Deferred tax liability		2,801
Total liabilities assumed		8,846
Total purchase price	$	26,596

Goodwill arising from Pagatelia was assigned to the Company’s Commercial Services segment and consists largely of the expected cash flows and future growth anticipated for the Company. The goodwill is not expected to be deductible for tax purposes. The customer relationships value was based on an excess earnings methodology utilizing projected cash flows. The trademark and the developed technology values were based on a relief-from-royalty method. The non-compete agreement values were based on the with-or-without method. The trademark, customer relationships, developed technology and non-compete agreements were assigned useful lives of 8.5 years, 9.5 years, 6.5 years and 3 years, respectively.  

The Company did not provide pro forma financial information for Pagatelia as it was not material.

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Accounts Receivable, Net

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Accounts Receivable, Net

4. Accounts Receivable, Net

Accounts receivable are uncollateralized customer obligations arising from the sale of products or services. Accounts receivable have normal trade terms less than one year and are initially stated at the amounts billed to the customers. Accounts receivable are subsequently measured at amortized cost net of allowance for credit loss. As part of its analysis for implementation of the CECL standard as of January 1, 2020, the Company reviewed historical loss rates, customer payment trends and collection rates on customer balances. Estimated loss rates were developed using historical credit loss experience, adjusted for future expectations using probability-weighted assumptions about potential outcomes. Receivables are written off against the allowance for credit loss when it is probable that amounts will not be collected based on terms of the customer contracts, and subsequent recoveries reverse the previous write-off and apply to the receivable in the period recovered. The Company periodically evaluates the adequacy of its allowance for expected credit losses by comparing its actual historical write-offs to its previously recorded estimates.

The Company identified portfolio segments based on type of business, industry in which the customer operates and historical credit loss patterns. The following presents by portfolio segment Accounts receivable, net and the activity in the Allowance for credit loss for the six months ended June 30, 2020:

($ in thousands)	Commercial Services (Driver-billed) (1)			Commercial Services (All other)			Government Solutions			Total
Accounts Receivable, Net at January 1, 2020 (2)	$	9,793		$	51,158		$	31,744		$	92,695
Allowance for credit loss at January 1, 2020 (2)	$	5,272		$	1,406		$	1,778		$	8,456
Credit loss expense		2,744			6,256			1,723			10,723
Write-offs, net of recoveries		(5,449	)		(334	)		(466	)		(6,249	)
Allowance for credit loss at June 30, 2020	$	2,567		$	7,328		$	3,035		$	12,930
Accounts Receivable, Net at June 30, 2020	$	7,926		$	48,934		$	68,392		$	125,252

(1) Driver-billed consists of receivables from drivers of rental cars and fleet management companies for which the Company bills on behalf of its customers. Receivables not collected from drivers within a defined number of days are transferred to customers subject to applicable bad debt sharing agreements.

(2) This includes a $0.8 million increase to Allowance for credit loss as a result of adopting the CECL standard.

The estimated credit loss expense for the six months ended June 30, 2020 includes a specific provision of $3.5 million for accounts receivable due from one of our Commercial Services (All other) customers who filed for Chapter 11 bankruptcy.

Concentration of Credit Risk

Significant customers are those which represent more than 10% of the Company’s total revenue and accounts receivable. Revenue from one of the Government Solutions customers as a percent of total revenue is presented below for the three and six months ended June 30, 2020 and 2019, respectively:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
City of New York Department of Transportation		40.5	%		12.4	%		31.6	%		10.4	%

The City of New York Department of Transportation represents 42.2% of accounts receivable, net as of June 30, 2020. Significant customer revenue generated through the Company’s Commercial Services partners as a percent of total revenue is presented below for the three and six months ended June 30, 2020 and 2019, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020	2019			2020			2019
Hertz Corporation	(1)		19.6	%		13.0	%		19.0	%
Avis Budget Group, Inc.	(1)		16.5	%	(1)				13.1	%
Enterprise Holdings, Inc.	(1)		13.5	%	(1)				13.7	%

(1) Customer revenue for the period was below 10% of total revenue.

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Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2020

Prepaid Expense And Other Assets Current [Abstract]

Prepaid Expenses and Other Current Assets

5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following at:

($ in thousands)	June 30, 2020		December 31, 2019
Prepaid tolls	$	7,947	$	10,116
Deposits		3,345		3,642
Prepaid services		3,176		5,201
Prepaid computer maintenance		2,559		2,923
Prepaid insurance		841		1,485
Photo enforcement equipment held for sale		416		1,410
Prepaid income taxes		230		1,025
Other		450		689
Total prepaid expenses and other current assets	$	18,964	$	26,491

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Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

6. Goodwill and Intangible Assets

The following table presents the changes in the carrying amount of goodwill by reportable segment:

	Commercial			Government
($ in thousands)	Services			Solutions		Total
Balance at December 31, 2019	$	424,404		$	159,746	$	584,150
Foreign currency translation adjustment		(2,535	)		—		(2,535	)
Balance at June 30, 2020	$	421,869		$	159,746	$	581,615

Intangible assets consist of the following as of the respective period-ends:

	June 30, 2020						December 31, 2019
	Weighted						Weighted
	Average	Gross					Average	Gross
	Remaining	Carrying			Accumulated		Remaining	Carrying			Accumulated
($ in thousands)	Useful Life	Amount			Amortization		Useful Life	Amount			Amortization
Trademarks	0.9 years	$	32,067		$	24,209	1.5 years	$	32,127		$	19,106
Non-compete agreements	2.5 years		62,555			31,119	3.0 years		62,549			24,834
Customer relationships	6.4 years		365,368			103,204	6.9 years		366,533			82,903
Developed technology	2.8 years		165,520			80,615	3.3 years		165,708			65,631
Gross carrying value of intangible assets			625,510		$	239,147			626,917		$	192,474
Less: accumulated amortization			(239,147	)					(192,474	)
Intangible assets, net		$	386,363					$	434,443

Amortization expense was $23.5 million and $23.1 million for the three months ended June 30, 2020 and 2019, respectively, and was $47.1 million and $46.3 million for the six months ended June 30, 2020 and 2019, respectively.

Estimated amortization expense in future years is expected to be:

($ in thousands)
Remainder of 2020	$	46,823
2021		85,379
2022		80,654
2023		52,157
2024		41,671
Thereafter		79,679
Total	$	386,363

Interim Goodwill Impairment Review

During the fourth quarter of each fiscal year, we perform our annual goodwill impairment test for each of our reporting units. Our reporting units are the same as our two reportable segments (Government Solutions and Commercial Services). We also test goodwill for impairment whenever events or circumstances occur which, in our judgment, could more likely than not reduce the fair value of one or more reporting units below its carrying amount. Potential impairment indicators include, but are not limited to, (i) a deterioration of the business environments in which we operate; (ii) downward revisions to internal forecasts, and the magnitude thereof, if any; and (iii) declines in our market capitalization below our book value, and the magnitude and duration of those declines, if any.

During the first half of fiscal 2020, our market capitalization declined significantly compared to December 31, 2019. Over the same period, the equity value of our key Commercial Services customers, our peer group companies and the overall U.S. stock market also declined significantly amid market volatility. These declines were driven by the uncertainty surrounding the outbreak of the novel coronavirus (“COVID-19”) and other macroeconomic events. Based on these factors, we concluded that a triggering event occurred and, accordingly, an interim quantitative impairment test was performed as of March 31, 2020 and updated as of June 30, 2020.

Based upon the results of our interim impairment tests, we concluded that the fair values of the Government Solutions and Commercial Services reporting units exceeded their carrying value. The current economic conditions due to COVID-19 are still evolving and any significant adverse changes in future periods to our internal forecasts or the external market conditions, if any, could reasonably be expected to negatively affect our key assumptions and may result in a future goodwill impairment charge, which could be material.

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Impairment of Other Long-lived Assets

6 Months Ended

Jun. 30, 2020

Asset Impairment Charges [Abstract]

Impairment of Other Long-lived Assets

7. Impairment of Other Long-lived Assets

The Company reviews its other long-lived assets for impairment (including intangible assets with finite useful lives) whenever events or circumstances indicate that the carrying value of an asset may not be fully recoverable. The Company assesses recoverability by comparing the estimated undiscounted future cash flows expected to be generated by the assets with their carrying value. If the carrying value of the assets exceeds the estimated undiscounted future cash flows, an impairment loss is recognized for the difference between the estimated fair value of the assets and their carrying value. At June 30, 2020, the Company performed a qualitative assessment and concluded that there is no impairment, as the fair values of the asset groups exceeded their respective carrying amounts.

The state of Texas passed legislation as of June 1, 2019 to ban red-light photo enforcement programs across the state, with certain carve-outs for some existing programs. The Company considered this event an indicator for potential impairment and, as such, evaluated the recoverability of property and equipment used in the operations of red-light photo enforcement programs in Texas. As a result, the Company recognized an impairment charge in the Government Solutions segment of $5.9 million for the three and six months ended June 30, 2019, which is included in Impairment of property and equipment in the condensed consolidated statements of operations.

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Accrued Liabilities

6 Months Ended

Jun. 30, 2020

Payables And Accruals [Abstract]

Accrued Liabilities

8. Accrued Liabilities

Accrued liabilities consist of the following at:

($ in thousands)	June 30, 2020		December 31, 2019
Accrued salaries and wages	$	4,228	$	10,319
Current portion of related party TRA liability		4,636		5,730
Current portion of operating lease liabilities		2,933		2,970
Advanced deposits payable		2,435		2,875
Income taxes payable		1,952		348
Restricted cash due to customers		711		917
Accrued sales commissions		480		612
Accrued interest payable		173		210
Other		2,022		1,296
Total accrued liabilities	$	19,570	$	25,277

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Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Debt

9. Debt

The following table provides a summary of the Company’s debt at:

($ in thousands)	June 30, 2020			December 31, 2019
First Lien Term Loan, due February 28, 2025	$	870,194		$	894,421
Less: original issue discounts		(4,469	)		(4,778	)
Less: unamortized deferred financing costs		(22,304	)		(23,178	)
Total debt		843,421			866,465
Less: current portion of long-term debt		(9,104	)		(28,779	)
Total long-term debt, net of current portion	$	834,317		$	837,686

In connection with an acquisition in 2018, VM Consolidated, Inc., a wholly-owned subsidiary of the Company, entered into a First Lien Term Loan Credit Agreement (the “First Lien Term Loan”), a Second Lien Term Loan Credit Agreement (the “Second Lien Term Loan”), (collectively the “Term Loans”) and a Revolving Credit Facility Agreement (the “Revolver”) with a syndicate of lenders (collectively, the “2018 Credit Facilities”). The 2018 Credit Facilities initially provided for committed senior secured financing of $1.115 billion, consisting of the Term Loans in an aggregate principal amount of $1.04 billion and the Revolver available for loans and letters of credit with an aggregate revolving commitment of up to $75 million (subject to borrowing eligibility requirements as described below). In July 2018, the Company amended the First Lien Term Loan to expand the aggregate principal loan amount from $840 million to $910 million. The additional $70 million along with funds contributed by Platinum Equity, LLC were used to repay the $200 million Second Lien Term Loan in full contemporaneously with the close of the Business Combination on October 17, 2018.

The First Lien Term Loan is repayable at 1.0% per annum of the amount initially borrowed, paid in quarterly installments. The First Lien Term Loan matures on February 28, 2025. The Company refinanced the entire outstanding amount under the First Lien Term Loan on February 20, 2020 which reduced the previous applicable margin by 50 basis points. The First Lien Term Loan now bears interest based, at our option, on either (1) LIBOR plus an applicable margin of 3.25% per annum, or (2) an alternate base rate plus an applicable margin of 2.25% per annum. As of June 30, 2020, the interest rate on the First Lien Term Loan was 3.6%.

In addition, the First Lien Term Loan requires mandatory prepayments equal to the product of the excess cash flows of the Company (as defined in the loan agreement) and the applicable prepayment percentages (calculated as of the last day of the fiscal year, beginning with the year ending December 31, 2019), as set forth in the following table:

Consolidated first lien net leverage ratio (as defined by the First Lien Term Loan agreement)	Applicable prepayment percentage
> 3.70:1.00	50%
< 3.70:1.00 and > 3.20:1.00	25%
< 3.20:1.00	0%

The Company made a $19.7 million mandatory prepayment of excess cash flow during the first quarter of fiscal 2020, which was classified as current portion of long-term debt in the condensed consolidated balance sheet at December 31, 2019.

The Revolver matures on February 28, 2023. The terms of the Revolver were not affected by the refinancing of the First Lien Term Loan discussed above. Borrowing eligibility under the Revolver is subject to a monthly borrowing base calculation based on (i) certain percentages of eligible accounts receivable and inventory, less (ii) certain reserve items, including outstanding letters of credit and other reserves. The Revolver bears interest on either (1) LIBOR plus an applicable margin, or (2) an alternate base rate, plus an applicable margin. The margin percentage applied to (1) LIBOR is either 1.25%, 1.50%, or 1.75%, or (2) the base rate is either 0.25%, 0.50%, or 0.75%, depending on the Company’s average availability to borrow under the commitment. At June 30, 2020, the Company had no outstanding borrowings on the Revolver and availability to borrow under the Revolver was $68.7 million, net of $6.3 million of outstanding letters of credit.

Interest on the unused portion of the Revolver is payable quarterly at 0.375%, and the Company is also required to pay participation and fronting fees at 1.38% on $6.3 million in outstanding letters of credit as of June 30, 2020.

All borrowings and other extensions of credits under the 2018 Credit Facilities are subject to the satisfaction of customary conditions and restrictive covenants including absence of defaults and accuracy in material respects of representations and warranties. At June 30, 2020, the Company was compliant with the 2018 Credit Facilities covenants. Substantially all of the Company’s assets are pledged as collateral to secure the Company’s indebtedness under the 2018 Credit Facilities.  

The Company recorded interest expense, including amortization of deferred financing costs and discounts, of $9.5 million and $15.7 million for the three months ended June 30, 2020 and 2019, respectively, and $22.0 million and $31.7 million for the six months ended June 30, 2020 and 2019, respectively.

In connection with the refinancing of the First Lien Term Loan in February 2020, which the Company determined was to be accounted for as a modification, the Company incurred $0.8 million of lender fees which were capitalized as deferred financing costs and amortized over the remaining life of the First Lien Term Loan, and $0.2 million of legal fees that were expensed as Selling, general and administrative expenses on the condensed consolidated statement of operations.

The weighted average effective interest rates on the Company’s outstanding borrowing under the 2018 Credit Facilities were 3.6% and 5.5% at June 30, 2020 and December 31, 2019, respectively.

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

10. Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurement, includes a single definition of fair value to be used for financial reporting purposes, provides a framework for applying this definition and for measuring fair value under U.S. GAAP, and establishes a fair value hierarchy that categorizes into three levels the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are summarized as follows:

Level 1 – Fair value is based on observable inputs such as quoted prices for identical assets or liabilities in active markets.

Level 2 – Fair value is determined using quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or inputs other than quoted prices that are directly or indirectly observable.

Level 3 – Fair value is determined using one or more significant inputs that are unobservable in active markets at the measurement date, such as a pricing model, discounted cash flow, or similar technique.

The carrying amounts reported in the Company’s condensed consolidated balance sheets for cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the immediate to short-term maturity of these financial instruments. The estimated fair value of the Company’s First Lien Term Loan as of June 30, 2020 and December 31, 2019 was categorized in Level 2 of the fair value hierarchy and was calculated based upon available market information. The carrying value and fair value of debt is as follows:

	Level in	June 30, 2020				December 31, 2019
	Fair Value	Carrying		Estimated		Carrying		Estimated
($ in thousands)	Hierarchy	Amount		Fair Value		Amount		Fair Value
Total debt	2	$	843,421	$	839,737	$	866,465	$	905,601

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Net (Loss) Income Per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Net (Loss) Income Per Share

11. Net (Loss) Income Per Share

Basic net (loss) income per share is calculated by dividing net (loss) income by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net (loss) income per share is calculated by adjusting the weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.

The components of basic and diluted net (loss) income per share are as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands, except per share data)	2020			2019		2020			2019
Numerator:
Net (loss) income	$	(15,388	)	$	3,591	$	(8,715	)	$	6,411
Denominator:
Weighted average shares - basic		161,710			157,846		161,317			156,956
Common stock equivalents		—			4,131		—			2,267
Weighted average shares - diluted		161,710			161,977		161,317			159,223
Net (loss) income per share - basic	$	(0.10	)	$	0.02	$	(0.05	)	$	0.04
Net (loss) income per share - diluted	$	(0.10	)	$	0.02	$	(0.05	)	$	0.04
Antidilutive shares excluded from diluted net (loss) income per share (1):
Contingently issuable shares (2)		5,000			8,214		5,000			9,107
Warrants		20,000			—		20,000			10,000
Non-qualified stock options		699			—		699			—
Performance share units		116			—		116			—
Restricted stock units		3,377			—		3,377			43
Total antidilutive shares excluded		29,192			8,214		29,192			19,150

(1) These amounts represent the total antidilutive shares outstanding for the three and six months ended June 30, 2020 and the weighted average antidilutive shares for the three and six months ended June 30, 2019.

(2) Contingently issuable shares relate to the earn-out agreement as discussed in Note 14, Related Party Transactions.

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Income Taxes

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

12. Income Taxes

Our interim income tax (benefit) provision is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that period. The estimated annual effective tax rate requires judgment and is dependent upon several factors. We provide for income taxes under the liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the tax basis of assets or liabilities and their carrying amounts in the financial statements.

We provide a valuation allowance for deferred tax assets if it is more likely than not that these items will expire before we are able to realize their benefit. We calculate the valuation allowance in accordance with the authoritative guidance relating to income taxes, which requires an assessment of both positive and negative evidence regarding the realizability of these deferred tax assets, when measuring the need for a valuation allowance. Significant judgment is required in determining any valuation allowance against deferred tax assets.

In December 2019, COVID-19 emerged in China and has since spread throughout the world causing severe disruption to the global economy. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law. There were several income tax provisions and other non-tax matters incorporated into law as a result of the enactment of the CARES Act. The Company applied certain articles of the CARES Act in the interim income tax (benefit) provision, including the increased interest deduction allowed up to 50 percent of adjusted taxable income for tax years 2019 and 2020. In addition, the Company delayed the employer-side of the FICA payments until 2021. The Company will continue to assess other aspects of the CARES Act and will account for them accordingly, if applicable.

Our effective income tax rate was 20.7% and 32.6% for the three months ended June 30, 2020 and 2019, respectively, and 8.5% and 32.3% for the six months ended June 30, 2020 and 2019, respectively. The effective tax rate change was primarily due to lower pre-tax income in the current year, resulting in the Company’s permanent book and tax differences having a proportionately greater impact on the effective tax rate in the current year.

The total amount of unrecognized tax benefits decreased by $0.9 million during fiscal 2020 primarily from the statute expiration of prior year tax positions. As of June 30, 2020, the total amount of unrecognized tax benefits was $0.8 million, of which $0.7 million would affect our effective tax rate if recognized. We recognize interest and penalties related to unrecognized

tax benefits through income tax expense. As of June 30, 2020, we had less than $0.1 million accrued for the payment of interest and penalties.

The Company is subject to examination by the Internal Revenue Service and taxing authorities in various states. The Company’s U.S. federal income tax returns remain subject to examination by tax authorities for the years 2016 to 2019. The Company’s state income tax returns are under examination by certain states for tax years 2015 to 2017, and other state income tax returns are subject to examination for tax years 2014 to 2019. Tax returns for years prior to 2014 remain open in a number of states due to tax attributes generated but not yet utilized. The Company regularly assesses the likelihood of additional tax deficiencies in each of the tax jurisdictions and, accordingly, makes appropriate adjustments to the tax provision as deemed necessary.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

13. Stock-Based Compensation

The following details the components of stock-based compensation for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2020		2019		2020		2019
Operating expenses	$	294	$	272	$	514	$	476
Selling, general and administrative expenses		2,977		2,540		5,525		4,479
Total stock-based compensation expense	$	3,271	$	2,812	$	6,039	$	4,955

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Related Party Transactions

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions

14. Related Party Transactions

Tax Receivable Agreement

At the closing of the Business Combination, the Company entered into a tax receivable agreement (“TRA”) with PE Greenlight Holdings, LLC (the “Platinum Stockholder”) and Greenlight Holding II Corporation as the stockholder representative. The TRA generally provides for the payment by the post-closing company to the Platinum Stockholder of 50% of the net cash savings, if any, in U.S. federal, state and local income tax that the post-closing company actually realizes (or is deemed to realize in certain circumstances) in periods after the closing of the Business Combination as a result of the increase in the tax basis of the intangible assets which resulted from an acquisition by the Company prior to the Business Combination. The post-closing company generally will retain the benefit of the remaining 50% of these cash savings. The Company estimated the potential maximum benefit to be paid will be approximately $70.0 million, and recorded an initial liability and corresponding charge to equity at the closing of the Business Combination. Subsequently, the Company made adjustments to this amount.

At June 30, 2020, the Company recorded a $4.4 million increase to the Payable related to tax receivable agreement with an offsetting charge to Loss from tax receivable agreement adjustment in the condensed consolidated statements of operations for the three and six months ended June 30, 2020. The adjustment reflects the impact of an increase to the Company’s deferred tax rate arising from higher estimated state tax rates due to a change in apportionment. At June 30, 2020, the TRA was approximately $70.2 million of which $4.6 million was the current portion included in Accrued liabilities and $65.6 million included in Payable related to tax receivable agreement on the condensed consolidated balance sheets.

Earn-Out Agreement

Under the Merger Agreement, the Platinum Stockholder is entitled to receive additional shares of Class A Common Stock (the “Earn-Out Shares”) if the volume weighted average closing sale price of one share of Class A Common Stock on Nasdaq exceeds certain thresholds for a period of at least 10 days out of 20 consecutive trading days at any time during the five-year period following the closing of the Business Combination (the “Common Stock Price”).

The Earn-Out Shares are issued by the Company to the Platinum Stockholder as follows:

Common Stock Price thresholds	One-time issuance of shares
> $13.00 (a)		2,500,000
> $15.50 (a)		2,500,000
> $18.00		2,500,000
> $20.50		2,500,000

(a) The first and second tranches of Earn-Out Shares have been issued, as discussed below.

If any of the Common Stock Price thresholds above (each, a “Triggering Event”) are not achieved within the five-year period following the closing of the Business Combination, the Company will not be required to issue the Earn-Out Shares in respect of such Common Stock Price threshold. In no event shall the Platinum Stockholder be entitled to receive more than an aggregate of 10,000,000 Earn-Out Shares.

If, during the earn-out period, there is a change of control (as defined in the Merger Agreement) that will result in the holders of Greenlight Acquisition Corporation (“Parent”) Class A Common Stock receiving a per share price equal to or in excess of the applicable Common Stock Price required in connection with any Triggering Event (an “Acceleration Event”), then immediately prior to the consummation of such change of control: (a) any such Triggering Event that has not previously occurred shall be deemed to have occurred; and (b) Parent shall issue the applicable Earn-Out Shares to the cash consideration stockholders (as defined in the Merger Agreement) (in accordance with their respective pro rata cash share), and the recipients of the issued Earn-Out Shares shall be eligible to participate in such change of control.

The Company estimated the original fair value of the contingently issuable shares to be $73.15 million, of which $36.6 million remains contingently issuable as of June 30, 2020. The estimated value is not subject to future revisions during the five-year period discussed above. The Company used a Monte Carlo simulation option-pricing model to arrive at its original estimate. Each tranche was valued separately giving specific consideration to the tranche’s price target. The simulation considered volatility and risk free rates utilizing a peer group based on a five year term. This was initially recorded as a distribution to shareholders and was presented as Common stock contingent consideration. Upon the occurrence of a Triggering Event, any issuable shares would be transferred from Common stock contingent consideration to Common stock and Additional paid-in capital accounts. Any contingently issuable shares not issued as a result of a Triggering Event not being attained by the end of earn-out period will be cancelled.

On April 26, 2019 and on January 27, 2020, the Triggering Events for the issuance of the first and second tranches of Earn-Out Shares occurred, as the volume weighted average closing sale price per share of the Company’s Class A Common Stock as of that date had been greater than $13.00 and $15.50, respectively, for 10 out of 20 consecutive trading days. These Triggering Events resulted in the issuance of an aggregate 5,000,000 shares of the Company’s Class A Common Stock to the Platinum Stockholder and an increase in the Company’s Common stock and Additional paid-in capital accounts of $36.6 million, with a corresponding decrease to the Common stock contingent consideration account.  

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Commitment and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

15. Commitments and Contingencies

The Company has issued various letters of credit under contractual arrangements with certain of its vendors and customers. Outstanding letters of credit under these arrangements totaled $6.3 million at June 30, 2020.

The Company has non-cancelable purchase commitments to certain vendors. The aggregate non-cancelable purchase commitments outstanding at June 30, 2020 were $16.0 million.

The Company is subject to tax audits in the normal course of business and does not have material contingencies recorded related to such audits.

Customer Guarantee

In the ordinary course of business, the Company occasionally employs contract terms that mitigate the customer’s risk of aggregate revenue decline in connection with the customer’s adoption of additional or changes to service models within its existing portfolio. These agreements require the customer to satisfy numerous conditions to trigger payment, including volume metrics and other operational requirements. The Company has one such guarantee outstanding for the one-year period ending March 31, 2021. At June 30, 2020, the Company has concluded that the likelihood of making payment under this guarantee is remote, and consequently no liability or corresponding contra revenue has been recorded in the Company’s financial statements.

Exit Activities

We commenced exit activities related to severance and other employee separation costs during the three and six months ended June 30, 2020. We accrued $0.5 million as of June 30, 2020, of which $0.4 million related to the Commercial Services segment and the remaining related to the Government Solutions segment. The Company expects to pay the amount before the end of fiscal 2020.

Legal Proceedings

The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The Company records a liability when it believes it is probable a loss will be incurred and the amount of loss or range of loss can be reasonably estimated. The assessment as to whether a loss is probable, reasonably possible or remote, and as to whether a loss or a range of such loss is estimable, often involves significant judgment about future events. The Company has determined that resolution of pending matters is not probable to have a material adverse impact on its condensed consolidated results of operations, cash flows, or financial position, and accordingly, no material contingency accruals are recorded. However, the outcome of litigation is inherently uncertain. As additional information becomes available, the Company reassesses the potential liability.

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Segment Reporting

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

16. Segment Reporting

The Company has two operating and reportable segments, Commercial Services and Government Solutions. Commercial Services offers toll and violation management solutions and title and registration services to commercial fleet vehicle owners, rental car companies and violation-issuing authorities. Government Solutions implements and administers traffic safety programs and products for municipalities and local government agencies of all sizes. The Company’s Chief Operating Decision Maker function (“CODM”) is comprised of the Company’s CEO and certain defined representatives of the Company’s executive management team. The Company’s CODM monitors operating performance, allocates resources and deploys capital based on these two segments.

Segment performance is based on revenues and (loss) income from operations before depreciation, amortization, gain (loss) on disposal of assets, net, and stock-based compensation. The measure also excludes interest expense, net, income taxes and is inclusive of other income, net. The tables below refer to this measure as Segment profit (loss). The aforementioned items are not indicative of operating performance, and, as a result are not included in the measures that are reviewed by the CODM for the segments. Other income, net consists primarily of credit card rebates earned on the prepayment of tolling transactions and is therefore included in Segment profit (loss). There are no significant non-cash items reported in Segment profit (loss).

The following tables set forth financial information by segment for the respective periods:

	For the Three Months Ended June 30, 2020
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	27,272		$	35,543		$	—		$	62,815
Product sales		—			16,994			—			16,994
Total revenue		27,272			52,537			—			79,809
Cost of service revenue		646			367			—			1,013
Cost of product sales		—			9,060			—			9,060
Operating expenses		10,750			15,655			—			26,405
Selling, general and administrative expenses		10,191			7,150			503			17,844
Other income, net		(1,507	)		(16	)		—			(1,523	)
Segment profit (loss)	$	7,192		$	20,321		$	(503	)	$	27,010
Segment profit (loss)	$	7,192		$	20,321		$	(503	)	$	27,010
Depreciation and amortization		—			—			29,159			29,159
Loss on disposal of assets, net		5			2			—			7
Loss from tax receivable agreement adjustment		—			—			4,446			4,446
Stock-based compensation		—			—			3,271			3,271
Interest expense, net		—			—			9,539			9,539
Income (loss) before income tax benefit	$	7,187		$	20,319		$	(46,918	)	$	(19,412	)

	For the Three Months Ended June 30, 2019
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	68,091		$	34,966		$	—		$	103,057
Product sales		—			6,518			—			6,518
Total revenue		68,091			41,484			—			109,575
Cost of service revenue		915			698			—			1,613
Cost of product sales		—			2,918			—			2,918
Operating expenses		16,722			14,801			—			31,523
Selling, general and administrative expenses		9,629			7,561			1,135			18,325
Other income, net		(3,308	)		(37	)		—			(3,345	)
Segment profit (loss)	$	44,133		$	15,543		$	(1,135	)	$	58,541
Segment profit (loss)	$	44,133		$	15,543		$	(1,135	)	$	58,541
Depreciation and amortization		—			—			28,865			28,865
Gain on disposal of assets, net		—			(15	)		—			(15	)
Impairment of property and equipment		—			5,898			—			5,898
Stock-based compensation		—			—			2,812			2,812
Interest expense, net		—			—			15,656			15,656
Income (loss) before income tax provision	$	44,133		$	9,660		$	(48,468	)	$	5,325

	For the Six Months Ended June 30, 2020
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	88,514		$	73,798		$	—		$	162,312
Product sales		—			34,210			—			34,210
Total revenue		88,514			108,008			—			196,522
Cost of service revenue		1,453			779			—			2,232
Cost of product sales		—			17,750			—			17,750
Operating expenses		27,280			31,164			—			58,444
Selling, general and administrative expenses		23,575			16,819			788			41,182
Other income, net		(4,396	)		(52	)		—			(4,448	)
Segment profit (loss)	$	40,602		$	41,548		$	(788	)	$	81,362
Segment profit (loss)	$	40,602		$	41,548		$	(788	)	$	81,362
Depreciation and amortization		—			—			58,409			58,409
Loss (gain) on disposal of assets, net		5			(2	)		—			3
Loss from tax receivable agreement adjustment		—			—			4,446			4,446
Stock-based compensation		—			—			6,039			6,039
Interest expense, net		—			—			21,990			21,990
Income (loss) before income tax benefit	$	40,597		$	41,550		$	(91,672	)	$	(9,525	)

	For the Six Months Ended June 30, 2019
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	130,679		$	70,448		$	—		$	201,127
Product sales		—			6,909			—			6,909
Total revenue		130,679			77,357			—			208,036
Cost of service revenue		1,779			1,223			—			3,002
Cost of product sales		—			3,194			—			3,194
Operating expenses		31,818			28,839			—			60,657
Selling, general and administrative expenses		20,391			15,411			1,135			36,937
Other income, net		(5,478	)		(74	)		—			(5,552	)
Segment profit (loss)	$	82,169		$	28,764		$	(1,135	)	$	109,798
Segment profit (loss)	$	82,169		$	28,764		$	(1,135	)	$	109,798
Depreciation and amortization		—			—			57,804			57,804
Gain on disposal of assets, net		—			(13	)		—			(13	)
Impairment of property and equipment		—			5,898			—			5,898
Stock-based compensation		—			—			4,955			4,955
Interest expense, net		—			—			31,689			31,689
Income (loss) before income tax provision	$	82,169		$	22,879		$	(95,583	)	$	9,465

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Guarantor/Non-Guarantor Financial Information

6 Months Ended

Jun. 30, 2020

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Guarantor/Non-Guarantor Financial Information

17. Guarantor/Non-Guarantor Financial Information

VM Consolidated, Inc., a wholly-owned subsidiary of the Company, is the lead borrower of the First Lien Term Loan and the Revolver. VM Consolidated, Inc. is owned by the Company through a series of holding companies that ultimately end with the Company. VM Consolidated, Inc. is wholly-owned by Greenlight Acquisition Corporation, which is wholly-owned by Greenlight Intermediate Holding Corporation, which is wholly-owned by Greenlight Holding Corporation, which is wholly-owned by Verra Mobility Holdings, LLC, which is wholly-owned by Verra Mobility Corporation or the Company. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, including transactions with the Company’s wholly-owned subsidiary guarantors and non-guarantor subsidiaries.

The following financial information presents the condensed consolidated balance sheets as of June 30, 2020 and the related condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2020 and condensed consolidated statements of cash flows for the six months ended June 30, 2020 for the Company, combined guarantor subsidiaries and combined non-guarantor subsidiaries.

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

at June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)		VM Consolidated Inc. (Guarantor Subsidiary)		Non- guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	98,566	$	14,673	$	—		$	113,239
Restricted cash		—		711		—		—			711
Accounts receivable (net of allowance for credit loss of $12.9 million )		—		122,373		2,879		—			125,252
Unbilled receivables		—		12,244		288		—			12,532
Investment in subsidiary		162,491		73,069		—		(235,560	)		—
Prepaid expenses and other current assets		—		16,655		2,309		—			18,964
Total current assets		162,491		323,618		20,149		(235,560	)		270,698
Installation and service parts, net		—		8,672		—		—			8,672
Property and equipment, net		—		69,987		3,617		—			73,604
Operating lease assets		—		30,588		345		—			30,933
Intangible assets, net		—		360,280		26,083		—			386,363
Goodwill		—		524,766		56,849		—			581,615
Due from affiliates		169,259		—		—		(169,259	)		—
Other non-current assets		—		3,223		14		—			3,237
Total assets	$	331,750	$	1,321,134	$	107,057	$	(404,819	)	$	1,355,122
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—	$	26,229	$	10,117	$	—		$	36,346
Accrued liabilities		—		16,546		3,024		—			19,570
Current portion of long-term debt		—		9,104		—		—			9,104
Total current liabilities		—		51,879		13,141		—			65,020
Long-term debt, net of current portion and deferred financing costs		—		834,317		—		—			834,317
Operating lease liabilities, net of current portion		—		29,070		170		—			29,240
Payable to related party pursuant to tax receivable agreement		—		65,620		—		—			65,620
Due to affiliates		—		153,369		15,890		(169,259	)		—
Asset retirement obligation		—		6,237		—		—			6,237
Deferred tax liabilities, net		—		17,904		4,787		—			22,691
Other long-term liabilities		—		247		—		—			247
Total liabilities		—		1,158,643		33,988		(169,259	)		1,023,372
Total stockholders' equity		331,750		162,491		73,069		(235,560	)		331,750
Total liabilities and stockholders' equity	$	331,750	$	1,321,134	$	107,057	$	(404,819	)	$	1,355,122

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Service revenue	$	—		$	59,784		$	3,031		$	—		$	62,815
Product sales		—			16,994			—			—			16,994
Total revenue		—			76,778			3,031			—			79,809
Cost of service revenue		—			451			562			—			1,013
Cost of product sales		—			9,060			—			—			9,060
Operating expenses		—			24,926			1,773			—			26,699
Selling, general and administrative expenses		—			19,649			1,172			—			20,821
Depreciation, amortization and (gain) loss on disposal of assets, net		—			27,876			1,290			—			29,166
Total costs and expenses		—			81,962			4,797			—			86,759
Loss from operations		—			(5,184	)		(1,766	)		—			(6,950	)
Loss from equity investment		15,388			1,521			—			(16,909	)		—
Interest expense, net		—			9,540			(1	)		—			9,539
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Other income, net		—			(1,494	)		(29	)		—			(1,523	)
Total other expenses (income)		15,388			14,013			(30	)		(16,909	)		12,462
Loss before income tax benefit		(15,388	)		(19,197	)		(1,736	)		16,909			(19,412	)
Income tax benefit		—			(3,809	)		(215	)		—			(4,024	)
Net loss	$	(15,388	)	$	(15,388	)	$	(1,521	)	$	16,909		$	(15,388	)
Other comprehensive loss:
Change in foreign currency translation adjustment		—			—			(508	)		—			(508	)
Total comprehensive loss	$	(15,388	)	$	(15,388	)	$	(2,029	)	$	16,909		$	(15,896	)

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Six Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Service revenue	$	—		$	155,434		$	6,878		$	—		$	162,312
Product sales		—			34,210			—			—			34,210
Total revenue		—			189,644			6,878			—			196,522
Cost of service revenue		—			1,119			1,113			—			2,232
Cost of product sales		—			17,750			—			—			17,750
Operating expenses		—			55,504			3,454			—			58,958
Selling, general and administrative expenses		—			43,624			3,083			—			46,707
Depreciation, amortization and (gain) loss on disposal of assets, net		—			55,871			2,541			—			58,412
Total costs and expenses		—			173,868			10,191			—			184,059
Income (loss) from operations		—			15,776			(3,313	)		—			12,463
Loss from equity investment		8,715			2,828			—			(11,543	)		—
Interest expense, net		—			22,002			(12	)		—			21,990
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Other income, net		—			(4,381	)		(67	)		—			(4,448	)
Total other expenses (income)		8,715			24,895			(79	)		(11,543	)		21,988
Loss before income tax benefit		(8,715	)		(9,119	)		(3,234	)		11,543			(9,525	)
Income tax benefit		—			(404	)		(406	)		—			(810	)
Net loss	$	(8,715	)	$	(8,715	)	$	(2,828	)	$	11,543		$	(8,715	)
Other comprehensive loss:
Change in foreign currency translation adjustment		—			—			(3,875	)		—			(3,875	)
Total comprehensive loss	$	(8,715	)	$	(8,715	)	$	(6,703	)	$	11,543		$	(12,590	)

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities:
Net loss	$	(8,715	)	$	(8,715	)	$	(2,828	)	$	11,543		$	(8,715	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		—			55,873			2,536			—			58,409
Amortization of deferred financing costs and discounts		—			2,106			—			—			2,106
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Credit loss expense		—			10,723			—			—			10,723
Deferred income taxes		—			(1,869	)		(627	)		—			(2,496	)
Stock-based compensation		—			6,039			—			—			6,039
Installation and service parts expense		—			559			—			—			559
Accretion expense		—			129			—			—			129
(Gain) loss on disposal of assets		—			(2	)		5			—			3
Loss from equity investment		8,715			2,828			—			(11,543	)		—
Changes in operating assets and liabilities:
Accounts receivable, net		—			(44,969	)		1,786			—			(43,183	)
Unbilled receivables		—			7,073			403			—			7,476
Prepaid expenses and other current assets		—			8,008			(29	)		—			7,979
Accounts payable and accrued liabilities		—			(13,865	)		(3,998	)		—			(17,863	)
Due to affiliates		—			(2,027	)		2,027			—			—
Other liabilities		—			(3,069	)		—			—			(3,069	)
Net cash provided by (used in) operating activities		—			23,268			(725	)		—			22,543
Cash Flows from Investing Activities:
Purchases of installation and service parts and property and equipment		—			(12,825	)		(1,476	)		—			(14,301	)
Cash proceeds from the sale of assets		—			49			—			—			49
Net cash used in investing activities		—			(12,776	)		(1,476	)		—			(14,252	)
Cash Flows from Financing Activities:
Repayment of long-term debt		—			(24,227	)		—			—			(24,227	)
Payment of debt issuance costs		—			(922	)		—			—			(922	)
Payment of employee tax withholding related to RSU vesting		—			(352	)		—			—			(352	)
Net cash used in financing activities		—			(25,501	)		—			—			(25,501	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(1,270	)		—			(1,270	)
Net decrease in cash, cash equivalents and restricted cash		—			(15,009	)		(3,471	)		—			(18,480	)
Cash, cash equivalents and restricted cash - beginning of period		—			114,286			18,144			—			132,430
Cash, cash equivalents and restricted cash - end of period	$	—		$	99,277		$	14,673		$	—		$	113,950

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

Six Months Ended June 30, 2020

(Unaudited)

	Verra Mobility Corporation (Ultimate Parent)		VM Consolidated Inc. (Guarantor Subsidiary)		Non- guarantor Subsidiaries		Eliminations		Consolidated
Supplemental cash flow information:
Interest paid	$	—	$	20,201	$	—	$	—	$	20,201
Income taxes paid, net		—		826		309		—		1,135
Supplemental non-cash investing and financing activities:
Earn-out shares issued to Platinum Stockholder		18,287		—		—		—		18,287
Additions to ARO, property and equipment, and other		—		41		—		—		41
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end		—		3,238		—		—		3,238

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

Use of Estimates

Use of Estimates

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited interim condensed consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the fair values assigned to net assets acquired (including identifiable intangibles) in business combinations, the carrying amounts of long-lived assets and goodwill, the carrying amount of installation and service parts, the allowance for credit loss, valuation allowances on deferred tax assets, asset retirement obligations, contingent consideration and the recognition and measurement of loss contingencies.

Management believes that its estimates and assumptions are reasonable in the circumstances; however, actual results could differ materially from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Standards Adopted

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test. Goodwill impairment is now the amount by which a reporting unit’s carrying value exceeds its fair value limited to the total amount of goodwill allocated to that reporting unit. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill for all reporting units, even those with zero or negative carrying amounts. The Company adopted the ASU as of January 1, 2020 and followed the one-step method in evaluating potential goodwill impairment for the first and second quarters of fiscal 2020, refer to Note 6, Goodwill and Intangible Assets. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and issued certain amendments within ASU 2019-04, ASU 2019-05 and ASU 2019-11, respectively. The guidance replaced the incurred loss impairment model and applies a new model, current expected credit losses (“CECL”), that requires entities to estimate expected credit losses measured over the contractual life of an instrument that consider supportable forecasts of future economic conditions in addition to information about past events and current conditions. An entity is required to measure and record an allowance for credit loss upon initial recognition of a financial asset, and present in-scope assets at amortized cost net of the amount expected to be collected. Under legacy GAAP, the Company recognized credit losses on trade receivables when it was probable that a loss has been incurred.

The Company adopted the CECL standard as of January 1, 2020 through a cumulative effect adjustment of $0.7 million, net of tax, to the opening balance of Accumulated deficit. The adjustment increased Accumulated deficit and increased the Allowance for credit loss accounts. Subsequent impacts to the Allowance for credit loss have been recorded through the Credit loss expense account included within Selling, general and administrative expenses in our condensed consolidated statements of operations and as an Allowance for credit loss on our condensed consolidated balance sheet. See Note 4. Accounts Receivable, Net for additional information.

Accounting Standards Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The ASU removes specific exceptions to the general principles in Topic 740 in U.S. GAAP including the exception to the incremental approach for intra-period tax allocation, exceptions to accounting for basis differences when there are ownership changes in foreign investments, and the exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. The ASU also simplifies current guidance in relation to franchise taxes that are partially based on income, transactions with a government that result in a step-up in tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Early adoption is permitted. The impact of the implementation of this standard is still being determined by the Company.

On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. It provides optional expedients and exceptions for applying GAAP to contract modifications, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The ASU is in effect for a limited time through December 31, 2022, to help stakeholders during the global market-wide reference rate transition period. The impact of the implementation of this standard is still being determined by the Company.

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Acquisition (Tables)

6 Months Ended

Jun. 30, 2020

Pagatelia S.L

Summary of Allocation of Purchase Consideration

The allocation of the purchase consideration is summarized as follows:

($ in thousands)
Assets acquired
Cash	$	1,086
Other assets		5,047
Trademark		771
Customer relationships		5,946
Developed technology		4,624
Non-compete agreements		440
Goodwill		17,528
Total assets acquired		35,442
Liabilities assumed
Accounts payable and accrued expenses		6,045
Deferred tax liability		2,801
Total liabilities assumed		8,846
Total purchase price	$	26,596

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Accounts Receivable, Net (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Summary of Accounts Receivable, Net and Activity in Allowance for Credit Loss by Portfolio Segment

The following presents by portfolio segment Accounts receivable, net and the activity in the Allowance for credit loss for the six months ended June 30, 2020:

($ in thousands)	Commercial Services (Driver-billed) (1)			Commercial Services (All other)			Government Solutions			Total
Accounts Receivable, Net at January 1, 2020 (2)	$	9,793		$	51,158		$	31,744		$	92,695
Allowance for credit loss at January 1, 2020 (2)	$	5,272		$	1,406		$	1,778		$	8,456
Credit loss expense		2,744			6,256			1,723			10,723
Write-offs, net of recoveries		(5,449	)		(334	)		(466	)		(6,249	)
Allowance for credit loss at June 30, 2020	$	2,567		$	7,328		$	3,035		$	12,930
Accounts Receivable, Net at June 30, 2020	$	7,926		$	48,934		$	68,392		$	125,252

(1) Driver-billed consists of receivables from drivers of rental cars and fleet management companies for which the Company bills on behalf of its customers. Receivables not collected from drivers within a defined number of days are transferred to customers subject to applicable bad debt sharing agreements.

(2) This includes a $0.8 million increase to Allowance for credit loss as a result of adopting the CECL standard.

Summary of Concentration of Credit Risk

Revenue from one of the Government Solutions customers as a percent of total revenue is presented below for the three and six months ended June 30, 2020 and 2019, respectively:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
City of New York Department of Transportation		40.5	%		12.4	%		31.6	%		10.4	%

The City of New York Department of Transportation represents 42.2% of accounts receivable, net as of June 30, 2020. Significant customer revenue generated through the Company’s Commercial Services partners as a percent of total revenue is presented below for the three and six months ended June 30, 2020 and 2019, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020	2019			2020			2019
Hertz Corporation	(1)		19.6	%		13.0	%		19.0	%
Avis Budget Group, Inc.	(1)		16.5	%	(1)				13.1	%
Enterprise Holdings, Inc.	(1)		13.5	%	(1)				13.7	%

(1) Customer revenue for the period was below 10% of total revenue.

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Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2020

Prepaid Expense And Other Assets Current [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following at:

($ in thousands)	June 30, 2020		December 31, 2019
Prepaid tolls	$	7,947	$	10,116
Deposits		3,345		3,642
Prepaid services		3,176		5,201
Prepaid computer maintenance		2,559		2,923
Prepaid insurance		841		1,485
Photo enforcement equipment held for sale		416		1,410
Prepaid income taxes		230		1,025
Other		450		689
Total prepaid expenses and other current assets	$	18,964	$	26,491

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Changes in Carrying Amount of Goodwill by Reportable Segment

The following table presents the changes in the carrying amount of goodwill by reportable segment:

	Commercial			Government
($ in thousands)	Services			Solutions		Total
Balance at December 31, 2019	$	424,404		$	159,746	$	584,150
Foreign currency translation adjustment		(2,535	)		—		(2,535	)
Balance at June 30, 2020	$	421,869		$	159,746	$	581,615

Schedule of Intangible Assets of Respective Period Ends

Intangible assets consist of the following as of the respective period-ends:

	June 30, 2020						December 31, 2019
	Weighted						Weighted
	Average	Gross					Average	Gross
	Remaining	Carrying			Accumulated		Remaining	Carrying			Accumulated
($ in thousands)	Useful Life	Amount			Amortization		Useful Life	Amount			Amortization
Trademarks	0.9 years	$	32,067		$	24,209	1.5 years	$	32,127		$	19,106
Non-compete agreements	2.5 years		62,555			31,119	3.0 years		62,549			24,834
Customer relationships	6.4 years		365,368			103,204	6.9 years		366,533			82,903
Developed technology	2.8 years		165,520			80,615	3.3 years		165,708			65,631
Gross carrying value of intangible assets			625,510		$	239,147			626,917		$	192,474
Less: accumulated amortization			(239,147	)					(192,474	)
Intangible assets, net		$	386,363					$	434,443

Estimated Amortization Expense in Future Years

Estimated amortization expense in future years is expected to be:

($ in thousands)
Remainder of 2020	$	46,823
2021		85,379
2022		80,654
2023		52,157
2024		41,671
Thereafter		79,679
Total	$	386,363

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Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Payables And Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consist of the following at:

($ in thousands)	June 30, 2020		December 31, 2019
Accrued salaries and wages	$	4,228	$	10,319
Current portion of related party TRA liability		4,636		5,730
Current portion of operating lease liabilities		2,933		2,970
Advanced deposits payable		2,435		2,875
Income taxes payable		1,952		348
Restricted cash due to customers		711		917
Accrued sales commissions		480		612
Accrued interest payable		173		210
Other		2,022		1,296
Total accrued liabilities	$	19,570	$	25,277

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Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Summary of the Company's Debt

The following table provides a summary of the Company’s debt at:

($ in thousands)	June 30, 2020			December 31, 2019
First Lien Term Loan, due February 28, 2025	$	870,194		$	894,421
Less: original issue discounts		(4,469	)		(4,778	)
Less: unamortized deferred financing costs		(22,304	)		(23,178	)
Total debt		843,421			866,465
Less: current portion of long-term debt		(9,104	)		(28,779	)
Total long-term debt, net of current portion	$	834,317		$	837,686

Schedule of Consolidated First Lien Net Leverage Ratio and Applicable Prepayment Percentage

In addition, the First Lien Term Loan requires mandatory prepayments equal to the product of the excess cash flows of the Company (as defined in the loan agreement) and the applicable prepayment percentages (calculated as of the last day of the fiscal year, beginning with the year ending December 31, 2019), as set forth in the following table:

Consolidated first lien net leverage ratio (as defined by the First Lien Term Loan agreement)	Applicable prepayment percentage
> 3.70:1.00	50%
< 3.70:1.00 and > 3.20:1.00	25%
< 3.20:1.00	0%

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Carrying Value and Fair Value of Debt

The carrying value and fair value of debt is as follows:

	Level in	June 30, 2020				December 31, 2019
	Fair Value	Carrying		Estimated		Carrying		Estimated
($ in thousands)	Hierarchy	Amount		Fair Value		Amount		Fair Value
Total debt	2	$	843,421	$	839,737	$	866,465	$	905,601

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Net (Loss) Income Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of Components of Basic and Diluted Net (Loss) Income Per Share

The components of basic and diluted net (loss) income per share are as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
(In thousands, except per share data)	2020			2019		2020			2019
Numerator:
Net (loss) income	$	(15,388	)	$	3,591	$	(8,715	)	$	6,411
Denominator:
Weighted average shares - basic		161,710			157,846		161,317			156,956
Common stock equivalents		—			4,131		—			2,267
Weighted average shares - diluted		161,710			161,977		161,317			159,223
Net (loss) income per share - basic	$	(0.10	)	$	0.02	$	(0.05	)	$	0.04
Net (loss) income per share - diluted	$	(0.10	)	$	0.02	$	(0.05	)	$	0.04
Antidilutive shares excluded from diluted net (loss) income per share (1):
Contingently issuable shares (2)		5,000			8,214		5,000			9,107
Warrants		20,000			—		20,000			10,000
Non-qualified stock options		699			—		699			—
Performance share units		116			—		116			—
Restricted stock units		3,377			—		3,377			43
Total antidilutive shares excluded		29,192			8,214		29,192			19,150

(1) These amounts represent the total antidilutive shares outstanding for the three and six months ended June 30, 2020 and the weighted average antidilutive shares for the three and six months ended June 30, 2019.

(2) Contingently issuable shares relate to the earn-out agreement as discussed in Note 14, Related Party Transactions.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Schedule of Components of Stock Based Compensation Expense

The following details the components of stock-based compensation for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)	2020		2019		2020		2019
Operating expenses	$	294	$	272	$	514	$	476
Selling, general and administrative expenses		2,977		2,540		5,525		4,479
Total stock-based compensation expense	$	3,271	$	2,812	$	6,039	$	4,955

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Summary of Earn Out Shares Issued by Company to Platinum Stockholder

The Earn-Out Shares are issued by the Company to the Platinum Stockholder as follows:

Common Stock Price thresholds	One-time issuance of shares
> $13.00 (a)		2,500,000
> $15.50 (a)		2,500,000
> $18.00		2,500,000
> $20.50		2,500,000

(a) The first and second tranches of Earn-Out Shares have been issued, as discussed below.

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2020

Segment Reporting [Abstract]

Financial Information by Segment

The following tables set forth financial information by segment for the respective periods:

	For the Three Months Ended June 30, 2020
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	27,272		$	35,543		$	—		$	62,815
Product sales		—			16,994			—			16,994
Total revenue		27,272			52,537			—			79,809
Cost of service revenue		646			367			—			1,013
Cost of product sales		—			9,060			—			9,060
Operating expenses		10,750			15,655			—			26,405
Selling, general and administrative expenses		10,191			7,150			503			17,844
Other income, net		(1,507	)		(16	)		—			(1,523	)
Segment profit (loss)	$	7,192		$	20,321		$	(503	)	$	27,010
Segment profit (loss)	$	7,192		$	20,321		$	(503	)	$	27,010
Depreciation and amortization		—			—			29,159			29,159
Loss on disposal of assets, net		5			2			—			7
Loss from tax receivable agreement adjustment		—			—			4,446			4,446
Stock-based compensation		—			—			3,271			3,271
Interest expense, net		—			—			9,539			9,539
Income (loss) before income tax benefit	$	7,187		$	20,319		$	(46,918	)	$	(19,412	)

	For the Three Months Ended June 30, 2019
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	68,091		$	34,966		$	—		$	103,057
Product sales		—			6,518			—			6,518
Total revenue		68,091			41,484			—			109,575
Cost of service revenue		915			698			—			1,613
Cost of product sales		—			2,918			—			2,918
Operating expenses		16,722			14,801			—			31,523
Selling, general and administrative expenses		9,629			7,561			1,135			18,325
Other income, net		(3,308	)		(37	)		—			(3,345	)
Segment profit (loss)	$	44,133		$	15,543		$	(1,135	)	$	58,541
Segment profit (loss)	$	44,133		$	15,543		$	(1,135	)	$	58,541
Depreciation and amortization		—			—			28,865			28,865
Gain on disposal of assets, net		—			(15	)		—			(15	)
Impairment of property and equipment		—			5,898			—			5,898
Stock-based compensation		—			—			2,812			2,812
Interest expense, net		—			—			15,656			15,656
Income (loss) before income tax provision	$	44,133		$	9,660		$	(48,468	)	$	5,325

	For the Six Months Ended June 30, 2020
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	88,514		$	73,798		$	—		$	162,312
Product sales		—			34,210			—			34,210
Total revenue		88,514			108,008			—			196,522
Cost of service revenue		1,453			779			—			2,232
Cost of product sales		—			17,750			—			17,750
Operating expenses		27,280			31,164			—			58,444
Selling, general and administrative expenses		23,575			16,819			788			41,182
Other income, net		(4,396	)		(52	)		—			(4,448	)
Segment profit (loss)	$	40,602		$	41,548		$	(788	)	$	81,362
Segment profit (loss)	$	40,602		$	41,548		$	(788	)	$	81,362
Depreciation and amortization		—			—			58,409			58,409
Loss (gain) on disposal of assets, net		5			(2	)		—			3
Loss from tax receivable agreement adjustment		—			—			4,446			4,446
Stock-based compensation		—			—			6,039			6,039
Interest expense, net		—			—			21,990			21,990
Income (loss) before income tax benefit	$	40,597		$	41,550		$	(91,672	)	$	(9,525	)

	For the Six Months Ended June 30, 2019
	Commercial			Government			Corporate
($ in thousands)	Services			Solutions			and Other			Total
Service revenue	$	130,679		$	70,448		$	—		$	201,127
Product sales		—			6,909			—			6,909
Total revenue		130,679			77,357			—			208,036
Cost of service revenue		1,779			1,223			—			3,002
Cost of product sales		—			3,194			—			3,194
Operating expenses		31,818			28,839			—			60,657
Selling, general and administrative expenses		20,391			15,411			1,135			36,937
Other income, net		(5,478	)		(74	)		—			(5,552	)
Segment profit (loss)	$	82,169		$	28,764		$	(1,135	)	$	109,798
Segment profit (loss)	$	82,169		$	28,764		$	(1,135	)	$	109,798
Depreciation and amortization		—			—			57,804			57,804
Gain on disposal of assets, net		—			(13	)		—			(13	)
Impairment of property and equipment		—			5,898			—			5,898
Stock-based compensation		—			—			4,955			4,955
Interest expense, net		—			—			31,689			31,689
Income (loss) before income tax provision	$	82,169		$	22,879		$	(95,583	)	$	9,465

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Guarantor/Non-Guarantor Financial Information (Tables)

6 Months Ended

Jun. 30, 2020

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Summary of Condensed Consolidated Balance Sheets

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

at June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)		VM Consolidated Inc. (Guarantor Subsidiary)		Non- guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	98,566	$	14,673	$	—		$	113,239
Restricted cash		—		711		—		—			711
Accounts receivable (net of allowance for credit loss of $12.9 million )		—		122,373		2,879		—			125,252
Unbilled receivables		—		12,244		288		—			12,532
Investment in subsidiary		162,491		73,069		—		(235,560	)		—
Prepaid expenses and other current assets		—		16,655		2,309		—			18,964
Total current assets		162,491		323,618		20,149		(235,560	)		270,698
Installation and service parts, net		—		8,672		—		—			8,672
Property and equipment, net		—		69,987		3,617		—			73,604
Operating lease assets		—		30,588		345		—			30,933
Intangible assets, net		—		360,280		26,083		—			386,363
Goodwill		—		524,766		56,849		—			581,615
Due from affiliates		169,259		—		—		(169,259	)		—
Other non-current assets		—		3,223		14		—			3,237
Total assets	$	331,750	$	1,321,134	$	107,057	$	(404,819	)	$	1,355,122
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—	$	26,229	$	10,117	$	—		$	36,346
Accrued liabilities		—		16,546		3,024		—			19,570
Current portion of long-term debt		—		9,104		—		—			9,104
Total current liabilities		—		51,879		13,141		—			65,020
Long-term debt, net of current portion and deferred financing costs		—		834,317		—		—			834,317
Operating lease liabilities, net of current portion		—		29,070		170		—			29,240
Payable to related party pursuant to tax receivable agreement		—		65,620		—		—			65,620
Due to affiliates		—		153,369		15,890		(169,259	)		—
Asset retirement obligation		—		6,237		—		—			6,237
Deferred tax liabilities, net		—		17,904		4,787		—			22,691
Other long-term liabilities		—		247		—		—			247
Total liabilities		—		1,158,643		33,988		(169,259	)		1,023,372
Total stockholders' equity		331,750		162,491		73,069		(235,560	)		331,750
Total liabilities and stockholders' equity	$	331,750	$	1,321,134	$	107,057	$	(404,819	)	$	1,355,122

Summary of Condensed Consolidated Statements of Operations and Comprehensive Loss

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Three Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Service revenue	$	—		$	59,784		$	3,031		$	—		$	62,815
Product sales		—			16,994			—			—			16,994
Total revenue		—			76,778			3,031			—			79,809
Cost of service revenue		—			451			562			—			1,013
Cost of product sales		—			9,060			—			—			9,060
Operating expenses		—			24,926			1,773			—			26,699
Selling, general and administrative expenses		—			19,649			1,172			—			20,821
Depreciation, amortization and (gain) loss on disposal of assets, net		—			27,876			1,290			—			29,166
Total costs and expenses		—			81,962			4,797			—			86,759
Loss from operations		—			(5,184	)		(1,766	)		—			(6,950	)
Loss from equity investment		15,388			1,521			—			(16,909	)		—
Interest expense, net		—			9,540			(1	)		—			9,539
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Other income, net		—			(1,494	)		(29	)		—			(1,523	)
Total other expenses (income)		15,388			14,013			(30	)		(16,909	)		12,462
Loss before income tax benefit		(15,388	)		(19,197	)		(1,736	)		16,909			(19,412	)
Income tax benefit		—			(3,809	)		(215	)		—			(4,024	)
Net loss	$	(15,388	)	$	(15,388	)	$	(1,521	)	$	16,909		$	(15,388	)
Other comprehensive loss:
Change in foreign currency translation adjustment		—			—			(508	)		—			(508	)
Total comprehensive loss	$	(15,388	)	$	(15,388	)	$	(2,029	)	$	16,909		$	(15,896	)

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

Six Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Service revenue	$	—		$	155,434		$	6,878		$	—		$	162,312
Product sales		—			34,210			—			—			34,210
Total revenue		—			189,644			6,878			—			196,522
Cost of service revenue		—			1,119			1,113			—			2,232
Cost of product sales		—			17,750			—			—			17,750
Operating expenses		—			55,504			3,454			—			58,958
Selling, general and administrative expenses		—			43,624			3,083			—			46,707
Depreciation, amortization and (gain) loss on disposal of assets, net		—			55,871			2,541			—			58,412
Total costs and expenses		—			173,868			10,191			—			184,059
Income (loss) from operations		—			15,776			(3,313	)		—			12,463
Loss from equity investment		8,715			2,828			—			(11,543	)		—
Interest expense, net		—			22,002			(12	)		—			21,990
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Other income, net		—			(4,381	)		(67	)		—			(4,448	)
Total other expenses (income)		8,715			24,895			(79	)		(11,543	)		21,988
Loss before income tax benefit		(8,715	)		(9,119	)		(3,234	)		11,543			(9,525	)
Income tax benefit		—			(404	)		(406	)		—			(810	)
Net loss	$	(8,715	)	$	(8,715	)	$	(2,828	)	$	11,543		$	(8,715	)
Other comprehensive loss:
Change in foreign currency translation adjustment		—			—			(3,875	)		—			(3,875	)
Total comprehensive loss	$	(8,715	)	$	(8,715	)	$	(6,703	)	$	11,543		$	(12,590	)

Summary of Condensed Consolidated Statements of Cash Flows

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2020

(Unaudited)

($ in thousands)	Verra Mobility Corporation (Ultimate Parent)			VM Consolidated Inc. (Guarantor Subsidiary)			Non- guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities:
Net loss	$	(8,715	)	$	(8,715	)	$	(2,828	)	$	11,543		$	(8,715	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		—			55,873			2,536			—			58,409
Amortization of deferred financing costs and discounts		—			2,106			—			—			2,106
Loss from tax receivable agreement adjustment		—			4,446			—			—			4,446
Credit loss expense		—			10,723			—			—			10,723
Deferred income taxes		—			(1,869	)		(627	)		—			(2,496	)
Stock-based compensation		—			6,039			—			—			6,039
Installation and service parts expense		—			559			—			—			559
Accretion expense		—			129			—			—			129
(Gain) loss on disposal of assets		—			(2	)		5			—			3
Loss from equity investment		8,715			2,828			—			(11,543	)		—
Changes in operating assets and liabilities:
Accounts receivable, net		—			(44,969	)		1,786			—			(43,183	)
Unbilled receivables		—			7,073			403			—			7,476
Prepaid expenses and other current assets		—			8,008			(29	)		—			7,979
Accounts payable and accrued liabilities		—			(13,865	)		(3,998	)		—			(17,863	)
Due to affiliates		—			(2,027	)		2,027			—			—
Other liabilities		—			(3,069	)		—			—			(3,069	)
Net cash provided by (used in) operating activities		—			23,268			(725	)		—			22,543
Cash Flows from Investing Activities:
Purchases of installation and service parts and property and equipment		—			(12,825	)		(1,476	)		—			(14,301	)
Cash proceeds from the sale of assets		—			49			—			—			49
Net cash used in investing activities		—			(12,776	)		(1,476	)		—			(14,252	)
Cash Flows from Financing Activities:
Repayment of long-term debt		—			(24,227	)		—			—			(24,227	)
Payment of debt issuance costs		—			(922	)		—			—			(922	)
Payment of employee tax withholding related to RSU vesting		—			(352	)		—			—			(352	)
Net cash used in financing activities		—			(25,501	)		—			—			(25,501	)
Effect of exchange rate changes on cash and cash equivalents		—			—			(1,270	)		—			(1,270	)
Net decrease in cash, cash equivalents and restricted cash		—			(15,009	)		(3,471	)		—			(18,480	)
Cash, cash equivalents and restricted cash - beginning of period		—			114,286			18,144			—			132,430
Cash, cash equivalents and restricted cash - end of period	$	—		$	99,277		$	14,673		$	—		$	113,950

Verra Mobility Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

Six Months Ended June 30, 2020

(Unaudited)

	Verra Mobility Corporation (Ultimate Parent)		VM Consolidated Inc. (Guarantor Subsidiary)		Non- guarantor Subsidiaries		Eliminations		Consolidated
Supplemental cash flow information:
Interest paid	$	—	$	20,201	$	—	$	—	$	20,201
Income taxes paid, net		—		826		309		—		1,135
Supplemental non-cash investing and financing activities:
Earn-out shares issued to Platinum Stockholder		18,287		—		—		—		18,287
Additions to ARO, property and equipment, and other		—		41		—		—		41
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end		—		3,238		—		—		3,238

XML

Description of Business - Additional Information (Details)	6 Months Ended
	Jun. 30, 2020 Segment
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of operating segments	2

XML

Significant Accounting Policies - Additional Information (Details) $ in Millions	Jan. 01, 2020 USD ($)
Accounting Standards Update 2016-13
Summary Of Significant Accounting Principles And Policies [Line Items]
Adjustment to accumulated deficit	$ 0.7

XML

Acquisition - Additional Information (Details) - Pagatelia S.L $ in Millions	Oct. 31, 2019 USD ($)
Business Acquisition [Line Items]
Purchase price	$ 26.6
Trademarks
Business Acquisition [Line Items]
Identifiable intangible assets useful life	8 years 6 months
Customer Relationships
Business Acquisition [Line Items]
Identifiable intangible assets useful life	9 years 6 months
Developed Technology
Business Acquisition [Line Items]
Identifiable intangible assets useful life	6 years 6 months
Non-compete Agreements
Business Acquisition [Line Items]
Identifiable intangible assets useful life	3 years

XML

Acquisition - Summary of Allocation of Purchase Consideration (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Oct. 31, 2019
Assets acquired
Goodwill	$ 581,615	$ 584,150
Pagatelia S.L
Assets acquired
Cash			$ 1,086
Other assets			5,047
Goodwill			17,528
Total assets acquired			35,442
Liabilities assumed
Accounts payable and accrued expenses			6,045
Deferred tax liability			2,801
Total liabilities assumed			8,846
Total purchase price			26,596
Trademarks | Pagatelia S.L
Assets acquired
Intangible assets			771
Customer Relationships | Pagatelia S.L
Assets acquired
Intangible assets			5,946
Developed Technology | Pagatelia S.L
Assets acquired
Intangible assets			4,624
Non-compete Agreements | Pagatelia S.L
Assets acquired
Intangible assets			$ 440

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Accounts Receivable, Net - Summary of Accounts Receivable, Net and Activity in Allowance for Credit Loss by Portfolio Segment (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Accounts Notes And Loans Receivable [Line Items]
Accounts Receivable, Net, beginning balance	$ 92,695
Allowance for credit loss, beginning balance	8,456
Credit loss expense	10,723	$ 2,736
Write-offs, net of recoveries	(6,249)
Allowance for credit loss, ending balance	12,930
Accounts Receivable, Net, ending balance	125,252
Commercial Services (Driver Billed)
Accounts Notes And Loans Receivable [Line Items]
Accounts Receivable, Net, beginning balance	9,793
Allowance for credit loss, beginning balance	5,272
Credit loss expense	2,744
Write-offs, net of recoveries	(5,449)
Allowance for credit loss, ending balance	2,567
Accounts Receivable, Net, ending balance	7,926
Commercial Services (All Other)
Accounts Notes And Loans Receivable [Line Items]
Accounts Receivable, Net, beginning balance	51,158
Allowance for credit loss, beginning balance	1,406
Credit loss expense	6,256
Write-offs, net of recoveries	(334)
Allowance for credit loss, ending balance	7,328
Accounts Receivable, Net, ending balance	48,934
Government Solutions
Accounts Notes And Loans Receivable [Line Items]
Accounts Receivable, Net, beginning balance	31,744
Allowance for credit loss, beginning balance	1,778
Credit loss expense	1,723
Write-offs, net of recoveries	(466)
Allowance for credit loss, ending balance	3,035
Accounts Receivable, Net, ending balance	$ 68,392

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Accounts Receivable, Net - Summary of Accounts Receivable, Net and Activity in Allowance for Credit Loss by Portfolio Segment (Parenthetical) (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($)
Allowance For Doubtful Accounts Receivable Rollforward
Allowance for credit loss increase	$ 0.8

XML

Accounts Receivable, Net - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019
Accounts Notes And Loans Receivable [Line Items]
Estimated credit loss expense includes specific provision		$ 10,723	$ 2,736
Sales Revenue
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage	10.00%	10.00%
Sales Revenue | Minimum | Customer Concentration Risk
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage		10.00%
Accounts Receivable | Customer Concentration Risk | City of New York Department of Transportation
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage		42.20%
Accounts Receivable | Minimum | Customer Concentration Risk
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage		10.00%
One Customer of Commercial Services (All Other)
Accounts Notes And Loans Receivable [Line Items]
Estimated credit loss expense includes specific provision		$ 3,500

XML

Accounts Receivable, Net - Summary of Concentration of Credit Risk (Details) - Sales Revenue	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage	10.00%		10.00%
Customer Concentration Risk | Government Solutions | City of New York Department of Transportation
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage	40.50%	12.40%	31.60%	10.40%
Customer Concentration Risk | Commercial Services | Hertz Corporation
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage		19.60%	13.00%	19.00%
Customer Concentration Risk | Commercial Services | Avis Budget Group Inc
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage		16.50%		13.10%
Customer Concentration Risk | Commercial Services | Enterprise Holdings Inc
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage		13.50%		13.70%

XML

Accounts Receivable, Net - Summary of Concentration of Credit Risk (Parenthetical) (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Sales Revenue
Accounts Notes And Loans Receivable [Line Items]
Concentration risk percentage	10.00%	10.00%

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Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Prepaid Expense And Other Assets Current [Abstract]
Prepaid tolls	$ 7,947	$ 10,116
Deposits	3,345	3,642
Prepaid services	3,176	5,201
Prepaid computer maintenance	2,559	2,923
Prepaid insurance	841	1,485
Photo enforcement equipment held for sale	416	1,410
Prepaid income taxes	230	1,025
Other	450	689
Total prepaid expenses and other current assets	$ 18,964	$ 26,491

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Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill by Reportable Segment (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($)
Goodwill [Line Items]
Balance	$ 584,150
Foreign currency translation adjustment	(2,535)
Balance	581,615
Commercial Services
Goodwill [Line Items]
Balance	424,404
Foreign currency translation adjustment	(2,535)
Balance	421,869
Government Solutions
Goodwill [Line Items]
Balance	159,746
Balance	$ 159,746

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Goodwill and Intangible Assets - Gross Carrying Amount and Accumulated Amortization of Separately Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 625,510	$ 626,917
Accumulated Amortization	239,147	192,474
Less: accumulated amortization	(239,147)	(192,474)
Intangible assets, net	$ 386,363	$ 434,443
Trademarks
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life	10 months 24 days	1 year 6 months
Gross Carrying Amount	$ 32,067	$ 32,127
Accumulated Amortization	24,209	19,106
Less: accumulated amortization	$ (24,209)	$ (19,106)
Non-compete Agreements
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life	2 years 6 months	3 years
Gross Carrying Amount	$ 62,555	$ 62,549
Accumulated Amortization	31,119	24,834
Less: accumulated amortization	$ (31,119)	$ (24,834)
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life	6 years 4 months 24 days	6 years 10 months 24 days
Gross Carrying Amount	$ 365,368	$ 366,533
Accumulated Amortization	103,204	82,903
Less: accumulated amortization	$ (103,204)	$ (82,903)
Developed Technology
Finite Lived Intangible Assets [Line Items]
Weighted Average Remaining Useful Life	2 years 9 months 18 days	3 years 3 months 18 days
Gross Carrying Amount	$ 165,520	$ 165,708
Accumulated Amortization	80,615	65,631
Less: accumulated amortization	$ (80,615)	$ (65,631)

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Goodwill and Intangible Assets - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense	$ 23.5	$ 23.1	$ 47.1	$ 46.3

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Goodwill and Intangible Assets - Estimated Amortization Expense in Future Years (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Remainder of 2020	$ 46,823
2021	85,379
2022	80,654
2023	52,157
2024	41,671
Thereafter	79,679
Total	$ 386,363

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Impairment of Other Long-lived Assets - Additional Information (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Property Plant And Equipment [Line Items]
Impairment other long-lived assets		$ 0
Impairment of property and equipment	$ 5,898,000		$ 5,898,000
Government Solutions
Property Plant And Equipment [Line Items]
Impairment of property and equipment	$ 5,900,000		$ 5,900,000

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Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Payables And Accruals [Abstract]
Accrued salaries and wages	$ 4,228	$ 10,319
Current portion of related party TRA liability	4,636	5,730
Current portion of operating lease liabilities	2,933	2,970
Advanced deposits payable	2,435	2,875
Income taxes payable	1,952	348
Restricted cash due to customers	711	917
Accrued sales commissions	480	612
Accrued interest payable	173	210
Other	2,022	1,296
Total accrued liabilities	$ 19,570	$ 25,277

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Debt - Summary of the Company's Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Disclosure [Abstract]
First Lien Term Loan, due February 28, 2025	$ 870,194	$ 894,421
Less: original issue discounts	(4,469)	(4,778)
Less: unamortized deferred financing costs	(22,304)	(23,178)
Total debt	843,421	866,465
Less: current portion of long-term debt	(9,104)	(28,779)
Long-term debt, net of current portion and deferred financing costs	$ 834,317	$ 837,686

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Debt - Summary of the Company's Debt (Parenthetical) (Details)	6 Months Ended
	Jun. 30, 2020
First Lien Term Loan, Due February 28, 2025
Debt Instrument [Line Items]
Debt instrument, maturity date	Feb. 28, 2025

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Debt - Additional Information (Details) - USD ($)			3 Months Ended			6 Months Ended
	Feb. 20, 2020	Oct. 17, 2018	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Jul. 31, 2018
Debt Instrument [Line Items]
Debt Instrument, interest rate	0.50%
Outstanding letters of credit			$ 6,300,000			$ 6,300,000
Debt instrument, periodic payment, interest rate			0.375%			0.375%
Debt instrument fronting fees						$ 6,300,000
Participation and fronting fees percentage on outstanding letter of credit						1.38%
Interest expense including amortization of deferred financing costs and discounts			$ 9,500,000		$ 15,700,000	$ 22,000,000.0	$ 31,700,000
Weighted average effective interest rates			3.60%			3.60%		5.50%
First Lien Term Loan
Debt Instrument [Line Items]
Debt instrument, interest rate during the period						1.00%
Debt instrument, maturity date						Feb. 28, 2025
Debt instrument interest rate			3.60%			3.60%
Debt instrument fee amount			$ 800,000			$ 800,000
Debt instrument legal fees						$ 200,000
First Lien Term Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Debt instrument interest rate per annum						3.25%
First Lien Term Loan | Base Rate
Debt Instrument [Line Items]
Debt instrument interest rate per annum						2.25%
Revolver
Debt Instrument [Line Items]
Mandatory prepayment of excess cash flow under loan agreement				$ 19,700,000
Outstanding borrowings			0			$ 0
Debt instrument borrow under new revolver			68,700,000			68,700,000
Outstanding letters of credit			$ 6,300,000			$ 6,300,000
Revolver | LIBOR 1.25%
Debt Instrument [Line Items]
Debt instrument interest rate per annum						1.25%
Revolver | LIBOR 1.50%
Debt Instrument [Line Items]
Debt instrument interest rate per annum						1.50%
Revolver | LIBOR 1.75%
Debt Instrument [Line Items]
Debt instrument interest rate per annum						1.75%
Revolver | Base Rate 0.25%
Debt Instrument [Line Items]
Debt instrument interest rate per annum						0.25%
Revolver | Base Rate 0.50%
Debt Instrument [Line Items]
Debt instrument interest rate per annum						0.50%
Revolver | Base Rate 0.75%
Debt Instrument [Line Items]
Debt instrument interest rate per annum						0.75%
2018 Credit Facilities
Debt Instrument [Line Items]
Outstanding borrowings									$ 1,115,000,000
Debt instrument, aggregate principal amount									1,040,000,000.00
Aggregate revolving commitment						$ 75,000,000
2018 Credit Facilities | Second Lien Term Loan
Debt Instrument [Line Items]
Debt instrument, face amount		$ 200,000,000
Additional repayments of lines of credit		$ 70,000,000
2018 Credit Facilities | Minimum | First Lien Term Loan
Debt Instrument [Line Items]
Debt instrument, face amount									840,000,000
2018 Credit Facilities | Maximum | First Lien Term Loan
Debt Instrument [Line Items]
Debt instrument, face amount									$ 910,000,000

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Debt - Schedule of Consolidated First Lien Net Leverage Ratio and Applicable Prepayment Percentage (Details) - First Lien Term Loan	6 Months Ended
	Jun. 30, 2020
> 3.70:1.00
Debt Instrument [Line Items]
Applicable prepayment percentage	50.00%
≤ 3.70:1.00 and > 3.20:1.00
Debt Instrument [Line Items]
Applicable prepayment percentage	25.00%
≤ 3.20:1.00
Debt Instrument [Line Items]
Applicable prepayment percentage	0.00%

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Fair Value of Financial Instruments - Carrying Value and Fair Value of Debt (Details) - Level 2 - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Carrying Amount
Debt Instrument [Line Items]
Total debt	$ 843,421	$ 866,465
Estimated Fair Value
Debt Instrument [Line Items]
Total debt	$ 839,737	$ 905,601

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Net (Loss) Income Per Share - Schedule of Components of Basic and Diluted Net (Loss) Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Numerator:
Net (loss) income	$ (15,388)	$ 6,673	$ 3,591	$ 2,820	$ (8,715)	$ 6,411
Weighted average shares used in per share calculation:
Weighted average shares - basic	161,710		157,846		161,317	156,956
Common stock equivalents			4,131			2,267
Weighted average shares - diluted	161,710		161,977		161,317	159,223
Net (loss) income per share - basic	$ (0.10)		$ 0.02		$ (0.05)	$ 0.04
Net (loss) income per share - diluted	$ (0.10)		$ 0.02		$ (0.05)	$ 0.04
Antidilutive shares excluded from diluted net (loss) income per share:
Total antidilutive shares excluded	29,192		8,214		29,192	19,150
Contingently Issuable Shares
Antidilutive shares excluded from diluted net (loss) income per share:
Total antidilutive shares excluded	5,000		8,214		5,000	9,107
Warrants
Antidilutive shares excluded from diluted net (loss) income per share:
Total antidilutive shares excluded	20,000				20,000	10,000
Non-qualified Stock Options
Antidilutive shares excluded from diluted net (loss) income per share:
Total antidilutive shares excluded	699				699
Performance Share Units
Antidilutive shares excluded from diluted net (loss) income per share:
Total antidilutive shares excluded	116				116
Restricted Stock Units
Antidilutive shares excluded from diluted net (loss) income per share:
Total antidilutive shares excluded	3,377				3,377	43

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Income Taxes - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2020
Income Tax [Line Items]
Effective tax rate	20.70%	32.60%	8.50%	32.30%
Unrecognized tax benefits	$ 800,000		$ 800,000
Unrecognized tax benefits, if recognized	700,000		$ 700,000
Earliest | Internal Revenue Service
Income Tax [Line Items]
Income Tax Examination, Year under Examination			2016
Earliest | Certain States
Income Tax [Line Items]
Income Tax Examination, Year under Examination			2015
Earliest | Other States
Income Tax [Line Items]
Income Tax Examination, Year under Examination			2014
Latest | Internal Revenue Service
Income Tax [Line Items]
Income Tax Examination, Year under Examination			2019
Latest | Certain States
Income Tax [Line Items]
Income Tax Examination, Year under Examination			2017
Latest | Other States
Income Tax [Line Items]
Income Tax Examination, Year under Examination			2019
Scenario Forecast
Income Tax [Line Items]
Unrecognized tax benefits decreased from prior tax positions					$ 900,000
Maximum
Income Tax [Line Items]
Percent of adjusted taxable income with regard to CARES Act			50.00%
Accrued interest and penalties	$ 100,000		$ 100,000

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Stock-Based Compensation - Schedule of Components of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 3,271	$ 2,812	$ 6,039	$ 4,955
Operating Expenses
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	294	272	514	476
Selling, General and Administrative Expenses
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 2,977	$ 2,540	$ 5,525	$ 4,479

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Related Party Transactions - Additional Information (Details) $ / shares in Units, $ in Thousands			6 Months Ended
	Jan. 27, 2020 USD ($) $ / shares	Apr. 26, 2019 $ / shares	Jun. 30, 2020 USD ($) yr $ / shares shares	Dec. 31, 2019 USD ($)	Oct. 01, 2018 USD ($)
Related Party Transaction [Line Items]
Estimated maximum benefit to be paid to tax receivable agreement			$ 65,620	$ 61,174
Platinum Stockholder | Common Stock Price Greater than $13.00 and $15.50
Related Party Transaction [Line Items]
Earn-out shares issuable if condition met | shares			5,000,000
Platinum Stockholder | Common Stock Price Greater than $13.00 and $15.50 | Common Stock Including Additional Paid in Capital
Related Party Transaction [Line Items]
Earn-out shares issued value	$ 36,600
Platinum Stockholder | Common Stock Price Greater than $13.00
Related Party Transaction [Line Items]
Common stock price | $ / shares		$ 13.00
Platinum Stockholder | Common Stock Price Greater than $15.50
Related Party Transaction [Line Items]
Common stock price | $ / shares	$ 15.50
Platinum Stockholder | Earn-Out Agreement | Earn-Out Scenario Five
Related Party Transaction [Line Items]
Earn-out shares issuable if condition met | shares			0
Platinum Stockholder | Earn-Out Agreement | Common Stock Price Greater than $13.00
Related Party Transaction [Line Items]
Earn-out shares issuable if condition met | shares			2,500,000
Common stock price | $ / shares			$ 13.00
Platinum Stockholder | Earn-Out Agreement | Common Stock Price Greater than $15.50
Related Party Transaction [Line Items]
Earn-out shares issuable if condition met | shares			2,500,000
Common stock price | $ / shares			$ 15.50
Minimum | Platinum Stockholder | Common Stock Price Greater than $13.00
Related Party Transaction [Line Items]
Common stock price threshold trading days		10 days
Minimum | Platinum Stockholder | Common Stock Price Greater than $15.50
Related Party Transaction [Line Items]
Common stock price threshold trading days	10 days
Maximum | Platinum Stockholder | Common Stock Price Greater than $13.00
Related Party Transaction [Line Items]
Common stock price threshold trading days		20 days
Maximum | Platinum Stockholder | Common Stock Price Greater than $15.50
Related Party Transaction [Line Items]
Common stock price threshold trading days	20 days
Maximum | Platinum Stockholder | Earn-Out Agreement
Related Party Transaction [Line Items]
Earn-out shares issuable if condition met | shares			10,000,000
Verra Mobility Business Combination
Related Party Transaction [Line Items]
Tax Receivable Agreement, portion of net cash savings paid out			50.00%
Tax Receivable Agreement, portion of net cash savings retained			50.00%
Estimated maximum benefit to be paid to tax receivable agreement			$ 70,000
Increase to payable related to tax receivable agreement adjustment			4,400
Tax receivable agreement, amount payable			$ 70,200
Contingency period			5 years
Verra Mobility Business Combination | Platinum Stockholder | Earn-Out Agreement
Related Party Transaction [Line Items]
Contingent consideration					$ 73,150
Term of volatility and risk free rates utilizing a peer group | yr			5
Verra Mobility Business Combination | Minimum
Related Party Transaction [Line Items]
Common stock price threshold trading days			10 days
Verra Mobility Business Combination | Maximum
Related Party Transaction [Line Items]
Common stock price threshold trading days			20 days
Verra Mobility Business Combination | Accrued Liabilities
Related Party Transaction [Line Items]
Tax receivable agreement, amount payable			$ 4,600
Verra Mobility Business Combination | Payable Related to Tax Receivable Agreement
Related Party Transaction [Line Items]
Tax receivable agreement, amount payable			$ 65,600

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Related Party Transactions - Summary of Earn Out Shares Issued by Company to Platinum Stockholder (Details) - Platinum Stockholder - $ / shares	6 Months Ended
	Jun. 30, 2020	Jan. 27, 2020	Apr. 26, 2019
Common Stock Price Greater than $13.00
Related Party Transaction [Line Items]
Common Stock Price thresholds			$ 13.00
Common Stock Price Greater than $15.50
Related Party Transaction [Line Items]
Common Stock Price thresholds		$ 15.50
Earn-Out Agreement | Common Stock Price Greater than $13.00
Related Party Transaction [Line Items]
Common Stock Price thresholds	$ 13.00
One-time issuance of shares	2,500,000
Earn-Out Agreement | Common Stock Price Greater than $15.50
Related Party Transaction [Line Items]
Common Stock Price thresholds	$ 15.50
One-time issuance of shares	2,500,000
Earn-Out Agreement | Common Stock Price Greater than $18.00
Related Party Transaction [Line Items]
Common Stock Price thresholds	$ 18.00
One-time issuance of shares	2,500,000
Earn-Out Agreement | Common Stock Price Greater than $20.50
Related Party Transaction [Line Items]
Common Stock Price thresholds	$ 20.50
One-time issuance of shares	2,500,000

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Commitment and Contingencies - Additional Information (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($)	Mar. 31, 2021 Guarantee
Loss Contingencies [Line Items]
Letters of Credit Outstanding	$ 6,300,000
Non-cancelable purchase commitments outstanding	$ 16,000,000.0
Guarantee triggering events, description	In the ordinary course of business, the Company occasionally employs contract terms that mitigate the customer’s risk of aggregate revenue decline in connection with the customer’s adoption of additional or changes to service models within its existing portfolio. These agreements require the customer to satisfy numerous conditions to trigger payment, including volume metrics and other operational requirements.
Guarantee liability	$ 0
Contra revenue	0
Accrued exit costs related to severance and other employee separation costs	400,000
Commercial Services
Loss Contingencies [Line Items]
Accrued exit costs related to severance and other employee separation costs	$ 500,000
Scenario Forecast
Loss Contingencies [Line Items]
Guarantee outstanding | Guarantee		1
Guarantee outstanding period		1 year

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Segment Reporting - Additional Information (Details)	6 Months Ended
	Jun. 30, 2020 Segment
Segment Reporting [Abstract]
Number of operating segments	2
Number of reportable segments	2

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Segment Reporting - Financial Information by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Segment Reporting Information [Line Items]
Total revenue	$ 79,809	$ 109,575	$ 196,522	$ 208,036
Operating expenses	26,405	31,523	58,444	60,657
Selling, general and administrative expenses	17,844	18,325	41,182	36,937
Other income, net	(1,523)	(3,345)	(4,448)	(5,552)
Segment profit (loss)	(6,950)	17,636	12,463	35,602
Depreciation and amortization	29,159	28,865	58,409	57,804
Loss (gain) on disposal of assets, net	7	(15)	3	(13)
Loss from tax receivable agreement adjustment	4,446		4,446
Stock-based compensation	3,271	2,812	6,039	4,955
Interest expense, net	9,539	15,656	21,990	31,689
Income (loss) before income tax benefit, provision	(19,412)	5,325	(9,525)	9,465
Impairment of property and equipment		5,898		5,898
Government Solutions
Segment Reporting Information [Line Items]
Impairment of property and equipment		5,900		5,900
Service Revenue
Segment Reporting Information [Line Items]
Total revenue	62,815	103,057	162,312	201,127
Cost of revenue	1,013	1,613	2,232	3,002
Product Sales
Segment Reporting Information [Line Items]
Total revenue	16,994	6,518	34,210	6,909
Cost of revenue	9,060	2,918	17,750	3,194
Operating Segments
Segment Reporting Information [Line Items]
Segment profit (loss)	27,010	58,541	81,362	109,798
Operating Segments | Government Solutions
Segment Reporting Information [Line Items]
Total revenue	52,537	41,484	108,008	77,357
Operating expenses	15,655	14,801	31,164	28,839
Selling, general and administrative expenses	7,150	7,561	16,819	15,411
Other income, net	(16)	(37)	(52)	(74)
Segment profit (loss)	20,321	15,543	41,548	28,764
Loss (gain) on disposal of assets, net	2	(15)	(2)	(13)
Income (loss) before income tax benefit, provision	20,319	9,660	41,550	22,879
Impairment of property and equipment		5,898		5,898
Operating Segments | Commercial Services
Segment Reporting Information [Line Items]
Total revenue	27,272	68,091	88,514	130,679
Operating expenses	10,750	16,722	27,280	31,818
Selling, general and administrative expenses	10,191	9,629	23,575	20,391
Other income, net	(1,507)	(3,308)	(4,396)	(5,478)
Segment profit (loss)	7,192	44,133	40,602	82,169
Loss (gain) on disposal of assets, net	5		5
Income (loss) before income tax benefit, provision	7,187	44,133	40,597	82,169
Operating Segments | Service Revenue | Government Solutions
Segment Reporting Information [Line Items]
Total revenue	35,543	34,966	73,798	70,448
Cost of revenue	367	698	779	1,223
Operating Segments | Service Revenue | Commercial Services
Segment Reporting Information [Line Items]
Total revenue	27,272	68,091	88,514	130,679
Cost of revenue	646	915	1,453	1,779
Operating Segments | Product Sales | Government Solutions
Segment Reporting Information [Line Items]
Total revenue	16,994	6,518	34,210	6,909
Cost of revenue	9,060	2,918	17,750	3,194
Corporate and Other
Segment Reporting Information [Line Items]
Selling, general and administrative expenses	503	1,135	788	1,135
Segment profit (loss)	(503)	(1,135)	(788)	(1,135)
Depreciation and amortization	29,159	28,865	58,409	57,804
Loss from tax receivable agreement adjustment	4,446		4,446
Stock-based compensation	3,271	2,812	6,039	4,955
Interest expense, net	9,539	15,656	21,990	31,689
Income (loss) before income tax benefit, provision	$ (46,918)	$ (48,468)	$ (91,672)	$ (95,583)

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Guarantor/Non-Guarantor Financial Information - Summary of Condensed Consolidated Balance Sheets (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 113,239		$ 131,513
Restricted cash	711		917
Accounts receivable (net of allowance for credit loss of $12.9 million at June 30, 2020)	125,252		93,514
Unbilled receivables	12,532		20,003
Prepaid expenses and other current assets	18,964		26,491
Total current assets	270,698		272,438
Installation and service parts, net	8,672		8,841
Property and equipment, net	73,604		72,266
Operating lease assets	30,933		32,177
Intangible assets, net	386,363		434,443
Goodwill	581,615		584,150
Other non-current assets	3,237		3,111
Total assets	1,355,122		1,407,426
Current liabilities:
Accounts payable	36,346		50,825
Accrued liabilities	19,570		25,277
Current portion of long-term debt	9,104		28,779
Total current liabilities	65,020		104,881
Long-term debt, net of current portion and deferred financing costs	834,317
Operating lease liabilities, net of current portion	29,240		30,130
Payable to related party pursuant to tax receivable agreement	65,620		61,174
Asset retirement obligation	6,237		6,309
Deferred tax liabilities, net	22,691		25,716
Other long-term liabilities	247
Total liabilities	1,023,372		1,068,079
Total stockholders' equity	331,750	$ 344,400	339,347	$ 309,828	$ 304,821	$ 302,056
Total liabilities and stockholders' equity	1,355,122		$ 1,407,426
Verra Mobility Corporation (Ultimate Parent)
Current assets:
Investment in subsidiary	162,491
Total current assets	162,491
Due from affiliates	169,259
Total assets	331,750
Current liabilities:
Total stockholders' equity	331,750
Total liabilities and stockholders' equity	331,750
VM Consolidated Inc. (Guarantor Subsidiary)
Current assets:
Cash and cash equivalents	98,566
Restricted cash	711
Accounts receivable (net of allowance for credit loss of $12.9 million at June 30, 2020)	122,373
Unbilled receivables	12,244
Investment in subsidiary	73,069
Prepaid expenses and other current assets	16,655
Total current assets	323,618
Installation and service parts, net	8,672
Property and equipment, net	69,987
Operating lease assets	30,588
Intangible assets, net	360,280
Goodwill	524,766
Other non-current assets	3,223
Total assets	1,321,134
Current liabilities:
Accounts payable	26,229
Accrued liabilities	16,546
Current portion of long-term debt	9,104
Total current liabilities	51,879
Long-term debt, net of current portion and deferred financing costs	834,317
Operating lease liabilities, net of current portion	29,070
Payable to related party pursuant to tax receivable agreement	65,620
Due to affiliates	153,369
Asset retirement obligation	6,237
Deferred tax liabilities, net	17,904
Other long-term liabilities	247
Total liabilities	1,158,643
Total stockholders' equity	162,491
Total liabilities and stockholders' equity	1,321,134
Non-guarantor Subsidiaries
Current assets:
Cash and cash equivalents	14,673
Accounts receivable (net of allowance for credit loss of $12.9 million at June 30, 2020)	2,879
Unbilled receivables	288
Prepaid expenses and other current assets	2,309
Total current assets	20,149
Property and equipment, net	3,617
Operating lease assets	345
Intangible assets, net	26,083
Goodwill	56,849
Other non-current assets	14
Total assets	107,057
Current liabilities:
Accounts payable	10,117
Accrued liabilities	3,024
Total current liabilities	13,141
Operating lease liabilities, net of current portion	170
Due to affiliates	15,890
Deferred tax liabilities, net	4,787
Total liabilities	33,988
Total stockholders' equity	73,069
Total liabilities and stockholders' equity	107,057
Eliminations
Current assets:
Investment in subsidiary	(235,560)
Total current assets	(235,560)
Due from affiliates	(169,259)
Total assets	(404,819)
Current liabilities:
Due to affiliates	(169,259)
Total liabilities	(169,259)
Total stockholders' equity	(235,560)
Total liabilities and stockholders' equity	$ (404,819)

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Guarantor/Non-Guarantor Financial Information - Summary of Condensed Consolidated Balance Sheets (Parenthetical) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Condensed Financial Information Of Parent Company Only Disclosure [Abstract]
Allowance for credit loss	$ 12,930	$ 8,456

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Guarantor/Non-Guarantor Financial Information - Summary of Condensed Consolidated Statements of Operations and Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019
Condensed Statement Of Income Captions [Line Items]
Total revenue	$ 79,809		$ 109,575		$ 196,522	$ 208,036
Operating expenses	26,699		31,795		58,958	61,133
Selling, general and administrative expenses	20,821		20,865		46,707	41,416
Depreciation, amortization and (gain) loss on disposal of assets, net	29,166		28,850		58,412	57,791
Total costs and expenses	86,759		91,939		184,059	172,434
(Loss) income from operations	(6,950)		17,636		12,463	35,602
Interest expense, net	9,539		15,656		21,990	31,689
Loss from tax receivable agreement adjustment	4,446				4,446
Other income, net	(1,523)		(3,345)		(4,448)	(5,552)
Total other expenses	12,462		12,311		21,988	26,137
(Loss) income before income tax (benefit) provision	(19,412)		5,325		(9,525)	9,465
Income tax (benefit) provision	(4,024)		1,734		(810)	3,054
Net (loss) income	(15,388)	$ 6,673	3,591	$ 2,820	(8,715)	6,411
Other comprehensive loss:
Change in foreign currency translation adjustment	(508)		(1,396)		(3,875)	(72)
Total comprehensive (loss) income	(15,896)		2,195		(12,590)	6,339
Verra Mobility Corporation (Ultimate Parent)
Condensed Statement Of Income Captions [Line Items]
Loss from equity investment	15,388				8,715
Total other expenses	15,388				8,715
(Loss) income before income tax (benefit) provision	(15,388)				(8,715)
Net (loss) income	(15,388)				(8,715)
Other comprehensive loss:
Total comprehensive (loss) income	(15,388)				(8,715)
VM Consolidated Inc. (Guarantor Subsidiary)
Condensed Statement Of Income Captions [Line Items]
Total revenue	76,778				189,644
Operating expenses	24,926				55,504
Selling, general and administrative expenses	19,649				43,624
Depreciation, amortization and (gain) loss on disposal of assets, net	27,876				55,871
Total costs and expenses	81,962				173,868
(Loss) income from operations	(5,184)				15,776
Loss from equity investment	1,521				2,828
Interest expense, net	9,540				22,002
Loss from tax receivable agreement adjustment	4,446				4,446
Other income, net	(1,494)				(4,381)
Total other expenses	14,013				24,895
(Loss) income before income tax (benefit) provision	(19,197)				(9,119)
Income tax (benefit) provision	(3,809)				(404)
Net (loss) income	(15,388)				(8,715)
Other comprehensive loss:
Total comprehensive (loss) income	(15,388)				(8,715)
Non-guarantor Subsidiaries
Condensed Statement Of Income Captions [Line Items]
Total revenue	3,031				6,878
Operating expenses	1,773				3,454
Selling, general and administrative expenses	1,172				3,083
Depreciation, amortization and (gain) loss on disposal of assets, net	1,290				2,541
Total costs and expenses	4,797				10,191
(Loss) income from operations	(1,766)				(3,313)
Interest expense, net	(1)				(12)
Other income, net	(29)				(67)
Total other expenses	(30)				(79)
(Loss) income before income tax (benefit) provision	(1,736)				(3,234)
Income tax (benefit) provision	(215)				(406)
Net (loss) income	(1,521)				(2,828)
Other comprehensive loss:
Change in foreign currency translation adjustment	(508)				(3,875)
Total comprehensive (loss) income	(2,029)				(6,703)
Eliminations
Condensed Statement Of Income Captions [Line Items]
Loss from equity investment	(16,909)				(11,543)
Total other expenses	(16,909)				(11,543)
(Loss) income before income tax (benefit) provision	16,909				11,543
Net (loss) income	16,909				11,543
Other comprehensive loss:
Total comprehensive (loss) income	16,909				11,543
Service Revenue
Condensed Statement Of Income Captions [Line Items]
Total revenue	62,815		103,057		162,312	201,127
Cost of revenue	1,013		1,613		2,232	3,002
Service Revenue | VM Consolidated Inc. (Guarantor Subsidiary)
Condensed Statement Of Income Captions [Line Items]
Total revenue	59,784				155,434
Cost of revenue	451				1,119
Service Revenue | Non-guarantor Subsidiaries
Condensed Statement Of Income Captions [Line Items]
Total revenue	3,031				6,878
Cost of revenue	562				1,113
Product Sales
Condensed Statement Of Income Captions [Line Items]
Total revenue	16,994		6,518		34,210	6,909
Cost of revenue	9,060		$ 2,918		17,750	$ 3,194
Product Sales | VM Consolidated Inc. (Guarantor Subsidiary)
Condensed Statement Of Income Captions [Line Items]
Total revenue	16,994				34,210
Cost of revenue	$ 9,060				$ 17,750

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Guarantor/Non-Guarantor Financial Information - Summary of Condensed Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Cash Flows from Operating Activities:
Net (loss) income			$ (8,715)	$ 6,411
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	$ 29,159	$ 28,865	58,409	57,804
Amortization of deferred financing costs and discounts			2,106
Loss from tax receivable agreement adjustment	4,446		4,446
Credit loss expense			10,723	2,736
Deferred income taxes			(2,496)	(11,568)
Stock-based compensation	3,271	2,812	6,039	4,955
Installation and service parts expense			559	643
Accretion expense			129	183
(Gain) loss on disposal of assets			3	(13)
Changes in operating assets and liabilities:
Accounts receivable, net			(43,183)	(21,433)
Unbilled receivables			7,476	(616)
Prepaid expenses and other current assets			7,979	(4,199)
Accounts payable and accrued liabilities			(17,863)	5,224
Other liabilities			(3,069)	(3,833)
Net cash provided by operating activities			22,543	45,781
Cash Flows from Investing Activities:
Purchases of installation and service parts and property and equipment			(14,301)	(14,192)
Cash proceeds from the sale of assets			49
Net cash used in investing activities			(14,252)	(14,178)
Cash Flows from Financing Activities:
Repayment of long-term debt			(24,227)	(4,552)
Payment of debt issuance costs			(922)	(152)
Payment of employee tax withholding related to RSU vesting			(352)
Net cash used in financing activities			(25,501)	(4,704)
Effect of exchange rate changes on cash and cash equivalents			(1,270)
Net (decrease) increase in cash, cash equivalents and restricted cash			(18,480)	26,909
Cash, cash equivalents and restricted cash - beginning of period			132,430	67,081
Cash, cash equivalents and restricted cash - end of period	113,950	$ 93,990	113,950	93,990
Supplemental cash flow information:
Interest paid			20,201	28,144
Income taxes paid, net			1,135	15,448
Supplemental non-cash investing and financing activities:
Earn-out shares issued to Platinum Stockholder			18,287	18,288
Additions to ARO, property and equipment, and other			41	143
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end			3,238	$ 4,269
Verra Mobility Corporation (Ultimate Parent)
Cash Flows from Operating Activities:
Net (loss) income			(8,715)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Loss from equity investment	15,388		8,715
Supplemental non-cash investing and financing activities:
Earn-out shares issued to Platinum Stockholder			18,287
VM Consolidated Inc. (Guarantor Subsidiary)
Cash Flows from Operating Activities:
Net (loss) income			(8,715)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization			55,873
Amortization of deferred financing costs and discounts			2,106
Loss from tax receivable agreement adjustment	4,446		4,446
Credit loss expense			10,723
Deferred income taxes			(1,869)
Stock-based compensation			6,039
Installation and service parts expense			559
Accretion expense			129
(Gain) loss on disposal of assets			(2)
Loss from equity investment	1,521		2,828
Changes in operating assets and liabilities:
Accounts receivable, net			(44,969)
Unbilled receivables			7,073
Prepaid expenses and other current assets			8,008
Accounts payable and accrued liabilities			(13,865)
Due to affiliates			(2,027)
Other liabilities			(3,069)
Net cash provided by operating activities			23,268
Cash Flows from Investing Activities:
Purchases of installation and service parts and property and equipment			(12,825)
Cash proceeds from the sale of assets			49
Net cash used in investing activities			(12,776)
Cash Flows from Financing Activities:
Repayment of long-term debt			(24,227)
Payment of debt issuance costs			(922)
Payment of employee tax withholding related to RSU vesting			(352)
Net cash used in financing activities			(25,501)
Net (decrease) increase in cash, cash equivalents and restricted cash			(15,009)
Cash, cash equivalents and restricted cash - beginning of period			114,286
Cash, cash equivalents and restricted cash - end of period	99,277		99,277
Supplemental cash flow information:
Interest paid			20,201
Income taxes paid, net			826
Supplemental non-cash investing and financing activities:
Additions to ARO, property and equipment, and other			41
Purchases of installation and service parts and property and equipment in accounts payable and accrued liabilities at period-end			3,238
Non-guarantor Subsidiaries
Cash Flows from Operating Activities:
Net (loss) income			(2,828)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization			2,536
Deferred income taxes			(627)
(Gain) loss on disposal of assets			5
Changes in operating assets and liabilities:
Accounts receivable, net			1,786
Unbilled receivables			403
Prepaid expenses and other current assets			(29)
Accounts payable and accrued liabilities			(3,998)
Due to affiliates			2,027
Net cash provided by operating activities			(725)
Cash Flows from Investing Activities:
Purchases of installation and service parts and property and equipment			(1,476)
Net cash used in investing activities			(1,476)
Cash Flows from Financing Activities:
Effect of exchange rate changes on cash and cash equivalents			(1,270)
Net (decrease) increase in cash, cash equivalents and restricted cash			(3,471)
Cash, cash equivalents and restricted cash - beginning of period			18,144
Cash, cash equivalents and restricted cash - end of period	14,673		14,673
Supplemental cash flow information:
Income taxes paid, net			309
Eliminations
Cash Flows from Operating Activities:
Net (loss) income			11,543
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Loss from equity investment	$ (16,909)		$ (11,543)