Traffic solutions company Verra Mobility (NYSE: VRRM) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 16.1% year on year to $261.9 million. The company’s full-year revenue guidance of $960 million at the midpoint came in 3.1% above analysts’ estimates. Its non-GAAP profit of $0.37 per share was 7.7% above analysts’ consensus estimates.

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"We delivered a strong third quarter with all key financial measures ahead of our internal expectations," said David Roberts, President and CEO, Verra Mobility.

Company Overview

Aiming to wrap technology and data around a historically manual and paper-based industry, Verra Mobility (NYSE: VRRM) is a leading provider of smart mobility technology to address tolls and violations, title and registration services, as well as safety and traffic enforcement.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Verra Mobility grew its sales at an incredible 18.4% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Verra Mobility’s annualized revenue growth of 9.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Verra Mobility’s recent performance shows it’s one of the better Electrical Systems businesses as many of its peers faced declining sales because of cyclical headwinds.

This quarter, Verra Mobility reported year-on-year revenue growth of 16.1%, and its $261.9 million of revenue exceeded Wall Street’s estimates by 9.8%.

Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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Operating Margin

Verra Mobility has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 21.2%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Verra Mobility’s operating margin decreased by 1.6 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Verra Mobility generated an operating margin profit margin of 28.6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Verra Mobility’s EPS grew at an astounding 20.4% compounded annual growth rate over the last five years, higher than its 18.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Verra Mobility, its two-year annual EPS growth of 10.8% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Verra Mobility reported adjusted EPS of $0.37, up from $0.32 in the same quarter last year. This print beat analysts’ estimates by 7.7%. Over the next 12 months, Wall Street expects Verra Mobility’s full-year EPS of $1.34 to grow 8.6%.

Key Takeaways from Verra Mobility’s Q3 Results

We were impressed by how significantly Verra Mobility blew past analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance trumped Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 5.3% to $25.05 immediately after reporting.

Indeed, Verra Mobility had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.