Good afternoon, ladies and gentlemen, and welcome to the Verra Mobility Third Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. I would now like to turn the conference over to Mark Zindler, Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone. I appreciate you joining us today. We are demonstrating what we view as the predictable strength of our portfolio of businesses. Based on our year-to-date financial performance and our outlook for the remainder of the year, we are reaffirming full year 2024 revenue, adjusted EBITDA, and adjusted EPS guidance, while increasing the adjusted free cash flow guidance to the upper end of the range. Craig will elaborate on the details in his remarks. Today, we'll highlight four value drivers underpinning our businesses. The current sentiment from the major airlines continues to suggest resilient travel demand, albeit off the first half of the 2024 highlights. Second, the demand for automated photo enforcement is strong and growing. Third, the company continues to generate robust free cash flow, providing optionality for capital allocation. And fourth, we are putting measures in place to stabilize the T2 Parking business and rejuvenate its growth trajectory. Starting with travel demand, year-to-date TSA passenger volumes as of September 30th stood at about 106% of the 2023 volume for the same period, driven by strong consumer and business demand. However, travel has decelerated in September and October, particularly in the last week of September and the second week of October due to the hurricanes. We have seen a recent reacceleration of travel back to the levels assumed in our guidance, so we feel comfortable about travel volumes as we close out the year. Additionally, the current sentiment from the major airlines, along with the independent surveys we have reviewed indicates resilient demand, suggesting TSA volume growth commensurate with GDP type growth next year. These domestic travel trends had a strong impact on our Commercial Services business. We delivered outstanding results driven by strong performance in rental car tolling and continued solid performance in the Fleet Management business. Third quarter revenues of $109 million grew 11% over the prior year quarter, and segment profit margins of 67% were up about 30 basis points over the last year period, due primarily to the strength in rental car tolling. The third quarter travel demand drove solid growth in adopted rental agreements and tolls incurred, all of which resulted in a 6% increase in rental car tolling revenue. Additionally, our Fleet Management business generated revenue of $18 million for the quarter, representing 9% growth over the prior year period, primarily driven by enrollments of new vehicles and increased tolling from Fleet Management customers. Moving on to Government Solutions Service revenue, which reflects 95% of total revenue for the quarter and is primarily recurring revenue, grew 7% over the same period last year. The service revenue growth was driven by program expansion from existing customers and new cities implementing photo enforcement efforts to improve road safety. To this point, outside of New York City, we drove 12% service revenue growth due to these factors. Total revenue, including international product sales were up about 6% over the prior year quarter. Looking at the big picture, the demand for automated enforcement has never been stronger. We generated a strong third quarter in contract awards and saw additional legislative actions supporting automated enforcement. In the third quarter, we won contract awards representing about $22 million of incremental annual recurring revenue at full run rate, bringing the year-to-date incremental annual recurring revenue total to $45 million. The largest award came through our partnership with Hayden AI, supporting automated bus line and bus stop enforcement with our share representing approximately $8 million of the incremental annual recurring revenue. Our partnership with Hayden AI demonstrates the new and expanding opportunities for automated enforcement beyond speed and red light enforcement. Additionally, we were awarded contracts in Florida, representing about $3 million of incremental annual recurring revenue and in Washington state, which represented about $2 million of incremental annual recurring revenue. Other notable awards include speed enforcement programs in Australia and Canada, which combined represent about $5 million in total incremental annual recurring revenue. As we shared in our press release earlier this month, I'm excited to report that the San Francisco Municipal Transportation Agency awarded us the contract to manage its speed safety program. This is California's first automated speed safety program under the state's legislative authorization. Under this contract, we will design, build, operate, and maintain a speed safety program with cameras at 33 sites across San Francisco. The goal is to have a fully operational program in early 2025. Additionally, we anticipate competing for the other California City speed enforcement pilot programs over the next year. These pilot programs are a pivotal step in what we expect will be a broader initiative to expand speed safety across the state as more citizens demand solutions from lawmakers to help make roads safer in California. Moving on to New York City, we look forward to submitting our proposal for the automated traffic enforcement program. New York City is the leader using automated enforcement technology to make roads safer and more efficient, and they have trusted us to be their technology partner for a highly complex program for many years. While the program is subject to a very competitive procurement process, we remain confident that our scope of services and the support meet the specifications for the program today, and we remain ready to meet the city's evolving needs quickly should we be afforded the ongoing opportunity. We're also excited that New York's Red Light Expansion Bill was signed into law earlier last week, allowing for the expansion of cameras at 450 additional intersections in New York City. This is an important milestone toward the goals and objectives of Vision Zero. Next, a brief update on T2 Systems. We generated revenue of approximately $21 million for the third quarter, slightly below our internal expectations. Segment profit was $4 million for the quarter, with segment profit dollars and margins growing sequentially over the second quarter as we anticipated. In August, we announced that Lin Bo joined our executive leadership team to lead T2, bringing valuable experience in enhancing operations, driving growth, and leading business transformation efforts. As a reminder, our strategic thesis around T2 revolved around the strong and durable recurring revenue of permits and enforcement for cities and universities. We expect this time to increase over time with the unique challenges related to urbanization and current management. To date, we have encountered several challenges since we closed the acquisition in December of 2021. First, the parking industry has experienced a transition away from hardware and related services, which historically represented about 45% of revenue to focus on software and mobile payment solutions. This is expected to benefit our business in the long term, but has impacted short-term revenue growth. Additionally, we expect to see a greater conversion of our SaaS pipeline of backlog and revenue generation, and Lin is earnestly working on retooling the organization to drive execution in this area. The market opportunity for T2 is significant, and we're taking the steps needed to drive long-term execution and performance. We also added another talented and experienced executive to our leadership team. We appointed Harshad Kharche as the Senior Vice President of Business Transformation. In this role, Harshad will ensure the continuing adoption of Verra Mobility's business operating system and help enhance our culture of continuous improvement company-wide. Next, we reported a record quarter of free cash flow generating $85 million for the third quarter. This provides significant optionality for capital deployment. We have been actively evaluating M&A opportunities in current and adjacent technology sectors, and we also have approximately $50 million remaining under our existing share buyback authorization. Next, our long-term outlook remains intact relative to the revenue and adjusted EBITDA targets we provided at our July 2022 Investor Day. As we've indicated, there will be years where we exceed the growth rates and other years where we're at or modestly below our growth targets. Based on our current views of travel demand next year and the cadence of converting Government Solutions backlog to revenue, we anticipate year-over-year revenue growth at the low end of our 6% to 8% long-term guide in 2025. In addition, we expect growth in 2025 adjusted EBITDA dollars to be in the low to mid-single digits compared to 2024 as we continue to invest in business development and complete the customer installs in front of expected strong revenue generation as we exit 2025 and into 2026. Craig will elaborate on the key drivers in his remarks. In summary, the first nine months of the year have been great, and we are very excited about our long-term outlook. We've done exactly what we said we would do in terms of financial performance. Additionally, travel demand appears to remain solid, albeit off the 2024 highs, and the bid pipeline for automated enforcement is strong and growing. This is a great business with a bright future, and I look forward to sharing additional updates as we continue to execute against our growth strategy. Before I conclude, I'd like to share a road safety reminder that tonight's Halloween festivities can be potentially dangerous as kids are trick-or-treating at dusk. The risk of pedestrian fatalities is 43% higher on Halloween compared to any other night according to research published by the Journal of American Medical Association, so please drive safely and responsibly. Craig, I'll turn it over to you to guide us through our financial results, current year guidance, and a high-level preview of the 2025 financial estimates.

Thank you, David, and hello everyone. I appreciate you joining us on the call today. Let's turn to Slide 4, which outlines the key financial measures for the consolidated business for the third quarter. Our Q3 performance was right on plan, which included 8% services revenue growth and 7% of total revenue. The service revenue growth, which was primarily recurring revenue, was driven by strong third quarter travel demand in the Commercial Services business and service revenue growth outside of New York City and the Government Solutions business. At the segment level, Commercial Services grew 11% year-over-year, Government Solutions Service revenue increased by 7% over the prior year, while T2 Systems SaaS and Services revenue declined 4% over the third quarter of last year. Product revenue was $8 million for the quarter, with Government Solutions contributing $5 million, and T2 delivered about $3 million in product sales overall. Our consolidated adjusted EBITDA for the quarter was $105 million, an increase of approximately 8% versus last year, with margins flat. We reported net income of $35 million for the quarter including a tax provision of about $14 million, representing an effective tax rate of 28%. This rate includes certain discrete items, which favorably impacted the tax rate for the quarter. For the full year, we're anticipating an approximate 30% effective tax. GAAP EPS was $0.21 per share for the third quarter of 2024 as compared to $0.18 per share for the prior year period. Adjusted EPS, which excludes amortization, stock-based compensation, and other nonrecurring items, was $0.32 per share for the third quarter of this year compared to $0.29 per share in the third quarter of 2023, representing 10% year-over-year. Cash flows provided by operating activities totaled $109 million, and we delivered $85 million of free cash flow for the quarter, which was above our quarterly run rate due to a catch-up on cash collections and other non-recurring working capital items. Turning to Slide 5, we generated $391 million of adjusted EBITDA on approximately $869 million of revenue for the trailing 12 months, representing a 45% adjusted EBITDA margin. Additionally, over the trailing 12 months, we generated $172 million of adjusted free cash flow or a 44% conversion of adjusted EBITDA on a weighted average base of approximately 168 million shares. Next, I'll walk through the third quarter performance of each of our three business segments, beginning with Commercial Services on Slide 6. Commercial Services year-over-year revenue growth was 11% in the third quarter. Rental car tolling revenue increased 6% or about $5 million over the same period last year, driven by strong travel volume and increased rental volume. Our Fleet Management business grew 9% or about $1 million year-over-year, driven by the enrollment of new vehicles and tolling growth from the existing and newly enrolled Fleet Management customers. Additionally, the combination of title and registration, violations management in Europe contributed approximately $4 million of revenue growth in the quarter. Commercial Services' segment profit margins expanded about 30 basis points to 57%, driven by volume leverage from the summer driving season. Turning to Slide 7, Government Solutions had strong service revenue growth in the quarter, driven by 12% growth outside of New York City. Total revenue grew 6% over the prior year quarter. Segment profit was $28 million for the quarter, representing margins of 29%. The reduction in margins versus the prior year is primarily due to increased spending on business development efforts, the non-capitalized portion of our platform investment, and a favorable nonrecurring bad debt adjustment in the prior year period. Let's turn to Slide 8 for a view of the results of T2 Systems, which is our Parking Solutions business segment. We generated revenue of $21 million in segment profit of approximately $4 million for the quarter. SaaS and Service sales were down 4% or $700,000 from the prior year quarter, while product revenue was down 7% or $300,000 compared to last year. Breaking the SaaS and Services revenue down further, pure SaaS revenue grew low single-digits over the prior year quarter. However, offsetting this increase was a decline in installation and other professional services due to the reduction in product sales over the past three quarters. Let's turn to Slide 9 and discuss the balance sheet and take a closer look at leverage. As you can see, we ended the quarter with a net debt balance of $844 million, down significantly on a sequential basis due to our strong free cash flow generation this quarter. We ended the quarter with net leverage of 2.2 times, and we have maintained significant liquidity with our undrawn credit revolver. Our gross debt balance at year-end stands at about $1.1 billion, of which approximately $700 million is floating rate debt. Based on the SOFR forward yield curve, we opted to utilize our early termination option and cancel the entirety of our float for fixed rate spot. Consequently, the term loan is now fully floating. In addition, subsequent to the end of the third quarter, we completed a successful repricing of our $700 million term loan B. The repricing was materially oversubscribed, and we achieved a 50 basis point reduction in the coupon rate, lowering it to SOFR plus 2.25%. The transaction yields about $10 million in cash savings net of fees over the remaining life of the debt. On our total debt back, this lowers our weighted average cost of debt to about 6.5% at current SOFR levels. This was our second successful debt repricing this year, the cumulative effect being a reduction in our spread of a full 100 basis points this year. Let's turn to Slide 10 and have a look at full year 2024 guidance. Revenue, adjusted EBITDA, and adjusted EPS remain unchanged. However, we are increasing adjusted free cash flow to the upper end of the range. For purposes of review, I'll give you a quick run-through of our total year guidance by major category. We expect total revenue growth of approximately 8% and adjusted EBITDA dollars growth of approximately 9% compared to 2023. Adjusted EPS is expected to be at the upper end of the $1.15 to $1.20 per share range. Adjusted free cash flow is now anticipated to be at the upper end of the range of $155 million to $165 million, driven by lower CapEx spending. We expect to spend about $75 million in 2024 CapEx. The lower CapEx spend is partially offset by an increased use of working capital. And finally, we expect net leverage will land at approximately 2 times, assuming no additional capital allocation investments beyond the investments we've made through the third quarter. Our revenue guidance incorporates a modest reduction in rental car tolling driven by historical fourth quarter travel trends as well as certain temporary Florida toll road suspension stemming from hurricanes. Government Solutions service revenue is expected to be up slightly in the fourth quarter due to customer installations generating incremental annual recurring revenue. Finally, Parking Solutions revenue is expected to be about sequentially flat in the fourth quarter. Additionally, at the total company level, we expect sequential margin expansion in the fourth quarter, in line with our existing guidance. Other key assumptions supporting our adjusted EPS and adjusted free cash flow outlook can be found on Slide 11. Now, let's move to a brief preview of how we expect 2025 will play out. I'll remind you that our annual operating plan is not yet complete, so these estimates may change. As David mentioned, we currently anticipate revenue growth at the low end of our 6% to 8% long-term guidance next year. This is largely driven by three factors. First, we're anticipating that TSA passenger volume growth will decelerate and will be in line with GDP type growth next year, which impacts overall commercial services revenue. Second, we expect flat revenue from our largest customer, New York City, while we await the outcome of the competitive procurement. And lastly, while we've had a terrific year generating new annual recurring revenue bookings in our Government Solutions business, it may take up to 18 months to convert this backlog into full revenue. From a profit perspective, we expect adjusted EBITDA dollars to grow low to mid-single digits in 2025, driven primarily by portfolio mix, TAM execution costs, and financial infrastructure investments. Let me give you a little bit of detail on between these drivers. The TAM execution cost item is largely driven by our government business as we incur incremental business development costs and project go-live costs in advance of converting our growing backlog trend. The financial infrastructure item relates to our previously discussed in-flight replacement of our aging ERP. We expect to incur about $5 million in non-capitalized costs in the first half of the year to complete this project. These project costs are one-time in nature and will not continue past 2025. The portfolio mix is primarily in our Commercial business where we expect travel growth year-over-year. However, that growth will be moderated relative to other growth drivers in the business, limiting margin expansion. From a cash perspective, at the total company level, we anticipate our 2025 free cash flow to adjusted EBITDA conversion to be about 40% to 45%. Finally, as David indicated, we have approximately $50 million left on our open share buyback authorization. Consistent with our past practice, we will evaluate the optimal returns for capital deployment and execute reporting. In summary, the core fundamentals of the business are solid. We think travel demand is resilient, and our bookings in Government Solutions are healthy, leading to strong recurring revenue growth in the future. Additionally, we have identified a path to recovery and growth in the Parking business. On the basis of these trends, we anticipate that our long-term outlook remains intact relative to the revenue and adjusted EBITDA targets we provided at our July 2022 Investor Day. This concludes our prepared remarks. Thank you for your time and attention today.

Thank you. We will now begin the question-and-answer session. Your first question comes from Nik Cremo with UBS. Please go ahead.

Congrats on the strong results, David and Craig. First, I just wanted to touch on the New York City RFP. So, we know that Barra has a strong track record of renewing large customers on the rental car side of the business, but I think it would be helpful just to hear about what you see as there as many competitive advantages relative to competitors going after this RFP including some of the investments you've been making in the platform and how that shapes up to your level of confidence of successfully winning this renewal relative to some of the other large renewals in the past? And also any update on when we could hear back? Thank you.

Yes, it's David. Thanks for the question. I think about it this way: we are currently under a Request for Proposal, which limits our ability to answer a range of questions. That said, New York, like our other long-term customers, comes down to a few key factors. We are confident in our technology, which is considered best-in-class, and we believe our support services are also top-notch. Regarding your question about the timeline, the RFP is due next week, and I don't expect responses to come immediately. The answers will be detailed, and I anticipate the City will need time to review them. We probably won’t have clear information until around the second quarter of next year, just to provide some context.

Got it. Thanks for all the color on that. And then just on the preliminary 2025 outlook, can you just discuss the cadence of growth throughout the year? Like should we maybe see an acceleration in the back half of 2025 as some of the annual recurring revenue that you're winning comes online? And also, how should we think about the Government Solutions business ex-New York City for next year? Thanks.

Yes, this is Craig. Thank you for the question, Nik. To address the second part first, for New York City, we're planning for it to remain flat year-over-year in 2024. As David mentioned, the RFP is live, and we won’t have clarity on the outcome until well into the year. Regarding the pacing, I need to analyze it further. If we look at the three main drivers, I want to touch on profit for a moment. These drivers include the portfolio mix, the execution within the total addressable market (TAM), and the financial infrastructure. It’s evident that spending on financial infrastructure will definitely occur in the first half of the year, and I expect this to happen within the first six months. We won’t see it in the latter half. In terms of growth pacing, I anticipate that, without a finalized plan, we should see sequential growth in the Government Solutions business as some new TAM opportunities start to develop in the latter half of 2025. However, the significant revenue increase is expected in 2026 once those opportunities are implemented and operational.

Got it. Thanks for all the color Craig.

Your next question comes from the line of Daniel Moore with CJS Securities. Please go ahead.

Thank you for addressing my questions. Considering the outlook for fiscal 2025, is it reasonable to expect that in terms of growth ranking, Commercial Services might see mid-single-digit growth while Government Solutions could be slightly higher? Also, what assumptions are you using for T2?

Yes, let's go through each business briefly. I completely grasp your question. The way to consider it is that it would fall at the lower end of the long-term guidance we shared on Investor Day. I don't anticipate being close to low single digits at this point. So, let's just say it's at the low end of our long-term guidance, which is based on travel growing at a rate similar to GDP year-over-year. For the Government Solutions business, I expect it to be at the higher end of our long-term guidance. We've noted its strength, and I believe we'll capture some of that revenue in the latter half of the year. Growth rates for Government Solutions should be similar to those projected for 2024 and 2025. T2 will be somewhat more variable and is facing challenges with equipment sales, as we've observed this year. I do anticipate growth, but realistically, whether we grow at mid-single digits or low single digits won't significantly impact the overall results at the consolidated level. That's how I currently see things.

It makes sense. Regarding the recent legislation, the New York Governor just signed a measure to expand the Red Light Camera program by 450 cameras by 2027. I'm curious if you anticipate that New York will be purchasing cameras as they have in the past and how you view the scale or potential of the opportunity in New York City as well as in other parts of the state as enabling legislation becomes available. Thank you.

Yes, I mean, the legislation just passed this week, so I don't think we've had any direct conversations, but I would anticipate up until the RFP is finalized that New York will probably sit on the sidelines related to that. And they'll make that determination at that time. I wouldn't have a read into the cities.

And if you remember, we did talk about in the past, and I know this was public from some of the Q&A is that New York is actually looking at the build-own-operating model that we have in the rest of the country. So, again, that's how we'll quote it. And New York City will make their choice as they will. With respect to the other part of your question, I don't see a direct camera purchase being any more prevalent in the United States in the future than it has been in the past. So, that’s the simple answer to the first part of your question.

All right. Maybe just one last one, I'll jump out, but with leverage now approaching 2 times by year-end, just talk about priorities for reinvesting cash flow and barring a meaningful M&A, would you continue to pay down debt? Or maybe accelerate investments and/or return cash to shareholders rather than push low leverage further or below the kind of long-term target range? Thank you again.

Yes, I mean, ultimately, I don't think there is anything that has changed in terms of our prioritization. The first thing is growth, and we want to continue to look for ways to continue to perform at the business level. So, we'll be looking both at opportunities to invest in the business as well as opportunities to invest via M&A. I think we've been very, very active on that. And I think our cash balance just gives us a really great position as we think about different types of transactions. Based on the timing or what we calculate as the returns related to those, we're always open to looking at both share repurchases. We have a $50 million authorization outstanding as we sit today. As Craig mentioned earlier, we've refinanced the debt twice this year. So, I think we're pretty open to whatever makes sense. Because of the cash flow generation of the company, we're able to make those decisions kind of on a quarterly view. So, right now, we're really comfortable with our cash position, and we remain active on the M&A front.

I would add just to that is that we still have a target of 3 times net leverage, right? So if we land at 2 times, if we don't do any incremental capital deployment from where we were at the end of the third quarter, as I said in the prepared remarks, that's going to be a result, not a target. The thought on target net leverage for the company hasn't changed.

Your next question comes from the line of Faiza Alwy with Deutsche Bank. Please go ahead.

Yes, hi. Thank you. So, Craig, I was hoping you could give us a little bit more color on the incremental cost that you talked about for 2025. And I think you mentioned portfolio mix and some costs. So, just if you can help frame some of those things for us, that would be helpful.

Yes, I'll address each point one at a time, Faiza. Thank you for your question. Regarding portfolio mix, this largely pertains to the Commercial Services business, which is experiencing growth in travel that mirrors GDP trends. There are other segments of the business that operate differently. I can't delve too deeply into specific margin percentages due to competitive reasons, as we've discussed previously on this call. Some parts of the business are expected to grow faster than our travel-focused segments next year, which may put slight pressure on margins. However, this impact won't be significantly material, and we shouldn't expect the same margin increases we saw in 2023 as a result of the travel recovery. The second aspect relates to TAM executions within the Government Solutions business. Several developments are occurring here. We've previously mentioned the ongoing costs associated with lobbying, legislation, and sales, which will continue as we establish new TAMs. This remains part of our operational rhythm. More importantly, we’ve seen a significant increase in the ARR win announcements, particularly in the latter half of this year, which will subsequently influence revenue. Looking forward 12 to 18 months, we’re focusing on revenue projections for late 2025 and early 2026. Additionally, as we move to implement these wins, we'll incur R&D expenses with each installation. This includes costs like road signage, accommodating various camera angle requirements from different municipalities, and creating custom evidence packages. These expenses are standard for each rollout we perform. Given the favorable conditions for installations leading into next year, we expect these costs to precede the revenue they will generate. Therefore, when I evaluate our situation for 2025, we anticipate additional costs arising before we see corresponding revenue. Lastly, on the financial infrastructure front, we’ve discussed this for about a year, and we are in the final stages of implementing a new ERP system for the company. This will involve approximately $5 million in non-capitalized costs, expected to be incurred in the first half of 2025.

I understand. That's very helpful. I just have two quick follow-up questions. One is, are you anticipating a higher level of CapEx spending in 2025?

Yes, marginally. And I would bracket it by saying, I'm still working that out, Faiza, here's how I would bracket it. I think that free cash flow conversion as a percentage of adjusted EBITDA is going to be in the 40% to 45% range next year. We're going to be at the high end of that range this year. So, by widening that range a little bit, that would tell you, I probably am going to have a little bit more CapEx, but those installs as we get to the back half of last year could push like they did this year in terms of timing. So, I think the CapEx will be roughly similar, but higher year-over-year.

Okay. And then just one last question, this might be tricky to answer, but I'm curious about the new contracts you are winning and the annual recurring revenue you mentioned, along with the installation costs. How should we view the margin mix with these new contracts? I know there is quite a bit of competition in some cases. Looking ahead over a longer period, do you think these will negatively impact the margins of the Government business? Or are you securing them with a margin profile similar to your current one, or at least to where you were last year?

Yes, I would say it's going to depend on the size of the program. I mean some of the programs that are much larger, like New York have higher levels of cost. And certainly, some that are smaller, just it's going to depend. So, what I would say is that generally speaking, we are winning the deals at prices that have been relatively similar to where they have been in the last several years, and so we would continue to hope to win and maintain margin outside of the investments that Craig mentioned earlier.

Yes, I agree, David. Currently, I see the margin percentage of the business in the low 30s. We may have a significant installation that could reach the top of the high 20s, but that's due to incurring costs before the revenue comes in. However, I don't expect this business to be below 30% in a couple of years, Faiza. It's quite variable, not only by municipality but also by the different modes of selling. We don't just sell one product; we offer multiple products. Overall, I view this as a low 30s business as we continue to scale with volume moving forward.

Great. Thank you so much.

Your next question comes from the line of Dave Koning with Baird. Please go ahead.

Yes, hey guys. Thanks for doing this and taking my call. So, first of all, just on parking, the service part of parking had been flat to up for I think almost all the quarters since you bought it. But this quarter, I believe it was down about 4% year-over-year just on the service side, too. Maybe refresh on what that was or why that is, and does that kind of get back to growth mode pretty soon?

Sure. The service includes installation services and warranty services, which are linked to the equipment side of the business. There is also a pure SaaS component included. In our prepared remarks, we aimed to separate these elements. Looking specifically at the pure SaaS component, which constitutes about 50% of the business, it experienced year-over-year growth, even in this challenging environment, with an increase of a couple of percent compared to last year. However, the true service aspect, which we define as services and consolidation, decreased by approximately 4% to 5%, reflecting a mid-single-digit decline. This decline is attributed to the services related to the equipment side of the business, which has faced pressure in the latter part of the year.

Got you. Okay. And then I guess my follow-up question, it's like super nerdy, but in the filing, the last couple of quarters, a little over half of the commercial growth was tolling and then a third or so is fleet. And then just a little bit was kind of other stuff. This quarter, about half was tolling, only $1 million was fleet, and then about half of the growth was actually it looked like title registration, violations, all that other stuff. So, this quarter was really big on that stuff compared to the last many quarters. Am I reading that right? And maybe why were some of those things strong this quarter?

I believe we had a unique event last year that might be affecting the comparisons. There isn't really much to discuss in that regard. Let's focus on the TSA throughput, as it's probably the best way to frame it. For the first three quarters of this year, we've recorded $106 million, $106 million, and $104.5 million. The tolling aspect of our business typically aligns with those figures, and the violation aspect does as well. One point regarding Title and Registration that stands out is that we have seen a decrease in registrations this year. The rental car companies will report tomorrow, so you can get more details from them. However, when I consider the overall performance of Commercial Services, I don't think there's much to extract from it.

Yes. Got you. And tolling overall was good, it looks like. So, I appreciate that all. Thank you.

Your next question comes from the line of Keith Housum with Northcoast Research. Please go ahead.

Good afternoon guys. Just first off, a little bit of housekeeping in terms of the fourth quarter. In terms of the disruption in terms of the Florida toll result of the hurricanes, can you quantify what kind of headwind that's presenting for you guys in the quarter?

Yes. Our best guess on that is $1 million to $2 million, probably towards the upper end of that range, Keith, if I were to bet on this. I haven't seen it all come through that. That's why I can't give you a precise answer, even though the storm hit 23 days ago, but it will be around $1 million to $2 million.

Great. Appreciate it. And then just in terms of the international business, I think, David, you might have called out Australia and Canada as having some nice ARR wins. But perhaps you could go through each of your segments and talk about the importance of international, both in terms of what it is today and perhaps how it's growing compared to the rest of the business?

I believe that we continue to see significant strength in our Government Solutions business, particularly in Australia. We have one of our largest global customers in New South Wales, and our ongoing partnership with them is crucial. This relationship is key for our Government Solutions business moving forward. We also see it as an opportunity to expand our work into New Zealand, as discussed last quarter. In Europe, our focus remains on Commercial Services, which is performing well. We are actively working on pilots with several rental car companies across different countries, with some contracts nearing renewal. We are excited about this development. Additionally, we are making progress in Italy, which is a major market for tolling. As mentioned in previous quarters, we are beginning to observe positive trends in this area, underscoring its significance for the company’s long-term growth.

Got you. Appreciate it. And last question for you. Do I understand it right that New York City also has a pilot out there for your CrossingGuard product that I think you might be doing with one of your competitors? Can you maybe clarify if it's part of the larger New York City proposal that we've been talking about here, or is that a separate proposal you guys are working on?

I'm not familiar with the combined situation.

Yes, I mean there's a separate procurement for the school bus stop arm.

You said pilot.

Yes, there's not a pilot program.

Okay. And that's separate from the New York City RFP that we've been talking about in terms of Red speed cameras, etc., correct?

Yes, it would be a second submittal.

Thank you. And there are no further questions at this time. This now concludes today's conference call. Thank you all for participating. You may now disconnect.