Verra Mobility plunges 46% as Avis Budget terminates contract, cuts guidance

Verra Mobility Corp. shares lost 46% of their value after Avis Budget Group terminated a contract representing more than 10% of revenue.

"The company was surprised and disappointed by the decision and is moving decisively to adjust operations," Chief Executive Officer David Roberts said.

The May 26 termination came 20 days after Roberts described negotiations with the customer as "ongoing and constructive" on the company's first-quarter earnings call. On that May 6 call, Chief Financial Officer Craig Conti reaffirmed full-year 2026 revenue guidance of $1.02 billion to $1.03 billion. Verra Mobility now expects revenue of $985 million to $995 million, a reduction of about 13% from the prior midpoint. Adjusted earnings per share are seen at $1.19 to $1.25, with adjusted EBITDA of $380 million to $385 million and free cash flow of $140 million to $150 million.

The contract loss removes a customer that accounted for more than 10% of Verra Mobility's revenue, raising questions about customer concentration and the adequacy of the company's disclosure practices. Levi & Korsinsky, a securities litigation firm, has opened an investigation into whether Verra Mobility made materially false or misleading statements regarding the contract renewal. The stock closed at its lowest level since the company's listing, erasing more than $1 billion in market value.

The termination takes effect in September, giving Verra Mobility roughly four months to transition. The company said it is reviewing its contractual rights and the handling of confidential information while taking steps to cut costs and reassign resources tied to the customer.

Verra Mobility provides smart mobility technology through government solutions, commercial services and parking solutions segments. The Avis contract was one of its largest commercial accounts, and the guidance revision implies the company expects no revenue contribution from the rental car giant for the remainder of the fiscal year.

The decline puts Verra Mobility shares at their lowest since the company's public listing, testing support levels not seen in years. Investors will watch for any additional customer disclosures or potential legal filings as the Levi & Korsinsky investigation proceeds.

This article is for informational purposes only and does not constitute investment advice.