Verra Mobility Corporation reported that Avis Budget Group has issued a termination notice for their contract, with the termination to take effect in September 2026. The disclosure sent Verra Mobility shares down 29% in after-hours trading on Tuesday.
The Mesa, Arizona-based provider of smart mobility technology said it was surprised and disappointed by Avis’ decision, noting the relationship had been longstanding and that the parties were engaged in extension negotiations at the time of the notice. In response, Verra Mobility said it is immediately taking steps to lower costs and reallocate personnel and other resources that had been dedicated to the Avis account to other customers.
David Roberts, President and CEO of Verra Mobility, said the company is moving decisively to reduce costs, adapt operations, and position the business for continued growth. The company also stated it intends to protect its contractual rights, intellectual property, and business interests and is reviewing issues tied to the parties’ negotiations and the handling of confidential information.
Management estimated the Avis termination will reduce the Commercial Services unit’s 2026 annualized revenue by approximately $135 million to $145 million. The company expects a corresponding reduction in 2026 annualized segment profit of roughly $120 million to $125 million, before taking into account the impact of cost reduction initiatives.
As a result of the notice, Verra Mobility revised its full-year 2026 guidance. The company now expects total revenue of $985 million to $995 million and adjusted EBITDA of $380 million to $385 million. Adjusted earnings per share are forecast at $1.19 to $1.25, and free cash flow is projected at $140 million to $150 million for 2026.
The updated outlook assumes a weighted average fully diluted share count of approximately 155 million shares and an effective tax rate of 28.0% to 29.0%. Capital expenditures for 2026 are expected to be about $125 million, principally relating to camera installations and the implementation of the MOSAIC platform.
Summary
- Verra Mobility said Avis Budget Group notified the company it will terminate their contract effective September 2026, a development that drove a 29% after-hours stock decline.
- Management will reduce costs and reassign resources related to the Avis account, while reviewing contractual protections and confidential information handling.
- Verra trimmed its 2026 guidance to reflect the expected hit to revenue, profit, and cash flow, with specific numeric ranges provided for revenue, adjusted EBITDA, adjusted EPS, and free cash flow.
Key points
- The termination is expected to lower Commercial Services 2026 annualized revenue by approximately $135 million to $145 million and segment profit by about $120 million to $125 million - impacts that are material to the segment.
- Revised 2026 guidance: total revenue of $985 million to $995 million; adjusted EBITDA of $380 million to $385 million; adjusted EPS $1.19 to $1.25; free cash flow $140 million to $150 million.
- Operational responses include immediate cost reductions and resource reallocation; capital spending remains planned at roughly $125 million for camera installs and MOSAIC implementation.
Risks and uncertainties
- The timing and scale of cost reduction initiatives - while expected to offset some of the lost revenue and profit, the ultimate benefit is uncertain based on the information provided.
- Potential legal or contractual disputes - the company said it will protect contractual rights and is reviewing negotiation and confidential information matters, indicating unresolved legal or commercial questions tied to the termination.
- Customer concentration and revenue replacement - the loss of a longstanding customer and the need to reallocate resources may create pressure on Commercial Services and related market segments until replacement revenue is secured.
Verra Mobility’s revised financial ranges, share-count and tax-rate assumptions, and planned capital expenditures reflect management’s current assessment given the Avis notice. The company’s next updates will be important for market participants assessing the pace and effectiveness of cost actions and any progress in mitigating the revenue shortfall.