Verra Mobility Corporation (VRRM) DCF Valuation & Fundamental Primer
Verra Mobility Corporation (VRRM) currently trades at $22.41 with an enterprise value of $4.60B. Our proprietary institutional model rates Verra Mobility Corporation at 79/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 21.3% vs. historical growth of 22.3% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Verra Mobility Corporation (VRRM) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Verra Mobility Corporation (VRRM) 3-Scenario DCF Valuation Range
Stress-test VRRM's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $22.41).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $26.80 +20% | $28.88 +29% | $31.31 +40% | $34.18 +53% | $37.62 +68% |
| 9.3% | $23.43 +5% | $25.07 +12% | $26.95 +20% | $29.13 +30% | $31.69 +41% |
| 10.0% | $20.66 -8% | $21.97 -2% | $23.47 +5% | $25.17 +12% | $27.14 +21% |
| 10.8% | $18.34 -18% | $19.42 -13% | $20.62 -8% | $21.99 -2% | $23.54 +5% |
| 11.5% | $16.37 -27% | $17.27 -23% | $18.26 -19% | $19.37 -14% | $20.62 -8% |
Institutional Software Quality Scorecard (79/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Strong cash conversion; 100%+ of operating profit turns into free cash
Minimal dilution friction; management compensation aligned with shareholders
High-quality software margins with healthy balanced growth and profitability
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High cash conversion: 100%+ of operating income converted to free cash flow
- Low dilution friction: SBC is only 2.6% of revenue
- Healthy unit economics: 97.8% gross margin
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into VRRM?
Market implies 21.3% annual revenue growth over next 5 years (23.8% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (2.6% of revenue) and annual share dilution (0.3%/yr). Accounting for both requires 23.8% 5-year revenue CAGR to justify $22.41/sh on a true per-share economic cash flow basis.
Verra Mobility Corporation (VRRM) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $879.2M | $879.2M | $1.07B | $1.31B | $1.61B | $1.96B | $2.40B |
| Gross Profit | $860.2M | $860.2M | $1.05B | $1.29B | $1.57B | $1.92B | $2.35B |
| Operating Income (EBIT) | $136.0M | $136.0M | $166.3M | $203.3M | $248.5M | $303.8M | $371.4M |
| Stock-Based Compensation (SBC) | $23.0M | $22.9M | $28.1M | $34.3M | $41.9M | $51.3M | $62.7M |
| Unlevered Free Cash Flow (FCF) | $152.8M | $152.8M | $186.8M | $228.4M | $279.2M | $341.3M | $417.2M |
| SBC-Adjusted True Cash Flow | $129.8M | $129.9M | $158.8M | $194.1M | $237.3M | $290.0M | $354.6M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -25.4 + 0.73 × (Rule of 40) · R² = 81%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Verra Mobility Corporation | VRRM | $3.58B | $879.2M | 97.8% | 17.4% | 39.6% | 2.6% | 5.1× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 5.1× | $4.45B | $3.58B | $22.41 | 0.0% |
| -20% Multiple Compression | 4.0× | $3.56B | $2.69B | $16.84 | -20.0% |
| -35% Multiple Compression | 3.3× | $2.89B | $2.02B | $12.66 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $4.40B | $3.53B | $22.09 | -1.1% |
Frequently Asked Questions: Verra Mobility Corporation (VRRM) Valuation
What is Verra Mobility Corporation (VRRM)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Verra Mobility Corporation (VRRM) has a Base Case implied value of $23.38 per share (with a Bear Case of $6.50 and a Bull Case of $47.48), compared to its current price of $22.41. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Verra Mobility Corporation (VRRM)'s Rule of 40 score and Free Cash Flow margin?
Verra Mobility Corporation achieves a Rule of 40 score of 39.6%, combining a 22.3% revenue growth run-rate with a 17.4% TTM free cash flow margin on $879.2M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into VRRM stock according to Reverse-DCF analysis?
At $22.41 per share (Enterprise Value of $4.45B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 21.3%, compared to Verra Mobility Corporation's historical CAGR of 22.3%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Verra Mobility Corporation compare to Software & Cloud Services software peers?
Verra Mobility Corporation (VRRM) earns an institutional Software Quality Score of 79/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Verra Mobility Corporation (VRRM)'s valuation?
Verra Mobility Corporation recorded $23.0M in TTM stock-based compensation (2.6% of revenue). When treating SBC as a cash-equivalent compensation expense, Verra Mobility Corporation's SBC-adjusted free cash flow yield is 3.6%, scoring 25/25 on our Shareholder Dilution Friction pillar.