Verra Mobility Corp. shares dropped more than 42.5% in late Tuesday trading after it said Avis Budget Group is terminating its contract, starting in September.
Verra Mobility, a smart mobility tech company, also lowered its full-year 2026 revenue and earnings guidance. The company said it is taking steps to cuts costs and reallocate some resources to other customers.
"We were surprised and disappointed to receive this notice from Avis Budget Group given our longstanding partnership and the significant time invested by both parties in ongoing extension negotiations," Verra Mobility President and CEO David Roberts said. "We are now moving decisively to reduce costs, adapt our operations, and position the business for continued growth and future opportunities."
"We remain confident in the strength of our platform, our ability to continue innovating, and our capacity to meet customers' evolving needs while mitigating the impact of this development," he added.
Avis Budget Group could not immediately be reached.
Verra Mobility said the termination will reduce its commercial services' annualized revenue this year by $135 million to $145 million, and its 2026 annualized segment profit by about $120 million to $125 million, before expected cost-reduction initiatives.
Verra Mobility, based in Mesa, Az., revised its guidance for its full-year 2026, saying it now expects total revenue of $985 million to $995 million, down from $1.02 billion to $1.03 billion earlier this month.
It lowered its forecast for adjusted earnings before interest, taxes, depreciation, and amortization to $380 million to $385 million, down from $405 million to $415 million previously.
It now expects adjusted earnings per share of $1.19 to $1.25, compared with a range of $1.32 to $1.38 previously.
It lowered its free cash flow projection to $140 million to $150 million, from $150 million to $160 million previously.
On May 6, Verra Mobility reported first-quarter revenue of $223.6 million, up 0.1% from the $223.3 million in the first quarter of 2025. Its adjusted earnings were 25 cents a share, down from 30 cents a share in the year-ago first quarter.
Service revenue increased 1%, driven by a 4% growth in its government solutions segment.
But its commercial services segment declined 4%, to $97.8 million, from a year ago, and commercial segment profit decreased 2% to $61.8 million, because of lower revenue generated from its fleet management customers due to prior period customer churn. Commercial Services includes automated toll and violations management and title and registration solutions for rental car companies, fleet management companies, and other large fleet owners.
"The decline in Commercial Services revenue was due to lower revenue from our fleet management company customers due to prior period customer churn," Verra said at the time.
Net income of $26.7 million declined from $32.3 million in the previous first quarter, which Verra said was "primarily attributable to an increase in operating expenses, decrease in product sales, partially offset by a legal settlement finalized in February 2026, in which the company received ordinary shares of a publicly traded company based in Australia."
Verra Mobility's stock is down 41.6% through Tuesday's close, and down 44% over the past 12 months.