Q3 2023 Verra Mobility Corp Earnings Call
Greetings and welcome to Veeva CRM ability third quarter 'twenty earnings call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
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As a reminder, this country's being recorded.
It's not my pleasure to introduce your host Mark syndrome, Vice President of Investor Relations. Thank you you may begin.
Thank you good afternoon and welcome to their mobility is third quarter 2023 earnings call today, we'll be discussing the results announced in our press release issued after the market closed along with our earnings presentation, which is available on the Investor Relations section of our website at IR dot their mobility dotcom.
With me on the call are David Roberts, Verra mobility, as Chief Executive Officer and <unk>.
Craig Conti, our Chief Financial Officer, David will begin with prepared remarks, followed by Craig and then we'll open up the call for Q&A.
Management may make forward looking statements during the call regarding future events anticipated future trends and the anticipated future performance of the company.
We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict.
Actual results may differ materially from those projected in the forward looking statements due to a variety of factors. These factors are described in our SEC filings. Please refer to our earnings presentation or excuse me. Please refer to our earnings press release for Verra mobility is complete forward looking statement disclosure, we do not undertake any obligation to update.
Looking statements.
During todays call well refer to certain non-GAAP financial measures a reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in our earnings release, which can be found on our website at IR Dot verra mobility dot com and on the Sec's website at SEC Gov with that I'll turn the call.
Over to David.
Thank you Mark and thanks, everyone for joining us we delivered a strong third quarter highlighted by 11% year over year recurring service revenue growth.
Moreover, we delivered adjusted EBITDA growth of 7% over last year and converted 53% of adjusted EBITDA to free cash flow for the quarter.
Additionally, we are pleased to report we renew the tolling contract with enterprise mobility for a three year term with terms and conditions that are materially consistent with the prior agreement.
Enterprise has been a terrific longtime partner and we look forward to continued success in the future.
I'm incredibly pleased to point out that we are 100% fully D spat with all warrants now exercise and all earn out shares issued.
This comes as we celebrate our five year anniversary as a publicly traded company a significant milestone in our incredible journey to become a leader in smart mobility solutions.
Additionally, we executed our previously authorized $100 million share repurchase program, the details of which Craig will further elaborate in his remarks and our board of directors has also authorized a new.
18 months $100 million share repurchase program.
Lastly, we are again, increasing our financial guidance due to our strong year to date performance and our outlook for the fourth quarter.
Moving on to our operations and starting with commercial services, we delivered 14%.
Revenue growth driven in large part by an exceptionally strong summer travel season.
Year to date TSA volume is about 101% from 22, 2019 and about 113% of 2022 volume.
Rack tolling revenue increased 818% over the prior year quarter due to increases in adopted rental agreements the increased adoption of all inclusive pricing plans.
Durable trend of longer rentals, and the secular tailwind related to increased toll roads and cashless toll lanes.
We believe the sentiment from the major Airlines hotel chains and rental car companies suggest no signs of slowing domestic travel demand through the remainder of this year and as we head into 2024 and the near to midterm, we believe sentiment and bookings suggest that domestic travel demand will see steady growth underpinned by an IND.
Increase in business travel driven by return to office mandates and hybrid work schedules, increasing weekend leisure travel.
We continued to experience strong growth from the FMC business generating 20% over the two O generating 20% over the same period last year. This was higher than our internal expectations driven by several factors the expansion of our sales team and the purposeful intent and focus in this market area second we are enhancing.
Brand awareness outside of our core customer base and building new distribution channels and lastly, we have capitalized on the near term opportunity to market the value of our solutions to a customer base that historically perform these activities internally.
On a go forward basis, we expect the FMC business growth to moderate and to grow in line with the overall commercial services growth rate.
The key factors influencing our conviction in the high single digit growth rates are low market penetration levels, particularly among small and medium size fleets and the value added tools, we offer that reduce cost and improve improve the customer experience.
Moving onto government solutions recurring service revenue, which reflects 94% of the total revenue for the quarter grew 10% over the same period last year.
Government solutions sales growth is benefiting from the prior year completion of the New York City build out and the city's decision to transition to 24 by seven monitoring as well as program expansion with existing customers and new camera installations with new customers.
As we look toward the future we are anticipating significant growth in our government solutions Tam we continue to experience a favorable legislative environment as states are increasingly turning towards enhanced automated enforcement to increase traffic safety for their citizens.
In October, California signed into law legislation for a speed safety pilot program in six major cities, including Los Angeles, San Jose Oakland, Glendale Long Beach in the city and County of San Francisco, We currently estimate the potential annual recurring revenue opportunity associated with this pilot program.
To be greater than $10 million per year. However.
However, as the program demonstrated efficacy and we anticipate that additional legislative authority may expand the scope of the speed program in future years, we estimate the total recurring revenue opportunity could be greater than 100 million annually within the next few years if legislation allows.
Additionally, in Pennsylvania, where we're seeing continued positive momentum for the automated enforcement.
The legislation is seeking to enable new use cases, including schools on speed and school bus stop arm as well as extend and expand existing use cases for works on speed and highway speed enforcement.
As we previously discussed Florida passed schools on speed and school bus stop arm legislation in May and we are actively monitoring how cities seek to operationalize the new legislation and subsequent RFP announcements, we continue to anticipate generating.
We continue to anticipate getting revenue from initial awards in deployments in the back half of 'twenty 'twenty four and we'll provide more color. When we provided 2020 for guidance on our fourth quarter earnings call.
I'm also pleased to report that we were awarded a contract with the city of Yonkers, New York and the Yonkers Public school system in which nearly 500 school buses will be equipped with our school bus stop arm safety cameras. This is a great example of purpose built safety program that will protect our children and the spirit of vision zero.
We see a continued demand nationwide part solutions and according to NHTSA and estimated 19500 people died in motor vehicle traffic crashes in the first half of this year, which represents a 3% decrease compared to over 20000 fatalities in the first half of 2022 at the same time.
People are driving more and preliminary data shows vehicle miles traveled in the first half of 2023 increased by more than 35 billion miles roughly 2% higher than the same time last year.
While it's promising to see some safety improvements there is still much work to do to make our roads safer. We are confident that our technology can play a key role in addressing public safety.
Moving onto T. Two systems total revenue was effectively flat year over year, SaaS and services revenue a key value driver was up 4% over the prior year quarter slightly ahead of expectations. However, one time hardware sales were down about $1 million compared to last year due to customer requested installation.
Timing considerations, we anticipate solid sequential revenue growth in the fourth quarter due to continued strength in recurring SaaS and services.
In summary, this was an incredible quarter highlighted by a key customer contract renewal exciting new enabling legislation executing our capital allocation initiatives strong financial performance and increasing our financial guidance with that Craig I'll turn it over you to guide us through our financial results and our our revised current year outlook.
David Good afternoon, and thanks to everyone for joining us on the call.
Start out today by providing an overview of our third quarter results followed by our updated 2023 financial guidance and I'll conclude with the discussion on capital allocation.
Before I dive into third quarter results I wanted to briefly mention that we appointed Deloitte as our independent registered public accounting firm during the third quarter the move to a new public accounting firm requires tremendous effort and I'm pleased to report that transition is going well I want to personally. Thank the teams at verra mobility, and Deloitte, who are all hard at work.
Making this happen.
Now, let's turn to our operating results beginning on slide four which outlines revenue and adjusted EBITDA performance for the consolidated business total revenue increased more than 6% year over year to $210 million for the quarter driven by strong recurring service revenue growth excluding.
Excluding domestic government solutions product sales in the third quarter of last year total revenue grew 11% year over year.
Recurring service revenue grew 11% over the prior year quarter, driven by a strong trouble.
A strong summer travel season in the prior year expansion of the New York City School Zone speed program.
At the segment level commercial services revenue grew 14% year over year government solutions service revenue increased by 10% over the prior year and <unk> Systems' SaaS and services revenue grew 4% over the third quarter of last year.
Product revenue was 9 million for the quarter about $4 million of this total was from Tito systems, while 5 million was from government solutions, the majority of which were international product sales.
From a total profit standpoint, consolidated adjusted EBITDA of $97 million increased by approximately 7% over last year. The core business defined as excluding onetime domestic government solutions product sales generated adjusted EBITDA growth of approximately 11% versus the third quarter of 2022.
Turning to slide five we've generated about $364 million of adjusted EBITDA on approximately $792 million of revenue on a trailing 12 month basis, representing a 46% adjusted EBITDA margin over.
Over the same term, we've generated about $187 million of free cash flow for a 51% conversion of adjusted EBITDA, representing $1 19, a free cash flow per share.
Moving to commercial services on slide six we delivered revenue of $98 million in the third quarter, which is a 14% year over year increase.
Rack tolling revenue increased 18% over the same period last year, driven by robust travel volume and increase rental volume.
Additionally, our FMC business grew 20% year over year as our growth initiatives continued to produce the intended results.
As David mentioned FMC revenue exceeded internal expectations, driven by the success, we've experienced enrolling small and medium sized business fleets.
Third quarter adjusted EBITDA in commercial services was $65 million, representing 16% year over year growth adjusted EBITDA margins of about 67% reflected normal seasonality and we're up about 1% compared to the third quarter of last year due primarily to the strengths of rack Tony.
Let's turn to slide seven and we'll take a look at the results of the government solutions business.
Driven primarily by New York city's photo enforcement expansion efforts service revenue increased by $8 million or 10% over the same period last year to $85 million for the quarter.
Product revenue was about 5 million for the quarter and was driven primarily by international programs.
Adjusted EBITDA was $29 million for the quarter representing margins of 32%.
The reduction in margins versus the prior year is primarily due to increased spending on platform investments and business development efforts.
Now turning to slide eight we had mixed results for parking solutions revenue.
Revenue of $21 5 million and adjusted EBITDA of about $3 6 million were slightly below internal expectations sah.
SaaS and services revenue slightly exceeded expectations, which is the primary value driver, but approximately $2 million in one time product sales shifted into the fourth quarter.
We have made several process improvements in our forecasting process, but we'll need to continue to evaluate given the choppiness of the university purchasing cycle.
Moving to slide nine we'll take a look at reported income and leverage we've reported net income of $30 million for the quarter, including a tax provision of about $11 million, representing an effective tax rate of 28%.
Having fully this back this quarter this will be the last quarter that our tax rate is impacted by permanent differences related to mark to market adjustments for our private placement warrants.
Adjusted EPS, which excludes amortization stock based compensation and other nonrecurring items was 29 per share for the current quarter, which is <unk> <unk> per share higher than the third quarter of 2022.
On the right hand side of the page you can see that we ended the third quarter with a net debt balance of $942 million, resulting in net leverage of two six times for the third quarter the <unk>.
Primary drivers were strong free cash flow debt repayments and the cash exercise of warrants, which yielded approximately $56 million of cash proceeds during the third quarter.
As of the end of the third quarter, we have paid down approximately $180 billion of floating rate term loan debt on a year to date basis.
Our gross debt balance at quarter end stands at about $1 1 billion of which approximately $700 million is floating rate debt.
With a notional hedge of approximately $675 million, we have hedged about 95% of our current floating debt total with a flow per fixed rate swaps.
This hedging instrument fixes the sofa portion of our sulfur plus 325 basis point term loan b at a rate of five 2% for three years with a monthly option to cancel beginning in December of this year that we can execute in the event that interest rates move in our favor.
From a cash standpoint, we generated approximately $62 million in cash flow from operating activities, resulting in 52 million of free cash flow for the quarter.
Okay, Let's turn to slide 10, and have a look at full year 2023 guidance.
Based on our year to date results and our outlook for the remainder of the year, we are increasing our revenue guidance from the prior range of $800 million to $810 million to the higher end of that range.
We are increasing our adjusted EBITDA guidance from the prior range of $365 million to $370 million to the higher end of that range.
We are increasing our guidance for adjusted EPS to an updated range of $1 <unk>.
To $1 10 per share despite our increased share count.
And lastly, there's no change to our prior free cash flow guidance of $145 million to $155 million.
Our revenue guidance incorporates a modest reduction in rack tolling that we typically experienced in the fourth quarter, which is consistent with historical trends.
Government solutions service revenue is expected to be up slightly in the fourth quarter, representing a lower rate of year over year growth due to the anniversary of the completion of the New York City camera installed in the transition to 24 by seven monitor.
In addition, our parking solutions business is expected to generate solid sequential revenue growth due to the normal University spending cycles and continued strength in SaaS and services revenue.
Additionally, based on achieving the adjusted EBITDA and free cash flow guidance ranges, we expect net leverage to be around two five times by year end 2023.
The expected net leverage target reflects a reduction of nearly a full turn of net leverage over the past year driven by the strong free cash flow generation capabilities of our company along with the year to date proceeds from the exercise of warrants.
Moving now to our capital allocation plans for the remainder of the year as David and I. Previously mentioned, we are now fully <unk> with the remaining warrants converted to shares at a cashless basis during the third quarter.
In addition, as we discussed on our second quarter call, we paid down an additional $100 million of floating rate debt in the third quarter, bringing our total debt pay down for the year to about $180 million.
Next I'd like to give you a brief update on the share repurchase program. The Companys Board of directors authorized in November of last year for up to an aggregate amount of $100 million over an 18 month period.
Primarily using an accelerated share repurchase program, we repurchased about four 5 million shares through the end of the third quarter.
The final settlement of the ASR is expected to occur during the first quarter of 2024 at which time, our volume weighted average price calculation over the term of the ASR agreement will be used to determine the final number and average price of the shares repurchased and retired.
At this time, we expect the final outcome of the full $100 million share buyback program to result in the repurchase of approximately 5 million shares.
As David briefly mentioned our board of Directors also authorized a new 18 months $100 million share buyback program.
We remain committed to delivering value to our shareholders through a disciplined and flexible capital allocation strategy. This new buyback authorization highlights our balanced capital allocation approach focused on the tremendous cash flow capacity of our business.
In summary, we are in a fantastic financial position and we believe the operating trends in our business are favorable and durable.
This concludes our prepared remarks, thank you for your time and attention today at this time I'd like to invite Irene to open the line for any questions taken away I read.
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The first question we have is from Paypal we have.
Deutsche Bank. Please go ahead.
Yes, hi, thank you so much and so I first actually I wanted to talk about the California legislation that you reference I think I heard you say that it can drive incremental annual revenues of 10 million that can then go up to 100 million all the time so just.
Curious if you can give a bit more color around that do you need incremental legislation or are there certain outcome that would drive that increase and just said that you know.
That 10 million just seems it seems a bit low so curious.
In terms of what your assumptions are there.
Yeah. This is David Great question, the way to think about it was similar to other states. The state of California decided to do a pilot program with a fixed number of cameras that they would allow so it's dispersed across the cities that I mentioned on the call but.
Decided to start with a fixed number.
And what I would in terms of milestones what I would anticipate that they'll look from proved from the program in terms of how is it impacting.
Speed and certain sites are in school zones in different areas within the state and then based upon that and the benefits we anticipate from that that wouldn't be they would go back to the legislation or go back to the legislative body, rather than look forward an expansion in a more permanent status of the <unk> of the legislation. We have had other states that started.
In the same way.
Got it okay understood and then secondly, you made some comments around 'twenty 'twenty four.
The point in the year.
Looking at refining our models for 'twenty four so I'm curious if I know you'll be there probably still in your planning process, but how should what are some of the things that we should keep in mind is as we look ahead to 2024.
Yeah, Faiza, it's Craig Thanks, and you're right. We are still in the planning process, but it's starting to become at least a little clearer as we get deeper into the fourth quarter. Here you know I think for the total company level organic revenue I expect to land in the same range that we talked about at Investor day right. So.
To see that organic growth year over year in that same range.
If I look at it from a margin standpoint I. My best guess today is that we would be flattish to have a modest margin growth next year still doing a little bit of investment and I think that'll be clear when I talk about how we're thinking about cash, notably how we're thinking about capex. So if you take what David said.
His prepared remarks.
I think we've been talking about for quite some time.
The expansion in Tam and the government solution space domestically is kind of unprecedented so in order for us to play our part we have to lead with Capex right. So we will see the draw on our Capex, which will be all growth Capex next year I'm expecting it to be somewhere in the range of $25 million to $30 million of additional capex year over year.
As we look to capitalize on that growth so.
In summary, I expect the organic growth to look a lot like Investor day, I do expect margins.
Love to say, it's going to be.
A bit accretive, but flattish to a bit accretive and we will have increased capex and again the majority of the thrust of that is going to in government solutions, where you had hoped it would.
Got it. Thank you so much I really appreciate it.
Sure.
The next question we have is from the criminal housekeeping. Please go ahead.
Alright, David and Craig Congrats on the strong quarter.
First I just wanted to ask you about what's driving the continued outperformance in that.
<unk> business, such as the new distribution channels are building out and all types of new customer bases that you're gaining traction with.
Yeah sure. So you know traditionally we have looked at really.
If you look at commercial fleet as a whole, we've obviously focused a lot on rental car.
And then through channel distributions are Fmc's, one as we sort of what I would say as we doubled our efforts through an increased amount of sales resources into that traditional channel with FMC and then in addition, we've been working on looking at smaller fleets outside of those that don't necessarily have a fleet managed company.
And that's an area that we're looking to continue to grow and we're investing this year and we would anticipate growth from that what you might call. A small fleet you going into next year. So I would just call it a real commercial execution and traction within the core and then some expansion as we look at.
A different channel distribution.
Yeah, just to add onto that.
The growth this quarter surprised US you know when we talked about this last quarter. We said we thought the back half of the year would look a lot like the overall consolidated growth rate.
So.
If you break this business down it's somewhere between 12 and $15 million a quarter, so 10% more growth while it's material. It's not it's not exactly a huge we do expect that growth to look more like the consolidated commercial services growth rate here in the fourth quarter, but really really pleased with the performance.
Got it thanks for the additional color.
Uh huh.
The next question we have is from Daniel Moore of CJS Securities. Please go ahead.
Yes, good afternoon, Dave and Craig Thanks for the color.
Maybe start with on the government solution side as you as you just described margins ticked a little bit lower increased operating expenses.
Yeah.
Associated with enhanced dancing customer facing programs.
It sounds like David you know, that's a crank that.
Maybe some of the expenses that will linger into fiscal 'twenty for keeping margins, a little bit flatter or maybe any additional color on sort of what's onetime versus recurring that would be really helpful. Thank you.
Yeah, Yeah, great Great question, So, let's talk Myopically about 2023, just for a second here. So so you're right.
In Q3, the margins came down quite a bit and this is some of the platform investments that we were making in the back half of this year. They are really they were centered on Q3, so that youre going to see that margin grow into Q4, right and I still think we're going to land somewhere in the 34 to 34, 5% range for government solutions.
<unk> like I've been saying all year, so that's a little bit geography between the back half of the year.
As we look towards next year Youre right.
I think that it all comes down and the reason why I can't give you a precise number yet is it comes down to timing.
As these new terms are opening it depends how how soon we can get our product in the ground right. If it's going to be towards the back half of the year, we're gonna be running some expense to get that done if it's towards the front half of the year, we won't have to run some of that expense. So when we talk about being flattish year over year and was slightly accretive in 2024 I would.
Spect that same rubric to apply to the <unk> business, that's where the investment is.
Got it makes sense.
On the parking side to maybe just talk about the pipeline of Rfps and opportunities as we look into 'twenty four and you know more generally where do must be opportunities come from is it customers doesn't typically been managed in house or competing with incumbents.
To say, how you see that the growth in that business.
In 'twenty four and beyond thanks.
Yeah in particular on the SaaS the software side of the business as we looked at our products that we focus on universities and then ones for smaller municipalities for permits and enforcements I'd say both of those have strong pipelines are the market is still <unk>.
I think actually continuing to be strong for those markets.
You know typically we will.
Parking has been around awhile. So obviously people are more often than not they are either considering moving to something that they've been managing themselves, where they're already using a competitor I would say it depends on which market you're talking about as to which is 50 50 or 60 40 or what have you.
But the good news is especially in University, we have such a strong reputation and that's a that's a customer base that really talks to one out of there. So we feel really good about is we're going into next year, just kind of really focusing in on the University segment and expanding share of wallet with the portfolio of new products as well.
Got it and last for me.
You know between the ASR and obviously, the new authorization clearly being aggressive.
Around these levels is the plan to continue to be aggressive or maybe be a little bit more opportunistic as it relates to the new authorization. Thanks again.
Yeah. Thanks, Dan.
Noticed for a while and I think the great aspect of Verra mobility is our ability to sort of reevaluate capital allocation on a pretty almost on a quarter by quarter, but certainly every six months.
And what we do is we sort of every single time, we go and look at the landscape. We look at our M&A pipeline, we look at our cost of capital our debt and then we looked at our.
Share price related to our calculation of intrinsic value and then we make a determination so.
Our history shows that we've been very opportunistic on all of the above and I would anticipate we would continue to do so.
Alright, Thanks, again, I'll jump back with any follow ups. Thanks, Dan.
The next question, we have Keith Hoffman of Northcoast Research. Please go ahead.
Good afternoon, guys and congratulations on the quarter.
We have an active year in terms of you know the state legislature without some favorable legislation for travelling tourism cameras.
Are there one or two more states that perhaps are in your.
Ear focus that perhaps isn't gonna be active by legislation going forward over the next few months as well or do you think we're in a hiatus here where.
Absorb what was going on.
Well, there's no such thing as hiatus, we don't we don't believe in that for sure. What I would say is we have so much incredible opportunity in front of US. We are really focused on maximizing the opportunities that our teams have done such a great job of creating in places like Florida, and California and others.
We will continue to obviously be on offense and some of the key states and really look to do kind of what we did in Florida, which is we took a state that was only red light and then through a lot of hard work added other products to it so expanding sort of think of it as a legislative share of wallet. If you will and I would anticipate we'll continue to do that but between.
The opportunities that we have here in the U S plus some of the emerging opportunities that we see in Canada, and Australia, New Zealand I think we've got so much in front of us, that's where we're going to focus our efforts.
Gotcha, and just expanding on that in terms of the states that perhaps had a rough night, and they're adding speed or vice versa I guess.
These days, but how important is that for you guys to be able to leverage your red light relationship already I mean is it almost like a surety that you'd get that business.
Or is it perhaps open that someone else can walk in there.
Well, sometimes dependent often times because more than.
The people that are making decisions on Red Lake may not be the ones that are making decisions as an example on school bus stop arm.
Totally different set and even it could be different on speed, depending on the deployment, meaning if at school zone speed our works on speed that might be a different decision maker.
So certainly we are able to leverage and point to the success, we've had with other clients. It doesn't necessarily mean that they're just saying Oh, what's added to the contract or do you have them that would be great, but more often than not it doesn't occur that way.
Great. Thanks, I appreciate it.
Yep.
The next question we have is from James Faucette of Morgan Stanley. Please go ahead.
Great. Thanks, I wanted to follow up on a couple of questions on the trial in California, So that could be up to $10 million you know.
If you are able to win those pilots like what's the time to pilot award and then potential time to Robin now.
From your perspective at least.
I would anticipate we you know there is still good.
Typically there's a period of time between the final governor signing a bill and then cities really working through the details of how to deploy it I would anticipate probably sometime in the mid to late next year is when we start to see some awards coming through.
They want meaning that all 10 million won't sort of turn on Theres multiple decision, making us theres multiple opinions about it they're making those determinations. So that's what I would anticipate from a timing standpoint.
Got it and then.
You highlighted some of the the school bus and an arm related wins.
I'm wondering how we should think about like the revenue curves associated with those I know a lot of times and speed cameras or even red light cameras.
See an initial pickup in and in our revenue and then as people get used to and condition to to that enforcement mechanism that it'll come down and level off at some point is that.
Similar curve description and how should we think about that as particularly on some of these new wins.
Yeah, we don't really it's different for school bus stop arm. So it's typically more of a a fix.
Fixed fee arrangement with the customer per camera per bus.
Given the high levels of variability because these things are moving around so it's a little bit we actually used to do that many years ago, we no longer do that but so think of it more of a fixed fee per camera per month.
Oh, that's great I appreciate that.
Mhm.
Yeah.
The next question, we have is from Louie Dipalma of William Blair. Please go ahead.
David Craig and Mark good afternoon.
Hey, Louie Louie.
Hey, Craig did you say that there is an additional $25 million of.
Expected success based Capex for 2024.
Yes growth Capex, I expect $25 million to $30 million. Additionally, over and above what we will do this year.
And again, all or almost all of that increase and a large part of the base not just the increase is in the government solutions business as we continue to expand into these new markets.
Awesome and are those.
Is that success based capex is that generally tied to specific con.
Contract wins that you.
You may have won thus far this year.
We have some indications on a little bit of it some of that I think is certainly going to be on is certainly going to be on the come but I think there's also some platform investment in that number as well, but that is revenue generating platform investment that isn't necessarily tied to one specific customer right. So.
The answer the direct answer to your question. Louis is some of that has already won.
Some of that is also in.
The pipeline as we speak.
Great and one final one for me in terms of the all inclusive.
Plans are there still a large number of the rack brands that.
Haven't yet offered all.
All inclusive and is this an opportunity for you.
I would say, we don't want to get too specific about that but what I would say is it is not fully penetrated and so yes. There is still opportunity to grow that as we looked at our portfolio across our rack customers.
Awesome, Thanks, David Craig and Mike Yeah. Thanks Louie.
The last question, we have is from Dave Koning of Robert W. Baird. Please go ahead.
Yeah, Hey, guys nice job as always.
It may.
Maybe my first question it looked in the 10-Q like enterprise kind of crushed it this quarter.
A tonne like 25% sequentially give or take and up 20% year over year something something in that in that range was that is that one starting to pick up all inclusive or is there something else.
You know to enterprise right now.
Yeah. So.
That's that's off airport volume that is purely volume. What you are seeing that is not a new commercial contract or a new way to contract with the customer data.
Wow. So there's just a lot of our a lot of rental line that's great yes.
We'll take it right and then separately just on the on the share count because of all the warrant complexity and now that the buyback and stuff.
What.
What should we figure for Q4, and then Q1 is probably going up some residual impact to like whats the best way to think about those two quarters for diluted share count.
Yep, Okay, I was waiting for that one David so thank you. So yeah I shouldn't I should have put up my comment that that's what that tells me. So at year end I expect that share count to be 160 million shares. Okay. That's year end 2023.
Weighted average weighted average that the weighted average so the number I'm, giving you is going to be the base for adjusted EPS.
Is that the number you're after.
Well, yeah, I mean, that's very helpful. But also Q. The Q4 average just just so we've got that because that's kind of what we're gonna use for going forward too.
Okay, well why don't I move over to just got the go ahead Mark.
We get better at this point for Q4 weighted average should be about 161 68.
Yeah. That's helpful and then a little lower going forward, because youre doing some buybacks now that all kind of kind of fall into next year that the average and stuff.
That is correct and let's take it all the way, let's take it all the way forward to 2024, when we get to the end of the year of 2024 again, the weighted share count that we would expect for the full year is about 168 million shares.
Yeah, Yeah that is very helpful. Thanks, so much guys.
You bet. Thank you.
There are no further questions at this time and with that this concludes today's conference. Thank you for joining US you may now disconnect your lines.
Thank you.
[music].
Okay.