Via Transportation, Inc. (VIA) Earnings Call Transcript & Summary

Thank you. In Suffolk County, we run 911 square miles. So it was a challenge every single day. Without paratransit, it would be very difficult for me to get around and to go to work. Our day-to-day prior to VIA was a little chaotic. Phones ringing off the hook, people asking, where's my bus, my bus is running.

A lot of vehicles are out on the roads around the same times that we're trying to travel. With VEER, it puts the routes together for us. Everybody now doesn't get so uptight because of the phone calls. You could see it's much more calm. We have noticed an on-time performance increase of about six percent, which has been very beneficial. We saw about thirty.

reduction and the time that the passengers have to spend on the bus. With the app they can see where the bus is. These people who cannot take a transit bus for whatever reason, it makes life so much easier for them. When I first started using the app, I said to myself, this is a lot easier. I don't know what I would do without a power train. This is.

Good morning and welcome everyone to VIA's second quarter 2026 earnings call. I'm Noah Silver, VIA's head of investor relations and corporate development. With me today are Daniel Remote, VIA's co-founder and CEO, and Clara Fain, VIA's chief financial officer. During today's call, Daniel will review our second quarter 2026 business update before handing it off to Clara to discuss financial results and our guidance for the rest of the We will then open the call to Q&A. In addition to prepared remarks on this call, additional information can be found in our investor presentation, press release, and SEC filings on our investor relations website at investors.ridewithvia.com. Before we get started, we want to draw your attention to the Safe Harbor statement included in our press release and investor presentation. THE ITEMS WE DISCUSSED TODAY WILL INCLUDE FORWARD-LOOKING STATEMENTS ABOUT TOPICS INCLUDING BUT NOT LIMITED TO OUR FUTURE FINANCIAL PERFORMANCE, PROJECTIONS, AND MANAGEMENT'S PLANS AND OBJECTIVES FOR FUTURE OPERATIONS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE PRESENTED IN THE FORWARD-LOOKING STATEMENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES DESCRIBED MORE FULLY IN OUR SEC FILINGS, INCLUDING OUR QUARTERLY REVIEW OF THE STATEMENTS. report on form 10 Q. Any forward looking statements that we make on this call are based on assumptions as of today, August 6th, 2026. Unless required by law, we undertake no obligations to update or revise these statements as a result of new information or future events. We would also like to point out that our discussion today will include certain non-GAAP financial measures in addition to, not as a substitute for, financial measures calculated in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with reconciliations of non-GAAP to GAAP financial measures, are provided in our press release and our investor presentation.

Now I'll hand it over to Daniel. Thanks, Noah, and thank you everyone for joining us today. We're delighted to report another outstanding quarter for VIA. In Q2, our revenue grew 27% year-over-year to $136 million. The number of customers on our platform grew to 847, up 23% year-over-year. Q2 adjusted EBITDA was negative $3.4 million, and adjusted net loss per share was negative one cent, a major step towards our target of Q4 adjusted EBITDA profitability. Furthermore, our pipeline doubled year-over-year for the second quarter in a row, laying the foundation for accelerating revenue growth in the coming quarters. The public transit market is at a moment of inflection, and VIA is perfectly positioned to capitalize on the moment and capture this enormous market. The need for transit has never been greater. For many households, the rising costs of car ownership have become untenable. Aging populations are increasingly dependent on transit for their mobility. In the United States, our transportation infrastructure is falling further behind that of our economic peers. Nearly 40% of roads in the country are graded as being in poor or mediocre condition. At the same time, public transit budgets are not growing fast enough. There is tremendous demand for transit, but also powerful pressure to provide it ever more efficiently. there is a growing recognition that America can no longer afford the status quo. Historically, transportation investment has been measured by inputs such as dollars spent, miles of track built, buses deployed rather than outcomes. That accountability gap is real and has fed legitimate skepticism about the value of public transit spending. Today, the technology exists to build public transit systems that are not only smart, data driven and efficient, but also deliver outcomes that can be clearly measured and tracked. AI is accelerating that development, allowing for the creation of systems that work proactively to optimize the delivery of transportation. VIA is leading the charge to build efficient, outcomes-based public transit. We are both the catalyst of this transit revolution and the ones powering it at scale. We have achieved this position through relentless focus on the execution of a simple strategy, to build the world's most intelligent and most complete end-to-end platform for public transit. At the core of our platform is our purpose-built AI-powered software, which leverages proprietary data and expertise we've amassed over more than a decade. And while we have built the most advanced software platform for public transit, we are not solely a software company. We offer a full-stack transit solution with a broad suite of technology-enabled services that allow us to directly participate in the delivery of transit services to end customers. Importantly, our software is embedded in every aspect of our services, driving significant efficiency over legacy transit providers who make limited use of technology in their operations. And our services create a powerful data feedback loop that supports continuous improvement of our software and AI models. VIA's rapid and durable revenue growth is a testament to the success of our strategy. As we look ahead to the second half of the year and to 2027, we're encouraged by the fact that our pipeline doubled year over year for the second quarter in a row. Our pipeline is measured in growth annual contract value. This is the annual contract value of opportunities with both new and existing customers that is incremental to our current revenue. The rapid expansion of our pipeline is a strong indication that we're just getting started and unlocking our huge market. And that we have an exciting opportunity to accelerate revenue growth in the coming quarters. A significant portion of our pipeline growth is driven by network opportunities, where we leverage our end-to-end platform to take over entire transit networks. Network deals are incredibly energized for our team as they allow us to drive greatly improved outcomes for customers. In Q2, we continue to see strong progress with network deals at all stages of the pipeline, and these deals continue to represent the key opportunity for growth for the company. For example, a city in Alabama that started with VIA's micro-transit solution is now leveraging our full network solution to completely transform their entire transit system. Prior to VIA, the city's transit network ran on a piecemeal system of legacy software, making it difficult for agency staff to perform their jobs and providing a lack of visibility into performance. A couple of years ago, the city's transit network ran on a piecemeal system of legacy combination of driver staffing shortages and lack of transparency led to 20% of scheduled buses failing to run as planned. For residents across much of the city, fewer than one-sixth of the city's jobs were reachable by transit in an hour or less. Now, leveraging V.S. technology, the city was able to digitize and automate driver recruitment, vetting, and onboarding processes, reducing the costs associated with workforce management, and closing the staffing shortages. A redesign of the entire network is rolling out that, for the same annual budget, will extend transit access to 20% of the city's population that previously had no transit access at all, connecting residents to vital economic, healthcare, and educational opportunities. I also could not be more excited by the growth of our schools vertical. In Q3 2025, our first quarter as a public company, we identified school transit as a vertical that we believed had tremendous opportunity for growth. Now as we approach the new school year, we're seeing a large number of new projects slated to launch this summer and fall. Our school's product is primarily focused on providing alternative transportation services. These programs transport students who are poorly served by traditional yellow school buses, students in foster or shelter housing, students with complex custody arrangements, students with disabilities. For a school district in the Midwest that implemented VIA's student transit solution, the results were transformative. While we may take it for granted that we can track our pizza from the moment it leaves the oven, for the parents and caregivers who rely on these programs, there was previously no way to track pickups, drop-offs, or view their child's upcoming ride schedule. For the district, the ability to monitor these trips and ensure reliable on-time performance has completely transformed their ability to guarantee students arrive at school safely, on time, and ready to focus on learning. AI is at the core of our strategy and is transforming our business. We are embedding AI throughout our platform to deliver better outcomes for our customers. deploying new AI native products at an accelerating pace, from our voice AI system, which now automates passenger calls in dozens of cities, to AI powered dispatch, planning co-pilots, and proactive network optimization. These products drive immediate ROI for our customers and increase the stickiness of our platform. We are also leveraging AI to drive internal efficiency. With 95% of our code now written by and with AI, our engineering team is able to ship new features and products at a pace we could not have imagined two years ago. AI is also accelerating our operations, from how we respond to RFPs to how we manage fleets and dispatch rides. These efficiencies are directly contributing to our operating leverage and our path to profitability. Lastly, but certainly not least, we're delighted to report we've successfully launched our first projects with AI Labs. The power of VS Platform is in the ability to intelligently join troves of local disparate, and in many cases analog data sources, scattered across different verticals and leverage AI to generate actionable insights. We've seen strong demand from our municipal customers for AI solutions that can similarly unlock powerful optimization across the siloed data and cumbersome operational practices of local government. Our goal is to amplify the capacity and capabilities of the employees who are tasked with performing critical government services. democratizing access to the models and agentic capabilities that are becoming ubiquitous, while ensuring that critical government data remains protected. The AI Labs projects we've launched range from agentic workflows to informed citation decisions, to snow removal optimization, to automated permitting. One customer was able to reduce the manual time spent on the processing of public records requests by 92% with the agentic solution developed by our AI Labs engineers. We're incredibly excited about the potential for AI Labs as we scale it across cities and government functions.

And with that, I'll pass it over to Clara to review the financial highlights for the quarter and our guidance for the year. Thank you, Daniel. I'm happy to report that Q2 was another very strong quarter for revenue and profitability. This is our fourth quarter as a public company. And for the first consecutive quarter, we demonstrated our commitment to consistent execution and durable growth. Over the past quarter, we not only achieved robust revenue growth and record pipeline, we also continued to make significant progress on our path to profitability, with adjusted net loss under $1 million, or about $0.01 per share. Let's start with the top line. In Q2 2026, our annual run rate revenue, which is defined as our quarterly revenue multiplied by four, was $543 million, representing a year-over-year increase of 27%. Our growth was once again fueled by strong momentum in the United States, which represents 76% of our total revenue, and our revenue was up 35% year over year. Pipeline continued to grow very rapidly and surpassed $700 million in growth annual contract value. We closed the quarter with 847 customers, representing a year-over-year increase of 23%. We continue to benefit from Flywheel FX, where the success of existing customers drives referenceability and allows us to rapidly grow revenue without a corresponding increase in sales and marketing investment. We continue to benefit from Flywheel FX, where the success of existing customers drives referenceability and allows us to rapidly grow revenue without a corresponding increase in sales and marketing investment. Our largest customers continue to drive strong growth. We ended the quarter with 114 customers with annual run rate revenue over $1 million, a 36% year-over-year growth. This growth in large customers contributed to higher annualized revenue per customer, which now stands at $641,000. highest point in V.S. history. Our significant momentum with network opportunities gives us confidence in our ability to continue growing our base of large customers. Now let's dive into our margins and expenses, presented on an adjusted basis. Our adjusted gross margin was 41% this quarter, up from 40% in Q2 2025, thanks to a more favorable revenue mix. In particular, non-subscription revenue came in at the high end of our typical range and contributed favorably to the higher gross margin. We expect gross margin in Q2 to be more consistent with prior quarters and on subscription revenue to revert to a lower level within our typical range. In Q2 2026, we spent 13% of our revenue on sales and marketing, compared to 14% in Q2 2025. We continue to benefit from flywheel effects and AI-driven initiatives that are enabling sales and yielding measurable efficiency gains. We also spent 15% of revenue on G&A, which was consistent year over year. R&D expenses represented 16% of revenue compared to 20% in Q2 2025, demonstrating effective leverage in the business despite the continuous strengths of the Israeli shekel, which is the currency of our largest R&D center. The shekel had a negative impact of approximately $2.2 million on adjusted R&D expenses when compared to Q2 2025. to 2025. We wrapped up Q2 2026 with a negative 2.5% adjusted EBITDA margin. our narrowest loss on record. This is a meaningful improvement over negative 8.5% in Q2 2025 and demonstrates a significant progress on our path to profitability. Finally, our balance sheet remains robust with $336 million of cash and no outstanding debt. It is also worth noting that adjusted net losses per share was on the edge of profitability this quarter, at negative 1 cent per share, compared to negative 72 cents per share in Q2 2025. Over the past few years, we have been able to drive significant operating leverage while generating rapid revenue growth. Early platform revenue has grown from $53 million in Q1 2023 to $136 million in Q2 2026. While over the same period, non-GAAP quarterly operating expenses grew from $47 million to $60 million. believe that we can continue to execute with the same level of discipline for the remainder of the year. Now let's turn to guidance. For the third quarter of 2026, we expect revenue to be between $137.6 and $138.2 million, representing a 25.5 to 26% year-over-year growth. We expect adjusted EBITDA to be between negative 4.5 and negative 3.5 million dollars. Our Q3 adjusted EBITDA guidance reflects typical seasonal patterns, as many of our customers operate at lower volumes during the summer month, as well as deliberate investment in launching new network and school transportation customers that we expect to contribute meaningfully full revenue growth in Q4 and beyond. For the full year 2026, we are raising our revenue guidance to $550 to $553 million, representing a 26.6 to 27.3% year-over-year growth. We are maintaining our Justice Debit Act guidance of negative 12.5 to negative 7.5 million dollars. Additionally, we reiterate our goal to deliver our first quarter of profitability in Q4 2026 with positive adjusted EBITDA, which will be a major milestone for VIA. through the end of 2026 and beyond. We feel very good about our trajectory heading into 2027. After Our pipeline is at record levels, our sales team is executing, and the pace of launches ramping into next year is paving the way for accelerating our durable growth trajectory. With that, I'd like to thank you all again and turn it back to the operator so we can take some questions.

At this time, if you would like to ask a question, press star then the number one on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Your first question comes from the line of Michael Turin from Wells Fargo. Your line is open.

Hey, great. Thanks. Good morning. I appreciate you taking the questions and nice job with the with the. Two key results. I think just to start, maybe if you can go back, Daniel, Clara, and maybe just expand on the drivers of pipeline expansion. We certainly appreciate you quantifying pipeline, just what you're seeing there, how it's evolved since it became a public company. And maybe just if you could expand around the visibility that gives you the forward growth. about how far into the future some of that near-term engagement could extend and what it means for durability of growth from your perspective. I think that's all useful. Hi, Michael. Good morning. Thanks for the question.

I think it's a great question. If I take a step back and look at what where we are since we've gone public and what's driving the growth in particular in the pipeline. I think there are a few factors that as I think about sort of the near term and then looking further out. In the near term, what we're seeing, if you sort of think of, say, today, tomorrow growth, this is driven by the traditional growth vectors that we have, microtransit, paratransit, planning, all of our usual products. But really, where you're seeing some of this really strong growth that's coming through in the pipeline, this doubling of the pipeline, A lot of that is coming from our ability, increasing ability to sell the entire platform, which we talked about over the last few quarters as well. It's what we're referring to as network opportunities or network deals, where we're able to approach agencies with the, and cities with the proposition that we will be able to take over their entire transit network and really transform it in a meaningful way. That's something that we've been working towards for several years. First of all, of course, on the product to build out the entire product on the suite of services that we've developed and through the sales process, you know, developing that credibility that's so critical because these sales are so dependent on references. And so as we've put together that program, that's starting to translate into real results. You're seeing that in the pipeline. We're starting to see that come through in the revenue, some of the wins, the network wins that we've been driving. So that's sort of where a lot of the growth is coming from. That's the core of the growth today and tomorrow. As we look a little bit further, if we're layering sort of S curves of growth, I think that's what's driving the current S curve. The next S curve is coming from schools in our view. You know, that's where we believe it's coming from the schools vertical. We have a huge opportunity. We're seeing really nice traction, some new launches coming up. Obviously, it's tied to the school year, so that's going to come up over the summer and in the fall. very excited about the opportunity there in schools. And then, you know, if you look further out and that's obviously very early stage still, but exciting, we're starting to see some real traction. That's where we're expanding beyond transit and schools into the broader gov tech space with VII labs, starting to sell solutions at the municipal level that, you know, span a broad range.

see a remarkable opportunity in the long term. Thanks very much. Just as a follow up, if I may, Clara, Daniel touched on a little bit with schools, but maybe just also if you could remind us on, if there's anything to be mindful within some of the key sub-segments, specifically on the bigger network decisions or within schools, if there are seasonal buying patterns for us to be mindful of at all.

Thanks Michael. Yes, there's some, that's a good point. There's some seasonality for the school business where the school contracts tend to launch at the end of Q3, it's in September. So for next quarter, we expect some school ads on the customer account, and that tend to drive a little bit of seasonality on the revenue for customers. They only have one month for the quarter, And all that it will continue to help drive growth. Thanks, Michael. Thanks very much.

Your next question comes from the line of John DeFucci with Guggenheim Securities. Your line is open.

Thank you. I think Michael asked, I think, the most important question, but I'm going to – I expand on it a little bit. So Daniel, on that pipeline and Clara, to be clear, because Daniel, you talked about network deals. I just wanna, is that pipeline going to change your mix of product and services? Because as you know, there's a keen eye on your gross margins and the services are lower gross margin. if you're selling these network deals that are everything, is that going to change your mix going forward and pressure gross margins? David Wiltshire.

Thanks for the question. We listen to what we're doing right now is that we're in the process of transforming this legacy industry with our technology and our platforms, technology and technical services. and we're seeing a tremendous results and with the growth in the pipeline, the growth in the revenue, And as of today, we don't see any change in our kind of mix overall. So we're confident in continuing to be able to execute on our gross margin plan. As a reminder, we laid out a plan to expand on our gross margins. I see this quarter was a step in a good direction. And the plan relies on launching new solutions that are creative. So, you know, obviously the, some of those full network solutions, you know, have different, can have different margin profiles, but some of them are creative, some of them last, you know, it really depends on the exact deal. And the schools tend to be quite creative and of course, AI lab is very creative. So I think going forward, there's definitely an opportunity to continue to expand gross margins and we're very much focused on that.

That's great. That's great to hear, Clara. Thank you. And I guess on a similar path here. And that pipeline increased $50 million sequentially, year-over-year doubling. I just want to make sure that's all new ARR. Does that include renewals at all? I think I know the answer to that, but I want to be clear that everybody does.

Yes, to be clear, it does not include renewal. It's all net new AR, so annual revenue from existing or new customers.

And then just one last one on this little one. But usually most companies want to see a one to three ratio of close to pipeline. if I'm right, I think yours is actually typically a higher ratio of clothes, which is a good thing. And I think that has to do with sort of what we call the intimate relationship you have with your customers. But forget about that for just a second. I just want to make sure that, because I know your sales cycle is, can be like up to nine months and then could be two or three quarters before it's implemented. Is this pipeline typically is this about a year pipeline i mean of course things it can expand out and they can come back in because when i look at the your rate when i look at that pipeline relative to what's implied in new arr coming on online this year it's It's just a very different. It's a very different ratio. It's like half that. It's like one to six versus one to three. And of course, numbers are going to go up a little bit after this quarter.

nice job on that. But am I thinking about all this right? I think you're thinking about this right, John. For us, this is a leading indicator of the state function increase in revenue and potential acceleration of our revenue. We're very excited about it. As you said, we have to execute on it at the right win rate, which we're confident we can do. Thank you. So that's definitely a leading indicator for acceleration and growth. Perfect. Thank you very much for taking my questions.

Thanks, John. Your next question comes from the line of Chris Quintero with Morgan Stanley. Your line is open.

Hey, good morning, everyone. Thank you for taking the questions here. I wanted to ask another question on the pipeline that you called out. Can you remind us again, like what's the typical conversion timeline from when you sign that, when you have that pipeline to when that actually translates to contracted revenue?.

Hey Chris, good morning. We typically see from a sales cycle about nine to ten months, as John mentioned, that's pretty typical and been very consistent for us for quite a long time. And then the implementation on average is two to three months. So you're looking at about a year from when a data deal enters our pipeline until typically we start to recognize revenue. Got it. Very helpful. Thank you. Chris, I was going to add, it's maybe worth mentioning that there's a, you know, when you think about the pipeline, of course, those are the averages. So you have a distribution, right? Some deals are going to start to contribute revenue sooner and other deals are going to take longer. These are maybe just obvious, but just the average that we're talking about here. Yes.

Got it. That's very helpful. And then we saw some regulatory developments over the the past few months, US Conference of Mayors, they passed a resolution. There was also, I believe, some funding from the Federal Transit Administration that got approved. So just curious what you're seeing from maybe some of those recent regulatory government changes.

of your pipeline and what you're seeing there? Yes, that's a great question.

I, you know, our feeling is that the, the overall climate for public transit continues to be very positive with bipartisan support, certainly in the US with bipartisan support across the country, both at the federal level and at the local level. We, you're absolutely right that there's some encouraging signs. Certainly the conference of mayors I think at the, particularly at the mayor level, if you're speaking with mayors, there is real need, you know, affordability is such a huge issue these days politically, and there's a real need if you're an elected official to show that you are doing things that support affordability. And while, you know, housing, groceries, I think oftentimes transportation is underestimated how much that that contributes and drives affordability for folks. And so as that becomes a bigger and bigger political issue across the country, certainly at the local level, we're seeing transportation elevated. The conversation about transportation elevated. and the understanding that we need to put money into affordable means of transportation And of course, that's a very big positive for us. Excellent. Thank you so much.

Your next question comes from the line of Brad Zelnick with Deutsche Bank. Your line is open.

Oh, great. Thank you so much for taking the question. You know, it's great to hear the update on student transportation. Can you expand more on the incremental TAM that you see here, the pipeline and anatomy of these deals, and just maybe how the funding of these initiatives compares and contrasts with securing funds for transit modernization?.