VIA Transportation (VIA) Q2 FY26 earnings call: guidance and Q&A

Can you elaborate on the drivers behind the pipeline doubling, how it has evolved since going public, and what visibility it provides for future growth, including the typical time horizon for near-term engagement?

The pipeline growth is primarily driven by the increasing ability to sell the entire platform through 'network opportunities' to agencies, transforming their transit networks. This has been a multi-year effort in product development and building credibility through references. The schools vertical is seen as the next growth S-curve, with AI Labs providing long-term GovTech expansion. The sales cycle is 9-10 months, with 2-3 months for implementation, leading to revenue recognition around a year.

“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.”

asked by Michael Turin · answered by Daniel Remote

Will the shift towards larger 'network deals' change the product/service mix and potentially pressure gross margins, given services typically have lower margins? Also, is the pipeline entirely new ARR, excluding renewals, and what is the typical conversion timeline?

The company does not foresee a significant change in the overall mix that would pressure gross margins, as they are focused on expanding margins by launching accretive solutions like schools and AI Labs. The pipeline is indeed all net new ARR, excluding renewals. The pipeline is a leading indicator for revenue acceleration, with a typical sales cycle of 9-10 months and implementation of 2-3 months.

“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.”

asked by John DeFucci · answered by Clara Fain

What impact are recent regulatory developments, such as the US Conference of Mayors resolution and Federal Transit Administration funding, having on VIA's pipeline and market opportunities?

The overall climate for public transit remains very positive with bipartisan support. The Conference of Mayors highlights the increasing political importance of affordability, where transportation plays a significant role. This elevates the conversation around transportation and the need for affordable solutions, which is a positive for VIA.

“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.”

asked by Chris Quintero · answered by Unknown Speaker

Can you expand on the incremental TAM for student transportation, the pipeline, deal anatomy, and how funding compares to general transit modernization?

The schools opportunity is very large, with more school buses in the U.S. than any other type. VIA focuses on specialized transportation for students poorly served by traditional buses, which is a large and accretive opportunity. The pipeline is strong, requiring a high level of execution due to the sensitive nature of the population served.

“On the TAM side, we believe the school's opportunity is very large. In the U.S., from an asset class, if you look at the number of buses, there are more school buses than any other kind of bus across the U.S. combined. from an opportunity size, we feel this is a very large opportunity.”

asked by Brad Zelnick · answered by Unknown Speaker

How good of a leading indicator is the RPO number for VIA, and what drove the sequential increase, especially given the company's specific contract structures?

The RPO number is important but does not fully track VIA's business because many contracts with federal funding include termination-for-convenience clauses, making them non-includable. It represents a small subset of their book. However, the significant increase in pipeline and strong sales execution give high confidence in growth acceleration.

“The RPO number is an important number, but for VIA it is not fully tracked. The businesses, most of our contracts get federal funding and then they include a termination for convenience clothes that in practice is never used. utilized but it makes them not includable in into this this metric so The metric as a whole is trending in the right direction. I agree with you, but it does not reflect the entirety of our book. It's actually a small subset of our book.”

asked by Brian Peterson · answered by Clara Fain

How does the current sales pipeline mix between new customers and expansions compare to historical trends? Also, for AI Labs, how repeatable are the projects, and are they customizable or more off-the-shelf for long-term margins?

Historically, growth was one-third new customers and two-thirds existing. The current pipeline shows a similar pattern, possibly with a slightly higher weight for new customers due to the 'flywheel impact.' AI Lab projects are proving to be broadly applicable and can be quickly scaled across cities once built on a real-time, GenPick platform, suggesting high repeatability and efficiency.

“Historically, the growth has been driven – a third of the growth has come from new customers, and two-thirds of the growth has come from external sources. with existing customers, you know, we're continuing to see a pretty similar pattern in the pipeline with maybe a slightly higher weight for new customers.”

asked by Scott Berg · answered by Clara Fain

What is the average ARR uplift provided by network solutions compared to piecemeal deals, and does this put VIA in competition with a different group of vendors?

Network opportunities are quite large, driving up revenue per customer, with an internal target to reach an average of $1 million per customer. The competitive landscape remains consistent: innovative tech-forward companies, legacy software companies, and transit operators, with VIA aiming to disrupt them.

“As we disclosed last quarter, we had four for about $40 million, so that was on average $10 million each year. I would say that they will tend to be over a million, over multi-million, so they tend to drive up the revenue. revenue per customer.”

asked by Jonathan Ho · answered by Clara Fain

Daniel mentioned pressure on transit agency budgets driving demand for efficient solutions. Can you elaborate on this dynamic and whether it's a double-edged sword for existing projects?

Public transit budgets are growing slowly (low single digits). The pressure comes from increased focus on outcomes, efficiency, and accountability for taxpayer money. Aging populations increase demand for expensive paratransit, and affordability concerns push officials to rethink services. This creates a 'public transit revolution' where budgets are available but require effective and efficient use, which VIA is uniquely positioned to address.

“The overall, you know, from a budget perspective, you look overall for public transit, there hasn't been much of a change versus historical patterns. We're still seeing, you know, budgets grow fairly slowly, you know, low single digit percent year over year on the whole.”

asked by Jonathan Ho · answered by Unknown Speaker

Regarding the gross profit dollar acceleration and better gross margins this quarter, was there anything one-time in nature from a mix perspective, and what should be borne in mind for the second half?

The gross margin improvement was driven by a more favorable revenue mix, specifically with slightly higher one-time revenue. This is expected to revert to a slightly lower level next quarter. However, the company remains committed to expanding gross margins overall.

“On the gross margin side, it was driven by a more favorable revenue mix. with slightly higher one-time revenue, as you mentioned. You know, we expect that to revert to a slightly lower level next quarter, but overall we feel kind of committed to expanding our gross margin.”

asked by Alex Zucchi · answered by Clara Fain