Discontinuation of Coverage

研报英文原文证据摘录

Discontinuation of Coverage

t toward higher-quality recurring framework** = Based on consensus methodology

revenue. Despite flat annualized organic growth in F2Q, underlying recurring trends e = Morgan Stanley Research estimates

Quarterly EPS ($)

remain largely supportive, with ARR +12% in the quarter, SaaS +37%, and ~80% of

2026e 2026e 2027e 2027e

revenue now coming from recurring sources. We believe recent strength in Quarter 2025 Prior Current Prior Current

Q1 0.31 - 0.26a 0.29 0.29

JusticeTech and Transportation should support management's HSD long-term

Q2 0.32 - 0.32a 0.31 0.32

organic growth outlook, while continuing to view M&A as a key lever in the Q3 0.23 0.28 0.27 0.31 0.30

Q4 0.27 0.30 0.29 0.33 0.33

company's growth algorithm, with IIIV retaining ample balance-sheet flexibility to

e = Morgan Stanley Research estimates, a = Actual Company reported data

pursue strategic acquisitions that deepen its position in core public-sector verticals,

while preserving optionality for buybacks. The recent insurance-verification deal

exemplifies this strategy, adding a market-leading Transportation asset with state-

level expansion, SaaS-like revenue, and potential cross-sell opportunities across

payments, data services, and broader DMV / motor-carrier workflows.

Investors likely to remain focused on the path to re-accelerating organic growth

and proving margin durability, particularly given the post-divestiture reset.

Margins declined ~50 bps to 28.8% in F2Q, reflecting JusticeTech investments,

higher hosting costs, and declining professional services revenue. While

management reiterated their 50-100 bps annual long-term margin expansion target,

we think the near-term setup is complicated by a further deterioration in non-

recurring professional services.