Public Transit Digitization And AI Adoption Will Transform Long Term Prospects For This Operator

Catalysts

About Via Transportation

Via Transportation provides software and tech enabled services that help governments and transit agencies digitize and operate public transportation networks.

What are the underlying business or industry changes driving this perspective?

• Public transit funding support from voters and across political parties, including recent ballot measures approving US$11.8b in new transit funding and federal proposals for higher transit budgets, can support new contracts and larger deployments. This directly feeds into subscription revenue growth and longer term earnings power.
• The company addresses an estimated US$82b serviceable market in North America and Western Europe with roughly 1% customer penetration at 713 customers out of about 63,000. Simply increasing adoption of existing products by similar public agencies can extend revenue growth and expand contracted backlog.
• The push by cities and regions to digitize one of the last pen and paper industries, including UK initiatives to bring transit under regional authorities and widespread interest in modernizing networks like Springfield and Mobile, creates recurring opportunities for Via’s planning and operating modules to gain share. This can support higher platform revenue and improved net margins over time.
• Long term investment in AI and data, including an LLM for cities and an agent AI suite that automates eligibility, customer calls and planning workflows, can lower cost to serve and R&D intensity while enabling higher value software SKUs. This supports the path from a 39.6% adjusted gross margin toward the company’s 50% target and can improve earnings.
• Newer areas such as student transportation, which saw more than 2x growth in customers in Q3 2025, and partnerships like the Waymo autonomous vehicle integration, open additional use cases and higher margin software heavy contracts. These can add to platform revenue, support gross margin expansion and improve adjusted EBITDA margins as these offerings scale.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Via Transportation compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Via Transportation's revenue will grow by 24.2% annually over the next 3 years.
• The bullish analysts are not forecasting that Via Transportation will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Via Transportation's profit margin will increase from -21.6% to the average US Software industry of 12.1% in 3 years.
• If Via Transportation's profit margin were to converge on the industry average, you could expect earnings to reach $107.5 million (and earnings per share of $1.08) by about June 2029, up from -$100.2 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 64.8x on those 2029 earnings, up from -12.5x today. This future PE is greater than the current PE for the US Software industry at 25.7x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.57%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Via relies heavily on long term public transit funding and bipartisan political support. While recent ballot measures and federal proposals point to ongoing backing, any sustained shift in budget priorities at federal, state or local levels could reduce money available for new projects and contract renewals, which would pressure revenue growth and contracted backlog.
• The company is still addressing less than 1% of its estimated US$82b serviceable market, and it sells into governments that are naturally risk averse and slow to change. If procurement cycles lengthen or adoption barriers stay high despite reference customers, the pace of new deals and upsells could fall short of bullish expectations, which would affect revenue and future earnings power.
• About 20% of customers procure tech enabled services alongside software, and Via is targeting a long term adjusted gross margin of 50% from 39.6% today. If it struggles to shift lower margin services to third parties or to acquire and integrate higher margin products successfully, gross margin and the path to stronger net margins and positive earnings could be weaker than hoped.
• Long term investment in AI, an LLM for cities and the agent AI suite is intended to lower cost to serve and support higher value software SKUs. If governments are slow to adopt AI tools, or if competitors and point solutions compress pricing and product differentiation, the uplift in platform revenue and the improvement in net margins and earnings may not materialize as expected.
• Newer growth areas such as student transportation and the Waymo autonomous vehicle partnership are still nascent. If school district budgets tighten or autonomous vehicle deployment is slower or more limited than anticipated, these use cases may not scale meaningfully, which would constrain higher margin revenue streams and delay any improvement in adjusted EBITDA margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Via Transportation is $54.64, which represents up to two standard deviations above the consensus price target of $30.9. This valuation is based on what can be assumed as the expectations of Via Transportation's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $55.0, and the most bearish reporting a price target of just $19.0.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $887.6 million, earnings will come to $107.5 million, and it would be trading on a PE ratio of 64.8x, assuming you use a discount rate of 8.6%.
• Given the current share price of $15.37, the analyst price target of $54.64 is 71.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.