The Smart City Observer

Home , Breeze Card, CharlieCard, Easy Card, SEPTA Key, SmarTrip, Ventra

Equity Research Global Industrial Infrastructure

May 23, 2019 Industry Report

Louie DiPalma, CFA +1 312 364 5437 [email protected] The Smart City Observer

Please refer to important disclosures on pages 13 and 14. Analyst certification is on page 13. William Blair or an affiliate does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This report is not intended to provide personal investment advice. The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments, or strategies to particular clients. The recipient of this report must make its own independent decisions regarding any securities or financial instruments mentioned herein. William Blair

Overview

“Smart city” technology innovations and regulatory developments are occurring at a rapid pace. In The Smart City Observer, we observe how cities are using sensors to observe (monitor) and automate processes across transportation, security, and payments. We analyze leading smart city technologies related to our coverage of AeroVironment, Cubic, FLIR, and Verra Mobility that include connected car, public transit payments, vehicle payments that use surveillance technologies

(for deliveries and safety), facial recognition surveillance, and urban surveillance (safe city). The key(tolling/red-light themes that we cameras/speed highlight are ascameras), follows. congestion and traffic management, drones/robotics

• Recent M&A activity in surveillance, transportation tech, and payments has been robust, with vendors positioning themselves to take advantage of a surge in urban RFPs and innovation.

• The largest global cities are upgrading public transit payment systems to support tap-and-go transactions.

• New York City, Seattle, Los Angeles, and San Francisco are all investigating the implementation of congestion pricing.

• Multimodal public transit payment/trip-planning apps are drawing interest from big tech.

infrastructure. • Audi’s “time to green” feature provides the first glimpse of connected cars networking with city • While red-light photo enforcement remains political, school zone speed enforcement cameras have a much better public image and are steadily proliferating.

• Facial recognition systems are increasingly being used for smartphone payments and airport security, yet privacy concerns and performance issues have hindered widespread urban rollouts.

• RuralFirst responders cities are partnering are rapidly with acquiring the FAA fleets and commercial of drones for vendors public to safety trial usingmissions. drones to deliver food, medical supplies, and even human organs.

Mergers and Acquisitions

Recent transportation surveillance/analytics M&A activity has been robust. Over the past nine months, Cubic, FLIR, Motorola, Bridgestone, and Verra Mobility have completed six deals total- ing over $4 billion in the transportation tech and smart city space. In January, Motorola acquired license plate reader systems and analytics provider VAAS International for $445 million, and

signalCubic acquiredsystems. trafficAlso in signal October, systems the Gores provider II SPAC GRIDSMART merged with for Verra$87 million. Mobility, Cubic’s the industry deal came leader just inmonths red-light/speed after its October cameras, $236 in million a $2.4 purchasebillion transaction. of Trafficware, In September, another leading FLIR acquired provider Acyclica,of traffic

citieswhich seek provides to reduce traffic congestion, intersection increase data analysis. safety, and We raise believe funding. this recent flurry of transportation surveillance M&A activity reflects momentum behind connected car and smart city initiatives, as

2 Louie DiPalma, CFA +1 312 364 5437 William Blair

Exhibit 1 Smart City Transportation/Surveillance M&A

Consideration Date Acquirer Target (millions) Revenue Description Masternaut is one of the largest European telematics 5/16/19 Michelin Masternaut providers with 220,000 light utility vehicles under contract

TomTom is the largest telematics provider in Europe with a 1/22/19 Bridgestone TomTom Telematics €910 user base of 860,000 vehicles

License plate reader recognition systems software and 1/7/19 Motorola Solutions VAAS International $445 $100 analytics provider 1/2/19 Cubic GRIDSMART $87 $47 Video-based traffic signals management systems

Platform to optimize monetization of parking lots; ParkJockey 12/3/18 Softbank ParkJockey $1,000 recently acquired Imperial Parking Corp and Citizens Parking

11/2/18 Ford Spin $100 E-scooter network

10/24/18 Cubic Trafficware $236 $55 Leading provider of intersection management technology

Verra Mobility is the industry leading provider of vehicle 10/17/18 Gores (PE) Verra Mobility $2,400 $387 tolling solutions for rental car customers, and end-to-end red light camera services for government customers Developer of software for automotive roadway and 9/11/18 FLIR Acyclica $22 intersection data generation and analysis

The largest bike sharing network in the U.S.; according to the 7/2/18 Lyft Motivate $251 Lyft prospectus, there were 35 million bike share trips in the U.S. in 2017, and 74% were on Motivate systems Public safety camera (body cameras) and cloud-based 5/4/18 Axon VIEVU $17 evidence management system provider to hundreds of law enforcement agencies Specializes in collection of fees from rental car and 4/6/18 Verra Mobility EPC $63 unregistered vehicles in Europe 3/1/18 Verra Mobility HTA $604 $120 Rental car outsourced tolling for Avis and Enterprise

Designs, develops, and manufactures advanced security surveillance solutions, including video analytics, network 2/1/18 Motorola Solutions Avigilon $1,000 $354 video management software and hardware, surveillance cameras, and access control solutions Priority traffic signal control for public transit and emergency Global Traffic vehicles with Opticom priority control system and Canoga 12/6/16 Gilbarco (unit of Fortive) $150 Technologies (GTT) sensor system; installed base of 90,000 intersections in 41 of 50 largest U.S. cities Fleetmatics is one the leading North American providers telematics services that include vehicle location, fuel usage, 8/1/16 Verizon Fleetmatics $2,400 speed and mileage; it has over 37,000 customers and 737,000 subscribers Specialized in the development and supply of complex traffic management systems for the monitoring and control of urban and intra-urban road networks, encompassing integrated 11/27/13 Cubic Serco $70 $67 traffic and incident management, decision support, bus tracking, and passenger information through integrated user interfaces

Video image processing software and hardware for traffic 12/28/12 FLIR Traficon $46 analysis

Sources: Company reports, William Blair estimates

Louie DiPalma, CFA +1 312 364 5437 3 William Blair

Public Transit Payment Tech

The largest global cities are upgrading public transit systems to support smartphone payments. public transit payment systems of New York City, Boston, Brisbane, and San Francisco to support next-generationOver the paymentpast 18 months, platforms Cubic that has include won $1.9contactless billion inbankcards base value and contracts smartphone to upgrade payments the

awarded a €60 million contract to French electronic payment provider Worldline and Conduent to upgradefrom Apple its Pay,fare Googlepayment Wallet, system. and In Samsung March 2019, Pay. In the December Singapore 2018, government the Paris announcedtransport authority that the Singapore public transit network will support contactless bank cards. The March 25 Apple special event showcased how Apple Pay will soon support smart cards for Chicago (Ventra), Portland (Hop Fastpass), and New York City (OMNY). Cubic operates the Ventra and OMNY system, while INIT In- novations in Transportation operates Fastpass.

Multimodal public transit payment/trip-planning apps drawing interest from big tech. In

collaborating to develop a mobile app that will allow users to plan trips and pay for numerous forms ofSeptember public and 2018, private the transportation Los Angeles transit options authority (including announced rail, bus, thatbike-share, Cubic and and salesforce.com parking) on an are integrated platform. Portland, Columbus, and St. Louis are among numerous other cities developing multimodal transit apps. According to our analysis, Cubic holds contracts to develop and operate

transit networks in North America. public transit payment systems (including the mobile app) for 10 of the 13 most trafficked public

Exhibit 2 Payment System Vendors for North American Rail Systems With Heaviest Ridership

Estimated Annual Base Cities Rail System Payment System Transit Agencies Ridership Vendor Contract Value Duration Metropolitan New York City NYC Subway OMNY 2,699,536,300 Cubic $540 2018-2023 + options Transportation Authority Toronto Toronto Subway Presto Metrolink 302,000,000 Accenture $250 2006-2016 + options Chicago Transit Chicago The "L" Ventra 230,204,200 Cubic $454 2011-2023 Authority Washington Washington, D.C. Washington Metro SmarTrip Metropolitan Area 229,595,700 Cubic Transit Authority Boston The "T" CharlieCard MBTA 167,167,900 Cubic $699 2018-2031

Vancouver SkyTrain TransLink 151,000,000 Cubic $220 2011-2023 + options San Francisco Bay Area Bay Area BART Clipper 129,268,100 Cubic $387 2019-2029 RTD Manhattan, Hudson Port Authority of New PATH SmartLink 93,012,400 Conduent $114 2018-2028 County, and Newark York and New Jersey Southeastern Philadelphia SEPTA SEPTA Key Pennsylvania 91,772,000 Conduent $130 2011-2021 Transportation Authority Metropolitan Atlanta Atlanta MARTA Rail Breeze 67,410,000 Cubic Rapid Transit Authority Los Angeles County Los Angeles Metro Rail TAP Metropolitan 44,860,700 Cubic $68 2019-2025 Transportation Authority Miami Metrorail EASY Card Miami-Dade Transit 19,680,400 Cubic Maryland Transit Baltimore Metro Subway CharmCard 10,821,100 Cubic Administration Sources: American Public Transportation Association, company reports, William Blair

4 Louie DiPalma, CFA +1 312 364 5437 William Blair

techCubic companies appears to eager be in toa strategic become theposition one-stop to help shop cities for transit.achieve Google their objective Maps has of also reducing incorporated conges Limetion as bikes its systems and scooters analyze in public its app. transit and auto traffic data. Besides Cubic, there are several other

Middle-market cities are also revamping public transit payments with simple smartphone- based solutions. Middle-market cities are also modernizing their public transit payment systems. In December, Indianapolis awarded a contract to IndyGo to modernize its fare collection payment system. In January, the city of San Diego awarded a public transit payment contract to INIT. The systems in middle-market cities are generally much less sophisticated than those of tier-1 cities, and

to be worth about $35 million over a 10-year period, while the New York City base deal is worth roughlythat is reflected $600 million in the for size a similarof the contracts. time horizon. For example, the San Diego base contract is estimated

Connected Car

Automatic Labs, Verra, and Gentex each rolled out vehicle solutions that seek to eliminate the need for dashboard transponders. branded as Peasy for video-based pay-as-you-go tolling. For an annual price of $30, subscribers no longer need to use physical transpondersIn late for electronic2018, Verra tolling Mobility payments. introduced In addition, a subscription users no service longer need to prefund their tolling accounts as required with typical electronic tolling transponder sys-

February 2019, Audi launched an integrated tolling option in partnership with Gentex and Transcore thattems. provides Verra Mobility a tolling provides transponder coverage option for thatmost is toll built roads in to in the 33 rearviewof the 48 mirrorcontinental and isU.S. compatible states. In

launched a service called Connected Car Assistant that provides crash alerts, roadside assistance, real-timewith toll roads vehicle in the location, United and States, cashless Canada, toll and payment Mexico. processing In May, SiriusXM through subsidiary its PayTollo Automatic subsidiary. Labs The service connects to the cloud over AT&T’s 4G LTE network.

Audi’s “time to green” feature provides the first glimpse of vehicle-to-infrastructure (V2I) connectivity that will be used in connected cars and autonomous vehicles. In addition to integrated tolling, Audi also aims to be at the forefront for V2I. In February 2019, Audi announced

to-infrastructure system on select models. Certain Audi vehicle models can download data from that it partnered with Traffic Technology Services, a traffic data specialist, to expand its vehicle- countdown clock is displayed on the dashboard. When a vehicle is approaching a red light or a city traffic light servers using 4G LTE connectivity. Enhanced traffic signal information such as a when the light is going to change, enabling the driver to prepare accordingly. Audi indicated that itsgreen technology light, the works countdown with 4,700 clock intersections that is networked in 13 withcities the as oftraffic-light February server2019. Weinforms believe the there driver is

significant opportunity for Cubic as this technology becomes more widespread. This technology is Vehiclealso capable OEMs of alertingare seeking the driver to integrate about other parking intersection apps into events, the dashboard.such as a pedestrian jaywalking. Amazon’s Alexa Fund invested in Arrive, which was formerly known as ParkWhiz. Amazon has been In November 2018, believe that real-time mapping of parking spaces, parking space payments, and dynamic pricing of able to integrate its Alexa artificial intelligence platform into vehicles for several tier-1 auto OEMs. We functionality of the Automatic Labs app to be integrated into vehicle dashboard operating systems. parking spaces will be a significant feature of connected car V2I technology. We ultimately expect the

Louie DiPalma, CFA +1 312 364 5437 5 William Blair

Facial Recognition Authentication/Surveillance

Next-generation payments could involve facial recognition technology. In March, Visa published a report titled, “The Future of Transportation: Mobility in the Age of the Megacity,” that outlined how facial recognition authentication could be used for mass-transit payments in the future. Numerous data points suggest that progress is being made toward this future, but privacy concerns will likely prevent facial recognition technology from being used in mass transit in the near term. Today, Apple Pay supports its Face ID authentication. Cubic has been developing facial recognition technology for

is already trialing gateless entry via facial recognition. gateless entry. We demoed the technology at its headquarters in 2018. A subway system in China Facial recognition deployment across top U.S. airports.

In November 2018, Delta Air Lines and JetBlue both introduced biometric boarding that used facial recognition technology in conjunction Kennedywith U.S. InternationalCustoms and Airport. Border InProtection December, and Thales the Transportationsubsidiary Gemalto Security announced Administration. that it is trial The- technology is featured at Hartsfield-Jackson Atlanta International Airport and New York’s John F. Department of Homeland Security intends to implement facial recognition surveillance across the ing biometric boarding system at Los Angeles International Airport. Reports indicate that the U.S.

Unsuccessfultop 20 U.S. airports facial by recognition 2021. trials on NYC highway. The Wall Street Journal in April reported how the MTA in New York City conducted a facial recognition trial aimed at evaluating the technology’s ability to detect faces through windshields of vehicles traveling on New York City’s Robert F.

assetKennedy with Bridge. its GRIDSMART The undisclosed acquisition system that was also unable provides to detect real-time any video faces. analytics In February and 2018, processing. Cubic Amazonacquired currently MotionDSP, offers which ReKognition provides object facial recognitiondetection within software live invideo. the OrlandoWe expect Police Cubic Department to use this

Megvii also provide similar tools. in Florida and the Washington County Sheriff’s Office in Oregon. IBM, Microsoft, and China-based San Francisco surveillance safeguards reflect public apprehension that governments may use surveillance technologies inappropriately. On May 6, the city of San Francisco passed an ordinance that restricts the use of surveillance technologies by city agencies. An excerpt from the ordinance stated: “The propensity for facial recognition technology to endanger civil rights and civil

technologiesliberties substantially in the ordinance outweighs include its purported facial recognition benefits, and surveillance, the technology video will surveillance, exacerbate audioracial surveillance,injustice and gunshotthreaten detection our ability recorders, to live free and of automated continuous license government plate readers, monitoring.” among Surveillance others. City agencies must request approval from the San Francisco board of supervisors before purchasing or using surveillance technology.

6 Louie DiPalma, CFA +1 312 364 5437 William Blair

Vehicle Surveillance Payments (Tolling/Red-Light Cameras/ Speed Cameras)

Proliferation of cashless tolling. Electronic tolling systems (cashless) are being implemented

feature cashless tolling, which requires drivers to either use electronic tolling transponders or pay aacross higher the rate United via mail States or to online. reduce Cashless congestion tolling on highways.was implemented Today, we on have the identifiedMass Pike 12 in states 2016 thatand

andon portions its rental of car the tolling New York products. Thruway in 2018. Several other states, including New Hampshire, are also evaluating removing toll booths and going electronic-only. This trend benefits Verra Mobility Red-light cameras are launching in new cities, while potentially leaving others. Verra Mobility,

Red-light cameras are generally lucrative for both the city and the vendor. In May 2019, the Texas Conduent, and Redflex are industry-leading providers of red-light camera photo enforcement systems. shut down its red-light camera system. There are signs that a small number of red light cameras will belegislature turned off passed in Chicago. a bill that At prohibitsthe same red-lighttime, many cameras other throughoutcities such asthe San state Francisco, of Texas. Baltimore,In 2018, Miami and

Colorado Springs are implementing them for theExhibit first 3 time or expanding existing programs. North America Safety Camera Vendor Market Shares by Revenue

Sensys/Gatso 5% Other 9%

Redflex 14% Verra 50%

Conduent 22%

Note: Cameras include red light, speed, school bus, and city bus lane road safety cameras Sources: Company reports, William Blair estimates

Momentum for school-zone speed cameras in 2019. Although red-light cameras and speed cameras in non-school zones are politically divisive, the sentiment has been positive for school-related safety cameras. On March 5, the city of Kirkland, Washington awarded a school zone speed camera contract to Verra. On March 19, the New York legislature approved an initiative to expand the number of school zones with speed cameras from 140 to 750. Verra is the incumbent speed camera opera-

suggested that Verra won a contract for an additional 300 cameras as part of the program. Verra hastor foralso the alluded first 140 to speed school camera zones, trialswhich taking entails place 235 incameras. Georgia; On Buffalo, March New26, NYC York; Comptroller California; data and Washington, D.C. Also in March, La Plata, Maryland, announced its plan to install cameras on the stop-arms of 72 school buses to identify motorists who fail to stop appropriately.

Louie DiPalma, CFA +1 312 364 5437 7 William Blair

New York City, Seattle, Los Angeles, and San Francisco are all investigating the implementation Traffic ofManagement congestion tax systems. In late March, New York state legislators approved the state budget, which included a congestion tax plan to alleviate congestion, reduce pollution, and raise money to fund public infrastructure. Singapore has successfully used a congestion tax since 1975, and

Stockholm. These congestion tax systems generally rely on cameras that incorporate license plate readerLondon software implemented to track a congestion vehicles entering tax in 2003. and Otherdeparting major the cities city. withThe cityinfrastructure tolls include is Milansimilar and to

from the implementation of a congestion tax if it became more widespread. Verra Mobility is the industrythe technology leader behind in photo red-light enforcement camera surveillancesystems. We believepayments, Verra and Mobility Cubic andprovides Cubic a could hyper-scale benefit

transit payment systems. The implementation of the NYC system is still being determined, with a targetback-office launch payment scheduled platform for 2021. that The is used degree by someof success of the for largest NYC’s cities deployment in the world will likely for their determine public whether other tier-1 cities follow.

Cities upgrading traffic signal systems to support connected cars and autonomous vehicles.

increasing approximately 20% as cities prepare for connected cars and autonomous vehicles. In Revenue for Cubic’s two traffic signal systems providers, Trafficware and GRIDSMART, has been-

one example, Cubic’s Trafficware in April was awarded a contract by the city of Cupertino to pro vide advanced data analytics for its traffic management system. Trafficware partners with Traffic PhotoTechnology detection Services systems to distribute used to traffic enforce signal high data occupancy to Audi’s V2Ivehicle connected (HOV) car lanes. platform. San Francisco and New York are evaluating photo detection systems for their HOV lanes. Potential vendors include Conduent, Transcore, and Indra. Conduent has asserted that its system does not use facial recognition software.

FAA making progress on the drone regulation. There are a number of regulatory challenges that Urban Unmannedhave hindered the FAA Systems from authorizing for more Deliveries widespread use of unmanned aerial systems. Current

FAA “Part 107” drone rules only permit commercial and recreational drones in the United States droneto fly within operators visible to workline of with sight. commercial In October service2018, the providers FAA added to operate nine service drones providers within restricted to its five existing providers for its Low Altitude Authorization & Notification Capability System, which allows-

airspace. These service providers are Aeronyde, Airbus, AiRXOS, Altitude Angel, Converge, DJI, Kit WingtyHawk, demonstrated UASidekick, anUnifly, open-sourced AirMap, Harris drone Corp., remote Project ID platform Wing, Skyward, with AirMap and Thalesand Kittyhawk.io. Group. One Inof Aprilthe largest 2019, challenges the FAA granted is the lack approval of ability for Wingto remotely to operate identify as an drones. airline In to December deliver certain 2018, packages Google’s via drone in Virginia. Wing also has the ability to apply for a license to operate in other markets. Amazon has been developing its own drone delivery program.

Medical supply drone delivery trials begin in Raleigh, North Carolina. announced that it partnered with Boeing-funded drone operator Matternet along with the FAA, the North Carolina Department of Transportation, and WakeMed to deliver medicalOn March supplies 26, UPS to

System Integration Pilot Program to evaluate how drones can be used to aid in day-to-day activities WakeMed’s hospital campus in the Raleigh. The FAA is conducting a three-year Unmanned Aircraft

Louie DiPalma, CFA +1 312 364 5437

8 William Blair

in the public and private sectors. The WakeMed program uses Matternet’s M2 quadcopter. Tradition- ally, medical supplies have been transported using courier car. Matternet has already performed over 3,000 drone deliveries for healthcare operators in Switzerland.

Food delivery.

Icelandic start-up Aha has been delivering food in Iceland’s capital city of Reykjavik since the summer of 2018. It has used a DJI Matrice 600 quadcopter and a logistics system from UniversityIsraeli firm ofFlytrex. Maryland The system organ candelivery perform via deliveriesdrone. in a 4 km radius.

On April 26, in an industry first, a customized- drone was used to deliver a kidney for transplant to doctors at the University of Maryland Medical Center. The project was a coordinated effort between University of Maryland Medical Center sur isgeons, often engineers, a challenge and in the certain local FAAremote affiliate. areas. One Delivery of the surgeons via drone who may performed be able to the improve kidney reliability. transplant pioneered the project. Since transplant organs have only a short window of viability, transportation

Safe City

FLIR gaining safe city traction in the Middle East. On its February earnings call, FLIR discussed how it won the largest-ever contract for its commercial security division to secure the Haramain High-Speed Railway. In the Middle East, FLIR also provides video security solutions for the Abu Dhabi Monitoring and Control Centre (ADMCC). The ADMCC uses 45,000 FLIR sensors that incorporate license plate recognition, facial recognition, video analytics, and video management technologies.

Robust public safety agency demand for unmanned systems. The Center for the Study of the

withDrone China-based at Bard College commercial has estimated drone that leader over DJI 900 to U.S. provide government thermal agencies surveillance have acquired sensors droneson un- over the past three years, with purchases increased by 82% over the past year. FLIR has partnered

manned aerial systems. FLIR in the second half of 2018 and in the first quarter of 2019 reported strong growth in selling these thermal-equipped drones to first responders. FLIR anticipates that unmanneddemand for ground unmanned systems systems provider will remain Endeavor robust Robotics. from city governments. In the first three months of 2019, FLIR invested $685 million to acquire unmanned aerial systems provider Aeryon Labs and Cities adding security features to red-light cameras. Verra Mobility offers an add-on service to its red-light cameras that allows law enforcement agencies to view live video streams from its red- light cameras. On April 4, the city of Tampa, Florida, announced that it renewed and upgraded its contract with Verra Mobility for its 54 red-light cameras. The upgraded system will use automated license plate reader technology to geo-fence areas and issue alerts for missing people, kidnappings, bank robbers, or stolen vehicles.

Louie DiPalma, CFA +1 312 364 5437 9 William Blair

Dynniq Privatewww.dynniq.com Company Profiles

Management

Ron van Laar, CFO Cees de Wijs, CEO Description

Dynniq, founded in 1929 and based in the Netherlands, is a leading provider of traffic management connectivity.systems and softwareIts mobility that group is poised includes to benefit intelligent from transportation industry trends. system The company (ITS) products was previously aimed at known as ImTech Traffic & Infra, and operates divisions that include mobility, parking, energy, and

alleviating urban congestion and increasing energy efficiency. Key traffic products include FlowNode, groupa next-generation includes its WPStraffic subsidiary, light controller, a leading and provider ImFlow, of a parking flexible managementtraffic management solutions, system. with overThe 350company’s employees. flow-as-a-service WPS services big customers data software such as complements Impark, Q-Park, the hardwareand AutoPark. solutions. Dynniq’s Its parking energy division provides an energy management system and microgrids with customers such as Stedin, Tennet, and Alliander. Dynniq’s connectivity division designs and operates private telecom networks for mission-critical applications that service government, industrial, and utility customers.

carsAs underscored and autonomous by Cubic’s vehicles. recent acquisitions of Trafficware and GRIDSMART, and FLIR’s recent acquisition of Acyclica, traffic management systems are expected to play a key role in connected Ennis-Flint, Inc.

Managementwww.ennisflint.com Matt Soule, CEO Dan Carpenter, COO

Description Ennis-Flint, founded in 1996 and based in Greensboro, North Carolina, is a leading global provider

andof high-tech commercial traffic customers control solutions in more than and pavement90 countries marking to help products. alleviate Itcongestion was formed and from optimize the 2012 the merger of Ennis Traffic Safety Solutions and Flint Trading. Its solutions service federal, state, local,

flow of traffic. It provides a full portfolio of marking products that include paint, thermoplastics, markingsraised pavement can play markers, a critical and role glass in interacting beads. Its TrafficScapes with vehicle portfoliosensors. provides decorative pavement markings. With the algorithms behind autonomous vehicles being refined, we believe that road Eberle Design, its intelligent transportation solutions division, provides a complete set of products

(i.e.,for traffic inductive control, loop, including video, magnetometer, inductive loop laser, sensors, thermal, controller radar, Wi-Fi,cabinets, and and Bluetooth), traffic management and pushes real-timesoftware. Itsintersection iCITE Data data Aggregator into the platform cloud for interfaces analysis. with Ennis-Flint’s the full array Eberle of traffic Design detection division sensors should

benefit as traffic management systems are upgraded to network traffic signal data and traffic flow data with connected cars and back-office servers managing congestion pricing schemes.

10 Louie DiPalma, CFA +1 312 364 5437 William Blair

Exhibit 4 Smart Cities Comp Group

Price EV EV/Sales EV/EBITDA P/E Company Name Ticker 5/22/19 Rating (millions) 2019E 2020E 2019E 2020E 2019E 2020E

AeroVironment, Inc. AVAV $68.56 OP $1,357 4.1x 3.5x 25.5x 21.1x 40.9x 47.8x Conduent, Inc. CNDT $9.60 NC $3,017 0.7x 0.7x 5.4x 5.0x 9.1x 12.2x Cubic Corporation CUB $60.84 OP $2,258 1.6x 1.4x 14.9x 12.0x 209.8x 17.4x FLIR Systems, Inc. FLIR $50.99 OP $7,479 3.9x 3.7x 15.4x 14.0x 23.0x 21.7x Iteris, Inc. ITI $5.28 NC $165 1.5x 1.2x 8.6x Motorola Solutions, Inc. MSI $152.63 NC $31,067 4.0x 3.8x 14.1x 13.0x 21.3x 19.8x Verra Mobility Corporation VRRM $14.24 OP $3,068 7.2x 6.6x 13.2x 12.0x 22.7x 21.6x

OP: Outperform; NC: Not Covered Sources: Company reports, FactSet, and William Blair estimates

Louie DiPalma, CFA +1 312 364 5437 11 William Blair

The prices of the common stock of other public companies mentioned in this report follow:

Accenture (Outperform) $177.90 Alphabet Inc. Class C (Outperform) $1,151.42

Amazon.com, Inc. (Outperform) $1,859.68 Apple Inc. (Not Rated) $182.78 DeltaAT&T AirInc. Lines, (Market Inc. Perform) $54.06$32.28 Axon Enterprise (Outperform) $68.30

Fortive (Market Perform) $78.50 IBMGentex Corporation $136.35$22.08 JetBlueHarris Corporation Airways Corporation $17.56$188.34 Microsoft Corporation (Outperform) $127.67 Roper Technologies, Inc. $356.73 salesforce.com, inc. (Outperform) $157.64

Verizon Communications Inc. (Market Perform) $59.25 VisaSirius Inc. XM Class Holdings, A (Outperform) Inc. $164.24$5.56

12 Louie DiPalma, CFA +1 312 364 5437 William Blair

IMPORTANT DISCLOSURES

This report is available in electronic form to registered users via R*Docs™ at https://williamblairlibrary.bluematrix.com or www.williamblair.com.

Please contact us at +1 800 621 0687 or consult williamblair.com/Research-and-Insights/Equity-Research/Coverage.aspx for all disclosures.

Louie DiPalma attests that 1) all of the views expressed in this research report accurately reflect his/her personal views about any and all of the securities and companies covered by this report, and 2) no part of his/her compensation was, is, or will be related, directly or indirectly, to the specific recommendations or views expressed by him/her in this report. We seek to update our research as appropriate. Other than certain periodical industry reports, the majority of reports are published at irregular intervals as deemed appropriate by the research analyst.

DOW JONES: 25776.60 S&P 500: 2856.27 NASDAQ: 7750.84

AdditionalCurrent Rating information Distribution is available (as of upon May request. 23, 2019): Coverage Universe Percent Inv. Banking Relationships * Percent

Outperform (Buy) 66 Outperform (Buy) 15 Market Perform (Hold) 33 Market Perform (Hold) 7 Underperform (Sell) 1 Underperform (Sell) 0 *Percentage of companies in each rating category that are investment banking clients, defined as companies for which William Blair has received compensation for investment banking services within the past 12 months.

The compensation of the research analyst is based on a variety of factors, including performance of his or her stock recommendations; contributions to all of the firm’s departments, including asset management, corporate finance, institutional sales, and retail brokerage; firm profitability; and competitive factors.

13 | Louie DiPalma +1 312 364 5437 William Blair

OTHER IMPORTANT DISCLOSURES

Stock ratings and valuation methodologies: William Blair & Company, L.L.C. uses a three-point system to rate stocks. Individual ratings reflect the expected performance of the stock relative to the broader market (generally the S&P 500, unless otherwise indicated) over the next 12 months. The assessment of expected performance is a function of near-, intermediate-, and long-term company fundamentals, industry outlook, confidence in earnings estimates, valuation (and our valuation methodology), and other factors. Outperform (O) - stock expected to outperform the broader market over the next 12 months; Market Perform (M) - stock expected to perform approximately in line with the broader market over the next 12 months; Underperform (U) - stock expected to underperform the broader market over the next 12 months; not rated (NR) - the stock is not currently rated. The valuation methodologies include (but are not limited to) price-to-earnings multiple (P/E), relative P/E (compared with the relevant market), P/E-to-growth-rate (PEG) ratio, market capitalization/revenue multiple, enterprise value/EBITDA ratio, discounted cash flow, and others. Stock ratings and valuation methodologies should not be used or relied upon as investment advice. Past performance is not necessarily a guide to future performance.

The ratings and valuation methodologies reflect the opinion of the individual analyst and are subject to change at any time.

Our salespeople, traders, and other professionals may provide oral or written market commentary, short-term trade ideas, or trading strategies-to our clients, prospective clients, and our trading desks-that are contrary to opinions expressed in this research report. Certain outstanding research reports may contain discussions or investment opinions relating to securities, financial instruments and/or issuers that are no longer current. Always refer to the most recent report on a company or issuer. Our asset management and trading desks may make investment decisions that are inconsistent with recommendations or views expressed in this report. We will from time to time have long or short positions in, act as principal in, and buy or sell the securities referred to in this report. Our research is disseminated primarily electronically, and in some instances in printed form. Research is simultaneously available to all clients. This research report is for our clients only. No part of this material may be copied or duplicated in any form by any means or redistributed without the prior written consent of William Blair & Company, L.L.C.

This is not in any sense an offer or solicitation for the purchase or sale of a security or financial instrument. The factual statements herein have been take from sources we believe to be reliable, but such statements are made without any representation as to accuracy or completeness or otherwise, except with respect to any disclosures relative to William Blair or its research analysts. Opinions expressed are our own unless otherwise stated and are subject to change without notice. Prices shown are approximate.

This material is distributed in the United Kingdom and the European Economic Area (EEA) by William Blair International, Ltd., authorised and regulated by the Financial Conduct Authority (FCA). William Blair International, Limited is a limited liability company registered in England and Wales with company number 03619027. This material is only directed and issued to persons regarded as Professional investors or equivalent in their home jurisdiction, or persons falling within articles 19 (5), 38, 47, and 49 of the Financial Services and Markets Act of 2000 (Financial Promotion) Order 2005 (all such persons being referred to as "relevant persons"). This document must not be acted on or relied on by persons who are not "relevant persons."

14 | Louie DiPalma +1 312 364 5437