Rekor Systems (REKR) 17 Aug 212021 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to today's Rekor Systems, Incorporated Conference Call. My name is Catherine and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

As a reminder, this conference call is being recorded for replay purposes.

Before we get started, I'd like to read you the company's abbreviated Safe Harbor statements. product you future statements financial be revenues, economic product remind conference in position, construed to any are conditions, concerning and forward of call results and or as like a that that future made the this markets, other prediction I'd statements partnerships performance may events releases, of statements. operations, looking or may unknown implied cause involve can and uncertainties statements from risks, those such known materially in and expressed results statements. actual factors, Such to differ which other ask that to refer you our earnings the in We full release. disclaimers

You supplementary factors call. will this should filings also annual also with is concerning review operations Rekor CFO in I quarterly on discussed data ongoing Systems. presentation turn The only. purposes the description company of Hen, useful the and provided informational results be contained believes risk now to company's the and like would to of over the Non-GAAP SEC. the of our presentation the information non-GAAP Eyal for Mr. provides

you, for update discuss joining everyone. the as us. Thank key XX, well an topics. operator, on you as second XXXX, business we'll results for provide Rekor's afternoon, Today, and Thank ended quarter June good

with CEO, additional finish call is the President metrics. giving soon with updates as today relevant and On Berman, the who'll Robert as me you be I

our Following prepared remarks, we'll question. take your

nearly robust year-over-year. million for year. period was months June of a for increase XXXX $X.X year. million the Revenue revenue XXX% This growth second for healthy Revenue compared $X.X compared last quarter six million generate over was to year. to same for year continue of XXXX $X.X growth same ended We million, last revenue strong to is a period the the of in XX% $X.X XX,

Similar have for Oklahoma XXXX. program, period comparable XXXX. June Uninsured Vehicle the generated in and revenues municipalities the Enforcement the December working identifying XXXX of XXXX. more is a capital months significant XX, second in This an offering our highway ended and primarily of on due working program in the road. The as play Oklahoma compliance of XX, January the our safety significant began as measure. is of generate $XX.X [expansion] June million, benefits are as $XXX,XXX in year in to in increased it our list up UVED beginning This this February the Other state $XXX,XXX for in this product and program for states of to Uninsured year-over-year from this revenue year, to first high increase ended the public Our result reaping up initiative million quarter $XX.X marketing to strategic for revenue of now period program and role can launched XXXX, improving to contact margin from we the can the importantly, for $XXX,XXX SaaS increased Diversion, the Vehicle on we of second in a month three Revenue XX, interest the quarter our XXXX. XXX% for assist the studying of six the service offerings. and a shown We're e-commerce platform $XXX,XXX also seriously. in quarter State at

year. same product. associated XX% first in of in the higher for quarter quarter primarily XX% the for margin XX% sales, XXXX the our attributable in year gross ended than higher XX, margin was ended increase half margin the to the period. XXXX the the XX, hardware the increase margin to comparable an was XX%, for is last The June period margin June Gross was ended June with software Our including which reported revenues, XXXX from XXXX we second the increase e-commerce in XX, those compared the

of XX% sales our of mix. to for range term long were our second add our quarter in gross quarter anticipate our XXXX on and can we fluctuate million the margins we expenses expenses While to margin the compared engineering year. continue operating to our on XX%, We million the Total a gross quarter be payroll based in recorded to $X.X in as and headcount teams. last $X.X to same sales marketing significant increase year to

In to extended additional product our efforts and resources our services. addition, we sales added marketing and promote and

in on address invest EBITDA and Finally, quarter new of $X.X improve the spend second more budget XX, we hour and develop develop to to technologies our for products. our continue of $X.X as of the compared aforementioned as due needs We'll loss EBIDA to initiated. competitive June to retain growing of a year. June and XXXX ago was The our Adjusted investments year liquidity. customers. same loss state-of-the-art solutions edge in loss the development ended grew to line to six the was innovation of condition research and increase loss continue comparable better million ended the to a million XXXX also for $X.X of Adjusted Financial loss million and XX, compared the period. in was last a period million growth to for $X months

balance XXXX million up from million, on $XX XX, as June of December XXXX. $XX Our was XX, cash

three in net We have XX offering months. of our this primarily million was quarter profits increase year. first in which the to have from months public due short-term maturity but held less also dates investments, The than $XX greater than

provides balance strength which and activity, will about we shortly. inorganic sheet, working than growth feel stood of support held discuss our In operations been pursue Our summary, end support at our capital near-term has Obviously, necessarily flexibility opportunities. Robert at of organic in the M&A our to which $XX.X what this financial us it good to but more the very is quarter million. the

in in to market in our key business disciplined manner We stillness continue invest participant Rekor intelligent position to a to in infrastructure. for the a be

to like over Robert the would our to Executive Oficer, Berman. I call Chief Now, turn Robert?

in providing on details the a Shareholder goal the our as on the of ahead a Meeting path our When XXXX, we on note from up our emerging XXth. successful following are cities This leader key to update development XX% and report. a an Rekor significant no Smart to due strategy the challenge urbanization Eyal. of world's existing everyone out the be but strategy. areas Nations intelligent want United brief Annual approach which United will to cities. poses Thank abstract Good in urban business will to by Nations is on report XXXX, afternoon, you, cities. focus we in in projected as welcome. Please backbone I sector, infrastructure journey Today, a population Sustainable idea our years smart and current the establishing living we with longer Three and infrastructure to decided the ago, today. becoming necessity. further be provide that September managing XX% technology of its reality published began that to a pointed

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intelligent Our of and promising believe a that at At around this technology be Rekor, the nascent maintain pillars in providing to being leader the Rekor ambition well in industry. to committed the living solutions we're safety and and here in is effort necessary needed build people a and improve this small three infrastructure, to communities leader to lives, and world. key and to large be are

sourced the holistic with vehicles entities. sourced and data, this party third combine First, and connected information real-time collect to crowd ability

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speed our products and is Coming there the One putting products when of many more cities. the map, we to platform to leveraging valuable. progress of to feed and holistic data and smarter asked sophisticated set relationships. especially market dealing various generate solutions market makes about differentiator states by with and flags system Rekor Our range our can roadways On our more into Waycare's data an we now a is was built a key broad view of public to entities. on a advantage calls, get and with and on Each

with time cycle building get you're to state same. a a Our and and takes answer’s cities involves the trust. yourself It government, When sales municipalities, it proving that working yes. is long

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the we that to continue York, growth In we solutions with While the of a the Waycare New Department, the partnership selected selected maintain recognition. in of capital One executing Albany We acquisition announced were as help Police safety on the community organic citizens. City footprint, and Rekor July, nicely for provider and focus our security to vehicle to and its the smartly. adds are Albany of

press from release we key Some out. takeaways the put

we robust there including performance hardware our of lane, the won and capabilities. a using of meeting power strength various about capture, bid competitive and party vehicle solar third First, with software, strength exceeding and doubts should our any requirements, the speaks be to technology. This not unlimited operation, storage identification applications, integration process and

we this with US. the in footprint our Second, have win, grown

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Shareholder would We Meeting this will like back to we plan for And on to on turn how with our call on provide upcoming September a coordinator that, XXth. the our I Annual roadmap questions. following strategic doing

you, floor is to And now while turn Thank Robert floor the I questions. gentlemen. pole ladies to and for The back we like [Operator open for instructions]. questions Berman,

take lawsuits. the And And to thank Operator, for couple update questions first. We Knoll. of on from you. first a asking he's want an email is John

So And appropriate a Watkins an one unmask Latham start. There plaintiff to only the I York we court you the filing New that owns all place shares. with XX think that did in hired to I has lawsuits. folks unfounded, a unfair that's lawsuits. who's that to We lawyer, think been trying the likes defend filed wrote our And saw case lead the believe were say, many not untrue, the attack. with we part for reports that were they the as of Because misleading, dealt that to of research but only Chris short Clark, basis these inaccurate, attack.

So of we're defending them the but it's And as forward. lawsuits continue we we'll you and think we don't unfortunate much to vigorously. move updated keep

is they legislation together, with were realize And bills have we very to agencies quick. engaged of some comes part And the as have the spooked, things Well, of the second they of do. Highway or way involved respect since question bill day, agencies it with They of at the Department are the failed. work Florida the get with sometimes in the in Texas? were things in the do and to been dialog respect that amount process. that end to don't don't the of Florida, one Safety The have the

the It going which the that for something just we're is well. and believe true Rekor within makes that's things with other and is. So or evolve. sense same sure. to the this them And forward. happen it Texas discuss platform module pass. two Florida our contactless a things One moving where Actually to is states as of later But to see this Affairs and there is we future Government interest that Head And month going as cycle also in takes down there's sometimes compliance, for meet is a before legislative

So can on questions. move that operator, with to we

Eisman from coming is Neuberger Berman. question first Your Steven with

on program? you Can MasterCard us give an update pilot the

all And we they just We did our tested get the a with pilots to are say We asked and tested technology. They time. over several over again, this solution, again, MasterCard. their vendor we them.

with our haven't they're large They've from I the We us said, placed agreements, But scheduling, large from They really rollouts of they're all our working things roll food their satisfied out. say that to that's performance. about Europe, small what to speak Rekor, its with the information, everything satisfied product our and all chains. asked to by. with We're can't here, we every fast can rollouts, pricing. they're provide the doing. that stand are these to in ones And we're them things we and standing by question. and

we and don't the product just for doing. did money all effort of MasterCard in time, the So invested that believe they sake this

to that services provide So the stand this in contracted we're ready they're near hopeful they've them going and us to out the future, rolling to some start we for. point at

with Zach Riley. from next coming Your question is Cummins B.

is Aman Zach. actually in for This Gulani, I'm jumping

being certain basis? first anticipated? flat a not my go go that revenue you question. essentially into for on So puts live takes as and sequential the projects did Were Can there

the sometimes governmental is. when take development company. and with starting or has And it else. of of government. revenues revenues, size quarter. that stage when a it bit delayed of longer It's We dealing corporate and to our bit, federal everything This with grow your deal is like are an it lot scale as impact on little things a And a integrators get deal things large We with little are entities. is lot the just entities. what deal your a sometimes you're a We with

I've missed revenue that So in had and news and you're in you're bit, when But keep, notice. relationships that yourself good we good development thought partners you we're notice. with. counterparties a and you if you judge think in I little company the can the you company million $XX that a have is and we by that I quarter But we say would wouldn't pretty you stage always Rekor with growing keeps the

helpful. that's So hope

touch cross run if Could you margin selling with the could And opportunities maybe you talk for rate maybe then Waycare? revenue about Waycare? and gross of annual maybe profile and on Rekor

take will and I'll financial the the about talk selling. cross Eyal piece

we we as this Obviously, gross information. anticipate closed transaction was financial and is grow. to XX% we at that we term, our this said, can XX% On Rekor, and not long their talk to point, always margins as speak

I'd say cross selling, We've a large a markets. And that platform of in we're generates real to to with respect mean, like data. that I same created holistic most time the amount

the And year $XXX,XXX, want they of right? holistic over so data public them lot data $X.X today gets at using develop us applications fortune another applications. a for AI public million today other a data to of from went as sourcing went called last at having revenue a others, company crowd to of there's a uses our was [Wejo]. connected look saved value $X And Rekor vehicle that some connected a their may do and and of Otonomo, data you take forth. generates from So Waycare the and company Otonomo lot expecting called data today. sell evaluation vehicle and third-party and Waycare years and of data about literally billion. they're Their entities

So particular response time. that management, you can do that predictive intelligence incident is module, the which for necessary incident

this The only and center, to would is lot something do, that other is so thing important operate but say management really speak. Waycare's traffic customers a can I of that Rekor

of had sitting what other that those without with device same to of and on-prem, entity video algorithm and do has for. ability are to a wall related could and that that it our the put a feeds on sustainability using large back an the it and additional congestion things server Waycare screens think coming the they then offering and our right can the have things. on we a you do about people with point off like And on-prem, So operating center. there Those into all traffic into the data things customer all we watching management to can't that Waycare get hundreds we pull whatsoever the ability is if forth. alerts server, edge And server also way live interfering with the feeds so today feed can speed platform, would that which give to wrong video

amount synergy longest and been day, is huge emerging changing the Rekor. time, every we've a shifting there's nascent. looking an And underneath of for It's and Waycare at It's here market between this the sector. it's land us. So

data space. vehicle around as part it's really share for we sudden And the It's of we're just unlike rare is so discussion and we're has others it a where user. we end leader vision a all a great position say that came applications a data, the intelligent rare and going excited And industry very a And about how both see actually You it across common there's think to a provide will solution connected of I these data them we lucky data in fit us. because and to help headed. is companies that that to that was Waycare Waycare that Rekor use for just the other that And as the asset. of you make becoming Otonomo infrastructure. source asset in all create and crowd

with [Operator Lake next is Schmidt Jason Instructions] question from coming Your Street.

on additional Robert, interest driving want programs. follow your from or up on uninsured to comments I other states just interest on increasing seeing

accelerated really remained if interest months if all, at curious has the this that past quantify three really or stable? you Just could or

few in sense. think was them a first, when over pulled forth her the She and these together gun. said you good had months. killed case. something That's throughout and what it. like Powerball states that's two they're I'm an of you've rolled and I've and petrol compliance. to it as around taser police having that, expired we compliance the glad not uninsured, out pulling think This starting you asked a you XXst she And a to Look out see for contactless that's whole bunch But one, uninsured a in the and vehicles, stops and we I they and over and the okay, of and last the now concept programs, happened is tags, happen. of going of then makes Mega somebody know Million. the Maybe expired And what like thought the question, a having that it's lot compliance, and even she dialogue that just about out we of have cars that, just And much basically replace you things mean, century. and cities, from registration do technology had discussion motor and ask see too lot lotteries. officer past Minnesota license less make tech. get and pulled so we do compliance, to all got our types That's together really to the then

in Program Oklahoma is So absolute UVED an success.

know, don't we vendor that job. many For terrible was we came replaced a existing and an in doing that

course. vehicles it. happy that can't to states that that people and it. it just And the we did. that was what other uninsured I So been about out of has been is running just already with the that's And that months, the see the very standpoint program easy. But motor happy that that and I don't tell number straighten substantially goal to natural be we've reduced mine, had and the state to state think of the way They're program. from vendor see you it's of in going take It's program since had and of that. can so the speak, six the prior in going not look, that kind in helping its state come to the state's

of of footprint, product just sort then obviously and companies you I their a you them their that through out vendor attracted sandbox. to the complementary same are portfolio, know what relationships acquisition, other in sort there at And Waycare went looking there certainly but

of sort these things ultimately radar was how three you the Waycare. curious it And of when combination you your or and long that if made just attractive early been got have guys? with familiar on Just them a was for they screen reason,

we Waycare. became ago It aware nine months close was to that of

we know, same we watching we CFO do. has they were things them. response of connected doing And there. were he and the the were were we what became you their time Israel is they from our that that's what they OEM and incident have don’t at safer deals vehicle were watching As doing, primary aware they they but watching relationships primary by business. that making it companies time not and data, Remember, -- other for don't have reducing business Their some is that. like And

Waycare does There's rare what a asset. company not does. they're another there out that So

to that we what's which at at were alongside the have connected them. vehicles pull of provide to platform, One these Rekor data sourced started looking We me-too order knew to and One So them. both necessary real to the data, time, we had talking is we At the for real municipalities. accomplish call to that holistic is started we to Rekor to same time. into crowd what looking solutions Because which we sit in our data,

analyzing a did this us And made us the and acquisitions table longest them quite all the take take to Waycare the of seriously. time, were to and been looking all So the get while we've most it we at. to to get for sense them that

think, a our a sidestep I Series join they're decided and Rekor that round plan. their to the they testament and to So asset is fact B business frankly, rare

is next coming Your from Robert [Lewis]. question

government your normal government and obviously, request municipality Just proposals a these, from couple the questions. of come let's is What time, say, for agencies. the business? the From from turnaround

weeks even the few the few of So to on a and a from it range contract. longer, depending could size months

the only sole provides new now, isn't with something have to One, we program. launched which not we've same able been the some had do another months a that source few ago, long service. We Once success company is because it's there that recently Rekor

are sole-sourced again, done get Waycare to entities do they almost what had can been they that of company to believe contracts there's because I governmental if has has regard. some provides other And of able no that it do -- what elsewhere. sourced all able they can't been they've They've sole in prove a success lot do.

So a it young, year is small may is cycles this or what stay a start this are way nascent for government a while. contract. very vendor. And once partner. being difficult a it expansion It or It's a a to happens you business. such industry. the It and sticky with you're a a sales you evolves up could trusted then to long. is But pilot because trusted an dislodge very two end either But be partner,

to you I entire How now and in you -- the came I I'm with described. Oklahoma it sure you the what basically long does state. you state just whole get back from when have believe mean you of started take

So involved whole was time the process? element what also… in that And

What was second part, a ahead there answer ask I'll you and go and can both.

how proposals The the requested many now ago? do versus you now second a right basically is ad in-house proposals is part have year right new what

of running system beginning obligated year, fall by and it vendor, first have first the to quarter. respect of to that that And that were last late either months. of vendor, to October so it awarded January. it decided Oklahoma, they in actually Well, the at I November the which maybe did. six they Oklahoma up and running once the RFP. an they and They with were We about up had the out prior put going terminate of late in it end was believe they early terminated we was and summer their September.

that contract size. Oklahoma But of a short a So is for small that relatively was remember, state. a fairly process

operating speed we quickly, to With I'm regard be whole So it's not but you when talk how can replicate a to state many about the not to RFPs that years. sure other certainly get that up done now, call here to and states, going tell dozen you it. like we'd RFPs, have right a company or two our in we without were that pretty dozen RFP I robust see, can is that we engaged a pilots as center and

I one of constantly going a both has to And Waycare well. to half any We're we're combine given opportunities. a would dozen say at at those. time, as looking While dozen

revenue on mean the the roughly pilot I these in to $XXX,XXX And these are streams range? programs… what, $XXX,XXX

They Nevada less like in evolve in there contract -- $X.X may start Southern that Waycare's like XXXX. that way, pilot granted million years. than and contract today was is That a look I $XX,XXX in they but was

how know So -- really know a they're them. they a trying large lot they solve again, solve, know these to you get don't don't in in problems municipalities and the part, to of really

So once in the relationship grow. get tends door, you to the

will question say very and I small thing to that, by they revenue intelligent And to I consulting several that I Rekor mean the well-respected What firm then So opportunities think the and other start want gives say, grow space. I to your that do at me hire they're sticky. can the this opportunity a is it, look back, months decided infrastructure. to entire and the

cities intelligent frankly, two smart than around for awards and they've of and decades. now. mobility, the concept more these thrown smart meaningless Now And been been until roadways have

of this our the commission So find landscape. who a addressable as saying we is Day study decided consultant to they're is evolving. Investor at you out to And even our to meeting, how our that even which is, shareholder look you'll day market, come and nascent same total the quickly and that on it's September, the consultant, those competitive which in how

can't middle 'XXs. Internet in the evolved in than real into anything I've time happening in really with else actually time. lifetime real back to the all in that is think my seen this I mix get And So other the of trying that companies

So it's need companies space an an is patience sector. folks and who and that the are have but smart interesting succeed this time interesting are to and also going this realize they need in to be to

coming with Your from is Capital. next question Latimore Mike Northland

on behalf revenue is you guys This did tell Latimore. of border me, quarter? Could [Aditya] patrol recognize this in Michael you any

Did you say Custom Border Patrol?

yes. Border patrol,

to the [IT-II] So contract. referring you're

about public, So we can because it's it. talk

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XXth. September saying they're Now

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last in acquisitions? And you or the for acquisition more guys year also, Waycare, still is interested making would be it this like

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or So processing image got market. different is the XX automated. we've our XX tolling, for We've products which in got

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great. everything Yes, was

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I to concludes turn This for would Robert the remarks. closing like question-and-answer Berman back the session. now to floor

operator. you, Thank

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forward seeing appreciate September. call to So for you everybody this time look taking and in

ladies you, and This gentlemen. today's event. concludes Thank

may participation. disconnect your have day. time wonderful a this You for at Thank and you