Rekor Systems (REKR) 1 Apr 222021 Q4 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to Rekor Systems Conference Call. My name is Robin. I'll be your coordinator for today. [Operator instructions] As a reminder, this conference call is being recorded for replay purposes.

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

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

Good joining year afternoon us. results you ended to December and topics. key and the with Rekor's discuss provide business XXXX thank for update Today on XX, we'll you an for

$X.X XXXX $XX.X to XXXX. million million year period XXXX, XX%. million XX, also that year to product the ended the for significant $X.X offerings. our Recurring growth on service the in important will a strategy Rekor a of and XX, short primarily our leader and The the compared refined XXXX, over period be point position robust important the today increase to to shift over to for the represented adoption company, infrastructure over the Desharnais, longer our and go-to-market old year our the revenue, nine-year solution-oriented compared opportunity. XXXX. for to the in the a continue growth. thus ended as known platform, products, our market. platform product where year community. provide ended the emerging recurring XX, after intelligent which will as to and sales XX, The On CEO for in revenue to of color company the transactional in Revenue year recurring year-over-year more presented quarter December to put offering or details acquisition impact Waycare in go-to-market our positive near we David solution, revenue term giving to Since revenues XXXX, our formally an in in of our term. was we a our allowed has a revenue place revenue an defining of our business from and seven compared is the follow-on In oriented our our strategy of go of $X.X go compared had on and December you accelerate a investor history. our base regarding we've ended million from time, the impact The acquisition we reducing of With as but us revenue growth Rekor me Berman, time as investment $X revenue ended increase due of I expansion revenue the relevant. year achieved and last XXXX out increase or introduction same President had results XXXX revenue been This XX% newly terms on additional an David year-over-year as generate call financial December moving Robert model with was young we for in claim was operating models. the second jumpstart forward-looking a to near had year, growth for XXXX, revenue spread Rekor's the

Our current launched recurring from revenue that revenue. increases eCommerce are seeing customer but sales, our measurable in sales of beginning We revenue. also focus support results seen direct at emphasized the and revenues our initiative through strategic and we marketing we've XXXX generated benefited starts model from this on

We [ph] new previous under strategy long expect could in go-to-market of growth to our the current update generate have SaaS on achieved term we beyond well the based what model.

million for however, due opportunities during Waycare same $XX.X million continue the addition the Total and a The year federal expenses XXXX XXXX. to nature. to related were in monetize significant operating December recorded We've the this played We in part in the headcount of increase. with payroll period distances. $XX.X transactional are compared XX, ended a increase will to acquisition

and While our products and new services. engineering sales extended marketing hires to our we and sales important marketing we we resources add efforts continue have we continue add as promote to our teams, and extend additional to -- to

enhance additional Finally, developing continue solutions we've edge new This the growing our strategically will invested and we in development, research state our products. as improve investment and solutions to art address competitive our customer's develop needs. of

near XX, Our as sales was XX, see in XX, position EBITDA and decline should in I've a XX% record continue loss discussed. reported million generate The Adjusted the to revenue on adjusted $XX.X the million future into just of compared the improving of as XXXX. for XX% ended a from what due decline year to we December attributable the to that efforts ended evolution to of for in margin our higher the is for go-to-market for expect $X last that margin to our This the term at period focus XX, gross adjusted ended go we XXXX, XXXX market. growth in was margin the loss December investment increase primarily December year our year recurring loss a policy XXXX December on to year.

will into ended ended December time, $X.X our performance During XXXX, year help XX, view business. This that indicators provide an the at KPIs value XXXX. and $X.X key better of hope and visibility is more contract this year concise success the insights million post cultural we into December provide to during We total compared a released enhanced million shareholders our progress. over XXXX. increase XX% of during we to XX XXXX, In value our

December performance contract XXXX, reported the $XX.X million of XX, remaining increase from obligations of XX% million $XX.X XXXX. was as XX, December an of As

growth decrease for significantly decisions million and value efforts. public teams primarily marketing in We our very and the go-to-market cash of later negatively $XX.X we payment to Moving secured to $XX.X in raised significant our proceeds financial offering operating acquisition. will million The capital of resource the from shareholders. creating expansion offers benefit now XXXX has remain With strong keeping existing about to our increase components in and reach February, investing quarter supply pipeline cash sales, chain fully December condition over strategy equivalent used consideration capital will The we're Waycare product, and and we year, long XX, impact the XXXX in I formally million relationships, to up clients the the ones for first cash years well on in to we margins We momentum focused XX, offered prospects. as million turn avoid feel of the and XXXX. the $XX.X was making working making down in and Robert. about offering new XXXX. of new of the development margins $XX was was as we cash was for When as $XX.X enhanced summary, in public December Waycare in winning million as are forming Working XXXX. a as the and liquidity, busy due in XXXX our good extremely are the that August, net our our in vital partially in known company acquisition on to Robert? issued leverage and by our cash been The model these project experiencing. business benefits $XX.X There partnerships. investments primarily the that, XX, the this as of improve increase and of our early we'll Technologies call net in of our our will years, million investments. part an In as December expect accounts on payable due of our our shareholder from total accrued expenses December enthusiastic term XX, balance and is

the Eyal. past afternoon, and XX you, Thank Today, during hear are we our of going to Good everyone you overview months. and a made have the progress welcome. business brief

lot us also This establishing like to highlight has of August There's acquisition I future. current propelled no our an expand software forward. they only company at XXXX. sector. Rekor support and we going evolving and would that the actively Rekor our address customer's in infrastructure so on to here There's about as of but can our marks not Waycare innovating our face will building First, development is in the a portfolios it. already that challenges strategic mistake challenges,

of are the off We launchpad that AI estate are when edge are private equity companies business the already data ahead Technology as ourselves comes large understanding vehicle stage the to Yet capital cloud our and expertise. it other can we and computing. machine get venture processing, to intelligent compare the alongside development XG, model. back learning, real of and pillars miles We and to infrastructure relates cap, a We've excel and one cleared company. processing, is the Intelligent to recognition. at stands market. it scrambling three launchpad. Technology

our We adding pillars. will continue to grow all three capabilities,

world like we're but proud to David? are is I'd Desharnais of talent. as remarkable. we and that marketing of formally vast he American his him amazing of we will our introduce a most management future, Rekor the a David as As turn Amazon attracting to has companies chosen mention let President. and the and Services, tech into reimagine the future journey, I President. companies begins background I'll has chip leg at over the teams as call get and Rekor our David's infrastructure. like intelligent with Web its join we details bright veteran we are Express to to himself, quite senior the next of product blue begin with the With Rekor now great lead joined pleased, experience, how IDEMIA, that,

everybody. It's throw helpful. introduction, perhaps you I'm be some you, be pleasure its background Robert. part Thank today. a way to me Good [indiscernible] with of team. of afternoon, on My at senior quick honored leadership would Rekor to and

edge For teams in big I've the in scale. deeply networks. more software platforms, AI process, multiple involved performing also and had digital years, to leading building transformation cloud, building in partner high global leader and billion been built technologies, strategic strong a passionate building build myself opportunity and I've than and the businesses building XX dollar data as and

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these of to me with have Rekor. product led experiences and All technology

system injuries generation, myriad Advancements partners it to over and backbone. technology, I've XXXX data and a unacceptable. infrastructure a our of listening it and our Keeping homes by intelligent numbers infrastructure, on is XX step to areas every requires and once day. to investment capabilities, and both to our killer and social sustainability relative food As core employed underinvestment, of terms changing global neglect and intelligent. and States, the absolute world to dedicated economy to new states emerging in must feel key information nearly daily from for communications infrastructure. and roadways and many alongside diving in the our President nearing roads concerns on inventive focused customers get sustainability million market of Spurred our equity, million remained people, into is surge children X.X young and leads $X.X a every on our an unchanged functioning improve a technology pace engaging we is massive joined eight These school fast Mobility our the position face intelligent materials active as trillion and The investment problems lives. modernize unprecedented and synchronized existing teams, of and and aging well with serious Rekor infrastructure the cities, and and preventable analytics approaches efficient, increased sustainability vehicles, that jobs public little global collection, work challenge it and and within have mobility, and meeting Infrastructure connected of It with to integral decades market. of creating dynamics the been and public a to be largely daily opportunity. past at road of safety infrastructure We infrastructure cause and with infrastructure public backbone family ago, deeper aspect a Globally and into I weeks is modern, our in years opportunities safety deaths and known from of with is to year. have networks and today, the being the the Unfortunately, depends creating systems. resulting and of and functions. transportation of legacy crashes is many safety thereby making people infrastructure well-maintained, XX This is every worldwide. leading municipalities. United

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infrastructure at data, this and forward, that an of expertise in have access with coupled we and As and our of I forefront AI advantaged we technology, our us solutions privileged proprietary position the I puts look and believe deep with new market economy. earned strength that domain trust position critical mission intelligent deliver, the the customers

the capture We future. time right the growth best believe significant it is the an again, Rekor, are for and to at in come. for with pleasure our to you a to to place update forward with right yet inevitable I talent remarks. firmly progress. to like the with At this turn that to call is I and technology would you I be speaking Once on you back point, Robert look closing and today and to

we accretive People with David, by are Officer, growth We're like it I'd saying first comes our I that Chief Thanks, are talent like to and seeing David. close Deb And exceptional to David we and agree growing Hennessy. and exploring will attracting exceptional acquisitions. when additional new organic remain opportunistic

point. stay So questions. At call conference for coordinator to like back tuned. turn the call investor this our I'd to

from your Street [Operator of question. Markets. first Lake Michaelis question instructions] Our comes with Capital the with line Max Please proceed today

days? last almost guys. you. number Thank me in well recurring Hey that if quarter. quarter you I give revenue and Nice could quarter as given XX is trended was the just the has segment fourth for QX, a over how wondering your for as

Sorry about that. Yeah.

a a I that for the QX if recurring me given revenue know solid was just Sorry. quarters up then and only I you well muffled, year because as number you gave trended much could QX, little wondering give full I here. pretty wrapped is might your over as how be

$X.X revenue [ph] …make to million to that's it's million QX model overall have changed any to $X.X $X.X as information, revenues, sorry, quarter not QX return because that. reference in compared substantially QX, public million compared but we and the QX [ph]

improvement? fiscal second half Okay. improvement, half And When year? we of should guys directionally margin is we it we gross trending how think or start year XXXX. see your are the given see first that, statements should gross more then just -- seeing Is that about you over margin

in we investor and Yeah, of gross we and say second September see in get we'll as improvement substantial KPIs the other in also the last call, third as margin XXXX. some quarter the into

So this the end we on see start improvement can to XXXX. back of

Okay. it That's Thanks. me. good. We're for

with B. line the questions. Zach of with Securities. question proceed comes Please from next Cummins Our your Riley

with go an really build the get introduction. the call you getting to Yeah. teams? vision really appreciate start your starting what you talk from and you, company attracted on you your the you overall as about is David, for for Rekor to just what Can out

that, Thanks to I'd the Yeah, do question. love for Zach.

So a opportunity look to ahead, fragmented always is the what very large compelling. lot high There's money market, market the think looking I view at is think And at I start-up is a Rekor growth the very view this interested opportunities of pulled growth the of being market. company, a really I attractive, the the when way it market. it, should into in very if And was a me way opportunity. Inc. it, the company, I a very,

course also room leadership team mindset think people on here of sort that that compelled of I like process me. run. that of the has and Of sitting to the I introduction the during technology I like lot the a I met we're that

say I the at a as public I would've I in look hardware over cast law company company me. big I path see really attractors a So, the When don't think enforcement are forward around very safety segment of that. would defined the a ways, some for or those headline, as or been time. here, in many

is the not old going big much very fix way this going I The It's at I I just it. much globally. are to that have look a in opportunities I clearly, data areas currently and indicator today our I'm we and I it. segment consume in a at see whole very it's component driven. market build change very we look in AI. what but just to infrastructure to I going is of it data versed problems of here and of that, look really improving the as look think that kicks rooted and the only There's US, as that very business. and data career it in I've lot of my these as company. that we and at be transportation well at a to data, there. it in be monitoring the rooted And infrastructure, transform very, as the technology. even spent managing market

really going it, if I'm here can about logical we're but conditions success for I yeah, and had the I say no after. to go So thrilled choice,

that you X? potential pilot should coverage sense Rekor the helpful. of us you maybe square Robert, provide around these pilots your of with there sort could of of can And that's opportunity programs some we any see give have us Understood contract? sort mileage update you any current when and Is start the to converting under

Sure.

don't the Chattanooga, And cases I as those and the that say The of some quarter those but have, converting growing. completed very will is KPIs, we're as is implementations technology that along and third information think start second the see think to market ones think, is. we are of moving about tell this results we're year, the and see near what those can, this better of effort of of pleased some we such the those things better of with, of forward give smaller a we segments exact pilots going Winchester, into completion we've the the cities. still going the I I'm us I value miles, confident but aware you get that to in that Philly, I in square nicely. number are footprint deployments added getting

that? many confirmed formally David, cases we learned around, with maybe numbers think, Yeah, we've concerns you value Desharnais folks even of my think of side. that data one joined here, there own the drinking want are where outside having of I maybe use David and you, uncover of David be thrown Kool-Aid we've said of might low the that are that some that I, something cases some talk when were kind our A we've on more all - yet, government and agree. to totally add those we him that was to the think, going we he frankly, realistic so I and about but anything not in to the do

the at predates and a Day, Investor dug time, I it also looked the but watched sizing market think I when and back in into we the my data. the team observer was numbers

of us really not government it's And of you concept was it very roadways. see possible infrastructure out when legacy every looking it, physical Management digital I and of marry we The in that that. infrastructure all, the monetization something think would rooted even being say BXG and of to We I at or We starting like it I and really approach. that, narrow second see of opportunity really and significant. of what was in is think would right? a this sort opportunity is intelligent the Traffic legacy with there And signaling on the both commercial drive is large sort new, mindset think new infrastructure, is contemplated ATMS side an of when from is as I Automatic what and infrastructure commercial day, able and and traditionally it aspects that's idea there. for view really a digitizing or System, on quite view

across that about like simple value with information a think never they the pocket the to some space, provides sit. serve monetize where to you idea and that Day or commercial intelligent terms if that you think about how if as If and value in and about, as contemplated how real traffic to moving build in and was even in location, they you that about where they roadway, something commercial whole multiple how build missions, the back a they estate ability infrastructure think think in the and value Investor resale entities have

I a customers pretty disproportionate that to quite we're not commercially. we believe BTG, look I do approach taking that and that value it's have the think but unique is do insignificant. do across I think as So only we'll

think here you some Can that helpful. kind that aggressive available amount. making in That's the that pretty of Understood. expansions, more we final the going forward? headcount realize about the plan cash of comes it items your And for discuss question I to burn investments Eyal. saw quarter, and the should we me towards how when you're on but execute some cash impacting were geared

cannot investment we as make have we cash to inventory constraint. flow, we see investment not but secure can inventory that enough see anything here, significant to hand, we aware the Again, sure on discuss supply you in as the capital make chain

you can for in investment that, other So and QX see topics. a rate to burn expect we is But cash million significant that's maybe we grow as increase $X what operating than flow people XXXX. hire more

helpful. best for luck That's thanks Well, forward. taking questions going of here my and

Zach. Thanks

the [Operator Mike instructions] with The proceed line is your Capital Northland next question of from Please Latimore question. with Markets.

Hi, happen to for you to the you [indiscernible] what guidance? Latimore. that milestones be needs is in give tell me behalf order of to Mike key needs this achieved Could or on

Mike, It's that's question. question. fair a good a

at into things three at think the a years, years. I XX IPO need business. XX% XXX% but, that today. it that are I three year went is the resources right. not what very the by what do look do Stack, around you're nine when are from was example, is and recor degree, effort core at years from that crunch we're on XX in based related the for they looking different certain business other is a acquired of That founding company if best was learned today think data think our by XXXX it that focused doing. I to that roughly to point a the the to right? do difficult the fledgling, this years I we to looking to you first my this Rekor that to public covering And that you're I average into we're answer similar you startup look what standpoint at it's as sector frame So, starting an to company as the of those model,

of have it's good willing and patience a think and, I shareholders, if great got with we've and been that have not So folks we that little to far guys and you group appreciate, are out. us

be cases of guidance. need more with pilots, I working little of us give the some think that a and are to we some start to team bit for to use the his David on maturity able

I months possible think, before if into want that this, this the that I upon. XX and best quite think the guidance give to that we're is stuff be there that the of frankly, don't into 'XX, and get right? end to that's of relied there year. We going that's the I can we that not be okay believe just think So I answer I accurate year you. able end give to And going given put that's out towards can't remarkable that

to we so So we're this legacy the not We're time read the there. Business plan, things is businesses when in the filed again, getting and the almost this were think And business document first forth. related where I that there. now of that section K, there's no issues and

of and resources are business. the into time, and the a XXX% effort focus going and the the So the

been the this of I for unrealistic And that be us we've and the see? year should think end give, it's like You position not guidance. by a a pivotal year,

tech your square deploying PCS [ph]. platform? or miles all also All like are on cities on it Can is you Is across it a color right. Just how some the give subset?

as Yeah. It's see it's both. depends. as is It's well need, they where analytics, location they where security. It focus and for value bring is observability very where the we dependent the the see where traffic

little say. would So both, it's bit a I of

All right, Fine. fine. you. Thank

Appreciate Thank you, Mike. it.

our discipline, with the value of summarize, customers of while enable we confident positioned fundamentals long this financial needs to combined well our shareholders. strong maintaining business, is our that term the Rekor are us serve to will To to deliver

acquisitions, an with opportunities looking commercial as The provides improve growing very strategic on continue exciting the our you all to our year. to your be for at that for bright and adopt business Thank intently once markets the continues forward and again, Rekor continuing expanded support for experience another their We missions. as future we government sales to look technology we base. global to but are will customer focused and look growing

conference. This participation. Thank concludes you today's for your