Rekor Systems (REKR) 16 May 222022 Q1 Earnings call transcript

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

Before we get started, 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

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

Good XXXX thank for March business discuss ended will the with quarter us. Rekor’s XX, joining afternoon topics. Today you provide update on results you an key and and we for

time quarter show XXXX. revenue we in in to compared XXXX, quarter growth recurring emphasis fourth the after CEO call go In sales morning of of third the of quarter revenue today me the Robert he our recurring from I We relevant be giving just is our of continue model, and on XXXX. on STS On speak the business will revenue over regarding color in first to briefly to exciting Berman, our announced the with shifted we acquisition news and point this under new our additional message. you our

and had near in revenue, we circumstances, the hardware on new will term This retaining has our services overall subscription our model appropriate growth sales, subscription that we ended XX, services in XX% $X.X quarter-to-quarter primarily to XXXX. and million revenue. increase a during reflects sales, was quarter XX%. year, ended for XX%, in to first million XXXX. increase million, XXXX, for time recurring with me our for Recurring recurring XXXX represented in financial hardware of for a details due March XXXX, the compared have revenue. compared an products ended ownership we're decrease With March to developing overall The continue are provides of compared to software on of only in seeing which revenue million a a providing of emphasis the on was term. and basis. March in of some But decrease a for While was $X.X partially sales quarter by point XX% a quarter with $X.X decrease the total $X.X the the data revenue into engage last which or in XX in long reduction the will to let impact the confident quarter the period that, the strong in point results in ended quarter March same Revenues in get $X.X quarter million hardware quarter-over-quarter positive impact for growth on offset XX, the revenues, the revenues time XX the

expenses to hires to achieved million and result and expanded quarter XXXX just quarter, million model. or in add sales, to during new revenue in marketing appropriate continue addition through based in for beyond in acquisition SaaS were continue quarter Total We add increase, the the to and XX, sales previous I and under we ended generate what headcount the base and to building a promote well expenses. expand revenue our increase in our $XX.X resources recorded as continue XXXX. we of offerings. will to due And a our a saw this in future efforts increases subscription in the hardware on operating The to We've teams. Waycare service circumstances. $X.X payroll emphasis of As we XXXX. term marketing long our stable have product for current of expect important growth could March with to we the additional related increase same payroll sales the engineering product mentioned, first time But in like in sales suite growing we period point significant expect played we growth strong and compared and may this part

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

XX, The March ended declining efforts quarter Our as to was the March presence margin quickly and expand primarily area. XX for our XX.X% project quarter decline is adjusted gross key ended the in March XXXX the margin on reported make for XXXX attributable we increased to XX% investments from new XXXX. winning XX, implementing a in

view million we for of progress. Since for change these over in growth an key enhanced business. loss You margin XX, that loss our success XXXX same to to our the a provide the adjusted I've quarter due visibility we time, gross million should loss see continues year. to a just position provide $X.X hope record insight period strategy improvement help compared as in indicators a into future. evolve our future our will to and performance more expense KPIs investment as This shareholders of the revenue that in Adjusted last was the We ended model, better the into was expect our have $X.X and to released lands discussed concise EBITDA March into and increase

XXXX. XX% In revenue we million to the period new recurring the in same before point $X.X first contract of a XXXX quarter X.X of March XXXX of total time to related million compared ended hardware by quarter million in X.X sales explained of won first million of in increased contracts. This $X.X decrease the earlier. the the decrease discussed As during value from primarily for won quarter XX% XX XXXX, is to

March expect recognize XX contract of total requires decrease is $X.X bring of previously we used. obligations or willingness than as subscription and we accommodate compared our remaining expanding focus of the continue we approximately pilot term on have XXXX. Also, typically of million to X% within to performance experience building value through and based in public our our contract obligations months. customers XX, which $XX.X XXXX, million, partially to we to performance in a This amount The this go-to-market as aim over in includes of XX% represents Europe decrease As short nature. $XX.X customers performance were December XX obligation This succeeding million related on our programs budget strategy. network, are constraints to whose relationships safety shorter to

we'll expand to KPIs As scale our see to contract, programs pilot to expect we improve. these continue and large convert

due partially extremely the summary, decrease future growth. cash XXXX. busy In company the XX, relationships, The primarily from as decrease are our on enhanced described a $XX.X sales to financial March million in above. as $X.X our our XXXX December our of The to we and loss was working we $X.X million, Moving net due growth build in down new in position in This existing cash Working cash increase for was was $XX as at partnerships. new condition down our XXXX. winning million was million primarily market on XX, as liquidity, XX cash client The prospects. offset about has million decrease of operations our XXXX decrease from March team capital to part cash deepening XX $XX.X been ones enthusiastic of forming cash from balance sales equivalents by was in and inflow December the of XXXX agreement. capital the

continue strong feel momentum We in market. our to a

decisions While of as our There term. this our the operating in call I will our to leverage increase over our the shareholders. and With on term in now value embedded long shareholder fully significant the significantly remain investment. will are Robert? margins to our and rapidly We is we model improve turn share now that, near that we will investments focused Robert. reap restrain making margin making business expect the creating benefits will benefit market to

while welcome. Traffic everyone Thank adding will of mobility lifetime transformation. company's briefly just highly and that the accelerates about exciting value and a of industry the tremendous Good that urban Rekor vision news STS. Services, combined for a communities beginning we I strategy Southern afternoon that serve. growth, our the undergo Solutions with shares Eyal. enabling recurring transportation high is first its addition regarding you, a speak is offers this STS morning STS The in to once revenue an entire issued company clients they

when remains have We potential perfect Rekor. always opportunistic acquisitions, and it for absolutely and STS is the fit an comes said company is to

departments engineering collection data pioneered in is company XXXX, contracts Traffic that trusted Systems Southern traffic specializing data transportation. is collection. leading Founded STS firm of a a in pay-for-data traffic with

footprint data provides the primarily for growth agencies traffic include study southeast. profiles. footprint centers existing key markets customer across in acquisitions design, Companies mobility government margin precisely impressive accelerator to STS. growth to and addition Rekor to In to solutions. geographic services planning, and to the engineering collection is the base aligned penetration, be United will market around the with opportunities across STS expanded exposed States like create traffic high A an urban traffic strong a that that our technology are with STS growth services increasing

moon date comes will our STS the this a conference to last known near future fall. know company special are you vision Waycare our set with We company the acquisitions. of many acquisition follows and formerly call discuss questions have for over as it and when to the absolutely a I in overall that acquisition

Now gears you allow about talk me to to QX. here and change

accomplish training platform from simultaneously investments models, identify recognize solutions we we Nobody to of and better quarter, but It the multiple advancement is draw and significant sources During create take new transform, ML algorithms extract that our algorithms to applications AI X better the algos We triangulate our sees insights for accelerate our other this and and information missions. customers. evolving IP. to constantly multiple our and data Rekor it patterns objects. better proprietary are our that made

as and takes Rekor stage a three safety, X intelligence urban Rekor company massive, public key comprehensive It to processes, in from in continuously constant learning knowledge a what put, that our of to insights, data. designed increases actions, we're and improve users. is Simply early the platform markets; management. in the powers new delivers that mobility technology form data is we products. feedback massive our is engine Rekor intelligence. our loop Our X transportation It's roadway and brain, apply serves recommendations an market.

infrastructure growth insights and rapid proof-of-concept specialized us mission us estate. advantages, We strategic through platform. trusted devices Our we relationships develop the different that go-to-market which our generate significant leads acquire We capabilities. We dynamic intelligent expand exponentially. poised the through intelligent that critical of And shows finally, a infrastructure and real our significant with to to analytics solutions advantage. at demonstrates have end a services and deliver have solutions, day and are that operating provided and help vertical market valuable

So to the operator, turn moderate to Q&A who the call I'd now our like will back session.

instructions] you.[Operator you. Thank Thank

B. First question. Zach Securities. Riley your with question state comes Cummins from Please

strategic Eyal taking given of STS sense acquisition, to into questions. just a sell and base. that customer Robert, good afternoon seems ability to make Hi, existing with starting the the thanks Rekor for for it off lot my Yes. Robert,

you under price. a more really just is for talk $XX more STS? little two then strategic the financing about that acquisition rationale of can bit mean, side, on part I the million question So And

So that sort give of around and you any we sense use fund of stock the the notes mix to us can cash acquisition?

Thanks. sure. Yes,

been installs, And, video systems, install you require industrial you'd [ph] technology their put if by to around pioneered and that to equipment keeping they roadside, we things acquisition. mid-XXs. on look too ago, DLT website, they've that things much includes, be not it sell Edge used, and longer on, behind the that the like needs loops look long replaced First has other their up Master no see ownership to which inductive they like that analytics. customers camera data STS contracts that where can the logic were installations the are since be of

we their video installing solar they've got as over permanent is sites, see sites. sites, well. by So the they've and collection additional can adding estate, all others XX,XXX thousands to those that as this camera customers, to got algorithms existing the power, And the real intelligence to get from we of and of maybe that analytics traffic some simple then

I this years So, coverage, of spent they've and concept. XX missions, miles. over thousand and XX,XXX building same hundred multiple lines square company, several aggregating system the mean, that's

always So, we've three pillars our business. said to

is which combination we're Edge which And a real technology, is forth. real estate, AI, of estate, first a then is and cellular, this of The right, management Rekor trusted through okay, third traffic have. tremendous engineering cloud, customers, machine STS is so their partner level the learning the giving are And to primarily processing, us that with expertise, a expertise they is bring and leg pleased expertise, DLTs.

same headed. and of were with makes is visions. and understanding So absolutely after, they the thrilled were companies was top that that a same They market this them of And, the of an and that seeing of list with the same the the acquisition we where engaging shared looking lot basically sense. meeting values, at, them

leverage, I record So, acquisition to just considerable of going here, think going that perspective, is STS Zach, we okay. tell time. that profitability And next our everything I, that's propel, to quite period can a the tremendous we're from well, by doing accelerate year, you a

excited I to been us that time, With transition to tell what through, So, combination, sell these forward cash it's to to out place. industry, let very leaders they to company the competitor, you pleased respect will the that to company agreements the easy their are we been the that's is smart infrastructure. again, right into of to And thinking understand the to they've for they've into the business technology their be decades. of stewards carry I they've people continue But industry space. better detail, into that acquisition, the ahead we're to very somebody those. I about built. they've respect stock, the curve been in generation definitive to because can't know get until will right forward there and of principles notes, mix seller it finalize to of the of decide bring release I and and just, going your mean, going think, be next right STS the are is going Right. future, And And a to sell the with

for just forces that it's great they've chosen So so us feel join a us. we to thing with fortunate it's

in on Rekor these going I sort you that's, contracts. can of actually to have of helpful. terms converting six And nine that's them any of Understood know, Robert, some the update, on on provide these months. of many X pilots, been now going

of there? update So just sort us curious, you can any give

running. a Well, some convert, month have. customers you're our are, the over that expansions larger we I some existing having we're maybe see think or I with success that of with you that the up place we've had next, going the a completed, and to we and just base of some two, customer and or of the are tell being implementations pilots every some of But that just will number smaller pilots

world a just, to all good. interesting static exciting. because, and infrastructure business a you're and is we're infrastructure think when exciting tunnels just it's the is think you this from about, it's talking stage roads of and when you're you're And amazing, top what when on it's transformational. very is about it But So really bridges moving not built and look, that And, just I and the a when time seeing that, it's digital whatnot.

got a just time this bunch of customers. is for of got And a great new happy we've customers. we happy So Rekor. bunch We've a think

for Rekor speak AWS that and mean, new question of can one? you AWS? could and expanding that potential partnership is the terms with for to you mean, in between the me how just adoption final And works what partnership Understood. I to related announced record

Yes, I call on think the us. David, with David's

David, are here? you So If want… you

hear you me? Sure. Yes. Can

Yes.

Yes, very good question.

have points market important into as AWS as there, as opportunities to is hit with up in order high the partnership strong multiple anybody What's to overall technology technical trigger just solution those distribution represents really bar front. for of gateway Amazon really into opportunities, distribution a of is on sales well well opportunities, gate The well you us. Network allowed a really as kind is So a activity. to the open as competence not that Partner large that very a as the

a into and the And expand admittance is selection organization, motivated milestone our sales a for into so the as very in very well very APM endorsement as the development, our with a opportunity market to into and theirs. important ours technology strong us

a distinction Amazon and customers different of is and other technology, that, credibility sector go-to-market The space Again, that sector, technology selected adoption and very for that for program automates motions buy public in sector sector, underpins big there's of of eases sector being from really the is even looking commercial public lot a another procurement side, for aspect the a and public on the also public process that. this a there's perspective, terms in us. of there's the sector to public for

summary, So for that really, it technology. a is say, I'd milestone in really

We camp, But continue part and are customers and will collected. channel. turn of on very for that solutions more and that have in that technology multiple exciting to more

us just of one underway clients. are David, and Virginia, the three in pilots thank introductions Chattanooga, with and those additional all were they made us you. continue that larger with work AWS, Winchester, I just by were Philadelphia that through AWS. reminded brought thing. to to The was Zach, all

luck taking Understood, that's the my of for thanks questions. quarter. of extremely for best And Well, rest helpful. the

Sure. Thank you.

you. Thank

Lake comes Please Schmidt ahead. with Jaeson from question go next Our Street.

for Hey, questions. guys, taking my thanks

us are growth to were you help their they $XX we growth guess think constrained be type could rate how I think were size on you'll release, all able they kind they under in Rekor in growing? Just revenue, but you're of just if do about expected should contribute And umbrella? of given the relatedly And that seeing. rate were about that STS, million questioning I you at up sort their rate growth know, mentioned think accelerate on? of you curious run the following on what to broader to

good a to that investment to family have brilliant when owned company years and is the and sights And data, the little I question. a ourselves own Rekor’s was that model, on and think bonding, to is it's Private we what the personal That's they decision to ago answer expand make made etcetera. which because systems you a bit guarantees their this, by yes. size the sell then it But given years a debt transition do model. at of scary, their the with installation with really

So, careful how, grew. were think being I regard very to they with they how

three the opposed decades, built answer they about, And to as install point certain value to further. constrained B, by grow in created, to probably the thinking and available business start to having thing the capital you of clearly the capital you were is second over when business So, going working what by you a systems. frankly, is securing yes, get a and deeper,

to them private their on going on question company rate with a for under lot So, that than owner. no because easier to as accelerate public take it growth it take is a that as there's a burden is Rekor’s it's us for ownership, to

and make helpful. that's follow mentioned sales then strategy, investment, know, your remarks Okay, as in continuing marketing, etcetera. up, to prepared just I And a implementing you

of QX think this throughout the about we should upon building level OpEx are year? a the kind So under

Others the there. some less growth I and said, growth little hire will bit other to say during quarter [Indiscernible] We'll continue growth. with and headcount more, know the some see than continue headcount But expand we they as grow a QX. significant. to our but year maybe Yes, that, we

guys. a Thanks helpful. that's lot, Okay,

Okay, thank you.

question Thanks. Northland Please Mike Instructions] comes from state Capital. your Our Latimore [Operator next question. with

you Hi, this is Could Mike do many some long of and have behalf how now? me contract Latimore. on Aditya you state miles local under tell governments

miles? square How many many square miles? How

right. that's Yes,

have answer I can but that our off I the number I'm question know of head, that not sure today. top don't we that don't I that

right. All

above well I other including includes are into things, certainly contracts you including five and it’s if figures. mean, pilots,

we All right, expect customers? federal right. the All start to to flowing could infrastructure bills And fine. when your

question. we're a this year. That's likely is What good QX hearing of

safety by I later lot QX. on think that industry, to more environmental of faster, equal everyone The a these other over side, same see of money flowing, is getting I flowing can sooner period the projects this public money analytic in and implemented that years. components But, lot expect XXXX, be And the of traffic we which timeframe QX, a the side, year is you'll is the QX in hard money in to doesn't lot is really and to starting a flow sense flow large quicker, not and that would multiyear it that stuff much I because think there'll and the on same infrastructure a require all it probably is our a into that's the study related lot of certain on news things. studies side, be requires. soft good the of, of instalments that that five because infrastructure, are require going think that things especially

I continue the coming that end money this going and to and into year So see by next guarantee amount then beyond. into year, of us, market, considerable will you're the of think

you. Thank fine. Alright,

you. Thank

turn There are remarks. closing I'll time. at floor you. questions this for no Thank to the further management back

time. today. look Well to forward for seeing our thanks the And your excited listen call. QX really thanks We're on conference everyone, we news you for, about

and here And it good expect looking excited we're we're come. markets I here we know I really glad things and times that it profitability these tough today that is going towards about just we to happen. was everyone believe propel because the expected. Rekor earlier to something acquisition on forward to we're are than to this And, but didn't focussed much is we're we think do

and Thank So soon. speaking we'll to it appreciate be you thanks, everybody and you.

can concludes All parties disconnect. This great conference. you. Thank Have today's a evening.