Rekor Systems (REKR) 14 Aug 232023 Q2 Earnings call transcript

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

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

You review contained description the the in of our with should filings a also risk annual factors and SEC. quarterly

results informational non-GAAP the call. information purposes only. Non-GAAP and the The of supplementary discussed useful operations presentation concerning data the also will provides company’s be for company provided on ongoing believes is

to Hen, presentation to of CFO the Systems. I want turn Mr. Eyal over Rekor

you for results XXXX. Thank discuss everyone. June the six for joining to XX, three-months ending us our Hi and

continuing by momentum would to I progress We you. share accelerated the and our are underscoring seen achievements we our excited recently. with have begin continuous to like revenue

but a becoming the management milestone journey command platform. This with of acquisition acquisition strategic of known trajectory only transportation in company growth the formerly not cornerstone marked Our of a the as us, XXXX. integrated, began for Waycare rapid was AI on seamlessly September significant our

as formerly Floris as Traffic and Services, Southern Building on has Rekor. record that of been milestone, in division June of integrated of known acquisition the STS, XXXX, we traffic closed company, the now services which the

AI-based the municipalities. of come, and second and introduction a Urban the Platform, of to recent was our class - breakthrough Discover late for Mobility transportation state to studies The Rekor delivering speed departments integration the approach

technologies execute and recognize the and this into growth achieve to and heart integrating by catalyst ability synergies All people, our of operation. on processes, our business them, swiftly drive expansion successfully underscores

to growth. are unprecedented this result highlight we pleased a As of an achievements, top line

expenses. that notable growth seamlessly over consecutive results is XX%. to achieve this able of quarterly above remarkable It we witnessed quarters our were quarter have while SSG&A quarter also We reducing

that even through development. also have be to future achieved integrated while in think investment prudent our and can It key is we mention significant this that make we research We continuing financially notable we to we demonstrated as acquisitions.

While in and revenue trajectory. our our as both we expansion upward are revenue an total seeing channels, non-current proportion is recurring our a on recurring revenue of

that will we as confident that tap are opportunities We abandoned persist, into this trend lie ahead. the

guidance As such, for earnings we are before. maintaining announced our as XXXX

about additional up momentum year. proportion overall Highlighting revenue for pleased same Now prior some and to are let’s three-months ending an stood period significant forward share we impressive we XX.X%, have details XXXX, that experienced, June the portfolio other from for in QX. talk in tangible the the revenue XX, our growth XX.X% the the recurring of

at sustained and first in in was figures trajectory frame upward strength the enduring on successful registering This toward concentrate XXXX, recurring us half to underscore compared over XXXX. These to of path the XX.X% execution XX.X% during our the stability. putting strategy time of revenue, generating the same

half first include period of XXXX that in achieved from is It year. XXXX, is million accrued last of million professional reduction down Our fiscal noting systems. used $XX.X operation deployment XXXX we same $XX.X payable payments the fees the cash discipline from further our in worth highlighted accounts new figures for commendable for where to one-time and

efficient our commitment for cash over $XX.X we to scale. was expenditure six-months this, bit million QX as for of just XXXX. management first This approximately for position our and a showcases million actual financial Recor for Adjusting $X.X and growth

in period we several I Due achieved key XXXX. same XXXX, consensus and a of XXXX million period trends to during the expectations million our from revenue, surge $X.X other recent the metrics. Turning the recorded will this cover to your $X.X all ending remarkable and in attention suppressing financial promising revenue, XX, developments, for in a metrics XXX.X% showcasing robust June

Our the revenues, first up period six-months of XXXX of same $X.X totaled XXXX. in the $XX.X XXX% million, from million

mentioned quarters since the acquisitions included, our of earlier, to in revenues have quarter-over-quarter. recent grow XX% continued all demonstrated been our by organically As as of than the more of revenue operations increases have fully

Turning to adjusted gross margins.

by second seen XXXX of automation second and XXXX. performance category, technology process quarter XX.X% in been of new the to years We enabling this costs margins. also to have in and improvements bolster advancements the XX.X% optimize has quarter in remarkable up from for fueled This of controls, us valuable the

a reduction operating our $XX.X as million expenses, we to quarter result XXXX in million in XXXX. of $XX.X and have Operating quarter second improved of second in loss from decreased SG&A of the margins our losses, successfully the

Furthermore, we saw as even the corresponding a reduction $XX.X STS the complete in down intently first from worked to of million XXXX XXXX the in the integration period of acquisition. $XX.X million half to

of significant second the sense a period from quarter at same of XX% for the million, $X.X improvement in over $XX year. million the the loss EBITDA XXXX, last Adjusted

by the year. million, For XXXX, period EBITDA the of six-months down XX.X% the from last XX.X first same $XX.X to loss reduced million in

we from We roughly top line our quarter-to-quarter continue manage approximately operating to improvement XXXX or QX a prudently. was $X.X XX%. anticipate this The to continue and grow trend reduction million expenses as our

payable associated management moved and linked deployment to borrowingXx inventory services. asset we have professional systems and forward, As expenses we are

continue that financial allocating operating maintain We objective to a expenses strategically drive the review to revenue of discipline the metrics best areas each our to with and opportunities on acceleration. resources provide of diligently approach

performance providing trajectory, To we a been enrich into our provide more granular upward key indicators. insight have

Our powers to contract not our to the enduring but you brings in only appreciate assess performance goal value contracts, empower our commitments. new this to obtaining is to

at over XXXX, quarter quarter second of in of the value In the total secured million contract X.X contracts $XX.X XXXX. million of we the worth XXX% increase same

value in ended the the contract June total contracts XXX% same secured XXXX. the of through XXXX, period $X million we at of Additionally, six-months XXth, million worth over increase $XX.X

obligations stood residual We or contract will approximately of December of the June realized of million notable jump coming XX% as obligation Finally, $XX.X be XXXX June in a as million, performance of $XX.X XX-months. that our million $XX.X with when of the project compared XX, at XXXX, XX, XX% XX, remaining performance as XXXX.

our of secure financial liquidity. Berman Robert January, participation other and to up closing notes the existing from million and conditions the senior our amount aggregated of investors. in by CEO Moving completed In we $XX led to with new

funded in XXXX. $XX.X At March, closing, million was

This We transaction for we us our needed also continue the completed $XX registered strategy. and direct million. a to gave liquidity execute offering

$X.X an a cash approximately cash Our balance June exercised warrants, from increase million of December XX, which resulted of holder on million. was $X.X his In million, July, $XX proceeds as XXXX warrant XX, XXXX.

position Our working has capital also improved significantly.

a equivalence June capital an a of deficit XXXX. cash As we XX, due cash as receivable. XXXX, The in of in working improvement working million $X.X to increase December and of $X.X capital as primarily million of and XX, compared had was to accounts deficit

are give In long-term strong guidance upward our confidence the generation. to and from results us continues in value trajectory, strategic synergistic shareholder to This continuing our growth summary, we pleased forward-looking and and to efficiencies see moves. and synergy commitment impacts and operational company’s

now David. With turn David. the to over that, call will I

today. Good everyone afternoon the on to Eyal. us Thanks call joining

with and growth of covered the solid business revenue lines. all Eyal across financial execution QX As another represented metrics, quarter

to national customers. by the for public significant the significant that delivering value private margin media gains are accompanied and new breakthrough technology and partnerships network, was we improvements, coverage This to deployments, unique product new news and key Rekor partner operational contributing on efficiency

high for All achieved of this contributes watermark in total a QX, million to and Rekor. margin in new XX.X improvements record our contract value

In product the quarter, we and and have customers of expanded licensing, including our lines, public safety gained existing and urban management. with mobility contracts all new transportation across customers

For adoption vehicle contract agencies Illinois, OEM for recognition QX for public law licensing and insights AI reseller and efforts based Oklahoma our safety more. our highlights increase direct include a in California, and Florida, in leading Jersey, New licensing, the enforcement and partners, channels, expansion some sales through and significant across

Given cities increasingly and that scout depend critical support vehicle provides platform, reduce continues real-time all to state vehicle, officers be serve. that the and as communities crime to of leading AI-based involved they local, proven work in federal crime which law they a on solution recognition, to mission enforcement agencies XX% a our

the for received and New played York aiding public that indispensable drug to QX the in role County and crack investigation. a our trafficking technology example Rekor One in Business was coverage news Fox weapons for Westchester very in AI national major

addition in our our sales to the value-added and further moving In will multiple expanded forward. efforts direct quarter, that also reseller go-to-market activities added w accelerate relationships

XX of South to additional product platform’s short initial permanent In assessment. line. of speed Transportation U.S., Mobility continue expanded term we deployment Florida and significant Carolina, class, the QX, and in our our and Discover well deployments interest, and gears that Departments are as as for in applications of and stages engagement see Georgia Switching states across count, across studies to Urban

across state investments. work we fund also to In their our gaining vehicle the speed leading addition featured and in are prove stations federal multiple important was count dollars back footprint edge local recover and classification, QX, to in to television and highlighting doing and to Carolina, states that use Florida states South infrastructure Georgia, help to news Rekor to

heads on For we significantly our outperform believe line, the product and other full approaches and continues are market. Mobility mode technology currently down here the all in to Urban execution

volumes up multiple vehicle Departments our able platform traffic night to cost periods dig having and real day addition all weather, does across fraction at Discover or in to of a kinds XX the being In high specialized to and for lanes this long in highway of to and capture without all time at block at uniquely having roadway. of speeds Transportation the all classes of

and of is way. workers from for harms putting Our using road side down lanes construction, roadway AI without implemented non-intrusive and or the solution in shutting is the

In businesses, we proven Discover unlock using has unprecedented out that have for better to building them based this serve proving attract, We addition, Discover customers. and application and commercial Insight. quarter, and call growth AI been enabling newly over Vehicle past the launched customer solution a engage to their brick-and-mortar insights technology, the same

edge immersion near Vehicle goes drives application. the data in the part as customer into a Intelligence, moment unmatched right By with Insight of fusing AI a to Insight our property Vehicle expertise and a new journey the Roadway onto end-to-end from unparalleled cutting businesses customer application provide our beyond

and demand, state for statistics access to characteristics analytics, plan flow provides to patterns, premier Companies and helping services customer facilitate set and of marketing geo-based vehicle to vehicle visitation data-driven assist EV vehicle initiatives. metrics as the vehicle, EV loyalty patterns electric plus delivering analysis that of and can in volumes understand, efforts, and and including on origin support volume with programs, rich traffic customer better of services access that such fluctuations, organizations help capabilities the prepare of a features

more, our bricks and customer and Insight From resorts they in and malls real customers’ businesses and into can major application better mortar restaurants, parks, shopping insight growth. gets shape Vehicle desires so to hotels, outlets theme drive the time retail casinos, needs experience real and

Transportation Turning our In delivering our the we innovations new third our to same line with while attention the presence expand Management. platform, also our into time command product and footprint at QX continue market.

QX across the the state, we our recent on Transportation, their States. Building largest the in backbone the being traffic the at of in which with are by where is Texas system entire deployed way, new roadway Department network United win management

Well the as Regional including our contract QX, CTRMA expansion districts into Texas, management. relationship multiple known we in for into Mobility otherwise Authority, and incident across extended other our Texas Central new

across our of based ability our Rekor agencies smarter, and This a work Rekor single on new multi-year enables as single and equitable service to CTRMA of they contract glass technologies. and and with pane source more our safer, network partner multiple with build to solidifies greener, truth Texas roads further a

In of to for and academic area traffic, most public-private international that final data analytics, engineering. scale. some of an we forged have in areas is One on the transportation, and highlight QX the and partnership infrastructure institutions with the prominent U.S. the

and Aviv this or Business Along for this to on to Analytics, laboratory LAMBDA front. domain, come Learning, look with line, specifically our and University, this more AI, announce we to updates continued Much in with short. providing pleased for I collaboration machine are forward Data distinguished Tel our

in to full want I The conclusion, confidence talented are and unwavering ceaseless their journey. driving team our bright partners our for for their we In it trust, is dedication, thank our for speed. future and our shareholders their

the Rekor to remarks. Chairman of I point, call Robert our will turn CEO Robert. Berman, over this for final and At

Thank you, afternoon, David. everyone. Good

my the we extend to foremost, accomplishments and moment to have dedicated team. want First today our I take to this heartfelt spreadsheet. just aren’t discussed numbers The gratitude on

the family, vision our driving single is span dedication, Their of are short financial the and while tireless hard growth feat. our testament drive It and the innovation, effort, of hours relentless of such Rekor revenue a countless laudable. to shared of achievements result within work significant small is and indeed every member no

our to I of commitment, Rekor. strategic these want emphasize team’s that only the value two and This the but truly adaptability our assimilation of and acquisitions. we new particularly seamless acquire, integration incorporate into entities ensuring not ability showcases

is We have a category intelligence roadway of we at it and proud and team’s are This is ventured that the innovative AI category it our perceive, our pioneered entirely analyze, And data. a an at is to intelligence. and in industry. in to spirit isn’t dominance roadway positions This a niche, just way Rekor we testament the lead. beyond have new utilize a us revolution AI forefront roadway

two the we meeting The School Engineering additions Mr. and Dean the are Operating and President, Head two for upcoming Arcus at and that and CEO have Davenport, news, Professor, directors more election Sanjay of Hence Mechanical share to MIT, Business; good Global. at Chief Officer Asia for of Tim fall. nominated shareholder Compliance new new this I’m Sharma, of pleased Chief

Professor urban financial will and a financial in the at leader vast mobility, brings Internet helped has long a and Auto Davenport pioneer invaluable a Mr. and also insight MIT the financial ID Center to operational in who recognized co-founder the a of shape to develop keen things. be expertise of helping wealth thought Rekor of board. His Sarma as been strategies. as

my express our shareholders. gratitude to to want I closing, In deep

have of achievements foundation our been and support, vision the belief Together. in trust, our Your

We the we are are just not future, it. navigating shaping

open may have, to the hesitate I for to please like so floor questions Now, would any you don’t ask.

address eager provide may or inquiries here concerns to Operator. We are to transparency you clarity, are and we and any have.

first Markets. with Northland Our comes question from Michael Capital Lana

safety value kind of sort say urban it and of there how mobility fair of you first, the out is laid given? contributor In the drivers to public total one terms contract transportation is here. third second the that was That

I’m I going - for Eyal think to you. Mike, answer should that

is It contributed say, the then to said it would this was not services I quite profit management order licensing and the all and significant DCV. you that urban values mobility right.

here, just want on mobility be then the I urban And opportunity to clear.

say you and sounds you So is in Florida it Carolina to have contracts it - fair have Georgia. South like

official contracts just there do production. So you wanted to for clarify that have

Yes. Yes, that is right.

right. are you Yes,

We the mentioned. state that have you official contracts with

or hardware kind the and Are of the type of of payments some them there, maintenance? the then be model, fully pay by recurring would

It is combination of a both, Mike.

And trials have then sounds so XX, is you basically on, right? going like state XX that other

with States almost resources our them Mike, the to controller states forth. try so traffic working an air doing and the up and like we would. in everything that timing to we can are and now, half right based United are line on Based on we

is but and in we interested that. we the are as now We out, revenue the looking where margin for things focused are everybody best with sort can, right states technology. the as will is and we work And this

is important thing. most And that the

product that of is adoption. we started. contract it significant total ago Urban long is that said, the the And Eyal is we thought and I this majority starting. It and additional think just in introduced just not Mobility, value,

I one, those make think dates that kind interest, end? how guess, just in by of rollout decision do commercial Last terms on your of a you a led many might

that? mean, I sense do David, you a of think, have I

almost move have those three forward. expect would to I end, year the decision made, to At quarters of

Our next with Riley B. question comes Please from Zach with Securities. your Cummins proceed question.

get sense give opportunities South Mobility some are of have within a the you trying Florida, Carolina that sense just maybe size the some maybe I and you pipeline? pretty a substantial the looking in at the size just you of but to of contracts that can Robert, the pipeline. of Urban of us opportunities know

XXX substantial that question, what get XXXX think sorting Zach, you you look plus those of of out, is over XXXX would it value And a of when are but good are. contract and at very they percent, still we all when I increase a are you sense opportunities. total

spend And funding that government. states is eight to lot technology the replacing simply data their from and technology is get seven, of this just around been So legacy decades. for a the federal new collect is introduced this that money

are So they all are They figure very all are seven, all contracts. large, eight, Zach. large. They nine

just are getting going. we So,

our our are So getting legs. sea we just footing and

So to We now. right about see think but I hesitant coming, I’m lung happening. excited it, it. will we are is numbers, but see coming. I and in It that we is it is it say It

competitors other with terms seeing Mobility Urban opportunity? are In landscape, overall these I front, of all that And the or technologies is it new legacy just or approaches you Robert, segment, mean, in emerging Rekor displacing that within this essentially this

answer to states to to reasons is I’m unequivocally the this the ask going have technology David legacy Rekor the going half other legacy that that had question, I’m data. the for half. answer and displacing to absolutely collect

Okay.

Where do we converge, And is because let world. to it is I’m of to a David things has that, going future and much that are headed in where Internet with things. answer the the different

take you David, can there. maybe, So it from

is you footprint that into multiple different footprint What services. when Zack, value-added look is a at interesting, extends

we when road legacy and to about, a be So is don’t on from you the really now think, think replacement available, tube for absolutely, way I knowing AI road that are across going sure. goes state seeing. that a the is is TACIAP, what of

deal. that tube? But in things addition emissions, is big couldn’t. with And coming for would do how that You down gas the path about when legislation the road that you like greenhouse you think to really new a

different to we market actually quite and is extensible. And so, the way go

count with pause answering there services value-added there with class Once have I to you I’m speed. are for device already your out sure that the into in, and you same in, going to second, once in, exact so Zach, I’m same are you to and you a the footprint, doing exact multiple want the we expand are able fundamental are question. make

growth but like covers opportunities and we in upon I get you should to adjacent lot Eyal it think cash, maybe sounds to is we and final ending of and did go of proceeds proceeds three in question, under great mean, into more the half continue as exercises my necessary think XXXX completely how your XXXX? And think execute about from million that I just into quarter, I geared towards second a July. there areas. plans, the

Yes.

have we additional cash mentioned, back As us ability look July reducing lot burn and And the for of are further But the closing burn I will to into reduced in take help XXXX. funds a it opportunities. our our the - significantly cash and and then, us GAAP other as mentioned, I significantly. we we

So this will is that take cash July raise long way. us in

Yes.

I add said. Zach, to think, I just want Al what to

and I and the margin, margin. out have the chasing resources think, are our with okay, we revenue all And look, revenue right. managing people we got there

same resources. So make right. we it right. much limited to everywhere facility be implement inefficient, sense. It its Because very we is equity a to debt systems, with The can’t focused time, able at doesn’t be have doing company is acquiring the do because on

I what And as do we to close to And the year, be with profitability on. is we this and debt, gap working Zach. hope are here that think and that come with, is coming, we later towards it able

are we cognizant So that. of very

much And dollars life much I today. ability given cash our with the extend the reduction think shorter burn that, us longer to of has

are and getting there. revenue day, closer the and because every closer So we margins are the

Michael with comes Northland Markets. Latimore question next from Capital Our

you have deploy very I on of new guess contracts? the looks Florida, South deployed? like And generally, those growth ability and Georgia to deals, to are curve resources So it about then How a feeling I major are what strong have you Carolina, mean, going and here. percent your been

completely you for models, to is data. have as pay Mike, we So, right? earlier, two alluded One

we and hardware where The other pay right. is combination cash, of revenue acquisition for are now where with a focused and is data. can And get we margin

pay be would for data. that So hardware

just extend footprint. tip percentage. the small ourselves states percentage, we with this touch can where we is the few large to small very regard to even So opportunity a trying iceberg very in We to of begin our how within barely are

convert. David as suggested, right the three going and half probably said got we country mean, have technology earlier, And them at this to I as you now, quarters looking of

when will right. to can, we them We get

best with That just we technology, our are right. deploy trying like we as all So is deploy, can until to way we resources manage we new we efficiently. the any through the can have capital

-- You right. the out, got figure to you deployment can’t capital

what that good, So, is out. is the good news adopted. the technology And are are we there, is demand is being figure to margins the trying the

We go the provide right more we much to demand do resources it. ability the now, have to do and

it just out question all is figuring So getting and a of there.

sort Is day there per of like, a deploy or number what run rate? the could current is you

resources depending this, Well, maybe state David, margin but to revenue are around depending from and can again, shifting we state, right. on state answer from to is, where you on, state,

you So, David, can help here?

radius day, we you a resources, getting have everything jumping are somewhere a are on trucks five where When a story. little a are and between of is from within local looking Yes. to mile It there. go XX if and different flight meaning hundred mean, anywhere depending at over on you to we bucket distances I

our the east say southeast coast. process it But I ground, in The located is and very majority efficient of a once things east, are for getting boots crews would on the installed. our

we as as be roll West well. So to expand coast, we looking will

what that the, that has news we component, we’d Mike, love think, great that margins data I revenue what good for the do all, model, margins think all is pay a the of I recurring on and is right. the

on so software software just there a hardware is as So component, well. the maintenance the margins

are margins. You know, they very high

to do way. it are we either So happy

a starting is of grow. you balancing And small, resources. it you When are fledgling, to are question

good demand the there. the news - adoption just is is is the there, are We getting more

know. are to can. as It problem, best is it you high class we we figure out trying So a

further turn Robert floor are to to would time. back now at questions over I like no There this Berman for the comments. closing

you, Thank Operator.

think questions, out relatively tremendous in didn’t questions. are short you Company’s ask made there when period a those you into there government, look, thank especially a lot listening Zach, when know but of Mike, of progress introduction right. for people time I with you about this So, new the of technology that is dealing

we the is, toughest what but not news adoption we is It period. working. to results, have made there, think see the easy the we good the the it are is technology doing, But is through do I

team, a got to through great is have got it and have ready We have are the company we leadership, we think I of this races the to I the difficult getting great most now, off catapult. period just we made mean, and last few years.

for Thank So, continued support your thanks everybody and interest. you.

This concludes today’s conference.

may lines Thank you this for time. You your participation. your at disconnect