Rekor Systems (REKR) 14 Nov 232023 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to today's Rekor Systems, Inc. Conference Call. My name is John, and I'll 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. known which from a releases, you revenues, involve statements. made may by position, construed results conditions, results and remind differ call performance the markets, materially cause as expressed to other statements products future any concerning of product want that future uncertainties may or in statements conference such risks, of economic statements events I that and be partnerships operations, are actual unknown prediction statements.Such and those implied forward-looking or can and other factors, to financial refer We ask that in the you to earnings our release. disclaimers full

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

for months joining X results the our for us discuss to and Thanks XXXX. September X XX, ending everyone. Hi,

have sharing We times significant we compound X roadway rate made CAGR. I slides past are or share our progress technology when included constrained by continued resources.We growth challenges a annual successfully technology you. intelligence with would revenue, since we Rekor's has years happy X in our XXX% integrated in delivered Rekor This like the has off start by you tracking our acquisitions. investments multiple and have been I that limited progress demonstrate think to the really with that to X made.Over been have

and other the well gained foothold technology in are X companies. as industry.The compares leader next time, a top AI we transportation quickly During the within becoming this slide recognized significant market

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while other companies. on have a intelligent sense right, of give less tech AI the this see can judiciously you these the other that revenue we we and our would equity of QX with progress mind, all the shareholders.With you like dilute much We continued seen existing in that of to than use also As discuss rapid did X during the achievements good last I equity momentum being made not to and we've mindful use overly months. and the

period pleased It's financially quarter-over-quarter the while of a line As quarter of last our make and and adopting noteworthy increased to $XX.X expenses.Over revenue X.X%. than for our we for million to the that $XX.X continued from of for accounts achieved XXXX second and include top quarter states, investments professional about the result demonstrated reduction progress, other operations $X.X in future to for mention of that can the the the year payable million, to a the details have be are share important year, same cash I over a in in higher our also yields growth $XX.X last payments we It's In momentum all XX, first million while same tangible increase significant significant year.And continuing significant as revenue in we period let's across discussed, an of of third more accomplished had like acquisitions. of third is talk mainly results we X accrued down research that prudent XX.X% just through integrate XXXX growth continued was the to our SG&A systems. months higher to we last XXXX consecutive reduce a our to point commercial our quarter and for significant some experienced XXXX, to which Highlighting with of we for out same for than unprecedented also growth million new September achieved organic and the this the we applications. even X.X% XXXX, announce XXXX, onetime about XXXX million, ended we we of customers and with million.Our this, XX.X% the QX. municipalities fees months period increase and X revenue we're $X.X technology that also forward would pleased additional more in development.Now $XX.X deployment XXXX.Total

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above XXXX XX.X% first of of for the QX months our during the in $XX.X period the also million quarter-over-quarter, X.X% was XXXX. million, totaled We XXXX.Revenue X $XX.X growth same continued up from which

bolster expenses, improved advancement grown full quarter has over quarter XXXX. a of even XXXX. in in million period earlier, an the of reduction enabling year. $XX.X and of from SG&A intently improvement in worked to automation first of quarter same $X.X adjusted to loss remarkable XX.X% and complete process the our decreased third the also our of XXXX XX% all show a operating XXXX, recent performance for margins, gross us we included.We've $X.X of corresponding quarter in $XX.X of the adjusted quarter XXXX $XX.X -- from from EBITDA revenue the improvement Due both in $XX.X for has the operations STS the to third down million of and last acquisitions in million loss. from acquisition.Adjusted controls, seen at Furthermore, organically third on As as to we period margin last fueled and cost the successfully EBITDA optimize the up since X mentioned technology to stands third million, to our the XXXX, million reduction margin impairment use the in months margins.Operating goodwill been in integration XXXX have the XX.X% This by not third including of our been the million, the

payable the quarters, million to $X.X roughly to as into same manage of deployment system grow first we X.X%. of maintain XXXX, professional improvements top QX and we associated months For from We We'll financial to X linked management, to assets on was review expenses EBITDA resources reduced operating last XXXX a each previous a indicators services. approach or inventory and that have trend expenses adjusted million XX.X% strategically insight the more metrics to diligently granular down the our best to opportunities the borrowed and our line upward allocate anticipate to from trajectory. approximately this to onetime in key disciplined our operating continue provide expenses year.Quarter-to-quarter performance million, and $XX.X been we prudently.As by in provide drive loss to revenue continue $XX.X areas period continue acceleration.We've reached and reduction our providing

the period total mix quarter value to and and for sold. result these our This in is you contracts commitment.In third XXXX, of the our ability percentage to enduring last obtain we of a was our new performance year. recurring Our the shareholders contracts services different appreciate decrease from assess was goal bring from the to to to products XX.X%, revenue revenue a same XX.X% during empower

same point-in-time products sales we As generally between revenue September on revenue.Recurring for vary may of XX% XXXX, have before, $X.X In mix last XX% from and we million, of X we decrease produce third XX% over recurring quarter XX, of contract in stated anticipate XXXX. quarter the value $X.X to the accounted the of of small provide same million executed XX% A revenue that contracts XXXX, period months the a XX% increase and based total to revenue. recurring which that total for the year. in revenues, those ended services worth the

secured to will liquidity we January, of closing, September $XX XX, in XXXX.Finally, executing XXXX the as with $XX.X offering and $X.X we obligations X million, for from registered XXX% transaction of performance value same the new of through worth total gave of the our existing our our months.Moving contract the the $XX.X completed up in the to $XX of led XX, months XXXX, a us XXXX, completed million, This $XX.X approximately XX% the as as our of million. million XX, $X.X XX secured at or notes million, we In compared remaining December funded.In be projected a obligation Berman, prominent other million continue period September million senior investors. increase XX, realized jump direct contracts and a We September XXXX, over Additionally, with by coming Robert performance participation million stood strategy. to XXXX. March also aggregate of remaining CEO, $XX.X XX% financial of amount At was liquidity. of in the closing condition ended

cash approximately warrant has as million, exercise increased capital significantly. million working of July, December XXXX, increase In $X.X of Our holder XX, balance cash in XX, in was from resulting proceeds.Our position September also an $X a XXXX. $XX warrants, million

to and we improvement increased as cash was continued solid see a to due summary, impacts XXXX, of to results had in synergistic and capital December acquisitions. The we're deficit capital XX, efforts September of receivable.In XX, working accounts strategic technology working and million from pleased As compared XXXX. $X.X development a million equivalents $X of and primarily of our cash

quarter the confidence the efficiencies that, for shareholder to over us year. David? to a long-term We and generation.With have also growth commitment expect value strong full David. will our beat upward turn to the or current now I to met trajectory, estimates This operational give call continues and in and fourth

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deepened expand for make the agencies to transportation as period performance management believe best another our across strength continued and growth and the company, the substantial the our customer product summary, our on same and as yet its solid marked traditional and connect for aggressively been them segment and quarter this a Marketplace procurement with of to in of of intelligence positioned third expand look told by Amazon, each and we've also customer innovate is have multiple continue scale At the to come counties growth and our scalability partnership states, the to dots markets and growth.In both partners technology, and progress clients. across ahead, team, quarter, our this in processes. they and AWS are customer government for has well the innovations across and to quarter timeliness time, complexities size relationships we we and each products this the services and immediate this often each to systems speed, with technology deployment range of announced of wisely with we market time engine.Designing designed of and relationship adoption time in even access have to any and adopt available our shorten accelerate much will optimizes that solutions.Overall, almost public and at investments ensures and To and customers and and manage Rekor now By accessible and Command in channel with new expand our intelligence platform state for and for Rekor we municipalities Rekor technology measure, roadway continuous reuse sharing with in simpler scale procurement.This for to and struggle roadway position demand in levels past. are they this aid co-selling making government through arcane systems integrate We segment, profitability our in segment. easier the product its the than in encouraged all to made sector states.As us way, modularly stronger any we is usage and this and enable collaboration segment a help our at seamlessly between our

we our believe recognize that and and the upheavals will mission into and our opportunity ahead.In exceptional vision and relentless us propel execution to significant growth immune focus continue financial continuous that momentum to I closing, our and geopolitical build market, grandchildren not and things durable, matters are against our to have while We the and something are the in something want world, and to further hard tell not about.Such something important, we're can vision to our in that U.S. customers around we be resolute something easy. meant here are working and faced to

for sacrifices, remain final Thank fortunate I our incredibly what CEO to I'll the to Chairman Berman, and and you, world trust, remarks their call a to around And encouragement group this who for continued our to your turn Rekor time for Rekor. employees today, and are our look have builds of the keeping point, business We for and is spending over you on grateful support. ever and dedicated shared and progress.At us to and our up-to-date vision Rekor of with Robert? for Robert customers dedication passion shareholders, continued our Q&A. forward you we

Thank underscore everyone. and in XXXX to revenue in STS comparison with roadway demonstrates million. our at annual you, industry XXXX, Eyal solidified noncore asset our in intelligence.Our growth the and last This reduction same revenue roadway which acquisitions. despite the presented particularly David. presence as key I'd and times resources.We've fact last of XXXX, the gross then, $X.X organic. million August of resulted of of the of rate. AI limited months company of of quarter brought Since of over fourth and am climb.I revenue XX of that $XX line top growth acquisition continues revenue, and the to our to leaders growth June ability combined a CAGR we've entirely the proud has approximately experienced of in the has sale Waycare his our is companies and experienced tech in through periods And Good enhanced a and Rekor compounded time, completed market afternoon, challenging earlier constantly intelligence also XXXX, what like began emerge we tracking our XXX% successfully sustain our technology slides.Since thought

shared prudently and and between be the per comparable using maximizing that we transact quickly allowing been peers our as don't scales to be products We a most the to problems, mindful than to with We're these in we the states or more have investment with direct position the breakeven our you the to weeks.In of much As beating advance allowed seize. need we'll the equity, strategic your we'll or more of another east more reach This about we meeting we've is organic to expect in companies.As a presence top and seeing trust, work dilution going this address our iceberg. this Rekor again value continued in more of I tip fourth growth record company as see equity our where estimates in achieved of related What closing, puts moves for share is the the belief to year has is differentiated and of debt technological David QX grows adoption was opportunity execution to my will more of as you revenue but challenge. addition, yet and and reflected continues revenue want often many people and say challenges the to its opportunities and is efficient, other sensors to are of from continue just request technology able while growth, the directly seen have the equity remarkable steadily, heavy IoT this to this the in scale roadside the Thanks gratitude us quarter work funding as to avoid to sector. to XXXX, the installations Eyal grow capital the no approach and towards of company XXXX.As that have quarter, of the current QX our this doubled line.Driving our ability to nationwide. to support outlined, mechanisms shareholders, its and these is to preserving as just footprint for team, coming our we're And west, to than of swiftly vision. our growth entire as us deep strength possible.In the company's to getting lead that in us manage technology, comparisons the express avoiding have going. milestones earlier.As shareholder in

have, the eager we're I'd here you any shaping to inquiries have. and not of hesitate the or And to may You've floor you achievements. like address we transparency and to provide concerns open any just we're for future, ask. navigating it.Now questions been together, Operator? may and don't We're clarity, the foundation please our are to

question [Operator Mike Instructions] Markets. comes the And Capital from Latimore first the line of Northland with

Congrats on organic here. the strong growth

remarks, don't more mentioned You the urban give was of quarter? I a in over half if can the strength quantification, you but it know in under little half in mobility. prepared bookings

the was percentage, nationwide. the but know percentage in I is to our sensors rolling be And quarter large IoT directly it out bookings don't I with and a focus that's and where respect Mike, speak fourth will I of to to continue that referenced can these what quarter. in the the

there? I all How kind mobility growth business do to fourth look quarter? X one planned the you the kind pronounced? see sequential more you of do as fourth of quarter, the driving think Or yes, segments about the drivers And more Is urban of kind is in pronounced?

infrastructure these will great I The ability profitable, what's that think urban if road as management.So, grow. over because is So, pieces. And in to a across which get will started mobility of the digital country, necessary, concept think across state in very the we contracts, and believe system layer way. where lead and way, public safety states and existing do it pulls I that that about and lead our we building, our team requires the the to our that's other right? you continue think transportation licensing will we the mobility of the revenue, long-term recurring pulls notes, business business,

together scale continue and of mobility, public will they behind.There point a Urban far will down will that's scale. So, a licensing how traffic secret I management way scale. lead think of a catch would scale. everything up that's all where comes because the road we're percentage say mobility a race, to understandable not may that's to horse the of probably like and and be years our safety urban that kind is Traffic the sauce I of management couple doing. what and And starts

it David, right regard? that's any a now. in thoughts at that looking have So, of way I that you good do think

you than Robert. more nothing said there, No,

I think you captured it well.

urban you how the do -- on to day? day? many many side site have per many, You per enough can deployments do of certain amounts how mobility things, deploy resource you know, And Great. how deployments or

take do that? you to David, want

concrete, process multistage day have you it's all it wait that, -- crews like cetera. for the to are a set, to after There's X a if you That's X operating. But this it et Yes. pour typical. pretty efficiently to you can pretty do

we for And be most have crews, crew, would so. for That right?

like roadway. or of Yes, crew, segment per crew. Yes, per That'd region be. per

X, go X, X on. They in Yes. system hours you can a put

And X have many crews? X crew, many to do per in? how you crews For how

now? David, right

and a -- building X staff. --

X four-and-a-half. So, between call -- -- it

now, add is, pretty and which just it's that takes labor is the stamp to it to the Mike, that's it much is, Once I want labor to repeat address process and out this there. that.

technicians towers cell field XG You can that or companies think installed and things have others. about like

that's which presence, a we the have transact labor states working of the we're it's business has, pretty where I well we've and required.So, can of really the mentioned So earlier no is that but got nature an challenge that in opportunity to that. expandable. lot And why is had that's Rekor solve

adding means what that's about. which really So, I crews. mean, that's all

Well, congrats again. Great.

Securities. B. the from Cummins And the Zach question Riley next comes line of with

seems the implementations? How And then additional second of weather just you an many do commercial is just move project get part now. states question to you're really in delays XX the in Was you it deployment more to a pilot United with in those of the ask I of as more with a year-end? I us give around of like expect towards forward kind terms States. mean, you mentioned onetime update? Southeastern you that of delay wanted it can

you why don't David, take that.

sure. Yes,

get there's it's afterwards. cleanup So, event, weather to itself, weather. preparation that the in out a And deployments if it's then the weather inability the weather it's the there on concerns, not for the just with

the So, heavy make of the all can't stuff. -- there.Second we down things It's all, rain, the an that it's put rain event impact. do threat close even of can crews out of the nature the it's the that itself, the really it's not work you in event of some because

you in dangerous don't kind out like send of that. crews weather the so, And

So, hurricane dealt the it's episodic we and certainly southeast. that the it's something in in season or episodic with,

now. back with in And the you are in to race so, we're partially, scheduling different as about becomes come the a existing moving our schedule deployments doing that right additional that have southeast westward work we'll XX, crews trying to questions.In right? these and it's if just them of we're now. So, terms condition, across And stages the right really

those to are have for right crew are we'll and well well. the X so, our process continue look progressing as we we members add as as to schedule can in as westward. that expand we And footprint rest quickly And now, as

financing like here the debt implement Robert, for It final at that you know, of seems is track mentioned some question deployments are then real to some pursuing about really fast just factor a thinking have gating of I How me. crews quick potentially pretty And you've of do that and options? pace. ability the Understood. to some these this. sort

appointments? really solutions thinking how of about these curious So, track potential I'm of just you're to fast some

Zach. Good question,

most news a the that do debt, here, we've credit, just systems. approach the repeated and if as stamped breakeven efficient about for contracts, the you it creating profitable. on of that think with able being good fund these been regard to will will Rekor months systems.The can be and of structure that with stayed to long-term those the the So, with working we good to need is counterparty, capital highly be for majority And way implementation is

that's more about problem have but we answer think that an So, that And -- to of these that that an lot guarantees, to no problem, we're way then And company's efficient we growth. we to and hoping been most we we a to solved. we have talk be fund able we've today, is just terribly the the this if accelerant we with have that's which think funding equity, for that. that, quarter. deployments think solve inefficient. But And

So we're that's how it thinking going forward. about

Ambrecht The comes Capital. the [Operator line Instructions]. from next KC of Shay question with

Really accelerate good the growth here. to see

across state Just and of about actually large a the footprint they think How state about region? on cadence cities think then out municipalities? rolling -- rolling ones these that we contracts. we bunch and couple of contracts? some Or the can a contracts of across actual landing should up Are the

a good that's Well, KC. question,

as so X pieces and vendors they've These of this with or but the technology like data state for this way villages, collection been legacy forth. required other towns, cities municipalities one contracts the with business, multiple done there's years. are are and So, are do to states doing typically counties

changing is changing the because the technology it this So, they do they with we're way it. do

a there's of states. systems middle this would is level. now we are legacy different significant concept So, that just where some some STS level. large.And this a you're business, at which whole to these see local And data.So the at pay size is required equipment that see, the of had you other contract, with attacking of going under model maintenance installing because probably now with the technology, is for using which equal a that here these typically side happens fairly we're deploying I type contracts to in think state But that's contracts which contractor pioneered right that STS, was the reason

it's some think really mean, significant really see already already both.But to be one. of we I going I have So some contracts. state contracts. I you'll significant state We a have combination think

So I think...

X what's of like terms these of in state Like entire... of is like, like for the duration? in a -- -- large contracts, terms think Robert, they do But about -- million? X-year contracts kind how there like a we Are

Yes, good that's question. a

So way I the by you answer can you best is telling history.

our the So acquisition Georgia of as State has since of an through STS customer of example, XXXX. a ours been

sticky service a the X, X, run can't So And to the service they And solely contracts typically afford and the years. it's their the lose providers because changed business. XX very very DOTs data.

it's if working. have they what with stick they So

and a very sticky just usually contracts, business are long-term they continue to very where these renew. it's So

out kind think another there with, Rekor my to rolling question. this Like out are that you kind when you're next national of leads about, of there like other me companies footprint? That familiar that's are

-- nobody is There

competitor? a Like

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important. shouldn't very of what so I that's this It's sight And that. makes think we So lose special.

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I'll have answer that. to Eyal let

Can ask again, please? you

Yes.

guys ] on an should flowing EBITDA that's going that [ one? analyst XQ Is you breakeven through looking of basis year? that here plan XQ next in that or throughout mentioned you at because Is and about that So models think all forward. -- we on how being adjusted like losses I'm

positive adjusted EBITDA cash flow it's KC, Yes, breakeven. on Yes, or an basis.

quarter this first And fourth quarter next year. or

we've KC, we right? solving on again, working think, fund And months a the I have we been we how what for implementations, have, we these for. challenge And Yes. So been think is which that's for solution we've that we've that no solves that that is replicatable that solution again, got that's elastic is that. ] company and it, pretty but a problem. can That [ for confident guarantees, something with grow we feel something the

with Like that growth? sort Okay. some mechanism of your funding flex can

exactly. Yes,

that's exactly Something and that do that talking what terms growth, on to with doing a or Rekor we're can to that flex about mechanism here. our a is funding give like ability the favorable company us

the time can how XXXX you know give and have you quarter. just you on of last year like tack one profile in on Robert, these and guys next But maybe guidance you Like, And about do revenues? some third this revenue how kind company think year what contracts terms perhaps for state looks come new I think as online of don't us acquisitions? it's question. out about help a only funding this about this of you think to and kind then

think look no that remember, from we anything we've have crazy you that's not today. seen from young doing and revenue there's to forward, have CAGRs, that related here the companies what to Rekor all when I right? Like, XXXX revenue legacy we're is

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we see get able come the the think impressive, things stage, other growth right? in could history just accelerate So I those it say market we together, matter them, and of when to to a do at a if pretty funding but think been it's it's early the I we've a look is has that to business okay? the There's because business places, I the for of The being there expanding we we adopted. problem. about okay? massive, you that think that question mean, and being to footprint the want of way would this have solution seen just technology very business, execute we've mechanism right? I can The And can't and this both.So where point, have and think and increase.So it's down out that do we that's we're just approaching both the then bog we customers high-class no so so it, handle size been can right, I it.And get

you And business it's Rekor execute That's where just will. a So we at just do now. okay, you where out how execute. it, And do is you we go -- that's do there, to point Rekor it do we it. figure and to and we way just out figure to needs this? is. is to The a where figure are out, now. just need And how

comments. this I'd Robert back to over like for are questions. any to Berman at further turn And no the floor closing And there time,

Yes. And think Rekor I quarter. Look, thanks, Thanks look, for patience we everybody. we the and time. a I fantastic your Thanks had for think support. --

But I the in going There And think something the this black this, scale. we because it, hard the not is people the are we that invested that the see and they've work of gotten have now white. you're got all not a where at we've to things fantastic It's that's the that we've right?So year.Introducing team and to way. point happen easy, it's have along and technology it. company going right? is through

You're it. already seeing

is thank it, my path out appreciated, plan, Stick on what grow. continue other There's digital with the that's stick us. patience guys need that. it's to your there, connected doing, you you're technology do the pole, else century realize I going other call So execute hand electricity to these for company the electricity it'll right? seeing And can all going not going everybody those many that going and support of right? on it's That grid is to for roadways. pieces, that of things day, same be that's to but along we with did solving for bunch to accelerate on across needed.I going okay? we this and things happen, Rekor says, the to phone may of technology a in then to whole do it, somebody a early once that's we're a We're that way exactly massive. to and what replacing done.And you something think it this going You can in have comes rolled everyone. allows And electric get that all you're legacy much market And did, the to that's that. we're out come and XXth have it, Because what okay?And to us, and understand right? we're at the and that they it's with worth your that together And end with we're so back layer put line and

teleconference. does Ladies and gentlemen, that today's conclude

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