Novume(REKR) - 2025 Q1 - Quarterly Results

Company Overview and Q1 2025 Highlights Rekor Systems' Q1 2025 saw a slight revenue decline but significant improvement in adjusted EBITDA loss, alongside a strategic shift to a GM structure for scalable growth Q1 2025 Business and Financial Highlights Rekor Systems' Q1 2025 revenue slightly decreased, but operational efficiency significantly improved, narrowing adjusted EBITDA loss, and a new GM structure was implemented for predictable, scalable growth - Company revenue slightly decreased to $9.2 million, but operational efficiency significantly improved, with adjusted EBITDA loss narrowing from $9.4 million in Q1 2024 to $7.4 million in Q1 2025[3][7] - The company is undergoing a strategic transformation by implementing a General Manager (GM) structure, clarifying P&L responsibilities for business units to enhance operational agility, accelerate innovation, and scale markets more effectively[4] About Rekor Systems, Inc. Rekor Systems leads in road intelligence, leveraging AI-driven computer vision and machine learning through its Rekor One® engine to collect, connect, and organize global mobility data, providing actionable insights for safer, greener, and more efficient road systems for governments and enterprises - Rekor Systems is a leader in developing and implementing advanced road intelligence systems using AI-driven computer vision and machine learning technologies[14] - The company's core technology is the Rekor One® road intelligence engine, which transforms vast amounts of data into intelligence, powering platforms and applications[14] - Rekor's solutions aim to provide governments and enterprises with a comprehensive road view and collaborative environment to drive a safer, greener, and more efficient world[14] First Quarter 2025 Financial Performance Rekor Systems' Q1 2025 financial performance reflects a revenue decline, improved gross margin, and significantly reduced operating and net losses, driven by cost control and operational efficiency Revenue and Cost of Revenue Analysis In Q1 2025, Rekor Systems' revenue decreased 6% year-over-year to $9.2 million, primarily due to adverse weather and slower government project activity, yet cost of revenue declined 10%, boosting adjusted gross margin by 2.2 percentage points to 48.2% Revenue and Cost of Revenue (Excluding Depreciation and Amortization) | Metric | Three Months Ended March 31, 2025 (thousand USD) | Three Months Ended March 31, 2024 (thousand USD) | Change ($) | Change (%) | | :--------------------------------- | :---------------------------------- | :---------------------------------- | :------- | :------- | | Revenue | 9,198 | 9,778 | (580) | -6% | | Cost of Revenue (excluding D&A) | 4,761 | 5,285 | (524) | -10% | | Adjusted Gross Profit | 4,437 | 4,493 | (56) | -1% | | Adjusted Gross Margin | 48.2% | 46.0% | 2.2% | 4.8% | - Revenue decline is primarily attributed to adverse weather conditions and slower engineering activity due to ongoing uncertainty in the government sector[8] - The decrease in cost of revenue is mainly due to reduced direct costs such as personnel and hardware, correlating with the revenue decline[9] Operating Expenses and Loss from Operations In Q1 2025, Rekor Systems' operating loss significantly narrowed by 22% year-over-year to $10.1 million, primarily driven by reduced salaries and related costs due to cost control measures Loss from Operations | Metric | Three Months Ended March 31, 2025 (thousand USD) | Three Months Ended March 31, 2024 (thousand USD) | Change ($) | Change (%) | | :--------------- | :---------------------------------- | :---------------------------------- | :------- | :------- | | Loss from Operations | (10,139) | (12,916) | 2,777 | 22% | - The reduction in operating loss is primarily due to lower salaries and related costs resulting from cost control measures[10] EBITDA and Adjusted EBITDA Reconciliation Rekor Systems significantly improved its EBITDA and Adjusted EBITDA in Q1 2025, with Adjusted EBITDA loss narrowing from $9.37 million in the prior year to $7.36 million, reflecting enhanced operational efficiency - EBITDA and Adjusted EBITDA are non-GAAP financial measures used to assess the company's ability to service debt, but calculation methods may vary across companies[11] EBITDA and Adjusted EBITDA Reconciliation Table | Metric | Three Months Ended March 31, 2025 (thousand USD) | Three Months Ended March 31, 2024 (thousand USD) | | :----------------------- | :---------------------------------- | :---------------------------------- | | Net Loss | (10,874) | (18,614) | | Interest | 590 | 1,054 | | Depreciation and Amortization | 1,556 | 2,332 | | EBITDA | (8,728) | (15,228) | | Stock-based Compensation | 1,370 | 1,167 | | Loss on Debt Extinguishment | - | 4,693 | | Adjusted EBITDA | (7,358) | (9,368) | Condensed Consolidated Statements of Operations In Q1 2025, Rekor Systems' net loss significantly narrowed year-over-year from $18.61 million to $10.87 million, with loss per share decreasing from $0.24 to $0.10, primarily due to reduced operating loss and the elimination of debt extinguishment losses Condensed Consolidated Statements of Operations (Excerpt) | Metric | Three Months Ended March 31, 2025 (thousand USD) | Three Months Ended March 31, 2024 (thousand USD) | | :--------------------------------- | :---------------------------------- | :---------------------------------- | | Revenue | 9,198 | 9,778 | | Cost of Revenue (excluding D&A) | 4,761 | 5,285 | | Total Operating Expenses | 14,576 | 17,409 | | Loss from Operations | (10,139) | (12,916) | | Loss on Debt Extinguishment | - | (4,693) | | Interest Expense, Net | (590) | (1,054) | | Other (Expense) Income | (145) | 49 | | Total Other Expenses | (735) | (5,698) | | Net Loss | (10,874) | (18,614) | | Loss Per Common Share | (0.10) | (0.24) | | Weighted Average Shares Outstanding (Basic and Diluted) | 106,815,912 | 78,894,017 | Financial Position As of March 31, 2025, Rekor Systems' total assets and liabilities slightly decreased, while shareholder equity also saw a minor reduction, with shifts in cash, receivables, and contract liabilities Condensed Consolidated Balance Sheets As of March 31, 2025, Rekor Systems' total assets slightly decreased to $79.80 million, total liabilities reduced to $46.44 million, and shareholder equity also slightly decreased to $33.36 million, with a decrease in cash and cash equivalents but an increase in accounts receivable and contract liabilities Condensed Consolidated Balance Sheets (Excerpt) | Metric | March 31, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :--------------------------------- | :---------------------------------- | :---------------------------------- | | Assets | | | | Cash and Cash Equivalents | 3,851 | 5,013 | | Restricted Cash | 458 | 316 | | Accounts Receivable, Net | 7,582 | 7,232 | | Inventory | 4,196 | 4,297 | | Other Current Assets | 3,526 | 2,732 | | Total Current Assets | 19,953 | 19,930 | | Total Long-Term Assets | 59,849 | 62,545 | | Total Assets | 79,802 | 82,475 | | Liabilities and Stockholders' Equity | | | | Accounts Payable and Accrued Expenses | 4,545 | 4,330 | | Contract Liabilities | 4,574 | 3,439 | | Other Current Liabilities | 4,900 | 5,129 | | Total Current Liabilities | 16,880 | 18,223 | | Total Long-Term Liabilities | 29,563 | 30,111 | | Total Liabilities | 46,443 | 48,334 | | Common Stock | 11 | 10 | | Additional Paid-in Capital | 305,119 | 294,935 | | Accumulated Deficit | (270,967) | (260,093) | | Total Stockholders' Equity | 33,359 | 34,141 | | Total Liabilities and Stockholders' Equity | 79,802 | 82,475 | Supplementary Information This section provides details on the Q1 2025 earnings call, forward-looking statements, and company contact information for investors and media Conference Call and Webcast Information Rekor Systems scheduled a conference call for March 15, 2025, to discuss Q1 2025 results, with call replay and webcast archive available - The Q1 2025 earnings conference call is scheduled for March 15, 2025, at 4:30 PM ET[12] - North American and international dial-in numbers, along with webcast links and replay information, are provided[13] Forward-Looking Statements This press release contains forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, regarding Rekor Systems' future expectations, plans, and prospects, cautioning investors about risks and uncertainties that could cause actual results to differ materially - Statements in this press release constitute "forward-looking statements" as defined by the Securities Act of 1933 and the Securities Exchange Act of 1934, protected by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[15] - Forward-looking statements involve future expectations, plans, and prospects, but are subject to various risks and uncertainties, and actual results may differ materially from projections[15] - The company undertakes no obligation to publicly update any forward-looking statements[15] Company and Investor Contacts Contact information for Rekor Systems' Chief Financial Officer, Eyal Hen, and the Media and Investor Relations department is provided - Company Contact: Eyal Hen, Chief Financial Officer, Phone: +1 (443) 545-7260, Email: ehen@rekor.ai[16] - Media and Investor Relations Contact: Charles Degliomini, Email: ir@rekor.ai[16]