Novume(REKR) - 2025 Q2 - Quarterly Results

Executive Summary & Outlook Rekor Systems reduced operating expenses by 17% and narrowed Adjusted EBITDA loss in Q2 2025, focusing on disciplined execution, AI data fusion, and a new General Manager structure - Management's focus for the second half of 2025 is on disciplined execution, expanding margins, and positioning the company for sustained long-term growth[2] - The company is building a connected intelligence infrastructure for modern transportation, with growing trust from agencies like TxDOT and CTRMA reflecting a broader industry shift toward AI-powered data fusion[6] - A new General Manager structure has been implemented, giving each business unit full P&L responsibility to drive innovation and scale operations more effectively[6] Q2 2025 Financial Highlights Summary | Metric | Value/Change | | :--- | :--- | | Quarterly Gross Revenue | $12.4 million (nearly flat YoY) | | Operating Expense Reduction | 17% (QoQ and YoY) | | Adjusted EBITDA Loss | Narrowed by $2 million for the six-month period | | ATM Offering | Terminated | Operational & Strategic Highlights Rekor secured a statewide blanket purchase order from TxDOT, a $1.4 million contract extension with CTRMA, and a new $1.2 million DaaS agreement, expanding its RoadView platform to smaller municipalities - Received a statewide blanket purchase order for Rekor Command® from the Texas Department of Transportation (TxDOT), with initial operations in Austin showing substantial benefits[2] - CTRMA extended its use of Rekor Command® with a $1.4 million, five-year contract, citing a 324% increase in incident detection and an 11-minute reduction in average response time from previous deployments[2] - Began a $1.2 million Data-as-a-Service (DaaS) deployment of 150 Rekor Discover® systems in a major Sun Belt state, expanding its recurring revenue model[3] - Expanded its RoadView situational awareness platform to municipalities and counties lacking 24/7 traffic operations centers, providing real-time visibility without significant infrastructure investment[5] Financial Performance Analysis This section analyzes Rekor's Q2 2025 financial results, highlighting a nearly flat year-over-year revenue but significant reductions in operating loss and improved Adjusted EBITDA through cost containment Revenue and Gross Profit Q2 2025 revenue was $12.4 million, a 1% decrease year-over-year, with Adjusted Gross Margin falling to 49.5% due to a less favorable software and hardware revenue mix Revenue and Adjusted Gross Profit (in thousands) | Period | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months | Revenue | $12,359 | $12,427 | -1% | | | Adjusted Gross Profit | $6,114 | $6,651 | -8% | | | Adjusted Gross Margin | 49.5% | 53.5% | -7% | | Six Months | Revenue | $21,557 | $22,205 | -3% | | | Adjusted Gross Profit | $10,551 | $11,144 | -5% | | | Adjusted Gross Margin | 48.9% | 50.2% | -3% | - The decrease in revenue for the six-month period was primarily attributed to adverse weather conditions and a slowdown in project activity within the government sector[8] - The increase in cost of revenue and subsequent decrease in Adjusted Gross Margin was due to the mix of software and hardware revenue, as software sales typically carry a higher margin[9][10] Loss from Operations Rekor significantly improved operational profitability in Q2 2025, reducing its loss from operations by 23% year-over-year to $(7.7) million, driven by successful cost containment efforts Loss from Operations (in thousands) | Period | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months | $(7,735) | $(10,075) | $2,340 | -23% | | Six Months | $(17,874) | $(22,991) | $5,117 | -22% | - The reduction in operating loss was primarily due to lower payroll and related costs resulting from cost containment efforts[11] - The loss from operations improved by $2.4 million, or 24%, in Q2 2025 compared to Q1 2025[12] EBITDA and Adjusted EBITDA Adjusted EBITDA for Q2 2025 was $(5.8) million, nearly flat year-over-year, but the six-month Adjusted EBITDA loss improved by $2.0 million to $(13.1) million due to better cost management EBITDA and Adjusted EBITDA Reconciliation (in thousands) | Period | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | | Net Loss | $(8,658) | $(9,795) | $(19,532) | $(28,409) | | | EBITDA | $(6,511) | $(6,907) | $(15,239) | $(22,135) | | | Adjusted EBITDA | $(5,788) | $(5,792) | $(13,146) | $(15,160) | - The company defines Adjusted EBITDA as net loss adjusted for interest, taxes, depreciation, amortization, stock-based compensation, and other non-recurring items[13] Financial Statements This section presents Rekor Systems' unaudited condensed consolidated financial statements, including Balance Sheets and Statements of Operations, for periods ending June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets As of June 30, 2025, Rekor's total assets were $80.1 million, total liabilities decreased to $44.7 million, and total stockholders' equity increased to $35.4 million Key Balance Sheet Items (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,830 | $5,013 | | Total current assets | $21,380 | $19,930 | | Total assets | $80,072 | $82,475 | | Total current liabilities | $15,221 | $18,223 | | Total liabilities | $44,673 | $48,334 | | Total stockholders' equity | $35,399 | $34,141 | Condensed Consolidated Statements of Operations Rekor reported a Q2 2025 net loss of $(8.7) million, or $(0.07) per share, an improvement from Q2 2024, with the six-month net loss also narrowing significantly to $(19.5) million Key Statement of Operations Items (in thousands, except per share data) | Period | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | | Revenue | $12,359 | $12,427 | $21,557 | $22,205 | | | Loss from operations | $(7,735) | $(10,075) | $(17,874) | $(22,991) | | | Net loss | $(8,658) | $(9,795) | $(19,532) | $(28,409) | | | Loss per common share | $(0.07) | $(0.12) | $(0.17) | $(0.35) | Conference Call Information Rekor Systems will host a conference call on August 12, 2025, at 4:30 P.M. ET, to discuss Q2 2025 financial results, with replay and webcast options available - A conference call to discuss Q2 2025 results is scheduled for Tuesday, August 12, 2025, at 4:30 P.M. (Eastern)[15] - A replay of the call will be available for two weeks via dial-in, and an archived webcast will be available on the company's investor relations website[16] About Rekor Systems, Inc. Rekor Systems, Inc. (NASDAQ: REKR) specializes in AI-enabled roadway intelligence systems, utilizing its Rekor One® platform to aggregate mobility data for actionable insights to improve road safety and efficiency - Rekor develops and implements roadway intelligence systems using AI, computer vision, and machine learning[17] - The company's core Rekor One® platform collects and organizes mobility data to create a digitally-enabled operating system for roadways[17] Forward-Looking Statements This section contains a standard safe harbor statement, cautioning that the press release includes forward-looking statements subject to substantial risks and uncertainties, advising readers to refer to SEC filings - The press release contains forward-looking statements regarding future results, business strategy, and objectives, which are subject to significant risks and uncertainties[18] - Readers are cautioned not to place undue reliance on these statements and are directed to the 'Risk Factors' section of the company's SEC filings for more information[18]