Novume(US:REKR)2021-11-15 21:07Company Overview - Rekor Systems, Inc. operates in 65 countries, providing real-time roadway intelligence and integrated solutions to enhance safety and efficiency [175]. - The company launched Rekor One™ in October 2020, a platform designed to unify roadway intelligence for government agencies, utilizing AI and machine learning [185]. - The City of Chattanooga, Tennessee, selected Rekor One™ for a pilot program to analyze traffic data over an area of 144.6 square miles, aiming to improve traffic congestion and public safety [187]. - Rekor's vehicle recognition solution can analyze images and video streams from approximately 80 countries, capturing license plate data and vehicle characteristics at high speeds with high accuracy [182]. - The company has partnered with Tomorrow.io to integrate weather data, enhancing transportation agencies' ability to manage weather-related traffic challenges [187]. - Rekor's incident management solution uses AI to detect anomalies in traffic patterns, providing proactive insights for agencies to improve roadway safety [183]. - The company aims to address issues of aging infrastructure and increasing traffic congestion through its advanced technology and actionable roadway intelligence [184]. - Rekor's technology is designed to be hardware and software agnostic, allowing seamless integration with existing systems without requiring significant upgrades [178]. - The growing smart city market presents opportunities for Rekor, as urban populations are expected to increase significantly by 2050, necessitating efficient resource management [190]. - Rekor's advanced sensors utilize edge processing to provide real-time data insights, enhancing operational efficiency for clients [177]. Financial Performance - Revenue for the three months ended September 30, 2021, was $2,615,000, representing a 23% increase from $2,126,000 in the same period of 2020 [213]. - Revenue for the nine months ended September 30, 2021, was $11,105,000, a 74% increase from $6,399,000 in the same period of 2020 [213]. - Cost of revenue, excluding depreciation and amortization, increased by $423,000 (43%) for the three months and by $1,960,000 (71%) for the nine months ended September 30, 2021, compared to the same periods in 2020 [216]. - General and administrative expenses rose to $6,813,000 for the three months ended September 30, 2021, a 155% increase from $2,676,000 in 2020 [218]. - Research and development expenses increased to $2,000,000 for the three months ended September 30, 2021, a 156% increase from $781,000 in 2020 [221]. - Net loss from continuing operations for the three months ended September 30, 2021, was $9,613,000, compared to a net loss of $6,667,000 in the same period of 2020 [212]. - Adjusted EBITDA for the three months ended September 30, 2021, was $(6,713,000), compared to $(2,662,000) in the same period of 2020 [227]. - The company generated $345,000 and $975,000 in revenue from Oklahoma's UVED Program during the three and nine months ended September 30, 2021, respectively [214]. - Total other income (expense) for the three months ended September 30, 2021, was $45,000, compared to $(3,293,000) in the same period of 2020 [223]. - The increase in selling and marketing expenses was primarily due to heightened marketing efforts, resulting in a 101% increase to $1,125,000 for the three months ended September 30, 2021, from $560,000 in 2020 [220]. - Adjusted Gross Profit for the three months ended September 30, 2021, was $1,213,000, compared to $1,147,000 for the same period in 2020, reflecting a growth of 5.8% [230]. - Adjusted Gross Margin for the nine months ended September 30, 2021, increased to 57.6% from 57.1% in 2020, while for the three months it decreased to 46.4% from 54.0% [230]. - Recurring revenue for the three months ended September 30, 2021, was $1,233,000, a 28% increase from $964,000 in 2020 [233]. - Total contract value won in the nine months ended September 30, 2021, was $7,663,000, representing a 108% increase from $3,682,000 in the same period of 2020 [235]. - As of September 30, 2021, the company had approximately $23,845,000 in unsatisfied performance obligations, with an expected 36% to be recognized in the next twelve months [236]. - Net cash used in operating activities for the nine months ended September 30, 2021, was $(12,321,000), a 57% increase from $(7,860,000) in 2020 [238]. - Net cash provided by financing activities for the nine months ended September 30, 2021, was $70,874,000, a 180% increase from $25,356,000 in 2020 [238]. - The company had cash and cash equivalents of $35,102,000 as of September 30, 2021, compared to $20,595,000 as of December 31, 2020 [241]. Strategic Initiatives - The company announced the acquisition of Waycare Technologies Ltd. for a total consideration of $61 million, enhancing its traffic management capabilities [1]. - The acquisition of Waycare was completed for a total purchase price of $61,100,000, consisting of $40,813,000 in cash and $20,287,000 in common stock [243]. - The company completed a public offering of 6,126,939 shares at $12.25 per share, raising approximately $75.1 million to support product development and strategic partnerships [1]. - The company expects to benefit from the growing demand for AI-driven infrastructure solutions, particularly in traffic management and vehicle recognition systems [2]. - The American Jobs Plan proposes approximately $1 trillion in total spending, with $550 billion in new spending over five years, which could create opportunities for the company's intelligent infrastructure solutions [1]. - The company anticipates an increase in general and administrative expenses due to compliance and investor relations costs, but expects these expenses to decrease as a percentage of revenue over the long term [1]. - Research and development expenses are expected to rise in absolute dollars as the company invests in enhancing its AI solutions, although they may decrease as a percentage of revenue over time [1]. - The company is focusing on expanding its market presence and strategic partnerships to reduce costs and increase adoption of its products and services [2]. - The company has launched several pilot programs in collaboration with state transportation departments to improve traffic safety and incident management [1]. - The company is leveraging advancements in GPU technology to enhance its image recognition capabilities, which is expected to improve product performance and reduce costs [2].