Financial Data and Key Metrics Changes - Rekor Systems reported record revenue of $14.2 million for Q3 2025, a 35% increase compared to Q3 2024 and a 15% increase compared to Q2 2025 [6] - Year-to-date revenue reached $35.8 million, up 9% from the first nine months of 2024 [6] - Adjusted gross margin improved to 63% in Q3 2025 from 44% in Q3 2024, and year-to-date adjusted gross margin was 55% compared to 48% in the prior year [7][8] - Adjusted EBITDA loss for Q3 2025 was $1.5 million, an improvement of $7.9 million or 84% from Q3 2024 [8][9] Business Line Data and Key Metrics Changes - Recurring revenue for Q3 2025 totaled $6.5 million, an 18% increase compared to Q3 2024, while year-to-date recurring revenue was $17.5 million, up 5% year over year [7] - The company continues to focus on expanding its recurring revenue base through long-term software and data-as-a-service subscription contracts [7] Market Data and Key Metrics Changes - Rekor secured a significant multi-year contract with the Georgia Department of Transportation valued at a minimum of $50 million, marking a major milestone for the company [11] - The company received recognition for its work in South Carolina, where its technology powers a virtual weigh station network, achieving nearly 100% accuracy in overweight truck targeting [11] Company Strategy and Development Direction - Rekor is entering the global deepfake detection market, leveraging its experience in video analytics for government agencies and law enforcement [12] - The company is focusing on a data-as-a-service business model, which is proving to be a major differentiator in the market [13] - Rekor aims to strengthen its Scout business with the appointment of Jennifer Candelaria as General Manager, focusing on market share expansion and revenue growth [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Rekor's future, highlighting the strong performance and momentum built across technology platforms and customer base [5][15] - The company anticipates continued growth driven by the increasing demand for data-as-a-service solutions and operational efficiencies [10][20] Other Important Information - The company has reduced total operating expenses by 24% quarter over quarter, reflecting discipline and cost containment [8] - Rekor is actively engaged with customers in Europe and plans to expand its business outside the U.S. in 2026 [52] Q&A Session Summary Question: What type of product does the Rekor team envision developing with the deepfake detection division? - Management indicated that the product is being developed by Rekor Labs, and more details will be shared closer to the product launch in 2026 [17][18] Question: How should we think about the EBITDA trajectory and margins over the next several quarters? - Management expects margins to stabilize higher than current levels as the company continues to focus on the data-as-a-service business model [20] Question: Do you see many other contracts similar to the Georgia contract in your pipeline? - Management noted that states often follow each other's procurement processes, and they are seeing unprompted RFPs for their business model [22] Question: Is Austin starting to ramp up with the Command contract? - Management confirmed that Austin has issued a purchase order under the RFP won by Rekor, and they are working to expand into other districts [30][31] Question: Do you expect a full ramp-up portion of the new Georgia contract in the fourth quarter? - Management confirmed that the Georgia contract is in effect since October, and they anticipate billing under the new contract [42] Question: Can you give feedback on the international market engagement? - Management stated that they are actively engaged with customers in Europe and hope to do business outside the U.S. in 2026 [52] Question: Do you believe profitability is what is holding the elevation in the share price? - Management acknowledged the challenges of being a small public company but expressed confidence in the company's ability to drive revenue and profitability [57]

Financial Data and Key Metrics Changes - The company reported fourth quarter 2024 revenue of $13.3 million, surpassing consensus estimates by 3% and marking a year-over-year growth rate above 20% [25] - For the full year 2024, revenue reached $46 million, a robust increase of 32% compared to $34.9 million in 2023 [27] - Adjusted gross margin rebounded to 52% in Q4 2024, up from 44% in Q3 2024, while the full year adjusted gross margin slightly decreased to 49.3% from 52.8% in 2023 [28] - Adjusted EBITDA loss reduced to approximately $4.7 million in Q4 2024, significantly improved from $9.2 million in Q3 2024 [29] Business Line Data and Key Metrics Changes - The Urban Mobility segment drove growth, primarily due to demand for the new roadway data aggregation solution [25] - Public safety, the second largest revenue source, achieved solid mid-teens growth, bolstered by strategic licensing partnerships [26] - Product and services revenue grew significantly to $23.4 million, up 65% year-over-year [27] Market Data and Key Metrics Changes - The company gained traction in states like Texas, Florida, Georgia, Maryland, and New Mexico, demonstrating the value of AI-driven platforms [11] - In Florida, the company achieved inclusion on the state's approved product list, allowing broader rollout of solutions [11] Company Strategy and Development Direction - The Board decided to shift strategy away from relying on traditional government contracting timelines, focusing instead on a more predictable revenue base [12][13] - The company aims to operate at a level with a clear path to breakeven, with any upside from large government contracts being additive rather than essential [14] - Partnerships with global technology leaders like Amazon Web Services and NVIDIA were deepened, enhancing the company's channel presence [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the robust government contracting pipeline, stating it is a matter of when, not if, orders will come through [12] - The new administration's focus on addressing inefficiencies in government technology is seen as an opportunity for the company [15] - Management emphasized the importance of aligning the company's cost structure with controllable factors rather than waiting on uncertain government timelines [15] Other Important Information - The company repaid the remaining balance of a $15 million prepaid advance agreement ahead of schedule, enhancing its balance sheet [22] - The former CEO David Desharnais resigned, and the Board is in the process of identifying a new CEO [23][24] Q&A Session Summary Question: Comparison with Flock Safety's license plate reader cameras - Management stated that comparing Flock and Rekor is not fair due to different market focuses and funding levels, emphasizing Rekor's strong vehicle recognition software [36] Question: Timeline for free cash flow breakeven - Management anticipates reaching free cash flow breakeven by the end of the year [39] Question: Progress of partnership with SoundThinking - Management indicated that SoundThinking is making progress and conducting pilots, which is expected to pay off in 2025 [41] Question: Rollout progress in Florida for the contract involving over 1,000 cameras - Management noted that government contracting processes take time, but they are optimistic about ongoing procurements in Florida and other states [44][45] Question: Organic growth expectations for the year - Management refrained from providing specific growth numbers but expressed confidence in the adoption of new products and technologies [52] Question: Cost-cutting measures and their effectiveness - Management confirmed that cost-cutting measures were implemented to focus on immediate needs while remaining flexible for future scaling [56] Question: Liquidity and share count - Management discussed the importance of revenue sharing notes for improving liquidity and reducing dilutive funding [61] Question: Camera deployment in Florida and potential contracts in other states - Management stated they cannot disclose specific deployment numbers but expressed confidence in ongoing relationships and potential contracts in various states [72][75]

Financial Performance - Rekor Systems, Inc. achieved record annual gross revenue of $46.0 million for the fiscal year ended December 31, 2024, representing a 32% increase from $34.9 million in 2023 [5] - The fourth quarter gross revenue reached an all-time high of $13.3 million, marking a 20% increase compared to Q4 2023 [5] - Adjusted EBITDA loss narrowed from $6.7 million in Q4 2023 to $4.7 million in Q4 2024, indicating improved operational efficiency [5] Operational and Strategic Achievements - The company expanded its AI-powered Rekor Command platform to enhance support for traffic and emergency operations centers, introducing features that improve real-time decision-making [2][3] - Rekor's platform, Rekor Scout, received certification for deployment in New Jersey, facilitating further market penetration [6] - A strategic partnership with Soundhound AI was established to develop advanced emergency vehicle technologies, enhancing situational awareness [6] Executive Leadership and Strategic Realignment - An Executive Committee was formed to review company operations and realign resources to accelerate revenue growth and reduce reliance on external financing [4] - Selective workforce reductions were made, and new executive leaders with experience in scaling global infrastructure businesses were appointed [4][8] Revenue Streams and Market Presence - The Urban Mobility revenue stream, which includes roadway data aggregation activities, significantly contributed to the revenue increase, with $10.1 million for the year and $2.7 million for the quarter [10] - Rekor Discover products have gained traction in multiple states, including Georgia, South Carolina, Virginia, New Mexico, Arkansas, and Florida [7]