Novume(US:REKR)2021-11-16 04:10Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $2.6 million, an increase of 23% compared to $2.1 million in Q3 2020 [10] - Revenue declined sequentially from $4.3 million in Q2 2021 [11] - Recurring revenues for Q3 2021 were $1.2 million, up 28% from $964,000 in Q3 2020 [11] - Year-to-date revenue for the nine months ended September 30, 2021, was $11.1 million, a 74% increase from $6.4 million in the same period last year [12] - Adjusted gross margin for Q3 2021 was 46%, down from 54% in Q3 2020 [17] - Total operating expenses for Q3 2021 were $10.9 million, compared to $4.5 million in Q3 2020 [19] - Adjusted EBITDA for Q3 2021 was a loss of $6.7 million, compared to a loss of $2.7 million in Q3 2020 [21] Business Line Data and Key Metrics Changes - The company is transitioning from a product-oriented transactional revenue model to a solution-oriented recurring revenue model [8] - The Oklahoma Uninsured Vehicle Enforcement Diversion Program generated $345,000 in revenue for Q3 2021 [15] - The year-over-year increase in revenue is attributed to the expansion of product and service offerings [14] Market Data and Key Metrics Changes - Remaining performance obligations in Q3 2021 were $23.8 million, a 57% increase from $15.2 million in Q2 2021 [12] - Total contract value won during the nine months ended September 30, 2021, was $7.7 million, an increase of 108% from $3.7 million in the same period in 2020 [13] Company Strategy and Development Direction - The company aims to capture a significant share of the emerging intelligent infrastructure market, projected to be $148 billion by 2026 [35] - The introduction of the Rekor One platform is designed to provide a comprehensive solution for multiple agencies [28] - The company plans to focus on subscription-based revenue to generate long-term growth [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth prospects despite the short-term impact of the new revenue model [23] - The company is committed to investing in innovation and expanding its geographic footprint [63] - Management highlighted the importance of building relationships with clients and providing verifiable results [47] Other Important Information - The company has been awarded the Intelligent Traffic System World Congress Hall of Fame Industry Award for the Americas [69] - The acquisition of Waycare is expected to enhance the company's capabilities and accelerate growth [68] Q&A Session Summary Question: How many square miles does Rekor have visibility on today through pilots? - Management indicated that square miles will be a component of KPIs and mentioned specific cities like Chattanooga [73][74] Question: What is the expected revenue recognition from performance obligations? - Management expects to recognize 36% of performance obligations over the next 12 months, amounting to nearly $9 million [76] Question: How does Rekor plan to engage with cities implementing contactless compliance solutions? - Management sees significant opportunities in cities like Philadelphia and Pittsburgh for contactless compliance solutions [78] Question: Can you explain the typical process for starting a pilot and securing a contract? - Management described a land and expand strategy where initial pilots lead to long-term contracts as stakeholders see the value [81] Question: What is the expected cash burn rate going forward? - Management noted that the cash burn rate will likely increase with the Waycare acquisition and ongoing investments, but they have access to capital markets if needed [90]