Novume(US:REKR)2024-11-15 02:04Financial Data and Key Metrics Changes - Revenues for Q3 2024 were $10.5 million, a 16% increase compared to Q3 2023, and for the nine months ended September 30, 2024, revenues reached $32.8 million, a 37% increase year-over-year [31] - Recurring revenue in Q3 2024 was $5.5 million, up 14% from the same period last year, while for the nine months ended September 30, 2024, it totaled $16.8 million, a 13% increase [32] - Adjusted gross margin for Q3 2024 was 44%, down from 52.6% in Q3 2023, and for the nine months ended September 30, 2024, it was 48.2%, also down from 52.6% [33] - Adjusted EBITDA loss for Q3 2024 was $9.2 million, compared to $6.6 million in the same period last year, with a nine-month adjusted EBITDA loss of $24.3 million, slightly up from $23.2 million [35][36] Business Line Data and Key Metrics Changes - The Urban Mobility segment, which includes roadway data aggregation activities, was the main driver of growth in Q3 2024 [31] - The Command solution for traffic management has seen significant adoption in Texas, with a reported 29% reduction in secondary crashes and a 44-minute faster restoration of normal traffic flows [15][17] Market Data and Key Metrics Changes - Florida has been identified as a cornerstone for growth, with the company beginning statewide deployments of its Discover system, which has been validated during emergency operations [9][10] - New York has advanced Rekor Discover from proof-of-concept to procurement, granting access to approximately 115,000 miles of public roadways [12] Company Strategy and Development Direction - The company is focused on creating a leaner structure, aiming for $15 million in annualized savings and reducing reliance on external capital to achieve positive cash flow by 2025 [27][38] - Rekor aims to transform 4.2 million miles of U.S. roadways with its AI-driven technology, anticipating a potential 40% compound annual growth rate in revenue over the next five years [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand for digital infrastructure and the company's ability to navigate government procurement cycles, which can be unpredictable [25][60] - The company is optimistic about the impact of the Infrastructure and Jobs Act, which is expected to remain in place regardless of the political administration [61][64] Other Important Information - The company has established partnerships with industry leaders like Amazon Web Services and NVIDIA, enhancing its capabilities in public safety and transportation infrastructure [21][22] - Rekor's presence at over 30 industry events has reinforced its role as a thought leader in the transportation sector [23] Q&A Session Summary Question: Impact of hurricanes on recurring revenue - Management confirmed that recurring revenue was impacted by hurricanes in Q3, similar to previous years, but anticipates a recovery in Q4 [46][47] Question: Details on Florida deployments - Management indicated that deployments in Florida are being planned closely with the central office and districts, with a focus on ensuring coverage during emergency operations [48][49] Question: Addressable market size - Management estimated a total addressable market of 750,000 to 1.5 million potential sites across various states, emphasizing the opportunity for upselling and cross-selling [53][55] Question: Cost savings and liquidity - Management confirmed that the $15 million in expected cost savings will provide sufficient liquidity to reach free cash flow breakeven in 2025 [76]