Novume(US:REKR)2025-11-13 22:30Financial 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]