Rekor Systems, Inc. Reports First Quarter 2024 Financial Results
Rekor Systems reported a 58% increase in Q1 2024 revenue to $9.8 million compared to $6.2 million in Q1 2023. Recurring revenue also grew by 18% to $5 million. Significant achievements include the acquisition of All Traffic Data and a $26.4 million public offering.
David Desharnais was appointed CEO, and Viraj Mehta joined the Board as Executive Director, effective May 16, 2024. Operating losses increased to $12.9 million from $12.7 million due to higher operating expenses, and the overall net loss rose to $18.6 million from $12.7 million.
Adjusted Gross Profit improved to $4.5 million, though the Adjusted Gross Margin decreased to 46%. Total contract value won decreased by 35% year-over-year to $7.8 million. The company had $22.9 million in remaining performance obligations as of March 31, 2024.
- Q1 2024 gross revenue increased by 58% to $9.8 million.
- Recurring revenue grew 18% to $5.0 million in Q1 2024.
- Successful acquisition of All Traffic Data.
- Completed a $26.4 million public offering.
- Adjusted Gross Profit improved to $4.5 million.
- Operating losses increased to $12.9 million from $12.7 million year-over-year.
- Net loss rose to $18.6 million, up from $12.7 million.
- Adjusted Gross Margin decreased to 46% from 53.6%.
- Total contract value won decreased 35% to $7.8 million.
- Remaining performance obligations fell to $22.9 million from $26.4 million.
Insights
The first quarter financial results showcase a significant revenue increase of
Despite the revenue growth, the company reported a loss from operations of
The completed public offering of
From a financial standpoint, while the revenue growth is promising, the higher costs and declining margins present risks that need careful consideration.
The acquisition of All Traffic Data is a strategic move enhancing Rekor Systems' market position in roadway intelligence technology. This acquisition has evidently contributed to the increased revenue but has also led to higher operational costs. The public offering worth
However, the decrease in the total contract value won during Q1 2024 compared to the same period in 2023, mainly due to the closing of large statewide contracts in the previous year, suggests potential volatility in future revenue streams. This could impact investor confidence if the company fails to secure similar significant contracts moving forward.
Moreover, the decrease in Adjusted Gross Margin to
In conclusion, while the acquisition and capital raise are positive developments, the decline in contract wins and margin compression present potential risks.
Rekor Systems' focus on roadway intelligence technology positions it in a niche yet growing sector. The integration of All Traffic Data into its operations promises to enhance its data analytics capabilities, potentially leading to improved product offerings and market competitiveness.
However, the company's success will heavily depend on its ability to leverage this acquisition to innovate and expand its technology portfolio. Given the current market trends towards smart city solutions and advanced traffic management systems, Rekor's prospects remain promising if they can capitalize on these opportunities effectively.
The reported increase in operating costs, while necessary for growth, highlights the need for effective cost management strategies to maintain profitability. Investors should watch for developments in the company's technology advancements and how they translate into market share and revenue growth.
Overall, the acquisition and revenue growth are positive, but the company must demonstrate sustainable innovation and cost control to ensure long-term success.
David Desharnais, President and COO, appointed as CEO; Viraj Mehta, Chief Investment Officer at Arctis Global, named Executive Director of the Board; Company Founder Robert A. Berman continues as Chairman.
Highlights:
- Q1 2024 gross revenue increased
58% to$9.8 million as compared to$6.2 million in Q1 2023 - Recurring revenue increased
18% to$5.0 million in Q1 2024 as compared to$4.2 million in Q1 2023 - Closed All Traffic Data acquisition in January 2024
- Completed a
$26.4 million Public Offering in February 2024 - Completed early redemption of Senior Secured Notes
- Company president and COO David Desharnais appointed CEO, effective May 16, 2024
- Viraj Mehta, Chief Investment Officer of Arctis Global, appointed Executive Director of the Board
COLUMBIA, MD / ACCESSWIRE / May 15, 2024 / Rekor Systems, Inc. (NASDAQ:REKR) ("Rekor" or the "Company"), a leader in developing and implementing state-of-the-art roadway intelligence technology, today disclosed financial results for the quarter ending March 31, 2024. Showing significant improvement across all key metrics, the Company maintained its year-over-year revenue growth pattern and established a foundation for future innovation and sustained financial stability. The Company also announced that its Board of Directors has appointed David Desharnais, currently President and COO, as the new CEO, and Viraj Mehta, Chief Investment Officer of Arctis Global, as an Executive Director of the Board, both effective May 16, 2024. Rekor's founder and outgoing CEO, Robert A. Berman, will continue to serve as the Chairman of the Board.
"The successful acquisition of All Traffic Data and completing a
First Quarter Ended March 31, 2024 Financial Results
This section highlights the changes for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.
Revenues
| Three Months Ended March 31, | Change | |||||||||||||||
(Dollars in thousands) | 2024 | 2023 | $ | % | ||||||||||||
Revenue | $ | 9,778 | $ | 6,185 | $ | 3,593 | 58 | % | ||||||||
The increase in revenue for the three-month period ended March 31, 2024, compared to the three months ended March 31, 2023, was primarily attributable to our acquisition of ATD. During the three months ended March 31, 2024, revenue attributable to ATD was
Cost of Revenue, excluding Depreciation and Amortization
| Three Months Ended March 31, | Change | |||||||||||||||
(Dollars in thousands) | 2024 | 2023 | $ | % | ||||||||||||
Cost of revenue, excluding depreciation and amortization | $ | 5,285 | $ | 2,868 | $ | 2,417 | 84 | % | ||||||||
For the three months ended March 31, 2024, the cost of revenue, excluding depreciation and amortization, increased compared to the three months ended March 31, 2023, primarily due to an increase in personnel and other direct costs such as hardware that were incurred to support our increase in revenue. Additionally,
Loss from Operations Excluding Goodwill Impairment
| Three Months Ended March 31, | Change | |||||||||||||||
(Dollars in thousands) | 2024 | 2023 | $ | % | ||||||||||||
Loss from operations | $ | (12,916 | ) | $ | (12,687 | ) | $ | (229 | ) | -2 | % | |||||
The increase in operating loss for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, was primarily attributable to our increased operating expenses year over year as a result of our acquisition of ATD.
Additional Key Performance Indicators and Non-GAAP Measures
Performance Obligations
As of March 31, 2024, the Company had approximately
Total Contract Value
The total contract value of contracts won in the current period also provides us with visibility into our future operating results and cash flows from operations. The total contract value is a non-GAAP measure in which there are certain assumptions that we make when determining the total value of a contract, such as the success rate of renewal periods, cancellations, and usage estimates. For the three months ended March 31, 2024, we won contracts valued at
Adjusted Gross Profit and Adjusted Gross Margin
| Three Months Ended March 31, | ||||||||
(Dollars in thousands) | 2024 | 2023 | ||||||
Revenue | $ | 9,778 | $ | 6,185 | ||||
Cost of revenue, excluding depreciation and amortization | 5,285 | 2,868 | ||||||
Adjusted Gross Profit | 4,493 | 3,317 | ||||||
Adjusted Gross Margin | 46.0 | % | 53.6 | % | ||||
Adjusted Gross Margin for the three months ended March 31, 2024, decreased compared to the three months ended March 31, 2023. During the three months ended March 31, 2024, the Company had a lower mix of software sales which typically carry a higher Adjusted Gross Margin.
EBITDA and Adjusted EBITDA
The Company calculates EBITDA as net loss before interest, taxes, depreciation, and amortization. The Company calculates Adjusted EBITDA as net loss before interest, taxes, depreciation, and amortization, adjusted for (i) impairment of intangible assets, (ii) loss on extinguishment of debt, (iii) stock-based compensation, (iv) losses or gains on sales of subsidiaries, and (v) other unusual or non-recurring items. EBITDA and Adjusted EBITDA are not measurements of financial performance or liquidity under accounting principles generally accepted in the U.S. ("U.S. GAAP") and should not be considered as an alternative to net earnings or cash flow from operating activities as indicators of our operating performance or as a measure of liquidity or any other measures of performance derived in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA are presented because we believe they are frequently used by securities analysts, investors, and other interested parties in the evaluation of a company's ability to service and/or incur debt. However, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than we do.
The following table sets forth the components of the EBITDA and Adjusted EBITDA for the periods included (dollars in thousands):
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
Net loss | $ | (18,614 | ) | $ | (12,682 | ) | ||
Interest | 1,054 | 761 | ||||||
Depreciation and amortization | 2,332 | 1,955 | ||||||
EBITDA | $ | (15,228 | ) | $ | (9,966 | ) | ||
Share-based compensation | $ | 1,167 | $ | 1,112 | ||||
Loss (gain) on extinguishment of debt | 4,693 | (527 | ) | |||||
Adjusted EBITDA | $ | (9,368 | ) | $ | (9,381 | ) | ||
Rekor has scheduled a conference call to discuss the first quarter 2024 results on Wednesday, May 15, 2024, at 4:30 P.M. (Eastern).
Any person interested in participating in the call should please dial in approximately 10 minutes prior to the start of the call using the following information:
North America: 877-407-8037/ 201-689-8037
International: Click here for participant International Toll-Free access numbers
Webcast: https://event.choruscall.com/mediaframe/webcast.html?webcastid=BcC5BcCM
REPLAY INFORMATION
A replay will be made available online approximately two hours following the live call for a period of two weeks. To access the replay, use the following numbers:
Replay Dial-In: 877-660-6853 / 201-612-7415
Access ID: 13746266
An archived webcast will also be available to replay this conference call directly from the Company's website under Investors, Events & Presentations.
About Rekor Systems, Inc.
Rekor Systems, Inc. (NASDAQ:REKR) is a leader in developing and implementing state-of-the-art roadway intelligence systems using AI-enabled computer vision and machine learning. As a pioneer in the implementation of digital infrastructure, Rekor is collecting, connecting, and organizing the world's mobility data - laying the foundation for a digitally-enabled operating system for the roadway. With our Rekor One® Roadway Intelligence Engine at the core of our technology, we aggregate and transform trillions of data points into intelligence through proprietary computer vision, machine learning, and big data analytics that power our platforms and applications. Our solutions provide actionable insights that give governments and businesses a comprehensive picture of roadways while providing a collaborative environment that drives the world to be safer, greener, and more efficient. To learn more, please visit our website: https://rekor.ai, and follow Rekor on social media on LinkedIn, X (formerly Twitter), Threads, and Facebook.
Forward-Looking Statements
This press release and its links and attachments contain statements concerning Rekor Systems, Inc. and its future expectations, plans, and prospects that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the impact of Rekor's core suite of AI-powered technology and the size and shape of the global market for ALPR systems. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue," by the negative of these terms or by other similar expressions. You are cautioned that such statements are subject to many risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual circumstances, events or results may differ materially from those projected in the forward-looking statements, particularly as a result of various risks and other factors identified in our filings with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events, or otherwise.
Company Contact:
Rekor Systems, Inc.
Eyal Hen
Chief Financial Officer
Phone: +1 (443) 545-7260
ehen@rekor.ai
Media & Investor Relations Contact: Rekor Systems, Inc.
Charles Degliomini
ir@rekor.ai
REKOR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
| December 31, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 11,881 | $ | 15,385 | ||||
Restricted cash and cash equivalents | 386 | 328 | ||||||
Accounts receivable, net | 7,542 | 4,955 | ||||||
Inventory | 3,754 | 3,058 | ||||||
Note receivable, current portion | 368 | 340 | ||||||
Other current assets | 1,632 | 1,270 | ||||||
Total current assets | 25,563 | 25,336 | ||||||
Long-term assets | ||||||||
Property and equipment, net | 13,876 | 13,188 | ||||||
Right-of-use operating lease assets, net | 9,634 | 9,584 | ||||||
Right-of-use financing lease assets, net | 1,866 | 1,989 | ||||||
Goodwill | 24,161 | 20,593 | ||||||
Intangible assets, net | 28,167 | 17,239 | ||||||
Note receivable, long-term | 397 | 482 | ||||||
Deposits | 3,486 | 3,740 | ||||||
Total long-term assets | 81,587 | 66,815 | ||||||
Total assets | $ | 107,150 | $ | 92,151 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued expenses | $ | 6,905 | $ | 5,139 | ||||
Notes payable, current portion | 1,000 | 1,000 | ||||||
Loan payable, current portion | 76 | 75 | ||||||
Lease liability operating, short-term | 1,377 | 1,261 | ||||||
Lease liability financing, short-term | 569 | 547 | ||||||
Contract liabilities | 4,635 | 3,604 | ||||||
Other current liabilities | 5,760 | 5,610 | ||||||
Total current liabilities | 20,322 | 17,236 | ||||||
Long-term Liabilities | ||||||||
Notes payable, long-term | 1,000 | 1,000 | ||||||
2023 Promissory Notes, net of debt discount of | - | 2,988 | ||||||
2023 Promissory Notes - related party, net of debt discount of | - | 6,351 | ||||||
Series A Prime Revenue Sharing Notes, net of debt discount of | 9,591 | 9,553 | ||||||
Series A Prime Revenue Sharing Notes - related party, net of debt discount of | 4,795 | 4,777 | ||||||
Loan payable, long-term | 253 | 273 | ||||||
Lease liability operating, long-term | 13,216 | 13,445 | ||||||
Lease liability financing, long-term | 948 | 1,057 | ||||||
Contract liabilities, long-term | 1,414 | 1,449 | ||||||
Deferred tax liability | 65 | 65 | ||||||
Other non-current liabilities | 587 | 587 | ||||||
Total long-term liabilities | 31,869 | 41,545 | ||||||
Total liabilities | 52,191 | 58,781 | ||||||
Commitments and contingencies (Note 7) | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | - | - | ||||||
Common stock, | 8 | 7 | ||||||
Treasury stock, 154,653 and 96,508 shares as of December 31, 2023 and December 31, 2022, respectively. | (702 | ) | (522 | ) | ||||
Additional paid-in capital | 272,950 | 232,568 | ||||||
Accumulated deficit | (217,297 | ) | (198,683 | ) | ||||
Total stockholders' equity | 54,959 | 33,370 | ||||||
Total liabilities and stockholders' equity | $ | 107,150 | $ | 92,151 | ||||
REKOR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share data)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
Revenue | $ | 9,778 | $ | 6,185 | ||||
Cost of revenue, excluding depreciation and amortization | 5,285 | 2,868 | ||||||
Operating expenses: | ||||||||
General and administrative expenses | 7,662 | 7,201 | ||||||
Selling and marketing expenses | 2,414 | 1,890 | ||||||
Research and development expenses | 5,001 | 4,958 | ||||||
Depreciation and amortization | 2,332 | 1,955 | ||||||
Total operating expenses | 17,409 | 16,004 | ||||||
Loss from operations | (12,916 | ) | (12,687 | ) | ||||
Other income (expense): | ||||||||
(Loss) gain on extinguishment of debt | (4,693 | ) | 527 | |||||
Interest expense, net | (1,054 | ) | (761 | ) | ||||
Other income | 49 | 239 | ||||||
Total other income (expense) | (5,698 | ) | 5 | |||||
Net loss | $ | (18,614 | ) | $ | (12,682 | ) | ||
Loss per common share | $ | (0.23 | ) | $ | (0.23 | ) | ||
Weighted average shares outstanding | ||||||||
Basic and diluted | 79,558,346 | 54,680,048 | ||||||
SOURCE: Rekor Systems, Inc.
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FAQ
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