Unique Products Deployed In Tightly Bundled
Software and Hardware Offerings Drives Solid Growth with 58%
Year-Over-Year Increase in Revenue
Rekor Systems, Inc. (REKR) (“Rekor”), a Maryland-based company
providing real-time roadway intelligence through AI-driven
decisions, today reported unaudited financial results for the
quarter ended March 31, 2020. The quarter is the first quarter that
reflects the Company’s classification of all operations in its
Professional Services segment as held for sale or discontinued
operations as the Company moves forward with the decision to
concentrate solely on its Technology segment.
First Quarter 2020 Financial and Operational
Highlights
- First quarter 2020 revenue increased 58% to $1.6 million as
compared to $1.0 million in the first quarter of 2019
- First quarter 2020 gross profit increased to 69% as compared to
51% in the first quarter of 2019
- Remaining performance obligations as of March 31, 2020
increased to $13.8 million from $10.1 million on December 31,
2019
Management Commentary
“Even in the face of challenges presented by COVID-19, the
essential nature of our software and hardware has allowed us to
make continued progress on our go-to-market strategy. With our
strong footprint across multiple markets, in a short amount of
time, Rekor has begun to disrupt a mature market with AI-driven
technology, an innovative business model, and proven results. We
have filled out our management team and are providing
municipalities and businesses tools to increase safety and
efficiencies by applying vehicle recognition data to their
workflows and operations,” said Robert A. Berman, President and CEO
of Rekor.
"The first quarter was highlighted by strength and continuing
growth in our top line. We improved our balance sheet and feel
confident we can continue to increase market share in the public
safety, customer experience and smart cities markets. The solid
performance in our Technology Segment translated into a growth in
revenue and gross margin—58% and 34%, respectively,” said Eyal Hen,
CFO, Rekor.
All of the Company’s operations related to the Professional
Services segment have been classified as “held for sale and
discontinued operations” and as of April 2, 2020, the Company sold
AOC Key Solutions, Inc.
On April 14, 2020, the company received coverage from B. Riley
FBR with an initial Buy rating and $6 price target, stating that
the Company's technology is under-penetrated and well-positioned
for "significant growth.”
First Quarter 2020 Financial Results
Revenues for the first quarter of 2020 and 2019 were $1.6
million and $1.0 million, respectively. The increase in revenue was
primarily attributable to the acquisition of OpenALPR in March
2019. During the three months ended March 31, 2020, revenue
attributable to OpenALPR was recognized for the full three-month
period compared to only half a month of revenue recognized in the
corresponding period in 2019.
Gross profit for the first quarter of 2020 was $1.1 million,
representing a 69% gross profit margin, compared to $0.5 million or
51% gross profit margin, for the same quarter in 2019. The increase
in gross profit was primarily attributable to the inclusion of
OpenALPR since its acquisition in March 2019. We realize higher
margins from the revenues associated with licensing and
subscription since there are less labor costs incurred.
Loss from operations for the first quarter of 2020 increased by
120% to $2.6 million, compared to $1.2 million in the same quarter
in 2019. The increase in the operating loss during the year is
attributable mainly to the increased operating expenses in
connection with our plan to develop and promote our technology
products and offerings. As part of this effort, we brought on
several new senior officers and other executives of the Company to
support our growth plan and build our corporate structure.
Loss per share from continuing operations for the first quarter
of 2020 was $0.19, compared to loss per share of $0.15 in the same
quarter in 2019. Without non-recurring items, loss per share with
Adjusted EBITDA was level at $0.11 and $0.07 for the three months
ended March 31, 2020 and 2019, respectively.
Notable Wins and Achievements
Software and Services
During the 1st quarter of 2020, the Company:
- Forged a partnership with a major payment network processor to
use Rekor technology to improve drive-thru and curbside pick-up for
the quick service restaurant market
- Launched new reseller and partner program created to grow its
product and services channels and develop mutually beneficial
collaborations
- Completed automation of a new licensing platform enabling
frictionless distribution of our high margin SaaS products
- Continued international expansion of its iP360 Parking and
citation management solutions
- Increased the issuance of our Watchman software products to the
United States Department of Defense
Products and Systems
Integration
The Company has recently added over 50 new public safety clients
and executed:
- Multi-year contract with the City of Lauderhill, Florida
- Multi-year contract with the City of Mt. Juliet, Tennessee
- Multi-year contract with the City of New Rochelle, New
York
EBITDA and Adjusted EBITDA
We calculate EBITDA as net loss before interest, taxes,
depreciation and amortization. We calculate 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
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,
Adjusted EBITDA and Adjusted loss per share for the periods
included (dollars in thousands):
Three Months Ended March 31,
2020
2019
Net loss
$
(3,774
)
$
(2,518
)
Income taxes
7
12
Interest
1,163
209
Depreciation and amortization
423
198
EBITDA
$
(2,181
)
$
(2,099
)
Loss on extinguishment of debt
-
1,113
Share-based compensation
171
63
Adjusted EBITDA
$
(2,010
)
$
(923
)
The following table reconciles the loss per share to the Loss
per share with Adjusted EBITDA for the periods included:
Three Months Ended March 31,
2020
2019
Loss per share
$
(0.19
)
$
(0.15
)
Income taxes
-
-
Interest
0.05
0.01
Depreciation and amortization
0.02
0.01
Loss on extinguishment of debt
-
0.06
Share-based compensation
0.01
-
Adjusted loss per share (1)
$
(0.11
)
$
(0.07
)
(1)
Adjusted loss per Share, which is a non-GAAP financial measure, is
defined as loss per share adjusted for the financial metrics to
calculate Adjustment EBITDA. Management uses Adjusted loss per
share to assess total Company operating performance on a consistent
basis. We believe that this non-GAAP financial measure, when
considered together with our GAAP financial results, provides
management and investors with an additional understanding of our
business operating results, including underlying trends.
About Rekor Systems, Inc.
Rekor (Nasdaq:REKR) is a Maryland-based company providing
real-time roadway intelligence through AI-driven decisions. Rekor
bridges commercial and government sectors with actionable,
real-time vehicle recognition data to enable informed decisions
faster, and with greater outcomes. Rekor is transforming industries
like Public Safety, Customer Experience, and Smart Cities in more
than 70 countries across the globe with smarter, quicker,
cost-competitive vehicle recognition solutions for security,
revenue discovery and recovery, public safety, electronic toll
collection, brand loyalty, parking operations, logistics, and
traffic management. We use the power of artificial intelligence to
analyze video streams and transform them into AI-driven decisions
by our clients. Our machine learning software can turn most IP
cameras into highly accurate and affordable vehicle recognition
devices used to help protect lives, increase brand loyalty, and
enhance operations and logistics, without the need to install
expensive new infrastructure. We make what was once considered
impossible, possible. To learn more please visit our website:
https://rekor.ai.
Forward-Looking Statements
This press release includes 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 of the market for global 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.
REKOR SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited)
March 31, 2020 December 31, 2019
ASSETS
Current Assets Cash and cash equivalents
$
1,087
$
1,075
Restricted cash and cash equivalents
415
461
Accounts receivable, net
737
776
Inventory
488
302
Other current assets, net
388
175
Current assets held for sale and discontinued operations
7,408
7,441
Total current assets
10,523
10,230
Property and equipment, net
480
442
Right-of-use lease assets, net
383
283
Goodwill
6,336
6,336
Intangible assets, net
7,993
8,244
Long-term assets held for sale and discontinued operations
3,407
3,457
Total assets
$
29,122
$
28,992
LIABILITIES AND SHAREHOLDERS'
DEFICIT
Current Liabilities Accounts payable and
accrued expenses
$
3,264
$
3,678
Lease liability, short-term
231
148
Contract liabilities
799
749
Current liabilities held for sale and discontinued operations
5,787
5,757
Total current liabilities
10,081
10,332
Notes payable
21,922
20,409
Lease liability, long-term
172
161
Contract liabilities, long term
775
775
Deferred tax liability
10
10
Long term liabilities held for sale and discontinued operations
502
536
Total liabilities
33,462
32,223
Series A Cumulative Convertible Redeemable Preferred stock, $0.0001
par value, 505,000 shares authorized and 502,327 shares issued and
outstanding as of March 31, 2020 and December 31, 2019,
respectively
6,010
5,804
Commitments and Contingencies Stockholders'
Deficit Common stock, $0.0001 par value, 100,000,000 and
30,000,000 shares authorized, 22,786,757 and 21,595,653 shares
issued and outstanding as of March 31, 2020 and December 31, 2019,
respectively
2
2
Preferred stock, $0.0001 par value, 2,000,000 authorized, 505,000
shares designated as Series A and 240,861 shares designated as
Series B as of March 31, 2020 and December 31, 2019, respectively
Series B Cumulative Convertible Preferred stock, $0.0001 par
value, 240,861 shares authorized, issued and outstanding as of
March 31, 2020 and December 31, 2019, respectively
-
-
Additional paid-in capital
21,959
19,371
Accumulated deficit
(32,311
)
(28,408
)
Total stockholders’ deficit
(10,350
)
(9,035
)
Total liabilities and stockholders’ deficit
$
29,122
$
28,992
REKOR SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
2020
2019
Revenue
$
1,595
$
1,010
Cost of Revenue
494
490
Gross profit
1,101
520
Operating expenses: General and
administrative expenses
2,791
1,543
Selling and marketing expenses
371
158
Research and development expenses
543
5
Operating expenses
3,705
1,706
Loss from operations
(2,604
)
(1,186
)
Other income (expense): Loss on extinguishment of
debt
-
(1,113
)
Interest expense
(1,163
)
(209
)
Other income
-
2
Total other expense
(1,163
)
(1,320
)
Loss before income taxes
(3,767
)
(2,506
)
Income tax provision
(7
)
(12
)
Net loss from continuing operations
$
(3,774
)
$
(2,518
)
Net loss from held for sale and discontinued operations
(14
)
(357
)
Net loss
$
(3,788
)
$
(2,875
)
Loss per common share from continuing operations - basic and
diluted
(0.19
)
(0.15
)
Loss per common share from held for sale and discontinued
operations - basic and diluted
-
(0.02
)
Loss per common share - basic and diluted
$
(0.19
)
$
(0.17
)
Weighted average shares outstanding
Basic and diluted
21,929,768
18,800,496
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200513005174/en/
Media: Lisa Throckmorton REQ for Rekor Systems
lthrockmorton@req.co 703-287-7803
Investors: Charles Degliomini Rekor Systems, Inc.
ir@rekor.ai
Rekor Systems (NASDAQ:REKR)
Historical Stock Chart
From Aug 2024 to Sep 2024
Rekor Systems (NASDAQ:REKR)
Historical Stock Chart
From Sep 2023 to Sep 2024