Q2 2021 Rekor Systems Inc Earnings Call
[music].
Good afternoon, ladies and gentlemen, and welcome to today's recourse systems incorporated conference call.
My name is Catherine and I will be your coordinator for today at this time all participants are in a listen only mode.
As a reminder, this conference call is being recorded for replay purposes before we get started I'd like to read you the company's abbreviated Safe Harbor statement.
I'd like to remind you that the statements made in this conference call concerning future revenues results of operations financial position markets economic conditions product and product releases partnerships and any other statements that may be construed as a prediction of future performance or events are forward looking statements.
Such statements can involve known and unknown risks uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied in such statements.
I ask that you refer to the full disclaimers in our earnings release, you should also reviewed the description of the risk factors contained in our annual and quarterly filings with the SEC non-GAAP results will also be discussed on this call. The company believes the presentation of non-GAAP information provides useful supplementary data.
Concerning the company's ongoing operations and is provided for informational purposes only.
I would now like to turn presentation over to Mr. Al <unk> CFO of recourse systems.
Thank you operator, and good afternoon, everyone. Thank you for joining us today I will discuss recourse the results for the second quarter ended June 32021, as well as provide an update on key business topics.
On the call with me today is Robert Berman, President and CEO will be giving you additional updates as soon as they're finished with a relevant metric.
Following our prepared remarks, we'll take your questions.
We continue to generate strong revenue growth year over year revenue for the second quarter of 2021 was $4.3 million.
Healthy increase of 60% compared to $2.7 million in revenue for the same period last year.
Revenue for six months ended June 32021 was <unk>.
$8.5 million compared to $4.3 million for the same period last year.
This is a robust growth of nearly 8% year over year.
Our working capital increased to $79.8 million up from $18.2 million as of December 31, 2020.
A result of our public offering in February 2021.
Similar to the first quarter of this year the increase in our revenue in the second quarter, primarily due to the expansion of our product and service offerings.
Also now reaping the benefits of the strategic marketing initiated will launch at the beginning of 2021.
Revenue for our high margin SaaS E Commerce platform increased to $405000 for the three month period ended June 32021.
<unk> hundred and 6% year over year from 197000 for the comparable period in 2020.
The Oklahoma uninsured vehicle enforcement diversion you've.
This program generated revenue of $387000.
Second quarter and 635000 golf for the six months ended June 32021.
This is a program that we began working on generally for this year the state of Oklahoma.
Ah in identifying uninsured vehicles on the road.
This program can generate significant revenue for state and more importantly can play a significant role in improving highway safety is a contactless compliance measure.
Other state and municipalities have shown an interest in this program and are starting it seriously.
Our gross margin for the quarter ended June 32021 was 66% an increase from the 52% we reported in the comparable 2020 period.
The increase in margin for the second quarter ended June 30, 'twenty 'twenty. One is primarily attributable to the higher margin software sales, including the increase in the E com with revenue, which was higher margin than those associated with our hardware product.
Gross margin for the first half of the year ended June 30, 2021 was 60% compared to 15, 9% in the same period last year.
While we anticipate our long term gross margins to be on the range of 60% to 65% of gross margins can fluctuate quarter to quarter based on our sales mix.
Total operating expenses for the second quarter of 'twenty, 'twenty, one or seven and a half million compared to $4.2 million in the same period last year.
We recorded a significant increase in payroll expenses as we continue to add head count in our engineering and sales and marketing teams.
In addition, we expanded our sales and marketing efforts and added additional resources to promote our products and services.
Finally, we grew our spent on research and development project to develop new technologies and improve our line of products.
We will continue to invest in innovation to retain our competitive edge and continue to develop more and better state of the art solutions to address the growing needs of our customers.
Adjusted EBITDA for the second quarter ended June 32021 was a loss of $2.9 million as compared to a loss of $2.1 million the same period last year.
Adjusted EBITDA for the six months ended June 30, 2021 was a loss of $6 million as compared to the loss of $4.1 million for the year ago comparable period.
The increase in loss was also due to the aforementioned investments in growth initiatives.
Financial condition liquidity, our cash balance on June 30.
2021 was 69 million up from 21 million as of December 31st 2020. We also have 13 million held in short term investments, which have maturity dates greater than three months uplift in 12 months.
This was primarily due to net proceeds from our public offering in the first quarter of this year.
Working capital at the end of the quarter stood at $79.8 million. Obviously this is more than what is necessary to support our near term operations, but has been held to support all the M&A activity, which all of us will discuss shortly.
In summary, we feel very good about the strength of our balance sheet, which provides us financial flexibility to pursue organic and inorganic growth opportunities. We continue to invest in our business in a disciplined manner to position recall to be a key participant in the still nascent market for intelligent infrastructure.
Now I would like to turn the call over to our Chief Executive officer of Burma or.
Thank you al good afternoon, everyone and welcome.
Today I want to provide a brief update on the path ahead and our strategy.
Please note that we will be providing further details on our strategy following our annual shareholder meeting on September 14th.
When we decided to focus on our technology business in 2019, we began the journey with the goal of establishing record as a leader in the emerging intelligent infrastructure sector, the backbone with smart cities.
Smart cities are no longer an abstract idea, what's becoming reality due to necessity.
Three years ago, the United Nations published a report, which projected at 68% from the world population will be living in urban areas by 2050 up.
Up from 55% today.
This poses a significant challenge to the existing infrastructure and current approach to managing cities.
Sustainable organization is key to successful development as the United Nations pointed out in his report.
With the growth in urban population and a focus on sustainability aging infrastructure and resource scarcity and become a severe challenge to governments.
All of this boils down to a very strong tailwind that can drive demand for our solutions and a rapidly growing market.
Engineers and infrastructure experts in the United States have been sounding the alarm for renewed national focus on overhauling our country's infrastructure.
Interstate highway system dates to the 19 fifties. According to the American Society of Civil Engineers crowding of poorly maintained roads costs. The U S more than $160 billion in waste to fuel and time each year.
Since 2008 congestion on roads has increased at a compounded annual growth rate of 1% to 3% outpacing population growth.
The average American is estimated to spend 54 hours a year and traffic up from 42 hours in 2014.
Core road surface conditions result, in motorist spending nearly $130 billion in extra vehicle repairs and operating cost each year.
Yeah.
The American Society.
Society of Civil Engineers estimates U S needs to spend as much as two trillion dollars on infrastructure over the next five years alone.
The Biden administration and a bipartisan coalition of Congress has recognized this and we are finally seeing a willingness to allocate the billions.
Not trillions of dollars needed for the development of renewed infrastructure.
Other developed and developing nations around the globe are also showing a willingness to meet these challenges and commit the funding necessary.
But novel approaches needs to be taken to address these basic problems the efficient movement of billions of people and goods to sustain them through increasingly congested spaces requires the ability to capture analyze and act on vast amounts of relevant data quickly reliably and intelligently.
This is important in every aspect from initial design to daily management.
The foundation of Smart cities and the networks that connect them in the future will be intelligent infrastructure.
That is designed and managed using the best data and analytical tools available.
Our ambition here a record has to be a leader in this effort to improve the lives safety and well being of people living in large and small communities around the world.
At <unk>, we're committed to providing the technology and solutions needed to build and maintain intelligent infrastructure and believe the three key pillars are necessary to be a leader in its nascent and promising industry.
First the ability to collect holistic and real time data.
Minus with third party sourced information connected vehicles Crowdsourced entities SEC.
The ability to analyze this data using cutting edge AI driven software to provide customized solutions for real problems with measurable results and last the ability to monetize these solutions and rapidly expand our geographic footprint.
All three pillars are essential to our building in artificial intelligence space ecosystem around smart cities that will enable us to capitalize on the need to improve the efficiency and effectiveness of how cities and communities are run.
By aggregating data processing data and ultimately providing immediate solutions to immediate problems. Our goal is to optimize the use of limited resources, while improving the wellbeing and safety of citizens around the world.
The first pillar the ability to collect real time data is the bloodline of our AI engine.
Our hardware uses the latest cutting edge technology to conduct on device edge AI processing.
We're able to aggregate real time data with very high accuracy, even in adverse conditions.
Based on our clients' needs. We can then combine our data with acquired third party data to create a holistic and accurate view of what's happening.
Our customers have the ability to view real time images and videos as well as both historic videos on demand.
Our edge processing with on device AI allows us to offer solutions at a fraction of the data related cost clients would have to pay for products that need consistent data transfer to the cloud.
And the beauty of our approach is that our customers don't have to upgrade to sophisticated optical sensors for our solutions to be effective.
We can integrate data from almost any IP camera into our solutions to lower the costs through legacy integration.
This is especially important as we address the needs of our commercial clients.
With the way care acquisition, we have significantly strengthened our ability to access third party data we.
We can overlay this data with our own real time data to provide a holistic view of the roads.
The way care acquisition accelerated efforts that were already in progress and would have involved considerably more time and expense.
In particular, it would have been difficult to replicate what wake her has already achieved in terms of its vendor relationships.
What sets us apart from the competition as our software on our algorithms.
This is the second pillar.
The ability to provide customized solutions via a cutting edge AI driven software.
Our AI based solutions can analyze the status quo to provide immediate answers to.
To do so yeah it needs to be taught.
This is not any different than how we humans developed.
We crawl.
We work and then we run.
It takes time for AI to learn and it becomes increasingly better and smarter.
The more data the eye processes smarter gets more effective it gets in providing optimized AI driven insights and solutions.
And that puts US years ahead of others, who are just trying to start developing this technology and it's another reason why wait wait cares AI based technology integrates well with our overall effort.
Finally, the third pillar is expanding geographic footprint. There was a significant first mover advantage as relationships tend to be sticky, resulting in recurring revenues.
This is why we are focusing on growing our footprint.
We can do this through acquisitions as we will discuss later or we can achieve this organically.
This entails putting a stake in the ground and we we will do this town by town County by County, and city by City.
We get a lot of questions from investors, who are asking about specific revenue opportunities from our pilot programs.
Since we're building an ecosystem.
I'd like to help you take a long term view at our process.
As we develop a relationship with a customer providing one solution our clients typically ask for additional help in addressing their growing needs.
This provides an opportunity to upsell our various products.
There are no stronger advocates then happy customers word of mouth advertising as the best advertising and what we have seen is that if one municipality buys your product and see some immediate benefits.
Neighboring municipality wants the same one.
There is a multiplier effect, which is not apparent when we initially signed a contract our experience is similar to that awake here.
If you remember from the presentation, we provided last week wake her entered a small pilot program in southern Nevada.
Which expanded to northern Nevada, growing total contract value by a factor of 161 times and only three years.
This is similar to what we have experienced with other customers.
Each market entry is an investment into future growth and we are just getting going we are seeing the benefits of moving to SaaS model with recurring revenue.
A small revenue opportunity can grow to a stream of recurring revenues with the right solution.
This will happen over time.
If we are ready for this and continue to provide our customers with remarkable solutions to their problems.
With <unk>, one we provide a complete disruptive intelligence platform that has no equals we offer hybrid cloud native solutions from the get go that our system agnostic and able to integrate with a multitude of hardware and software products.
We can also integrate and deploy our solutions across multiple agencies in a given region.
Cooperating our real time data with third party provided data to generate solutions for better outcomes.
Record one uses a modular approach.
We have the ability to turn on and off bearish modules to provide exactly what the client needs.
Our roadway intelligence solutions, which are an element of what we define as intelligent infrastructure can be provided within the same unified platform.
Our short term goal is to add additional functionality and solutions with each module.
And our long term ambition is to expand the platform to become a provider of all the holistic intelligent infrastructure solutions, which will form the foundations of smart cities.
Each module that we add to the platform will depend on the needs of our clients.
So we are providing solutions for a large number of use cases this.
This allowed us to monetize these relationships access our solutions and make improvements as needed.
Whether this is assisting with perimeter traffic and fleet management permit issuance and usage hazardous waste enforcement or improving forest fire modeling.
Use cases are many and we can use our technology to provide customized solutions to numerous challenges.
However, with Datacom to responsibility, we take privacy concerns very seriously and our proprietary algorithms are created to be in full compliance with the security and privacy requirements of each end user.
All our data we collect passes through our sophisticated and proprietary personally identifiable information.
I filter that the identifies and Anonymize the data in an irreversible way before it is incorporated into our roadway intelligence platform.
With require one there are significant economies of scale to be had.
Record one helps bridge gaps in information and communication, allowing humans to more efficiently use technology to better collaborate using data.
Monitoring analysis and ultimately collaboration.
So we are intently focused on three ingredients data software and geographic footprint.
With them, we can provide a multitude of products and solutions to reduce congestion.
Improved infrastructure.
Increased safety and security promote sustainability.
Improve efficiency and enhance customer experience.
We talked about this on our call last week, but I want to reiterate how the way care acquisition fits into our broader strategy.
As we mentioned there is a first mover advantage in this nascent industry.
Time is money, we can save both time and money by integrating with wake her.
We are accelerating speed to market by gaining expansive geographic footprint faster access to third party vendor relationships.
And diverse data sources, and adding an innovative software product that complements our offering and differentiates us from our competitors as we are building a comprehensive intelligence platform.
Wake Harris current footprint as well as potential opportunities to further expand it and put flags on the map and more states is very valuable.
Once we have entered a market and establish relationships, we can cross sell and up sell products, gaining a larger share of customers' wallets.
To provide the right solution, we need to feed our AI software, an increasing amount of data it would take us time to replicate what we care has already achieved in terms of its relationships with data partners and its investment in analyzing that data.
These partnerships, including leading Oems.
The vehicle data providers telematics solutions, and many more vendors and partners.
Our record one platform was built to generate a holistic view of roadways and now we can feed more data into our system by leveraging <unk> relationships.
Each set of data makes our products smarter and our solutions more sophisticated and valuable.
Coming to market with a broad range of products is a key differentiator and there is an advantage to speed to market and putting flags on the map.
Specially when dealing with public entities.
On many calls we get asked about the progress on various states and cities are answers the same.
When you're working with government states cities and municipalities. It takes time to get to yes. It is a long sales cycle that involves proving yourself and building trust.
However, once you have won a contract the same long sales cycle creates a moat.
Revenues tend to be recurring.
And there is a significant opportunity to cross sell to other agencies.
While the way care acquisition nicely adds to our footprint, we continue to focus on organic growth and are executing smartly.
In July we announced that the capital of New York City of Albany in partnership with you all many police department selected <unk> as a solutions provider for vehicle recognition.
We were selected to help maintain the safety and security of the community and its citizens.
Some key takeaways from the press release, we put out.
First we won a competitive bid process meeting and exceeding various performance requirements, including lane capture solar power operation easy integration with third party applications unlimited storage.
And robust vehicle identification capabilities.
This speaks to the strength of our hardware and software and there should not be any doubts about the strength of our technology SEC.
Second with this win we have grown our footprint in the U S. Our partnership with Albany fall successful implementation in 24 states nationwide.
As mentioned earlier wins like this generally result in additional wallet share or other cities and municipalities enquiring about our services.
This leads me to the final point.
Is this a big revenue contributor.
No not at this point, but allows us to build a relationship that can have a multiplier effect.
The same is true regarding the press release, we put out regarding Waukesha County Park system.
Selecting recall want to help maintain the security of each of its eight public parks and to ensure entrance fee compliance.
And with each win.
We grow our real estate, we gather additional data to help our AI learn and we build relationships that could drive meaningful revenue opportunities.
With each new win we're improving our product and enhance our capabilities.
This positions us well in pursuit of becoming a defining contributor to intelligent infrastructure.
We will provide a strategic roadmap on how we plan on doing this following our upcoming annual shareholder meeting on September 14th.
And with that I would like to turn the call back to our coordinator for questions.
Thank you ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone now.
Your question. Please back up your handset FSA on speaker phone unified opt on sound quality.
Okay.
The floor back to Robert Berman, while we poll for questions.
Operator, Thank you we want to take a couple of email questions first.
And the first is from John Noel and he is asking for an update on the lawsuits. So I think thats an appropriate place to start.
We hired.
Nathan Watkins to defend the lawsuits there has only been one case filed.
With a lead plaintiff that owns 50 shares.
And I think you all saw the filing that we did in.
New York Court.
Turning to unmask the folks that wrote the research reports that were the basis for the lawsuits.
Because we believe that not only were they on true unfounded inaccurate and misleading, but part of a short attack and as our lawyer.
Clark likes to say who's dealt with many of these ameritech.
So were event, we're defending lawsuits vigorously and it's unfortunate, but we don't think much of them and we'll continue to keep you updated as we move forward.
Second part of the question is with respect to the mills in Florida, and Texas, well with respect to Florida, we have been engaged in dialogue with.
The Department of Highway safety since the Bill failed. They were one of the agencies that were involved in the process and.
As things have it the way legislation comes together, sometimes things are very quick and at the end of the day some agencies get spooked. They don't realize the amount of work that they have to do or don't do.
So it also takes sometimes a legislative cycle or two before things pass.
But there is interest in Florida for sure actually our head of government affairs is going down there.
Later this month.
To meet with them.
And to discuss moving this forward and the same is true for Texas and other states as well and we believe that contactless compliance, which is a module within our record one platform is something that we're going to see.
See happen as.
Things evolve it's just it just makes sense and that's where the future is so odd.
Operator with that we can move onto questions.
Your first question is coming from Steven Iceman with Neuberger Berman.
Your line of sight.
Hi can you hear me.
Yes.
I can't update Hi, can you give us an update on the Mastercard pilot program.
Okay.
Sure we get asked this all the time.
And just again, we say over and over again, we are a vendor to Mastercard, we did have several pilots with them they tested.
<unk> solution they tested our technology, we have in place all of our agreements are pricing I can say that they're satisfied with <unk>.
They are satisfied with our performance.
But it's their product and they are the ones that are working with these.
Large fast food chains and we.
We really can't speak to the rollout they've they've asked us about everything from scheduling from.
Large rollouts to small rollouts two things in Europe to things here.
And we provide them all the information every question they said.
Standby and that's that's what we're doing we're standing by so we don't believe the Mastercard invested all the time effort and money. They did in this product.
For just for the sake of doing so.
So we're hopeful that that theyre going to start rolling this out at some point in the near future and we stand ready to.
Provide the services to them they've contracted with us.
Well thank you.
Thank you.
Your next question is coming from Zach Cummings with B Riley.
Your line is <unk> guys.
Hi. Thank you this is actually Amman, galotti I'm jumping in for Zach Thanks for taking my question.
Yes, My first question.
I went to the puts and takes for revenue being essentially flat.
<unk> basis.
What are the certain projects did not that did not go lives.
Got it.
Yes.
Like everything else. This is a development stage company and you know when your revenues as Youre starting to grow in scale.
Are you.
The size of our revenues are sometimes when things get delayed a little bit.
It has an impact on your quarter right.
Deal with a lot of governmental entities, we deal with a lot of large corporate entities, we deal with integrators that are dealing with the federal government.
And things just sometimes you know take little bit longer than it is what it is so if we had $50 million of revenue in a quarter and we missed.
Little bit you wouldn't notice right, but when you are a development stage and you're growing you notice.
The good news is that I would say that you know I've always thought that you can judge yourself by the company you keep and I think record keeps some pretty good company with the partners. We have in Counterparties that were in relationship with so.
Hope that's helpful. Okay Yep.
Yeah, No that's really helpful. Okay. Thank you.
Maybe talk about the annual.
Revenue run rate and gross margin profile of weight care and maybe if you could touch on maybe for the cross selling opportunities with <unk> and wake her.
Yeah, I'll take the financial piece and I'll talk about the cross selling.
Obviously at this point you know this transaction will close and we cannot sort of ground and speak to their financial information.
On record as we always said the long term gross margin, but we anticipated 60% to 65% as we grow.
And.
I'd like to say that with respect to cross selling I mean, we're both in the same markets.
We've created a platform that generates a large amount of.
Holistic real time data.
And some of you may want to take a look at a company that went public today called autonomy right. So they sell connected vehicle data and wake her gets data from them as do others right and there's another company called Huizhou from economy went public today.
Our evaluation of about $1.3 billion of revenue last year was 400000 or expecting 3 million today record generates a lot of holistic data and weight care uses a lot of connected vehicle data and other third party data from Crowdsourcing entities and so forth.
The value of using their applications over our data saved us literally years and are fortunate for having to develop the AI applications. So that you can do the predictive intelligence necessary for that particular module, which is incident management incident response time. The other thing that I would say is really important and.
This is something that only <unk> can do but a lot of <unk> customers operate.
Traffic management center, so to speak. So you can think about an entity that has a large video wall with hundreds of screens with people sitting there watching those things those are all live video feeds coming into that traffic management center and we have the ability to put our algorithm on prem on a server point the feeds to our server without interfering whatsoever.
With what are the customers using it for and then pull all the same data that we would get if we had a device operating on the edge right off of that server on Prem, Okay, which can feedback into the way care platform and it can also give.
<unk> the additional ability to do things that they can't do today like offering wrong way alerts and other things related to.
Speed and sustainability and congestion and so forth. So there's a huge amount of synergy here between weight care.
And recall and we've been looking at this market for the longest time and it's it's an emerging sector. It's nascent it's changing every day of the land is shifting underneath us.
You see all of a sudden these all of these companies and connected vehicle data and other crowdsourced data, becoming part of the discussion around how you create intelligent infrastructure.
And I will say the way care is a rare asset it's a very rare asset because unlike autonomous <unk> and others that provide just data.
Wait carriers, both applications to make use of that data so that theres actually a solution for the end user and it was just really a great fit for us and we're lucky that we.
We came across them and that we share a common vision as to where the industry is headed and we're excited about it and we think it's going to help position <unk> as a leader in the space.
Okay. Thank you I'll jump back into queue.
Yes. Thank you.
Once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone now.
Your next question is coming from Jason Smith with Lake Street.
Your line is live.
Hey, guys. Thanks for taking my questions. Robert I, just wanted to follow up on your comments on seeing increasing interest or additional interest from other states on uninsured driving programs I'm. Just curious if you could quantify that at all or.
The interest has really accelerated in the past 30 months or earlier remains stable.
Alright.
It's a really good question and I'm glad you asked it okay.
But as I've said in the past.
These types of programs and it's not just uninsured you've got to think about compliance a contactless compliance.
Look we all know what happened in Minnesota, when an officer pulled out what she thought was a taser and she pulled out or gone she killed somebody pulling them or unexpired pack. This is the 20 <unk> century.
Hey, maybe we ask our police to do too much in the concept of having patrol cars make less stops and having technology replace that okay for expired tags uninsured motor vehicles registration compliance license compliance and so forth mix a lot of sense, that's something that's going to happen and.
And we see.
Basically that.
That's the case and we see a lot of dialogue and discussion around that.
Throughout the states and cities just even over the last few months.
And think of it like the lotteries.
They rolled out in first you had one then you had two and now you have a whole bunch and then they are starting to get to get together and do things together like Powerball and Mega millions so.
The unit program in Oklahoma is an absolute success.
Okay for many that don't know we came in and we replaced an existing vendor that was doing a terrible job. So that that state had already been kind of mine so to speak from the standpoint of what the prior vendor did and the way that we had to come in and straighten that program out was not easy, but I think the stay.
It is very happy with it I can tell you that the number of uninsured motor vehicles in that state has reduced substantially just since we've been running the program in six months and Thats the goal of the program.
It's helping people in the states happy about it and it can't be that other states don't see that theyre going to see that and it's just going to it's going to take its natural course.
Okay, and then just looking at the way care acquisition I know you went through sort of what attracted you to them or their footprint their vendor relationships and obviously, a complementary product portfolio, but there are certainly other companies out there in that same sandbox just curious how long you have been familiar with.
Take care and when they sort of got on your radar screen and what ultimately was the horizon or if it was just a combination of these three things that really matter.
GAAP guidance.
It was.
Close to nine months ago.
We became aware of wake here as you know our CFO from Israel and he has relationships there and we became aware of what they were doing and we will watching them and at the same time that we were watching what they were done we were watching the other.
Companies that do what they do remember they don't.
They have some OEM deals for connected vehicle data, but thats not their primary business our primary businesses.
Making it safer by reducing incident response time and things like that so they are very rare asset there is not another company out there that does what <unk> does so we started looking at them. We started talking to them at the same time for the <unk>. One platform. We were looking at what we call the <unk> data which is connected.
Vehicles and crowd sourced data to pull that into recor want to sit alongside of our holistic data, which is real time, because we knew that we had to have both in order to accomplish what's necessary to provide real solutions to these municipalities. So we've been analyzing all of this for the longest time and wait care made them.
Most sense to us all the acquisitions that we were looking at.
And it did take quite a while to get them to the table and get them to take us seriously.
So I think frankly, there are rare asset and the fact that they decided to.
Sidestep their series B round and joined <unk> as a testament to our business plan.
Okay. Thanks, a lot guys.
Thank you.
Your next question is coming from Robert Lewis.
Your line is live.
Couple of questions from the time your request for proposals.
I'll come from these obviously government agencies, what is the normal turnaround time, let's say from the municipality and the government business.
That's a good question so it could range from.
A few weeks to a few months and even longer depending on the size of the contract.
We have had some success recently with a new program once we <unk>.
Launched <unk>, one which is not that long ago, it's only a few months now.
We've been able to do something sole sourced because there isn't another company that provides the same service and some governmental entities are able to do sole source contracts. If they can prove they can't get it elsewhere way care has had a lot of success in that regard they've been able to do more.
I believe almost all of what they have done has been sole source because again there is no. Other company that provides what they do so.
It may stay this way for a while it could be a year or two because this is such a young nascent industry.
But government sales cycles are long.
But what happens is you start with a small.
Either pilot or a contracted evolves to.
And expansion and then you end up being a trusted partner.
And once you are trusted partner it is very difficult to dislodge the vendor.
It's a very sticky very sticky business.
How long does it take you to get the entire state of Oklahoma from which I'm sure you started with.
What you just described I mean, you came back in and basically now you I believe you have the whole state. So what was the time element involved in that whole process.
And guidance.
Go ahead.
I was there a second part you can go ahead and ask him to answer both.
Yes.
The second part is basically what is the request for proposals right now and how many new proposals that you have in house right now versus a year ago.
Well, so first with respect to Oklahoma. It was about six months, Oklahoma decided that they were going to terminate their prior vendor, which they did and once they terminated that vendor.
They put out an RFP I believe it was in the late.
Late summer.
Last year, maybe the early fall September.
The awarded in either late October and November and we were obligated to have that system up and running by the end of the first quarter, we actually had it up and running.
At the beginning of January.
So that was a fairly short process for a contract of that size, but remember Oklahoma is a relatively small state. So when you talk about other states I'm not sure that we can replicate the speed to.
We got a whole stayed up and operating that quickly, but it's certainly not going to be years, where.
With regard to how many.
Rfps, we see right now I can tell you that our company is engaged in.
A dozen or two dozen pilots that were done without rfps and we have a pretty robust RFP center here is we'd like to call. It a wake her has one as well we're going to combine both of those.
And I would say at any given time, we're constantly looking at a half a dozen to a dozen opportunities.
And the revenue streams on these what roughly in the two to $300000 range.
These were all they should think restart they may start that way, but they evolve like it looked like in a way care's contract in southern Nevada.
Was granted in 2018 that was a $30000 pilot and that contract today is $5.3 million in less than three years. So again, it's you get in and in large part a lot of these municipalities don't really know they know the problems they're trying to solve they really don't know how to solve them. So once you get in the door that the.
Relationship tends to it tends to grow.
So I will say that the revenue opportunities can start small and then they grow and they are sticky and the other thing that I want to say it.
And I think your question gives me the opportunity to do it is several months back.
<unk> decided to hire a very well respected global.
Insulting firm to look at this entire space.
What I mean by that intelligent infrastructure now the concept of smart cities and.
Intelligent roadways, and smart mobility These awards and the turnaround for more than two decades, and it frankly, they've been meaningless until now.
So we decided to commission a study to look at the total addressable market the competitive landscape.
And even our consultant, which.
Those of you that come to our Investor day in September, which which is on the same day as our shareholder meeting.
Youll find out who that consultant is and <unk>.
Even.
They're saying how nascent this is and how quickly it is evolving.
So this is all happening in real time, and I can't think of anything else that I've seen in my lifetime that really actually evolved in real time with companies trying to get into the mix.
Other than the Internet back in the middle nineties.
So it's an interesting time and this is an interesting space.
And folks need to have patients, but they also need to be smart and realized through who the companies are that are going to succeed.
In this sector.
Yes.
Okay. Thank you.
Thank you.
Your next question is coming from Mike Latimore with Northland capital.
Your line is live.
Hi, This is <unk> on behalf of Michael It's Patrick.
Could you tell me did you guys recognize any border patrol revenue in this quarter.
Did you say custom custom border patrol.
Border patrol yet.
Oh, so okay, you're referring to Europe in Tucson.
You are referring to the <unk> two contract.
So.
Because its public we can talk about it right. So the custom border patrol is re bidding of five year I think it's like a $400 million contract.
For redoing all of the technology.
Both inbound and outbound lanes, along with other things whatever they are doing and recourse teamed with.
All bidders that are bidding on it.
And.
CBP has not yet.
Narrowed the field they were supposed to do that last month, they haven't gone at Theyre, saying Theyre doing it at the end of this month. So the original award date was supposed to be.
At the end of this month now Theyre, saying September 30th.
We will have to see but again, it's the federal government's September 30th can slip till October.
We've had a little bit of revenue from it this quarter not much.
Very very little we expected quite a bit more because we also our team with the incumbent.
And the incumbent is still responsible for replacing.
Systems, where they have a system failure or other problems. So.
We didn't have as much revenue from it this quarter as we expected, but we're hoping that they awarded the contract.
This fall because theyre going to redo the whole thing and it's a considerable.
Considerable win for <unk> at the end of the Diana.
I think we have a pretty good shot given that everybody is team with us so.
It's a good question. Thank you.
Alright.
Also vacate its looks like the last acquisition for this year or do you guys still be interested in making more acquisitions.
I think that we have an awful lot of work to do to integrate way care and.
So much opportunity.
That way care and <unk> present, together, we're going to focus on that we are looking at always looking at.
Things that.
Where it might be better to buy rather than build little pieces of pack and stuff like that but.
I think we've got our plate is full and I think we're going to focus on we're going to focus on what we have in hand.
Thats correct alright, great. Thank.
Thank you yes.
Thank you.
Your next question is coming from re Yigal.
Your line is live.
Yes, Robert Hi, I appreciate you keeping the shareholders up to speed as often as you can.
Any shareholder with the company since <unk> put.
A lot of my questions have been answered, but I have three with the <unk> acquisition and the sign definitely agreement are you able to start integrating two into one or do we have to wait till it's completely finalized.
Second question is how many applications as Recor offer solutions and you see that growing and my third question is.
Best of luck relationship, we havent heard much on that since I believe it.
It was put out patents with Congress and Thats, all I had thanks so much.
And thanks for being so patient manner shareholder for such a long time.
So.
The answer to the first question is that.
We have had lots of dialogue with the way care team and by the way a really super bunch of smart people.
Some great talent.
Out.
How we would integrate if we had a deal done so we've already started that roadmap and we've actually started to work on.
Some of those things are having meetings almost daily about that because we want to we want to get going as quickly as possible as do they.
So we expect that.
The integration will get done in a relatively short period of time, but it's going to take a lot of work, but that doesn't mean, we can't start selling immediately because of the way. These two technologies complement each other remember one is sitting over the top of data and the other provides data.
So they really work well together.
And then again the natural fit is the ability to make use of incoming video streams and some of their customers.
Traffic management centers.
So the second part of your question with regard to solutions.
<unk>.
<unk> done a lot.
This company has only really I think of it as starting in 2019, although it's been around for a couple of years prior to that but that was a completely different business model. We had companies that had nothing to do with what we're doing here.
So we had a lot of bandwidth distracted dealing with all that stuff and when we turned our focus to the technology in 2019.
Because we're public.
We ended up.
Missing things because we wanted to do the best we could to try to generate revenue and so forth. So.
We've got 25 or 30 different products in the market. We've got our image processing for tolling, which is automated we have our ecommerce platform. We have the products, we put out there for law enforcement, even though we're not an LPR company, we still compete in that space and so on and so forth, but our goal has always been the <unk> one platform for Intel.
Region infrastructure smart cities.
That that platform.
And if you include what the way care modules are.
<unk> has well over 20 different modules two alright, so its incident management, it's event management if some.
It's wrong way detection and things related to sustainability and congestion and and the list goes on and on and of course any of these things can be turned on and that can be turned off so that's what's nice about the platform.
So and Thats going to continue to grow because as we.
Aggregate more data and as there's more third party data from companies like <unk> and others.
We're going to come up with different applications right that solve problems. So I think that.
The answer is that we've we've got a lot of products out there, we're not going to stop doing some of the things that we've been doing.
Because we're doing them already but our focus is going to be on an intelligent infrastructure platform and again, there's probably close to a couple of dozen.
Products there so does that.
And personally I am sorry.
All I can tell you is that is still being worked on.
If you think government is Pat when you work with large.
Companies, Okay, and I know people say, Where's Mastercard, and we Didnt look Mastercard announced their product recorded announce so we've been even talk about it we're still not allowed to talk about who they are working with.
Right. So if you think it's difficult working with government try working with companies the size of Mastercard and Tesla and others.
We move at their pace, Okay. It doesn't mean that things are moving but you move at their pace.
And I know that everybody on this call and everybody that as an investor in record, we'd like to think see things happen sooner and solid way.
We don't control those things so we'll keep doing the best we can and when we're able to say something about that stuff. We'll we'll do so so thank you for the question and I hope that was helpful.
Yeah, it's great. So I appreciate it.
Your responses and definitely like I said, keeping the shareholders up to speed as often as you can again. Thank you.
Okay.
Thank you. This concludes our question and answer session I would now like to turn the floor back to Robert Berman for closing remarks.
Thank you operator, so look.
We are so excited about where we're heading and the opportunity that lies ahead of us and the recent acquisition of <unk> significantly improves our capabilities.
And it adds to our footprint and also transaction, it's not going to result in 101 is three sort of scenario, but we think it could be multiple of this right and together, we're creating a roadmap for others to follow and I think theres a lot of companies trying to figure this space out and Theres a lot of money. If you just look at what's accident in the last few months throwing money into the sector.
Everybody is chasing it but we think we've got it right and.
We've never been so excited about the future of people and investors just have to have patients and recognize this as a development stage company that happens to be public. So guess, what okay, that's an opportunity because I.
I don't think Softbank is going to sell sure sure here, our share there or something that they've gotten this space right now that theyre going to launch in three years right.
So.
The core business is intelligent infrastructure thats, what its always been.
And it's early innings right and for the game.
I will say this it's not easy for us to do what we do everyday and and.
And we know that you all have lots of questions and for good reason youre, making an investment in us and you have given us a chance and we want to be able to communicate and we want to be able to let you know what is happening so here's what we're doing in September.
On the same day as our shareholder.
Meeting.
At one o'clock that afternoon St place, we're going to have an investor day additional invitations for the Investor day are going to go out to the shareholders as well. So you got your proxy what youre going to get invited to the Investor day, Youre going to have a half a dozen speakers there we're going to be able to release. The findings of this report with this very well respected.
Global firm that we'll be able to put a stake in the ground and say here is what this new sector is here's how big this market is and here's where what we're doing fits and I will tell you that even some of the large banks I'm not going to name names, but you guys. All know the big ones, they're analysts don't even understand this space yet.
It's nothing to do with the fact that.
They should because it can't because nobody understands it's all happening in real time, so we're going to.
I think we're going to surprise everybody in September and I think people are going to walk out of there and recognize the fact that.
There were a really good company and we are in the right place at the right time, and we've got the right tools and the right people and and thanks to all of the support we have from our shareholders.
An opportunity to have success so.
I appreciate everybody taking time for this call and look forward to seeing you in September.
Thank you ladies and gentlemen, this concludes today's event.
May disconnect at this time and have a wonderful day. Thank you for your participation.