Q1 2025 Rekor Systems Inc Earnings Call
Matt: Good afternoon, ladies and gentlemen, and welcome to today's Rekor Systems, Inc. conference call. My name is Matt, and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
Good afternoon, ladies and gentlemen, and welcome to the H Recourse Citizens, Inc. Conference call. My name is Matt and I'll be your coordinator for today.
At this time all participants are in a listen only mode.
And answer session will follow the formal presentation.
If anyone should require operator assistance. Please press star zero on your telephone keypad.
Minder This conference is being recorded.
Matt: Before we start, I want to read you the company's abbreviated Safe Harbor Statement. I want to remind you that statements made in this conference call concerning future revenues, results of operations, financial position, markets, economic conditions, products and product releases, partnerships, and any other statements that may be construed as predicting a 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 by such.
Before I start I want to read you the company's abbreviated Safe Harbor statement I want to remind you that 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 prediction of future performance or events are.
Looking statements.
Such statements involve known and unknown risks uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements.
Matt: We ask that you refer to the full disclaimers and our earnings You should also review a description of the risk factors contained in our annual and quarterly filings with the S. Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations, and it's provided for informational purposes.
We ask that you refer to the full disclaimers in our earnings release, you should also review a description of the risk factors contained in our annual and quarterly filings with the SEC.
non-GAAP results will also be discussed on the 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.
Robert Berman: I would now like to turn the conference over to Mr. Robert Berman, Interim President and CEO of Rekor Systems. Thank you. You may begin. Thank you, Nat, and good afternoon, everyone. We appreciate you joining us today to discuss Rekor Systems first quarter 2025 results. Normally, we begin our presentation by having our CFO, Eyal Hen, review the numbers. But as described in our last earnings call, we've been going through an extensive review and realignment of our operations since the end of last year. We anticipated that the market and the economy might face a period of uncertainty.
Speaker Change: I would now like to turn the conference over to Mr. Robert Berman interim President and CEO of recourse systems. Thank you you may begin.
Robert Berman: Thank you, Matt and good afternoon, everyone. We appreciate you joining us today to discuss recourse systems first quarter 2025 results.
Speaker Change: Normally we begin our presentation by having our CFO al hand review the numbers.
Speaker Change: Well that was described in our last earnings call, we've been going through an extensive review and realignment of our operations since the end of last year.
Speaker Change: We anticipated that the market and the economy might face a period of uncertainty.
Robert Berman: For the long-term benefit of our shareholders, we felt it would be less important to concentrate on future projects at this point than it would be to emphasize the revenue potential of what we've already achieved. As you've been told repeatedly, Rekor has seen adoption of its tech and is now in the early stages of launching it into larger markets that are overdue for it. Competitors are racing to catch up, but everyone is meeting the current challenges in the markets and the economy. So for now, we want to remain focused on exploiting the commercial potential of what we've already produced.
Speaker Change: For the long term benefit our shareholders, we felt it would be less important to concentrate on future projects. At this point then it would be to emphasize the revenue potential of what we've already achieved.
Speaker Change: As you've been told repeatedly record has seen adoption of its tech and is now in the early stages of launching it into larger markets that are overdue for it.
Speaker Change: Competitors are racing to catch up but everyone is meeting the current challenges in the markets and the economy.
Speaker Change: So for now we want to remain focused on exploiting the commercial potential of what we've already produced.
Robert Berman: So it's important to put the numbers Eyal discusses into perspective. As we began our review process, we prioritized steps that would immediately reduce our expense. In some cases, this led to a temporary increase in expenses, but you'll see solid evidence of the success of these efforts. These expense reductions haven't been done blindly, and they're not finished. But our overall objective was to position Rekor for stronger, more predictable, and scalable growth moving forward. We've learned that our prior approach, while visionary, was not sufficiently grounded in the revenue-driven execution our shareholders deserve. We spent too much time building a company in anticipation of growth rather than ensuring that our approach and leadership were structured toward delivering revenue, sustaining revenue against defined milestones.
Speaker Change: So it's important to put the numbers say I'll discusses into perspective, as we began our review process, we prioritize steps that would immediately reduce our expenses and in some cases. This led to a temporary increase in expenses well youll see solid evidence of the success of these efforts.
These expense reductions havent been done blindly.
Speaker Change: And they're not finished.
Speaker Change: But our overall objective was to position <unk> for stronger more predictable and scalable growth moving forward.
Speaker Change: We've learned that our prior approach while visionary was not sufficiently grounded in a revenue driven execution our shareholders deserve.
Speaker Change: We spent too much time building a company in anticipation of growth rather than ensuring that our approach and leadership, we're structured towards delivering revenue sustaining revenue against defined milestones that was a mistake and it needed to be addressed.
Robert Berman: That was a mistake and it needed to be addressed.
Robert Berman: Beginning in Q2, Rekor is implementing a new general manager structure to sharpen our focus on customers and accelerate the adoption of our products in a way that produces a business with sustainable revenues. We've been in the process of evolving the structure over the last few months and expect you to see the benefits very shortly. Under this structure, each core business unit is led by a dedicated general manager with clear profit and loss responsibility. By reorganizing into focused units, we aim to improve operational accountability, foster greater innovation, and enhance our customer focus. This structure also positions Rekor to scale revenue more effectively as we expand our reach into domestic and international markets.
Speaker Change: Beginning in Q2 record is implementing a new general manager structure to sharpen our focus on customers and accelerate the adoption of our products in a way that produces a business with sustainable revenues.
Speaker Change: We've been in the process of evolving our structure over the last few months and expect you to see the benefits very shortly.
Speaker Change: Under this structure each core business unit is led by a dedicated general manager with clear profit and loss responsibility.
Speaker Change: By reorganizing into focused units, we aimed to improve operational accountability.
Speaker Change: Foster greater innovation and enhance our customer focus.
Speaker Change: This structure also positions record of scale revenue more effectively as we expand our reach into domestic and international markets.
Robert Berman: Our new GM structure is anchored by experienced leaders who bring deep industry expertise and a global perspective to Rekor. One of these is Mark Phillips. a seasoned roadway technology executive with significant international experience. Mark's global background at QFRE and elsewhere in scaling businesses will help position Rekor Solutions on a worldwide stage. He will leverage his international expertise to drive global market penetration and ensure that Rekor's offerings meet the needs of customers across different regions. Mark's leadership is also expected to strengthen Rekor's domestic presence. aligning our products with international opportunities and partnerships. Mark is both a talented business leader and a skilled electrical engineer.
Speaker Change: Our new GM structure is anchored by experienced leaders, who bring deep industry expertise and a global perspective to recall.
Speaker Change: One of these is mark Phillips.
Susan: Susan roadway technology executive with significant international experience.
Speaker Change: March global background at Q3, and elsewhere and scaling businesses will help position recourse solutions on a worldwide stage.
Speaker Change: He will leverage his international expertise to drive global market penetration and ensure that recourse offerings to meet the needs of customers across different regions.
Speaker Change: Leadership is also expected to strengthen recourse domestic presence.
Speaker Change: Aligning our products with international opportunities and partnerships.
Mark Phillips: Mark is both a talented business leader and a skilled electrical engineer.
Robert Berman: In the early 2000s, Mark founded a company that developed an innovative data logger used by DOTs around the world, which was later acquired by Qfree, a Norwegian technology company specializing in intelligent traffic systems. The company operates globally with offices in Europe, Asia, Australia, and the Americas. And following the acquisition, he remained with Q-free to help establish a global distribution network.
Mark Phillips: In the early two thousands Marc founded a company that developed an innovative data logger used by dot's around the world, which.
Mark Phillips: Which was later acquired by Q3, and Norwegian Technology company specializing in intelligent traffic systems. The company operates globally with offices in Europe, Asia, Australia, and the Americas and following the acquisition. He remained with Q3 to help establish a global distribution network.
Robert Berman: We expect the full scope of our organizational changes to be completed and are formally announced in Q2. Leaders will manage their respective business units with an entrepreneurial approach, enabling each unit to respond quickly and effectively to customers' needs. The GMs will be supported by shared services, including engineering, which is now led by Shobit Jain as chief product and technology officer. Shobit has held senior leadership roles at both Verum Mobility and HERE Technologies. He served as Vice President of Product and Innovation for Government Solutions at Vero Mobility, a leading provider of smart mobility technology solutions for government agencies and commercial fleets.
Mark Phillips: We expect the full scope of our organizational changes to be completed and it's one we announced in Q2.
Leaders will manage their respective business units with an entrepreneurial approach, enabling each unit to respond quickly and effectively to customers' needs. The.
Mark Phillips: The Gms will be supported by shared services, including engineering, which is now led by sugar Jane as Chief product and Technology Officer. Sheldon has held senior leadership roles at both verra mobility and hear technologies.
Mark Phillips: He served as vice president of product and innovation for government solutions at Verra mobility, a leading provider of smart mobility technology solutions for government agencies and commercial fleets.
Robert Berman: He was previously head of innovation at HERE Technologies, a global leader in mapping and location-based platform services. Under the GM structure, Rekor's operations are now organized into dedicated business units centered around our customers' needs in each of our core solution areas. Each unit is empowered to focus on its product portfolio and customer base, enabling more agility and specialized attention. By restructuring Rekor around these solution focused units, each led by strong management, we can better serve the needs of each new and existing customer. Customer centricity is a core objective, and each GM is tasked with staying close to the customer base and their domain, and rapidly responding to feedback and tailoring offerings to solve specific problems for those user groups.
Mark Phillips: He was previously head of innovation that here technologies, a global leader in mapping and location based platform services.
Speaker Change: Although the GM structure recourse operations are now organized into dedicated business units centered around our customers' needs in each of our core solution areas.
Speaker Change: Each unit is empowered to focus on its product portfolio and customer base, enabling more agility.
Speaker Change: And specialized attention.
Speaker Change: By restructuring Recor around these solution focused units each led by strong management, we can better serve the needs of each new and existing customer.
Speaker Change: Customer Centricity is a core objective and each GM is tasked with staying close to the customer base and their domain and rapidly responding to feedback and tailoring offerings to solve specific problems for those user groups.
Robert Berman: The shift to a GM structure led organization is designed to deliver several strategic benefits. greater accountability, where each GM will be responsible to build a team that focuses on sustainable growth within their own segment. enhanced innovation. By giving them more control, each unit will be able to concentrate on innovations that are most valuable to their customers on a near-term basis. Top priority in product development will be given to customer value. improve customer focus. By concentrating more intensively on the needs of new and existing customers, our teams will be more focused on learning what their current needs are, rather than imagining what their needs might be in the future.
Speaker Change: The shift to a G. Structured led organization is designed to deliver several strategic benefits.
Speaker Change: Greater accountability for each jam will be responsible to build a team that focuses on sustainable growth within their own segment.
Speaker Change: Enhanced innovation by.
Speaker Change: By giving them more control each unit will be able to concentrate on innovations that are most valuable to their customers on a near term basis top priority in product development will be given to customer value.
Speaker Change: Improved customer focus by concentrating more intensively on the needs of new and existing customers. Our teams will be more focused on learning what their current needs are rather than imagining what their needs might be in the future.
Robert Berman: Scalable Revenue Growth. By concentrating on distinct product lines and regions, each unit can pursue growth opportunities more effectively. Mark Phillips' international expertise, for example, will help replicate successful go-to-market strategies across global markets. This focused approach lays the groundwork for scalable revenue streams as each business unit expands its market share. The new structure also makes it easier to integrate future acquisitions or partnerships directly into the relevant unit, fueling further growth. We expect the structure to unlock new levels of performance, resulting in a more agile company that can sustainably scale revenue and maintain a leadership role in our industry.
Speaker Change: Scalable revenue growth by concentrating on distinct product lines and regions each unit can pursue growth opportunities more effectively.
Speaker Change: Mark Phillips International expertise for example will help replicate successful go to market strategies across global markets.
Speaker Change: This focused approach lays the groundwork for scalable revenue streams as each business unit expands its market share.
Speaker Change: The new structure also makes it easier to integrate future acquisitions or partnerships directly into the relevant unit fueling further growth.
Speaker Change: We expect this structure to unlock new levels of performance, resulting in a more agile company that can sustainably scale revenue and maintain a leadership role in our industry.
Robert Berman: So, thank you for your continued support as we embark on this new chapter, and we're confident that these changes will drive meaningful improvements in our operations and accelerate Rekor's growth trajectory on a global stage.
Speaker Change: So thank you for your continued support as we embark on this new chapter and we're confident that these changes will drive meaningful improvements in our operations and accelerate recourse growth trajectory on a global stage.
Eyal Hen: Now I'll turn the call over to our CFO Eyal Hen for a deeper look at our financial results for Q1 2025. Eyal? Thank you, Robert, and thanks to all of you joining us today to discuss our first quarter of 2025. We reported revenue of $9.2 million for Q1 2025, representing a 6% decrease compared to the same quarter last year. Despite this reduction, we achieved a $2 million improvement in our adjusted EBITDA loss, thanks to meaningful reductions in our operating expenses. Revenue was impacted across all three of our business segments. Factors such as adverse weather conditions in the Southeast, delays in contract signings, and budget constraints from DOTs and public safety agencies, largely due to the uncertainty surrounding the new administration, created significant headway to sales execution.
Al Hand: Now I'll turn the call over to our CFO al hand for a deeper look at our financial results for Q1 2025.
Speaker Change: Al.
Speaker Change: Thank you Robin and thanks to all of you joining us today to discuss our first quarter of 2025 results.
Speaker Change: We reported revenue of $9 $2 million for Q1, 2025 represent representing a 6% decrease compared to the same quarter last year. Despite this reduction we achieved a $2 million improvement in our adjusted EBITDA loss, thanks to meaningfully.
Speaker Change: The reductions in our operating expenses.
Speaker Change: Revenue was impacted across all three of our business segments factors, such as adverse weather conditions in the south.
Speaker Change: East delays in contract signings and budget constraints from D O T and public safety agencies, largely due to the uncertainty surrounding the new administration created significant headwinds to sales execution.
Eyal Hen: That said, we did see stability in our recurring revenue, which totaled $5.1 million for the quarter, making a modest 3% increase from Q1 2024. Adjusted gross margin for the first quarter of 2025 was 48.2% up from 46% in the same period last year, primarily driven by a higher mix of margin creative offerings. Looking forward, we anticipate continued gross margin expansion, supported by growing share of SAS-based revenue and increased contributions from our pay-for-data contract. Adjusted debit or loss was $7.4 million. significantly improved from $9.4 million in Q1 2024. This was a result of the efforts Robert mentioned to optimize our cost structure.
Speaker Change: That said we.
Speaker Change: We did see stability now recurring it.
Speaker Change: Which totaled $5 1 million for the quarter, making a modest 3% increase for Q1 'twenty 'twenty four.
Speaker Change: Adjusted gross margin for the first quarter.
Speaker Change: What else 2025 was 48, 2% up from.
Speaker Change: 46% in the same period last year, primarily driven by a higher mix of margin accretive offerings.
Speaker Change: Looking forward, we anticipate continued gross margin expansion supported by growing share of SaaS based dragging and increased contributions so I'll pay for data contracts.
Speaker Change: Adjusted EBITDA loss was $7 $4 million significantly improved from $94 million in Q1 2024.
Speaker Change: This was the result of the airports, where I lived in Asia to optimize our cost structure, which we started in November of 'twenty 'twenty four.
Eyal Hen: which we started in November of 2024. Moving forward, we will continue to work towards steady declines in adjusted EBITDA losses as revenue grows, supported by an improving gross margin. It's worth noting that our cost optimization initiatives, which included targeted workforce realignment and voluntary compensation reductions in exchange for equity, were initiated to improve our cash flow and operational efficiency. By sharpening our focus and reducing expenses, we've been able to deliver tangible financial benefit. As a result, operating expenses in Q1 2025 were significantly lower than they would have been without this initiative. contributing directly to our Nowhere EBITDA Law.
Speaker Change: Moving forward, we will continue to work towards steady declines in adjusted EBITDA loss is revenue growth supported by an improving gross margin.
Speaker Change: It's worth noting that our close to optimization initiatives, which included targeted workforce realignment.
Speaker Change: Voluntary compensation reductions in exchange for equity.
Speaker Change: We initiated to improve our cash flow and operational efficiency.
Speaker Change: By sharpening our focus and it just.
Speaker Change: <unk> expenses.
Speaker Change: Able to deliver tangible financial benefits.
Speaker Change: As a result operating expenses in Q1 2025 were significantly lower than they would have been without any.
Speaker Change: Initiate this.
Speaker Change: Contributing directly to our nowhere near where EBITDA loss.
Eyal Hen: remain diligent in managing our cost structure as we balance growth investments.
Speaker Change: We remain diligent in managing our cost structure as we balance growth investments with.
Eyal Hen: Ad to profit a bit. Our first quarter in 2025 was affected by seasonal and other factors that we do not expect to continue throughout the year. Looking ahead, we anticipate continued improvement in adjusted EBITDA as we progress through 2025. The combination of revenue growth and expanding gross margins gives us confidence that our adjusted EBITDA losses will keep narrowing down in upcoming quarters. We expect gross margins to improve steadily, driven by an increasing mix of higher margin SAS revenue and data sales. as well as efficiency in our delivery of solutions. At the same time, our cost optimization efforts are ongoing.
Speaker Change: Pat to perfect ability.
Speaker Change: Our first quarter and 2025 was affected by seasonal and other factors that we do.
Speaker Change: Not expected to continue throughout the year.
Speaker Change: Looking ahead.
Speaker Change: Dissipate continued improvement in adjusted EBITA as we progress through 2025.
Speaker Change: The combination of revenue growth and extending gross margins gives us confidence in our adjusted EBITDA losses, we keep narrowing down.
Speaker Change: In upcoming quarters.
Speaker Change: We expect gross margins to improve steadily.
Speaker Change: And by an increasing mix of higher margin, that's where IP and data services as well as the tissue.
Speaker Change: Delivery of solution.
Speaker Change: At the same time, our cost optimization efforts are ongoing.
Eyal Hen: We will maintain the discipline that we established last year, ensuring that any expense growth stays well below our revenue growth. In practical terms, this means we plan to deliver sequentially better EBITDA results as the year unfolds, supported by both top-line momentum and margin expenses. Our sales pipeline remains strong and we remain encouraged by the traction we're seeing with State Department of Transportation and public safety agencies. As these opportunities convert into revenue, the incremental sales should flow through the higher contribution market. further bolstering our perfect debate. We are also targeting additional operation efficiencies in 2025, which we expect will help offset inflationary pressures and sustain the trajectory of EBITDA improvement.
Speaker Change: We will maintain the discipline, it's established last year.
Speaker Change: During that any expense growth stays well below our revenue growth rate.
Speaker Change: And proxy costs tariffs. This means we plan to deliver sequentially better EBITDA results as the year unfolds.
Speaker Change: Sorted by both topline momentum and the margin extension.
Speaker Change: Our sales pipeline remains strong.
Speaker Change: We remain encouraged by the traction we're seeing state departments of transportation and public safety agencies.
Speaker Change: As these opportunities convert into revenue the incremental savings should flow through that it's higher contribution margin.
Speaker Change: So are there bolstering our predictability.
Speaker Change: We are also targeting additional operational efficiency 2025, which.
Speaker Change: Which we expect will help offset inflationary pressures.
Speaker Change: Sustained trajectory awesome.
Speaker Change: That'd be that purpose.
Speaker Change: Yes.
Eyal Hen: Overall, our goal is to exit 2025 on a significantly stronger financial footing than we entered. We are working towards achieving break-even adjusted EBITDA in the foreseeable future. And each quarter, we intend to move closer to that milestone. The first quarter results, while not where we ultimately want them to be, show that we are making progress in the right direction.
Speaker Change: Although our goal is to exit 2025, when significantly stronger financial footing.
Speaker Change: Okay.
Speaker Change: We are working towards achieving breakeven adjusted EBITDA in the foreseeable future.
Speaker Change: And each quarter, we intend to move closer to that milestone.
Speaker Change: The first quarter results were not where we ultimately want it to be show that we are making progress in their write their exit.
Eyal Hen: Before I conclude, I want to acknowledge our shareholders. We recognize that our Q1 performance came in below our expectations, and likely below the expectations of some of you listening today. We do not take this lightly. Rest assured, the entire management team is focused on improving execution and delivering the results you expect. We have a clear plan in place to drive growth and margin improvement. and we are confident in our path forward. Importantly, we are grateful for the continued support and patience of our investors as we navigate these changes and strive to unlock Rekor's full potential.
Speaker Change: Before I conclude I want to acknowledge our shareholders. We recognize that our Q1 performance came in below our expectations and likely below the expectation with some of you there.
Speaker Change: To date.
Speaker Change: We do not take this light right.
Speaker Change: Sure the entire management team is focused on improving execution and delivery. There is that you expect from it.
Speaker Change: We have a clear plan in place to drive growth and margin improvement.
Speaker Change: And we are confident in our path forward.
Speaker Change: Importantly, we're grateful for the continued support and patience of our investors.
Speaker Change: Mitigate these changes and strive to unbilled three quarters full potential.
Eyal Hen: Your support has been crucial as we implement necessary changes and invest for future success. We remain committed to building shareholder value and rewarding that trust through our actions and results in the coming quarter. Thank you for your attention and for your support. We are confident that steps we've taken to optimize cost-directing our capital structure and drive growth will position Rekor for improved performance throughout 2025.
Speaker Change: Their support has been crucial as we implement necessary changes.
Speaker Change: Invest for future success.
Speaker Change: We remain committed to building shareholder value and rewarding that trust through our actions and results in the coming quarters.
Speaker Change: Thank you for your attention and for your support we are confident that the steps we've taken to oxy mines cost strengthen our capital structure and drive growth.
Speaker Change: Physician recall for improved performance throughout 2025.
Robert Berman: Now I'll turn the call back to Robert.
Speaker Change: Now I'll turn the call back door.
Robert Berman: Robert? Eyal, thank you.
Speaker Change: Well the.
Speaker Change: Al Thank you.
Matt: I'd now like to open the call for questions from our shareholders. Operator. and we will be conducting.
Speaker Change: I'd now like to open the call for questions from our shareholders.
Speaker Change: Operator.
Speaker Change: Great. Thank you.
Speaker Change: I think any question and answer session if you'd.
Matt: If you would like to ask a question, please press star 1 on your telephone. Any confirmation toll will indicate your line is in the question area. You may press star 2 to remove yourself. and Speaker Equipment. It may be necessary to pick up your handset before pressing. One moment, please.
Speaker Change: Like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Speaker Change: Let me first start to remove yourself from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please pull for questions.
Aditya Dagaonkar: First question is from Michael Latimore from Northland Capital Police. Hi, this is Aditya on behalf of Mike Latimore. Could you give some color on the pipeline for Scout and how are the bookings in 1Q for Scout?
Speaker Change: First question from Mike Latimore from Northland Capital. Please go ahead.
Speaker Change: Okay.
Hi, This is on behalf of Mike Latimore could you give some color on the pipeline for scope and already bookings in <unk> plus coke.
David Desharnais: and David Desharnais. Thank you. I'm sorry, I'm not clear with the question. So how has the pipeline been for Scout and bookings? How are the bookings for Scout in 1Q? I think that's a fair question. We were just looking at Scout the other day. Since launching Scout in 2019, it's grown by more than 4,700% in revenue. And frankly, we dropped the ball with it a bit in 2024. And part of this reorganization is getting back to Scout. Less on the law enforcement side and more on the commercial side, which is where the majority of our ARR is from, Scout.
Speaker Change: Hey al.
Al Hand: Hey, sorry, I'm not clear with the question.
Al Hand: So how has the pipeline been forced to cold.
Al Hand: King.
Al Hand: However, bookings pulse co <unk>.
Al Hand: I think that.
Al Hand: That's a fair question.
Al Hand: Yeah, we were just looking at scout the other day.
Al Hand: Since launching scout in 2019, it's grown by more than 4700% revenue.
Al Hand: And frankly, we have dropped the ball with it a bit in 2024 on and part of this reorganization is getting back to scout.
Al Hand: Les on the law enforcement side and more on the commercial side, which is where the majority of our ours from scout.
Aditya Dagaonkar: So I think that you'll see a lot more activity with Scout as a product over the next, actually, 30 to 60 days. Got it.
Al Hand: So I think that you'll see a lot more activity with scout.
Al Hand: As a product over the next storm actually 30 to 60 days.
Al Hand: Got it.
David Desharnais: And are there any partnerships that you're working on just like sound thinking last year? We do have some that are actively in. discussion that we. We just can't talk about because they're not concluded and it's on public. But we're always working on those, and primarily with Scout for sure. But also with Discover now, having brought Mark Phillips on and changing a little bit the way we approach the sales methodology with Discover as, you know, a piece of technology that's fully productized that we can sell out of the box through distributors and others and markets that we've not penetrated yet and we're just entering now.
Speaker Change: And are there any partnerships that you're working on just like phone thinking last year.
Al Hand: We do have some that are actively in.
Speaker Change: Discussion that we.
Speaker Change: We just can't talk about because they're not concluded in its own public but.
Speaker Change: We're always working on those.
Speaker Change: Merrily with scout for sure.
Speaker Change: But also with discover now having brought.
Speaker Change: Mark Phillips on and changing a little bit the way we approach the sales methodology with discover.
Speaker Change: As you know a piece of technology, that's fully product ties that we can sell out of the box through distributors and others in markets that we've not penetrated yet we're just entering now.
Aditya Dagaonkar: All right, got it. Thank you.
Speaker Change: Alright got it thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Tim Moore: Next question is from Tim Moore from Clear Street, please go ahead. Thanks. I'm just trying to build a bit more conviction, you know, the possibility for maybe double-digit organic sales growth drivers this year. You know, I know there was weather issue and the election overhang in the March quarter. You know, I think the September quarter was probably negative organic growth if you strip out the ATD acquisition contribution. So, you know, we know that many, you know, legacy transportation and monitoring device systems are, you know, inaccurate, they're not effective, and, you know, they're pretty much obsolete.
Speaker Change: Next question is from Tim Moore from clear Street. Please go ahead.
Speaker Change: Thanks.
Speaker Change: Just trying to build the pit more conviction.
So the possibility for double digit organic sales growth drivers. This year, you know I know there was a weather issue in the election overhang in the March quarter.
Speaker Change: I think the September quarter was.
Speaker Change: How many negative organic growth if you strip out the <unk> acquisition contribution. So we know that many in our legacy transportation and monitoring device systems are inaccurate theyre not effective and you know they're pretty much simply obsolete.
David Desharnais: Can you provide us maybe a better sense of how the task order side, you know, not big projects or new big wins, but the task order size might backfill or help sales growth this year instead of, you know, waiting for a lumpy new sales state win? You know, are you expecting to roll out a lot of Discover and Edge units for repair and replacement this year, Waves? That's a really good question, and I think as we said earlier in the call with regard to the way we're structured now with this jam structure, you know, Discover is fully productized.
Speaker Change: Can you provide us maybe a better sense of how the task order side, no not big projects or near Big brands, but that's.
Speaker Change: Task order size might backfill or help sales growth this year instead of waiting for a lumpy new sales state win.
Speaker Change: Are you expecting to roll out a lot of discover and edge units for repair and played out this year in waves.
Speaker Change: That's a really good question and I think as we said earlier in the call with regard to reorganize our structure now with this GM structure.
Speaker Change: <unk> discovers fully product ties it takes time to get governments to adopt technology, we're seeing broad adoption with discover.
David Desharnais: It takes time to get governments to adopt technology. We're seeing broad adoption with Discover, and I think as we get deeper into this quarter, okay, and we announce the reorder, we'll be able to give you some clarity with respect to the growth in that, and I think you're going to see a substantial change with that because of a little bit of modification with our pricing structure on Discover and the go-to-market strategy with it. Look, this has been a learning process, right? We're dealing with government. We're replacing legacy technology that they've been using for decades and decades, and, you know, to think that, you know, we were trying to push certain business models into the way governments do business maybe was a mistake on our part, and I think now that understand more the way that the DOTs buy, I think you're going to see a lot more growth with Discover, and it's a fantastic model because it's got, you know, strong ability to deliver a piece of a device that does, you know, provides a service but also has strong recurring revenue and higher margins to it, so a little bit of a learning curve, right, but having launched in 2022 takes some time, but I think we're there, and I think you'll see more of that in the coming weeks.
Speaker Change: And I think as we get deeper into this quarter, Okay, and we announced a reward will be able to give you some clarity with respect to the growth in that and I think you're going to see a substantial change with that because.
Speaker Change: A little bit of modification with our pricing structure on discover and go to market strategy with it look we it's been a learning process right, we're dealing with government.
Speaker Change: We're replacing legacy technology that they have been using for decades and decades.
Speaker Change: And.
Speaker Change: Two.
Speaker Change: That we were trying to.
Speaker Change: Push certain business models into the way governments do business maybe.
Speaker Change: Wasn't mistake on our part and I think now that we understand more of the way that the dot's by I think youre going to see a lot more growth with the scrubber and it's a fantastic model because it.
Speaker Change: It's got strong ability to deliver a piece of <unk>.
Speaker Change: Device that does it.
Speaker Change: <unk> provides a service, but also has strong recurring revenue and higher margins too. So we'll have a bit of a learning curve right, but having launched in 2020 to take some time, but I think we're there.
Speaker Change: And I think just taking over the coming weeks.
Tim Moore: That's helpful to hear on that color. Now, just switching gears, you know, as you mentioned, you narrowed the EBITDA loss by $2 million, you know, despite the sales decline, you know, that was pretty good. Just wondering, you know, how much of the $15 million annualized cost savings expense realignment, you know, have you implemented this year? And I was just wondering if that $15 million figure from, I think it was November, is that dependent on a certain level of sales growth this year, like you've got to put up teens growth to achieve that? I'm just curious if you have any color on cost implementation.
Speaker Change: That's helpful to hear on that color and then just switching gears you know as you mentioned you narrow the EBITDA loss by <unk> 2 million.
Speaker Change: The sales decline.
Speaker Change: That was pretty good.
Speaker Change: Just wondering you know how much of the 15 million annualized cost savings expense realignment.
Speaker Change: Have you implemented this year and I was just wondering if that $15 million figure from I think it was November.
Speaker Change: Is that dependent on a certain level of sales growth. This year like you've got to put up teens growth to achieve that I'm. Just curious if you have any color on cost implementation.
David Desharnais: I think it's realizing that we've got things that are fully productized and we're focusing on those. We have a lot of expenses that were related to R&D of products that we can't tie revenue to, you know, in the near term. So it's changing our focus and looking at things that we can do today. And I think you're going to see, you know, more reductions. And I think as you see additional revenue, you're going to see incremental margin along with the, you know, reduction in cost. Eyal, would you agree with that? Yeah, absolutely. That's true. And then, as we said, the 15 million will go along the year and not just the first quarter.
Speaker Change: I think it's it's realizing that we've got.
Speaker Change: Things that are fully product ties and we're focusing on those.
Speaker Change: We have a lot of expenses that were related to R&D or product set.
Speaker Change: We can't tie revenue to in the near term so it's changing our focus and.
Speaker Change: Looking at things that we can do today, and I think youre going to see more reductions and I think as you see additional revenue youre going to see incremental margin along with the reduction in cost.
Speaker Change: All would you agree with that.
Speaker Change: Yes.
Speaker Change: Absolutely that's true and then did you said 15 million will go along the year and not just the first quarter. So you will see as we as we mentioned continued reduction in the cost improve then the EBITDA as we go.
David Desharnais: So we'll see, as we as we mentioned, continue reduction in the cost improved in the EBITDA as we go. Look, it's a really good point you're raising. You know, we're developing technology to replace, you know, decades old legacy tech. And it's a learning curve. And we had to get there and understand the customer. And I think now, with the approach we're taking to it, we get it. We don't need to do the R&D, the products there, it works. It's just delivering the product and not thinking about three years from now, it's about thinking about today.
Speaker Change: It's a really good it's a really good point you're raising.
Speaker Change: We're developing technology to replace a decades old legacy Tech and it's a learning curve and we had to get there and understand the customer and I think now with the approach we're taking to we get it.
Speaker Change: We don't need to do the R&D the products there. It works, it's just delivering the product and not thinking about three years from now it's about thinking about today.
David Desharnais: And I think that's the big change here. And I think you'll see the incremental savings as well as the revenue growth come from that, which is gonna give us margin to eliminate the burn and drive the company to profitability.
And I think that's the big change here and I think you'll you'll see the incremental savings as well as the revenue growth come from that which is going to give us margin to eliminate the burn in and drive the company to profitability.
Tim Moore: No, that'd be really good if you can come up with a 15 million.
Speaker Change: No that'd be really good if you can come up with a $15 million. My last question is really a different question.
Tim Moore: My last question is really a different question. You know, I mean, you aggregate, I think more than 20 trillion data points for roadway intelligence. Is there any other way to maybe monetize that or can you license some of that out to maybe a user fee to some cities that you don't have any contracts with?
Speaker Change: Aggregate, thank more than 20 trillion data points for runaway intelligence is there any other ways to maybe monetize that energy and licensed some of that out to maybe a user fee to some cities that you don't have any contracts with.
David Desharnais: That's also a good question. I think I'm going to drop back and say, you know, what we've realized is we've got three really healthy product platforms here, Discover, Command, and Scout. Scout is the most mature, obviously, it's been out there for a while. We're focused more on the commercial side now than on law enforcement. But with Command and Discover, I think what I'm trying to say, we're going to stop where we are and sell what we have. And we've realized that that's what we need to do because there's demand for it. So thank you very much.
Speaker Change: That's also a good question I think I'm going to drop back and say you know what we've realized since we've got three really healthy product platform sure discover command and Scout Scout is the most mature obviously, it's been out there for a while.
Speaker Change: We're focused more on the commercial side now than on law enforcement, but with the command and the scrubber I think I think what I'm trying to say, we're going to stop where we are and so what we have and we've realized that that's what we need to do because there's demand for it so.
David Desharnais: That's where we're going to stay focused. And the nice thing about the way that the technology is developed is that we can always import additional data and provide additional services, but that's not a necessity in driving revenue today and growth today and profit. And I think that was the mistake that we made historically. And, you know, as I said earlier, building a company for future, you know, growth and revenues, as opposed to focusing and realizing what we have is, I hate to say good enough, but it is good enough. Okay, and there's demand for it and we're seeing adoption and that's what we need to focus rather than confusing customers, right?
Speaker Change: That's where we're going to stay focused and the nice thing about the way the technologies developed so we can always important additional data and provide additional services, but that's not that's not a necessity and driving revenue today and growth today and profit today.
Speaker Change: And I think that that was the mistake that we made historically and you know as.
Speaker Change: I said earlier building a company for future.
Speaker Change: Growth in revenues as opposed to focusing and realizing what we have is.
Speaker Change: I hate to say good enough, but it is good okay and there is demand for it and we're seeing adoption.
Speaker Change: That's what we need to focus rather than confusing customers right.
David Desharnais: With just more and more and more and more.
More and more and more and more.
Tim Moore: Understood. No, thanks for that, Keller, and for answering my questions.
Speaker Change: Understood. Thanks for that color on France, being my questions Thats It for my questions.
Tim Moore: That's it for my questions. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Matt: As a reminder, if you'd like to ask a question, it is star 1.
Speaker Change: As a reminder, if you'd like to ask the question that is star one.
Noah Levitz: Congratulations from Noah Levitz and Bruce Blair. Good afternoon, Robert and Eyal. Thanks for taking my questions. To start off, I thought it was interesting about your new GM structure, your particular hire of Mark, you noted that he has a lot of international experience in particular. And I'm curious if, you know, with the procurement environment being as difficult as it is in the US, are you already selling in international markets, or do you see a particularly high level of demand there and opportunity there that Mark, for example, could help Rekor take advantage of? We do. Almost every developed nation uses some form of collection of data for planning, but also for traffic operations.
Bill: Next question is from Bill <unk> from <unk>. Please go ahead.
Bill: Good afternoon, Robert and now thanks for taking my questions to start off I thought it was interesting.
Bill: GM stock's Harrier and taken a higher mark.
Speaker Change: You noted that he has a lot of international experience in particular and I'm curious if you know what the procurement environment being as difficult as it is in the U S are you already.
Speaker Change: Selling and international markets or do you see a particular Lee.
Speaker Change: The high level of demand there and opportunity there.
Mark Phillips: Mark for example.
Mark Phillips: Pulp Greencore take advantage of.
Mark Phillips: All we do.
Mark Phillips: Almost every developed nation.
Mark Phillips: Uses some form.
Mark Phillips: Uh huh.
Mark Phillips: Collection of data for planning, but also for traffic operations and that's the thing about record discover it does both.
Robert Berman: And that's the thing about Rekor Discover, it does both. So it eliminates the need for multiple devices out on the roadway. And we do see demand and it's just, it's a subtle difference of classifications here in the U.S. We have 13 bins in places like Ireland, as an example, they have seven. Other countries have more or less, but they're all pretty much the same. It's just a matter of machine learning and training. And I think our customers understand that. Mark is actually in Europe right now, doing an installation for a pilot in another country. So we think there's demand for this product across the board.
Mark Phillips: It eliminates the need for multiple devices out on the roadway.
Mark Phillips: And we do see demand and it's just it's a subtle difference of classifications here in the U S. We have 13 bands in places like Ireland as an example, they have seven.
Mark Phillips: Other countries have more or less but they're all pretty much. The same it's just a matter of machine learning and training and I think our customers understand that Mark is actually in Europe right now.
Mark Phillips: Doing an installation for a pilot in another country.
Mark Phillips: So.
Mark Phillips: We think there's demand for this product across the board and that's that's our point about being box ready and the point about having the GM structure because.
Robert Berman: And that's our point about being box ready and the point about having the GM structure because we've got these products, they're proven, the adoption is there, and we need the ability for the people that are leading each one of these verticals to be able to control the P&L, be responsible for sales and make it happen. And I think we're shifting from this mentality of R&D for this tech, for this changing world that we're living in to, hey, we've got some good stuff here, let's go sell it. And, you know, let's go from there. And I think that's where we are.
Mark Phillips: We've got these products they are proven the adoption is there.
Mark Phillips: And we need the ability for the people that are leading each one of these.
Verticals to be able to control the P&L, you're responsible for sales and make it happen and I think we're shifting from the mentality of R&D for the stack for this changing world that we're living into Hey, we've got some good stuff here, let's go sell it and let's go from there.
Mark Phillips: I think that's that's where we are.
Noah Levitz: That's great. Thank you.
Mark Phillips: No that's great. Thank you.
Robert Berman: And then my last question is on your partnership for Plate Ranger with Sound Thinking. Can you just provide a little bit of color on the adoption of that system and whether or not you're currently recognizing any revenue or when you would hope to see that start to happen? So we have a contract that was negotiated with Sound Thinking that gives us guaranteed revenue at $25, $26, and $27. They're out there selling and they're a great company. And I think, you know, the law enforcement market is a market that they're built to operate in, a lot of blocking and tackling and so forth.
Mark Phillips: Then my last question is on your partnership for plate Ranger when he found thinking can.
Speaker Change: Can you just provide a little bit of color on the adoption of that system and whether or not you're currently recognizing any revenue or when you would hope to see that start to hit thanks.
Speaker Change: So we have a contract that was negotiated with sound thinking that gives us guaranteed revenue at $25 26 to 27.
Speaker Change: They are out there selling.
Speaker Change: And they're a great company and I Thank God.
Speaker Change: Law enforcement market is a market that they are built to operate in a lot of blocking and tackling and so forth.
Robert Berman: So you'll have to talk to them about that, but we think they're going to be successful with it. And the early indications are that they will be, they've committed to it, put some dollars behind it. So we'll let them do that while we're working on the commercial side of it, because that's, you know, what differentiates what Scout does from folks that are purely in law enforcement and doing LPR, right? And frankly, that's the in Scout. And it's just that, you know, I said earlier, we dropped the ball with it in 2024, having grown it from, you know, over 4000% in a few years.
Speaker Change: So you'll have to talk to them about that but we think theyre going to be successful with it and.
Speaker Change: Early indications are that they will be they've committed to put some dollars behind it.
Speaker Change: So, we'll let them do that while we're working on the commercial side a bit because that's.
Speaker Change: What differentiates.
Speaker Change: With Scout does.
Speaker Change: Folks that are purely and law enforcement and doing LPR right and frankly, that's the majority of the IRR.
Speaker Change: And scout and it's just that when I said it earlier, we dropped the ball with it in 2024, having grown it from.
Speaker Change: Over 4000%.
Ray Yigal: Mostly on the commercial side, we just dropped the ball. And we're going back to that now. So But I think sound thinking will do well with the product and I think their focus is there and you should chat with them about that. and I think we lose you.
Speaker Change: Mostly on the commercial side, we just dropped the ball and we're going back to that now so.
Speaker Change: But I think sound thinking, we'll do well with the product and I think their focus is orange chat with them about that.
Speaker Change: Yeah.
Alicia: Thank you Alicia.
Okay.
Speaker Change: The next question is from Great vehicles, a private investor. Please go ahead.
Robert Berman: Ray Yigal, a private investor. Yes, hi. Thanks for taking my call. A couple of questions. Actually, the last caller tapped into my question. I had mentioned a couple of quarters ago to David about overseas contracts, and he mentioned there was enough revenue to be focused in the U.S., but I saw, I believe, you'll be attending the ITS European Congress, May 19th. Can we expect more of that? Yeah we're over there and I think that's one of the things that we're trying to point out here. You know once you have a technology that's productized that's let's call it box ready and you have the support materials necessary to sell that through channel partners then you can go ahead and do that and again there are every developed nation does some form of account class and speed just like we do here in the U.S.
Speaker Change: Yes, hi, Thanks for taking my call a couple of questions actually.
Speaker Change: The last call there.
Speaker Change: Tapped into my question.
Speaker Change: A couple of quarters ago today, that's about overseas contracts and you mentioned there was enough revenue to be focused and you ask what I saw I believe you will be attending the <unk> European Congress may 19th.
Speaker Change: Can we expect more of that.
Speaker Change: Yeah, we're over there and I think that's one of the things that we're trying to point out here.
Speaker Change: Once you have a technology thats product cause that's let's call it box ready.
Speaker Change: And you have the.
Speaker Change: The support materials necessary to sell that through channel partners.
Speaker Change: Then you can go ahead and do that and again there are every developed nation does some form account classes speeds just like we do here in the U S and they use that same data for traffic operations and.
Robert Berman: and they use that same data for traffic operations and we have the ability to sell that product now internationally and that's exactly what we're doing. Not that we've even penetrated you know the tip of the iceberg here in the U.S. but we're starting to see the adoption things take a little longer you know we know we've talked about a lot of states and contracts and other things but nothing's changed we think those things are coming but there's no reason for us not to be focused on the international market because there's demand for the product and you know, we can send it there.
Speaker Change: We have the ability to sell that product now internationally and that's exactly what we're doing not that we've even been penetrated.
Speaker Change: The tip of the iceberg here in the U S. But we're starting to see the adoption things take a little longer you know we know we've talked about a lot of states and contracts and other things but.
Nothing has changed we think those things are coming.
Speaker Change: But there is no reason for us not to be focused on the international market because there is demand for the product and.
Speaker Change: We can send it there so that's that's our plan.
Robert Berman: So that's our plan.
Robert Berman: Thank you. And last quarter, you mentioned a little over 15 proof of concepts. And I would have thought maybe by this today's release of the revenue that we would have maybe heard one or two. Can we expect that that's full drip to continue throughout the year or would they be a little bit of a quicker process? I can tell you that almost all of the states where we have proof of concept New York, as an example, has actually acquired technology, and the majority of the other states, when I say adoption, we're now seeing, you know, more orders, we're seeing larger contracts.
Speaker Change: Thank you.
Speaker Change: Last quarter you mentioned.
Speaker Change: A little over 15 proof of concept.
Speaker Change: And I would've thought maybe by this.
Speaker Change: Release of it.
Speaker Change: Revenue that we would have made it hard one or two can we expect that.
Speaker Change: So just to continue throughout the year or will they.
Speaker Change: A little bit of a quicker process.
Speaker Change:
Speaker Change: I can tell you that.
Speaker Change: Almost all of the states, where we have proof of concept.
Speaker Change: Systems.
Speaker Change: New York as an example has actually acquired.
Speaker Change: Technology and the majority of the other states when I say adoption, we're now seeing.
Speaker Change: No more orders, we're seeing larger contracts and.
Robert Berman: And I think that, to be frank about it, I think we had the sales approach and pricing in such a way that wasn't consistent with the way that these agencies procure. And if you think about how complicated it is, you know, we needed to make sure that we configured the way we sell into the way they buy, as opposed to swimming upstream.
Speaker Change: I think that to be Frank about it I think we had.
Speaker Change: The sales approach and pricing.
Speaker Change: In such a way that wasn't consistent with the way that these agencies procure.
Speaker Change: And if you think about how complicated it is.
Speaker Change: We needed to make make sure that we configured the way we sell into the way they buy as opposed to swimming upstream and I think we figured that out.
Robert Berman: And I think we figured that out over the last few months, and we made those changes, and I think you'll see the results of that very soon. In today's press release, you mentioned about the adverse weather conditions with the slowdown in the revenue. Hurricane season, not too far away. Do you focus on planning on having more personnel in that area before that happens? Well, you know, it's funny, but like in, in one of our customers in the most southern state, we actually had to get out there and help them in between the two hurricanes they had last year.
Over the last few months and we made those changes and I think youll see the results of that very soon.
Speaker Change: And today's press release, you mentioned about the adverse weather conditions, but that slowdown in revenue.
Speaker Change: Hurricanes see not too far away.
Speaker Change: Do you focus on planning on having more personnel personnel.
Speaker Change: And that area before that happens.
Speaker Change: Well you know, it's funny, but like in one of our customers in the most southern state.
Speaker Change: We actually have to get out there and help them and between the two hurricanes they had last year.
Robert Berman: and the technology perform well. I don't think it's a question of having the personnel out there. I think it's the ability to have the product ready to be deployed as a technology company as opposed to being a contractor. And that's the difference. At the end of the day, Rekor is a technology software data company and not a construction company. And that's why we've changed the model of the way we run the company and manage the company because we can deploy the technology and we don't necessarily have to do that work. And we can get the same revenue and recurring revenue from having others do it because the products are ready to be deployed that way.
Speaker Change: And the technology performed well I don't think it's a question of having the personnel out there I think it's the ability to have the product ready.
Speaker Change: To be deployed as a technology company as opposed to being a contract and that's the difference at the end of the day record is technology software data company.
Speaker Change: And not not a construction company and.
Speaker Change: That's why we've changed the model of the way we run the company and manage the company because we can deploy the technology and we don't necessarily have to do that work and we can get the same revenue and recurring revenue from.
Speaker Change: Having others do it because the products are ready to be deployed that way, but it took a little bit of time to get it there.
Robert Berman: But it took a little bit of time to get it there. And, you know, now we're there. So I think it's not a question of how much manpower we have. I think it's a question of. you know, the demand for the product. And I think now that we've modified the way we're doing business, I think you're going to see the scale coming with that.
Speaker Change: <unk>.
Speaker Change: Now now we're there so I think it's not a question of how much manpower. We have I think it's a question of you.
Speaker Change: The demand for the product and I think now that we've modified the way we're doing business I think.
Speaker Change: See the scale coming with that.
Robert Berman: And that's frankly what we were hoping, that's what we were hoping to do, so.
Speaker Change: And my last frankly, what we were hoping that that's that's what we were hoping to do so.
Robert Berman: And my last question, is the, I mentioned a couple quarters ago to David and he said stay tuned, but is the QSR kind of a debt sector right now or are you still focused on that or revenue isn't high there? That's a good question. So I can tell you that the, you know, it's an interesting area because Scout started out as LPR, vehicle recognition. We produce a lot more data from Scout and hold a variety of patents on how to anonymize that data. So privacy information that goes out doesn't, you know, become a problem with respect to commercial customers not wanting the same information that, let's say, a law enforcement agency would have.
Speaker Change: And my last question is no.
Speaker Change: A couple of quarters ago, David you said stay tuned, but it's a <unk>.
Speaker Change: Kind of in that sector right now or are you still focused on that or.
Speaker Change: Revenue isn't there.
Speaker Change: That's a good question. So I can tell you that the.
Speaker Change: Yes, it's an interesting area because scout started out as LPR vehicle recognition.
Speaker Change: We produce a lot more data from scout and hold them a variety of patents somehow to anonymize that data privacy information.
Speaker Change: It goes out those.
Speaker Change: From a problem with respect to commercial customers not wanting the same information that let's say a law enforcement agency would have.
Robert Berman: And I think that that sector is going to open up more for us. We've had success with it in the past with companies like Six Flags and others, casino companies that we've announced, and we see a lot more value to that data today than we did even six months or a year ago. And again, it's the way we were marketing and where we were focused. And I think we're turning our focus back towards commercial. So the answer is yes, QSRs are very much a part of that.
Speaker Change: And I think that that that sector is going to open up more for us.
Speaker Change: We've had success with in the past with companies like six flags and others casino companies that we've announced and we see a lot more value to that data.
Today than we did even six months or a year ago and again, it's the way we were marketing and where we're focused and I think we're turning our focus back towards commercial so the answer is yes, <unk> is very much part of that.
Robert Berman: Look, there's an article, you guys can Google and go search it, but Chick-fil-A was flying drones over their properties to look at the traffic flow coming in and out of some of their stores. So if you can just envision that and think about, you know, and it's all on our websites, the data that we can produce from Scout, you know, for our customers, there's a lot of valuable data there for folks that are in retail businesses, whether it's a QSR, a big box store, a sports stadium, a casino, whatever it might be. And that's where our focus is now.
Speaker Change: Look there is an article you guys can Google search at Chipotle was flying drones over their properties to look at.
Speaker Change: The traffic flow coming in and out of some of their stores.
Speaker Change: If you can just envision that and think about.
Speaker Change: And it's all on our websites the data that we can produce from.
Speaker Change: Scout for our customers, there's a lot of valuable data there for folks that are in retail businesses, whether it's USR a big box store.
Speaker Change: Well, our sports Stadium live casino, whatever it might be and Thats, where our focus is now and I think youre going to see more of that.
Robert Berman: And I think you're going to see more of that in the, you know, in the coming weeks and months.
Speaker Change: In the coming weeks and months.
Robert Berman: And you believe we're still on track then for profitability by the end of the year? I personally believe that we are. on track for profitability before the end of the year. I don't want to commit to it, but I think we're going to get there. I think it's around the corner. And that's that's what we're doing. We're working to drive the company to scale revenue, become efficient, not just from the standpoint of being efficient, meaning cutting costs and overhead, but being able to deliver the product to the customer with less bureaucracy. And look, Rekor was just.
Speaker Change: I believe we're still on track for profitability by the end of the year.
Speaker Change: I personally believe that we are.
Speaker Change: On track for profitability before the end of the year I don't want to commit to it but I think we're going to get there.
Speaker Change: It gets around the corner and that's that's what we're doing we're working to drive the company to scale revenue.
Speaker Change: Become efficient not just from the standpoint of being efficient mean cutting costs and overhead, but being able to deliver that.
Speaker Change: The product to the customer with less bureaucracy.
Speaker Change: Look <unk> was just.
Robert Berman: you know, overbuilt, okay, too bureaucratic for its size, with great products that there was demand for that we couldn't get out the door because we just had this process here that just didn't work.
Speaker Change: Overbuilt.
Speaker Change: Hey, too bureaucratic for its size.
Speaker Change: With great products that.
Speaker Change: There was demand for that we couldnt get out the door because we just had this.
Speaker Change: Process here that just didnt work.
Robert Berman: And we're gonna fully announce the structural changes that are coming with this GM structure. And the board is still out actively looking. I'll stay here as long as it takes to make this work and hope to continue to stay on the board because I believe in the company, but we're gonna find the right person to manage it and the right people to do what we're doing. And I think we have that structure in place now. And I think you're gonna see the results of that and it's not gonna take a long time.
Speaker Change: And we're going to fully announced structural changes that.
Speaker Change: <unk> are coming with this GM structure.
Speaker Change: And the board is still look actively looking I will stay here as long as it takes to make this work and can help us continue to stay on the board that casino I believe in the company, but we're going to find the right person to manage it and right people to do what we're doing and I think we have that structure in place now and I think youre going to see the results of that and that's not going to take a long time.
Speaker Change: <unk>.
Robert Berman: Okay, and will there be any updates on Mexico? I can't speak to that right now because it's just... Again, it's non-public stuff, but as soon as we have something to update, we will. I understand.
Speaker Change: Okay and will there be any updates on Mexico.
Speaker Change: I can't speak to that right now because it's just that.
Speaker Change: Again, it's nonpublic stuff, but okay. As soon as we have something to update we will.
Ray Yigal: That's all I have. I appreciate your time.
Understood. That's all I have I appreciate your time.
Ray Yigal: Yeah, thank you.
Speaker Change: Yes. Thank you.
Robert Berman: This concludes the question and answer session. I'd like to turn it forward back to management for any Yeah, thank you. And look, everybody, thanks again for your patience. And, you know, I think every company has growing pains. And I think, you know, Rekor is on the backside of ours, because I think we realized some of the things that we were doing that were inhibiting the growth in the scale and the profitability in the margins. And look, the board is fully involved in this. And, you know, we think we've come up with the right structure, the right plan.
Speaker Change: This concludes the question and answer session I'd like to turn the floor back to management for any closing comments.
Yeah. Thank you and look everybody. Thanks again for your patience and.
Speaker Change: Thanks.
Every company has growing pains and I think.
Speaker Change: Record is on the back side of ours, because I think we realized some of the things that we were doing that work.
Speaker Change: Inhibiting the growth in the scale and the profitability and the margins.
Speaker Change: And look the board is fully involved in this.
Speaker Change: And we think we've come up with the right structure.
Robert Berman: We think we have the right people as GMs in place. And again, we're going to be talking more about that in the coming weeks this quarter. And we'll also continue to look for, you know, a permanent person to here as an interim CEO, but not going anywhere until we make this work right. And when we find the right person, we'll make those changes as well. But we're going to get through this. And I think you'll see that. And it's not going to be quarters and quarters away. I think it's just a matter of, you know, weeks here.
Speaker Change: The rate plan, we think we have the right people is gms in place and again, we're going to be talking more about that in the coming weeks this quarter.
Speaker Change: We will also continue to look for.
Speaker Change: A permanent person to here's an interim CEO, but not going anywhere.
Speaker Change: Until we make this work right and when we find the right person, we will make those changes as well, but we're going to get through this.
Speaker Change: And I think.
Speaker Change: You'll see that it's not going to be quarters and quarters away I think it's just a matter of.
Robert Berman: So. Appreciate everybody's patience and thank you so much for, you know, staying with us.
Speaker Change: Weeks here so.
Speaker Change: I appreciate everybody's patience and thank you so much for staying with us.
Speaker Change: Yes.
Speaker Change: Okay.
Matt: This concludes today's teleconference, you may disconnect your lines at this time. Thank you again.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.
Speaker Change: Thank you.
Speaker Change: [music].
Speaker: Good evening welcome to youtuube .
Speaker Change: Hum.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: Okay.