Aug 11, 2022 (ACCESSWIRE via COMTEX) -- Highlights:
Company completed the acquisition of Southern Traffic Services ("STS"), a traffic engineering firm specializing in traffic data collection
Recurring revenue increased to 48% of total revenue for the three and six months ended June 30, 2022, respectively, as compared to $21% for the three and six months ended June 30, 2021
Performance obligation increased to $31.9 million as of June 30, 2022, compared to $22.6 million as of December 31, 2021
Rekor Systems Intelligent Infrastructure Solution was selected by Missouri Department Of Transportation ("MoDOT") to improve Highway Congestion and Reduce Traffic Fatalities
Raised $20.4 million in net cash proceeds during the first half of 2022 with the At-The-Market 2022 Sales Agreement
COLUMBIA, MD / ACCESSWIRE / August 11, 2022 / Rekor Systems, Inc. /zigman2/quotes/200959926/composite REKR -0.55% ("Rekor" or the "Company"), a global AI technology company with a mission to provide insights that build safer, smarter, and more efficient cities around the world through intelligent infrastructure, announced its unaudited financial results for the three and six months ended June 30, 2022.
"We continue to demonstrate significant growth in recurring revenue under our new sales model for the three and six months ended June 30, 2022, compared to the same periods in 2021, as well as continued quarter over quarter growth since September 30, 2021," said Eyal Hen, Chief Financial Officer, Rekor. "In 2022, we have been focused on sales initiatives that create continuing relationships. This has resulted in an outsized increase in recurring revenues."
Hen added, "The acquisition of STS was valued at up to $14.5 million, including cash, stock, promissory notes and earnouts, with the final value to be determined by the achievement of certain performance metrics. This acquisition has been partly responsible for the increase in our performance obligations as of June 30, 2022, to $31.9 million compared to $22.6 million as of December 31, 2021."
Notable Second Quarter Wins and Achievements
Completed acquisition of STS. This acquisition is expected to generate at least $15 million of revenue, of which 50% is recurring, and $3.0 million of EBITDA.
The Company was selected by Israel National Infrastructure Company for AI-driven Intelligent Infrastructure on Israel Highways.
Rekor was selected for the launch of a multi-year program by the MoDOT. The program is intended to not only make roads less congested and safer, but to help rid the state of severe traffic crashes - all key objectives of Missouri's Show-Me Zero Strategic Highway Safety Plan 2021-2025.
Rekor Transportation Management Platform was certified by Amazon Web Services ("AWS") as "Well-Architected" to improve traffic and incident management, increase public safety and security, and optimize urban mobility. This certification marks distinctions in security, reliability, performance efficiency and scale, and opens up new growth channels through AWS's extensive global partner network and Marketplace.
"We are proud of our solid operational results which exceeded our expectations and included generating a significant increase in recurring revenue and performance obligations. We believe our strong and consistent operational execution reflects the resilience of a development stage AI company that has been built deliberately to ensure we can take advantage of the national and worldwide attention that is now laser focused on digitizing roadways," said Robert A. Berman, CEO and Chair, Rekor.
Second Quarter 2022 Financial Results
Revenue for the three months ended June 30, 2022, increased $60,000 or 1% to $4,334,000, compared to $4,274,000 for the three months ended June 30, 2021. Revenue for the six months ended June 30, 2022, decreased $549,000 or 6% to $7,942,000, compared to $8,491,000 for the comparable period in 2021. The increase in revenue for the three months ended, June 30, 2022, compared to the three months ended June 30, 2021, was primarily attributable to the synergies with our Waycare and STS acquisitions and our land and expand strategy, which involves expanding the services and solutions we provide to existing customers and also facilitating cooperation between our existing customers and new customers as part of a broader information network.
The decrease in revenue for the six months ended June 30, 2022, compared to the six months ended June 30, 2021, was a result of a decrease in product and service revenue in the current period. As part of our change in selling strategy, we have focused on a sales model that employs contracts with recurring revenue. We expect these contracts to provide a more predictable stream of revenues, compared to one-time sales of hardware and software licenses which are generally more difficult to predict. During the six months ended June 30, 2021, there was one customer who accounted for over $1.6 million of revenue as a result of a one-time sale of hardware and software. The decrease in one-time sale revenues during the six months ended June 30, 2022, was significantly offset by revenue attributable to the synergies with our Waycare and STS acquisitions and our land and expand strategy as described above.
Recurring revenue increased 133% and 115% to $2.1 million and $3.8 million for the three and six months ended June 30, 2022, respectively, as compared to $0.9 million and $1.8 million for the three and six months ended June 30, 2021, respectively
Adjusted Gross Profit and Adjusted Gross Margin
Adjusted Gross Margin, for the three and six months ended June 30, 2022, and 2021 decreased to 38.5% from 67.7%, and 41.5% from 61.1%, respectively. As part of a sales strategy to more quickly expand our market reach, we have recently offered certain customers short-term pilot programs which range from three to six months. Our pilot programs generally have lower margins due to additional upfront costs we incur to establish the program, which will not be incurred again if the pilot program is converted into a long-term program. In addition, the Company experienced lower margins on certain hardware sales during these quarters.