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Sep 30, 2021
Rekor Systems Q3 2021 Earnings Report
Rekor Systems reported a 23% increase in revenue year-over-year, driven by additional products, programs, and sales, but faced a sequential revenue dip due to a shift towards a recurring revenue model and investments in infrastructure.
Key Takeaways
Rekor Systems reported a 23% increase in revenue for Q3 2021 compared to Q3 2020. The company is transitioning to a recurring revenue model, which caused a sequential dip in revenues. They also acquired Waycare Technologies to enhance their capabilities.
Launched Rekor OneTM operating system for intelligent infrastructure.
Evolved revenue model to focus on land-and-expand strategy.
Performance obligations increased 57% to $23.8 million from the previous quarter.
Recurring revenue increased 28% to $1.2 million compared to Q3 2020.
Rekor Systems
Rekor Systems
Forward Guidance
Rekor Systems expects revenues in Q4 2021 and the first half of 2022 to remain below Q1 and Q2 2021 levels as they continue to execute their land-and-expand strategy. They anticipate a meaningful pick up in revenue in the second half of 2022 and beyond.
Positive Outlook
- Focus on recurring, subscription-based revenues is expected to enhance Rekor’s value proposition.
- Retaining ownership of sensors allows for customized solutions and use cases without additional sensor installations.
- Software subscriptions will expand geographic footprint more quickly.
- Expect to position the Company to achieve a meaningful pick up in revenue in the second half of 2022 and beyond.
- Aggressively growing our sales force and customer base and will use a direct consultative sales approach to expand our footprint rapidly.
Challenges Ahead
- Revenues in the fourth quarter and first half of 2022 to remain below what we were able to generate in the first and second quarter of 2021.
- Emphasizes sensor-based subscriptions that produce lower initial revenues.
- Strategic software subscriptions to expand our geographic footprint could pose headwinds to revenue growth over the next few quarters.
- Saw a sequential dip in revenues in the quarter.
- Overall adjusted gross profit margin declined from the year-ago quarter.