Rekor Systems’ Earnings Call: Achievements and Challenges

Rekor Systems ((REKR)) has held its Q2 earnings call. Read on for the main highlights of the call.

Rekor Systems’ recent earnings call painted a mixed picture, highlighting both significant achievements and ongoing challenges. The company celebrated major contracts with transportation agencies and improvements in operational efficiency. However, these positive developments were tempered by issues such as flat revenue growth, a decline in recurring revenue, and decreased gross margins.

Major Statewide Blanket Purchase Order

Rekor Systems announced a transformative statewide blanket purchase order with the Texas Department of Transportation for its Rekor Command platform. This deal marks a significant milestone for both the company and the transportation industry, showcasing Rekor’s growing influence and capability in providing advanced traffic management solutions.

Contract Expansion with Central Texas Regional Mobile Authority

The company secured a $1.4 million contract expansion over five years with the Central Texas Regional Mobile Authority. This expansion demonstrates the trust and investment in Rekor’s Command technology, highlighting the significant measurable results it has delivered.

Deployment of Rekor Discover

Rekor deployed its Discover platform in a Sunbelt state as part of a new statewide initiative to modernize traffic operations. This deployment, under a one-year $1.2 million Data-as-a-Service contract, underscores Rekor’s commitment to innovation and modernization in traffic management.

Operating Efficiency Improvements

Rekor reported a 17% year-over-year decline in total operating expenses for Q2, with notable reductions in general and administrative, sales and marketing, and research and development expenses. This improvement reflects the company’s strategic focus on enhancing operational efficiency.

Flat Revenue Year-Over-Year

Rekor’s total revenue for Q2 2025 was $12.4 million, consistent with the same quarter last year. However, there was a year-to-date decline of 3% from the first half of 2024, indicating challenges in maintaining revenue growth.

Decline in Recurring Revenue

The company’s recurring revenue for Q2 totaled $5.9 million, representing 48% of total revenue, a slight decline from 50.6% in Q2 2024. This decrease highlights the challenges Rekor faces in sustaining its recurring revenue streams.

Decreased Adjusted Gross Margin

Rekor’s adjusted gross margin for Q2 2025 was 49.5%, down from 53.5% in Q2 2024. This decrease is attributed to a greater proportion of hardware-based contracts, which typically have lower margins.

Challenges Due to Weather Conditions

The modest revenue decline was partly driven by slower project activity and adverse weather conditions at the beginning of the year, impacting the company’s ability to execute projects as planned.

Forward-Looking Guidance

Looking ahead, Rekor Systems anticipates sequential growth across its Discover, Command, and Scout product lines. The company is focusing on increasing recurring revenue through SaaS and data subscription models, driven by a strong sales pipeline and ongoing deployments.

In summary, Rekor Systems’ earnings call reflected a balanced view of achievements and challenges. While the company secured major contracts and improved operational efficiency, it faces hurdles in revenue growth and margin pressures. The forward-looking guidance suggests optimism for growth in its product lines, with a strategic emphasis on recurring revenue models.