Rekor Systems Q1 Earnings Call Highlights

Key Points

• Rekor Systems said its Q1 revenue rose 12% year over year, helped by growth in Scout, Discover and Command, while recurring revenue made up about 64% of quarterly revenue.
• The company’s adjusted gross margin improved to 53% from 48% a year earlier, and its EBITDA loss narrowed to about $6.5 million as cost-cutting efforts began to take hold.
• Management said it has cut roughly 16% of its workforce and expects expenses to drop sharply in Q2, with a goal of reaching EBITDA neutral by late Q2 or early Q3 and positive by the end of 2026.

Rekor Systems NASDAQ: REKR said its first-quarter results reflected early benefits from a broad cost-reduction effort, while management pointed to stronger margins, higher recurring revenue and a path toward improved EBITDA performance later in 2026.

Chief Executive Officer Robert Berman told investors that the company conducted a comprehensive review of headcount, contracts and expenses beginning near the end of 2025 and continuing into the first quarter of 2026. He said Rekor reduced headcount by approximately 45 positions, or roughly 16% of its workforce, between year-end 2025 and the end of the first quarter.

“The organization we are running today is leaner, faster, and more focused than the one we had a year ago,” Berman said. He added that the financial impact of the restructuring was not fully visible in the first quarter because some actions occurred mid-quarter and some one-time costs were recorded during the period.

Revenue Rises Across Product Lines

Eyal Koursh, who reviewed the financial results on the call, said first-quarter revenue increased 12% year over year, with approximately $1.1 million of growth realized across Rekor’s Scout, Discover and Command product lines.

• Scout contributed $281,000 to the year-over-year increase.
• Discover contributed $682,000.
• Command contributed approximately $102,000.

Adjusted gross margin rose to 53% in the first quarter of 2026 from 48% in the first quarter of 2025. Koursh attributed the five-percentage-point improvement to revenue growth, improved deployment efficiency and a more favorable product mix, including higher-margin software sales and recurring revenue representing a larger share of total revenue.

During the question-and-answer portion of the call, management said recurring revenue accounted for about 64% of first-quarter revenue.

EBITDA Loss Narrows as Cost Cuts Begin to Take Hold

Rekor reported an EBITDA loss of approximately $6.5 million for the quarter, compared with a $7.4 million loss in the same period a year earlier. Koursh said the improvement was driven by revenue growth and cost containment, though he emphasized that the first quarter did not fully reflect the savings from actions implemented during the period.

Koursh said first-quarter expenses were likely to be “on the higher end” for the year because the company incurred one-time costs tied to workforce reductions and other restructuring actions. He said investors should expect “a stark drop in expenses” beginning in the second quarter, particularly in operating expenses, with the lower cost structure continuing through the rest of the year.

Berman said severance costs and expenses tied to office shutdowns and lease negotiations were largely finalized toward the end of the first quarter. He said the company expects the results of those efforts to become more visible in the second quarter and beyond.

Management said Rekor is targeting EBITDA positive performance by the end of 2026 and expects to be close to EBITDA neutral by the end of the second quarter or in early third quarter. Berman described that outlook as based on the cost reductions already executed and the company’s current revenue trajectory.

Cash Declines Sequentially; Refinancing Under Review

Rekor ended the first quarter of 2026 with $12.2 million in cash, down from $16.6 million at the end of 2025. Koursh said the sequential decline was expected and reflected normal first-quarter seasonality as well as one-time restructuring costs.

On a year-over-year basis, Koursh said operating cash consumption improved, which he said supported management’s view that the underlying business is moving in the right direction.

The company is also evaluating options to refinance its existing Series A Prime Revenue Sharing Notes, with the goal of reducing its cost of capital. Koursh said Rekor’s growing contract portfolio supports that refinancing effort and that management expects to provide more information later in 2026.

Georgia DOT Contract and UVED Program Discussed

In response to a question from Michael Latimore of Northland Capital Markets, Berman said the Georgia Department of Transportation deployment took longer to finalize but is now producing growth. He said the agreement functions as a contract vehicle, allowing other entities in Georgia to purchase through it.

Without providing specific details, Berman said Rekor is already working with several counties and a couple of large cities in the state. He said the company continues to believe the value of the Georgia contract could be “substantially higher” than its base value, which he described as roughly $60 million. Berman also said Rekor received a price increase on equipment already in the ground, which he said should support higher margins.

Asked about Oklahoma’s uninsured vehicle enforcement diversion, or UVED, program, Berman said Rekor is speaking with several other states about similar programs. He said government adoption takes time but pointed to the benefits such programs can provide to states and the insurance industry.

Rekor Labs Preparing GoSecure Launch

Berman also discussed Rekor Labs, a unit created to develop technology for public safety and commercial markets. Its first product, GoSecure, is on track for commercial release in the third quarter of 2026, he said.

According to Berman, GoSecure was developed in response to a question from a law enforcement customer about whether video evidence captured by Rekor’s platform could be faked. He said the product is designed to certify whether video or photo content has been altered, including down to a single frame, while verifying the camera of origin, timestamp, GPS location and file integrity from capture.

Berman said the product is intended to address concerns created by increasingly accessible deepfake technology and the need to authenticate surveillance video used by law enforcement, insurers and courts.

Rekor Labs is chaired by Professor Sanjay Sarma, an MIT professor of mechanical engineering and former vice president for open learning at MIT. Sarma previously served as a director of Rekor Systems.

About Rekor Systems NASDAQ: REKR

Rekor Systems, Inc is a U.S.-based technology company specializing in real-time vehicle recognition solutions powered by artificial intelligence and machine learning. The company develops software and hardware systems that capture, analyze and store vehicle data—such as license plate images, make and model, color and vehicle characteristics—by leveraging advanced computer vision algorithms. Rekor's platforms enable public safety agencies, transportation departments and private enterprises to automate vehicle identification, enhance situational awareness and improve operational efficiency.

The company's flagship offering is a suite of intelligent camera and analytics products that include built-in license plate recognition (LPR) and vehicle attribute classification.

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