Rekor Systems, Inc.

What they do

Rekor operates through wholly-owned subsidiaries including Rekor Recognition Systems, Waycare, Southern Traffic Services, and All Traffic Data Services, with a separate venture, Rekor Labs LLC, commercializing patent-pending video authenticity verification. Its products collect, connect and organize mobility data through the Rekor One roadway intelligence engine, covering use cases such as real-time hazard detection, traffic flow analytics, border and freight vehicle identification, and automated uninsured-driver enforcement. Customers are primarily public sector agencies such as departments of transportation and public safety agencies, along with private sector partners.

Revenue drivers

• Recurring revenue (software and services) — Recurring revenue was $6.7 million in Q2 2026, up 14% year over year, and $13.3 million for the first six months of 2026, up 21%; management says higher-margin software and recurring revenue made up a larger share of total revenue.
• Total revenue base — Total revenue was $12.7 million in Q2 2026, up 23% sequentially and 2% year over year; the company said the increase did not include any large, non-recurring software transactions.
• Annual revenue trend — Annual revenue rose from $11.6 million in 2021 to $48.5 million in 2025, with the growth rate decelerating to about 5% in 2025 from roughly 32% in 2024.

Recent performance

Q2 2026 revenue was $12.7 million, up 23% sequentially and 2% year over year, with recurring revenue of $6.7 million, up 14% year over year. Adjusted gross margin was 56%, up from 50% in Q2 2025, and the adjusted EBITDA loss was $1.2 million, a 79% improvement from Q2 2025. The company ended the quarter with $10.0 million in cash and quarterly operating cash burn of $2.4 million; for the first six months of 2026, cash used in operating activities improved by $9.6 million, or 61%, year over year. Headcount was reduced by 20% during the first half of 2026. Full-year 2025 results were revenue of $48.5 million and a net loss of $31.5 million, or $0.26 per diluted share.

Strategy

Management is cutting its operating expense base, having reduced headcount 20% in the first half of 2026 and realigned engineering operations, with further non-workforce efficiencies expected to produce several million dollars of additional annualized savings. The company is prioritizing higher-margin software and recurring revenue to lift gross margin and is targeting adjusted EBITDA profitability in the second half of 2026. It is also evaluating options to refinance its existing Prime Revenue Sharing Notes, supported by increases in the size of its contract portfolio and operational improvements. Product launches in Q2 2026 included Go-Secure.Video and the Rekor Scout Axis Agent integration. Rekor Labs continues to pursue commercialization of its patent-pending video authenticity technology as a separate venture.

Risks

• Unprofitable with recurring losses — Rekor reported a net loss of $31.5 million in 2025 and has stated it may continue to experience operating and net losses in the future.
• Cash consumption and financing needs — Operating cash flow has been negative every year from 2021 through 2025 (negative $20.4 million in 2025), leaving the company dependent on external financing, and it held only $9.8 million in cash and equivalents at June 30, 2026.
• Reliance on public sector customers — Its customers are primarily public agencies such as DOTs and public safety agencies, exposing revenue to government budgets, procurement cycles and regulation.
• Recent listing-rule failure — The company reported a delisting notice or listing-rule failure in an 8-K filed May 1, 2026, indicating it has faced a Nasdaq listing compliance issue.

Outlook

Management reaffirmed that adjusted EBITDA profitability is expected during the second half of 2026, following the $1.2 million adjusted EBITDA loss in Q2 2026. It cites a lower operating expense base, improved gross profit, tighter working capital management and growth in recurring revenue as support for that path. The company also said it is evaluating options to refinance its existing Prime Revenue Sharing Notes.