Rekor Systems Inc

Rekor Systems expects to reach adjusted EBITDA profitability in the second half of 2026, management said on its Q2 earnings call. CFO Joseph Nalepa cited cost reductions and recurring revenue growth, with Q2 revenue of $12.7 million and adjusted gross margin expanding to 56% from 50% a year earlier. The company also extended its GoSecure authenticity platform to recorded audio, following the June launch of video signing, and aims to finalize initial launch partner commercial terms in the third quarter. Nalepa noted a one-time $2.8 million lease remeasurement gain led to income from operations in Q2, while cash burn was $2.4 million and cash slightly exceeded $10 million.

Rekor Systems has been selected by the South Carolina Department of Transportation for a seven-year contract with a potential value exceeding $22 million, subject to final negotiations. The company will maintain and modernize SCDOT's traffic count, vehicle classification, speed monitoring, and weigh-in-motion sites statewide, replacing aging in-road sensors with AI-powered roadside systems to improve data accuracy and reduce maintenance-related lane closures. The contract is also available to South Carolina cities, counties, and other local agencies, which could push the total value above the $22 million statewide baseline. Rekor will provide the infrastructure and manage the systems under a Data-as-a-Service model, while SCDOT receives validated traffic data. Shares of Rekor Systems traded 2.25% higher at approximately $0.68 following the announcement.

Rekor Systems announced preliminary second-quarter 2026 results showing an expected adjusted EBITDA loss of approximately $1.3 million, a significant improvement driven by its operational realignment. Revenue is expected to reach approximately $12.6 million, up about 22% sequentially and 2% year-over-year, with an adjusted gross margin of approximately 55%. The company ended the quarter with approximately $10 million in cash and has identified additional annualized cost savings of several million dollars that do not require further workforce reductions. Rekor expects to achieve profitability on an adjusted EBITDA basis during the second half of 2026, supported by its lower expense base, continued revenue growth, and potential commercial partnerships for its newly launched Go-Secure.Video media-authentication technology.