Rekor Systems

Rekor just signed its biggest contract ever with the Georgia Department of Transportation, worth at least 50 million dollars over eight years and potentially as much as 100 million. That sits on top of a multi-year deal in Texas. For a company doing only about 50 million dollars in annual revenue, locking in deals this size is a major signal that states are buying in.

The business is shifting from one-time sales to steady subscription revenue. In the most recent quarter, recurring revenue grew about 29 percent year over year to 6.6 million dollars and now makes up nearly two thirds of the total. Recurring software is higher margin and more predictable, which is exactly the direction a software company wants to go.

Rekor is not profitable and is spending more than it brings in. Net margins are deeply negative at roughly negative 60 percent, and the company ended the latest quarter with a working capital deficit and a cash pile that shrank from about 17 million dollars to 12.6 million in a single quarter. It has leaned heavily on selling new stock to stay funded, which dilutes existing shareholders.

In its own filings, Rekor states there is substantial doubt about its ability to keep operating over the next year without raising more money. Revenue is also lumpy, with one customer making up 15 percent of sales and some recent growth coming from one-time license sales rather than steady contracts. This is a high-risk turnaround bet, not a safe holding.