Good afternoon, ladies and gentlemen, and welcome to today's Rekor Systems, Inc. Conference Call. My name is Robert, and I'll be your coordinator for today. Before we start, I want to read you the company's abbreviated safe harbor statement. I want to remind you that statements made in this conference call concerning future revenues, results of operations, financial position, markets, economic conditions, products and product releases partnerships and any other statements that may be construed as a prediction of future performance or events are forward-looking statements. Such statements can involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements. We ask that you refer to the full disclaimers in our earnings release. You should also review a description of the risk factors contained in our annual and quarterly filings with the SEC. Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations and is provided for informational purposes only. I would now like to turn the presentation over to Mr. Robert Berman, Interim President and CEO of Rekor Systems.

Thank you, operator, and good afternoon, everyone. We appreciate you joining us to review Rekor's Systems' Second Quarter 2025 results. We typically begin these calls with our CFO, Eyal Hen, walking through the financials. But as we did last quarter, I'd like to first provide some broader context to help frame the numbers you'll hear shortly. With that, I'm pleased to kick off the conversation this afternoon. Earlier this year, we announced a major statewide blanket purchase order with the Texas Department of Transportation, one of the most influential and sophisticated departments of transportation in the country. This marks a transformative moment not just for Rekor, but for the broader transportation industry. TxDOT's adoption of the Rekor Command platform sets a new standard for how large agencies can leverage AI and data fusion to improve roadway decision-making, safety, and operational efficiency. That said, it is important to recognize that the expanded adoption across the rest of TxDOT's 25 districts is not a switch flip overnight. We expect the process of bringing additional districts on board to unfold over the coming quarters. And as stakeholders gain confidence in results and operational benefits demonstrated in Austin and other future early deployments. In that regard, we also secured and began executing 2 additional deployments that validate our broader market traction. The Central Texas Regional Mobile Authority has entered into a $1.4 million contract expansion for over 5 years, demonstrating the authority's continued trust and investment in its Rekor Command technology. The implementation of Rekor Command, where this agency has led to significant measurable results, including a 324% increase in incident detection and an 11-minute faster average response time highlighting the effectiveness of the technology and improving roadway safety. The new contract expansion enhances their use of the platform by adding advanced features such as bidirectional driver communication and AI-powered predictive insights to the capabilities they now use and will enhance its contribution to roadway management. This partnership aligns with broader regional growth supporting over 35 major infrastructure projects in Central Texas through enhanced technology, which can lead to increased demand for Rekor services. Another notable development for Rekor in the second quarter has been a major deployment of Rekor Discover in a Sunbelt state. As part of the new statewide initiative to modernize traffic operations, the agency is installing 150 Discover systems under a 1-year $1.2 million Data-as-a-Service contract. Our installations are expected to be completed shortly. This deployment reflects growing momentum for Rekor Discover as transportation agencies seek safer, nonintrusive FHWA compliance solutions to replace older in-road technologies. In addition to this project, Discover is now active in multiple states, including Arizona, Colorado, Florida, Georgia, New Mexico, New York, South Carolina, further strengthening our national footprint and supporting future international expansion. On a local level, we've continued rolling out Rekor Road View, our situational awareness platform built specifically for cities and counties that don't operate 24/7 traffic management centers. Road View provides real-time alerts for incidents, congestion and work zones, allowing smaller agencies to take timely action and improve operational response without heavy infrastructure investments. Feedback from the early adopters has been very encouraging. We also expanded our Data-as-a-Service model for Rekor Discover, giving users access to accurate FHWA compliant traffic data on a subscription basis. No hardware, no installation, and no maintenance, just the data they need when they need it. It's a win-win that will reduce agencies' costs and complexity while allowing us to increase recurring revenue while delivering high-value insights at scale. The transportation landscape is evolving quickly, and Rekor is playing a leading role in increasing transportation data's value not just as a planning tool, but as a national asset with implications for safety, resilience, and economic development. That recognition is shaping our conversations with agency partners and opening doors to new opportunities. Rekor is well positioned to meet this moment with the technology, credibility, and policy alignment required to help agencies modernize, responsibly and securely. As we look to the second half of 2025, we'll continue executing against current deployments while deepening those relationships. We'll work to bring new TxDOT districts online over time. We'll build on our momentum to secure additional Discover contracts at the state and regional levels, and we'll continue participating in a national dialogue around AI, transportation, and infrastructure modernization and developing new products and services to address these important needs. Two major milestones ahead. First, the ITE 2025 in Florida this week, and the ITS World Congress in Atlanta later this month. We'll be demonstrating our full connected intelligence suite and engaging with global transportation leaders to reinforce Rekor's leadership position. In closing, Rekor is continuing to advance as a connected intelligence partner for the public sector. We're solving real problems, delivering value, and helping agencies rethink how they manage and secure the most vital public assets, our roads. Thank you again for your continued support. And with that, I'll turn it over to our CFO, Eyal Hen, for a review of the financials.

Thank you, Robert, and good afternoon to everyone joining us today. I'll walk you through our financial results for the 3 and 6 months ending June 30, 2025. While the macro environment remains somewhat challenging, particularly due to continued uncertainty in the government sector, we remain focused on execution and operational efficiency, and we are encouraged by the progress we continue to make in this challenging environment. Total revenue for Q2 2025 was $12.4 million, consistent with the same quarter of last year. On a year-to-date basis, we recorded $21.6 million, down 3% from the first half of 2024. This modest decline was primarily driven by slower project activity and weather conditions at the beginning of the year. However, we continue to see strength in our sales pipeline and current deployment and are confident in our ability to drive sequential growth in the second half of the year. Recurring revenue for Q2 totaled $5.9 million, representing 48% of total revenue compared to 50.6% in Q2 2024. For the 6 months ended June 30, 2025, recurring revenue was $11 million, a slight decline of 2% from the prior year. These fluctuations reflect some recent increases in point-in-time sales. However, our long-term strategy remains focused on growing our recurring revenue base through SaaS and data subscription models. Adjusted gross margin for the quarter was 49.5%, compared to 53.5% in Q2 2024. For the first 6 months of 2025, adjusted gross margin was 48.9% versus 50.2% in the prior year period. The decline in margin is largely attributable to the revenue mix with a greater proportion of hardware-based contracts compared to high-margin software sales. We continue to expect margin increases over time as our SaaS and data businesses grow and account for a larger share of revenue. A key highlight this quarter is our continued focus on operating efficiency. Total operating expenses for Q2 declined 17% year-over-year, representing a $2.9 million reduction. Year-to-date, we have reduced operating expenses by $5.7 million, also a 17% improvement. These savings were achieved across all major areas of the business. G&A expenses decreased 6% in Q2 and 5% year-to-date. Sales and marketing expenses were down 16% for the quarter and 22% year-to-date. And R&D expenses decreased 27% in Q2 and 24% for the first 6 months. These results reflect disciplined cost containment and deliberate realignment of resources to match our operating model and growth strategy. Adjusted EBITDA loss for Q2 2025 was $5.8 million, in line with the prior year. On a year-to-date basis, adjusted EBITDA improved by $2 million, narrowing to $13.1 million compared to $15.2 million in the same period last year, with our commitment to continued cost discipline in sight and higher revenue in the current quarter. We anticipate continued improvement in adjusted EBITDA for the remainder of 2025. Looking ahead, we are very optimistic our pipeline remains strong, particularly with our State Department of Transportation and Public Safety vertical. We expect this relationship to continue to extend and contribute more meaningfully to revenue in the second half of the year. We also continue to identify opportunities for additional operational efficiency to help improve our bottom line. With our focus on revenue growth, extended SaaS offerings, and disciplined execution, we remain confident in our goal of exiting 2025 on a stronger financial footing and moving closer to breakeven adjusted EBITDA. Before I turn it back to Robert, I want to thank our shareholders for their continued support. We recognize the challenges of the past year, but we are proud of the operational and financial progress made in the first half of 2025. We have a clear strategy, and we are executing on that plan. Your trust and patience are invaluable, and we remain committed to delivering long-term shareholder value. Thank you for your attention. Robert, back to you.

Thanks, Eyal. Now I'd like to open the floor for any questions you may have.

Our first question comes from Michael Latimore with Northland Capital Markets.

There was solid, really strong sequential growth in the quarter. Was that mainly due to better weather, or is there another factor driving that?

It's the pipeline that we have in Q1, I think, change. As we said, Q1 was depressed a little bit by the diverse weather that impacted our portable business. And Q2 is stronger, and we anticipate the remainder of the year to be stronger with the pipeline that we have currently.

And what would be a more important sort of second half driver? I think you talked about sequential growth generally, but would Discover or Command be more important to kind of the second half here?

It will be across actually Discover, Command and Scout as we anticipate to have sequential growth on all 3 business lines.

And then on Scout and the public safety space, what are some of the more interesting use cases you're seeing there and types of customers you're seeing?

Mike, it's Robert. All right, well, good, mostly commercial, Mike. We're focused on the commercial sector, which is really where we're seeing a lot more use of vehicle recognition. Marking everything from parking to businesses like car washes, rental car companies, fleet management for a lot of different businesses and still forward. So that's where the focus is.

And then just the last one for me. You talked about the Data-as-a-Service option for Discover. How important is that to the Discover pipeline relative to more traditional models there?

Very important, well, like everything else, it is taking a lot of time to convince the government to change the way they do business. And Data-as-a-Service is the right way for them to do business. And it's a much better business for us because it's all recurring revenue.

Our next question comes from Tim Moore with Clear Street.

This is Larry Stavitski on for Tim. He had to drop off to attend another call, but I just wanted to pinch it for him. Do you guys have any large pilots or studies that you did in the last 12 to 24 months besides Austin, that are nearing a contract or some type of larger pilot with a meaningful revenue contribution that we should be aware of?

I talk about that because those are procurement right now. So it's just the nature of business. But yes, we're piloting and using POCs, have done REs, RFOs once it enters the RFP stage...

Yes, I think I lost you guys first, I'm back on. I don't know if you can hear me. I kind of missed you there.

Yes. What I was saying was that a number of customers did POCs with pilots have come back and they've decided to proceed. And once you enter your stage, the process should be smooth. But the good news is that a lot of the pipeline we have from doing the pilot and POCs has resulted in positive outcomes and feedback.

And that's what you guys are talking about in the back half of the year coming to fruition in terms of sequential growth. I guess if you could put a little bit more color on the organic growth in the back half of the year for your expectations in terms of revenue?

Yes. I mean, look, to be frank, I think we've learned that this is a business that has a long sales cycle because of the procurement process, and we've learned how to manage that better and make more educated estimates as to when these things will turn into revenue. And we feel very good about the back half of the year about Q3 and Q4. And we're confident that the company is turning the corner now.

Our next question is from Noah Levitz with William Blair.

Thanks, Robert. To start off, can you provide any color on the progress with PlateRanger and your partnership with SoundThinking?

Currently, not much. We are working with them. But currently, there is not much progress right now with the test.

Yes, we really don't have much involvement with that product. It's all SoundThinking. They market it, they sell it, they implement it, and we provide the technology. So we're hoping that they get some traction, but we'll see; we're hopeful.

Got you. And then secondly, the IIJ bill continues to deploy funds. A lot of companies we follow have noted that there's a bipartisan group in Congress currently working on the subsequent bill, and it seems to be gaining a lot of steam. And Secretary Duffy has promoted the America is building again program. So it seems like besides an uncertain procurement environment, there's a lot of positivity in investing in transportation infrastructure. Does this give you confidence like when you go to the ITS conference in a month or so that the conversations are going to be more optimistic and that in 2026 and beyond, you will see more traction with your products?

Well, it's interesting because Eyal and I are currently at the IT conference in Orlando before the upcoming ITS event. But for me, IT is much different. There's over 100 vendors here. The dialogue is completely different. The reason for it is it's being driven by the present administration, which has realized that the federal government has mismanaged the trust fund that they operate every year. They're putting much more focus on data, okay? Because the data drives where you spend money, and you can't manage what you can't measure. Hearing the dialogue, listening to the speakers, just seeing discussions on the floor, it's a completely different focus now. It’s on data, and that's what our company is all about. We're building an ecosystem for data management and planning for roadways. It's nice to see that shift in conversation.

Our next question comes from an unidentified analyst.

I was curious at the beginning when you spoke about the difficulties and challenges associated with unpredictable weather. Have you developed any plan or strategy if this happens again?

Yes. Look, that's a fair question. The company is small and is starting to scale. And a small amount of our revenue comes from a certain number of customers that are in areas where the weather can get unpredictable. But as the company scales, the weather won't really impact the implementation systems. Command is a SaaS product that's installed inside buildings on computers and ATM platforms, whereas Discover is being installed roadside. So I think a lot of that has to do with the company's size. When you're smaller, small impacts can lead to significant changes in your revenue. So I hope that clarifies things, but it's not a seasonal business if that's what you're getting at.

Yes. That was mainly my question.

Yes. It's not a seasonal business.

We have reached the end of the question-and-answer session. I'd now like to turn the call back to management for closing comments.

Well, everybody, thank you. I appreciate it. I wish you could all be here with Eyal and me and the rest of the team to see what we see. It's exciting. And again, we're confident about the back half of the year and that finally, we're getting the attention that we believe the company's technology deserves. So we'll look forward to seeing you on the next call in the fall. Thanks, everyone.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.