Good afternoon, ladies and gentlemen, and welcome to today's Rekor Systems Conference Call. My name is Alicia, and I'll be your coordinator for today. As a reminder, this conference is being recorded for replay purposes. Before we start, I want to review 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 disclaimer 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 now would like to turn the presentation over to Mr. Robert Berman, Interim President and CEO of Rekor Systems.

Good afternoon, everyone. I'm incredibly proud of what the Rekor team has accomplished this quarter, the best performing quarter in our company's history. So I'm pleased to lead off today's call. But we are going to switch things up a bit today. Before diving into the business and technology updates, I'll first turn the call over to our CFO, Eyal Hen for some important financial and organizational updates. Eyal, the floor is yours.

Thank you, Robert, and good afternoon to everyone joining us. After nearly 7 years with Rekor, I've made the decision to step down from my role as Chief Financial Officer. It has been a tremendous privilege to help lead the company through its transformation and growth journey and I'm deeply proud to conclude this chapter with the strongest quarterly and year-to-date results in Rekor history. It's truly a testament to the dedication and talent of our entire team. I'm also very pleased to introduce my successor, Joel, who will take over as Chief Financial Officer. Joel has served as Rekor Corporate Controller for the past 6.5 years and has been deeply involved in every aspect of the CFO role over the past year. Joel brings both internal institutional knowledge and with experience as a manager at KPMG, his long-term tenure at Rekor and commitment to excellence make him the ideal person to step into this role. There will be no learning curve; his appointment by our Board ensures a seamless transition, maintaining continuity and stability. I remain overwhelmingly optimistic about Rekor's future and live with complete confidence in the company's strategy, our team, and the tremendous momentum the company has built. It's been an honor working alongside such a talented and mission-driven team. Rekor's future is bright, and I look forward to continued success. With that, it's my pleasure to turn the call over to our incoming CFO to discuss the financial performance for the quarter.

Thank you, and best of luck to you and your family. I'd also like to thank all our investors who have joined us on today's call. Today, I'll walk you through our financial results for the 3 and 9 months ended September 30, 2025. We've been focusing on execution and operational efficiency and are encouraged by the progress we continue to make. During the third quarter of 2025, Rekor delivered its best financial performance in its history, marking our third consecutive quarter of positive results. We delivered record revenue of $14.2 million, an increase of 35% compared to Q3 2024 and 15% compared to Q2 2025. On a year-to-date basis, we recorded revenue of $35.8 million, up 9% from the first 9 months of 2024. This increase represents continued growth across our public safety and urban mobility businesses. We continue to see strong momentum in our sales pipeline and active deployments, giving us confidence in our ability to continue to drive growth going forward. Recurring revenue for the third quarter of 2025 totaled $6.5 million, representing an 18% increase compared to the recurring revenue in Q3 2024. For the 9 months ended September 30, 2025, recurring revenue was $17.5 million, up 5% year-over-year. This reflects our long-term strategy of expanding our recurring revenue base through long-term software and data as a service subscription contracts. Our adjusted gross margin for the quarter was 63% compared to 44% in Q3 2024. For the first 9 months of 2025, adjusted gross margin was 55% versus 48% in the prior year period. This improvement was largely driven by a greater portion of high-margin software sales compared to our service and hardware-based contracts. As noted previously, we expect margins to continue to fluctuate over time but to gradually stabilize as our Software and Data as a Service businesses become a larger share of total revenue. A key highlight this quarter was our continued focus on operating efficiency. Total operating expenses, excluding depreciation and amortization, declined 24% quarter-over-quarter, representing a $3.7 million reduction. Year-to-date, we've reduced operating expenses by $7.8 million, an 18% improvement compared to the same period last year. These reductions were achieved across all major areas of the business and reflect disciplined cost containment and a deliberate realignment of resources to support our strategy. The combination of record revenue and operational efficiencies resulted in significant improvements in our profitability. Adjusted EBITDA loss for Q3 2025 was $1.5 million, an improvement of $7.9 million or 84% from Q3 2024. On a year-to-date basis, adjusted EBITDA loss improved by $10.8 million to $14.5 million compared to $25.3 million in the prior year period. These results reflect record performances across the company as we continue to manage our operating expenses to align with our growth as our revenue base continues to expand. Before I turn it back to Robert, I want to say how truly honored and excited that I am to serve as CFO and move forward with our efforts to focus on transparency, financial discipline, and execution that supports our long-term strategy. We have a clear strategy, a strong foundation, and a dedicated team driving results to create value for our shareholders. I look forward to building on the progress we have made in helping lead the next phase of growth. Thank you for your attention. Robert, back to you.

Thanks, Joe, and welcome officially to your new role. We've had a long-standing relationship, and I am pleased to see you take on this leadership position. With your prior experience at KPMG and long tenure at Rekor, we are fortunate to have you here to take the reins. As outlined, this quarter represents the third straight quarter of positive results for both investors and the company. We are seeing clear signs that Rekor is reaching a point where the growth of recurring revenue and expanding market demand are aligning with operational discipline to drive sustainable growth. These results reflect the momentum outlined in our prior announcement, where we stated that Rekor expected record quarterly revenue along with a significantly improved adjustment in EBITDA and gross margin. We continue to work towards these objectives. In early October, we achieved a major milestone by securing our largest statewide multiyear contract with the Georgia Department of Transportation valued at a minimum of $50 million over the contract's full term. This contract further validates our leadership in roadway intelligence and data infrastructure providing a long-term growth foundation in one of the most strategically important transportation markets in the country. We also received recognition for our work in South Carolina where Rekor technology powers the state's virtual way station network. The program was recently awarded a State Technology Innovation Award for establishing a nearly 100% accuracy rate and overweight truck targeting, a model that other states can follow. This project showcases Rekor's ability to effectively use AI and connected infrastructure to deliver measurable value and efficiency to state agencies. Furthermore, three new and very large states have begun using Rekor Discover. Beyond our core operations, I'd like to briefly mention a new initiative Rekor plans to enter the global detection market. While we can't speak in detail yet, this opportunity builds on Rekor's years of experience in video analytics for government agencies and particularly law enforcement. For some time, even before deep fakes were on the public's mind, we considered the evidential implications of synthetic media and deep fake technologies and positioned ourselves to protect our customers and the public at large in this critical area. These efforts have now been concentrated in Rekor Labs, which is operating as an independent entity, and there's more to come on this when the time is right. We continue to see strong performance across our core portfolio. Rekor Discover and Command have generated considerable attention and adoption in the market. More importantly, we are now seeing an organic convergence of these two technologies and new RFPs issued by transportation authorities. This reflects a growing industry movement towards integrated data and intelligent solutions, an approach that Rekor has been pioneering for years. Importantly, our data-as-a-service business model is proven to be a major differentiator. Agencies increasingly want data without the hardware burden, deployment headaches, and maintenance issues. Rekor is perfectly positioned to meet that demand with AI-driven solutions that are scalable, cloud-based, and high margin. I also want to take a moment to recognize the continued strength of Rekor Scout. While Discover and Command have received much of the public attention, a significant portion of our revenue continues to come from Scout, which remains a cornerstone of our technology portfolio and a recognized leader in vehicle and license plate recognition. As part of our ongoing effort to strengthen and expand this business, I am pleased to announce that Jennifer Candelaria will join Rekor as General Manager of Scout, will be based in our Columbia, Maryland office and report directly to me, bringing more than a decade of global leadership experience across North America, Europe, Asia, and Latin America and the Caribbean. She has a strong track record in technical sales, product management, and business development with prior leadership roles at Motor Oil Solutions and Milestone Systems AI business unit, BriefCam. Her appointment significantly strengthens our overall leadership team and reinforces our commitment to operational excellence across all business lines. As we enter the first quarter of the year and look ahead to 2026, Rekor continues to be positioned for substantial growth. The momentum we've built across our technology platforms, customer base, and financial performance underscores that Rekor's transformation is delivering lasting value. We would like to thank our shareholders, employees, and partners for their continued trust and support. And lastly, I'd like to publicly thank Eyal once again for his dedicated service to Rekor. With that, operator, we'll now turn the call over for questions.

Our first question comes from Louie Dipalma with William Blair.

Good afternoon. Robert and Joe, and it was a pleasure working with you, and congrats, Joe, on your appointment as CFO. My first question for Robert, what type of product does the Rekor team envision developing with the deep fake detection division? And would the product be software as a service? Or do you imagine it would be more of a solution in which it requires your personnel combined with your software?

So this is Robert. And thanks for the question. By the way, it's Joe who is assuming the role of CFO. But let me answer you by saying that the product we had previously announced is being developed by a subsidiary, which is operating independently as Rekor Labs under the management of a Director. Given what's going on in that space and the competition for IP and other factors, there's not much more we can say about what we're doing than what we've said. I know that's probably not satisfying, but we expect to get a product in the market in '26. And we just want to be careful. Look, Rekor has a long history of working with AI machine vision, which is video and audio, and this came to our attention back in '23. So it's not something that just kind of popped up one day and we decided to get into deep fakes, right? So we have been looking at it, and we actually started developing some technology around it for our customers that were requesting this technology. So that's really all we can say about it at this point in time.

Definitely exciting. And how should we think about the EBITDA trajectory and margins over the next several quarters? I think you've been able to take OpEx out of the model, and you're also in the process of scaling the Georgia contract, so how should we think of margins and EBITDA?

I think the way you should think about it is exactly what we've been saying. We've always said that we expect as things progress that our margins will increase. We expect that they will stabilize higher than we reported this quarter, and that's just part of the development process of the technology that we're putting in the field. I think the most important thing is what was said earlier about our clients looking for the Data as a Service business model. They're not interested in technology and hardware and maintenance contracts. They need the data that they need to operate the roadways. Look, everyone here understands what's happening. You hear all these things about robo-taxis and companies doing this and the other thing. Well, the DOTs have to keep pace. They've got to keep the roadway safe. They have to do that through managing data, and the idea of delivering the data as a service as opposed to delivering technology and supplying it, maintaining it as a contractor is where it's headed. That means higher margins, longer-term contracts, and a better business model for a company like Rekor. So I think it's consistent with where we projected that we were going and we're seeing that in the results today.

Great. Do you see many other contracts similar to the Georgia contract in your pipeline such that other states will look at Georgia as the model or paradigm? They perhaps won't need to do a rigorous RFP process. They can trust that Georgia did the proper due diligence and they can expedite the process and go straight with you.

Yes. Well, look, I think obviously, states procure the way they procure, but I think the good news is that they do follow each other. At the end of the day, I believe that we're seeing what we pioneered: the concept of Data as a Service and delivering the solutions that these agencies are looking for. And that's where it's headed. What we're seeing now, which I think we said during the call, is that this is unprompted; we're seeing RFPs come out that we're responding to that are asking for this business model with the solutions that we have. And what's really interesting about it is that we're seeing a convergence of both the Discover and the Command platform. What I mean by that is when people think about DOTs, they have two sides; they have operations—maintaining roadways, operating the roadway public safety—and all the things that go along with that. Then you have more longer-term things like planning for how you maintain your roadways over the next 10, 15, 20 years. What we're seeing is that the DOTs are looking to combine that into a single pane of glass where they can get the data that they need through one supplier, not by buying hardware, not by having a contractor install equipment and worrying about whether it's working or not, but by a company that says we'll give you all of this data that you need to do both planning and operations, and you pay us for the data. If we don't give you what you need to operate your roadway system, then don't pay us. Look, everyone knows that today's world is used to getting things as a service. That's something that I'm proud to say we pioneered. We fought long and hard to make that business model work, and seven years ago, people said, 'Oh, I'm not sure that's going to work,' but that's exactly what we're starting to see. We're seeing RFPs come from states that are unprompted; they're just showing up and they're looking for exactly what Rekor does. The way we do business—that's where we think Rekor is uniquely positioned to offer those services and solutions.

Our next question comes from Tim Moore with Clear Street.

All the best for your next phase outside of Rekor. I remember meeting at your headquarters a year ago and speaking many times since then. So, good luck with everything. My first question is about your Command win that you were piloting a few years back in Austin, Texas, and the contract clearly came through well in June or so. So just wondering, is Austin starting to ramp up? Is the plan there to kind of tackle Austin because that's where the pilot was and then really go out to Dallas, Fort Worth, and then Houston? Is there any kind of just color you can add on that in the ramp-up?

That's a great question. Austin has issued a PO under the RFP quarter 1, so we have an expanded contract with them. I think it's about three years. I'm not sure on that. But it took full advantage of the pricing we had, and we've been working closely with TxDOT's procurement group. They wanted to roll this out to the other districts in a certain way. When you work with states, you follow their lead and do the best you can to support what they're asking you to do. I think we'll see a successful rollout in Texas beyond Austin, and we're just in that process right now with the TxDOT procurement team. But look, one additional thing about our business is it's B2G. We saw the good news that when you win, you're in, and you're there for a long time. That aspect of this business is rewarding, especially given Georgia and other states like Texas.

Great. Just to play on that thread of when you're in, which is great. How does the value Discover contracts stack up? Do you think that's like one-third the value of what you'll be doing either in Georgia or Texas, just kind of curious?

Look, California is large, but it's tough to talk about the size of that potential opportunity. I'd hate to get ahead of ourselves and have the folks at Caltrans get concerned. It's a massive opportunity, and we were pleased to be asked to come out and showcase the fact for Caltrans and all their districts. But look, we're going to slow things down a bit and be methodical about what we're telling the market. The good news is that tech is being adopted, and the business model is also being adopted. The states have to do this work, and Rekor is in a premium position to be able to deliver these services because, again, we pioneered much of this.

I just have one last question for Al, Joe, Robert, whoever wants to answer it. Now that you nailed down the Texas contract and the extended higher-value Georgia contract, Caltrans, do you expect to do a revenue sharing note again? Because that would definitely help improve liquidity. I'm just kind of curious what the thoughts are around that.

We are working as part of improving our liquidity. We are working with a banker, as we announced before, to have another series of this note. Now with Georgia and Texas coming in, it adds to the pool that gives us the opportunity to raise money through this revenue-sharing tool that we have had for the last 1.5 years. So definitely, yes, we are working towards it, and you will know when it's been executed, but we are working with the banker, as we announced before, through this second series of notes.

Our next question comes from Mike Latimore with Mawson Capital Markets.

This is Vijay Devar. Should you get a full re-rate portion of the new Georgia contract in the fourth quarter?

I'm not sure we caught that.

Can you repeat the question, please?

Do you expect a full pro-rata portion of the new Georgia contract in the fourth quarter?

Yes, we do. The Georgia contract is in full effect since October, and we anticipate billing them under the new contract terms.

Okay. And tell me the status of the Discover deployment in Georgia.

Can you repeat the question again?

The status of Discover deployments in Georgia?

I think we can't get into the details, but we have new Discover deployments going in Georgia and Florida, and in a couple of other states as well. I'm not sure that we have those exact numbers. Just so you know, towards the end of the year, we shift our resources around because some states slow down work over the Thanksgiving to New Year's holiday and other states allow us to work. But trust that we're taking full advantage of working wherever we can, getting as many systems as possible. I think we've put in a record number of systems in Florida in a very short period of time.

And finally, are cities joining the Georgia procurement contract yet?

The Georgia contract is in full effect. We have a PO from them for the next year. It went through the whole process, and it is effective as we speak.

Our next question comes from Ray Yakel, a private investor.

Yes. The international market, I believe, reported the ITS ERP back on May 19, and Mark was over there earlier in the year. Can you give us any feedback on that?

Sure. I mean this is new for us because we haven't looked to do business outside the U.S. borders, other than with the Scout platform. But we are actively engaged with a number of customers in Europe. The technology looks here looks there. We hope to be doing business in Europe and outside of the U.S. in 2026.

And the QSR sector, is there any push for that? Or are you just not seeing revenue there?

Again, it's mostly Scout, and it's not something that we're prepared to talk about today. But we are with its vehicle recognition software that has some unique tools, allowing property owners to extract anonymized information from vehicles on their property. That's something that has a lot of commercial application, and I think that's an area we will focus on in 2026. And with Jan joining us, we'll be able to produce some real results in that area. Companies want to know who's on the property, where they're coming from, and if you can do that in an anonymized way, which we can do and have some IP and patents on how we do that. We expect to take advantage of that in the commercial sector.

And do you see the technology being used anywhere else, for example, maybe shipping containers?

Well, that's a good question. Without getting into too much detail, I can tell you that state DOTs and the federal government have a strong interest in tracking what comes in through ports onto highways. That's what makes Rekor unique because not only do we have the ability to do what we do on roadways with respect to Discover, but we also have the ability to recognize DOT numbers and other things related to what might be on the side of a shipping container. So yes, that's very much something we are looking at and working on.

And my last question is from a long-term shareholder perspective. Do you believe profitability is what's holding the elevation in the share price and maintaining it there in your opinion?

Well, this small public company in this world is tough. The good news is that I think we've proven that we can advance the company; we can increase our revenue. We can control our costs; we can do so without impairing revenue, and we can drive the company to profitability. At the end of the day, it's really the value of the technology, and there's a lot of value to what we've developed. It took years to do, and it's not easily replicated. I personally expect that value will be reflected in the share price at some point, and people will realize it.

You don't expect to slow down in this quarter with the holidays, Thanksgiving, Christmas, New Year's?

Well, there is some seasonality in our business. Certain DOTs do limit the amount of work that you do roadside from Thanksgiving to New Year's. However, we're shifting around to those states where we can work, and we think there is a good chance that the growth can overcome a little bit of seasonality. At the end of the day, this stuff really doesn't matter because once the company gets its sea legs and grows, it's just going to grow because it's still very early. The more important thing is that the pipeline is there, the adoption is there, the expansion is there, and as I said earlier, the RFPs we're seeing unprompted from our customers tell you that Rekor is headed in the right direction. We're providing what they want; it's a really big market, and we haven't even touched the tip of the iceberg.

There are no further questions at this time. I'd like to pass the call back over to Robert for any closing remarks.

Yes, operator, I just want to make sure that there are no further questions from any shareholders. Sometimes we hear that there were questions that people didn't get a chance to ask, but there are no further questions; the queue is clear. Okay. Well, look, everyone, thank you so much for the support. Thank you for joining the call. It's early in the game for Rekor, but I think we've proven that we're headed in the right direction. You just don't land contracts with states like Rekor has without having something substantial. It's a good sign, and we're looking forward to a great year in 2026 and seeing you all on the next call. Thank you all; appreciate it.

This concludes today's teleconference; you may disconnect your lines at this time. Thank you for your participation.