Rekor Systems reported third-quarter 2026 revenue of $10.9 million, a 23% decline from $14.2 million a year earlier, as the absence of high-margin perpetual software licenses in its public safety segment weighed on results. Recurring revenue rose 16% year over year to $7.5 million, making up 69% of total revenue compared with 46% in the prior-year period. The company posted a net loss of $2.9 million, or $0.02 per share, narrowing from $4.1 million, or $0.03 per share, a year earlier.
Management attributed the narrower loss to cost-containment measures and gains from lease exits. GAAP operating expenses fell 41% to $7.6 million from $13.0 million, including a $1.75 million net benefit from exiting facilities in Columbia and Tel Aviv. Core general and administrative, sales and marketing, and research and development expenses dropped by a combined $3.2 million during the quarter. Lease liabilities fell to $0.8 million as of Sept. 30, 2026, from $13.3 million at the end of 2025. Annualized savings from the 2026 rightsizing initiatives are estimated at $10 million, including more than $2 million in annual lease savings.S2
Adjusted gross margin fell to 48.2% from 63.4%, reflecting a less favorable revenue mix without the prior year's perpetual license sales. Adjusted EBITDA loss widened to $2.6 million from $1.5 million a year earlier, driven by higher urban mobility delivery costs and lower high-margin software sales. For the first nine months, operating cash use improved 49% to $10.6 million from $20.6 million, while nine-month revenue was $33.8 million, down from $35.8 million, and recurring revenue grew 19% to $20.8 million.S2
On contracts, Rekor selected a seven-year statewide contract in South Carolina with a potential value above $22 million, subject to final negotiations. The Florida statewide contract ceiling rose 94% to $9.5 million, though actual revenue depends on specific task work orders. An Oregon driver alert program, a five-year intent to award, carries an anticipated value of $1.4 million, and a Southern Nevada RTC contract could be worth $1.54 million if extension options are fully exercised.S2
Liquidity remains a near-term concern. The company held $5.1 million in cash and equivalents at quarter end, plus $0.3 million in restricted cash, and faces $15 million in Series A Prime Revenue Sharing Notes maturing on Dec. 15, 2026, which it is discussing refinancing. Management stressed that no definitive agreement has been reached and there can be no assurance of a refinancing outcome. Rekor also holds $2 million in Discover core components already paid for to support anticipated 2027 deployments.S2
