Rekor Systems (NASDAQ:REKR) detailed improved margins and reduced losses in 2025 as management said it shifted the company from a development-heavy posture to a more disciplined, customer-focused operating model.
2025 results: revenue growth, higher margins, and lower losses
CFO Joseph Nalepa said Rekor generated $48.5 million in revenue for the year ended Dec. 31, 2025, up 5% from $46.0 million in 2024, driven by growth across its public safety and urban mobility businesses. Recurring revenue totaled $23.9 million, a 6% year-over-year increase, which Nalepa said aligns with the company’s strategy to expand software and data-as-a-service subscription contracts.
On expenses, Nalepa said total operating expenses (excluding depreciation, amortization, and asset impairment charges) declined 20% year over year, representing an $11.4 million reduction. He said the cost cuts were broad-based “across all major areas of the business” and reflected “disciplined cost containment and a deliberate realignment of resources.”
Adjusted EBITDA loss for 2025 was $18.1 million, improving by $11.0 million or 38% compared to 2024. Nalepa emphasized progress through the year: adjusted EBITDA loss was $13.1 million in the first half of 2025, compared with a loss of $5.0 million in the second half.
Backlog and remaining performance obligations increased
Nalepa said remaining performance obligations totaled $25.9 million as of Dec. 31, 2025, nearly an 80% increase from the prior year. He said the increase “highlights strong momentum” and gives the company confidence in its ability to drive growth into 2026.
Operational changes: onshoring engineering and restructuring charges
During 2025, Rekor decided to onshore its engineering efforts, a move Nalepa described as part of optimizing engineering operations and containing costs. The decision resulted in a $3.8 million non-cash asset impairment charge in 2025.
Looking into 2026, Nalepa said the company anticipates one-time charges in the first and second quarters, “primarily related to the cancellation and restructuring of existing agreements.” He framed those charges as near-term steps toward “a leaner, more scalable operating structure.”
CEO Robert A. Berman said 2025 marked a pivot toward “executing a pragmatic, profitable business model,” describing Rekor as having moved from an R&D-driven organization to “a customer-focused business with fully productized solutions.” As “rightsizing actions conclude towards the end of Q2,” Berman said the company expects to enter a new phase focused on scaling, with plans to “aggressively ramp sales execution” in the back half of 2026.
Cash flow, R&D spending targets, and integration progress
Berman said Rekor reduced net loss by 49% and “importantly achieved operating cash flow positivity in the fourth quarter of 2025.” He called the combined improvement in operating cash flow and adjusted EBITDA a “critical inflection point” for the business model.
Asked whether 2026 would be cash-flow positive, Nalepa said he did not want to provide “specific profitability guidance,” but said management was encouraged by the momentum exiting 2025. He added the company expects additional cost savings related to onshoring engineering and other initiatives to reduce the expense base while maintaining top-line growth, while also noting the impact of one-time restructuring charges.
On investment priorities, Berman said the company is “reducing and normalizing R&D to a run rate of 7%–10% of gross revenue by the back half of 2026,” describing the change as aligning investment levels with the company’s size while improving development efficiency through modern tooling and customer-driven priorities.
Berman also recapped corporate integration efforts following acquisitions completed between late 2021 and late 2023. He said integration is “substantially complete,” the company is operating on a unified platform, and the organization is “aligned, stable and focused.”
Deployments and demand: Georgia, Florida, and Texas
On deployments, Berman said activity in Georgia typically slows between Thanksgiving and New Year’s due to state agency schedules and can be further constrained by weather. He said work in Georgia began ramping “towards the second half of the first quarter” and that the company was working “at a pace that’s more than we’ve ever done in Georgia before.”
In Florida, Berman clarified that a prior win discussed as “1,000+” cameras was actually “150 systems in District Seven” as a pilot, as the state evaluates moving to a data-as-a-service model statewide. He said the pilot has gone well and the company is in discussions as the program expands, though he noted the expansion is “not public” and he could not yet provide details. Berman added that the data-as-a-service model is “clearly starting to scale” and said the company is seeing that across a number of states.
Regarding Texas, Berman described sales efforts for its Command product as “a very slow grind,” reflecting the pace of agency procurement. He said the company has upcoming meetings “later in April” with districts, and that Rekor is working on “a couple of new contracts and a couple renewals of existing contracts.” He also said onshoring Command brought the company closer to customers and helped address system bugs, which he said should enable the company to scale and iterate faster.
Business mix and ALPR-related scrutiny
In the Q&A, Nalepa said the company’s 2025 revenue split was “about a 50/50” mix between recurring revenue and equipment revenue, and reiterated the 6% recurring revenue growth rate. Nalepa said the company expects to continue pushing customers toward recurring models, though he noted adoption can depend on the buying power of specific DOTs.
Berman expanded on the company’s view that government procurement is gradually shifting. He said DOTs historically bought hardware and software with maintenance packages, but he described data as a service as an appealing model where customers pay for the data and the provider remains responsible for hardware, software, and maintenance. “It takes government a little bit of time to catch on,” he said, adding, “It is catching on.”
Addressing political or regulatory resistance to automated license plate recognition (ALPR) technologies, Berman said most of the company’s software license sales are not in law enforcement and include customers such as theme parks and parking companies. For law enforcement, he said scrutiny “has always been an issue” and “it’s not going away,” but he added that Rekor does not operate “like others,” stating, “We don’t have data lakes. We don’t sell the data to third parties.”
In closing remarks, Berman reiterated the company’s focus on profitability and pointed investors to the improved adjusted EBITDA loss in the second half of 2025 compared with the first half. He also said additional rightsizing and efficiency actions in early 2026 could be “equal to or, if not greater than what we did last year,” and said the company expects to focus on scaling in the back half of 2026 while growing “profitably and smartly.”
About Rekor Systems (NASDAQ:REKR)
Rekor Systems, Inc is a U.S.-based technology company specializing in real-time vehicle recognition solutions powered by artificial intelligence and machine learning. The company develops software and hardware systems that capture, analyze and store vehicle data—such as license plate images, make and model, color and vehicle characteristics—by leveraging advanced computer vision algorithms. Rekor’s platforms enable public safety agencies, transportation departments and private enterprises to automate vehicle identification, enhance situational awareness and improve operational efficiency.
The company’s flagship offering is a suite of intelligent camera and analytics products that include built-in license plate recognition (LPR) and vehicle attribute classification.
