Rekor Systems, Inc. (NASDAQ:REKR) Q3 2023 Earnings Call Transcript

Rekor Systems, Inc. (NASDAQ:REKR) Q3 2023 Earnings Call Transcript November 14, 2023

Operator: Good morning, ladies and gentlemen. And welcome to today’s Rekor Systems, Inc. Conference Call. My name is John, and I’ll be your coordinator for today. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. Before we start, I want to read you the company’s abbreviated Safe Harbor statement. I want to remind you that statements made in the 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. And now I want to turn the presentation over to Mr. Eyal Hen, CFO of Rekor Systems.

Eyal Hen: Hi, everyone. Thanks for joining us to discuss our results for the three months and nine months ending September 30, 2023. We are happy to share our continued progress with you. I would like to start off by sharing two slides with you that I think really demonstrate the progress that Rekor made. Over the past five years since we have been tracking our technology revenue, Rekor has delivered a 268% compound annual growth rate or CAGR. This has included multiple challenges and times when we have been constrained by limited resources. We have made significant investments in our roadway intelligence technology and successfully integrated two acquisitions. During this time, we quickly gained a significant foothold in the transportation market and are becoming well recognized as top leaders within the industry.

The next slide compares three other AI technology companies. As you can see on the left, the revenue per share for Rekor is significantly higher than the other three companies and was accomplished in much less time. As you can also see on the right, we did all of this with the intelligent use of much less equity than these other AI tech companies. This gives you a good sense of the rapid progress that we have made, while being mindful to use equity judiciously and not overly dilute our existing shareholders. With that in mind, I would like to discuss the continued revenues momentum and other achievements we have seen during Q3 and the last nine months. As a result of our continued growth and progress, we are pleased to announce an unprecedented topline for the third quarter of 2023, with a consecutive quarter over quarter increase of 6.5%.

It’s noteworthy that we accomplished this while we also continue to reduce our SG&A expenses. Over the last year, we have demonstrated that we can be financially prudent even as we integrate significant acquisitions. It’s also important to mention that we achieved this while continuing to make significant investment in our future through research and development. Now let’s talk about some other significant additional details for Q3. Highlighting the tangible growth and forward momentum we just discussed, we’re pleased to share that our revenue for the third quarter increased to $9.1 million, 35 — 34.5% higher than the $6.8 million experienced in the same period last year and about 6.5% higher than the second quarter of 2023. Total revenue for the nine months ended September 30, 2023 was $23.9 million, a significant increase of 77.4% over the same period in 2022, which had revenue of $13.5 million.

Our 2023 growth is mainly organic, with more and more states, municipalities and commercial customers adopting our technology across all applications. In the first nine months of 2023, we also achieved a reduction in cash use for operations, down to $26.7 million from $13.4 million in the same period last year. And I’d like to point out our 2023 results include one-time payments for accrued accounts payable for 2022, professional fees and deployment of new systems. During the third quarter, our cash burn continued to decline. This showcases our commitment to thoughtful and efficient financial management as we position Rekor for growth and scale. Turning our attention to financial metrics and other recent developments, I’ll cover several promising trends.

Q3 2023 revenue achieved a robust $9.1 million in revenues, demonstrating significant growth of 34.5 million — 34.5% from the $6.8 million recorded during the same period in 2023. We also continued our growth quarter-over-quarter, which was 6.5% above Q2 of 2023. Revenue for the nine — for the first nine months of 2023 totaled $23.9 million, up 77.4% from the $13.5 million during the same period in 2022. As mentioned earlier, our revenue has grown organically since all operations for our recent acquisitions have been fully included. We’ve also seen remarkable improvement in adjusted gross margins, up to 52.6% for the third quarter of 2023 from 46.1% in the third quarter of 2022. This margin performance has been fueled both by technology advancement and the use of automation and process controls, enabling us to optimize costs and bolster margins.

Operating losses due to our improved margins and reduction in SG&A expenses we have successfully decreased our operating loss from $12.8 million in the third quarter of 2022, not including the goodwill impairment to $9.8 million in the third quarter of 2023. Furthermore, the first nine months of 2023 show a reduction from $40.9 million in the corresponding period in 2022, down to $32.8 million, even as we worked intently to complete the integration of the SDS acquisition. Adjusted EBITDA, for the third quarter of 2023, the adjusted EBITDA loss stands at $6.6 million, an improvement of over 38% from the $10.7 million in the same period last year. For the first nine months of 2023, we reduced the adjusted EBITDA loss by 28.5% to $23.2 million, down from $32.4 million in the same period last year.

Quarter-to-quarter improvements from Q2 2023 was roughly a $0.5 million reduction or approximately 7.6%. We anticipate this trend to continue as we continue to grow our topline and manage operating expenses prudently. As in previous quarters, we have borne one-time expenses linked to payable management, asset and inventory system deployment, and associated professional services. We’ll continue to maintain a disciplined approach on operating expenses and diligently review each of our financial metrics to strategically allocate resources to areas that provide the best opportunities to drive revenue acceleration. We’ve been providing enriched key performance indicators to provide a more granular insight into our upward trajectory. Our goal is to empower you to assess our ability to obtain new contracts and for shareholders to appreciate the enduring value these contracts bring to our performance commitment.

In the third quarter of 2023, our recurring revenue percentage from total revenue was 52.6%, a decrease from 71.4% during the same period last year. This was a result of different mix in the products and services we sold. As we stated before, we generally anticipate to have 65% to 75% of recurring revenues, which may vary based on the mix of sales between products and services that provide recurring revenue and those that produce point-in-time revenue. Recurring revenue for the nine months ended September 30, 2023 accounted for 62% of total revenue, a small decrease from 64% in the same period last year. In the third quarter of 2023, we executed contracts worth $8.4 million, a 74% increase over the $4.8 million total contract value in the same quarter of 2023.

Additionally, through the nine months ended September 30, 2023, we secured contracts worth of $38.1 million, a 343% increase over the $8.6 million total contract value in the same period of 2022. Finally, as of September 30, 2023, our remaining performance obligations stood at $30.2 million, a prominent jump of $8.8 million or 41%, compared with the $21.4 million as of December 31, 2022. We project that approximately 73% of the remaining performance obligations as of September 30, 2023 will be realized in the coming 12 months. Moving to our financial condition and liquidity, in January, we completed the closing of senior secure notes in the aggregate amount of up to $15 million, led by our CEO, Robert Berman, with participation from other new and existing investors.

At closing, $12.5 million was funded. In March 2023, we also completed a registered direct offering for $10 million. These transactions gave us the liquidity to continue executing our strategy. Our cash balance for September 30, 2023, was $7 million, an increase from $1.9 million as of December 31, 2022. In July, a warrant holder exercised warrants, resulting in approximately $11 million in cash proceeds. Our working capital position has also increased significantly. As of September 30, 2023, we had a working capital of $3.6 million, compared to a deficit of $6 million as of December 31, 2022. The improvement in working capital was primarily due to increased cash and cash equivalents and accounts receivable. In summary, we are pleased to see continuing solid results and synergistic impacts from our technology development efforts and strategic acquisitions.

We also expect to have a strong fourth quarter and meet or beat the current estimates for the full year. This continues to give us confidence in our upward trajectory, operational efficiencies and commitment to long-term growth and shareholder value generation. With that, I will now turn the call over to David. David?

David Desharnais: Thank you, Eyal, and good afternoon to all of you that have joined us today. We appreciate your interest in Rekor and in our progress. Building upon Eyal’s comments about our financial performance and momentum, I am pleased to report that the third quarter has marked yet another period of continued performance and growth for Rekor. Not only have we expanded the breadth of our market presence, but also deepened the impact with customers across each business segment we serve. As we have all seen and read in the media lately, U.S. roadways are in a critical state. The increasing number of roadway collapses and the overall deterioration of roads have created heightened public awareness and intense political pressure to address the continued decline in Public Safety stemming from sharp increases in traffic congestion, environmental concerns and roadway fatalities.

Traditional tools and methods for managing and optimizing this vital infrastructure are proving inadequate and there is an immediate need and urgent call for innovative approaches and transformative solutions. The passage of the Bilateral Infrastructure Law at the end of 2021 marked a historic $1.2 trillion investment for the revitalization and digitalization of critical infrastructure and roadways. In this dynamic landscape of both chaos and opportunity, the markets and public agency customers we interact with are doing more than just reassess their existing investments. They are proactively looking to embrace AI and digital infrastructure technologies as a solution. For Rekor, this is where preparedness and opportunity meet. The guiding vision of Rekor and the passion of our teams is to improve the lives of people and the world around them by enabling roadways and communities to be safer, smarter and greener for all.

To realize our vision, we leverage our 3,000-plus man-years of field and roadway experience and combine that with our award-winning AI technology to collect, connect and organize the world’s mobility data to create essential and comprehensive roadway intelligence that is useful and easily accessible for our customers. Our strategy is distinct in that we do not simply collect data as a pass-through to customers, as is common practice in the transportation industry. Data for data is not helpful or useful. What’s different about Rekor and our approach is that we use AI to aggregate and fuse together massive amounts of volumes, velocities and varieties of data. Data about roadways, data about anything moving on or around the roadways and data about events that can impact roadways, and we bring all of this together to generate unique, real-time and predictive insights and roadway intelligence that is used by our customers to help them make better, more informed, mission-critical decisions that improve the lives of people on roadways and the world around them.

We provide our roadway intelligence solutions to both commercial and public sector customers across Public Safety, Urban Mobility and Transportation Management Market segments. This past quarter, in particular, has been pivotal for us in cementing our position as an essential innovator in AI for digital infrastructure and delivering significant breakthroughs in our products and platforms in each of these market segments. We also worked to exponentially increase our distribution capacity, scale our internal systems and processes and strengthen our brand promise as a leading provider in roadway intelligence solutions. I am pleased to provide some key highlights in each of these areas on our call today. Starting with Public Safety and licensing, we made significant technology an AI model updates in the quarter, dramatically expanding our geographic coverage and scope of vehicle recognition capabilities, including the latest plate designs and reflective properties, and new vehicle makes and models across traditional combustion engine, hybrid and electric vehicles driving on roadways around the world.

In parallel to these technology updates, we saw new and expanded adoption of our Scout vehicle recognition platform with major wins in Colorado, Florida and New Jersey. We also saw a continued expansion of our footprint in Latin America, EMEA, Asia and North America, and through our fast-growing OEM licensing and reseller channels. Scout’s vehicle recognition technology operates as the powerhouse engine under the hood of critical solutions provided by companies like Safe Fleet, Hayden AI and multiple others that are deploying tools to transit authorities and law enforcement agencies globally, and across major metro areas in the United States, including New York, Philadelphia, Chicago and Washington, D.C. This represents Rekor’s technology licensing arm in action and we expect this area to grow significantly in the coming quarters.

Beyond law enforcement and transit, we’ve also continued to deepen our relationships and footprint with enterprise clients such as corporate campuses, stadiums, universities, parking facilities, theme parks, casinos, retail establishments and more in the quarter. This expansion is supported by a growing set of regional value-added resellers that we recently established to drive faster and more efficient market penetration and scale. Now let’s shift attention to our performance in the Urban Mobility segment for the quarter. Departments of Transportation and commercial entities are supposed to conduct an estimated 5 million traffic studies in the U.S. each year. These traffic studies are mandated by the Federal Highways Administration and the U.S. Department of Transportation and must meet exacting standards for vehicle counts, classification and speeds on all of their roadways.

Today, states struggle to collect and report traffic data for most of their roadways due to the cost of collection and the inability for legacy technologies and manual approaches to keep up with and meet the evolving standards. The inability to properly report these traffic studies means states cannot recoup the much-needed funding to build and maintain their vital infrastructure. This perpetual lack of underinvestment is also a reason why roadways and bridges in the U.S. have an Abysmal C- report card. This has to change. At Rekor, nothing gives us more pleasure than reinventing normal, creating technology and innovations that customers love and resetting their expectation for what normal should be. This is certainly the case with our groundbreaking Discover platform for AI-based traffic studies that we launched earlier this year.

We built our Rekor Discover solution to provide an unmatched value proposition for our customers. Our unique AI-driven approach delivers substantial cost savings per data collection site compared to traditional legacy methods and ensures fast, safe and non-intrusive deployment, keeping road workers out of harm’s way. We do this at a fraction of the cost and in a fraction of the time, safely, flexibly and with the highest levels of reliability and accuracy made possible by advanced AI. Using the Discover platform, customers can now easily and completely collect data across all of their roadways, address the federal requirements for traffic data coverage and accuracy, and automatically generate comprehensive reporting for class, count and speed across all of their roadways.

Using Discover, customers can now substantiate, secure and reclaim federal funds back to the state for critical infrastructure development and they’re doing that. In the quarter, despite incredibly challenging weather conditions from an intense hurricane season in our southeast markets that continuously disrupted roadway operations, our dedicated teams in Georgia, Florida, Alabama, the Carolinas and Virginia rose to the occasion. As a result, we recorded our most successful quarter ever in our history for the volume of both permanent and short-term traffic studies and a major milestone for the year so far. And our customer pipeline for our Urban Mobility segment continues to expand across the United States as well. Already generating significant revenue from our footprint in key states such as Georgia, Florida and South Carolina, our influence continues to broaden.

With an additional 14 pilot programs already underway in various states, including New Mexico, North Carolina, Maryland, New York, Montana and Colorado, and more, our upward trajectory for continued growth here is more than promising. Shifting gears to our Transportation Management Market, I’m excited to share that we have also made significant progress here in the quarter as well, including major new technological advancements, expanded partner programs and customer growth. Traffic Management Centers shoulder a substantial responsibility, tasked with ensuring smooth and safe traffic flow across extensive road networks. Their role is critical in managing and optimizing traffic, tasks made increasingly difficult due to chronic understaffing and reliance on outdated tools.

The job they do is mission critical in maintaining efficient and safe transportation and they are demanding advanced solutions to augment their capabilities. This has become urgent. As a leader in roadway intelligence solutions and building on the success of our Rekor Command platform, which is already popular among major Traffic Management Centers both in the U.S. and internationally, we delivered an enhanced suite of new advanced capabilities, tools and actionable insights in the quarter that further create a force multiplier for Traffic Management Centers and provide an even more comprehensive and essential toolkit for situational awareness and response for the roadways. Roadway status, incident persistence scoring and automated response planning are among a few examples of these new capabilities that were released to the market.

We also unveiled a groundbreaking new approach and predictive analytics to assess roadway and crash risk, enabling traffic managers to foresee potential road hazards and accidents hours in advance. Proactive responsiveness to an incident saves lives and being able to do this, again, is a force multiplier for our customers. In fact, Traffic Management Centers enthusiastically report to us over and over that by using our Rekor Command platform, they can now automatically detect up to 49% more potentially fatal incidents that would have otherwise been missed and respond to incidences up to 23 minutes faster than traditional methods. Not only does this translate to reduced congestion on our roadways and secondary crashes, but more importantly, it saves lives.

Rekor stands alone in our ability to provide these kinds of real-time and predictive insights to Traffic Management Centers. For these reasons and more, we are observing an increase in annual revenue per customer, growth in profitability per customer and a sharp rise in engagement, adoption and usage of new capabilities. We believe that this momentum will continue to build and here’s why. Efficiencies like these also deliver substantial operational and fiscal benefits to our customers, amounting to tens of millions of dollars in potential direct and indirect savings per year to the state. All of these compounding advantages work together and its why customers choose Rekor. Supporting this, I’m pleased to report that we strengthened and deepened our position with the largest states in the United States and on the largest roadway networks in the nation, including Texas, Florida and California.

We also advanced our work with the Oregon Department of Transportation, where we are partnering with Cintra and serving as the core technology platform and hub for all data and connected vehicle providers. Oregon aims to deploy a first-of-its-kind, comprehensive, ambient computer solution for roadway usage charging, across what is today the highest concentration per capita of electric and hybrid vehicles on roadways in the U.S. Many other states are closely monitoring our work in Oregon as a potential template for their own road usage programs in the coming year. In addition to this, we also kicked off new projects in multiple other states, counties and municipal districts as part of a targeted sales campaign and marketing initiatives to reach 800 cities, counties and municipal planning organizations in the U.S. We believe this is a segment of the transportation market that is wildly underserved today and where Rekor can deliver unique and disproportionate impact as we do at the state level.

We are well positioned to help connect the dots and enable sharing and collaboration between agencies at all levels, across the state and even across multiple states. As we look ahead, customers in this segment have told us they often struggle to manage through arcane complexities and timeliness of traditional government procurement systems and processes. To aid in this and to accelerate growth in this segment, this quarter we also announced deepened partnership and a co-selling channel relationship with Amazon, its AWS Marketplace, and its public sector team, making the Rekor Command platform available and accessible for easier government procurement. This will make technology adoption and deployment much simpler for states, counties and municipalities and ensures immediate and continuous access and scalability on demand for them as they adopt and expand usage of our roadway intelligence solutions.

Overall, we are encouraged with the progress that we’ve made this quarter in the Transportation Management Customer segment and believe the best is yet to come as we continue to expand and scale our technology, partners and customer growth. In summary, the third quarter has been another period of solid performance for our company, marked by substantial product innovations across each of our customer markets and growth in both the size and the strength of our relationships with clients. At the same time, we’ve continued to aggressively innovate and expand our range of products and services with each new product designed modularly to integrate seamlessly with our Rekor One roadway intelligence engine. Designing our systems wisely in this way optimizes our technology investments for speed, reuse and scale, and shortens time to market and profitability for each segment.

By almost any measure, Rekor is in a stronger position now than at any time in our past. We have momentum and believe our relentless focus and execution against our vision and mission will continue to propel us into further exceptional growth and opportunity ahead. In closing, I want to recognize that while we’re not immune to the significant and continuous market, financial and geopolitical upheavals faced here in the U.S. and around the world, we are resolute in our vision and are working hard to build something important, something durable, something that matters to our customers and something that we can tell our grandchildren about. Such things are not meant to be easy. We are incredibly fortunate to have a group of dedicated Rekor employees around the world whose sacrifices, dedication and passion for our shared vision is what builds Rekor.

And we remain ever grateful to our customers for their business and trust and to you, our shareholders, for your continued encouragement and support. Thank you for spending time with us today and I look forward to keeping you up-to-date on our continued progress. At this point, I’ll turn the call over to Robert Berman, our CEO and Chairman of Rekor, for final remarks and Q&A. Robert?

Robert Berman: Thank you, David. Good afternoon, everyone. I’d like to underscore what Eyal presented earlier with his CAGR and AI tech companies comparison slides. Since we began tracking our roadway intelligence revenue in 2018, Rekor has experienced a 268% compounded annual growth rate. This demonstrates our ability to sustain growth through challenging times and periods of limited resources. We’ve constantly enhanced our technology and successfully completed key acquisitions. And at the same time, we’ve also solidified our market presence and emerged as industry thought leaders in roadway intelligence. Our acquisition of Waycare in August of 2021 and SDS in June of 2022 brought combined revenue of approximately $15 million.

Since then and despite the sale of our last non-core asset in the fourth quarter of 2022, which resulted in a reduction of $2.5 million of gross revenue, our topline continues to climb. I am particularly proud of the fact that the revenue growth the company has experienced over the last 12 months is entirely organic. As we expect to have yet another record quarter meeting or beating the current revenue estimates for the fourth quarter of 2023, Rekor will have again more than doubled its topline. Driving this organic growth is the adoption of the company’s technology and we’re just getting going. What you are seeing is just the tip of the iceberg. Thanks to the continued execution of the entire team, this remarkable growth was achieved more swiftly than many of our peers, as reflected in the revenue per share comparisons that Eyal shared with you earlier.

As David outlined, the strength of our differentiated products and technology, and our ability to scale is allowing us to grow more quickly and with less equity investment than comparable companies. As we work to prudently manage our equity, we’ve been able to reach these milestones while avoiding the heavy dilution that is often seen in the sector. This strategic approach has allowed us to advance steadily, mindful of preserving and maximizing shareholder value as the company moves towards breakeven between Q4 this year and Q1 of 2024. As the company scales its growth, most of the capital we’ll need is directly related to the installations of roadside IoT sensors nationwide. We’re going to continue to be efficient, avoid using equity and work to address this funding with debt and other mechanisms as much as possible.

In addition, as our footprint grows from east to west, the opportunity to transact in states where we have no direct presence or people continues to be a challenge. We don’t see these as problems, but more as challenges and opportunities that our technological lead puts us in a position to seize and we’ll have more to say about this in the coming weeks. In closing, I want to express my deep gratitude to our shareholders for your trust, support and belief in our vision. You’ve been the foundation of our achievements and together we are just not navigating the future, we’re shaping it. Now I’d like to open the floor for any questions you may have and please don’t hesitate to ask. We’re here to provide transparency and clarity, and we’re eager to address any concerns or inquiries you may have.

Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] And the first question comes from the line of Mike Latimore with Northland Capital Markets. Please proceed with your question.

Mike Latimore: All right. Thanks so much. Yeah. Congrats on the strong organic growth here. Yeah. You mentioned in the prepared remarks, strength in Urban Mobility. I don’t know if you can give a little more quantification, but was it over half, under half of bookings in the quarter?

Robert Berman: Mike, I don’t know that I can speak directly to the percentage, but it was a large percentage of bookings in the quarter and will continue to be in the fourth quarter and that’s where our focus is and what I referenced with respect to rolling out these IoT sensors nationwide.

Mike Latimore: And, yeah, as you look to the fourth quarter, do you see kind of all three business segments driving the planned sequential growth there or is one more pronounced? Is this Urban Mobility more pronounced? How do I think about kind of drivers in the fourth quarter?

Robert Berman: I think, we believe that Urban Mobility will lead the way, and if you think about our Public Safety and Licensing business where we started, that will continue to grow. The concept of building, which is what’s necessary, a digital layer of infrastructure over our existing road system requires IoT nodes, right? So as we get these across the states and then across the country, it pulls in Transportation Management. So I think Urban Mobility will lead the way and that’s a great business, because long-term state contracts, recurring revenue, very profitable and that pulls in the ability to do the other pieces. So I think Urban Mobility, they will all scale. Urban Mobility probably will lead the way in scale, in percentage of scale.

And I would say that, Public Safety and Licensing will continue to scale and traffic management is not far behind. There may be a point a couple of years down the road where Traffic Management starts to kind of catch up like a horse race and that’s understandable, because that’s how everything comes together and that’s the secret sauce of what we’re doing. So I think that’s a good way of looking at it right now. David, do you have any thoughts in that regard?

David Desharnais: No. Nothing more than you said there, Robert. I think you captured it well.

Robert Berman: Okay.

Mike Latimore: Great. And how many on the Urban Mobility side of things, how many deployments or site deployments can you do per day? How many — do you have enough resource to deploy at certain amounts per day now?

Robert Berman: David, do you want to take that?

David Desharnais: Yeah. There is a — it’s a multi-stage process. Like in poor concrete, you have to wait for it to set, et cetera. But after that, you can do this pretty efficiently, four-day to six-day if the crews are all operating. That’s pretty typical.

Robert Berman: That would be per crew, right? And we have multiple crews.

David Desharnais: That…

Robert Berman: Yeah.

David Desharnais: Per crew, yeah, per crew, per like region or segment of roadway. Yeah.

Robert Berman: They go in like four hours, five hours, six hours, you can put a system on.

Mike Latimore: Okay. And how many crews do you have then? Four per crew to six per crew, how many crews?

Robert Berman: David right now.

David Desharnais: Four and building a fifth.

Robert Berman: So four…

David Desharnais: Call it four and a half.

Robert Berman: Yeah.

Mike Latimore: Yeah. Yeah. That makes sense. Okay. Great. Thanks.

Robert Berman: But I know, Mike, I just want to add to that. Once the process is down, which it is, it’s pretty much stamp and repeat. And the labor that it takes to address this is, labor that’s out there. You can think about field technicians that have installed things like 5G towers for cell companies and others. So, that’s the nature of the labor required. So it’s pretty well expandable. And that’s why I had mentioned earlier the challenge that Rekor has, which is really an opportunity is that we’ve got a lot of business in states where we can transact but have no presence and we’re working to solve that. So, which means adding crews, right? I mean, that’s really what that’s all about.

Mike Latimore: Sure. Sure. Great, well, congrats again. Thanks very much.

Robert Berman: Yeah. Thank you.

David Desharnais: Thank you.

Operator: And the next question comes from the line of Zach Cummins with B. Riley Securities. Please proceed with your question.

Zach Cummins: Hi. Good afternoon. Thanks for taking my questions. I just wanted to ask around the weather delays that you mentioned in the southeastern United States. I mean, you give us an update. Was it really more of just kind of a one-time delay in terms of project implementations? And then second part of the question is, it seems like you’re in pilot with 14 additional states now. How many of those do you expect to move forward with more commercial deployment as you get towards the year end?

Robert Berman: Hey. David, do you want to take that.