Rekor Systems, a company focused on roadway intelligence, recently held its Q1 2024 earnings call. While the headlines focused on revenue growth and the delayed procurement process in a major state, there's a deeper story hidden in the transcript. CEO, David Desharnais, hinted at a monumental opportunity, a "pot of gold" that could redefine Rekor's future, one that goes far beyond simply replacing outdated roadside infrastructure.

Desharnais uses evocative language, painting a picture of millions of obsolete sensors littering US roadways, remnants of past technological waves now drowning in disrepair. He describes the urgency of a "once in a generation technology refresh cycle", a $1.2 trillion investment opportunity to modernize American infrastructure, with Rekor poised to capture a significant portion.

But the real story, the one that hasn't yet captured Wall Street's attention, lies in Rekor's ability to leverage this refresh cycle to become a data behemoth. Desharnais refers to Rekor's devices as "supercomputers plugged into a roadway", not just replacing legacy tech, but acting as gateways to a vast, interconnected network of mobility data.

He reveals a fascinating statistic: Rekor is already aggregating over 20 trillion data points in its system, and it's just the beginning. Imagine a future where Rekor becomes the central hub for a "transcontinental standardized operating system for roadways", a data exchange connecting vehicles, infrastructure, and agencies across the country.

"This vision transcends the immediate concern of replacing failing piezos and radars. It speaks to a world where Rekor's data fuels a multi-billion dollar ecosystem. Think autonomous vehicles, smart cities, real-time traffic optimization, predictive maintenance, targeted advertising, and insurance risk assessment – all powered by the insights derived from Rekor's rapidly growing data pool."

While the CEO refrains from providing detailed financial projections, he drops a tantalizing hint. He suggests that the mobility data and roadway intelligence Rekor is collecting has "multi-billion dollar potential across multiple market segments and industries over time". This statement should send shivers down the spines of savvy investors.

Rekor's Potential Data Growth

The following chart illustrates Rekor's current data aggregation and the projected growth based on the CEO's statements about the infrastructure refresh cycle.

Here's why this vision holds such immense potential. The previous waves of roadway technology refresh, from pneumatic tubes to side-firing radars, generated an estimated $35 billion in cumulative spending. We are now entering a new era, one driven by digital infrastructure and powered by AI. Desharnais estimates that Rekor's addressable market within this refresh cycle is approximately $350 billion.

This is the "rainbow" he speaks of, a lucrative opportunity to modernize outdated systems. But the real prize lies at the end of that rainbow, the "pot of gold", the massive data hub Rekor is building as a byproduct of this modernization.

If Rekor can successfully execute its vision, capturing and connecting data from millions of devices across US roadways, it could become a data powerhouse with unparalleled access to the most valuable resource of the 21st century: information.

The Hypothesis: Rekor's Data is Undervalued

The market is currently valuing Rekor primarily as a provider of roadside hardware and traffic study services. This myopic view ignores the long-term potential of its data aggregation strategy. As Rekor's data pool grows and its AI capabilities mature, the company will be able to unlock new revenue streams and monetize its data in ways that are not yet fully appreciated by the market.

The Numbers: A Glimpse of the Potential

Consider the potential of even a small slice of this data. The global market for vehicle telematics, which uses data to track and manage vehicles, is projected to reach $103 billion by 2026. Rekor's data could power a significant portion of this market, providing real-time vehicle location, speed, and other insights to fleet management companies, insurance providers, and other businesses.

Similarly, the market for smart city solutions, which use data to improve urban efficiency and livability, is expected to reach $2.5 trillion by 2025. Rekor's data could play a crucial role in these solutions, providing insights into traffic patterns, parking availability, and other critical factors.

Conclusion: A Data Tsunami on the Horizon?

Rekor Systems is at a critical inflection point. The company is not only riding the wave of a massive infrastructure refresh cycle, but also quietly building a data empire that could have far-reaching implications. While the market remains focused on near-term revenue projections, the real story lies in the potential of Rekor's data to unlock new and lucrative opportunities. This is the quiet before the storm, and the potential data tsunami could redefine Rekor's future, making it a company to watch closely in the years to come.

"Fun Fact: The amount of data Rekor is already collecting (20 trillion data points) is equivalent to roughly 2.5 million hours of HD video. That's enough to watch the entire "Lord of the Rings" trilogy over 285,000 times!"