Welcome back everyone. We have an update from Route1, which trades on the TSXV under the symbol ROI and on the OTCQB under the symbol ROIUF. It's an operational technology company focused on parking operations, ALPR ecosystems, operational intelligence, secure mobility, and lifecycle operational engagement. Please welcome President and CEO, Tony Busseri. Welcome, Tony. We're looking forward to hearing your update today.
Great. Thanks for having me back. This is not going to be a presentation on Flock. It's been in the media a lot, but we're going to focus on Route1 today, if that's okay. First of all, again, thanks for having me. My name's Tony Busseri. It's a quick update, and we're going to move through this so we also can take your questions. From a legal perspective, I'm not going to read it's available to you in the notice here. I'll give it a couple seconds for you to consider it. We continue to be a TSXV-listed company and respecting things we have to do. Our Q2 results will be coming out next week, and we look forward to providing you an update with that. A couple touch points from our Q1 results I want to highlight again.
We've moved from being a hardware or a deployment story into an outcome story, and our execution as we move forward is going to reinforce that. Particularly, I want to point out our recurring revenue around support contracts and software application licenses. We stood, last time we talked about it at the end of March, with about $1.35 million USD of recurring revenue. Near term, you're going to be looking for us to continue to show execution. We put out a news release last week, not the largest of ones, but around a couple clients, City of Davis, California, the City of Santa Barbara, particularly their police department. What's exciting for us is that we have clients that are growing their support agreements with us, support agreements obviously focused around outcomes. We're going to talk about those outcomes briefly.
We start with the hardware and building a relationship with the client, scoping out the project, do the install, do the training, and start building support with them around their hardware and their employees, and the use of the technology. Ultimately, it leads to how do we use this technology to improve enforcement, deal with compliance, deal with governance related issue. That's then when we step in and have a much larger agreement with them towards their outcomes. Parking management's radically evolving today with the use of AI, different state laws, particularly in the state of Washington, soon to be in the state of California. With issues that are going on with fixed camera deployments, in particular with ALPR.
We again, referencing Flock, makes this a little bit more complicated than just using technology to buy a ticket so that I can park in a spot. Our business model really, really, really focuses around the outcomes for our clients. Using that data towards not just reporting, but using that data to create better outcomes for their clients, which could be ease of use, finding your spot, buying a permit, an online permit, or a digital permit quicker, prior to entering. More and more, we are seeing parking operators, whether it is a police department or a private operator, having to deal with governance issues can be around how LPR is used, when it is used, how long that data is retained.
We working with the end user, our clients, towards meeting the expectations, again, towards outcomes and towards reporting and governance, is a role that we are playing more and more. It is a nice spot to be in because you clearly can use data analytics and AI towards helping our operators. Particularly AI, I want to stress that in this use case, it is not to replace people, it is to act as a force multiplier. To turn data from historical reporting into what can we do moving forward to have more reads of plates, provide better outcomes for our client's client, right? I just cannot underscore compliancy. It was something we were moving towards long before some of the Flock challenges we have read in the media. We partner with a company called Genetec.
They are a Montreal, Canada-based company manufacturing here in the U.S. Very different technology model where they are not going to run into the same challenges of Flock. They do not have shared databases. They have very easily identifiable parameters around how long data is retained, and that becomes client centric. If the client wants that data removed in a day, 15 days, 30 days, or depending upon state or local community laws, they can enforce that. We are really happy to be partnering with Genetec. Great partner. We are seeing a lot of benefit. As you move forward here, expect from us, yes, we are going to report results. Yes, that will mean greater recurring revenue. Yes, that will mean greater free cash flow.
Look for our news releases to talk about how we continue to evolve our support plans, the use of AI, and look for a lot more evidence around the execution of growing our client base and upsizing each client into a more robust contract. That is your quick update. Look for Q2 results from us next week. We believe the second half will be materially stronger and better than the first half. We have made a major investment. We have been out there selling and working with our clients with the new model. I will stop here, invite questions. Thank you.
Thank you, Tony. What is the average annual recurring revenue per customer today, and where do you believe that number can ultimately go?
That's a really good question. It's a little more than $10,000 per customer per year. What we're starting to see is clients who are about to close with us that are six digits. Do I think every client's going to get $100,000 plus a year? No. But we will see dramatic improvement off of the 10.
Do recurring customers tend to expand their spending after the first year?
Yes. Is it specific year one? Not necessarily, because there's budget cycles and the like, but we have clients that made decisions that they're going to invest in two of their five enforcement vehicles. Once they have success and they understand how the technology works, they'll deploy it across all units. You see communities who might have 25 enforcement vehicles. It's a revenue-generating item. Look, you loo k at the state of Florida, where they're saying, "Hey, we're going to get rid of property taxes." That money needs to come from somewhere else, so they do greater enforcement on the parking for people that come and visit the community. We are definitely seeing the investment in more and more enforcement vehicles, and that leads to greater revenue for us.
How quickly can a customer typically recover the cost of ABI through improved operational performance?
Right. We have that calculator built right in so they can track it. Forget about buying more hardware. Let's just maximize what we have. The investment with Route1 ABI is anywhere from a couple of weeks to a couple of months, depending upon how aggressive the operator is around encouraging behavioral change from their enforcement team. Very quick turnaround.
Is Mr. Parking essentially an AI interface into ABI, or does it perform additional analysis or operational decision making?
Really good question. Not that others weren't, but I like this one a lot. Specifically, Mr. Parking is using the data from Route1 ABI and presenting to the operator new ways of running routes to encourage more coverage of their parking spots or their stalls, and/or a greater regularity. What's it doing ultimately is understanding a number of things in its algorithm, but it's looking at the data and saying, "Tuesdays between 9:00 and 10:00, we generally have this issue." It's accessing traffic apps, it's accessing weather, and it's taking the scarce resource, which is cameras and enforcement vehicles, and deploying it so that it can have the best coverage possible for the end user.
Does the system learn from historical citation data or ALPR data of parking behavior?
Absolutely. Yeah, I've used the term that when we birthed Mr. Parking, it's like a baby, right? It grows and educates itself, and over the course of the summer, it's been learning. Look, selfishly, Mr. Parking also is a great sales engineer tool for our team, our sales team, when we're talking with our clients. We don't want to get ahead of ourselves. It's going to take what it's going to take relative to time with our subject matter experts and learning from how each of our clients are adopting and using LPR, and ultimately, helping them with the logistics aspects. So stay tuned. We're going to talk a lot more about it. We have AI, we have our patents pending with the USPTO, and we'll give updates to the market upon where we stand with those, too.
How many municipalities, universities, and private parking operators in North America fit yo ur target customer profile?
Thousands. The parking industry is a $30 billion a year-plus industry here in America, not including Canada or southbound in Mexico. We are talking a very robust opportunity that is in growth mode, right? This is a revenue stream, whether you are a blue state or red state. It is not just about revenue, it is obviously about their client experience, governance, making sure we are using the technology in the proper way. Look, this is not a contracting industry, this is a growth one.
I will let you end with this. What should investors watch over the balance of 2026 to judge whether that conversion is working?
Recurring revenue. EBITDA.
Great. All right. Well, wonderful update. Congrats on all this. We would love to have you back with some more positive updates like this.
Thank you. Look forward to it. Cheers.
Thanks, Tony. All right, everyone, we will be right back.