Creative Realities Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 10, 2023

There are 7 speakers on the call.

Operator

Good morning. At this time, I would like to welcome everyone to the Third Quarter 2023 Creative Realities Inc. Earnings Conference Call. This call will be recorded and a copy will be available on the company's website atcri.com following the completion of the call. The company has prepared remarks summarizing the interim results along with additional industry and company updates.

Operator

Joining me on the call today is Rick Mills, CEO and Will Logan, CFO. Thank you very much. Mr. Logan, you may begin.

Speaker 1

Thank you, and good morning. This is Will Logan, Chief Financial Welcome to our financial results and earnings call for the 3 9 months ended September 30, 2023. I'd like to take this opportunity to remind you that our remarks today will include forward looking statements. The words anticipated, will, believes, expects, intends, Plans, estimates, projects, should, may, propose and similar expressions or the negative versions of such words or expressions as they relate to us or our management are intended to identify forward looking statements. Actual results may differ materially from those contemplated by these forward looking statements.

Speaker 1

Factors that could cause these results to differ materially are set forth in our quarterly financial statements on Form 10Q Filed with the SEC yesterday afternoon, November 9, 2023, and in our annual report on Form 10 ks filed with the SEC on March 30, 2023. Any forward looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update A reconciliation of GAAP to non GAAP measures is included in our public filings and in our earnings release that was released yesterday afternoon. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities Inc.

Speaker 2

Thanks, Will. Good morning, everybody. I want to thank everybody for joining. And as always, I want to thank everyone at CRI. Our people make it happen Every day, day in and day out.

Speaker 2

So thanks again to all the CRI folks. So now let's get started. In addition to discussing our Q3 2023 results, we have a number of important updates And developments including our updated guidance for 2024. I am pleased to report Q3 2023 revenue of $11,600,000 with a gross profit of $5,300,000 both are company records not only for Q3 But for any quarter in the company history, the gross profit margin percentage for the 3rd quarter Of 45.8 is a 500 basis point improvement over the same period last year. This continues a trend that was evident in the 1st and second quarters of this year.

Speaker 2

This trend is a key strategic output From growing our higher margin SaaS revenue, ultimately with a flow through effect To increased cash flow generation. From time to time, a large hardware deployment May suppress our margins in a given period temporarily, but with a diminishing impact On a go forward basis, as we continue to scale our SaaS based annual recurring revenue or ARR. Please keep in mind that hardware sales further seed high margin ARR once the hardware has been deployed and is being utilized for our SaaS services. Adjusted EBITDA for the 3rd quarter Came in at $1,000,000 The 3rd quarter adjusted EBITDA margin of approximately 8.8% Reflects the short term impact of scaling up our operations as we begin the deployment of the Boeing project. Revenue for the 1st 9 months of the year totals $30,700,000 With a gross profit of $14,700,000 the latter also a company record for the 1st 9 months of any year.

Speaker 2

The company's gross margin percentage for this period is 47.8%. Adjusted EBITDA on a year to date basis is $2,300,000 Our SaaS based annual recurring revenue run rate now resides at $15,600,000 exiting the 3rd quarter on track On October 20, the company communicated revenue estimates of 27.3 to 29.3 for the combined 3rd and 4th quarters of 2023 and projected Fiscal 2023 record revenue of $46,400,000 to 48,400,000 Our 3rd quarter results are in line with those previously communicated projections and we expect 4th quarter revenue to come in between $16,000,000 $17,000,000 also in line with what we communicated in October. We continue to anticipate that our SaaS based ARR will approximate $16,000,000 on a run rate basis Exiting 2023, reiterating 2024 guidance for between $60,000,000 $80,000,000 With anticipated adjusted EBITDA margins between 12% 15%. We see ARR growing to an exit run rate of $18,000,000 next year. For the first time in company history, I want to take a moment to address the range in revenue we have provided.

Speaker 2

Exiting the pandemic and following the acquisition of Reflect, We have scaled the business and repeatedly demonstrated an ability to win business due to the platform that we have assembled. Concurrently, we have increased the amount of information that we communicate to investors With an emphasis on leading indicators associated with the scaling of the business and the projected impact On profit generation and value creation, information concerning backlog, RFP win rates, revenue growth, projected margin improvements and that leverage management are intended It is important for everyone to understand while we control many facets of our business, we don't always control timing As customers ultimately control the cadence of the rollout. The bowling project is a great example of the points that I just Discussed, we have begun to roll out the bowling project. As you may recall, we had revenue shift forward From the Q2 of this year due to an unexpected supply chain challenge for equipment that was being procured and delivered by a third party. The supply chain issue was alleviated and now with installations beginning, we expect to see the benefits of this rollout And accelerating during and throughout 2024.

Speaker 2

To be clear, this contract has not gone anywhere. CRI expects to deliver $35,000,000 plus in revenue associated with this customer contract. Only the timing has changed and we are confident our shareholders will be rewarded. We believe this clearly demonstrates that we are on the correct path. It is not a matter of if value will be created, But simply just when.

Speaker 2

Our pipeline continues to strengthen. Our backlog remains Steady at greater than $110,000,000 Our backlog calculation is comprised of the anticipated rollout of projects as indicated Our current customers already under contract and includes all revenues that would be received and includes projected revenues that are not currently subject to binding purchase orders or commitments. We think that the ranges in revenue and profit for 2024 that we are communicating Represent the appropriate goalposts based on the communication and commitments that we have in hand. We will endeavor to refine our projections as the year plays out, but the key concept is that we expect to surface value at an increasing rate going forward. Revenue growth continues to be driven by the fastest rate of new customer acquisition that the company has ever experienced.

Speaker 2

We are experiencing wins in CRI key verticals such as Retail, digital out of home ad networks, food service, sports and entertainment venues And media contracts with an RFP win percentage that approximates 70% Over the past 12 months, both our platform and our personnel continue to be widely acknowledged By our vendor partners and customers as best in class, we are actively Competing in a significant number of new customer engagements in our pipeline has simply never been stronger. With significant scale, improvements in profit, tremendous tailwinds for new business And a strengthening balance sheet, the company is poised for significant value creation. I will turn it back over to Will A few notes on our business activities. Will?

Speaker 1

Thanks, Rick. Just a couple of other areas to highlight from our Q3 financial release. On August 17, 2023, the company sold 3,000,000 shares of common stock at a public offering price of $2 per share and received approximately 5 point $5,000,000 in net proceeds after deducting underwriting fees of $478,000 and offering costs of 68,000 No warrants were issued in this transaction. The offering proceeds are earmarked for 2 purposes: first, the repayment of the company's currently amortizing note And second, to bolster working capital through the end of the Q1 2024 when we expect to transition to generating positive cash flows on a net basis. The company's cash on hand as of September 30, 2023 increased to $8,400,000 from $1,600,000 as of December 31, 2022 As a result of the equity offering, collections on accounts receivable, annual billings associated with our SaaS based contracts and increases in customer deposits on future deployments, partially offset by investments in software development projects and the repayment of principal and debt.

Speaker 1

Proceeds from the public offering have been invested into short term Government backed fixed income securities yielding in excess of 5%. Through September 30, 2023, the company has repaid approximately 3 $9,000,000 in principal on debt in the current calendar year. The company has now repaid in full the $2,000,000 note drawn in October 2022 and has begun making incremental principal debt payments of approximately $379,000 per month related to the company's $7,200,000 amortizing note that matures in February of 2025. The company also continues to repay approximately $105,000 per on its original $2,500,000 seller note from the Reflect merger, which currently has 5 remaining payments. We are working to strengthen our balance By increasing revenues, improving profitability and managing our debt leverage, we entered 2023 with net debt of $19,000,000 Our leverage ratio has reduced to 2.6 times utilizing trailing 12 month adjusted EBITDA.

Speaker 1

While our public offering in August instrumental to reduce our debt. It is not the only factor at play to reduce leverage. With the revenue and profit projections that we have communicated for 2024, We project a 2024 exit leverage ratio of between 1.2x and 1.5x barring any additional financings or strategic opportunities. We believe the risk profile of the company is substantially changed and will continue to significantly improve throughout 2024. Rick,

Speaker 2

Thanks, Will. I want to highlight several of our customer engagements and other initiatives. First, I'd like to provide an update on a previous announcement. During our Q2 earnings call, we discussed CRI's RFP victory of the Panera Bread Business, whereby we were selected as the go forward digital provider for both indoor menu boards and the digital drive through. At that time, we had also indicated a press release would be forthcoming outlining the details of the engagement.

Speaker 2

Throughout 2023, we have worked hand in hand with the customer on test sites, content layouts And custom integrations within our software to provide maximum flexibility and capability for Panera's digital initiatives. As of today, all Panera sites with digital signage have been transitioned to the CRI platform And we are beginning to install both indoor digital menu boards and digital drive thru outdoor menu board solutions Beginning with their new construction and remodel sites in Q4 of this year, We are actively working with Panera on their evaluation of existing site retrofit activities And ultimately a launch which will allow franchisees to opt into the digital program. Panera is utilizing CRI hardware and deployment, our Clarity content management system as well as day 2 services, including content creation and management. Panera And a change in CEO in July of 2023, which altered the timing of our press release announcing our partnership. I want to reiterate that CRI remains Panera's digital signage provider, that CRI has received High praise from Panera thus far and that Panera has already provided referrals into other QSR brands In lieu of the formal press release, the partnership is alive, well, and we look for this customer to accelerate its adoption of our technology throughout 2024.

Speaker 2

When a brand like Panera trust you, many others are set to follow. BCTV or Bowling, we discussed during the Q2 call that the supply chain hurdles We're conquered in July, which put us on a path towards deployment. We have been working diligently in Q3 To complete the site surveys, having now completed over 300, and beginning the electrical installation site prep work, With material revenue from this engagement, which should accelerate through the first half of twenty twenty four. So enough of bowling, let's talk about another customer, The Human Being. The Human Being was founded in 1998 with a commitment To developing the very best coffee drive thru in Southern Oregon.

Speaker 2

Today, their franchise family spans hundreds of locations Open and or in development across the country. As stated by Janie Page, He is the Chief Marketing Officer at The Human Being. Our collaboration with Creative Realities enables us to blend Technology seamlessly with our friendly service, ensuring our guests enjoy both convenience And the genuine warmth that defines the human being now and in the future. We love the following statement on the Human Being homepage. Today is the smallest we will ever be.

Speaker 2

When hundreds of stores turn into 1,000, we will always treat our people like good human beings. What a great philosophy. Okay. Another customer, 6 Flags and Cedar Fair. Well, they've been in the news this week.

Speaker 2

Earlier this week, 2 of our customers, Cedar Fair and 6 Flags, announced plans to merge to create an expansive Amusement Park Operator with operations spread across 17 U. S. States and 3 countries. The combined company will boast 27 amusement parks, 15 water parks And 9 resort properties in the U. S, Canada and Mexico.

Speaker 2

The combined entity is utilizing our CMS and ad serving platforms to power 100 percent of the Fun TV network along with all their food service venues. More to come in 2024 assuming the merger closes, but we do not When appropriate. Another new customer win, Black Rifle Coffee. CRI executed an agreement with Black Rifle in Q4, which will see the customer transition all of their current screens To our Claroty CMS platform, the customer had previously deployed with another software provider, But was not happy with the breadth of features and functionality and the customer support it received. We expect this customer to significantly expand its footprint in the second half of twenty twenty four And throughout 2025, which will generate incremental revenue opportunities for CRI.

Speaker 2

This provides another key example of how CRI's full service approach resonates With customers in the market and evidence our ability to compete and win new business. Even in the instances where the customer has previously chosen another provider. Retail Media Networks, As we remain in discussion with multiple potential prospects who are evaluating the build out of retail media networks throughout their physical locations. We intend to keep you all updated as these Okay. So that's really an update on some customer activities.

Speaker 2

A couple other pieces I want to highlight. 2023 stock incentive plan. The CRI Board of Directors approved a 2023 stock incentive plan on November 8, 2023, Authorizing the potential future issuance of up to 1,500,000 shares of common stock. The company's previous plan, which was initiated in 2014, expired in April of this past year. This plan is designed to provide tools for management to increase shareholder value and advance the interest of the company By furnishing economic incentives designed to recruit, retain and motivate key employees, Consultants and other individuals that provide services to the company.

Speaker 2

Along with tremendous growth and transformation That the CRI team is delivering comes the need to drive and reward productivity and incentive plan Such as this is an effective vehicle for doing so. Any awards issued under this plan would be subject to Board approval. We intend to seek shareholder approval of the plan in the future via our annual proxy procedures In the normal course and until we receive approval, we will not issue any shares of common stock Under the plan and no options will be able to be exercised. One other parting note, I want to give a shout out to Dennis McGill. I want to take a moment and acknowledge Dennis McGill, who has served as our Board Chairman for the past 4 years.

Speaker 2

On November 8, 2023, Dennis McGill resigned as Chairman And as a Director of the company effective immediately. Mr. McGill resigned for family reasons and did not resign as a result of any matter relating to the company's operations, policies or practices. As a result of Mr. McGill's resignation, I have been appointed to serve as Chairman of the Board of Directors.

Speaker 2

Following Mr. McGill's resignation, the Board of Directors approved a reduction in the size of the Board to 4 directors. The Board does plan to evaluate adding another member with formal search activities Likely to occur in 2024. Dennis' contributions to the CRI Board were meaningful With tremendous focus on completing the company's platform and a drive towards generating profitability, each of which have provided lessons for us into the future. We fought through COVID disruption together And Dennis has added tremendous value as we transform the company into a true service SaaS provider, what a journey.

Speaker 2

Thank you, Dennis McGill. Will, Any further commentary you'd like to add to our Q3 2023 results?

Speaker 1

Thank you, Rick. An overview of our financial results for the quarter year to date periods were provided in our earnings release report yesterday afternoon, which included the condensed consolidated balance sheet as of September 30, 2023, along with the condensed consolidated statement of operations and statement of cash flows for the 9 months ended September 30, 2023, as well as a detailed reconciliation of net income to EBITDA and adjusted EBITDA for the current and immediately preceding 4 quarters. Regarding the results for the 3 9 months ended September 30, 2023, we know that the MD and A section of our interim report on Form 10 Q provides reviewed Financial information. In the interest of time and in light of insights and comments provided earlier in this call, we will move to the Q and A portion of the call at this time.

Operator

And our first question will be coming from Brian Kinstlinger of Alliance Global Partners. Your line is open.

Speaker 3

Good morning, guys. Thanks for taking my questions. As you mentioned, the $60,000,000 to $80,000,000 range is quite wide. Can you speak to the high end and low end of those and what the scenarios look like? Is the base case the midpoint based on what you have scheduled And then the ability to ramp faster or if customers ramp slower gets you to the high or low end of the range?

Speaker 2

Hey, Brian, this is Rick. Thanks for the question. Thanks for joining the call. I would tell you the $60,000,000 range is what we feel like would be minimum performance with our Boeing contract, Right. And if Boeing assuming it picks up speed and continues to roll out, we would believe we would be More towards the higher end of the range, but it really is dependent upon How quickly we can deploy bowling beginning we're beginning now, but what does it really look like in the first Quarter or 2.

Speaker 2

We'll have a better sense by January, February timeframe, but that's the reason for the wide variability. Got

Speaker 3

it. And then you mentioned $35,000,000 First, is that multi year estimate or 2024 contribution? And then as you look at the schedule for the next 4 to 5 quarters, is that controlled solely by the local bowling alleys? Is it Strike 10 in the PE firm? Is it your ability to procure product?

Speaker 3

Just take us through what are the main drivers of that schedule?

Speaker 2

The main drivers of the schedule, really it comes down to 2 things. First off, There are no supply issues. We have plenty of supply. We have plenty of those things. There is an interim step once we Contract with the center, we have to schedule electrical installs.

Speaker 2

So the electrical install adds anywhere from 4 to 8 weeks just getting it done. The electrical industry today, the electrician industry is they're all full up, Right. So getting them to come install the plugs is just a long pole in the tent. But that's really it. Assuming that we can deploy consistently throughout 2024, There is an expectation that we would install certainly 600 to 700 bowling centers in 2024.

Speaker 2

So that's really the rollout thoughts.

Speaker 3

Great. And we've thanks for all the updates on the customers. One customer I didn't hear about, which I thought was one of your biggest opportunities is Starlight Media. I actually haven't heard about it in a little bit in our conversations when I've seen you. And it's kind of stuck in my memory that it was so big.

Speaker 3

So maybe talk about what's happening there? Has that moved forward? Has it not moved And what the opportunity still is there?

Speaker 2

Okay. It's moving forward. Today, We are in the process of finishing the installs from the last order. There is pending another large order That is currently pending. We potentially expect that in 2 to 4 weeks timeframe, But they are very focused Starlight is very focused on continuing to deploy their platform.

Speaker 2

And they have the funding. So it's just a matter as quickly as they can get the locations signed up And get the location because in many locations they already have a paper poster. So now it's getting permission to convert the paper poster location to a digital, which involves Installing electric, but as quick as they're getting that done, we're continuing to roll out. As a matter of fact, I'm having Launched next week with the CEO of Starlight, and the relationship continues to grow. So we expect more news over the next month or 2.

Speaker 2

Just wasn't comfortable announcing anything on this call. Yes.

Speaker 4

And Brian, just for a little more context, we had the POC in August For 20 sites, we had an order of 2 20 sites in the Q3 that are getting deployed now. And I think the opportunity, If it comes to fruition, it would be somewhere between 500 and 1,000 sites in 2024.

Speaker 2

Well said, Will.

Speaker 3

Great. Just typing as fast as I can. My last question and I'll get back in

Speaker 4

the queue

Speaker 3

is 70% win rate is quite high, so congratulations. The natural question for that is, why aren't you bidding on more businesses? Is it a lack of opportunities, which I doubt? Is it Carefully managing your capital, so right now it's hard to hire enough sales people into your cash flowing. Maybe just help us understand Given such a big pipeline that it sounds like, why aren't you casting a much larger web?

Speaker 2

It's really a combination of a number of things. Number 1, yes, we wish we had more sales resources And we expect to add more sales resources as 2024 comes on, number 1. Number 2, It really is, there's a whole lot of customers out there across the U. S. And many of them have heard of us, But there's a number of customers who still have never heard of CRI.

Speaker 2

And so as our name recognition continues to grow And we get invited. It's really simply a reason that a lack of invite. If we are invited, We do very, very well.

Speaker 3

Understood. It's an invite, not a RFP where you can just be Someone who

Speaker 2

responds. Yes. I mean, we typically don't like RFPs, Right, Brian, because we don't you don't have a relationship with the customer, you're just a number. We prefer where we really have a relationship The customer where we understand what they're looking for and then they do an RFP, we have no issue participating. But Out of the blue, hey, here's an RFP.

Speaker 2

We know nothing about the customer. While we will participate, that's not our most favorite venue.

Speaker 3

Great. Thanks for all your responses.

Speaker 2

Thank you, Brian.

Operator

And one moment for our next question. Our next question will be coming from Howard Halpern of Taglich Brothers. Your line is open.

Speaker 5

Congratulations. Great quarter guys. I guess piggybacking off the last question, I know you say you're going to increase your sales team as time goes on, but Existing customers and referrals, could you talk about how that is playing a role in building that backlog?

Speaker 2

Sure, Howard. Hey, thanks for joining the call by the way. I mean, our customers Our current customers, we work with them on a project By project basis, so some years they have budgets, some they don't, Right. It depends upon their own internal cycles. So and that's really what I can say about current customers.

Speaker 2

Will, do you have some things to add to that?

Speaker 4

Yes. It's Howard. I would just say there's we've talked about in the past that there's material Expansion opportunity within that existing customer base, right? There's a number of key customers Who are not at 100 percent site deployment, right? And as we continue to add new customers like Panera, that opportunity grows.

Speaker 4

You've seen over the last 6, 7, 8 quarters, whatever the number is now, a $10,000,000 plus kind of baseline out of that existing customer Pipeline, and we expect that to continue into the future and it's now these new customers who begin to deploy that help us to accelerate the growth.

Speaker 5

Okay. And given your forecast and the deployment schedule, Would you anticipate a skew now towards hardware versus the service mix and a little bit of a More than a fifty-fifty split?

Speaker 2

Yes, I would tell you the first Half of twenty twenty four, we are doing a number of significant deployments, Right, Howard. So it will be hardware heavy. But remember, hardware is hardware seeds to the long tail of recurring revenue. We expect our ARR to increase materially throughout 2024 Because we're finally to the point where we're putting a whole lot of screens up, which seeds the ARR.

Speaker 4

Yes. I would tell you, Howard, that from a modeling standpoint, it's probably safe to look at a fifty-fifty split for 2024 at this time. First pass on our end probably that trends more to 40five-fifty 5, right? But I think it's safe to go with fifty-fifty until we get into January and have a little bit More visibility into the full year.

Speaker 5

Okay. And in terms of now you're getting all the screens up and running, Talk a little bit about, I guess, how your team feels about media and ad sales on those screens. How is that Trending.

Speaker 2

Will, do you want to talk about that?

Speaker 4

Still early stages, Howard, right? We have the theme park tour customers. We have a number of retail customers Who are exploring and have created what we'll call media companies within their businesses. So they're Exploring and planning and prepping, we have a number of ad network or ad opportunities in the pipeline, None that we would say today has moved the needle as far as the media sales operations, but we can see the Moving in that direction. Probably a larger opportunity for the second half of twenty twenty four into twenty twenty five.

Speaker 5

Okay. And one last one. Your cost structure in place can support The projections going forward, which is modest increases in G and A down the road?

Speaker 2

Yes. That is correct.

Speaker 5

Okay. Okay. Thanks and keep up the great work.

Speaker 2

Thank you, Robert.

Operator

And one moment for our next question. Our next question will be coming from John Roy of Water Tower Research. Your line is open, John.

Speaker 6

Thank you. So Rick, I want to start off saying congratulations on your promotion. I did want to get maybe a step back and look at possible new use cases for your products and in particular the software. Was curious as if you might be getting entrees into what you can do with the data? Is most of the data owned by the Company and is there any chance for some AI to go in there and help with the software?

Speaker 2

Great question, John. Thanks for joining the call. The answer is we continue to play with AI in the background. There's generative AI, which we believe will help customers relieve The burden of fresh content, so it will do some auto content generation. That's number 1.

Speaker 2

Number 2, we believe there will be process improvements with AI and significant Reduction in the maintenance work that customers sometimes have to do around their signage network, Some of the operational aspects. So we think AI will play in both of those. In terms of the data, Today, under our network agreements, all the data really belongs to our customers. We have access to it. We can run and glean information from it, but technically today the data belongs to our customers.

Speaker 2

Will, anything to add?

Speaker 4

So I think that's correct. I think there's an opportunity down the line. We're starting to get questions And more inquiries about analytics projects. We have done some in the past with respect to AB testing on menu boards or I think as customers start to look at driving that customer behavior through the technology more, we will see growth in that area. Today, still early stages.

Speaker 6

Great. That sounds interesting. So as a follow on, do you see Possibly increasing R and D spend in the future going forward?

Speaker 4

I would tell you that there's likely in R and D spend, moving forward, particularly in cap software, not because we don't think there are investments to make. We've highlighted over the last couple of years and heightened the level of spend in those areas associated with the key contract and the internationalization of our automotive platform, we've been slowly spinning that down here in the second half 2024 as we move towards an end of year launch or relaunch, if you will. So I would expect those numbers to reduce In the future and stabilize somewhere in the $2,000,000 to $2,500,000 a year range.

Speaker 6

Great. Thanks so much, Anal

Speaker 2

Yes. Thanks, John.

Operator

That completes the questions from the line today. Mr. Logan, are there any additional inquiries from the Investor Relations inbox that you would like to address?

Speaker 4

Yes. Thanks, Tanya. There were a few that have come in during the call, so I'll just The first was, do your customers ask you to sign agreements not to provide your services to their direct competition? The answer is typically no. We have one legacy contract with some limitations on it that is expiring.

Speaker 4

Otherwise, no, we do not have any limitations on Chasing competitive environments with our customers. 2nd, I think Rick addressed this. There were a couple of questions that came in about supply chain and whether there were any lingering issues with respect to the 3rd party sourced product, the answer is that that is behind us. We currently have no supply chain challenges. Next question, Based on current conditions and backlog, do we foresee the need to issue any more stock to service our existing debt?

Speaker 4

The answer today is no based on our Current operating plan, we did the capital raise in August. We thought that the quantity of cash that we brought onto the balance sheet Was sufficient to service the debt and get us through to production of cash free cash flow on a net basis. So we look forward to getting there in the Q1, Q2 of 2024. Don't believe we'll need to take any other supplemental actions. Last item that came in, there were a couple of brokers that look like they reported or sent out some notifications with respect to our Warrants yesterday about warrant exercises, we have looked into that, a couple of inquiries there.

Speaker 4

There are some a batch of warrants Spiring on November 19 from our 2018 offering. So I think that was just an error by some of the brokers there. It's not an exercise, but instead an expiration. Those were the questions that have come in to the inbox. So let me conclude the call By thanking all of our shareholders, clients, partners and employees for their continuing efforts, commitment and support as we work together to transform Creative Realities

Powered by Quartr

Key Takeaways

  • Creative Realities reported record Q3 revenue of $11.6 million and a gross profit of $5.3 million, with a 45.8% gross margin—up 500 basis points year-over-year.
  • SaaS-based annual recurring revenue (ARR) exited Q3 at a $15.6 million run rate, with expectations to hit $16 million by year-end and $18 million exiting 2024.
  • The company reiterated 2024 guidance of $60 million–$80 million in revenue and 12%–15% adjusted EBITDA margins, driven by continued SaaS growth and hardware deployments.
  • CRI’s Boeing project remains intact with an expected $35 million+ in revenue, though timing shifted due to third-party supply chain delays, and installation is set to accelerate in 2024.
  • Backlog stands at over $110 million and CRI has achieved a 70% RFP win rate, reflecting a strengthening pipeline across retail, quick-service restaurants, entertainment venues and ad networks.
A.I. generated. May contain errors.
Earnings Conference Call
Creative Realities Q3 2023
00:00 / 00:00