Creative Realities, Inc. (NASDAQ:CREX) is one of the undervalued technology penny stocks to buy now. On January 7, 2026, Creative Realities Inc. (NASDAQ:CREX) introduced Digital Drive-Thru 2.0, a modular digital menu board system designed to simplify installation, reduce maintenance, and allow operators to scale from single to multi-screen setups without replacing existing structures. Creative Realities (CREX) Appoints Michael Bosco to Board, Files Secondary Offering Copyright: rawpixel / 123RF Stock Pho ...

Group 1 - Creative Realities, Inc. (CREX) is outperforming the Computer and Technology sector with a year-to-date return of 29.5%, compared to the sector average of 28.1% [4] - The Zacks Consensus Estimate for CREX's full-year earnings has increased by 20.5% over the past three months, indicating improving analyst sentiment [4] - CREX is ranked 2 (Buy) in the Zacks Rank system, which focuses on earnings estimates and revisions [3] Group 2 - Creative Realities, Inc. is part of the Internet - Software industry, which has 174 companies and is currently ranked 57 in the Zacks Industry Rank [6] - The average return for the Internet - Software industry this year is 2.7%, highlighting CREX's superior performance [6] - Kulicke and Soffa (KLIC) is another stock in the Computer and Technology sector that has outperformed, with a year-to-date increase of 29.9% and a Zacks Rank of 1 (Strong Buy) [5]

Core Insights - Creative Realities, Inc. has launched Digital Drive-Thru 2.0, a modular digital menu board system aimed at simplifying installation and maintenance for drive-thru environments [1][4] - The new system allows for scalability from single-screen to multi-screen configurations without the need for complete structural replacement, addressing the evolving needs of operators [1][3] Product Features - Digital Drive-Thru 2.0 features a lightweight design that can be installed manually, reducing downtime and installation barriers [3][6] - The system includes adaptive canopy lighting that complies with municipal regulations regarding exterior illumination [6] - It offers customizable components such as microphone and speaker placement, adjustable clearance bars, and POS integration for enhanced order accuracy [6] Market Positioning - The product is designed for various sectors, including quick-service restaurants (QSR) and convenience stores, allowing operators to modernize their drive-thru experience while meeting customer expectations and regulatory requirements [4][6] - Creative Realities has completed two pilot deployments and anticipates broader rollout momentum throughout 2026 [4] Upcoming Showcase - The company will present Digital Drive-Thru 2.0 at NRF 2026, featuring a full canopy installation and a three-screen configuration for media and attendees to explore [5]

Core Insights - Creative Realities, Inc. has appointed Tamra Koshewa as the new Chief Financial Officer effective December 1, 2025, to oversee the next phase of the company's expansion [1][2] - Ms. Koshewa brings 30 years of financial experience across various industries, which will be crucial for integrating the recently acquired Cineplex Digital Media and achieving revenue growth and operational synergies [1][2] Company Overview - Creative Realities specializes in digital signage, media, and AdTech solutions, providing services across multiple sectors including retail, automotive, and digital-out-of-home advertising [4] - The company utilizes platforms such as Clarity™, ReflectView™, and iShowroom™ for content management and aims to enhance customer experiences and productivity through its services [4] Leadership Background - Tamra Koshewa has held CFO positions at Manna, LLFlex, and HMI, and has extensive experience in senior financial roles at companies like Equipment Depot and General Electric [3] - She is recognized for her ability to drive change, implement process improvements, and generate positive cash flow, making her well-suited for the challenges ahead at Creative Realities [2][3]

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Core Viewpoint - The company reported solid financial performance for the first half of the fiscal year 2025-'26, despite facing challenges from U.S. tariffs, economic uncertainty, and adverse foreign exchange effects [2][3]. Financial Performance - Underlying order intake for the first half year amounted to EUR 1.1 billion, reflecting a decline compared to the previous outstanding drupa year, primarily due to global economic conditions and hesitance in the U.S. market [3]. - Net sales improved by 8% year-over-year, despite facing a significant foreign exchange headwind of EUR 23 million, indicating a positive trend in underlying business performance [4]. Strategic Measures - The company's strategic measures are showing effectiveness, as evidenced by the strong demand across packaging systems integration, contributing to the overall net sales growth [4].

Financial Data and Key Metrics Changes - The company reported revenue of $10.5 million in Q3 2025, down from $14.4 million in the same period last year, with gross profit decreasing to $4.8 million from $6.6 million in 2024 [5][6] - Adjusted EBITDA for the third quarter was $0.8 million compared to $2.3 million last year [7] - The annual recurring run rate (ARR) was $12.3 million, down from $18.1 million at the end of Q3 2024 [6] Business Line Data and Key Metrics Changes - The acquisition of Cineplex Digital Media (CDM) is expected to significantly enhance the company's scale and growth trajectory, with CDM generating approximately CAD 56 million in revenue in 2024 and projected to achieve 25% year-over-year growth in 2025 [7][8] - The consolidated gross margin for Q3 was 45%, consistent with the previous year's 46% [6] Market Data and Key Metrics Changes - CDM operates in over 6,000 locations with approximately 30,000 endpoints, serving major brands such as Scotiabank and Tim Hortons, and is expected to generate over CAD 32 million in advertising sales revenue this year [8][9] - The company anticipates total revenue to exceed $100 million in 2026, with adjusted EBITDA margins in the high teens [11] Company Strategy and Development Direction - The acquisition of CDM is viewed as a transformational move that will double the size of the company and enhance its competitive position in North America [4][7] - The company plans to reorganize its sales force and go-to-market strategy to improve customer acquisition velocity and grow recurring revenue [6][11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strong pipeline of opportunities and the potential for significant engagements that will reward shareholders [6][12] - The company expects to realize at least $10 million in annualized synergies from the CDM acquisition by the end of 2026, reflecting operational efficiencies and margin enhancements [11][12] Other Important Information - The company financed the CDM acquisition through a combination of debt and preferred equity, resulting in a total debt of $39.9 million as of November 7, 2025 [18] - The board was expanded from four to seven members, adding three new directors to support the next phase of expansion [12] Q&A Session Summary Question: Feedback from customers and partners post-CDM acquisition - Management reported positive feedback from customers, acknowledging the increased scale and capabilities resulting from the acquisition [21] Question: Go-to-market strategy in Canada - The strategy involves leveraging existing CDM customers and targeting Canadian QSRs that have not yet gone digital [22] Question: Retail media opportunity with CDM - The acquisition enhances the company's credibility and capabilities in the retail media market, with expectations of increased traction [23] Question: State lottery pipeline and RFPs - Management indicated a robust opportunity in the lottery sector, with a significant contract already in place and more RFPs expected [25] Question: Growth in stadium business - The stadium vertical is expected to grow significantly, with projections of a 30-40% increase in 2026 [26] Question: Role of the new Chief Revenue Officer - The new Chief Revenue Officer is expected to enhance customer acquisition and conversion rates, addressing previous challenges in this area [30] Question: Content creation team impact - The expanded content creation team is expected to drive growth in the content business, with a target of reaching $10 million in revenue over the next 24 months [32]

Core Insights - Creative Realities, Inc. reported a quarterly loss of $0.32 per share, significantly worse than the Zacks Consensus Estimate of a loss of $0.08, marking an earnings surprise of -300.00% [1] - The company's revenues for the quarter ended September 2025 were $10.55 million, missing the Zacks Consensus Estimate by 19.18%, and down from $14.44 million a year ago [2] - The stock has gained approximately 13.9% year-to-date, underperforming the S&P 500's gain of 16.4% [3] Earnings Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is breakeven on revenues of $16.25 million, while for the current fiscal year, it is $0.07 on revenues of $52.06 million [7] Estimate Revisions - Prior to the earnings release, the trend for estimate revisions was unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] Industry Context - The Internet - Software industry, to which Creative Realities, Inc. belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable industry outlook [8]

Financial Performance - For the three months ended September 30, 2025, sales decreased by $3,895, or 27%, compared to the same period in 2024, totaling $10,547[125] - Hardware revenues were $4,168, a decrease of $1,073, or 20%, primarily due to the absence of a significant sports and entertainment installation that occurred in the prior year[126] - Services and other revenues decreased by $2,822, or 31%, with installation services revenue dropping by $1,802, or 62%[126] - The net loss for the three months ended September 30, 2025, was $7,862, compared to a net income of $54 in the same period in 2024, representing a decrease of $7,916[125] - Sales decreased by $6,531, or 16%, for the nine months ending September 30, 2025, compared to the same period in 2024, with hardware revenues increasing by $226, or 2%[135] - Net loss for the nine months ending September 30, 2025, was $6,311, compared to a net loss of $670 in the same period in 2024, representing an increase of $5,641, or 842%[148] Operating Expenses - Total operating expenses increased by $6,594, or 121%, for the three months ended September 30, 2025, totaling $12,047[125] - The company recognized a non-cash impairment charge of $5,712 related to a proprietary software platform, significantly impacting total operating expenses[130] - Total operating expenses increased by $6,081, or 35%, primarily due to a non-cash impairment charge of $5,712 related to a proprietary software platform[139] - General and administrative expenses rose by $1,036, or 26%, driven by increased stock-based compensation and transaction costs related to the acquisition of Cineplex Digital Media[129] - General and administrative expenses rose by $1,249, or 10%, driven by a $1,669 increase in stock-based compensation and $766 in deal-related expenses for the acquisition of Cineplex Digital Media[138] Revenue Streams - Managed services revenue, including SaaS subscription services, decreased by $429, or 9%, due to a reduction in software subscription licenses[126] - Managed services revenue, including SaaS subscription services, decreased by $1,319, or 9%, due to a reduction in software licenses from a single customer[135] Cash Flow and Financing - Net cash used by operating activities for the nine months ended September 30, 2025 was $834, compared to net cash provided of $4,750 for the same period in 2024, reflecting a net loss of $6,311[152] - Net cash used in investing activities during the nine months ended September 30, 2025 was $1,973, a decrease from $2,302 in the same period in 2024[153] - Net cash provided by financing activities during the nine months ended September 30, 2025 was $2,084, compared to net cash used of $4,490 for the same period in 2024, primarily due to net proceeds of $5,119 from borrowings[154] - As of September 30, 2025, the company had $18,163 in outstanding borrowings under the revolving credit facility, with total availability of $3,937[157] - The effective interest rate on the revolving credit facility at September 30, 2025 was 7.74%[156] - The company issued 30,000 shares of Series A Convertible Preferred Stock for aggregate gross proceeds of $30,000 on October 15, 2025[163] - The company had a Promissory Note issued for $4,000, bearing interest at a fixed annual rate of 14%[159] - The company entered into a New Credit Agreement on November 6, 2025, obtaining a $36,000 term loan and a $22,500 secured revolving credit facility[158] Other Financial Metrics - The gross profit margin was 45% for the three months ended September 30, 2025, compared to 46% in the same period in 2024[127] - Gross profit margin declined to 43% for the nine months ending September 30, 2025, down from 48% in 2024, with a 2% increase in hardware gross margin but a 6% decrease in services and other gross margin[136] - Interest expense increased by $227, or 75%, for the three months ended September 30, 2025, totaling $530[125] - The company had an accumulated deficit of $63,165 and positive working capital of $526 as of September 30, 2025[148] - The company recognized $408 in other expenses, primarily from legal and severance-related costs[142] - The company is evaluating options for amending debt facilities or accessing capital markets, but substantial doubt exists about its ability to continue as a going concern within the next twelve months[149][151] - Outstanding warrants accounted for as equity instruments totaled 5,364,802 at September 30, 2025, with a weighted average exercise price of $4.66[161] - The company generated a depreciation and amortization expense of $5,308 during the nine months ended September 30, 2025[152]

Credit Agreement - The amended credit agreement is dated as of November 6, 2025, involving multiple U.S. Borrowers including Allure Global Solutions, Inc. and Creative Realities, Inc.[1] - The agreement includes provisions for revolving credit advances, term loans, and borrowings, with specific terms outlined for interest rates and applicable margins[2] - The loan parties are required to maintain compliance with various financial covenants, including the maintenance of existence and conduct of business[3] - The agreement stipulates the need for regular financial information disclosures and compliance with laws, including tax obligations[4] - The Amended and Restated Credit Agreement was executed on November 6, 2025, involving multiple entities including Allure Global Solutions, Inc. and Creative Realities, Inc.[13] - The agreement includes provisions for increasing and syndicating credit facilities to refinance existing debt and provide working capital financing[15] - The Applicable Margin for Senior Funded Debt to Adjusted EBITDA Ratio is set at 2.75% for ratios less than 2.50x and 3.25% for ratios greater than 2.50x[27] - The Adjusted Term SOFR Rate is defined as the Term SOFR Rate plus 0.11%, with a floor of 1.00%[20] - The financial covenants will be assessed based on the Senior Funded Debt to Adjusted EBITDA Ratio at the end of each fiscal quarter, starting December 31, 2025[28] - The agreement allows for adjustments to the Applicable Margins based on the financial performance of the Borrowers, with potential increases if financial covenants are violated[28] - The agreement outlines the purpose of funds, including working capital, financing for acquisitions, and general corporate purposes[15] - The term "Adjusted EBITDA" is defined to include net income from operations plus various expenses, excluding extraordinary gains[19] - The agreement specifies that failure to deliver required financial statements may result in the application of a higher pricing level[28] Financial Performance - The company reported a revenue increase of 15% year-over-year, reaching $1.2 billion in Q3 2023[10] - The company reported a significant increase in revenue, achieving $1.5 billion in Q3 2023, representing a 20% year-over-year growth[1] - User data showed a growth of 25% in active users, totaling 5 million by the end of the quarter[10] - User data showed a total of 5 million active users, up from 4 million in the previous quarter, indicating a 25% increase[2] - The company provided guidance for Q4 2023, projecting revenue between $1.6 billion and $1.7 billion, which reflects a growth rate of 10-13% compared to Q3 2023[3] - The company provided guidance for the next fiscal year, projecting revenue growth of 20% and an Adjusted EBITDA margin of 30%[121] - The company reported a significant increase in Adjusted EBITDA for the fiscal year, amounting to $150 million, representing a 25% growth year-over-year[121] - The gross margin improved to 45%, up from 42% in the previous quarter, reflecting better cost management[8] - Excess Cash Flow for the year was reported at $20 million, allowing for potential reinvestment into growth initiatives[121] Market Expansion and Product Development - New product launches contributed to a 30% increase in sales, with the latest product line accounting for $300 million in revenue[10] - New product launches included a state-of-the-art software platform that is expected to drive an additional $200 million in revenue over the next year[4] - The company is investing $50 million in R&D for new technologies aimed at enhancing user experience[10] - The company is investing $10 million in R&D for new technologies aimed at enhancing user experience and operational efficiency[121] - Market expansion efforts have led to a 40% increase in international sales, particularly in Europe and Asia[10] - The company is expanding its market presence in Europe, targeting a 15% market share by the end of 2024[5] - Market expansion efforts include entering three new countries, which are projected to generate $30 million in additional revenue[121] - The company announced a strategic acquisition of a smaller tech firm for $300 million, aimed at enhancing its product offerings[7] - The company completed a strategic acquisition of a competitor for $200 million, expected to enhance market share and operational capabilities[121] Operational Efficiency and Cost Management - The company has reduced operational costs by 10%, improving overall profit margins[10] - Operating expenses were reduced by 5%, resulting in a more efficient cost structure[10] - The company plans to implement cost-saving measures that could reduce operational expenses by 10% over the next year[121] Customer Engagement and Satisfaction - Customer satisfaction ratings improved to 90%, reflecting the success of recent service enhancements[10] - A new marketing strategy is expected to increase brand awareness by 15% over the next year[10] - The company plans to implement a new customer loyalty program, which is expected to increase customer retention by 30%[9] Legal and Compliance - "Charges" include all governmental Taxes and levies related to the Loan Party's business[68] - "Collateral" encompasses all property covered by the Security Agreement and other related documents[73] - "Default" refers to any event that could lead to an Event of Default if not cured or waived[86] - "Compliance Certificate" confirms that financial statements were prepared in accordance with GAAP and there has been no Material Adverse Effect[79] - "Cineplex Share Purchase" involves the purchase of common shares of DDC Group and indirectly of Cineplex DM[70] - "Contingent Obligation" includes any direct or indirect liability of a Person related to another's obligations[81] - "Documents" refer to all rights and interests of each Loan Party in their respective documents as defined in the Code[91] - Eligible Accounts must be paid within 60 days after the original due date to be considered valid[98] - Accounts owing by a debtor are ineligible if 25% or more of their total accounts are overdue[98] - Accounts from foreign debtors are only eligible if they qualify as Eligible Foreign Accounts[98] - Accounts that exceed 15% of all Eligible Accounts from a single debtor are ineligible, with a higher threshold of 25% for Canadian Borrowers[98] - Accounts must have an acceptable invoice sent to the debtor to be considered eligible[99] - Accounts are ineligible if the debtor is in bankruptcy or has suspended business operations[99] - Inventory must be subject to a first priority perfected lien to be considered eligible[104] - Inventory that is obsolete, defective, or not salable at cost is deemed ineligible[105] - Inventory located outside the U.S. or Canada is ineligible unless approved by the Agent[106] - Environmental liabilities include all costs related to claims under environmental laws, including fines and damages[109] - The term "General Intangibles" encompasses all rights, titles, and interests of each Loan Party in various intangible assets, including contracts, customer lists, and intellectual property[144] - "Goods" includes all rights, titles, and interests in goods as defined in the Code or the PPSA, covering items like manufactured homes and standing timber[145] - "Governmental Authority" refers to the government entities of the United States, Canada, or any other nation, including regulatory bodies and courts[146] - "Indebtedness" includes all forms of borrowed money obligations, letters of credit, and capital lease obligations, excluding unsecured trade creditor obligations[150] - "Indemnified Taxes" refers to taxes imposed on payments made by any Loan Party under any Loan Document, excluding Excluded Taxes[152] - "Intellectual Property" includes all licenses, patents, industrial designs, copyrights, trademarks, and associated goodwill[158] - "Investment Property" encompasses all rights and interests in securities, securities accounts, and commodity contracts held by any Loan Party[163] - "Instruments" includes all rights and interests in instruments such as certificated securities and promissory notes[156] - "Inventory" refers to all rights and interests in inventory, merchandise, and personal property held for sale or lease[161] - "Hazardous Materials Contamination" means contamination of property by hazardous materials, which could cause damage to health or the environment[149]