Creative Realities(US:CREX)2022-08-16 20:43Financial Data and Key Metrics Changes - The company reported record revenue of $10.9 million for Q2 2022, an increase of $7.6 million or 233% year-over-year, bringing year-to-date revenue to $21.7 million, a 162% increase year-over-year [8][40]. - EBITDA for Q2 2022 was $2.8 million, with adjusted EBITDA at $933,000, improving the adjusted EBITDA margin from 5.9% in Q1 to 8.5% in Q2 [10][67]. - The gross profit margin decreased to 42.7% from 57.2% year-over-year, primarily due to a shift in revenue mix towards hardware sales [45][46]. Business Line Data and Key Metrics Changes - Hardware revenues reached $5.7 million in Q2 2022, a 337% increase compared to the prior year, driven by the merger with Reflect and growth in large-scale LED deployments [42]. - Services and other revenues were $5.3 million, a 165% increase, with SaaS revenue contributing $3.8 million, up from $1.4 million in the same period last year, reflecting a 175% growth [43]. Market Data and Key Metrics Changes - The company has grown its annual recurring revenue (ARR) run rate to over $14.5 million, achieving 83% of its target growth for the year through the first half [12]. - The company anticipates significant revenue from a new partnership with the Bowling Proprietors Association of America, targeting over 3,000 member bowling alleys [20][21]. Company Strategy and Development Direction - The management's strategic initiative focuses on growing ARR, primarily through SaaS subscriptions, with a goal to increase the ARR run rate by 25% from approximately $12 million at the end of 2021 to $15 million by the end of 2022 [11][12]. - The company aims to enhance its market share in the fragmented digital signage industry by offering integrated solutions beyond basic digital signage, including media sales and ad monetization [75][76]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving at least $43 million in revenue for 2022, with expectations to exceed $52 million in 2023 [65][66]. - The company anticipates ongoing margin expansion and expects adjusted EBITDA margins to exceed 15% in 2023 and 20% in 2024 as it scales its operations [69]. Other Important Information - The company has a cash position of approximately $3 million as of June 30, 2022, which, combined with accounts receivable, provides sufficient runway to service its debt [61]. - The company is actively pursuing strategic partnerships and acquisitions to enhance growth opportunities [78]. Q&A Session Summary Question: Can you provide details around the announced bowling contract? - The contract is expected to be executed soon, with over 650 bowling centers signed up to participate, and minor revenue expected in Q4 2022, with significant revenue anticipated in 2023 [90][91]. Question: Has there been any changes to expected delivery rates in the theme park market? - There has not been a slowdown in demand for digital conversion, with an acceleration in ad monetization capabilities observed among theme park customers [93][94]. Question: What is the company's ability to source products to meet demand? - There are no issues with display capability, but media players are currently running about 90 days out, and the company is placing orders ahead of schedule [96]. Question: How have global shipping costs impacted the hardware business? - The company experienced significant gross margin erosion due to increased shipping costs during the pandemic, but costs are moderating now [99]. Question: What is the runway for media offerings with the existing customer base? - The media sales apparatus is in the early stages, with significant interest from existing customers in monetization opportunities [102][103].