Financial Data and Key Metrics Changes - Revenues for Q2 2019 were $9.3 million, an increase of $2.1 million or 30% compared to Q2 2018 [8] - Gross profit was $4.2 million for the quarter, an increase of $1.1 million or 37% compared to the prior year [9] - EBITDA was $0.8 million for Q2 2019, compared to $0.5 million for the same period in 2018 [10] - Adjusted EBITDA was $1.1 million for Q2 2019, compared to $0.4 million in the same period in 2018 [10] Business Line Data and Key Metrics Changes - Hardware revenue decreased by approximately $1.2 million or 42% in Q2 2019, primarily due to a $1.7 million hardware-only project in Q2 2018 that did not recur [8] - Services and other revenue grew approximately $3.3 million or 77% in Q2 2019 compared to the same period in the prior year [9] - Managed services revenue, including SAS and help desk technical subscriptions, represented approximately $1.6 million in Q2 2019, an increase of $1.1 million or 211% compared to the same period in the prior year [9] Market Data and Key Metrics Changes - The company is focused on competing for national accounts in key verticals such as QSR, branded retail, and large venues, including sports venues [4] - The integration of Allure Global is complete, allowing the company to service all customers through its network operation center [5] Company Strategy and Development Direction - The company is pursuing a consolidation strategy to accompany organic growth and is in talks with multiple potential acquisition candidates [6] - A new agreement with FCA was executed, generating approximately $1 million a year in SAS fees, transitioning the application to the company's AWS platform [13] - The launch of a new content management system, Clarity, is underway, with expectations to migrate over 2,000 players to the solution by year-end [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about significant revenue growth and enhanced earnings in 2020 and beyond [5] - The company anticipates the back half of 2019 will show significant growth over the back half of 2018, with several projects in the pipeline ranging from $3 million to $28 million [29] - Management emphasized a commitment to organic growth and a nimble structure that allows for competitive positioning in the market [18] Other Important Information - A settlement from the Allure transaction resulted in a cash payment of $210,000 [11] - The outstanding principal balance of the seller note related to the Allure acquisition has been reduced to $1,637,000 as of June 30, 2019 [11] - A new board member, Steve Nesbitt, has joined, bringing extensive experience in digital signage and advertising [14] Q&A Session Summary Question: Any impacts from the back half of '18 on comps for the next two quarters? - Management noted that the second quarter of 2018 was the strongest, leading to expected headwinds in the second half of 2018 [20] Question: Insights on the deferred revenue line and its implications? - Management explained that revenue recognition challenges from prior periods were resolved in the first half of 2019, impacting cash flow positively [22] Question: Incremental impact of the FCA agreement? - The FCA agreement includes a 30% price increase and is expected to add approximately $0.5 million compared to the prior year [26][27] Question: Outlook for the back half of the year? - Management is optimistic about significant year-over-year growth, with several large projects in the final stages of negotiation [29]
Creative Realities(CREX) - 2019 Q2 - Earnings Call Transcript