Creative Realities(US:CREX)2025-03-17 13:00Financial Data and Key Metrics Changes - The company reported revenue of $11 million for Q4 2024, down from $14.5 million in Q4 2023, with a gross profit of $4.9 million compared to $7.5 million last year [7] - Adjusted EBITDA for Q4 2024 was approximately $500,000, a decrease from $2.8 million in the previous year, with annual recurring revenue (ARR) at a run rate of $16.8 million [7][10] - The company achieved a record annual revenue exceeding $50 million with an adjusted EBITDA margin of 10% for the full year [6] Business Line Data and Key Metrics Changes - The company completed 56 site installations in Q4 at an average sale price of $30,000, with expectations for a moderate increase in installations in the second half of 2025 [18] - The introduction of the AdLogic CPM plus platform is expected to enhance targeting precision and reduce costs for customers, positioning the company as a comprehensive ad tech solution provider [9] Market Data and Key Metrics Changes - The company is experiencing strong demand for its solutions, particularly in the quick-service restaurant and retail sectors, with significant projects in the pipeline [12][16] - The sports and entertainment sector has seen growth, with three MLB projects awarded in Q1 2025 and additional POCs ongoing at various venues [17] Company Strategy and Development Direction - The company aims to accelerate revenue growth in the second half of 2025, driven by better economies of scale and higher margins [10] - The focus is on enhancing customer experience through innovative solutions and expanding the retail media network offerings [12][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in overcoming the current operational challenges and anticipates a strong performance in 2025, despite a weaker Q1 [52] - The company is optimistic about the resolution of contingent liabilities, which will provide financial flexibility and allow a focus on growth [10][11] Other Important Information - The company has settled its contingent liability related to the acquisition of Reflex Systems, involving a $3 million cash payment and a $4 million promissory note [10][11] - The company achieved SOC2 Type one compliance, with expectations to reach Type two certification by year-end, enhancing its credibility with enterprise customers [19] Q&A Session Summary Question: Commentary on customer conversations regarding the frozen pipeline - Management noted that customers are beginning to move projects forward after a period of stagnation, with expectations for several projects to finalize soon [21][22] Question: Impact of tariffs on business - Management indicated that while there are concerns about tariffs, most components are domestically sourced, and only slight increases in costs are expected [24] Question: Adoption of the new AdLogic platform by existing customers - Customers are embracing the AdLogic platform as it enhances their digital operations, leading to potential margin improvements [34] Question: Visibility and flexibility from the new ERP system - The new ERP system is expected to provide significant cost management benefits and improve operational metrics [37][38] Question: Progress with channel partners - The company is actively recruiting and signing new channel partners, with demand for licenses increasing [42] Question: Details on the contingent consideration settlement - The settlement includes a six-year warrant with a strike price of $3.25, totaling approximately $800,000 [48] Question: Expectations for revenue growth in 2025 - Management expects year-over-year revenue growth in 2025 to exceed 2024 levels, with adjusted EBITDA profitability anticipated in Q1 [52][53] Question: Dynamics of customer adjustments impacting ARR - Two large customers made adjustments that led to a temporary decline in ARR, but management expects to recover this revenue in 2025 [101][102] Question: Future cash flow dynamics on major projects - Cash flow can vary significantly based on whether projects are privately or publicly funded, with deposits typically required for private projects [78] Question: Clarification on adjusted EBITDA margin expectations - Management aims to achieve a 15% adjusted EBITDA margin by the end of the year, with expectations for revenue growth to support this target [81][84]