Financial Data and Key Metrics Changes - The company reported revenue of $9.7 million for Q1 2025, down from $12.3 million in Q1 2024, attributed to installation timing on several large projects [6][7] - Gross profit decreased to $4.5 million from $5.8 million year-over-year, with a gross margin of 46%, consistent with the prior year [7] - Annual recurring revenue (ARR) increased to a run rate of $17.3 million at the end of Q1 2025, up from $16.8 million at the start of the year [7] - Adjusted EBITDA remained stable at $500,000, with SG&A expenses down 11% to $5.2 million compared to $5.8 million in Q1 2024 [8][16] - The company’s gross and net debt rose to approximately $23.2 million and $22.1 million respectively, compared to $13 million and $12 million at the start of 2025 [16][18] Business Line Data and Key Metrics Changes - The company is engaged in multiple projects, including three MLB projects and a significant partnership with a well-known upscale quick service restaurant chain [11][20] - The BCTV project is progressing, with over 300 site installations completed and plans for an additional 200 sites starting in Q3 2025, expected to generate approximately $3 million in revenue [20][21] - The DigiPoint Media Network is set to deploy approximately 2,000 sites, potentially generating over $4 million in hardware and installation revenue [21] Market Data and Key Metrics Changes - The company has expanded its sports entertainment team and completed its largest deployment in an NHL arena, indicating strong momentum in this sector [19] - The company is actively pursuing opportunities in Mexico, with a POC scheduled for a top convenience store chain and discussions with major retailers [58][60] Company Strategy and Development Direction - The company aims to optimize its capital structure and manage debt while focusing on growth opportunities and improving margins [11][13] - The introduction of the AdLogic CPM platform is expected to enhance the company's position in the market, providing targeted campaign capabilities [14] - The company is committed to achieving SOC 2 Type 2 compliance by year-end, enhancing its credibility with enterprise customers [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about revenue acceleration beginning in Q2 2025 and expects adjusted EBITDA as a percentage of revenue to rise to 15% by year-end [13] - The company is confident in its pipeline of opportunities and the quality of its top prospects, despite global trade uncertainties [28][29] - Management noted that the sports and entertainment vertical has a high appetite for spending, with many clients looking to upgrade facilities [51] Other Important Information - The company has revamped its operations and warehouse facilities, increasing capacity to handle anticipated growth in the second half of the year [23][41] - The company is strategically using cash flow to manage debt and optimize its capital structure [11][17] Q&A Session Summary Question: Expectations for screen installs related to the large QSR win - Management expects to begin installations at 20 locations or more per month by the end of Q3 2025, with 600 out of 1,000 locations expressing interest in converting to digital [25][26] Question: Details on delays in the first quarter - Delays were due to three separate projects, not a broad-based issue, and management is seeing a reversal in the second quarter [27] Question: Pipeline of large procurements and impact of global trade uncertainty - Management is still progressing with discussions on large opportunities, with no current projects on hold due to tariffs [28][29] Question: Demand for the ad tech solution and improvements in attach rates - The ad tech market is in the early stages, with significant interest from large retail customers exploring media networks [31][33] Question: Insights on the sports and entertainment vertical - The vertical has a high appetite for spending, with many clients looking to enhance facilities and generate income from digital screens [51][52]
Creative Realities(CREX) - 2025 Q1 - Earnings Call Transcript