Creative Realities(US:CREX)2023-05-15 18:25Financial Data and Key Metrics Changes - The company's Q1 2023 revenue was $9.9 million, with a gross profit of $5.1 million and adjusted EBITDA of $960,000, marking a record for the first quarter [11] - Although revenue decreased by $800,000 compared to the same period in 2022, gross profit and adjusted EBITDA increased by over $1 million and $300,000 respectively, primarily due to a $1.3 million increase in services revenue [13] - The company reaffirmed its full-year 2023 guidance of $60 million in revenue and a 15% adjusted EBITDA margin, with a backlog of approximately $110 million [14][42] Business Line Data and Key Metrics Changes - The revenue mix is driving gross profit and adjusted EBITDA, with a significant increase in services revenue contributing to overall profitability [13] - The company expects its quarterly revenue to double from Q3 2023 onwards, driven by existing customer engagements and new contracts [22] Market Data and Key Metrics Changes - The company has seen a significant increase in outreach to fast-casual brands, with a focus on drive-thru solutions, indicating a growing market demand [35] - The company has a win rate exceeding 80% on a dollar value basis for RFPs since the beginning of 2022, reflecting strong market positioning [38] Company Strategy and Development Direction - The company is positioned to exploit growth opportunities in the digital signage industry, with a focus on expanding annual recurring revenue (ARR) to drive profitability [18][23] - The management team is optimistic about the transformational potential for profit in the coming years, particularly as they capitalize on expanding revenue streams [20] Management's Comments on Operating Environment and Future Outlook - Management anticipates a material increase in revenue and profitability starting in Q3 2023, with expectations of a significant step-up in performance [21][66] - The company has navigated supply chain issues effectively, ensuring that production rollouts are not hindered [65][67] Other Important Information - The company executed a 1:3 reverse stock split to comply with NASDAQ minimum bid rules, resulting in 7.4 million common shares outstanding [26] - The company received an updated offer from Pegasus Capital Advisors to acquire all outstanding shares at $2.85 per share, which is currently under evaluation by the Board of Directors [27] Q&A Session Summary Question: Market dynamics for drive-thru products - The company has significantly increased outreach and added sales assets, engaging with fast-growing QSR drive-thrus [35] Question: Economic challenges and deployment plans - Customers are concerned about cash outlay, but the ROI on digital investments is typically less than 12 months [46] Question: Status of the bowling contract - Contracts are executed, and significant deployments are expected to begin in July, potentially generating $1.5 million in additional revenue per month [51] Question: Cash conversion from EBITDA to cash flow - The company expects 70% of EBITDA to convert into cash as they move past the current investment period [55] Question: Sales mix between hardware and services - The company anticipates a 50/50 split between hardware and services in the current year, with a shift towards more services as they scale [71]