In This Article:
Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Creative Realities Inc (NASDAQ:CREX) reported record third-quarter revenue of $14.4 million, a 25% increase from the previous year.
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The company achieved a gross profit of $6.6 million, up 24.5% from 2023.
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Adjusted EBITDA increased by 53% to approximately $2.3 million compared to last year.
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Annual recurring revenue (ARR) reached an annual run rate of $18.1 million.
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The company has a robust pipeline with multiple large contracts expected to be consummated in the coming months and quarters.
Negative Points
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There are delays in anticipated orders and deployments due to the decision-making processes of enterprise-grade customers.
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Visibility for the remainder of the year remains uncertain, impacting the ability to provide specific estimates for Q4 and full-year revenue.
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Cash on hand decreased to approximately $0.9 million from $2.9 million at the end of 2023.
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Debt levels rose slightly from the end of Q2 due to working capital requirements.
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The timing of large customer orders may push into fiscal 2025, affecting the goal of $20 million in ARR by year-end.
Q & A Highlights
Q: Are there any specific bottlenecks in your pipeline, and where are they occurring? A: Rick Mills, CEO: The bottlenecks are primarily in the decision-making process of companies, not in installation. Companies are evaluating more factors, such as how retail media network plans factor into their digital signage decisions, which is causing delays.
Q: Given the recent uptick in profitability, are you reconsidering the long-term profit model? A: William Logan, CFO: The current quarter shows the operating leverage at scale. While we are not ready to raise expectations, the results indicate potential for higher profitability than previously projected.
Q: Can you provide more context on your robust pipeline and which industries are the strongest? A: Rick Mills, CEO: Our pipeline is fuller than ever, with 5 to 10 significant projects at the one-yard line. Strong verticals include QSR, retail, and convenience stores, with significant opportunities in IP TV for sports and entertainment venues.
Q: What are the major growth drivers over the next few years? A: Rick Mills, CEO: Growth will come from QSR, which is about 30-35% penetrated, C-stores under 25% penetrated, IP TV in stadiums and arenas, and retail media networks. We expect IP TV to convert to a SaaS-based model, enhancing growth.