Creative Realities, Inc. (CREX) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows mixed signals: strong revenue growth from acquisitions and new opportunities in the NFL and retail media sectors are positives. However, significant increases in expenses, a decline in gross margin, and a net loss raise concerns. The Q&A highlights potential future growth, but current financial challenges balance the sentiment. The absence of market cap data limits prediction accuracy.
Key Financial Performance
Revenue $16.3 million in Q1 2026 versus $9.7 million in Q1 2025, a 68% increase. The increase includes $7.9 million from the CDM acquisition. Revenue was negatively affected by approximately $4 million due to extreme cold weather in the Southeast U.S., delaying new construction and installations.
Gross Profit $5.6 million in Q1 2026 compared to $4.5 million in Q1 2025, a 24% increase. Gross profit was impacted by a one-time event involving the termination of a CDM legacy subcontractor, reducing gross margin by approximately $0.5 million.
Gross Margin 34.2% in Q1 2026 versus 45.7% in Q1 2025, a decrease. The decline was due to a higher mix of QSR deployments and one-time costs of $0.5 million related to transitioning away from an outsourced CDM installer.
Net Loss Attributable to Common Shareholders $7.9 million in Q1 2026 compared to net income of $3.4 million in Q1 2025. The prior year included a $4.8 million gain on the settlement of a contingent liability, which did not recur in 2026.
Adjusted EBITDA Negative $0.5 million in Q1 2026 versus positive $0.5 million in Q1 2025. The decline was attributed to weather challenges and costs associated with the consolidation and reorganization of the CRI and CDM workforce.
Hardware Revenue $4.6 million in Q1 2026 versus $3.4 million in Q1 2025, a 35% increase. The increase reflects new deployments and the inclusion of CDM.
Service Revenue $11.8 million in Q1 2026 versus $6.3 million in Q1 2025, an 86% increase. The increase was driven by the CDM acquisition, partially offset by expired customer contracts.
Sales and Marketing Expenses $2.9 million in Q1 2026 versus $1.2 million in Q1 2025, a significant increase. The rise was primarily due to the acquisition of CDM.
General and Administrative Expenses $8.9 million in Q1 2026 versus $3.9 million in Q1 2025, a significant increase. The increase was primarily due to the acquisition of CDM, which contributed approximately $3.8 million of G&A expense.
Operating Loss $6.2 million in Q1 2026 compared to $0.7 million in Q1 2025. The increase in loss reflects higher expenses related to the CDM acquisition and other factors.
Cash on Hand $2.3 million as of March 31, 2026, compared to $1.6 million at the start of 2026, an increase.
Debt $47.5 million as of March 31, 2026, compared to $44 million at the beginning of 2026, an increase.
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Operating Highlights
Digital signage for Tennessee Titans' Nissan Stadium: Secured an $8.5 million deal to provide thousands of displays and a full IPTV solution for the new stadium, with most revenue recognized in 2026.
Dairy Queen contract: Awarded a contract for digital drive-throughs across 4,700 locations in the U.S. and Canada, expected to generate $1-2 million annually.
AMC theaters modernization: Partnered with National CineMedia to upgrade lobby media in 285 locations, involving 1,200 screens and large-format LEDs, with expected revenue of $6-7 million in 2026.
7 Brew expansion: Supporting 750 new locations in 2026, generating $8,000 per location in initial revenue and ongoing SaaS growth.
Retail media network: Finalizing a major deployment involving 10,000 screens and 20,000 data devices in 2026, expanding to 60,000 devices by mid-2027.
Market leadership in retail media networks: Positioned as a leading retail media network provider in North America, with significant growth in hardware, SaaS, and AdTech revenue.
Integration of CDM acquisition: Completed workforce consolidation and reorganization, with financial system migration to be finalized by Q2 2026.
Cost synergies: On track to achieve $10 million in annualized cost savings by the end of 2026, with 60% already realized.
Revenue and margin growth: Expecting revenue to exceed $100 million in 2026, with adjusted EBITDA margins reaching high teens and eventual 20%+ margins.
Focus on deleveraging: Prioritizing cash flow generation to reduce debt and optimize capital structure.
Technology investments: Investing in media business and technology initiatives to drive growth and operational efficiency.
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Risk or Challenges
Revenue Impact from Weather: Revenue in Q1 was negatively affected by approximately $4 million due to extreme cold weather and a major snowstorm in North Carolina, delaying new construction and installations.
Gross Margin Decline: Gross margin decreased from 45.7% to 34.2% due to a one-time event involving the termination of a CDM legacy subcontractor, reducing gross margin by approximately $0.5 million.
Delayed Installations: Several large planned installations were delayed due to weather conditions, pushing revenue recognition from Q1 into Q2 and Q3.
Legacy Contract Expirations: Revenue from legacy CRI business decreased by approximately 15% year-over-year due to the expiration of certain customer contracts in 2025.
Integration Challenges: The migration of legacy CDM financial accounting systems onto the NetSuite ERP platform is ongoing, posing operational challenges and requiring significant effort.
Increased Operating Expenses: Sales and marketing expenses rose to $2.9 million from $1.2 million, and general and administrative expenses increased to $8.9 million from $3.9 million, primarily due to the CDM acquisition.
Net Loss: The company reported a net loss of $7.9 million for Q1 2026 compared to net income of $3.4 million in the prior year period.
Debt Levels: Debt increased to $47.5 million at the end of Q1 2026 from $44 million at the beginning of the fiscal year, despite plans to deleverage the balance sheet.
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Guidance & Outlook
Revenue Growth: The company expects revenue to exceed $100 million in 2026, with growth acceleration in the remainder of the year. Revenue from delayed installations in Q1 is expected to be recognized in Q2 and Q3, driving sequential and year-over-year growth.
Margin Expansion: Adjusted EBITDA margins are projected to reach the high teens in the coming quarters, with further expansion above 20% once all synergies are realized by the end of 2026.
Cost Synergies: The company remains on track to achieve $10 million in annualized cost savings by the end of 2026, with over 60% of the goal already realized as of March 2026.
Debt Reduction: Cash generation will be used to deleverage the balance sheet and optimize the capital structure, supporting financial flexibility.
Retail Media Network Deployment: A significant retail media network deployment is in the final contracting stages, expected to include 10,000 screens and 20,000 data-gathering devices in 2026, expanding to 60,000 devices by mid-2027.
New Contracts and Projects: The company announced several new contracts, including an $8.5 million deal with the Tennessee Titans, a $6-7 million project with AMC theaters, and a new partnership with Dairy Queen, expected to drive additional annual revenue of $1-2 million.
Market Leadership: The company aims to solidify its position as the leading retail media network provider in North America.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What is the opportunity for expanding into football stadiums after landing a deal with the Tennessee Titans?
A:The company is excited about cracking the NFL market and is pursuing multiple other NFL teams for either full stadium refreshes or menu board operations. The IPTV group is expected to double its business this year, which is currently on track.
Q:Can you provide details about the RMN opportunity, including whether the process is still competitive and when deployment is expected?
A:The process is no longer competitive as the company has received a verbal award. Deployment is anticipated to begin in June with product shipping and full rollout in July. The company has already conducted a successful total store takeover.
Q:What are the additional costs and implications of onboarding the RMN deal, and how does it position CRI in the retail media business?
A:The deal is considered transformational, with significant referenceability. If successful, it will be the first-class retail media network in the U.S. with full closed-loop attribution at the cash register. Execution is critical for success.
Q:What is the TCV and recurring revenue opportunity for a deployment involving 50,000 devices, including 10,000 screens?
A:This year, 10,000 screens and 20,000 data gathering devices will be deployed, growing to 60,000 devices by mid-2027. The ongoing SaaS revenue is expected to be in the $6 million to $8 million range when fully deployed.
Q:What is the current revenue contribution from Gary Green related to CDM, and how does it compare to the expanded contract value?
A:Previously, revenue was $2 million to $2.5 million annually. With the expansion to include Drive-Thru, revenue is expected to grow to $4 million to $5 million, driven by additional SaaS and hardware deployments.
Q:What percentage of QSRs in North America have digital drive-throughs, and what is the market potential?
A:There are approximately 210,000 to 220,000 QSRs with drive-throughs in the U.S., with less than 40% penetration. McDonald's and Taco Bell dominate the installed base, making up the largest component of the 40%.
Q:Does the company follow up with franchisees or prospects who did not initially opt into retail media network programs?
A:Yes, the company works jointly with franchisors to engage franchisees who did not initially opt in. Installing digital systems improves throughput and profitability, benefiting both franchisees and franchisors.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses were detailed and addressed the questions directly.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ARR place
America installs
CDM GA
CDM Service
CDM accounting
CDM acquisition
CDM installer
CDM legacy
CDM workforce
CRI installs
CRI job
Carolina snowstorm
Development Ms
ERP platform
GA expense
Ms opportunity
NetSuite ERP
North
Reality Conference
SaaS expiration
Tamra
cash generation
challenge
cost
customer contract
expiration customer
flexibility
generation debt
migration legacy
period CDM
period margin
remainder
reminder
share
synergy
weather
CREX Transcript
Creative Realities, Inc. (CREX) Q1 2026 Earnings Call Transcript
Unknown5-15
The earnings call shows mixed signals: strong revenue growth from acquisitions and new opportunities in the NFL and retail media sectors are positives. However, significant increases in expenses, a decline in gross margin, and a net loss raise concerns. The Q&A highlights potential future growth, but current financial challenges balance the sentiment. The absence of market cap data limits prediction accuracy.
Creative Realities, Inc. (CREX) Q4 2025 Earnings Call Transcript
Positive4-14
The company reported improved financial performance and synergies from the CDM acquisition, with an operating income of $0.5 million compared to a previous loss. Despite increased debt, the acquisition enhanced customer perception and deal flow, with significant projects in the pipeline. Management's optimistic outlook for revenue growth in Q3 and Q4, coupled with increased sales force and strong engagement, outweighs concerns about unclear RFP timelines. Overall, the positive developments and strategic positioning suggest a likely stock price increase of 2% to 8% over the next two weeks.
Creative Realities, Inc. (CREX) Q3 2025 Earnings Call Transcript
Unknown11-12
Despite positive developments like the CDM acquisition and strategic plans for expansion, financial constraints and revenue decline present concerns. The Q&A reveals optimism but lacks detailed timelines and metrics. The company's low cash reserves and increased debt also weigh negatively. Overall, the sentiment is mixed, leading to a neutral prediction for stock price movement.
Creative Realities, Inc. (CREX) Q2 2025 Earnings Call Transcript
Positive8-13
The earnings call reveals strong financial performance with a growing ARR and successful client partnerships. The Q&A session highlighted confidence in revenue acceleration and profitability due to previous QSR wins and upcoming projects. Despite some delays and uncertainties, the overall guidance remains optimistic with expectations of breakeven by year-end and significant leverage from future projects. The positive sentiment is further supported by SOC 2 compliance and warehouse expansion, indicating robust operational capabilities. Therefore, the stock price is likely to see a positive movement.
CREX Report
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