Earnings call transcript Q4 2022

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Operator

Good morning. At this time, I would like to welcome everyone to the Creative Realities Incorporated 2022 Year-end Earnings Conference Call. This call will be recorded and a copy will be available on the company's website at CRI.com following the completion of the call. The company has prepared remarks summarizing the annual results, along with the additional industry and company updates.

Joining me on the call today is Rick Mills, Chief Executive Officer; and Will Logan, Chief Financial Officer. much. very you Thank Mr. begin. may you Logan,

Will Logan

XX Thanks, remarks Norma. Officer financial Logan, Financial remind ended is and take like this opportunity will morning. Creative Realities include This to December year of the our that call Will I Inc. would earnings to our Chief you for Good XXXX. today Welcome results statements. to forward-looking

financial expressions similar plans, as expressions or are believes, materially annual no we anticipated, results statements the based these should, cause projects, Factors by statements events. call words as such future us a our estimates, in words relate forward-looking on on result filed may contemplated expects, of they XX-K that that intends, this could or as to the results XXXX. to our forth and update of intended set these differ propose later we forward-looking of The negative to are differ new SEC undertake or versions Any and and these statements. information with statements. those are of statements may, obligation management assumptions from identify March to be today Actual to XX, forward-looking on Form make materially today

our present release this non-GAAP reconciliation in of public that non-GAAP measures our morning. both GAAP was this is we During earnings call, financial may and filings to and released GAAP measures. A included in

Mills, pleasure Rick Inc. to CEO my now introduce Creative is of It Realities

Rick Mills

been. profits, guidance What previously a to and very year results. Thanks, to investors. it by we our pleased has Will. start we're everyone to telling morning, announce Record that fiscal exceeding Good that QX provided want record everybody. XXXX the revenue, year I

impact new number which and Additionally, of company. expansions. of client will cumulative The important several announcements we and transformative be the significant have for client acquisitions, including updates, a

in to profit revenue updating cover we There is result, a be communication lot of for a be will its shareholders excited creation positive, backlog. also and and guidance our initiating prospects. and should revenue, value all growth ARR of As XXXX about

let's to it. So get

a record record XX% have brings exceeds year-over-year million, of million period $XX.X XXXX to that the and increase a an and represents same $X.X an had This We revenue guidance year-over-year. our that provided for increase fourth full million revenue of $XX.X quarter of XXX% year or growth. representing the it we

greater pro through to of February compared contributing is acquisition company to the XXXX. combined While The of XXXX organically these December Reflect forma XX than company combined as the in revenue has the results. results XX% grown

all focus these continue members the thank of to year-over-year. diligence the that and us to team to CRI for XX% allow dedicated remarkable gains. It's show want hard I to their grow work

a Adjusted exit achieving X.X%. million, basis. outperforming providing rate XX%. with post targeted a EBITDA through for Significantly quarter in and on $X of the QX our XXXX enhanced EBITDA XXXX the for Substantially the as move an integrated of we XXXX results for the profitability for foundation margin was period adjusted run same

performance for to For XXXX. million million was year-over-year improvement company. represents year margin, $X.X record in over the EBITDA X.X% also $X.X year an fiscal translates which EBITDA another The XXX% adjusted adjusted of improvement fiscal with XXXX, a

as ability have year guidance for business. to also to the the XXXX, our scale continue to adjusted previously EBITDA continues met our demonstrate and we fiscal This extract As revenue results we investors. profit, to with provided enhance

of through accelerate complete. margins fully expect adjusted improved is integration that EBITDA XXXX, We the to now Reflect

our comprised for key subscriptions to team, we SaaS, our Solution. strategic Moving of which have Signage communicated to is ARR or management initiative subscription recurring on continue my revenue, a grow to Digital primarily that to next annual point, Enterprise-Grade Software-as-a-Service is

exiting million on XXXX was by to XX% consolidated basis, million Our entering $XX from run ARR increase pro our XXXX $XX entering in rate to approximately stated forma XXXX. goal a

XX, our With just it of excess prior Solutions elimination business work and Space notes $XX.X December over we'll despite million, team congratulations revenue our for to Subscription ARR turn the that of we on activities. said, great effective the in million a our Through Safe year. from CRI, to rate of run grew few about $X.X Will,

Will Logan

XXXX XXXX, Thanks, its and Rick. There's banner February of executed from upon profitability. organic year in no doubt for growth value CRI, objectives. Systems that a improve was strong acquisition Management Reflex of the creation the

be next few While a year banner XXXX was to transformational. years the and look

is the and a that have significant make number to important new drive-thru traction existing of including acquisitions, and our updates in marketplace. We with announcements clients client gaining product relationships expanded

As revenue we'll for be backlog. discussing and XXXX updating guidance such, profit ARR and

get we activities. to comment on recent some to those Before updates. like I'd

reverse the open XX split of for of Capital March Market the effected the a at stock NASDAQ effect or one reverse First stock We XXXX. affected split. three on

the and bid So the minimum The to retain listing that NASDAQ done our price to to to our regain bridge the price compliance believes the company Capital access is investors Management observed Markets. NASDAQ the previously stock between disparity access gap necessary to to rule. and with Capital intrinsic needs the will. it this Markets reflect intrinsic company its intent we to our value. NASDAQ has communicated that results and of and shares At the financial believe value continued trading and some point,

Rick Mills

to the important the that was very to was do folks will here. as listed markets comment the one public recognize just necessary ultimately felt what we value it Will creation. remain Hey, we We believe

Will Logan

thanks Rick. Yes,

outstanding to the value, concluded Special that The the further Pegasus this business in not Board committee's and by offer. developments the based amplified the today interest and Earlier and acquire post positive reverse the of company Committee $X.XX company's current per was undervalued of shareholders. for by proposal the on purchase best special future proposal Directors views point of cash. The proposal of Second that given the week, a share current such in company's a committee all common intrinsic split Capital rejected the existing the significantly of of company's price the announced the stock. announced shares we it's recent on existing the company's prospects, Pegasus Advisors

Rick Mills

a just to one a Pegasus their believe comment. relationship ongoing for great Pegasus, were I before do been has than Again, the is forward this I input, the a here value offer was more we shareholders. current add fair we Rick, continue and to decade. They we not is up showed partner But partner. look great with

Will Logan

to the and date promissory maturity amendment that in February out $X.XX February note, was to other one-year period stockholders. promissory on company million eliminated XXXX the payment note XX a On One amendment XX to XXXX. secured of an the secure The for due executed Reflex balloon the the a February extended of XXXX note.

been the continue doing that make and payments During the extended XXX,XXX what of interest in on principal XXXX. requirements provided This period, is operating maturity to annual we execute the rate plan on term us reduced short accrue will with year debt new payable for which from service last consistent and for for our monthly the X.XX% moves full date. X.X%, and cash will runway about for to we've to

backlog of the what you how strategic should driving and can vision provide and is that with insight about into revenue we from our growth our acceleration think some continued our customers? current Rick,

Rick Mills

Will. Thanks,

to as There's be the ad in networks supported a So million of contract company support the time ad key $XX deployment a equity has that networks. supported agreed This period. valued deployment will and that ad an a deployed XXXX up CRI a first private new fund we for experiential to in this over across sponsor locations today, at has and a XX-month exclusive foremost, vertical. network country to a our have period, up to over growth revenue across new partner XX-month same designation leisure finalized

omnichannel in and differentiates digital end-to-end media industries. capability demonstrates signage, This our marketing again, the once unique that CRI

magnitude guidance Given to we a this announcements in will the substantial to provide XXXX. installation for will anticipates update company that other is of in morning, year. material The that transaction activities revenue the second of begin company poised half the this addition

RFP activity.

engaged market. chain. in or to for of the a national RFP RFP recognized processes, C-store number We've QSR win been brands, actively in continue venues, We many

XXXX, provider third the a fast the quarter in as we process competed the RFP chain casual an for ultimately of selected chain. go signage During digital and was national for forward

of work fully the RFP communicated to period supports value CRI to the process a of ongoing during of a in total deployed. as and with timing, customer the up scope SaaS by annually, annual of ultimate The when excess deployment three-year million $XX scale million over $X

for We joint a the marketing are the effort upcoming in we're currently announcement working customer prohibited in from naming months. processes an legal through the and

Additional, about ad supported of XXXX digital-out-of-home deployments. talked being Again the networks. year network we

vertical. partner are a with relationship in additional two We advanced in digital-out-of-home to currently with networks engagements key new deploy and support discussion

XXXX combined to over and period location in to in of result SaaS incremental two will up three-year hardware revenue This $XX for a revenues day is installation, million a time. up opportunity

and and XXXX menu walk board restaurant drive-thru creative digital talk about realities solution of let's and digitize begun Finally, also new, CRI announced new to up U.S. Freddy's Freddy's is of Custard solution. drive-thru Frozen deploy the our the drive-thru July has throughout solution. utilizing this fast year for since implementation solutions. outboard our casual launch customer steak Last the burgers and CRIs Freddy's on

are exclusive board the menu in partner installs their and new restaurant We drive-thru forward go indoor all space. for

we product additional restaurant fast casual commitments, with quick drive-thru three have companies. secured four our serve Additionally,

software our subscription CRI in solution, XXX revenue growth. than more locations deploy incremental both to hardware expect We and utilizing additional installation drive-thru XXXX,

delivering the optimized restaurant of the to and restaurant to transaction drive-thru the forefront value material From transformation at creation content box throughput, thrilled CRI Delivering partners. inside in be is industry. its

the with are underserved this and The tremendous static is and engaging there The is XX% consistent customers. existing feedback U.S., positive seeing opportunity of market more believe than are throughout we drive-thru new XXX,XXX when product prospective we locations are them for today.

Let's basis. talk an our last with our full EBITDA million call, about run updated XXXX of revenue On guidance guidance. an exit to profit and earnings we XX% ARR. adjusted on rate $XX XXXX year revenue

represents and Given developments that this creation of significance I the the have significant prospects covered, and new additional CRI. value for number

and rate revising adjusted and our upwardly projected We maintaining exit of XX%. run are revenue to additional $XX XX% million XXXX our EBITDA

ARR are $XX We projecting rate of run million XXXX. in an achieving

in timeframe, really, we to Beginning half of two and XXXX of to expect significant the second July XXXX revenue the to year. ramp busy. results first just in with really be in revenue June be runway quarters get financial we Now, in clear, a the similar

But back it moment. over Will backlog. just here a turn in the me I'll let Finally, address

is revenues projects, company of customers that calculation to our with all contracts services are binding the backlog orders are deploying as by the be indicated by anticipated them. received includes It or we of purchase under the these service under all subject would comprised contract, including project currently and to rollout necessary by products current that not of Our revenue commitments.

in level the at at recent high backlog Our and history. far approximately above company's historical a is million record $XXX any

works For sustaining but in elevate support to our ARR backlog investors to always on ARR projections. that a network revenue to bring or Backlog in primarily relates project will growth new our start, tandem with basis. deployments forward go revenue almost

As company and be the a about the I, of team team, the opportunities us. Will, the rest more the we excited could of of not state management ahead

record continue for to exploit value We are already results. so have our stakeholders. they prospects And of is truly for transformative. this that position creation benefit new to our significant the Management shareholders posted and scale continuing

turn for Logan. and XXXX, review, it QX, As Will back fiscal to

Will Logan

spent operations sheet release for and a for Those published of our XX EBITDA. from call ended The the included flows EBITDA XX income providing net balance Rick. XXXX December statement our on to were an walk Thanks, financial this results as in report We've of statement the adjusted year detailed December of XXXX. results the of and in cash earnings which overview morning historically this year. the time

that GAAP to MD&A income previous quarters also on Regarding adjusted those additional reconciliation know section EBITDA non-GAAP be four of today a published report which XX-K, financial the audited provided our and information. the quarterly results, Form later therein. EBITDA for we annual will and provides of current We've net

don't mind to taking the of call, into to go happy Norma, time begin we In the Q&A. this will those straight questions. and interest rehashing to opposed will be we'd if open numbers we lines, up on apply the as the disclosures, you previous

Operator

first [Operator Global Alliance Our Instructions] comes from Partners. Brian question with Kinstlinger

Your now line is open.

Brian Kinstlinger

so thanks much. Great,

great you're inventory in the screens with It's you Can is ability And question talk you some are demand, to is right wins deliver half an see. issue clearly locate to really great news now of and ability players My sharing. to that you announcing. all guys the your not need and in first about year? side will your invest supply the the to

Rick Mills

Brian, Rick. Hey, this question. is Great

supply we're Now chain ahead effectively issue. of the

manufacturers, mount years. the no, of curve, are not that, vendors, cetera, back et up. a metal ahead several little The increase an did Our the no price past well But other screen issue. over We have suppliers the than clucked now suffer issue.

too do switch has route has that a so of looks this -- effectively a Cisco been in market with network have the for network, switch player equipment early May caught we very in historically needed Cisco their route of as and expect out. And QX, We The we're land number one have comfortable. partnered the up we June. the months in end supplier,

that once the So do this any we're issue expect hits, the balance year. races not off for to and of

Will Logan

into And inventory. Brian, with investment respect to the

up those the degradation and at or opportunities don't material are to deposits that or the upfront cash working increasingly shifting start that build you CRI, those coming we of have size of churn deployments. our the the launch will, contracts so With if nature same customers, or from capital, to are

Brian Kinstlinger

great. would that's issue. Wow, the be That Right?

Will Logan

Yes.

Brian Kinstlinger

question. lot didn't them. Is so to of expectations XX. are about a lots trying there? anything sealed Have opportunities, you. I up big any But pretend Thank follow changed about heard you're strike there and We that hear My delivering? signed, of

Rick Mills

the meeting is the the actually The kickoff waiting executed -- in on the end, are signature. for launch expectations changed. our contract in days. have No launch is XX We next and

talked experiential is talked know, about you years. location after it we rollout. as about as But we've it XXXX that now off prior, kicked finally four So, here

Brian Kinstlinger

so Great. much. Thanks

Operator

Thank you. please. our next moment question, for One

open. from comes line Halpern now question with your Next Taglich Howard Brothers, is

Howard Halpern

Congratulations, guys. Great job.

the talking of do ARR, part Now, advertising that in over how the business? there additional of of then about and digital been So years? you've terms couple see the And what like opportunity? is deployments, is how mobile, in the the sitting next you

Rick Mills

about now spend shift That Well, dramatic are when occupied marketplace. the a in dollars greatest seeing digital yes, you that mobile those historically media in presence mobile, the web out-of-home or talk of you has in is, to how networks. commanded

again, example, gives you A know, this is sense. up you simple a made example. And a but just

somebody If you're you're going spend Coke, million and to across to get of that the Cola, ad store to out to you convince nearest option. buy and Coca have a run $XX their couch run TV,

shifting a contained $XX run same cooler gets a million pick TV $XX an Today, act screen, across all networks. in immediate or advertise they XX that's pack special Coke dollars retailers or out-of-home network print. actively million to networks. why on shopping, And of have the And XX see feet and a where you major POS spend feedback tremendous ad can spend their in Coke up option that on Coke. can out-of-home brand is in networks and the we're ad are opportunity somebody versus of the across out-of-home it, they to supported say walk to Dramatic seeing

Will, add? to anything

Will Logan

manage support full the run in networks, and to to the continue developing component. installation full service as an the certainly partners we and with these we deploying media as services capability Howard, but also to the activities, of revenue option provider sale both positioning ads, software those as CRI hardware assist network, the Yes, work these ad-based and provider, are the

continued So at with traction, we're seeing of full again, services focus as the enterprise provider a lot level. a our

Howard Halpern

with all as deployments, you the expense you with enter And are the Okay. XXXX? structure have, you comfortable upcoming operating

Will Logan

will We're continue that get and on profitable a tell that as the more of million short we EBITDA bottom at very models $XX we as model point Yes, believe our the to that to gets, on inflection answer, the line. larger And towards and is, the we in will an the become internally comfortable million, continuing revenue certainly our adjusted we We're scale, we and an yes. confident, Howard that, that XX% see middle basis we're progress journey. cross to million. $XXX in at point this us $XX

Howard Halpern

up keep the Well, guys, work. Okay. great

Will Logan

Howard. Thanks,

Operator

like would Thank to from you. you lines are question That there that additional relations would the the Mr. any from inbox the investor Logan, inquiries address? completes today. phone

Will Logan

appear Norma, does time. this not any are that at it there

Operator

turn over call I now will for Mr. Logan back And closing to the remarks.

Will Logan

Great.

efforts for CRI call CRI their digital and we brand in and shareholders, the signage to leading by of work together partners support to concludes clients, XXXX call. earnings continuing our conclude me employees This the the commitment Let transform all thanking solutions. as

Operator

Thank Ladies your conference. for today's and this participation. gentlemen you concludes

a day. disconnect now may You everyone wonderful have

Creative Realities (CREX) 30 Mar 232022 Q4 Earnings call transcript