Creative Realities, Inc. Q1 FY2026 earnings call

Post-Acquisition Integration and Cost Synergies

• Completed the full consolidation and reorganization of the combined CRI and CDM workforce across all sales, operational, and support functions after the CDM acquisition
• Migration of legacy CDM financial accounting systems to the company's NetSuite ERP platform is on track to be completed at the end of Q2 2026
• As of March 2026, the company has achieved over 60% of the targeted $10 million in annualized pre-merger cost synergies, with full implementation expected by the end of 2026
• Once all synergies are realized, adjusted EBITDA margins are projected to exceed 20%

New Customer Wins and Business Development

• Awarded an $8.5 million contract to serve as the official digital signage provider for the Tennessee Titans' new Nissan Stadium under construction in Nashville; most revenue will be recognized in 2026, with minor portions trailing into early 2027 for stadium opening punch list work
• Won the full North American Dairy Queen digital signage contract, previously held by CDM; annual revenue is expected to grow from the historical $2–$2.5 million to $4–$5 million, driven by expansion of digital drive-through installations across 4,700 existing locations
• Announced a 285-location lobby media footprint modernization project for AMC Theaters in partnership with National Cinemedia, involving 1,200 displays and large format LEDs to be installed in 2026; total expected revenue is $6–$7 million, with potential future expansion to other cinema chains
• Sevenbrew continues its rapid expansion, on track to open 750 new locations in 2026, generating upfront hardware revenue and recurring SaaS revenue growth for each new location
• In final contracting stages for what will be the largest U.S. retail media network deployment in 2026, with 10,000 screens and 20,000 data devices to be deployed by the end of 2026, growing to 60,000 total devices by mid-2027

Financial Position

• As of March 31, 2026, the company held $2.3 million in cash, with $47.5 million in total debt and $13 million in remaining available liquidity under its revolving credit facility
• The company's core long-term priority is to generate free cash flow to pay down debt, de-lever the balance sheet, and strengthen financial flexibility, while continuing to invest in growth and technology initiatives

Total consolidated revenue for Q1 2026 was $16.3 million, up 68% from $9.7 million in the prior year period. The newly acquired CDM segment contributed $7.9 million, accounting for 48% of total Q1 2026 revenue. Legacy CRI segment revenue decreased approximately 15% year over year, driven by the expiration of certain customer contracts in 2025. Hardware revenue totaled $4.6 million (28.2% of total revenue) in Q1 2026, up from $3.4 million in Q1 2025, with a gross margin of 14% compared to 32.1% in the prior year. Service revenue totaled $11.8 million (71.8% of total revenue) in Q1 2026, an 86% increase from $6.3 million in Q1 2025, with a gross margin of 42% compared to 53% in the prior year. Consolidated gross profit was $5.6 million in Q1 2026, compared to $4.5 million in Q1 2025, with a consolidated gross margin of 34.2% compared to 45.7% in the prior year. Net loss attributable to common shareholders was $7.9 million ($0.74 per diluted share), compared to net income of $3.4 million ($0.32 per diluted share) in Q1 2025, which included a one-time $4.8 million contingent liability settlement gain. Adjusted EBITDA was negative $0.5 million in Q1 2026, compared to positive $0.5 million in Q1 2025.

• Full year 2026 revenue is expected to exceed $100 million, which would be the company's best full year performance on record, with adjusted EBITDA margins reaching the high teens in the second half of the year
• Approximately $4 million in delayed Q1 2026 revenue from weather-related construction delays (including 500 planned lottery customer installation locations) was shifted to Q2 and Q3 2026, leading to expectations of sequential revenue growth and acceleration through the remainder of 2026
• The company maintains its original guidance of achieving at least $10 million in annualized pre-merger cost synergies by the end of 2026
• Gross margins are expected to increase in coming quarters driven by revenue growth, synergy realization, and improved operating cost leverage
• The company's IPTV/stadium solutions business unit is on track to double its revenue in 2026

• Extreme winter weather in the U.S. Southeast, specifically a major February 2026 snowstorm in North Carolina, delayed approximately $4 million in planned Q1 2026 revenue by pushing construction and installation timelines into subsequent quarters
• A one-time $0.5 million gross margin headwind resulted from the termination of a CDM legacy subcontractor and transition to new installation partners, reducing Q1 2026 consolidated gross margin by 680 basis points
• All forward-looking statements carry inherent uncertainty, and actual results may differ materially from projections due to unforeseen operational, market, or execution risks, as outlined in the company's SEC filings
• The large pending retail media network contract requires successful full execution to deliver the projected transformational growth and referenceability benefits

Q: After winning the Tennessee Titans NFL stadium contract, what is the expansion opportunity in professional football, and can the company replicate its historical pattern of winning multiple additional deals after an initial league entry? / A: The Titans contract is the company's second full control NFL stadium deal, following its existing work for the Dallas Cowboys. Management is currently pursuing deals with multiple other NFL teams for either full stadium digital refreshes or smaller menu board upgrades. The company's IPTV/stadium business unit remains on track to double its annual revenue in 2026, in line with prior guidance.

Q: Can you provide details on the large pending retail media network deal, including existing customer relationship, competitive status, deployment timeline, expected incremental costs, and strategic value? / A: The competitive process is complete, the company has received a verbal award, and a team is already working full-time on pre-deployment preparation. The customer approached the company after the original selected competitor failed to deliver on the pilot. Deployment is scheduled to start in July 2026 after pilot takeovers in June. Management notes the deal will create a top-tier referenceable deployment with closed-loop attribution no other U.S. provider has delivered, solidifying the company's leading retail media market position, though full execution is still required.

Q: What is the total contract value and recurring revenue opportunity for the 60,000-device retail media network when fully deployed by mid-2027? / A: When fully deployed, the network will include 25,000 screens and 35,000 data-gathering devices. Management expects annual recurring SaaS revenue from the fully deployed network will fall in the $6 million to $8 million range, with final terms still being confirmed in contract negotiations.

Q: How will the company work with franchise brands to convert non-participating franchisees to digital signage programs after an initial rollout? / A: After the initial upfront rollout to participating franchisees, the company conducts joint outreach with the franchisor to target non-participating multi-location franchisees. Both parties have aligned incentives to convert locations, as digital installations improve franchisee throughput and profitability, benefiting both the franchisee and the overall franchisor brand.