Creative Realities, Inc.

Good morning. At this time, I would like to welcome everyone to the Creative Realities Incorporated's 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 additional industry and company updates. Joining me on the call today is Rick Mills, Chief Executive Officer, and Will Logan, Chief Financial Officer. Thank you very much. Mr. Logan, you may begin.

Thanks, Norma. Good morning. This is Will Logan, Chief Financial Officer of Creative Realities, Inc. Welcome to our financial results and earnings call for the year-ended December 31, 2022. I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. The words anticipated, believes, expects, intends, plans, estimates, projects, should, may, propose, and similar expressions or the negative versions of such words or expressions as they relate to us or our management are intended to identify forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in our annual financial statements on Form 10-K and to be filed with the SEC later today, March 30, 2023. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in our public filings and in our earnings release that was released this morning. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities, Inc.

Thanks, Will. Good morning, everybody. I want to start by telling everyone that we're very pleased to announce our Q4 and fiscal year 2022 results. What a year it has been. Record revenue, record profits exceeding the guidance that we have previously provided to investors. Additionally, we have a number of important announcements and updates, including several new client acquisitions and significant client expansions the cumulative impact of which will be transformative for the company as a result we will be updating revenue profit and arr guidance for 2023 and also initiating communication of revenue backlog there is a lot to cover all of its positive and shareholders should be excited about our growth in value creation prospects So let's get to it. We had a record fourth quarter revenue of $10.5 million, represents an increase of $5.1 million or 94% year-over-year growth. This brings our full year 2022 revenue to a record $43.4 million, and that exceeds the guidance that we had provided for the same period and it represents an increase of 135% year over year. While the acquisition of Reflect in February 2022 is contributing to these results, the combined company revenue has grown organically greater than 40% as compared to the pro forma results of the combined company through December 31st, 2022. I want to thank all of the CRI team members for the dedicated focus to grow 40% year over year. It's their hard work and diligence that allow us to continue to show these remarkable gains. Adjusted EBITDA for Q4 2022 was $1 million, with an adjusted EBITDA margin for the quarter of 9.8%. substantially achieving our targeted exit run rate of 10%, significantly outperforming the results for the same period in 2021, and providing the foundation for enhanced profitability as we move through 2023 on a post-integrated basis. For fiscal year 2022, adjusted EBITDA was 3.8 million with an 8.8% margin, which also represents another record performance for the company. The year-over-year improvement of 2.6 million translates to a 215% improvement in adjusted EBITDA over fiscal year 2021. As with revenue for fiscal year 2022, our adjusted EBITDA results also met the guidance we had previously provided to investors. This continues to demonstrate our ability to extract and enhance profit as we continue to scale the business. We expect to accelerate improved adjusted EBITDA margins through 2023 now that the integration of Reflect is fully complete. Moving on to my next point, we have communicated that a key strategic initiative for our management team is to continue to grow our ARR, or annual recurring revenue, which is primarily comprised of software as a service subscription, SAS, subscriptions to our enterprise-grade digital signage solution. Our stated goal entering 2022 was to increase our ARR run rate by 25%. from approximately 12 million on a pro forma consolidated basis exiting 2021 to 15 million in entering 2023. Through December 31st, we grew our ARR run rate to in excess of 14.8 million despite the effective elimination of our safe space subscription solutions revenue of about $0.7 million from the prior year. With that said, congratulations, Team CRI. Great work. And we'll turn it over to Will just for a few notes on our business activities.