Creative Realities, Inc.

Good morning. At this time, I would like to welcome everyone to the Creative Realities, Inc. first quarter 2023 earnings conference call. This call will be recorded and will be available on the company's website at CRI.com following the completion of the call. The company has prepared remarks summarizing the interim results along with additional industry and company updates. Joining me on the call today is Rick Meehl, CEO, and Will Logan, CFO. Thank you very much. Mr. Logan, you may begin.

Thanks, Olivia. Good morning. This is Will Logan, Chief Financial Officer of Creative Realities, Inc. Welcome to our financial results and earnings call for the three months ended March 31st, 2023. I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. The words anticipated, will, believes, expects, intends, plans, estimates, projects, should, may, propose, and similar expressions of 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 quarterly financial statements on Form 10-Q to be filed with the SEC later today, May 15, 2023, and in our annual report on Form 10-K filed with the SEC on 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 will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our public filings and in our earnings release that was released earlier this morning. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities, Inc.

Thanks, Will. Good morning, everybody. Thanks for joining the call. What a great quarter. Our Q1 2023 revenue of $9.9 million includes a record first quarter gross profit of $5.1 million and a record first quarter adjusted EBITDA of $960,000. This is on the heels of our recent fiscal 2022 earnings call where we announced record revenue last year of $43,000 and record adjusted EBITDA of 3.8 million for last year. We believe our first quarter results continue to demonstrate the ongoing growth in our revenue as this is the fifth consecutive quarter for which our revenue has approximated or exceeded 10 million. Benefiting from increasing our record recurring revenue, Notably, we had previously communicated that annual recurring revenue is approaching a level where it covers our operating expenses, something we call the golden rule. Past this point, we project significant improvements in our adjusted EBITDA margin as every new dollar flows through to the bottom line at higher and more favorable margins. We see this in our first quarter results where revenue mix is driving gross profit and working in conjunction with scale driving adjusted EBITDA. In fact, though revenue for the first quarter was actually lower than the same period in 2022 by 800,000, our gross profit and adjusted EBITDA increased by over $1 million. and $300,000, respectively, due primarily to the increase of $1.3 million in services revenue. It is important to understand these effects as we scale and drive SAS-based annual recurring revenue. On our last call, we issued full-year 2023 guidance of $60 million in revenue, with 2023 exit annualized run rates of 17 million in ARR and 15% adjusted EBITDA margin. We also communicated a backlog of approximately 110 million. I'd like to reaffirm this guidance. We expect to see our business ramp up even further as we get deeper into executing on existing and new client contracts and deployments throughout 2023 and beyond. As you may recall, we had a number of other noteworthy announcements on our last call. In addition to announcing annual records for revenue and earnings, we also provided updates on significant new client contracts, which included winning an RFP for a national fast casual restaurant chain and securing an agreement to be an exclusive deployment partner for a new digital ad-supported network. We have announced an additional agreement with Starlight Media to supply and deploy up to 5,000 displays in conjunction with the expansion of that network at an initial deployment commitment valued at $2 million to CRI and approximately $50 million of additional backlog at full deployment. We also announced enhanced client engagements with Freshens, Roadrunner Sports, and others. We are still working through an announcement with the national fast casual restaurant chain and hope to be in a position to issue that in the near future. It will be worth the wait. As you can see, we have terrific momentum in the business and are seeing productivity from our business strategy. Very simply, we continue to win in the market with a corresponding reduction in the timeline to new customer acquisition and believe the company is uniquely situated to exploit the tremendous growth opportunities in our industry. I will turn it back over to Will for a few notes on our business activities.