Creative Realities, Inc.

At this time, I'd like to welcome everyone to the Creative Realities 2024 Second Quarter 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 interim results of the first quarter, along with additional industry and company updates. Joining me on the call today is Rick Mills, CEO, and Will Logan, CFO. Mr. Logan, you may begin.

Thank you, and good morning, everyone. Welcome to our earnings call for the second quarter ended June 30, 2024. I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. The words anticipates, will, 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 Form 10-Q filed with the SEC this morning, August 14, 2024, and in our annual report on Form 10-K filed with the SEC. 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 issued this morning. We believe the use of certain non-GAAP measures, such as adjusted EBITDA and several other important KPIs, represent meaningful ways to track our performance. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities.

Thanks, Will, and good morning, everybody. Thank you for joining this earnings call. Once again, we posted record quarterly results. In fact, this is the fourth consecutive quarter for which we have posted record quarterly revenues. Midway through fiscal 2024, we continue on a path towards our best year ever. With that said, I'm pleased to report the following results for the quarter. Record second quarter revenue of $13.1 million, up 43% from 9.2 million in the prior year. Record second quarter gross profit of 6.8 million, up from 4.3 million in 2023. Record second quarter adjusted EBITDA of approximately 1.5 million against 0.3 million last year. And finally, annual recurring revenue or ARR at an annual run rate of 18 million. We continue to make significant progress through the first two quarters of fiscal 2024 with strong revenue growth and improving margins. Most importantly, the rest of the year also remains encouraging with an active pipeline of opportunities being pursued to continue our growth. We're on track to deliver record results for the full year. Our Q2 revenue growth was up significantly over 2023 levels and also increased sequentially over the first quarter. While revenue can be lumpy at times, quarter to quarter, as a result of deployment timing, The long-term future remains bright for fiscal 2024 and beyond. Demand remains strong across all parts of the business, particularly for our quick-serve restaurant vertical, which includes digital menu boards and our drive-through solutions, our sports entertainment segments also. Our consolidated gross margin rose to 51.8% versus 46.7% in the fiscal 2023 second quarter. This largely reflects improved economies of scale and a stable pricing environment. We believe this enhanced margin trend will continue for the remainder of fiscal 2023. As I previously stated at the end of the second quarter, our ARR has grown to an all-time high of approximately 18 million on an annual run rate basis, and we remain on track to exit the current year with ARR of approximately 20 million. As we have stated in the past, We consider this a key metric as it provides visibility into our growth and profitability going forward, as well as underscoring the trust our customers place in the company's superior solutions. I want to take a brief moment to discuss our debt refinancing, which we completed at the end of May. we have secured a conventional $22.1 million senior revolving credit facility with the potential for an additional $5 million accordion. Utilizing this credit facility, we paid off $13.6 million of prior indebtedness that was scheduled to mature in February of 2025. This is a significant achievement for the company. By shifting our debt from short-term to long-term in nature, we improved our working capital, bolstered our excess to strategic capital, while adding increased financial flexibility, as well as the potential for reduced cash interest expense going forward. Working in tandem, With our disciplined approach to de-lever the company over this past year, we now have capacity to accelerate the pursuit of strategic alternatives and growth initiatives with a more favorable capital structure. Once again, we'd like to thank our prior creditor, Slipstream Communications, and its parent company, Pegasus Capital Advisors, for supporting our vision as lender and continuing as a shareholder to build a leading digital signage and digital media platform. I'll now turn it over to Will to share some additional comments on our financials. Will, back to you.