Creative Realities, Inc.

Good morning. At this time, I would like to welcome everyone to Creative Reality's 2024 Third 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 for the third quarter, along with additional industry and company updates. Joining me on the call today is Rick Mills, CEO, and William Logan, CFO. Mr. Logan, you may begin.

Thank you, and good morning, everyone. Welcome to our earnings call for the third quarter ended September 30, 2024. 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 or the negative versions of such words or expressions as they relate to us, our management, or our operations 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 report on Form 10-K filed with the SEC for the year ended December 31, 2023, our quarterly report on Form 10-Q for the quarter ended March 31, 2024, and the company's subsequent filings 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 that was issued this morning. We believe the use of certain non-GAAP measures, such as adjusted EBITDA and several other important key performance indicators, represent meaningful ways to track our performance. It is now my pleasure to introduce Rick Mills, CEO and Chairman of Creative Realities.

Thanks, Will. Good morning, everybody. Thank you for joining the call. Once again, we posted record quarterly results This time for Q3, our fifth consecutive period of record quarterly revenue. We remain on track for the best year ever. I am pleased to report the following. Record third quarter revenue of 14.4 million, up 25% from 11.6 million a year ago. Gross profit of 6.6 million, up 24.5% from 5.3 million in 2023. Adjusted EBITDA of approximately 2.3 million against 1.5 million last year. That's an increase of 53%. Finally, annual recurring revenue or ARR at an annual run rate of 18.1 million. We are pleased with our results and we continue down the path towards record performance for fiscal 2024. The company has a robust pipeline of opportunities being actively pursued with multiple large contracts expected to be consummated in the coming months and quarters. Our business dev team is hard at work fostering new relationships, driving additional deployment with current customers, and working hard with new brands and companies to grow our client network. Demand remains strong across all our industry verticals, whether it be with digital menu boards, digital drive-through, retail media networks, or IPTV solutions, which we deploy in sports and entertainment venues. That demand, combined with our ability to scale with a minimal impact on our cost structure, has driven revenue and profitability expansion, both year over year, as well as sequentially from the second quarter. As a result of our sales mix, consolidated gross margin, which varies quarter to quarter, was 45.6%, roughly in line with last year. While the gross margin percentage remained flat, we are confident that the underlying trend of expansion in gross margin dollars will continue to enhance bottom line profitability going forward as we leverage our larger size and improved economies of scale, along with some price inelasticity. As the results of our preceding four quarters show, the company's operating leverage is evident, as our adjusted EBITDA as a percent of revenue, which rose to 15.8% in the quarter, and is 11.5% year to date. which brings our trailing 12 month adjusted EBITDA to 7.4 million or 13.6% of trailing 12 month revenue. This is ahead of our projections of a 2024 exit run rate of approximately 12% on revenue of 60 million. As you can see from the numbers, our services are clearly in demand. That said, I want to provide our investors with insights into our anticipated fourth quarter revenue. As noted in our prior calls, we are focused on targeting enterprise-grade customers for our products and services. These high-quality large-scale customer deployments have created some delays or slowdown in our anticipated orders and deployments. As a result, our visibility in the remainder of the year remains somewhat murky. Given the customer deployments that remain in flux, we are unable to provide a specific estimate for the fourth quarter and full year. However, we are confident that 2024 will represent record revenue and profitability under any scenario. While we've now achieved record ARR of approximately 18.1 million on an annual run rate basis, the goal of 20 million in ARR by year end will also be impacted should the timing of these orders or deployments in Q4 slip. Make no mistake. We are on track for our best year ever, but certain large customer orders are anticipated to push into fiscal 2025. Nothing has been lost, just the timing is in question. We are optimistic about the future and expect to see solid growth and improved results going forward, and we anticipate providing further details and guidance about anticipated 2025 performance early next year. I will now turn it over to Will to share some additional comments on our financials.