Creative Realities, Inc.

Good morning. At this time, I would like to welcome everyone to Creative Realty's 2025 Third Quarter Earnings Conference Call. This call will be recorded and copy will be available on the company's website at cari.com. following its completion. Creative Realities has prepared remarks summarizing the interim results for the quarter along with additional industry and company updates. Joining the call today is Rick Mills, Chief Executive Officer, and George Sautter, Chief Strategy Officer and Head of Corporate Development. Mr. Sautter, you may proceed.

Thank you, and good morning, everyone. Welcome to our earnings call for the third quarter, and it's September 30, 2025. I would like to take this opportunity to remind you that 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 or our management are intended to identify forward-looking statements Actual results may differ materially from those contemplated by such statements. Factors that could cause these results to differ materially are set forth in our Form 10-K and other 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 KPIs represent meaningful ways to track our performance. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities.

Thanks, George. Good morning, everybody. We appreciate everybody joining today's call. We also want to take this moment to welcome all the team members from Cineplex Digital Media who are joining the call for the first time. As many of you are aware, we completed the purchase of Cineplex Digital Media, or CDM, just last week on November 7th. This was a tremendous effort by everyone here involving a great deal of due diligence, strategic analysis, and of course, the arrangement of appropriate financing to get the transaction across the finish line. I'll speak about this more in a moment, but in a nutshell, we just couldn't be happier with this acquisition. This is the one that we believe allows us to leapfrog the competition in North America, doubling the size of the company, puts us on an accelerated growth trajectory to significantly improve bottom line results. And as many of you know, we've talked about this transformational acquisition for the past year and a half, and it has finally come to fruition. But first, let me give you an overview of the quarter. We posted revenue of $10.5 million in Q3 versus $14.4 in the prior year period, while gross profit was $4.8 as compared to $6.6 million in 2024. A $2 million order slipped from the third quarter into the fourth quarter, negatively impacting our results. However, we do not believe this revenue has been lost. It's just been delayed. As we have discussed previously, we often don't control the sales cycle or the cadence of deployments by our customers, and working with our target enterprise customers can involve delays. Our pipeline still remains strong, and we believe that we are close to converting significant engagements that will reward our shareholders for their patience. However, we also recognize the need to improve the rate of conversion. Yesterday we announced the hiring of a chief revenue officer, Dan McAllister. Dan joins CRI this coming Monday with a clear mandate. Improve our new customer acquisition velocity across North America. Dan and I will be working hand in hand to reorganize our sales force and reorganize our go to market strategy with a shared vision. Grow our recurring revenue and push opportunities through the pipeline quicker. With that said, our third quarter consolidated gross margin was 45%, roughly in line with last year's 46%. As of December 30th, 2025, we had an annual recurring run rate or ARR of 12.3 versus 18.1 at the end of the third quarter in 2024. Adjusted EBITDA was 0.8 million, for the third quarter versus 2.3 million last year. Now, let's talk a little bit more about our acquisition. We purchased CDM for 70 million Canadian, approximately 50 million US, after many months of due diligence and negotiation. The business is a great addition, realities, and as I first discussed on a call following our announcement, The company is a leader in providing data, experience-based digital marketing solutions across North America. Over 60% of the revenue is recurring and approximately 84% of sales are based in Canada. CDM posted revenue of just under 56 million Canadian dollars in 2024 is on and is on track to deliver 25% top-line year-over-year growth in 2025. It operates in more than 6,000 locations that it has signage deployments in, approximately 30,000 endpoints, including such well-known brands as Scotiabank, RBC, AMC Theaters here in the U.S., and, of course, Tim Hortons in Canada. And it was recently made the exclusive partner for the North Carolina Educational Lottery retail deployment. This in itself was a huge win. It's a $54 million deployment over a 10-year period. In addition, with the acquisition of CDM, we acquired Canada's largest mall retail media network. which will generate over 32 million Canadian or 25 million US approximately of advertising sales revenue this year. This digital out of home or DOH media network has over 750 screens with exclusive representation and revenue sharing across 95 shopping destinations. These locations include 76 out of the 100 most productive Canadian shopping centers, nine out of the 10 busiest malls in Canada, and we serve approximately 750 million visitor or shopper visits annually. And by the way, this is the first and only mall network certified by the Canadian Out-of-Home Marketing and Measurement Bureau, or what is referred to as COM. All in all, through this transaction, we have more than doubled the size of the company, significantly increased our operations outside the US, opened new avenues for accelerating growth going forward. CDM serves thousands of QSR restaurants, financial institutions, and retail establishments across Canada. Combine that with our US coverage, it immediately places us in a strong position to take advantage of the explosive growth going on in retail media networks across North America. From a technology standpoint, these CDM customers bring a strong opportunity for CRI's broad product portfolio of solutions to improve the customer purchase experience driven by digital hardware installations, the management of retail media networks, and professional support services. By the way, in addition, CDM has a creative agency of record credentials. They do very high-end quality content all around content design and creation. In addition, while CDM currently license certain software applications from third-party providers, the combination with CRI, including our ReflectView, and Clarity CMS platforms, as well as our AdLogic ad server and AdLogic CPM Plus, our CMS and ad tech platforms, will provide significant synergies to accelerate growth across the business. Overall, we believe CDM will rapidly elevate our data science and content capabilities while adding the scale we need to thrive in an increasingly competitive, rapidly expanding marketplace. Given CDM's large customer base and operating footprint, we expect that our unified organization will see higher top line performance and improved bottom line results in the quarters to come. As previously disclosed, the acquisition is anticipated to provide synergies have at least 10 million across North America on an annualized basis by the end of 2026. This is really a reflection of the operating efficiencies, margin enhancement opportunities, and the adoption of our CMS and ad tech platforms throughout the CDM customer base. Taking these synergies into account across the new combined company, And based on CDM's business for the 12-month period ending September 30th, 2025, we calculate our purchase price to be somewhere between three and four times the adjusted EBITDA of CDM. On a forward-looking basis, we anticipate total company revenue to exceed $100 million in 2026 with an adjusted EBITDA margins in the high teens. Once all the synergies are realized, we expect adjusted EBITDA margins will exceed 20% and free cash flow generation will be significant. We financed the CDM acquisition through a combination of debt and preferred equity, as George will discuss shortly. He'll go into the details. Simultaneous with the transaction, the company increased the size of its board from four to seven individuals, appointing three new directors. I want to take this time to welcome Dan McGrath, who is the Chief Operating Officer of Cineplex, along with Tom Ellis and Mike Bosco from North Run Capital. These individuals, each with unique capabilities and expertise, will help lead us through our next phase of expansion across North America and potentially overseas. It's an exciting time to be here, and we can't wait to see what the future holds. We continue to have an extremely large pipeline of opportunities under consideration, including new potential business opportunities due to the acquisition of CDM. I'll go through our market outlook more detailed in a moment, but we are on track with our pre-announced deal with a large QSR chain that has over 1,000 locations across more than 25 states. We completed the pilot program in select locations during the third quarter and are in process of rolling out nationally in Q4. We are delivering turnkey solutions along with consulting content strategy, the hardware deployment, and then, of course, ongoing day two service, all powered by our proprietary CMS platform, Clarity. ad logic, ad server, and CPM plus programmatic applications also continue to see increasing traction and interest from existing and new customers. As a reminder, historically, we've already delivered up to 50 million ads daily via this advertising platform. I believe this technology will play a key role in driving top line growth going forward, particularly now with CDM under our belt. With all our advances and proprietary platforms, the future looks very bright for the new, much larger creative realities. We expect revenue to accelerate, backlog to grow, and margins to improve, putting us in position for much better results in 2026. I'll turn it back over to George to share some additional comments on our financials.