Creative Realities, Inc.

Good morning. At this time, I would like to welcome everyone to Creative Reality's 2026 First Quarter Earnings Conference Call. This call will be recorded and a copy will be available on the company's website at cri.com following its completion. Creative Reality's 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, Tamara Koshawa, Chief Financial Officer, and George Sautter, Chief Strategy Officer and Head of Corporate Development. Ms. Koshawa, you may proceed.

Thank you, and good morning, everyone. Welcome to our earnings call for the first quarter, ended March 31, 2026. 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 our management or operations 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 10k 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. 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. A reconciliation of GAAP to non-GAAP measures is included in our public filings and in our earnings release that was issued this morning. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities.

Thanks, Tamara. Good morning, everybody. We appreciate you joining today's call. I'll start by giving some highlights of our quarterly financials and some other recent developments. Tamara will go over the results in greater detail, but we posted revenue of $16.3 million in Q1 versus $9.7 in the prior year period, including $7.9 million from our CDM Our revenue in Q1 was negatively affected by approximately $4 million in revenue. This was due to the extreme cold weather across the southeast U.S., which, well, typically it slows down all new construction, and more specifically in North Carolina in February due to a major snowstorm that paralyzed most of the state. Our first quarter gross profit was 5.6 million as compared to 4.5 million in fiscal 2025. And our consolidated gross margin was 34.2 versus 45.7 in the prior year period. The gross profit and gross margin were affected by a one-time event as we terminated a CDM legacy subcontractor, which reduced gross margin by approximately a half a million. The approximate $4 million of revenue, it's not lost, it's just delayed. February and March new location openings were pushed out until April and May. Plus, we had 500 locations we were installing for a lottery customer that were going to be installed in Q1. This revenue shifted from Q1 into Q2. and then some of the locations will shift from Q2 to Q3. As a result, we expect our second quarter results to improve compared to the first quarter, with the remainder of 2026 showing growth acceleration and margin expansion. As of March 31st, we had an annual recurring revenue run rate, or ARR as we call it, of 20.1 million. With an additional $4 million of ARR contracted and in place already, that ARR will start at year end. Net loss attributed to common shareholders was $7.9 million for the three months ended March 31st, compared to net income of $3.4 million for the three months ended March 31st, 2026. Adjusted EBITDA was negative 0.5 million for the first quarter of 2026 versus a positive 0.5 million last year. While the first quarter had some weather challenges, as we discussed, we also completed the consolidation and reorganization of the entire CRI and CDM combined workforce, including all sales, operational, and support functions. To all the folks at newly combined CRI, I just want to say job well done. Wow, it was a lot of tough work. The final integration challenge in the migration of the legacy is the migration of the legacy CDM financial accounting systems onto our NetSuite's ERP platform. That will be completed at the end of Q2. I suspect my CFO camera is losing a little bit of sleep, and there will be some late nights ahead. However, I've seen her in action. I've seen the plan. We have done this multiple times before, and I have absolute confidence this will happen on time and the results will be first rate. Let me again state with a very bullish attitude, we remain on track for our best year ever with the company revenue exceeding $100 million. and adjust the EBITDA margins reaching the high teens in the coming quarters. We remain on track to realize the pre-merger combination cost savings of at least $10 million on an annualized basis by the end of 2026. Now, not all of that will show up this year as we are still in process of executing on those cost synergies. In March, We had achieved over 60% of the goal, and each month we achieve one more step in that journey. As a reminder, once all synergies are realized, adjusted EBITDA margins are expected to be above 20%, and free cash flow generation will allow us to pay down debt and de-lever the balance sheet, as we have done every time we completed an acquisition. I'll come back in a minute or so when Tamara's done to talk about some customer updates and a significant new retail media network. But I'll turn it over to Tamara to share some additional comments on our financials.