Q1 2026 Creative Realities Inc Earnings Call

May 15, 2026

Speaker #1: Good morning. At this time, I would like to welcome everyone to CREATIVE REALITIES 2026 first quarter earnings conference call. This call will be recorded and a copy will be available on the company's website at CRI dot com following its completion.

Operator: Good morning. At this time, I would like to welcome everyone to Creative Realities 2026 Q1 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 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, Tamra Koshewa, Chief Financial Officer, and George Sautter, Chief Strategy Officer and Head of Corporate Development. Mrs. Koshewa, you may proceed.

Speaker #1: CREATIVE REALITIES has prepared to mark 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.

Speaker #1: Mrs. Koshawa, you may proceed.

Speaker #2: 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.

Tamra Koshewa: Thank you, good morning, everyone. Welcome to our earnings call for the Q1 ended 31 March 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 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Tamra Koshewa: 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.

Tamra Koshewa: 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.

Speaker #2: 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.

Speaker #3: 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.

Rick Mills: Thanks, Tamra. Good morning, everybody. We appreciate you joining today's call. I'll start by giving some highlights of our quarterly financials and some, you know, other recent developments. Tamra will go over the results in greater detail. We posted revenue of $16.3 million in Q1 versus $9.7 in the prior year period, including $7.9 million from our CDM acquisition. Our revenue in Q1 was negatively affected by approximately $4 million in revenue. This was due to the extreme cold weather across the Southeast US, 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 Q1 gross profit was $5.6 million as compared to $4.5 million in fiscal 2025.

Rick Mills: Thanks, Tamra. Good morning, everybody. We appreciate you joining today's call. I'll start by giving some highlights of our quarterly financials and some, you know, other recent developments. Tamra will go over the results in greater detail. We posted revenue of $16.3 million in Q1 versus $9.7 million in the prior year period, including $7.9 million from our CDM acquisition. Our revenue in Q1 was negatively affected by approximately $4 million in revenue. This was due to the extreme cold weather across the Southeast US, 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 Q1 gross profit was $5.6 million as compared to $4.5 million in fiscal 2025.

Speaker #3: Tamara will go over the results in greater detail, but we posted revenue of $16.3 million in Q1 versus $9.7 million in the prior year period.

Speaker #3: Including 7.9 million from our CDM acquisition. Our revenue in Q1 was negatively affected by approximately 4 million in revenue. This was due to the extreme cold weather across the southeast US.

Speaker #3: Which will 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.

Speaker #3: Our first quarter gross profit was 5.6 million, as compared to 4.5 million in fiscal 2025. In our consolidated 34.2 versus 45.7 in the prior year period.

Rick Mills: 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. 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, some of the locations will shift from Q2 to Q3. As a result, we expect our Q2 results to improve compared to the Q1, with the remainder of 2026 showing growth acceleration and margin expansion.

Speaker #3: 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 half a million.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Rick Mills: As of 31 March, 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 31 March, compared to net income of $3.4 million for the three months ended 31 March 2026. Adjusted EBITDA was -$0.5 million for Q1 2026 versus a +$0.5 million last year. While Q1 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 wanna say job well done.

Speaker #3: Net loss attributed to common shareholders was 7.9 million for the three-month ended March 31st. Compared to net income of 3.4 million for the three-month ended March 31st, 2026.

Speaker #3: 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.

Speaker #3: 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.

Rick Mills: 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 ERP platform. That will be completed at the end of Q2. I suspect my CFO, Tamra, 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 adjusted EBITDA margins reaching the high teens in the coming quarters.

Speaker #3: That will be completed at the end of Q2. I suspect my CFO, Tamara, is losing a little bit of sleep, and there will be some late nights ahead.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: An adjusted 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.

Rick Mills: 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. 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 Tamra's done to talk about some customer updates and a significant new retail media network.

Rick Mills: 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. 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, djusted 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 Tamra's done to talk about some customer updates and a significant new retail media network.

Speaker #3: 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.

Speaker #3: 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 delever the balance sheet as we have done every time we completed an acquisition.

Speaker #3: 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.

Rick Mills: I'll turn it over to Tamra to share some additional comments on our financials.

Speaker #2: Thanks, Rick. And overview of our financial results for the first quarter of 2026 was provided in our earnings release and our Form 10Q, which included the condensed consolidated balance sheet as of March 31, 2026, the statement of operations, and cash flows for the three months ended March 31, and a detailed reconciliation of net income to EBITDA and adjusted EBITDA for the quarter ended March 31, as well as the preceding four quarters.

Tamra Koshewa: Thanks, Rick. An overview of our financial results for Q1 2026 was provided in our earnings release and our Form 10-Q, which included the condensed consolidated balance sheet as of 31 March 2026, the statement of operations and cash flows for the 3 months ended 31 March, and a detailed reconciliation of net income to EBITDA and Adjusted EBITDA for the quarter ended 31 March, as well as the preceding 4 quarters. While Rick reviewed our operating results briefly, let me provide more context related to our performance and our outlook. In terms of the income statement, Q1 revenue rose to $16.3 million versus $9.7 million in the same period in 2025, with approximately $7.9 million or 48% coming from CDM. Revenue from our legacy CRI business decreased approximately 15% year-over-year.

Tamra Koshewa: Thanks, Rick. An overview of our financial results for Q1 2026 was provided in our earnings release and our Form 10-Q, which included the condensed consolidated balance sheet as of 31 March 2026, the statement of operations and cash flows for the 3 months ended 31 March, and a detailed reconciliation of net income to EBITDA and adjusted EBITDA for the quarter ended 31 March, as well as the preceding 4 quarters. While Rick reviewed our operating results briefly, let me provide more context related to our performance and our outlook. In terms of the income statement, Q1 revenue rose to $16.3 million versus $9.7 million in the same period in 2025, with approximately $7.9 million or 48% coming from CDM. Revenue from our legacy CRI business decreased approximately 15% year-over-year.

Speaker #2: While Rick reviewed our operating results briefly, let me provide more context related to our performance and our outlook. In terms of the income statement, first quarter revenue rose to $16.3 million versus $9.7 million in the same period in 2025, with approximately $7.9 million, or 48%, coming from CDM.

Speaker #2: Revenue from our legacy CRI business decreased approximately 15% year over year. While there were new installs in the quarter, there was a decrease in our SaaS from expiration of certain customer contracts in 2025.

Tamra Koshewa: While there were new installs in the quarter, there was a decrease in our SaaS from expiration of certain customer contracts in 2025. As Rick mentioned, several large planned installations were delayed in the quarter due to snowstorms and other poor weather conditions across much of North America. We expect to catch up on these installs in Q2 and Q3, driving a healthy uptick in business both sequentially and year over year. Hardware revenue in Q1 rose to $4.6 million versus $3.4 million in the prior year period, reflecting both new deployments and the inclusion of CDM. Service revenues increased 86% to $11.8 million from $6.3 million in fiscal 2025, reflecting the CDM acquisition, offset partially by expired customer contracts.

Speaker #2: As Rick mentioned, several large planned installations were delayed in the quarter due to snowstorms and other poor weather conditions. Across much of North America, we expect to catch up on these installs in the second and third quarters driving a healthy uptick in business, both sequentially and year over year.

Speaker #2: Hardware revenue in the first quarter rose to 4.6 million versus 3.4 million in the prior year period, reflecting both new deployments and the inclusion of CDM.

Speaker #2: Service revenues increased 86% to $11.8 million from $6.3 million in fiscal 2025, reflecting the CDM acquisition, offset partially by expired customer contracts. Consolidated gross profit was $5.6 million for the fiscal 2026 first quarter versus $4.5 million in the prior year period.

Tamra Koshewa: Consolidated gross profit was $5.6 million for the fiscal 2026 Q1 versus $4.5 million in the prior year period. Consolidated gross margin was 34.2% versus 45.7% in the fiscal 2025 Q1. Gross margin on hardware revenue was 14% in Q1 of fiscal 2026 as compared to 32.1% in the prior year period due to an unusually higher mix of QSR deployments and certain one-time costs of approximately a half a million dollars associated with transitioning away from an outsourced CDM installer. Gross margin on service amounted to 42% versus 53% in the fiscal 2025 Q1, driven by the expiration of certain customer contracts in 2025. We anticipate an increase in margins going forward due to revenue growth, synergy realization, and improved operating cost leverage across the company.

Speaker #2: Consolidated gross margin was 34.2% versus 45.7% in the fiscal '25 first quarter. Gross margin on hardware revenue was 14% in Q1 of fiscal 2026 as compared to 32.1% in the prior year period due to an unusually higher mix of QSR deployments and certain one-time costs of approximately half a million dollars associated with transitioning away from an outsourced CDM installer.

Speaker #2: Gross margin on service amounted to 42% versus 53% in the fiscal 25 first quarter. Driven by the expiration of certain customer contracts in 2025.

Speaker #2: We anticipate an increase in margins going forward due to revenue growth, synergy realization, and improved operating cost leverage across the company. Sales and marketing expenses in the first quarter rose to $2.9 million versus $1.2 million in the prior year period, while general and administrative expenses increased to $8.9 million versus $3.9 million in fiscal 2025, primarily reflecting the acquisition of CDM, which contributed approximately $3.8 million of G&A expense.

Tamra Koshewa: Sales and marketing expenses in Q1 rose to $2.9 million versus $1.2 million in the prior year period, while general and administrative expenses increased to $8.9 million versus $3.9 million in fiscal 2025, primarily reflecting the acquisition of CDM, which contributed approximately $3.8 million of G&A expense. As Rick indicated, we remain on track to achieving the $10 million of synergies previously announced for fiscal 2026. We also continue to invest in our media business and other technology initiatives meant to drive increased growth across the company. We posted an operating loss of approximately $6.2 million in Q1 2026 compared to an operating loss of $700,000 in fiscal 2025, reflecting the items I just discussed.

Speaker #2: However, as Rick indicated, we remain on track to achieving the 10 million dollars of synergies previously announced for fiscal 2026. We also continue to invest in our media business and other technology initiatives meant to drive increased growth across the company.

Speaker #2: We posted an operating loss of approximately 6.2 million in the first quarter of 2026 compared to an operating loss of 700,000 in fiscal 2025, reflecting the items I just discussed.

Speaker #2: CRI reported a net loss of $7.5 million and a net loss attributable to common shareholders of $7.9 million, or $0.74 per diluted common share, in the quarter ended March 31, versus net income of $3.4 million, or $0.32 per diluted common share, in the prior year period.

Tamra Koshewa: CRI reported a net loss of $7.5 million and a net loss attributable to common shareholders of $7.9 million or $0.74 per diluted common share in the quarter ended 31 March versus net income of $3.4 million or $0.32 per diluted common share in the prior year period. As a reminder, the fiscal 2025 Q1 included a $4.8 million gain on the settlement of our prior contingent liability with the former stockholders of Reflect Systems. Adjusted EBITDA was -$500,000 in Q1 2026 as compared to $500,000 income in the prior year period. We anticipate EBITDA and cash flow to improve for the remainder of fiscal 2026, given the forecasted business growth and cost initiatives previously discussed.

Speaker #2: As a reminder, the fiscal 2025 first quarter included a $4.8 million gain on the settlement of our prior contingent liability with a former stockholder of Reflex Systems.

Speaker #2: Adjusted EBITDA was negative 500,000 in the first quarter of 2026 as compared to 500,000 income in the prior year period. We anticipate EBITDA and cash flow to improve for the remainder of fiscal 2026 given the forecasted business growth and cost initiatives previously discussed.

Speaker #2: When appropriate, we intend to use the cash generation to deliver our balance sheet and strengthen our financial flexibility as we've done in the past.

Tamra Koshewa: When appropriate, we intend to use the cash generation to delever our balance sheet and strengthen our financial flexibility as we've done in the past. This remains a key long-term priority for the company. In terms of the balance sheet, as of 31 March 2026, the company had cash on hand of approximately $2.3 million versus $1.6 million at the start of 2026. Our debt stood at $47 and a half million at the end of Q1 as compared to $44 million at the beginning of the fiscal year. We had approximately $13 million remaining in available liquidity under our revolving credit facility as of 31 March 2026. Going forward, as I just mentioned, we remain dedicated to using cash generation when possible to lower our debt and migrate to an optimized capital structure in support of financial flexibility.

Speaker #2: This remains a key long-term priority for the company. In terms of the balance sheet, as of March 31, 2026, the company had cash on hand of approximately 2.3 million versus 1.6 million at the start of 2026.

Speaker #2: Our debt stood at $47.5 million at the end of the first quarter as compared to $44 million at the beginning of the fiscal year.

Speaker #2: We had approximately 13 million dollars remaining in available liquidity under our revolving credit facility as of March 31, 2026. Going forward, as I just mentioned, we remained dedicated to using cash generation when possible to lower our debt and migrate to an optimized capital structure in support of financial flexibility.

Speaker #2: However, we will also continue to invest in the business to drive growth and improve technology applications across the organization. I will turn it back to Rick for additional comments around customer-specific activities.

Tamra Koshewa: However, we will also continue to invest in the business to drive growth and improve technology applications across the organization. I will turn it back to Rick for additional comments around customer-specific activities.

Speaker #1: Thanks, Dam. Let's talk about some customer updates. First, I'd like to announce that we are the official digital signage provider for the Tennessee Titans and the new Nissan Stadium, which is under construction in Nashville, Tennessee.

Rick Mills: Thanks, Tamara. Let's talk about some customer updates. First, I'd like to announce that we are the official digital signage provider for the Tennessee Titans in the new Nissan Stadium, which is under construction in Nashville, Tennessee. We talked about this previously. This is an $8.5 million deal. It includes thousands of displays and a full IPTV solution throughout the entire venue. Most of this revenue will be recognized in 2026. I think the official stadium opening's in February. We expect a little bit to trail into January, February, you know, punch list as the stadium gets open. Second, we'd like to announce Dairy Queen in North America, not only the US, but also Canada.

Speaker #1: We talked about this previously, but this is an $8.5 million deal. It includes thousands of displays and a full IPTV solution throughout the entire venue.

Speaker #1: Most of this revenue will be recognized in 2026. I think the official stadium openings in February so we expect a little bit to trail into January, February, punch list as the stadium gets open.

Speaker #1: Second, we'd like to announce Dairy Queen in North America. Not only the U.S., but also Canada. This is the QSR that we did not have the contract signed when we reported our Q4 results.

Rick Mills: This is the QSR that we did not have the contract signed when we reported our Q4 results. We acquired this business as a result of a very exhausting, tough RFP process, which ultimately culminated in us being awarded the business. We were actually awarded and given the verbal award the same month as our closing of the CDM acquisition. Here's what makes this unique. The prior provider of Dairy Queen was Cineplex Digital Media or CDM. We expect to expand the annual revenue, probably gonna grow between $1 and 2 million a year on an annual basis, mostly primarily driven by our drive-thru product. As of today, there's 4,700 approximately locations across the US and Canada. As we've evaluated, only 2 have digital drive-thrus. The demand for that product is pretty significant inside this account. Another customer, I guess third, if you will.

Rick Mills: This is the QSR that we did not have the contract signed when we reported our Q4 results. We acquired this business as a result of a very exhausting, tough RFP process, which ultimately culminated in us being awarded the business. We were actually awarded and given the verbal award the same month as our closing of the CDM acquisition. Here's what makes this unique. The prior provider of Dairy Queen was Cineplex Digital Media or CDM. We expect to expand the annual revenue, probably gonna grow between $1 million and $2 million a year on an annual basis, mostly primarily driven by our drive-thru product. As of today, there's 4,700 approximately locations across the US and Canada. As we've evaluated, only two have digital drive-thrus. The demand for that product is pretty significant inside this account. Another customer, I guess third, if you will.

Speaker #1: We acquired this business as a result of a very exhausting, tough RFP process, which ultimately cumulated in us being awarded the business. We were actually awarded and given the verbal award the same month as our closing of the CDM acquisition.

Speaker #1: Here is what makes this unique. The prior provider of Dairy Queen was Cineplex Digital Media, or CDM. So we expect to expand the annual revenue probably going to grow between one and two million a year, on an annual basis, mostly primarily driven by our drive-thru product.

Speaker #1: As of today, there's 4,700 approximately locations across the U.S. and Canada. And as we've evaluated, only two have digital drive-thrus. So the demand for that product is pretty significant inside this account.

Speaker #1: Another customer, I guess third if you will, on April 13th we announced a project to expand and modernize the AMC Theater's in-lobby media footprint across 285 locations nationwide.

Rick Mills: 13 April, we announced a project to expand and modernize the AMC Theatres in-lobby media footprint across 285 locations nationwide. Well, I wanna give a little additional color on that event or that announcement. This is a partnership between CRI and National CineMedia. National CineMedia is the leading cinema advertising platform in the US. This new initiative will turn the lobby at the participating theaters into a network of digital displays that will deliver the high-impact video brand storytelling and interactive experiences. These upgrades create a premium video platform that expands opportunities for advertisers to reach audiences both in the auditorium and throughout the entire theater location. We will install this network, it's approximately 1,200 screens and large format LEDs throughout the rest of 2026. This media network utilizes our CMS platform, including our Reflect CMS and our AdLogic ad-tech solution.

Speaker #1: Well, I want to give a little additional color on that event or that announcement. This is a partnership between CRI and National Cine Media.

Speaker #1: National Cine Media is the leading cinema advertising platform in the U.S. This new initiative will turn the lobby at the participating theaters into a network of digital displays that will deliver the high-impact video brand storytelling and interactive experiences.

Speaker #1: These upgrades create a premium video platform that expands opportunities for advertisers to reach audiences both in the auditorium and throughout the entire theater location.

Speaker #1: We will install this network. It's approximately 1,200 screens and large format LEDs throughout the rest of 2026. This media network utilizes our CMS platform, including our Reflex CMS and our AdLogic AdTech solution.

Speaker #1: Expected revenue of this is $6 to $7 million, and we expect to realize most, if not all, this year. However, think of the growth of this network to other cinema theater chains.

Rick Mills: Expected revenue of this is $6 to 7 million. We expect to realize most, if not all, this year. However, think of the growth of this network to other cinema theater chains or locations such as Cinemark and some of the other competitors, and is what we expect will ultimately happen. Okay, next customer. I wanna talk about 7 Brew. This account continues to grow. My last conversation with our account team indicated that in discussion with the customer, 7 Brew, they are on track to open 750 new locations this year. Well, each location's about $8,000 to us when it gets first opened. However, it is the ongoing SaaS that keeps growing with each new location. Finally, I wanna talk about a retail media network. We are in the final contracting stages of a significant retail media network deployment.

Speaker #1: Change or locations such as Cinemark and some of the other competitors is what we expect will ultimately happen. Okay, next customer. I want to talk about Seven Brew.

Speaker #1: This account continues to grow. My last conversation with our account team indicated that in discussion with the customer, Seven Brew, they are on track to open 750 new locations this year.

Speaker #1: Well, each location's about $8,000 to us when it gets first opened. However, it is the ongoing SaaS that keeps growing with each new location.

Speaker #1: And then, finally, I want to talk about a retail media network. We are in the final contracting stages of a significant retail media network deployment.

Rick Mills: While I can't yet discuss specifics, what I can tell you is this would result in a substantial sales of additional hardware, SaaS, and ad tech revenue. We understand it today, this would be the largest retail media network deployed in 2026, measured by the number of screens across the US. Think of it, in this year alone, it would be about 10,000 screens, plus an additional 20,000 data gathering devices. By year-end, we would be monitoring about 30,000 devices. By mid-2027, it would be in excess or approximately 60,000 devices. This solidifies CRI as the leading retail media network provider in North America. There's certainly more to come about this announcement as we finalize the contracts over the next three, four weeks.

Speaker #1: Well, I can't yet discuss specifics. What I can tell you is this would result in a substantial sales of additional hardware SaaS and AdTech revenue.

Speaker #1: As we understand it today, this would be the largest retail media network deployed in 2026, measured by the number of screens across the U.S.

Speaker #1: Think of it in this year alone, it would be about 10,000 screens. Plus, an additional 20,000 data gathering devices. So by year end, we would be monitoring about 30,000 devices.

Speaker #1: By mid-2027, it would be in excess or approximately 60,000 devices. This solidifies CRI as the leading retail media network provider in North America and they're certainly more to come about this announcement as we finalize the contracts over the next three, four weeks.

Speaker #1: I hope everyone can grasp the significant change in CRI as an operating entity. Let's review them. Number one, our position in the marketplace. I think it's very clear we are now clearly one of the leaders, if not the leader, in the U.S.

Rick Mills: I hope everyone can grasp the significant change in CRI as an operating entity. Let's review then. Number 1, our position in the marketplace. I think it's very clear we are now clearly 1 of the leaders, if not the leader in the US. Number 2, the revenue growth. Rapid expansion of revenue, we expect it to rapidly expand throughout the balance of this year. Number 3, the management team. I wanna repeat that, the management team. I talked a lot about it on our last call, this is a first-class management team in place running the business. Number 4, operational excellence. We continue to excel in deployment when weather doesn't get in our way. Last but not least, the financial discipline and commitment to de-lever the balance sheet. We are very focused on that.

Speaker #1: Number two, the revenue growth. Rapid expansion of revenue. We expect it to rapidly expand throughout the balance of this year. Number three, the management team.

Speaker #1: And I want to repeat that, the management team. I talked a lot about it on our last call, but it's a first-class management team in place running the business.

Speaker #1: Number four, operational excellence. We continue to excel in deployment. When weather doesn't get in our way. So and then last but not least, the financial discipline and commitment to deliver the balance sheet.

Speaker #1: We are very focused on that. Our pipeline remains robust and we expect to continue to land many new opportunities. We're in excellent position to post higher growth and improved operating results going forward.

Rick Mills: Our pipeline remains robust, and we expect to continue to land many new opportunities. We're in excellent position to post higher growth and improved operating results going forward. Again, we remain on track for our best year ever. With that, we'll now move to the Q&A portion of the call. Operator, I'll turn it back to you.

Speaker #1: And again, we remain on track for our best year ever. With that, we'll now move to the Q&A portion of the call. Operator, I'll turn it back to you.

Speaker #2: If you'd like to ask a question at this time, please press star 11 on your touch-tone phone and wait for your name to be announced.

Operator: If you'd like to ask a question at this time, please press star one one on your touchtone phone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Jason Kreyer with Craig-Hallum.

Speaker #2: To withdraw your question, please press star 1-1 again. Our first question comes from Jason Cryer with Craig Hallum.

Speaker #3: Wonderful. Thank you for taking my questions. Lots of good content in there. Rick, maybe we'll start on stadiums. You talked about the win with the Tennessee Titans, so congratulations on that.

Jason Kreyer: Wonderful. Thank you for taking my questions. Lots of good content in there. Rick, maybe we'll start on stadiums. You talked about the win with the Tennessee Titans. Congratulations on that.

Speaker #3: We've seen you have success in multiple leagues, right? You've already had success in basketball and hockey and others. And it seems like when you've landed one, you do a really good job of finding two or three or five other teams in that league that need help, need a refresh.

Rick Mills: Yep.

Jason Kreyer: We've seen you have success in multiple leagues, right? You've already had success in basketball and hockey and others. It seems like when you've landed one, you do a really good job of finding two or three or five other teams in that league that need help, need a refresh. Maybe talk about the opportunity in football and your ability to expand beyond now kind of landing a deal with the Titans. Thanks.

Speaker #3: So maybe talk about the opportunity in football and your ability to expand beyond now, kind of landing a deal with the Titans. Thanks.

Speaker #4: Sure. Thanks, Jason. We were really pleased to land this stadium. It's the second stadium where our software solutions that we deploy are controlling all of the screens.

Rick Mills: Sure. Thanks, Jason. You know, we were really pleased to land this stadium. It's the second stadium where our software solutions that we deploy are controlling all of the screens. Of course, our first one in the NFL was Dallas Cowboys, where we continue to manage 3,300 screens throughout the building. We're excited to have the Titans. Cracking the NFL is a big deal, and we are in pursuit of multiple other NFL teams for either, A, upgrades of the entire stadium refresh, or where we're seeing quicker penetration is taking over the menu board operations within those stadiums. It continues to grow. I think we talked last conference call that that business unit, our IPTV group, would probably double this year, and that currently appears to be on track.

Speaker #4: Of course, our first one in the NFL was Dallas Cowboys, where we continued to manage 3,300 screens throughout the building. So we're excited to have the Titans.

Speaker #4: Cracking the NFL is a big deal. And we do expect we are in pursuit of multiple other NFL teams for either A, upgrades of the entire stadium refresh, or where we're seeing quicker penetration is taking over the menu board operations within those stadiums.

Speaker #4: So it continues to grow. I think we talked last conference call that that business unit our IPTV group would probably double this year. And that currently appears to be on track.

Speaker #3: Great. I'll shift to the RMN opportunity that you'd highlighted at the end there. So maybe just a couple quick questions, and if you can expand on that.

Jason Kreyer: Great. I'll shift to the RMN opportunity that you highlighted at the end there. Maybe just a couple quick, you know, couple quick questions if you can expand on that. You know, is this a customer that you're already familiar with, that you've worked with in the past? Is the process still competitive at this point? Then if you get that win, when would you expect that to start to kick off?

Speaker #3: Is this a customer that you're already familiar with, that you've worked with in the past? Is the process still competitive at this point? And then, if you get that win, when would you expect that to start to kick off?

Speaker #4: Okay. Number one, the process is no longer competitive. We have received a verbal award. We are committed. We probably have certainly north of 10 people, almost full-time, working on preparing for this project.

Rick Mills: Okay. The Number one, the process is no longer competitive. We have received a verbal award. We are committed. We probably have certainly north of 10 people, almost full-time, working on preparing for this project. We anticipate deploying in June or potentially shipping product in June and deploying in July. This is coming fast and furious. We actually did a total store takeover, because this project started with somebody else in the industry as a competitor, who fell down. They came to us, and so we actually did a complete total store takeover. I believe it was Wednesday of this week, and that was a success, and we expect to take over the remaining test stores in the month of June and begin full rollout in July.

Speaker #4: We anticipate deploying in June or potentially shipping product in June and deploying in July. So this is coming fast and furious. We actually did a total store takeover because this project started with somebody else in the industry as a competitor who fell down.

Speaker #4: They came to us. And so we actually did a complete total store takeover, I believe it was Wednesday of this week. And that was a success.

Speaker #4: And we expect to take over the remaining test stores in the month of June and begin full rollout in July.

Speaker #3: I mean, this seems like this could be a kind of a transformational deal for CRI. Can you talk about maybe, first, additional costs that you may have to take on to onboard a deal like that?

Jason Kreyer: I mean, this seems like this could be a kind of a transformational deal for CRI. Can you talk about maybe first additional cost that you may have to take on to onboard a deal like that? With that, you know, what does this mean in terms of onboarding or in terms of reference ability, putting CRI on the map and really scaling up your retail media business?

Speaker #3: And then with that, what does this mean in terms of onboarding or in terms of referenceability, putting CRI on the map and really scaling up your retail media business?

Speaker #4: Well, we think it's huge. I mean, the reference ability of this is second to none. It would be considered, again—let's be clear, Jason.

Rick Mills: We think it's huge. I mean, the reference ability of this is second to none. It would be considered again, let's be clear, Jason. We gotta go execute, right? I gotta go get it done. Let's assume we're successful, and I think we will be, and we go get it done. This will be considered the top-shelf, first-class retail media network with full closed loop attribution at the cash register for this retailer. Nobody else has done that in the US, and here we are at the forefront of getting that done.

Speaker #4: We’ve got to go execute, right? I’ve got to go get it done. But let’s assume we’re successful—and I think we will be—and we go get it done.

Speaker #4: This will be considered the top-shelf, first-class retail media network with full closed-loop attribution at the cash register for this retailer. And nobody else has done that in the U.S.

Speaker #4: And here we are at the forefront of getting that done.

Speaker #3: Good luck as you close out negotiations there. Thanks for the time, Rick.

Jason Kreyer: Good luck as you close out negotiations there. Thanks for the time, Rick.

Speaker #4: Yep. Thank you.

Rick Mills: Yep. Thank you.

Speaker #2: Our next question comes from Brian Kinslinger with Alliance Global Partners.

Operator: Our next question comes from Brian Kinstlinger with Alliance Global Partners.

Speaker #5: Great. Thanks so much. Congrats on all the great business development. In terms of the retail media network follow-up, maybe you can size what a TCV looks like for 60,000 devices of which it sounds like 10,000 are screens and what maybe a ballpark what a recurring revenue opportunity looks like for something that large?

Brian Kinstlinger: Great. Thanks so much, and congrats on all the great business development. In terms of the retail media network follow-up, maybe you can size what a TCV looks like for 60,000 devices, of which it sounds like 10,000 are screens? What maybe a ballpark, what a recurring revenue opportunity looks like for something that large?

Speaker #4: Great question. In terms of it, put it in size. This year, we think it's 10,000 screens and about 20,000 data-gathering analytic devices will be deployed.

Rick Mills: Great question. You know, put it in size, this year we think it's 10,000 screens and about 20,000 data gathering analytic devices will be deployed, right, to map out the shopper journey as they manage through a retail environment. All total, by mid-2027, the customer expects it to be about 60,000 devices, which is roughly 25,000 screens, and then 35,000 data gathering devices. In terms of range of magnitude of ongoing SaaS, we would expect that to be in the $6 to 8 million range. Still being a little bit adjusted and negotiated as we finalize the contract, but we expect it will add $6 to 8 million, we believe, when it is fully deployed.

Speaker #4: Right? To map out the shopper journey as they manage through a retail environment. All total by mid-2027, the customer expects it to be about 60,000 devices which is roughly 25,000 screens and then 35,000 data-gathering devices.

Speaker #4: In terms of range of magnitude of ongoing SaaS, we would expect that to be in the 6 to 8 million range. Still being a little bit adjusted in negotiated as we finalize the contract, but we expect it will add 6 to 8 million we believe when it is fully deployed.

Brian Kinstlinger: Great.

Speaker #5: Great. Sounds great. And then in terms of Gary Quinn, what was the current revenue contribution as it related to CDM and maybe that'll help us size the actual contract value on top of that?

Rick Mills: Yep.

Brian Kinstlinger: That sounds great. Then in terms of Dairy Queen, what was the current revenue contribution as it related to CDM? Maybe, you know, that'll help us size the actual contract value on top of that.

Speaker #4: So, I'm converting from Canadian, Brian, so forgive me if I'm a little bit off. But before, it was about $2 to $2.5 million a year.

Rick Mills: I'm converting from Canadian, Brian, so forgive me if I'm a little bit off. Before, it was about CAD 2 to 2.5 million a year. That was a combination of SaaS and then indoor deployments because CDM was doing the indoor menu boards. As it now has expanded and includes the drive-thru, we expect that CAD 2 to 2.5. Tamra, I believe that number was about right, correct? That's in US, so. Yeah, in US, right. Yeah. It's, it was historically $2.5. We now expect it to be somewhere in the $4 to 5. That growth rate, Brian, is driven predominantly Well, some additional SaaS, but mostly just the actual pure hardware of drive-thru going in.

Speaker #4: That was a combination of SaaS, and then indoor deployments because CDM was doing the indoor menu boards. As it now has expanded and includes the drive-thru, we expect that two to two and a half Canadian.

Speaker #4: Tamara, I believe that number was about right. Correct?

Speaker #6: That's about in that's in US, though.

Speaker #4: Yeah, in the U.S.—right. But it was historically 2, 2 and a half. We now expect it to be somewhere in the 4 to 5 range.

Speaker #4: And that growth rate, Brian, is driven predominantly—well, some additional SaaS, but mostly just the actual pure hardware of drive-thru going in. And obviously, the benefit every time a drive-thru goes in, it's somewhere between 3 and 7 screens get added to the SaaS pool for every drive-thru.

Rick Mills: Obviously, the benefit, every time a drive-thru goes in, it's somewhere between 3 and 7 screens get added to the SaaS pool for every drive-thru. The difference of 3 to 7, it just depends, is it a single drive-thru or a double?

Speaker #4: The difference of 3 to 7, it just depends is it a single drive-thru or a double.

Speaker #5: Great. And then, last question for me on the drive-thru business: when you think about North America, what percentage of QSR has drive-thru digital now?

Brian Kinstlinger: Great. Last question from me on the drive-thru business. When you think about North America, what percentage of QSR has drive-thru digital now? Are we halfway through that?

Speaker #5: Are we halfway through that? In the market? Are we not?

Rick Mills: No

Brian Kinstlinger: in that market? Are we not?

Speaker #4: That's a great question. Again, this is maybe a little bit dated material because I haven't looked at it in the last six months or so.

Rick Mills: That's a great question. Again, this is maybe a little bit dated material because I haven't looked at it in the last six months or so. There's approximately 220,000, 210,000 QSRs with drive-thru in the US. We believe the penetration today is less than 40%. We believe they're 60% of the market. When you look at it, the two people that are the most dominant is McDonald's and Taco Bell, who fully rolled out digital. They actually make up the largest component of the installed base of the, you know, 40% that's out there installed.

Speaker #4: But there's approximately 220, 210,000 QSRs with drive-thru in the US. We believe the penetration today is less than 40%. We believe there's 60% of the market.

Speaker #4: And when you look at it, the two people that are the most dominant are McDonald's and Taco Bell, who fully rolled out digital. So they actually make up the largest component of the installed base of the 40% that's out there installed.

Speaker #5: Got it. All right. Great. Thanks for taking my questions.

Brian Kinstlinger: Got it. All right, great. Thanks for taking my questions.

Speaker #4: Sure. Thanks.

Rick Mills: Sure. Thanks.

Speaker #2: I'm showing no further phone questions at this time. Do we have any questions over the web?

Operator: I'm showing no further phone questions at this time. Do we have any questions over the web?

Speaker #5: Yes. Thank you. Rick, we have a question from Kevin Sheldon via email as to whether, for customers with a franchisee system or a coalition approach to retail media networks, Creative Realities or the customer continues to follow up with those franchisees or other prospects that did not opt in for a program when initially presented with an opportunity to do so.

George Sautter: Yes. Thank you. Rick, we have a question from Kevin Sheldon via email as to whether for customers with a franchisee system or a coalition approach to retail media networks, Creative Realities or the customer continues to follow up with those franchisees or other prospects that did not opt in for a program when initially presented with an opportunity to do so.

Speaker #4: Yeah. Great question, George and Kevin, so thank you for that. The answer is yes. Typically, when we first engage with a customer, of course, there's pent-up demand and there's a strong upfront rollout process as we fulfill the demand.

Rick Mills: Great, great question, George and Kevin. Thank you for that. The answer is yes. We typically, when we first engage with a customer, of course, there's pent-up demand and there's a strong upfront rollout process as we fulfill the demand. Once that demand kind of calms down a little bit, we meet with the franchisor. We go over the list of who are the franchisees that have multiple locations that did not opt in or has not installed digital. Typically, it's joint work between us and the franchisor to have discussions, meet with that franchisee, and ultimately get them to opt into the program. Because installing digital in the drive-thru specifically or indoor, it improves throughput, it improves profitability. Improved profitability at the franchisee benefits not only the franchisee but the franchisor.

Speaker #4: Once that demand kind of calms down a little bit, yeah, we meet with the franchisor. We go over the list of who are the franchisees that have multiple locations that did not opt in or have not installed digital.

Speaker #4: And then typically, it's joint work between us and the franchisor to have discussions, meet with that franchisee, and ultimately get them to opt into the program.

Speaker #4: Because installing digital in the drive-thru specifically, or indoor, it improves throughput. It improves profitability. And improved profitability at the franchisee benefits not only the franchisee, but the franchisor.

Speaker #4: So it's really a joint effort. But yes, we do do that.

Rick Mills: It's really a joint effort. Yes, we do that.

Speaker #5: Great. Thanks, Rick. There are no other questions via email.

George Sautter: Great. Thanks, Rick. There are no other questions via email.

Speaker #4: Okay. Well, first, finally, I want to conclude the call. I want to thank all our shareholders, clients, partners, and employees. And again, this was a really interesting quarter for our company as we combined 250 people into one organization and did the reorganization, and so again, I just want to say a shout-out to all the CRI employees for all the hard work.

Rick Mills: Okay. Well, first, you know, finally, I wanna, you know, conclude the call. I wanna thank all our shareholders, clients, partners, and employees. Again, this was a real interesting quarter for our company as we combined 250 people into one organization and did the reorganization. Again, I just wanna say, you know, a shout-out to all the CRI employees for all the hard work. This has fundamentally changed our company, and we expect to do nothing but continue to grow from here forward. Thanks for joining the call. We look forward to speaking to you again next quarter.

Speaker #4: This is fundamentally changed our company and we expect to do nothing but continue to grow from here forward. Thanks for joining the call. We look forward to speaking to you again next quarter.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.