Creative Realities (NASDAQ:CREX) highlighted the early impact of its November acquisition of CDM during its fourth-quarter earnings call, pointing to sharply higher revenue, improved profitability metrics, and a larger base of recurring software revenue as the company works through integration efforts and targets additional synergies.
Fourth-quarter results reflect CDM acquisition
Chief Executive Officer Rick Mills said the company’s fourth quarter included two months of CDM’s performance following the transaction’s Nov. 7 close, adding that the “sizable nature” of the deal contributed to a longer-than-usual close process for the quarter.
Chief Financial Officer Tamra Koshewa said legacy Creative Realities revenue declined about 6% year-over-year, which she attributed primarily to “project timing and decreased staff.” Hardware revenue increased to $6.6 million from $3.9 million, while service revenue rose to $17.3 million from $7.2 million, reflecting the CDM acquisition and deployment timing.
Koshewa reported operating income of approximately $0.5 million for the quarter, compared with an operating loss of approximately $0.7 million a year earlier. Net loss was $1.9 million, or $0.19 per diluted share, versus a net loss of $2.8 million, or $0.27 per diluted share, in the prior-year quarter. Adjusted EBITDA was $5.2 million, up from $0.5 million a year earlier and $0.8 million in the third quarter, according to Mills.
ARR, SaaS pipeline, and cost structure
Mills said annual recurring revenue run rate (ARR) was $20.1 million as of Dec. 31, 2025, up from $12.3 million at the end of the third quarter. He also said the company has $4.1 million of SaaS under contract expected to come online during the year and be added to its January 2027 SaaS total.
On expenses, Koshewa said sales and marketing costs increased to $2.0 million from $1.4 million year over year, while general and administrative expenses rose to $8.9 million from $4.2 million. She attributed the increase largely to the CDM acquisition, including approximately $3.2 million of expense from CDM, and said about $1.2 million of G&A costs were one-time items such as legal, accounting, and consulting fees and transaction closing costs.
Integration progress and synergy targets
Mills said Creative Realities has “substantially integrated” CDM operations and is making progress toward integration goals. He reiterated previously disclosed expectations for “synergies of at least $10 million U.S. across North America on an annualized basis by the end of this year,” and said the company is “north of 60% of the goal” at present.
As part of the acquisition rationale, Mills emphasized CDM’s footprint in Canada and its customer base across quick-service restaurants, financial institutions, and retail. He also highlighted that the company now owns what he described as Canada’s largest mall retail media network, with “over 750 screens” across “95 shopping destinations,” including “76 of the 100 most productive Canadian shopping centers” and “nine of the 10 busiest malls in Canada.”
Looking ahead, Mills said the company continues to anticipate total revenue exceeding $100 million in 2026 and an adjusted EBITDA margin in the “mid-teens,” with adjusted EBITDA margins expected to be “above 20%” once synergies are realized. He said the company expects free cash flow generation to support debt paydown and deleveraging “as we have done in the past after acquisitions.”
Balance sheet, financing, and interest expense expectations
Koshewa said cash on hand was approximately $1.6 million as of Dec. 31, 2025, compared with $1.0 million at the start of 2025, and noted the company uses a sweep arrangement to apply funds against its revolving debt facility to manage interest expense.
Gross debt and net debt were approximately $43.3 million and $41.7 million, respectively, at quarter-end, compared with $13.0 million and $12.0 million at the start of 2025. Koshewa said the increase largely reflected financing for the CDM acquisition, which she said included:
- a three-year $36 million senior syndicated term loan, and
- $30 million of convertible preferred equity with a $3 conversion price provided by affiliates of North Run Capital.
On interest expense, Koshewa told analysts it would depend on revolver levels but said the term loan would drive the majority of interest expense, which she characterized as “somewhere between a half a million and three-quarters of a million dollars a quarter.”
Commercial momentum: stadium win, AMC media network, and weather-driven Q1 delays
Mills outlined several customer and product updates across business verticals following a sales reorganization under Chief Revenue Officer Dan McAllister. Mills said the sales organization has been structured into vertical teams and is now 42 people, which he described as having “effectively tripled in size.”
Among notable project updates, Mills said the company was awarded a new $8 million stadium project involving “thousands of displays and IPTV,” expected to be completed in the second half of the year. He also said the company is refreshing an IPTV system for a Major League Baseball team and referenced additional stadium opportunities, adding that the IPTV division is expected to “double revenue this year to over $17 million.”
In quick-service restaurants, Mills said the company’s next-generation modular drive-through digital menu board system introduced in January is being deployed for multiple customers, with installations typically running about 10 new locations weekly, or “over 500 a year.”
Mills also announced a $6 million media network project for AMC Theatres lobbies in the U.S., with National CineMedia serving as media representative. He said the rollout will include “1,200-plus screens and large format LEDs” installed through the rest of 2026, and that the network will utilize Reflect CMS and AdLogic AdTech. In response to an analyst question, Mills said AMC had been a long-time CDM customer and characterized it as a “seven-figure customer” for software and content management, noting AMC had historically procured hardware internally. He added the new network includes a revenue share over the next five years.
For the North Carolina Lottery, Mills said the previously announced 10-year, $54 million contract is being deployed and has been migrated to the ReflectView CMS platform, with deployment across more than 1,550 locations expected to be completed in the second quarter, with a few remaining locations in the third quarter.
However, Mills said first-quarter 2026 results were disrupted by severe winter weather across the Midwest and Southeast, which he said delayed $4 million or more of revenue into the second quarter. He said construction on new QSR facilities was suspended for 30 to 45 days in some cases, pushing openings into April, May, and June, and shifting related installation revenue into later quarters. Mills said the delayed revenue was “not lost revenue, however, just delayed.”
Despite the near-term disruption, Mills said he remained bullish and reiterated his view that 2026 revenue will exceed $100 million, with adjusted EBITDA reaching “a run rate of 20% by year-end.”
Separately, Mills noted that in February the company repurchased all of Slipstream’s 1.7 million outstanding warrants for $200,000, saying the move reduced potential share overhang and improved visibility into shares outstanding.
About Creative Realities (NASDAQ:CREX)
Creative Realities, Inc (NASDAQ: CREX) is a technology company specializing in digital engagement solutions for retail, restaurant, corporate and public-facing environments. Headquartered in Dallas, Texas, the company develops and delivers integrated hardware and software platforms designed to create dynamic, interactive experiences. Its offerings include digital signage networks, interactive kiosks and video training systems, all powered by an enterprise-grade content management system that enables clients to deploy, schedule and monitor multimedia content across multiple locations.
The company’s flagship software platform provides real-time analytics, remote asset management and customizable user interfaces that support both touchscreen and traditional display formats.
