Creative Realities (NASDAQ:CREX) reported sharply higher first-quarter revenue following its acquisition of Cineplex Digital Media, while management said weather-related installation delays and integration costs weighed on margins and profitability.
The digital signage and retail media technology company posted first-quarter revenue of $16.3 million, up from $9.7 million in the prior-year period. Chief Executive Officer Rick Mills said the quarter included $7.9 million of revenue from the CDM acquisition.
“We had 500 locations we were installing for a lottery customer that were going to be installed in Q1,” Mills said. “This revenue shifted from Q1 into Q2, some of the locations will shift from Q2 to Q3.”
Margins Pressured by Mix, One-Time Costs
Gross profit rose to $5.6 million from $4.5 million a year earlier, while consolidated gross margin declined to 34.2% from 45.7%. Mills said gross profit and margin were affected by a one-time event tied to the termination of a CDM legacy subcontractor, which reduced gross margin by about $500,000.
Chief Financial Officer Tamra Koshewa said hardware revenue increased to $4.6 million from $3.4 million, reflecting new deployments and the addition of CDM. Service revenue rose 86% to $11.8 million from $6.3 million, also reflecting the acquisition, partially offset by expired customer contracts.
Koshewa said hardware gross margin fell to 14% from 32.1% due to a higher mix of quick-service restaurant deployments and the one-time costs associated with transitioning away from an outsourced CDM installer. Service gross margin declined to 42% from 53%, driven by the expiration of certain customer contracts in 2025.
Sales and marketing expenses rose to $2.9 million from $1.2 million, and general and administrative expenses increased to $8.9 million from $3.9 million, primarily reflecting the CDM acquisition. The company reported an operating loss of approximately $6.2 million, compared with an operating loss of $700,000 a year earlier.
Creative Realities reported a net loss attributable to common shareholders of $7.9 million, or $0.74 per diluted share, compared with net income of $3.4 million, or $0.32 per diluted share, in the prior-year period. Koshewa noted that the prior-year quarter included a $4.8 million gain related to the settlement of a contingent liability with former stockholders of Reflect Systems.
Adjusted EBITDA was negative $500,000 in the first quarter, compared with positive $500,000 a year earlier.
Management Reiterates 2026 Outlook
Mills said the company expects second-quarter results to improve from the first quarter, with growth acceleration and margin expansion through the remainder of 2026. He said Creative Realities remains on track for what he called its “best year ever,” with revenue expected to exceed $100 million and adjusted EBITDA margins reaching the high teens in coming quarters.
Management also said the company remains on track to realize at least $10 million of annualized cost savings from the CDM combination by the end of 2026. Mills said more than 60% of that goal had been achieved by March, though not all of the savings will appear in this year’s results.
The company’s annual recurring revenue run rate was $20.1 million as of March 31, with an additional $4 million of ARR contracted and expected to begin at year-end, Mills said.
Koshewa said Creative Realities had $2.3 million in cash as of March 31, up from $1.6 million at the start of 2026. Debt stood at $47.5 million, compared with $44 million at the beginning of the fiscal year, and the company had approximately $13 million of remaining availability under its revolving credit facility.
Both Mills and Koshewa said the company intends to use cash generation, when appropriate, to reduce debt while continuing to invest in growth and technology initiatives.
Customer Wins Include Titans, Dairy Queen and AMC
Mills highlighted several customer updates, including Creative Realities’ role as the official digital signage provider for the Tennessee Titans at the new Nissan Stadium in Nashville. He said the previously discussed $8.5 million deal includes thousands of displays and a full IPTV solution throughout the venue, with most revenue expected to be recognized in 2026.
The company also announced a North American contract with Dairy Queen, covering the U.S. and Canada. Mills said the customer was won through a competitive request-for-proposal process and that the prior provider was CDM. He said the business historically generated about $2 million to $2.5 million annually and is now expected to grow to $4 million to $5 million, primarily driven by drive-thru products.
Mills said Dairy Queen has about 4,700 locations across the U.S. and Canada, with only two currently using digital drive-thrus.
Creative Realities also discussed its previously announced project to expand and modernize AMC Theatres’ in-lobby media footprint across 285 locations nationwide in partnership with National CineMedia. Mills said the project involves approximately 1,200 screens and large-format LEDs, using the company’s Reflect CMS and AdLogic ad technology solutions. He said expected revenue from the project is $6 million to $7 million, with most, if not all, expected this year.
Mills also said the 7 Brew account continues to grow, with the customer on track to open 750 new locations this year. He said each new location represents about $8,000 to Creative Realities initially, with ongoing SaaS revenue increasing as locations are added.
Retail Media Network Opportunity in Final Contracting
Mills said Creative Realities is in the final contracting stages for what he described as a significant retail media network deployment. He did not identify the customer but said the project would include additional hardware, SaaS and advertising technology revenue.
He said the deployment could include about 10,000 screens and 20,000 data-gathering devices this year, with the company monitoring about 30,000 devices by year-end. By mid-2027, Mills said the deployment could reach about 60,000 devices, including approximately 25,000 screens and 35,000 data-gathering devices.
During the question-and-answer session, Mills said the process was “no longer competitive” and that Creative Realities had received a verbal award. He said the company expects to begin shipping product in June and deployment in July, following a successful test-store takeover.
Asked about the recurring revenue opportunity, Mills said the fully deployed network could add $6 million to $8 million in ongoing SaaS revenue, though he noted the figure was still being adjusted and negotiated as the contract is finalized.
Q&A Focuses on Stadiums and QSR Drive-Thru Opportunity
In response to a question from Jason Kreyer of Craig-Hallum, Mills said the Titans stadium win is the company’s second NFL stadium deployment where its software controls all screens, following the Dallas Cowboys. He said Creative Realities continues to pursue additional NFL opportunities, including stadium refreshes and menu board operations.
Asked by Brian Kinstlinger of Alliance Global Partners about the quick-service restaurant drive-thru market, Mills said there are approximately 210,000 to 220,000 U.S. QSR locations with drive-thrus and that digital penetration is believed to be below 40%. He said McDonald’s and Taco Bell make up a large portion of the installed base.
Mills closed the call by thanking shareholders, clients, partners and employees, saying the integration of 250 people into one organization had “fundamentally changed” the company.
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.
