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01/10 17:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals mixed signals. While there is optimism in product development, customer engagement, and potential revenue growth, financial performance shows a decline in revenue and increased debt levels. The Q&A section highlights some recovery in project delays and positive sentiment towards future opportunities, but also indicates management's avoidance of specific details. The lack of clear guidance and increased leverage ratios contribute to a neutral sentiment, balancing positive long-term potential with short-term financial concerns.
Revenue $9.7 million (down from $12.3 million in Q1 2024), a decrease attributed to installation timing on several large projects.
Gross Profit $4.5 million (down from $5.8 million in Q1 2024), with gross margin at 46%, roughly in-line with the prior year period.
Annual Recurring Revenue (ARR) $17.3 million (up from $16.8 million at the start of 2025), indicating growth despite revenue challenges.
Adjusted EBITDA $0.5 million (nominally changed versus last year), maintained due to active management of overhead costs, with SG&A expenses down 11% to $5.2 million from $5.8 million in Q1 2024.
Cash on Hand $1.1 million (up from $1 million at the end of 2024), reflecting minimal cash due to a sweep instrument against revolving debt.
Gross Debt $23.2 million (up from $13 million at the start of 2025), increase due to the settlement of a $12.8 million contingent liability for $7 million.
Net Debt $22.1 million (up from $12 million at the start of 2025), reflecting the same reasons as gross debt.
Leverage Ratio (Gross) 4.91 (up from 2.59 at the beginning of fiscal 2025), indicating increased debt levels.
Leverage Ratio (Net) 4.67 (up from 2.39 at the beginning of fiscal 2025), also indicating increased debt levels.
AdLogic CPM platform: The introduction of our AdLogic CPM platform has gone well with more potential clients looking at the power it brings to the enterprise. This innovative solution provides customers with the tool to deliver targeted high-performance campaigns at significantly reduced cost.
Upscale quick service restaurant chain partnership: CRI was selected by a well-known upscale quick service restaurant chain with over 1,000 locations across more than 25 states to help lead the transformation of its indoor and outdoor menu boards.
BCTV project: The BCTV project continues to move forward with 300-plus site installations to-date and plans to move forward with the next 200 sites beginning in Q3, generating approximately $3 million in revenue.
Digi Point Media Network: Deployment of approximately 2,000 sites for the Digi Point Media Network is expected to begin in Q3, potentially generating in excess of $4 million in hardware and installation revenue.
Operational efficiencies: SG&A expenses were down 11% to $5.2 million this year versus $5.8 million in the first quarter of 2024, contributing to improved profitability.
Warehouse capacity increase: The company transitioned to a larger warehouse space, significantly increasing capacity to process orders and projects with minimal cost increase.
Debt management strategy: The company resolved a $12.8 million contingent liability for $7 million, allowing a focus on growing the company and optimizing capital structure.
SOC 2 compliance: CRI achieved SOC 2 type 1 compliance in Q1 and expects to achieve type 2 by year-end, enhancing trustworthiness and credibility with enterprise customers.
Revenue Decrease: The company reported a revenue decrease from $12.3 million in Q1 2024 to $9.7 million in Q1 2025, attributed to installation timing on several large projects.
Debt Increase: The company's gross and net debt rose to approximately $23.2 million and $22.1 million respectively, primarily due to the settlement of a $12.8 million contingent liability.
Contingent Liability Settlement: The settlement of the contingent liability for $3 million in cash and additional debt instruments has increased overall debt levels, raising concerns about financial flexibility.
Operational Challenges: Deployment timing is expected to impact revenue and gross profit levels, indicating potential operational challenges in meeting project timelines.
Market Competition: The company faces competitive pressures in the digital transformation space, particularly from competitors lacking subject matter expertise in specific verticals.
Economic Factors: The overall economic environment may impact customer spending and project timelines, which could affect revenue growth.
Supply Chain Issues: The company may encounter supply chain challenges as it ramps up for new opportunities, particularly with hardware provisioning and installation.
Annual Recurring Revenue (ARR): ARR was at a run rate of $17.3 million at the end of the quarter, up from $16.8 million at the start of 2025.
New Client Partnership: CRI was selected by a well-known upscale quick service restaurant chain for a digital transformation project, with a national rollout expected after a successful pilot in Q3 2025.
AdLogic CPM Platform: The introduction of the AdLogic CPM platform has been successful, attracting potential clients and enhancing targeted campaign capabilities.
BCTV Project: The BCTV project is progressing, with plans to install over 200 sites beginning in Q3 2025, expected to generate approximately $3 million in revenue.
Digi Point Media Network: Deployment of approximately 2,000 sites is anticipated to begin in Q3 2025, potentially generating over $4 million in hardware and installation revenue.
SOC 2 Compliance: Achieved SOC 2 Type 1 compliance in Q1 2025, with expectations to achieve Type 2 by year-end.
Warehouse Expansion: Transitioned to a larger warehouse space to increase order processing capacity with minimal cost increase.
Revenue Expectations: Expect revenue to accelerate beginning in Q2 2025 and particularly in the second half of the year.
Adjusted EBITDA: Expect adjusted EBITDA as a percentage of revenue to rise to 15% by year-end.
Debt Management: Focus on optimizing capital structure and managing debt as growth opportunities arise.
Overall Outlook: Expecting another year of record performance with growing revenue, expanding margins, and solid cash flow.
Debt Management: The company resolved a $12.8 million contingent liability for $7 million, satisfied with a $3 million payment from the credit facility, a $4 million promissory note, and some warrants.
Debt Levels: Gross and net debt stood at approximately $23.2 million and $22.1 million, respectively, at the end of Q1 2025.
Debt Strategy: The company is focused on optimizing its capital structure and managing debt as it continues to evaluate growth opportunities.
Despite positive developments like the CDM acquisition and strategic plans for expansion, financial constraints and revenue decline present concerns. The Q&A reveals optimism but lacks detailed timelines and metrics. The company's low cash reserves and increased debt also weigh negatively. Overall, the sentiment is mixed, leading to a neutral prediction for stock price movement.
The earnings call reveals strong financial performance with a growing ARR and successful client partnerships. The Q&A session highlighted confidence in revenue acceleration and profitability due to previous QSR wins and upcoming projects. Despite some delays and uncertainties, the overall guidance remains optimistic with expectations of breakeven by year-end and significant leverage from future projects. The positive sentiment is further supported by SOC 2 compliance and warehouse expansion, indicating robust operational capabilities. Therefore, the stock price is likely to see a positive movement.
The earnings call reveals several concerns: declining revenue and gross profit, increased debt and leverage ratios, and competitive pressures. Despite some positive developments, such as SOC 2 compliance and customer engagement, the financial health and market strategy are weak. The Q&A section highlights project delays and management's vague responses on key issues, further dampening sentiment. While there is potential in new markets and verticals, the lack of immediate positive catalysts and the absence of a share repurchase program contribute to a negative outlook.
The earnings call reveals mixed signals. While there is optimism in product development, customer engagement, and potential revenue growth, financial performance shows a decline in revenue and increased debt levels. The Q&A section highlights some recovery in project delays and positive sentiment towards future opportunities, but also indicates management's avoidance of specific details. The lack of clear guidance and increased leverage ratios contribute to a neutral sentiment, balancing positive long-term potential with short-term financial concerns.
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