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01/10 16:57
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Revenue $9.7 million (down from $12.3 million in Q1 2024, a decrease of approximately 21% year-over-year due to installation timing on several large projects).
Gross Profit $4.5 million (down from $5.8 million in Q1 2024, a decrease of approximately 22% year-over-year, attributed to the decrease in revenue).
Gross Margin 46% (roughly in-line with the prior year period, indicating stable margins despite revenue decline).
Annual Recurring Revenue (ARR) $17.3 million (up from $16.8 million at the start of 2025, an increase of approximately 3% year-over-year).
Adjusted EBITDA $0.5 million (nominally changed year-over-year, attributed to active management of underlying overhead costs).
SG&A Expenses $5.2 million (down 11% from $5.8 million in Q1 2024, contributing to improved profitability).
Cash on Hand $1.1 million (up from $1 million at the end of 2024, indicating slight improvement in liquidity).
Gross Debt $23.2 million (up from $13 million at the start of 2025, primarily due to the settlement of a contingent liability).
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 leverage due to debt increase).
Leverage Ratio (Net) 4.67 (up from 2.39 at the beginning of fiscal 2025, reflecting similar trends as gross leverage).
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 efficiency improvements: 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: Revamped operations and warehouse facilities, transitioning to a larger space to significantly increase capacity for processing orders and projects.
Debt management strategy: The company resolved a $12.8 million contingent liability for $7 million, allowing for a focus on growth while managing debt and optimizing capital structure.
Expansion in sports and entertainment sector: The sports and entertainment team has been expanded to facilitate anticipated growth, with recent awards of three MLB projects and a completed NHL arena deployment.
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, due to the settlement of a $12.8 million contingent liability, which was resolved for $7 million.
Operational Challenges: Deployment timing is expected to impact revenue and gross profit levels, with a focus on managing overhead costs to improve profitability.
Leverage Ratio: The company's leverage ratios increased to 4.91 gross and 4.67 net, up from 2.59 and 2.39 at the beginning of fiscal 2025, indicating higher financial risk.
BCTV Project Delays: The BCTV project is progressing at a slower pace, with only 300-plus site installations completed and further installations expected to generate approximately $3 million in revenue.
Market Competition: The company faces competitive pressures in the digital transformation space, particularly in the quick-service restaurant sector, where it aims to leverage its subject matter expertise.
New Client Partnership: CRI was selected by a well-known upscale quick service restaurant chain to transform its indoor and outdoor menu boards, 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 300+ site installations completed and plans to move forward with an additional 200 sites in Q3 2025, generating approximately $3 million in revenue.
Digi Point Media Network: Deployment of approximately 2,000 sites is expected to begin in Q3 2025, potentially generating over $4 million in hardware and installation revenue.
SOC 2 Compliance: CRI achieved SOC 2 Type 1 compliance in Q1 2025 and expects to achieve Type 2 by year-end, enhancing trustworthiness for enterprise customers.
Revenue Expectations: CRI expects revenue to accelerate beginning in Q2 2025 and particularly in the second half of the year.
Adjusted EBITDA Margin: The company anticipates adjusted EBITDA as a percentage of revenue to rise to 15% by year-end.
Debt Management: CRI aims to optimize its capital structure and manage debt while pursuing growth opportunities.
Operational Capacity: The company has increased warehouse capacity to support anticipated growth in the second half of 2025.
Share Repurchase Program: None
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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