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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 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.
Revenue $13 million in Q2 2025, up 34% versus Q1 and roughly flat year-over-year. The flat year-over-year performance was due to changes in revenue mix, with more hardware sales versus services.
Gross Profit $5 million in Q2 2025, down from $6.8 million in Q2 2024. The decline was attributed to the exit from the media sales business and a shift in revenue mix towards hardware.
Gross Margin 39% in Q2 2025, down from 52% in Q2 2024. The lower margin was due to a higher proportion of hardware sales driven by customers purchasing in advance due to tariff uncertainties.
Annual Recurring Revenue (ARR) $18.1 million as of June 30, 2025, up from $17.3 million at the end of Q1 2025. The increase was driven by new deployments that grew SaaS-based ARR.
Adjusted EBITDA $1.2 million in Q2 2025, up from $0.5 million in Q1 2025 but down from $1.5 million in Q2 2024. The slight year-over-year decline was due to lower gross margins.
Debt Reduction $3.1 million reduction in debt during Q2 2025, achieved through operating cash flow.
Cash on Hand $600,000 as of June 30, 2025, down from $1 million at the start of 2025. The company uses a sweep instrument to apply cash against revolving debt to manage interest expenses.
Gross and Net Debt Gross debt at $20.1 million and net debt at $19.5 million as of June 30, 2025, compared to $13 million and $12 million, respectively, at the start of 2025. The increase was due to the settlement of a contingent liability in Q1 2025.
Drive-thru hardware and software solution: Introduced a new drive-thru solution featuring a 1-by-3 55-inch digital display priced at $14,999 fully installed, representing a 20% price reduction compared to competitors.
AdLogic CPM+ platform: Continued traction with three customers in the testing phase for in-store retail media networks, delivering over 25 million ads daily.
SOC 2 Type 2 certification: Achieved SOC 2 Type 2 certification, enhancing credibility and trustworthiness of products for enterprise customers.
Quick Service Restaurant (QSR) engagement: Signed a significant engagement with a well-known upscale QSR chain with over 1,000 locations across 25 states, with a pilot program underway and a national rollout expected.
C-store vertical expansion: Deployed the first C-store in Mexico for Circle K as a proof of concept and noted potential growth with 7-Eleven's expansion plans, which could generate $30 million in revenue and $5 million annually in SaaS over five years.
Live venue IPTV expansion: Secured projects across six athletic venues, NHL and NBA arenas, a soccer stadium in Mexico, and two Minor League Baseball stadiums.
Revenue and profitability: Revenue for Q2 2025 was $13 million, up 34% from Q1 but flat year-over-year. Gross margin decreased to 39% due to a shift in revenue mix, but margins are expected to improve in the second half of the year.
Debt reduction: Reduced debt by $3.1 million during Q2 through operating cash flow, with gross and net debt standing at $20.1 million and $19.5 million, respectively.
Digital transformation focus: Focused on transitioning QSRs, C-stores, retail, and sports venues to digital solutions, with a robust pipeline of opportunities.
Digi Point Media Network delay: Deployment of the retail media network on ICE boxes across groceries and C-stores delayed to Q4, expected to cover 2,000 sites and generate $4 million in hardware and installation revenue.
Gross Margin Decline: The company's gross margin decreased from 52% in Q2 2024 to 39% in Q2 2025, primarily due to a shift in revenue mix towards more hardware sales versus services. This could impact profitability if the trend continues.
Tariff Uncertainty: Some customers purchased hardware in advance due to tariff uncertainties, which may disrupt future revenue streams and create unpredictability in demand.
Debt Levels: The company has a gross debt of $20.1 million and net debt of $19.5 million as of Q2 2025, with leverage ratios increasing significantly compared to the start of the year. High debt levels could constrain financial flexibility.
Delayed Deployment: The Digi Point Media Network deployment, initially expected in Q3, has been delayed to Q4, potentially impacting revenue and project timelines.
Long Sales Cycles: The increasing scope and complexity of digital transformation projects are leading to longer sales cycles, which could delay revenue realization and strain resources.
Working Capital Constraints: The company operates with minimal cash on hand ($600,000 as of Q2 2025), relying on a sweep account for debt management. This could limit liquidity for operational needs.
Competitive Pricing Pressure: The introduction of a new drive-thru hardware solution at a price point 20% below competitors may pressure margins and profitability.
Dependence on Key Customers: Future revenue projections rely heavily on key customers like 7-Eleven and Circle K Mexico. Any disruption in these relationships could significantly impact financial performance.
Economic Uncertainty: While the company cites generally good economic conditions, any downturn could affect customer demand and project pipelines.
Margin Projections: Margins are expected to rise in the third and fourth quarters of 2025 as previously purchased hardware is installed.
Adjusted EBITDA: Anticipated to improve further as revenue increases and overhead expenses are managed, with adjusted EBITDA as a percent of revenue expected to rise back to 15% by year-end 2025.
Revenue Growth: Revenue is expected to accelerate in the second half of 2025, with backlog growth and margin improvements positioning the company for strong results in 2026.
Quick Service Restaurant (QSR) Engagement: A significant engagement with a well-known upscale QSR chain is underway, with a pilot program in Q3 and Q4 2025 and a national rollout expected immediately after. This includes a 100% turnkey solution powered by the proprietary CMS platform, Clarity.
Retail Media Network Growth: In-store Retail Media Network is expected to grow revenue and recurring SaaS in 2026 and beyond, with three customers currently in the testing evaluation phase of the AdLogic CPM+ platform.
7-Eleven Expansion: 7-Eleven's plan to open 1,100 new restaurants and 1,300 new larger format stores by 2030 could add over 17,000 displays, generating $30 million in revenue and $5 million annually in SaaS over five years, assuming continued partnership.
Digi Point Media Network Deployment: Deployment of the Digi Point Media Network, originally estimated for Q3 2025, is now expected to begin in Q4 2025, covering approximately 2,000 sites and generating over $4 million in hardware and installation revenue, along with additional SaaS revenue.
Live Venue IPTV Growth: Continued growth in live venue IPTV solutions is expected, with new deployments across various sports venues and international markets, including Canada and Mexico.
The selected topic was not discussed during the call.
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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