Announces Tripling in Managed Services Revenue

Creative Realities, Inc., a leading provider of digital marketing solutions, announced its financial results for the three- and six-months ended June 30, 2019.

Rick Mills, Chief Executive Officer, remarked, “CRI achieved quarterly revenue in excess of $9 million for the second straight quarter. During the second quarter we improved margins resulting in record quarterly Adjusted EBITDA of $1.1 million on an operating profit of $0.5 million. Our results for the first half of 2019 provide evidence of both the Company’s strong market momentum and ability to produce further positive results through scale.”

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2019 Second Quarter Financial Overview

• Revenues were $9.3 million for the three-month period ended June 30, 2019, an increase of $2.1 million, or 30%, compared to the same period in 2018.
• Hardware revenue decreased approximately $1.2 million, or 42%, in the second quarter of 2019 as compared to the same period in the prior year driven by a $1.7 million hardware-only project in the second quarter of 2018 which did not recur in 2019, partially offset by an increase in hardware sales to other customers. Gross margin on hardware revenue was 20% in 2Q19 as compared to 35% in 2Q18.
• Services and other revenue grew approximately $3.3 million, or 77%, in the second quarter of 2019 as compared to the same period in the prior year. Gross margin on services and other revenue increased to 51% in 2Q19 from 48% in 2Q18.
• Managed services revenue, which includes both SaaS and help desk technical subscription services, represented approximately $1.6 million revenue in the second quarter of 2019, an increase of $1.1 million, or 211%, as compared to the same period in the prior year.
• Gross profit was $4.2 million for the second quarter of 2019, an increase of $1.1 million, or 37%, compared to the same period in 2018. Gross margin increased to 45% in 2Q19 from 43% in 2Q18, driven primarily by the aforementioned mix of hardware and services and other revenue.
• The company achieved operating income of $0.5 million during 1Q19 as compared to operating breakeven in 1Q18.
• General and administrative expenses increased $0.5 million to $2.4 million in 2Q19 as compared to 2Q18 made up of $0.2 million in incremental stock compensation expense and $0.2 million of incremental rent expense associated with the acquisition of Allure Global Solutions, Inc. in November 2018.
• EBITDA was $0.8 million for the second quarter of 2019 compared to $0.5 million for the same period in 2018. Adjusted EBITDA was $1.1 million for the second quarter of 2019 compared to $0.4 million for the same period in 2018.

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Mr. Mills concluded, “We are pleased with the continued growth in the recurring portion of our revenue, a key focus for our business in 2019 and 2020. We continue to believe that our end-to-end services offering positions us well within the industry to compete for new and growing opportunities with partners in a variety of key verticals – a belief that is supported by an increase in the number of invitations we have received in 2019 to significant opportunities, measured as those opportunities in excess of $1 million. While we are experiencing an increase in significant opportunities, those opportunities do tend to experience a longer lead time and sales cycle. We remain committed to further execution of our strategy to gain more scale and act as a key participant in what we believe should be an industry rollup aimed at driving shareholder value.”

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