Creative Realities Q3 2025 Earnings Call: Contradictions Emerge in Lottery, Retail Media, and Stadium Growth Strategies

Date of Call: November 12, 2025

Financials Results

• Revenue: $10.5M in Q3 2025, vs $14.4M in Q3 2024
• Gross Margin: 45%, roughly in line with 46% in the prior year

Guidance:

• Total company revenue expected to exceed $100 million in 2026.
• Adjusted EBITDA margins expected in the high teens in 2026; >20% once synergies are realized.
• At least $10 million of annualized synergies across North America by end of 2026.
• Combined ARR plus ad revenue expected to exceed $40 million entering 2026.
• Free cash flow expected to be significant after synergies are realized.

Business Commentary:

• Acquisition Impact and Growth:
• Creative Realities, Inc. completed the acquisition of Cineplex Digital Media (CDM) for CAD 70 million, approximately USD 50 million, expected to double the company's size.
• The acquisition aims to accelerate growth, improve bottom-line results, and expand operations outside the U.S.

• CDM's 2024 revenue was just under CAD 56 million, with a projected 25% top-line year-over-year growth in 2025, adding significant scale and recurring revenue.

• Revenue and Profitability Impact:

• Q3 2025 saw a decrease in revenue to $10.5 million, from $14.4 million in the prior year, with gross profit at $4.8 million compared to $6.6 million in 2024.
• A $2 million order delay influenced results, but the company anticipates rapid growth with new customer acquisition improvements and pipeline conversion.

• Adjusted EBITDA and ARR:
• Adjusted EBITDA for Q3 2025 was $0.8 million, down from $2.3 million in the prior year, with an annual recurring run rate (ARR) of $12.3 million.

• The decrease was attributed to the delayed order and operational challenges, but the ARR indicates recurring revenue stability.

• Sales Strategy and Customer Acquisition:

• The company hired a Chief Revenue Officer to improve new customer acquisition velocity and reorganize the sales force.
• The strategy aims to enhance go-to-market efforts, focusing on recurring revenue growth and quicker pipeline conversion.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly framed the CDM acquisition as transformational: “We believe CDM will rapidly elevate our data science and content capabilities… We expect revenue to accelerate, backlog to grow and margins to improve, putting us in position for much better results in 2026.” They forecast revenue >$100M in 2026 and >20% adjusted EBITDA margins post-synergies.

Q&A:

• Question from Jason Kreyer (Craig-Hallum Capital Group LLC): Rick, I was just wondering if you can provide some feedback on what you've been hearing from customers and partners and stuff, since you announced the CDM acquisition a few weeks ago and any enthusiasm that's built up in the channel?
  Response: Customers and partners are very positive; acquisition gives CRI significant scale and industry recognition, positioning it among the top digital signage integrators in North America.

• Question from Jason Kreyer (Craig-Hallum Capital Group LLC): You've had a lot of success in QSR. Maybe you can just talk about how you go-to-market in Canada following the acquisition. Do you lead with existing CDM customers in Canada or with existing CRI customers that have a footprint in Canada?
  Response: A dual approach: pursue existing CRI customers with Canadian footprints and lead with drive-thru opportunities and Tier-2 Canadian QSRs (500–1,500 locations).

• Question from Jason Kreyer (Craig-Hallum Capital Group LLC): Reframe the retail media opportunity now with CDM in the fold — how does this increase scale, capabilities, and CRI's ability to win in that market?
  Response: CDM brings ownership of Canada's largest mall retail network (CAD32M ad sales, 750 screens), delivering credibility and retail-media expertise to accelerate wins and U.S. traction.

• Question from Brian Kinstlinger (Alliance Global Partners): While it's only been a month since you announced the acquisition, I'm curious if you've learned anything more about the state lottery pipeline and RFPs, when those might be completed? Maybe if you could size that opportunity collectively?
  Response: North Carolina Lottery is ~ $54M (hardware + SaaS over 10 years); management sees ~10 states planning RFPs, received first U.S. RFP and expects to participate in more — lottery opportunity is robust.

• Question from Brian Kinstlinger (Alliance Global Partners): Can you talk about your go-to-market strategy in U.S. malls as you leverage CDM's positioning in Canada?
  Response: Engaging U.S. mall owners over the next two quarters (e.g., Westfield, Simon) to export Canadian mall-network expertise and expand retail media into the U.S.

• Question from Brian Kinstlinger (Alliance Global Partners): We heard comments on QSR and retail. One vertical I didn't hear about is stadium — maybe you can provide an update on how that's materializing, if at all?
  Response: Stadium vertical is expanding; management expects 30–40% growth in 2026 with several signature wins pending signatures.

• Question from Brian Kinstlinger (Alliance Global Partners): Clarify the three separate opportunities (1,000-store, 4,000-store, 8,000-store) — which have been signed versus not? And is the customer-specific IceBox moving forward this quarter?
  Response: IceBox $2M order slipped to Q4 due to funding; 8,000-screen 7‑Eleven test runs Oct–Mar and could scale SaaS if successful; the 4,000-location QSR is a verbal win with contract expected mid-December (name withheld).

• Question from Jon Hickman (Ladenburg Thalmann & Co. Inc.): Can you elaborate on what you think the new Chief Revenue Officer can do to push customers over the goal line to actually sign with you?
  Response: CRO is a seasoned 20‑year industry closer expected to own the revenue number, bring relationships and sales talent, and materially improve deal conversion.

• Question from Jon Hickman (Ladenburg Thalmann & Co. Inc.): With him, how many sales guys will you actually have beside yourself?
  Response: Combined CRI and CDM customer-facing team totals approximately 40–43 individuals.

• Question from Howard Halpern (Taglich Brothers, Inc.): How does having now a content creation team help across your existing customer base?
  Response: CDM adds ~15 high-end content staff (agency-level capabilities); management budgets $5.5–6M content revenue for 2026 with a target of ~$10M within 24 months.

• Question from Howard Halpern (Taglich Brothers, Inc.): With the funding that occurred through the transaction, you're comfortable with the growth potential and the capital you have in place?
  Response: Yes — financing (including $36M term loan and $30M convertible preferred equity) provides ample headroom; approximately $17.7M credit availability post-transaction.

• Question from Howard Halpern (Taglich Brothers, Inc.): Entering 2026, what do you anticipate the combined company's ARR to be?
  Response: Combined ARR plus ad (ARR-like) revenue expected to exceed USD $40 million entering 2026.

Contradiction Point 1

Lottery Opportunities and Pipeline

It involves the company's expectations and progress regarding lottery opportunities, which are significant revenue streams and vital for growth projections.

What have you learned about the state lottery pipeline and RFPs, and when might they be completed? - Brian Kinstlinger (Alliance Global Partners, Research Division)

2025Q3: Received the first RFP and expect more. The opportunity in lottery is robust, with North Carolina Lottery valued at $54 million over 10 years. - Richard Mills(CFO, CEO & Chairman of the Board)

Rick, can you provide updates on the pipeline's progression and any visibility on deal unlocks following the QSR win? - Jason Michael Kreyer (Craig-Hallum)

2025Q2: North Carolina recently put out an RFP, and we are a contender. We are working to build another pipeline in Louisiana. - Richard Mills(CEO & Chairman of the Board)

Contradiction Point 2

Retail Media Network Opportunities

It involves the company's strategy and expectations for retail media networks, which are key growth areas with significant revenue potential.

How does CDM's integration affect the retail media opportunity and enhance your scale and capabilities? - Jason Kreyer (Craig-Hallum Capital Group LLC, Research Division)

2025Q3: CRI owns the largest mall network in Canada, enhancing capabilities and increasing scale for U.S. customers. - Richard Mills(CFO, CEO & Chairman of the Board)

What leverage can we expect from your digital retail networks in 2026, even with a large deployment? - Howard Allen Halpern (Taglich Brothers)

2025Q2: Significant. I mean, because, again, we know of two Retail Media Networks currently on the books for folks across the United States. So we know of two being rolled out. Each of them, well, one was an expected $180 million project over 24 months. The other is a $100 million project being rolled out in a 6-month period. - Richard Mills(CEO & Chairman of the Board)

Contradiction Point 3

CDM Acquisition Impact on Customer Acquisition Velocity

It involves the impact of the CDM acquisition on customer acquisition velocity, which is crucial for the company's growth and revenue projections.

Can you provide an update on the stadium business? - Brian Kinstlinger (Alliance Global Partners, Research Division)

2025Q3: The focus is on getting scale, growing the business. - Richard Mills(CFO, CEO & Chairman of the Board)

What investments and changes are you making to drive future growth? - Cal Bartyzal (Craig-Hallum Capital Group)

2025Q1: Investments in technology platforms will help to positively impact our customer acquisition velocity in the coming quarters. - Rick Mills(CEO)

Contradiction Point 4

Stadium Business Growth Expectations

It involves the expected growth rate of the stadium business, which is a significant revenue opportunity for the company.

Can you provide an update on the stadium business? - Brian Kinstlinger (Alliance Global Partners, Research Division)

2025Q3: Stadium business expected to grow 30%-40% in 2026. Signatures on significant wins are pending. - Richard Mills(CFO, CEO & Chairman of the Board)

Can you explain the sports and entertainment segment and the market demand for your products? - Howard Halpern (Taglich Brothers Inc.)

2025Q1: We are positioned for future growth with multiple POCs and long-term agreements. - Rick Mills(CEO)

Contradiction Point 5

Lottery Business Opportunity

It involves the expected timeline and potential impact of the lottery business opportunity, which could significantly influence company revenue and growth projections.

What's the status of the state lottery pipeline and RFPs, and when will they be completed? - Jason Kreyer(Craig-Hallum)

2025Q3: Received the first RFP and expect more. The opportunity in lottery is robust, with North Carolina Lottery valued at $54 million over 10 years. - Richard Mills(CEO)

What are customer discussions on the frozen pipeline and its prospects for opening in the coming months? How do tariffs pose headwinds? - Jason Kreyer(Craig-Hallum)

2024Q4: We think there's a good opportunity in lottery, which is something that the Board and myself and others have discussed. And it is one of those -- as we've mentioned, it's really a -- it's a -- it's a longer tail opportunity. - Rick Mills(CEO)