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Operator: Good morning. At this time, I would like to welcome everyone to the Creative Realities 2024 Fourth Quarter Earnings Conference Call. This call will be recorded and a copy will be available on the company’s website at cri.com following the completion of the call. The company has prepared remarks summarizing the interim results for the fourth quarter along with additional industry and company updates. Joining the call today is Rick Mills, Chief Executive Officer; George Sautter, Chief Strategy Officer; and Ryan Mudd, Interim Chief Financial Officer. Mr. Mudd, you may begin.

Ryan Mudd: Thank you, and good morning, everyone. Welcome to our earnings call for the fourth quarter ended December 31, 2024. I would like to take this opportunity to remind you that remarks today will include forward-looking statements. The words anticipated, will, believes, expects, intends, plans, estimates, projects, should, may, propose and similar expressions or the negative versions of such words or expressions as they relate to us, or our management are intended to identify forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in our annual report on Form 10-K filed with the SEC Friday evening, March 14, 2025, and in our other filings with the SEC.

Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our public filings and in our earnings release that was issued Friday evening, March 14, 2025. We believe the use of certain non-GAAP measures such as adjusted EBITDA and several other important KPIs represent meaningful ways to track our performance. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities.

Rick Mills: Thanks, Ryan, and good morning, everybody. Thanks for joining. Today, there are two big milestones to discuss. First, number one, we just closed out our best year in the company history. With revenue exceeding $50 million and adjusted EBITDA of 10%. Number two, we have resolved our outstanding contingent liability from the purchase of Reflect systems in 2022. But first, let me review our fourth quarter highlights as follows. Revenue of $11 million versus $14.5 million a year ago, gross profit of $4.9 million versus $7.5 million in 2023. Adjusted EBITDA of approximately a $0.5 million against $2.8 million last year. An annual recurring revenue or ARR at a run rate of $16.8 million. While completing our best year ever, the fourth quarter as expected was negatively impacted by deployment timing.

However, with an active pipeline of opportunities ahead of us, we remain on-track for another period of record performance in fiscal 2025. As mentioned on our third quarter call, we have numerous large opportunities currently being pursued, all of which give us a great degree of confidence in the quarters to come. We see revenue accelerating as the year progresses with especially strong results in the second half. Demand for our unique solutions continues to grow, a trend we anticipate will continue particularly with the introduction of our AdLogic CPM+ platform. This integrated innovative solution provides customers with the tools to deliver targeted high performing campaigns at significantly reduced cost. It combines robust programmatic capabilities with a user friendly self-serve interface that simplifies campaign execution, enhances targeting precision, and eliminates unnecessary intermediation fees.

It also positions creative realities uniquely as a one-stop shop for required AdTech solutions, and allows us to benefit from advertising revenue. From deploying on-premise screens, to offering sophisticated ad serving and campaign execution tools, our full service approach addresses the challenges faced by modern in-store retail media networks. We believe it’s a game changer in the industry that can significantly enhance the in-store media experience. As we expect top line growth to accelerate in the second half, we should see stronger operating results, driven by better economies of scale, higher margins, and increased cash flow. We see adjusted EBITDA as a percentage of revenue rising back to 15% by year-end. Early today pre-market in a separate press release and filing, we announced a settlement related to our contingent consideration obligation.

With former Reflect shareholders an issue which has been on our Investors’ minds for an extended period of time. We worked hard to resolve this liability in a way that was a win-win to the company, its investors, and the former Reflect stockholders. We believe that settlement accomplishes this objective and provides a great deal of financial flexibility while removing a substantial overhang on our shares. The key metrics are as follows: CRI will pay $3 million in cash utilizing the existing reserve in our current credit agreement. In addition, we entered into a $4 million 30-month promissory note that includes a balloon payment in September of 2024. This long term note, along with warrants, provides us time to continue growing the company and enhance shareholder value, while also giving former Reflect stockholders an additional return on their investment.

Again, I think this is a win-win for all involved that quantifies a payment plan and eliminates uncertainty through a clear, simplified financing structure. We are very pleased with this development that allows us to focus on growth and improved operating results for the remainder of fiscal 2025. Going forward, the combination of our active pipeline and new AdLogic CPM+ platform puts us on track for revenue acceleration and increased performance, with no further overhang or distraction from the dispute. As the quick serve restaurant and retail market requirements continue to become more complex and demand driven, CRI remains at the forefront of improving the customer experience in a growing list of innovative clients and brands. While we are not providing specific guidance at this time, we anticipate the year ahead will be one of accomplishment and new records.

I’ll turn it back over to Ryan to share some additional comments on our financials.

Ryan Mudd: Thank you, Rick. An overview of our financial results for the fourth quarter of 2024 was provided in our earnings release and Form 10-K filed Friday evening, March 14, 2025, which included the consolidated balance sheet as of December 31, 2024, the statement of operations and the statement of cash flows for the 12-months ended December 31, 2024, and a detailed reconciliation of net income to EBITDA and adjusted EBITDA for the quarter ended December 31, 2024, as well as the preceding four quarters. Now let me provide a couple of points of context relative to our balance sheet. As of December 31, 2024, the company had cash on hand of approximately $1 million versus $2.9 million at the end of 2023. As previously mentioned, our consolidated balance sheet Reflects minimal cash on hand as the company has set up a sweep instrument to apply against the revolving debt facility to further manage our interest expense.

Our gross and net debt stood at approximately $13 million and $12 million respectively at the end of the fourth quarter as compared to $15.1 million and $12.2 million respectfully at the start of 2024. Our debt level rose slightly from the end of Q3 as expected due to seasonal working capital requirements and the timing of our SaaS based billings. As a side note, as Rick previously discussed, our settlement of the contingent consideration included a $3 million payment from our credit facility and the issuance of a $4 million note, so our debt levels will rise during the first half of 2025. Of course, our long term vision remains the same to delever and strengthen the balance sheet whenever possible. At the end of fiscal 2024, our leverage on a gross and net basis was 2.59x and 2.39x respectfully, down from 2.97x and 2.4x at the beginning of fiscal 2024.

We remain dedicated to managing our debt as we continue to evaluate and migrate to an optimized capital structure in support of our growth. I will turn it back to Rick for additional comments on our results and customer activities.

Rick Mills: Thanks, Ryan. Our engagement with potential customers and prospects is at an all-time high. In July of last year, we hired David Schultz to fill a new position at the company, VP of New Business Development. This was a much needed person to fill the role and provide the dedicated focus required. We are pleased with the pipeline and the sheer number of discussions going on with potential prospects. Our sports and entertainment team has been expanded in order to continue to facilitate our anticipated growth in this sector, as we move into 2025. The company completed its largest deployment of this kind during the third quarter of 2024 an NHL arena, and we have tremendous momentum in the market moving into the New Year.

In this Q1 2025, we have already been awarded three MLB projects of varying sizes and types, and we have an additional seven POCs going on at other venues across the U.S. with regard to BCTV, this project continues to move forward, we completed 56 site installations in the fourth quarter at an average sale price of $30,000. While we expect this number to increase moderately in the second half of 2025, we expect a smaller number of installations in the first two quarters of the year. Currently, we have minimal installs scheduled from now until June as BCTV had us pause for a 90 day period. Our operations team has been working towards SOC 2 compliance. SOC 2 compliance is a valuable credential that can strengthen the trustworthiness and credibility of our products to enterprise customers.

The team has made a great deal of progress and I’m pleased to report that our hard work resulted in our receiving our SOC 2, Type 1 compliance and certification, that is done and complete. We expect to achieve SOC 2, Type 2 certification prior to year end. We believe this will be yet another differentiator of CRI enterprise grade offering. Before turning it over to the operator, let me just add one comment. We want to take a moment and wish our outgoing CFO, Will Logan all the best in his new endeavors. As previously announced, Will remain as an advisor to the company. With that, we’ll now move to the Q&A portion of the call. Please go ahead, operator.

Operator: [Operator Instructions] Our first question will be coming from Jason Kreyer of Craig-Hallum.

Jason Kreyer : Hey Rick, just wondering if you can just give us some general commentary on the conversations you’re having with your customers or maybe more so the potential customers. Just in regards to this kind of frozen pipeline that we’re in right now, and any prospects for that’s starting to open up in the coming months.

Rick Mills : Hey, Jason. Good morning. Thanks. Great question. We expect customers have had a frozen pipeline of projects that has been creeping to the finish line and we have an incredible number of them. We do expect to have a couple come across the finish line here in the coming few months, but it’s a little the market is trying to understand where tariffs might come into play or not. So, those conversations are also starting to happen at customers they’re starting to ask questions about how tariffs could get in the way of their projects. That’s currently the state Jason.

Jason Kreyer: Maybe you can double click on that second part just on from a tariff perspective. Curious what kind of potential headwinds those can create for the business or maybe if there’s any other opportunities you would see ahead competitively or otherwise.

Rick Mills: There is tremendous pressure on these customers to build out their networks, right. Retail media networks are exploding and there is tremendous pressure on these companies to get them built out. For most of the industry, we expect minimal or no tariffs at all to be a problem. However, the mounts, most of the mounts are made here domestically and there is a steel problem. So, we expect slight moderate increases in steel and we expect that not to really affect much. The question will be the display business and how the display business the actual screens themselves, and I think that will unfold over the next 30, 60, 90 days.

Jason Kreyer: Perfect. Maybe stepping back and looking at just your opportunities in retail media. How do those conversations progress in terms of deal size and opportunity, and I’m curious if that’s perhaps leading to some of the delays. I mean, it would seem as though when retail media gets added to a deal. There’s broader conversations that need to be had more strategic planning and curious to what degree that’s causing some of these deals to just slow down and not get past the finish line.

Rick Mills: That is very astute as you look at it from the market, Jason. That is exactly what happens when they look at deploying a retail media network they look for there’s a tremendous amount of detail that the customer will go through, not only with us as a potential vendor also internally. How are they going to run it, what does ad operations look like and how are they going to run it. So that tends to extend the process, number one. Number two, the CapEx deployment by these customers for retail media networks is significant. These are not, and Jason just to be clear these are not $5 million and $10 million and $15 million projects, these are $40 million, $50 million, $80 million, $100 million projects in their size. Now they bring tremendous returns to the customer who deploys them.

Typically, if a customer has the foot traffic and has the locations and spends $100 million to deploy a retail media network, they will see an ROI on that in certainly less than 24 months. So, tremendous opportunities, but they have slowed down the process of getting it across the finish line. And I’d just like to ask my compatriot, George Sautter, who really runs all the AdTech rolls up to George, who’s our Chief Strategy Officer. George, anything to comment there?

George Sautter : No, Jason, I think you, you hit it on the head and as Rick indicated, the complexity of these projects for the enterprise customers that we service can be pretty daunting, but all the more reason why what we’ve done by knitting together the solutions for retail media networks, our product suite, the CMS, the ad server, and now the new programmatic platform as a one stop shot, it is indeed a competitive advantage the way that we reckon it. The more complex, the more simplified solutions we provide to help our customers deploy those networks. But it does take time and we provide the advisory services in conjunction with walking them through the process. So, the dollars are big as Rick has indicated, probably bigger dollars than we’ve seen historically in any one deal. And therefore, obviously these are sophisticated operators who are doing their diligence and building their business case. There are huge CapEx dollars at play here, so it takes time.

Jason Kreyer: Thank you for the up update updates guys.

Operator: Our next question will be coming from Howard Halpern of Taglich Brothers, Inc.

Howard Halpern : Congratulations on a record you guys. In terms of your existing customer base, how have they begun to embrace the new AdLogic platform and how is that going to impact margins down the road?

Rick Mills : First and foremost, as our customers have decided to turn their digital operations from a signage network to a retail media network, because retail media network incorporates Signage Howard, but it’s a whole lot more to it when you turn on the AdLogic and those ad functions. I mean, our customers have embraced it because it solves a problem for them. And we’ve updated the product to embrace all the different types of advertising around the AdLogic platform so that it can do programmatic just as quickly and deploy a programmatic ad in seconds, as it does non-programmatic. So those upgrades are out in the market being well embraced by our customers.

George Sautter : And Rick, if I can just add to that, Howard, great question. Internally, we have a saying that infrastructure seeds, retail media networks and retail media networks sells infrastructure and SaaS. And I would tell you that the addressable market has just got into a lot bigger for CRI. So we do have existing customers that have the infrastructure and have deployed the CapEx and obviously converting that existing network into a retail media network represents new returns on those previously sunk costs. So there’s, there’s a compelling business case that’s driving that type of activity. So it’s not only about new customer acquisition, but it’s also about existing customers migrating up to a retail media network and all net new.

Howard Halpern: Okay. In terms of — you talk about how the first half and the second half and some of the hesitations, but how has the new ERP system given you the maybe visibility, flexibility to control what your infrastructure is going forward?

Rick Mills: Howard, this is Rick. I’ll take that one. I’ll tell you, we completed the switch over July, okay. So, we’re now actually moving into the third quarter where we are actually using it. But it’s also the first quarter of our new budget year, right, in 2025. So, we literally redid the entire general ledger, etcetera, as we migrated to the new system. We see it paying significant cost management dividends, okay. And I will tell you, they’re not in place today, some of them, but we expect to see real super strong expense controls and management of the key metrics of the business, which is something that we did not have as we entered 2024. So, we feel very good about it, but it’s still we’re still on the journey. But we’re using every function. Ryan Mudd, is that correct? Every function of the software today is up and running.

Ryan Mudd: That’s correct. Yes, sir.

Rick Mills: Okay. So, we feel good about it.

Howard Halpern: Okay. And one last one, could you talk about, I guess, channel partners, the progress you’re making there and what you’re seeing in that area?

Rick Mills: We continue to have demand from our channel partners. I’ll turn that over to George. George ultimately owns the channel program.

Howard Halpern: Okay.

George Sautter: Great question, Howard. We obviously committed to developing the channel and we see licenses and license demand ramping up. I think as you know, last year, unfortunately we had an executive that was heading up that part of the business for us who passed in an untimely way tragically. We have now basically put a new team on that side of the business and they’re conducting outreach in addition to fielding all the inbound. But we’re very much committed to that, and see that business growing and are actively recruiting and signing on new customers.

Operator: Our next question will be coming from Brian Kinstlinger of Alliance Global Partners.

Brian Kinstlinger: Thanks for taking my questions and it’s nice to see the settlement for the contingent consideration in the rearview mirror. Can you quantify the number of warrants, I don’t even see it that will be issued to Reflect what the strike price is and when the expiration date is?

Rick Mills: Yes, it’s a six year warrant. Brian, strike price is $3.25 quantity of warrants was matched the quantity of shares that was originally issued back two years ago. So, the number is 777,790 just under 800,000 in warrants.

Brian Kinstlinger : Great, thanks. And then can you speak to, you commented that you expected revenue growth is going to accelerate in the second half of the year. I think you’re talking about growth, but not dollars. I’m not sure. And as you exit the year 15% EBITDA margin. First, I guess I’m curious because the fourth quarter is seasonally weak, so I’m curious what gives you confidence that the second half will be stronger, whether it’s scale or revenue growth? And then you didn’t say anything about the first half of the year. Should we expect year-over-year declines? Do you expect to be adjusted EBITDA profitable? Just maybe just a little bit more high level commentary.

Rick Mills : We expect to be adjusted EBITDA profitable, but just barely, certainly in Q1, the first part of the year. And I think we’ve made no, we’ve articulated that on even on the last calls. We have a number of projects, Brian, that give us great comfort in understanding that the moment a trigger is pulled, revenue will be — will grow tremendously. We expect to see year-over-year growth on 2025, we’ll exceed 2024, and we expect nice growth in there and also growth in the EBITDA. So we’re very…

Brian Kinstlinger : When you’re, um, I’m sure it varies, but can you help us understand what a project with an MLB or NHL stadium. What an average total contract value is? Does it range from a couple $100,000 to a couple million? Is it more a couple?

Rick Mills : Great question. And so there’s two types. We go into an MLB stadium and they may have already deployed an IPTV system, right? So they already have bought that piece. And then typically where they embrace us is, can you help me with the menu board? So we would do all of the menu boards inside a stadium, some might need hardware replacement, but most of it’s just software and content. So that would be on the low end. That would be $150,000 project a year, because a combination of SaaS on the menu boards and some content refresh and updating of menu boards, that’s the low end of the equation. Other side of the equation, typical ballpark has somewhere between 600 and 1,000 displays and they’re really looking to deploy IPTV throughout and refresh the entire stadium. That project is always typically in the — between $2 million and $3 million. It’s $1 million for the IPTV system, software deployment, et cetera. And then it’s another $1 million for the screens —

Brian Kinstlinger: And your MLB projects, the – you’ve won, are those more on the pool solution side or are they more on the menu boards?

Rick Mills : It’s really a mix. I’ve got seven POCs going on right now, and I believe out of those seven, if they were decide to move forward, four of them would be full stadium refreshes. So, four of them would be in the $2 million and up range.

Brian Kinstlinger: Got it. And to achieve that second half acceleration, do we need a handful of these large projects to materialize, just one or two? How do you think about what it takes to achieve your internal targets?

Rick Mills: Just we’re just looking for a handful, okay. We’ve got two or three very large retail media networks ready to pull the trigger. We have a couple of significant QSRs ready to potentially head to full deployment. And then we have a whole series of these sports entertainment facilities. So, tremendous amount going on. I just can’t talk about it at this moment.

Brian Kinstlinger: And then one more on –

Rick Mills: I was just going to comment. Thanks for recognizing the importance of solving the RSI. It’s taken a lot of time, a lot of effort, but we’re glad to get that done and behind us.

Brian Kinstlinger: Yes, for sure. Can you share just a little bit more information on what led to the ninety day pause on BCTV and could it possibly be longer than that?

Rick Mills: Yes, that’s BCTV on its side. I believe they have continued the private equity firm that invested money and is the primary controller of that. I think put a pause on additional funding, so BCTV would get caught up, and I believe that’s really it. It’s a discussion between BCTV and its funding vendors. We do believe that BCTV will roll out starting again in the June timeframe.

Operator: Our next question will be coming from Laurence Lytton of Second Line Capital.

Laurence Lytton: Good morning. Thank you. The credit facility, on a pro form a basis, it’s like $16 million outstanding on the revolver. What’s available, if any, beyond that $16 million today?

Rick Mills: It’s a great question. I’ll turn that over to Ryan Mudd.

Ryan Mudd: Yes. We’ve got the revolver we have set up today has us at $22.1 million in max capacity. I think at the end of the year, we just reported we were at about $12 million, and obviously this $3 million added on will come from there in this settlement. So, that cash settlement will come through and that $3 million will hit as well. So, that’s kind of where we stand today going into the end of the first quarter.

Laurence Lytton: So, the implication being you may have close to $6 million or $7 million available as of year-end.

Ryan Mudd: Correct. Yes, you’ll have, from that $4 million reserve we had, there will be $1 million that kind of freed up as we settled to that $3 million so that’s correct.

Laurence Lytton: Okay. And then there was some comment in the 10-K about $5 million potential additionally available. Is there any chance that that comes into play or $22 million as a hard cap?

Rick Mills: This is Rick. That’s a complex math that our bank does based upon earnings, trailing 12-months earnings. Several things go into that calculation. But currently, we are not — currently we’re comfortable with our credit facility.

Laurence Lytton : So does that, obviously you don’t want to raise equity here. Do you feel, do you feel comfortable that you won’t have to?

Rick Mills : Currently, we do not expect to raise equity. Now, unless we have some transaction that we would announce. So currently we have been on that track and we currently have stayed that away.

Laurence Lytton : Okay. And since you bring it up, transaction would be an acquisition candidate, or you’re talking about a large program that needs some financing, for example?

Rick Mills : It could be one or the other, but primarily an acquisition.

Laurence Lytton: And can you comment either on the magnitude of the pipeline or the backlog or where they are relative to six months ago, for example?

Rick Mills : I think six months ago I would’ve told you they were at the 10 yard line. And some of them today, I would tell you they’re at the one inch line. So, and the magnitude of these projects is significant. Far larger than any project we’ve announced historically.

Laurence Lytton : And what’s the cash flow on a major project? Either these a full scale baseball stadium or some of these other programs you’re thinking about? Do they out of the gate for a quarter or two, have some kind of a meaningful negative cash flow? Or does the customer fund them positively almost immediately?

Rick Mills : That’s a great question. It’s about a 50/50. Think about it as if it’s a private owned stadium and facility. We would typically ask for a significant deposit. If it’s $2 million project, we may ask for $1 million deposit sometimes, if not more, but if it’s a public partnership, like it is owned by the city or it’s owned by the state, you’re working under a standard state construction contract. And that one would come with negative cash flow up front. Because that’s where you get reimbursed as project percentage completion. Correct, Ryan?

Ryan Mudd : That’s correct.

Rick Mills : So that one typically has some negative cash flow for the first probably 90 days is the practical number.

Laurence Lytton : And lastly, just want to come back to a prior question that I don’t think you fully answered. In your comments, you talk about exiting the year at a 15% adjusted EBITDA margin. What are you trying to say there? The fourth quarter you’re hoping has that margin or going into next year, you think that’s where the run rate should be?

Rick Mills : No, it is just where we believe we will finish this year. Margins were a little compressed. Revenue was a little down as we’ve articulated to the market. Just because the timing of projects, but we see those coming back here. And so we see and again, is you — we would always point to look at the leverage in our business model. When our revenue is at $15 million a quarter, the company is very profitable. And so, we believe we will exceed that as we enter the second half of the year.

Laurence Lytton : And so exceed that for the, but you’re not talking about a full year of 15%, or potentially you are?

Rick Mills: Yes. We are.

Laurence Lytton: Okay. And because this year you did 10%, so revenues will grow, you could do 15% for the year?

Rick Mills: We believe that is our goal.

Operator: Our next question is a follow-up from Brian Kinstlinger of Alliance Global Partners.

Brian Kinstlinger: Because that EBITDA and revenue acceleration depends on some of these projects on the goal line getting over the finish line. Can you talk about, in general, how long it takes to ramp contracts? Do you see them immediately happening with your inventory? Do you think it takes a couple of months? Does it vary? I guess just trying to understand that time frame from when deals are —

Rick Mills: Great question, Brian. It always takes extended time. So number one, you work a long time to finally sign a project and now it is signed. The first thing the customer will always do is a POC proof-of-concept. Okay, we’re now ready to go. Now let’s go deploy a subset, right? So we’re talking to a QSR about a 1,000 store rollout. We’re right on the cusp. They’re going to do a POC of the first 40 locations just to see how it rolls out before they launch the rest, okay? Same thing on a large media network. They’re looking at several thousand locations. They want to do a POC for 80 locations. And so those POCs will typically take 90 days. to get deployed and then the customer will evaluate it for 60 or 90 and they’re going to say, now let’s go and run hard. George, anything to add to that?

George Sautter: Yes. Brian, just to build on that and double back on a previous question that you posed about the revenue slope for the year and adjusted EBITDA on top of that. Obviously, we’ve made a big announcement with AdLogic CPM+ basically developing that programmatic platform and knitting together with AdLogic, which is our ad server and of course, CMS. Some of these opportunities that we’re speaking about, they’ve been in motion now for an extended period of time. And Rick previously said we expect several to crystallize to some outcome whether it’s a POC and awarded business or an expansion of business in the coming months. And obviously, we’re careful about representations we make about the probability of that happening.

But the quantum of these opportunities are incredibly significant. And they are and why is the challenge to us providing guidance and — but we do anticipate that we’re in a good position on a number of these opportunities. The one thing I did want to double back on and just expand upon because it’s really important is the new monetization models that align with our Retail Media network product suite. We all know we sell infrastructure, digital signage. There’s a hardware component to that. We’ve talked extensively about what our margins are on that. The infrastructure seed, SaaS. SaaS, obviously, is very — is much higher margin for us, and we’ve talked extensively about that. What’s net new here is our ability to monetize new monetization models in conjunction with our ad server and our programmatic platform.

And these follow more in line with platform access fees, user licenses, SaaS dollars and more importantly, particularly with CPM+, an ability to participate in the ad revenue that is flowing through the stack. So can’t overstate the importance of that to us in terms of — on a go-forward basis, incremental revenue opportunities that previously we probably wouldn’t have had access to, but also the enhanced margins, the superior margins of the new revenues that we see flowing through that stack. And we’re well positioned for all of that, and it’s been an ongoing process. We’ve been previewing CPM+ with certain customers in conjunction with RFP opportunities now for well over 6 months. And so when we talk about how long does it take to convert one of these opportunities, it can vary, but many of them have been gestating already for an extended period of time.

And as Rick indicated, we expect that they’re going to crystallize to one outcome or another very shortly. We’re just unfortunately not in a position to make any representations about that. But we fully expect by the time that we present on Q1, we would have known that we’ve won a piece of business or not that we have a POC and are executing on it and can provide much better information as to the quantum of the opportunity.

Operator: And our next question will be coming from Ben Howard of Pivotal Group.

Ben Howard : Congrats on the Reflect settlement. It sounds like it’s really mutually beneficial for all parties and glad to finally put this behind us as well. And then when we look at ARR, especially as we see kind of subsequent growth throughout the quarter-over-quarter in Managed Services, it’s kind of a trend we’d like to follow, and it looks like an exit rate of $20 million on the managed service line, but then you reported a $16.8 million ARR number to exit the year. Is that a big customer loss? Or can you kind of just explain that discrepancy and the quarter-over-quarter decline from $18.1 million exit?

Rick Mills: Yes. This is Rick. We had 2 large customers who are both SaaS customers. One of them is actually its own retail media network that they run, and they did — they had a product that was out in the field. It was installed in thousands of their customer locations, and they retreated some of those, they retired some of those. We had another large customer who has over 50,000 screens also do some inter adjustments on its contract neither of them is a lost customer, but certainly, one of them did decline in annual basis of about $1 million. So that’s the short-term reduction. We expect to make that back up as we continue through 2025, but there was an absolute reduction in that SaaS due to those 2 customer adjustments. Again, I use the term adjustments not lost.

Ben Howard: Great. That makes sense. And then when we look at customers, are there other customers in the book currently that have similar dynamics where they run their own retail media network or potentially at risk of reductions? And are these 2 specifically are the chances of win back to get that back to prior revenue levels?

Rick Mills: Certainly, one of them is not because one of them is adjusted its business model. But we don’t see them doing reductions over their current spend. So we’re comfortable that they’re their status. The other 1 has been a long-time customer for 13-plus years and we see potential expansion in that network, but that network will expand in 2026, not 2025.

Ben Howard: And then just to answer that first question, are there other customers in your book that you have similar dynamics where you could see them pulling back like these 2?

Rick Mills: No, not really. We do not.

Ben Howard: And then when we look also at kind of the media sales and advertising sales as well, we saw a pretty big drop in Q4 from I think it was $1.4 million in other services and to $200,000, I believe. When we look at AdLogic CPM+, do you believe that will be higher attach rate when you get that out and rolling for some of the retail media networks? And do you think that provides a substantial uplift that ad services and media sales category?

George Sautter: Yes. Ben, this is George Sautter. Yes, we do see that. We definitely have executed the pivot internally. We previously had a media sales team that was selling advertising. We had different accountabilities to certain retail media networks to either sell into those networks exclusively or to have the option to sell into them. But candidly, not aligning — that wasn’t really aligning with our business model. We’re a software in a technology company. And most customers who are deploying retail media networks aren’t looking for assistance in media cells. So all the more reason why we’ve committed to AdTech and the revenue streams that are going to come along with AdTech. And this goes back several years. One of the key reasons we merged would Reflect was their ad serving platform.

And then we immediately set upon building the programmatic layer up or developing a programmatic layer, looking to knit together all of these solutions. So while the media sales might have gone down and those weren’t very high-margin dollars, the way that they were very labor intensive and we have partners in order to generate those. On a go-forward basis, it will flow through the stack, it significantly increased margins. And we do see the attachment rate escalating throughout the year. We’re just not in a position to make representations about how big that can get. But as I indicated previously, we’re well down the path with a number of customers on activating our retail media network product suite. And therefore, we would — we certainly — it’s a strategic thrust, and we see that to be a very important part of our business and something that can scale very quickly and again, at much higher margins than the very labor-intensive way we’re going at media sales.

Ben Howard: It makes sense. And then when we think of the AdTech platform, is that going to flow into managed services? Or is that still going to be any other services? I don’t know if that’s better suited for you or out?

Rick Mills: Yes. I would imagine it’ll be able to managed services as we we’ll see that continue to flow.

Ben Howard: Congrats on the Reflect settlement. It’s excited to move forward with that behind us now.

Operator: Okay. And I’m showing no further questions at this time. I would now like to turn the call back to Rick for closing remarks.

A – Rick Mills: Thank you, everybody, for joining the call. Let me conclude the call by thanking all our shareholders, clients, partners and employees for their continuing efforts, commitment and support as we work together to transform CRI and the leading branded digital signage solutions. Again, we look forward to speaking with everybody next quarter. Thank you, and goodbye.

Operator: And this concludes today’s conference call. Thank you for participating. You may now disconnect.