Good morning. At this time, I would like to welcome everyone to Creative Realities Inc 2023 year-end 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 fourth quarter and calendar year 2023 financial results along with additional industry and company updates. Joining me on the call today is Rick Mills, CEO, and Will Logan, CFO. Thank you very much. Mr. Logan, you may begin. Thank you and good morning. I am Will Logan, Chief Financial Officer of Creative Realities I nc. Welcome to our financial results and earnings call for the year ended December 31st, 2023. I would like to take this opportunity to remind you that our 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 on March 21st, 2024. 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 in our earnings release that was issued this morning. The use of non-GAAP measures such as Adjusted EBITDA and several other important KPIs will be discussed by management during today's conference call because we believe they represent meaningful ways to track our performance. After several years of economic, geopolitical, and healthcare uncertainties, we are very pleased with the progress our business has made, particularly through the course of 2023. It is our intent to provide investors with appropriate disclosures and transparency to measure our success. With that, it is now my pleasure to introduce Rick Mills, CEO of Creative Realities Inc, to kick things off. Thanks, Will. Good morning, everybody. Thank you for joining the call. For fiscal 2023, we posted record quarterly and annual results in almost every aspect with which we measure our company today. I want to thank everybody at CRI for making it happen day in and day out. Let's get started. I'm really pleased to report the following: for Q4 2023, an all-time quarterly record revenue of $14.5 million, an all-time quarterly record gross profit of $7.5 million, an all-time quarterly record of Adjusted EBITDA of $2.8 million, and for fiscal year 2023, all-time annual record revenue of $45.2 million, all-time annual record gross profit of $22.2 million. I know it sounds like a broken record, all-time annual, but we are. We're achieving great results. Operating income of $1.3 million, which marks the first time that the company has posted a positive result on an annual basis. All-time annual record of Adjusted EBITDA of $5.1 million, and an all-time annual record of 11.2% of revenue for the EBITDA. Growth of annual recurring revenue, our ARR, to an all-time record $16.3 million run rate exiting 2023. Additionally, our ARR run rate as we sit today here in the middle of March now stands at an all-time high of $17.7 million. This is an important metric as it provides enhanced visibility into our high-margin revenues as well as the increasing trust our customers are placing in our enhanced solutions. I hope everyone can see the spectacular performance, tremendous execution, and continued focus on profitability and debt reductions. Well done, team. I will turn it back over to Will for a few notes on our business activities. Thanks, Rick. I'd like to add some additional context and information about our financial statements and position. First, with respect to cash, as of December 31st, 2023, the company had cash on hand of approximately $2.9 million. As of the date of this earnings release, the company has cash on hand of approximately $4.5 million, despite repayment of approximately $1 million in additional debt principal since January 1st, 2024, driven in part by customers with annual SaaS billings at the start of each calendar year. As we stated when we completed our equity offering last August, we believe the company has sufficient cash to continue to repay its currently amortizing debt obligation until such time as the company generates free cash flows on a net basis. Next, I'll cover our net debt position. As of December 31st, 2023, the company had outstanding principal debt of approximately $15.1 million, resulting in net debt of approximately $12.2 million as of that date. This represents a reduction of approximately $7 million in net debt as compared to December 31st, 2022, at which point net debt was $19 million. The company continues to repay approximately $370,000 in debt principal monthly, with a focus to reduce its leverage ratio to between 1.0x and 1.5x by December 31st, 2024. As of the date of this earnings release, the company's net debt position is approximately $9.5 million. We continue to focus on strengthening our balance sheet by increasing revenue, improving profitability, and managing our debt leverage. We entered 2023 with net debt of $19 million and a leverage ratio of approximately 5 x. As of the end of 2023, our leverage ratio has reduced to approximately 2.4 x on trailing 12-month Adjusted EBITDA. We believe the risk profile of the company is substantially altered and will continue to significantly improve throughout 2024. In connection with entering into a significant new multi-year media sales contract during the Q4 of 2023, the company modified its accounting for media sales to be recorded at net rather than gross, beginning in Q4 2023 and in forward periods. This change has and will continue to have the effect of recognizing revenues at a lower value than under previous reporting for similar transactions. Revenues were reduced by $0.9 million for Q4 2023 and fiscal 2023, respectively, as a result of this change. While this change will not impact gross profit, operating income, Adjusted EBITDA, or net income in terms of absolute dollars over the life of the contracts, the percentage of such metrics as a factor of sales and the reporting period they are booked does change, in a manner management believes is more appropriate depiction of the actual profitability of the company. The results reported in Q4 2023 are records under either reporting methodology, and the company's calculation of ARR is completely unaffected by these contract amendments. I will turn it back to Rick for additional comments on our results and customer activities. Thanks, Will. There is no doubt that 2023 was another transformable year for the company, and the performance that we have reported for Q4 and fiscal year 2023 are a solid foundation for ongoing growth going forward. I'd like to address certain results in more detail, how they tie into our strategy and value creation plan, and how this represents momentum for our performance in 2024. As we have detailed previously, due to significant new customer acquisitions, we have projected a step function increase in revenue beginning with Q4 2023. This has been achieved, and we see this continuing in 2024 and beyond. While we are not revising our revenue guidance for 2024 at this point in time, we project between 20% and 40% revenue growth for each year-over-year quarter in 2024. This allows us to account for seasonality, as Q1 is our traditionally slowest quarter, with budget approvals happening and then project ramp-ups. Then comes Q2 and Q3, where things tend to be moving at full speed, and finally Q4, where you have a slowing of projects as Thanksgiving and Christmas appear on the horizon. Exceptions to Q4 can occur when customers have money to spend on equipment at year-end and occasionally do. Let's talk about our overperformance, over-execution in our ARR against prior projections, and how important it is with respect to meeting or exceeding our revenue and profitability projections moving forward. The fact that we were able to outperform on ARR helped the company to substantially achieve its revenue projections in Q4 with superior gross profit, despite delayed rollouts of major customer deployments. In addition, new customer contracts and pricing changes have already driven our ARR on SaaS to $17.7 million. Well on its way to exceeding the $18 million in guidance we had previously conveyed for fiscal 2024. Therefore, we are increasing the 2024 guidance for exit run rate ARR on our SaaS-based subscription license revenue from $18 million to $20 million. This will have a significant impact on future profitability. Increasing ARR will continue to drive improved profitability and free cash flow as we accelerate top-line growth throughout 2024. In conjunction with this step change in revenue supported by new customer acquisitions and significantly higher ARR is improved profitability. We are at an inflection point where every new dollar in revenue is coming to us with improved margins. We are beginning to benefit from meaningful operating leverage, which has further implications for improving our capital structure, investing in our platforms, and potentially enabling future acquisitions. We've also discussed how we intend to pay down debt in 2024, de-levering the company and strengthening our balance sheet. Since reporting our Q 2023 results, we reduced gross long-term debt to $15.1 million at the end of 2023 from $17.2 million previously. As of today, debt now stands at approximately $14 million, down another $2 million since the start of the year. With $4.5 million in cash on hand at present, net debt stands at approximately $9.5 million. Utilizing our trailing Adjusted EBITDA at $5.1 million as of the end of 2023, our leverage ratio amounts to 2.7 x on gross debt and 1.9x on net debt. This is vastly improved from the 5.4x and 5.0x for gross and net debt at the end of 2022. We believe that the risk profile of the company has changed dramatically and is much more favorable. We intend to continue using cash to pay down debt and de-lever the company in the quarters to come. I cannot overstate the strategic importance of these accomplishments as they unlock numerous commercial and strategic options in the back half of the year and in dealing with the maturity of long-term debt obligations in 2025. Now, let's address a couple of other items. Number one, customer concentration. Number two, customer retention. And then three, just some updated customer activities. In 2022, there were four customers that accounted for 54% of the total revenue of the company. With additional customer acquisition throughout 2022 and 2023, no single customer exceeded 10% of the company's revenue in 2023. Customer retention on a dollar-for-dollar basis is in excess of 100% for 2023, all trending in the right direction for a company like us that is focused on the enterprise marketplace. Okay, some other activities. Channel program. We launched a channel program formally on February 1st, starting small, but we're already approaching 100 licenses. It's all pure SaaS play from SMBs that CRI would not otherwise penetrate. Goal is to ramp up to 1,000 licenses quickly, generating additional SaaS revenue. Bowling or BCTV, we did absorb some startup cost in 2023. It was $400,000, primarily consisting of onboarding and training of the team prior to installations beginning. We performed eight installations in 2023 at an average sale price of $27,000 per location. Q1 2024 looks to be 50-60 locations installed, with acceleration happening throughout Q2 and Q3. A new retail media network. We landed another customer, at this point unnamed. This customer is in the financial sector and has chosen us as their deployment partner. This includes our AdTech software with initial deployment of 650 sites and approximately 1,300 screens. It'll generate $16,000 a month in SaaS once these are fully deployed by the end of Q2 this year. They will evaluate the success of media revenue over the summer and could deploy thousands of locations in the future. Starlite Media. This ad-based network continues to transition from static to digital. We expect this network to convert and/or add several hundred locations to digital every quarter throughout 2024 and 2025. Starlite's premium network is known for its big, bright, and bold displays in outdoor shopping centers across the U.S. Our drive-thru product introduced the product in 2021, just coming out of COVID. Today, this product line is continuing to accelerate, and we believe we are one of the largest suppliers of drive-thru solutions in the QSR industry. On average, every business day in America, we are installing one or more drive-thru solutions somewhere. Finally, let's discuss our transition to a comprehensive company-wide ERP solution. We are heads down in the middle of this project. We are in the process of transitioning from the planning and setup stages to the implementation and utilize phase. Our first department or departments come online in Q2. More to come on this as the company completes the transition to this ERP solution this year. Will, any further commentary you'd like to add on our Q4 and 2023 annual results? Thanks, Rick. In the interest of time and in light of the insights and comments provided earlier on the call, I think we'll move into the Q&A portion of the call at this time. As a reminder, to ask a question, please press star one one on your telephone. One moment for our first question. The first question comes from Brian Kinstlinger with Alliance Global Partners. Your line is open. Hey, guys. Thanks for taking my questions. And 2023, congratulations. The company looks so much different than two or three years ago. Congratulations on that. Thanks, Brian. I want to start, yep. I didn't hear a backlog number. It sounds like things are going fantastic, and they have been for a while. And while it sounds like those trends are solid and I wait for the backlog, over the last few quarters, we haven't seen that backlog increase. There's lots of puts and takes, I know. So maybe you can provide the backlog and talk about that as well as the opportunities with all that you've discussed of growing the backlog over the course of the year. Brian, yeah, our backlog has remained relatively flat. We've been installing at about the same pace as we've been adding to it. We expect that to change over the next two quarters as we have a tremendous amount of opportunity that we're circling to close, but not much to say. It's remained relatively flat, and there's certainly still 18-24 months' worth of revenue in that pipeline or in that backlog, sorry. Okay. And then you discussed a lot of different great details on your businesses. You've had particular success early on in drive-thru upgrades to digital. Are these successes leading to greater brand awareness in the market and therefore more enterprises looking to work with you than previously? Very much so. You talked about the improvement in the business over the last couple of years, right, Brian? Two years ago, at times, we were simply not invited, right? Number one, they didn't know to invite us. Number two, their perception of our company wasn't that we weren't big enough or whatever the case may be. Today, that is very different. If you're a midsize or a large QSR brand from the biggest ones, the Big 4 QSR brands down to the mid-brands that got 400 or 500 locations, and you are in the process of evaluating drive-thru, CRI's name comes up. We are included in the conversation. For the largest ones, the Big 4, but even slightly smaller, who is the competition? Is it system integrators? I'm trying to think about who they are looking if it's not CRI in that space. There's several large ones, right, that we compete against every day. We compete against STRATACACHE literally on a daily basis. STRATACACHE software and solution drives McDonald's. Coates is a supplier out of Australia that has supplied a lot of McDonald's hardware. They have tried to penetrate other accounts, have not been so successful. Okay? So those are really primarily the main two. A third one, and it's SICOM. They have Burger King. And so the Big 4 are effectively taken. Wendy's has chosen somebody. It is not a name brand. I'm totally surprised. So those are well on their way to rolling out. But where we'll really thrive and do an excellent job is in the companies that have 500-2,000 locations. We are the head of the pack in those locations. And then you gave some clear path forward on the Strike Ten contract, Bowling Center TV. Has installs in the fourth quarter and early first quarter gone a little bit slower than expected? And what gives you the confidence of the significant ramp over the course of the year? A couple of things. A lot of learnings, really, on BCTV's part and certainly some of CRI's, but we're gaining speed. Literally, as we speak at the end of March, deploying an entire second install team and a third install team are starting to hit the ground running. So we see by mid-April is when we think there'll start to be some increased velocity. And certainly, by the end of Q2, we'll be at full stride. Now, there is one of the other things that we just bring out, and I noted in the call. Originally, we projected BCTV. This was a $35 million project. It was expected to be $35,000 per location, 1,000 locations, right, Brian? So far, just due to the uniqueness of the bowling centers that we've done, which is Will Logan, is it 40-50 now, approximately? Yeah, we're approaching our 60th install. Approaching our 60th install. They've come in about 27,000. So it's a little bit lower than the original expectation. But it is moving forward relatively quickly, Brian. Yep. Yep. Great. And then you mentioned, at a high level, customer delays. Is that outside of Strike Ten? And are you seeing any changes to that or any commonalities in why there are delays? I think what I was attempting to articulate was when I was talking about the fluctuation from quarter to quarter, right? Everybody starts and launches January. Well, there's a full 30 days of planning and getting the budget approved. And then so it's not like on January 3rd, everybody's moving forward. Everybody stands still most of January. So it's February that we start to really get going, right? And that's just the industry that we're in, right? So the year always starts off a little slower just because of that. Q2, and then you also have weather, right? By Q2, weather's warmed up. Q2 and Q3, construction and all the other trades that we have to interface with are in full swing. So that's when you tend to see our revenue bounce up, accelerate. And then as you get into Q4, things usually are going pretty strong. And then as we get up to Thanksgiving, people start to wind down because you got Thanksgiving and Christmas. That was what the attempt was to articulate. Okay. Last question I have, maybe for Will. On the fourth quarter results, the gross margin percentage on hardware and services seem to have abnormalities to the past. Services much higher than usual, hardware a little bit lower than usual. I think that's what I remember. Can you help us understand those dynamics? And then you talked about the change in media sales. So maybe help us understand what reasonable assumptions are going forward with the gross margins of these two lines of revenue. Yeah, great question, Brian. I think that the best proxy is to use the full-year figures. In the fourth quarter, we had some cleanup in gross net accounting, particularly with media, that removed some COGS and brought in some revenue, which kind of gave you a little distortion there on the services line. On the hardware line, we do have a couple of newer AdTech or ad-based network customers that did some very large purchasing with some additional budget here in the November, December timeframe. Those were, in some instances, some very expensive displays. The top-end displays in the market tend to have a slightly tighter margin, but that's not the normal profile moving forward, I would model off of the year-to-date figures. Typically, you've been in the mid 60s and low 20s, something like that. Is that about right? I have to go back and get the answer. Yes. I think that low 20s for hardware and low 60s on the services is a good proxy. We'll continue to update and reevaluate that based on mix as the SaaS grows. Great. Thanks, guys. Thanks, Brian. One moment for the next question. The next question comes from Howard Halpern with Taglich Brothers. Your line is now open. Congratulations, guys. Great execution. Hey, Howard. How are you? Good to hear your voice. I'm doing well. You just really started the channel partner program, and you already have 100 licenses. What is the feedback you're getting from them, and how excited are you that it seems to be ramping fairly quickly with higher margin SaaS revenue? I mean, we're excited about it. The feedback is they love what we're doing. They love our software package. I mean, that's really all. The success of a channel program is all built upon two things. Number one, the actual software platform, and that's getting rave reviews, and the guy that's running the channel. And we think we've got the best channel guy in the business, Dave Petricig, joined us, and we're just excited to have him. He's doing a great job. He was here for about eight months or so, finally launched the channel program, and we expect it to grow fast. Okay. And in terms of the cost structure, operating expenses, do you basically have that in place? And now that with the bowling contract and other contracts, it's just basically layering and leveraging going forward? Yes, Howard. I mean, if you look back, we've probably added 40 or 50 roles over the last 12-18 months in the company to really build the baseline and the infrastructure of this business to take it to the next level. We're where we need to be, and the top line is catching up quickly. So we've been carrying that cost since the second half of 2023. We feel like we've got the team in place and the infrastructure that we require to move forward throughout 2024 with limited change. Okay. Just one last one on different opportunities out there. What do you view as some of the newer opportunities? Is it in convenience stores and even in deli departments in supermarkets? Can you describe what the various opportunities that, I guess, are potentially in your pipeline? Sure. QSR remains hot, particularly on the digital drive-thru. We see continued acceleration of inflow of capital into supporting digital out-of-home or advertising networks. A lot of folks transitioning to point-of-purchase funding, right, away from mobile ads or other television and other products into that point of purchase, which is resulting in networks like Starlite Media and BCTV being built out. We see continued shift in that direction and strong demand for years to come. Supermarkets is absolutely in play, Howard. Several of them are trying to figure out whole-store ecosystems with both potentially outside-the-building digital advertising, inside-the-building digital menu boards, wayfinding, price shelf stickers. Still early stages on that because there are a lot of moving pieces, but see that being an area of focus over the next 24 months. Beyond that, retailers are also trying to figure out incremental digital engagement, but that one's probably fourth on the list of those that I named. Okay. Okay. Well, thanks, and keep up the great work, guys. Thanks, Howard. One moment for our next question. Our next question comes from Kris Tuttle with Caterpillar Capital. Your line is open. Hey, thanks for taking my questions, and congratulations on some good old-fashioned Louisville execution down there. Thanks, Kris. Appreciate it. I wanted to just ask, there's a couple of things you've announced that I'd love to learn a little bit more about. One of them is Icebox media. And I was reading through that one again yesterday, and I was trying to figure out, is that more of a software arrangement? Is there incremental hardware, a lot more incremental hardware involved? Just wondered if you could give me some of the moving parts on that one so I understand it better. Sure. That's actually a digital display, but think of it as about 8-12 inches tall and about 3 feet wide with a small mounting fixture that goes on top of those Iceboxes outside of convenience locations. It is a digital advertising network, so there are a lot of posters in those locations now. There is funding from private equity that has come in and said, "We're going to build out a digital ad network right there at the Icebox." We're the hardware provider, although it's a limited amount of hardware, Kris, on that since it's one kind of small screen, and then the software provider behind that. So ultimately, a software play for us in the grand scheme. That is in a test of about 85 locations that started rolling out here in the last two months, running to speed. They'd love to do 5,000, and we'd love to help them with it. So we're waiting to see results on how that goes as deployed. Okay. And if they do that broadening out, will they just go with you guys, or would they rebuild? Yes. Oh, they would. Okay. No, we've already been through the front-end process to be evaluated as the partner, been selected. We helped actually design and engineer the solution on the hardware side and have tested that with our software. So we're queued up. We're the partner of choice. Now it's just a matter of how quick will they scale? Got it. Then similar question just on, you announced a deal with Black Rifle, and I wanted to understand, particularly this QSR thing is kind of interesting, right? There are companies like PAR Technology out there that are going after that market, and then you have Toast and restaurants that are more back-end and infrastructure-focused. But I'd love to learn more about what you're doing with Black Rifle operationally as well, sort of how you guys see yourself playing more deeply in that market. Yeah. So with respect to PAR, Toast, those folks, we actually have our Clarity Software, our food-based platform, integrated to those partners on the POS side so that there is a single source of truth. A change in one system or the other will automatically reflect on the digital menu board. So that's typically something that we're doing at the start of an engagement with the QSR and hasn't, frankly, been a lot of competition. It's more of an integration with those folks for a combined solution for the customer. In the case of Black Rifle in particular, they actually had digital signage already. They had rolled out with a very bare-bones Samsung MagicINFO license that comes embedded in the display but does not have any kind of dynamic capabilities. That's been in the field for six months or a year. They indicated it wasn't giving them what they need, and we're doing a virtual conversion of their existing units. I think it's about 600 displays live in the field that'll come over to our software platform here in 2Q. 1Q and 2Q, we did some testing in 1Q. The rest will go this quarter. Any new locations will then be deployed. Our hardware and our software solution. I got it. I got it. And then ultimately, how big could they be after the 600 units are converted? Yeah, great question. I think that they have intentions, if you read about them, to scale up. Not sure where that gets to, but they do have about, I believe, 6-8 screens per location, right? So if they end up at 1,000 locations at some point in the future, a good proxy would be 6-8 displays per. Okay. Got it. And then my last question, I've seen some talk about this because you guys have made some acquisitions, and it's relating to your software pricing. Is increasing pricing for your software an important factor in the growth there when some of these older contracts renew? I'd love to get a feel for what that looks like. And then if you have, as you add modules, you have the opportunity to go back to your base and offer them additional functionality at essentially higher subscription prices. So I'd love to just get a little bit more insight from you on that. So I would say yes on all fronts. On the incremental services and upsell, particularly with respect to adding our AdLogic platform for network monetization, we go to existing infrastructure accounts and offer them that added layer of SaaS, which we think will be additive to existing customers, additional incremental subscription price. We are also seeing two other things that are important, Kris. One is new customers with new devices added. We are adding those today at a higher price per endpoint per month than our existing average today. So each new endpoint is slowly bringing up my average SaaS per device per month. We're also lapping some longer-term renewals. It's part of what you saw in our disclosures around where we are today in March versus where we were at December 31st. We've had a couple of contracts where we've gone back, renegotiated, and we're successfully able to increase prices on the existing SaaS customers. We believe, as this market continues to consolidate and some of the smaller kind of bottom feeder players dwindle out over time, that there will be a slow rise as those renewals occur over the next one to two cycles. Okay. I got it. That's really helpful. Thanks, guys. I'll leave it there, and I'll follow up with you later on. Thanks, Kris. That completes the questions from the line today. Mr. Logan, are there any additional inquiries from the Investor Relations inbox that you would like to address? Thanks, Michelle. We did have two quick questions. I'll just run through them, and then we can close the call. The first was just an inquiry about Generative AI developments at CRI. The company's strategy with respect to Generative AI is to provide for integration points with its software platforms to address opportunities associated with the production and delivery of contextual content. That's where we see the first play on the customer side, and we are exploring several partnerships at this time. There are obviously other use cases internally for operating effectiveness, but from a customer standpoint, that's where we're focused. Also had a question about the cap table and just the warrants that were outstanding. There are two tranches with an exercise price of $423 and $6. Those both do not feature a cashless exercise option, so those would be incremental cash to the company if exercised and the value if exercised is in excess of the current total debt of the company, which was the inquiry that came in. That concludes the questions from the IR inbox. So let me conclude the call by thanking all of our shareholders, clients, partners, and employees for their continuing efforts, commitment, and support as we work together to transform Creative Realities into the leading brand in digital signage solutions. This concludes the Creative Realities 2023 year-end earnings call.