Creative Realities Inc. (NASDAQ: CREX) reported Q1 revenue for the quarter came in at $3.7 million versus the consensus estimate of $5.5 million.

2020 First Quarter Financial Overview

• Revenues were $3.7 million for the quarter ended March 31, 2020, a decrease of $5.8 million, or 61%, compared to the same period in 2019.
• Hardware revenue decreased approximately $0.3 million, or 17%, in the quarter ended March 31, 2020 as compared to the same quarter in the prior year. Gross margin on hardware revenue was 28% in 1Q2020 as compared to 14% in 1Q2019.
• Services and other revenue decreased approximately $5.5 million, or 70%, in the quarter ended March 31, 2020 as compared to the same period in 2019. Gross margin on services and other revenue was 52% in the quarter ended March 31, 2020 compared to 44% in the same period in 2019.
• Managed services revenue, which includes both SaaS and help desk technical subscription services, represented approximately $1.3 million revenue in the first quarter of 2020, a decrease of $0.2 million, or 11%, as compared to the same period in the prior year.
• Gross profit was $1.6 million for the first quarter of 2020, a decrease of $3.7 million, or 64%, compared to the same period in 2019. Consolidated gross margin increased to 43% for the quarter ended March 31, 2020 from 39% in the same quarter in the prior year, driven primarily by a higher ratio of managed services revenue to total revenue in the period.
• Excluding the effects of a non-cash charge for goodwill impairment of $10.6 million and incremental reserves recorded against our accounts receivable as a result of COVID-19 of $0.4 million in the quarter ended March 31, 2020, operating expenses remained flat at approximately $3.6 million for the three months ended March 31, 2020 as compared to the same period in 2019. Total operating expenses were $14.6 million in the quarter ended March 31, 2020 as compared to $3.6 million in the same period in 2019 inclusive of those charges.
• Excluding the effects of the goodwill impairment and the incremental reserves recorded against our accounts receivable in the quarter ended March 31, 2020, operating loss was $2.0 million for the three months ended March 31, 2020 as compared to breakeven for the same period in prior year.
• Net loss was $13.2 million in the quarter ended March 31, 2020 as compared to a net loss of $0.2 million for the same period in 2019. Excluding the $10.6 million goodwill impairment charge in the quarter ended March 31, 2020, net loss increased $2.4 million in the quarter ended March 31, 2020 compared to the same period in prior year.
• EBITDA was ($12.7) million for the three months ended March 31, 2020 compared to $0.3 million the same period in 2019. Adjusted EBITDA was ($1.9) million for the three months ended March 31, 2020, compared to $0.4 million in Adjusted EBITDA for the same period in 2019. See below for a description of these non-GAAP financial measures and reconciliation to our net loss.

Rick Mills, Chief Executive Officer, remarked "Creative Realities entered 2020 with tremendous momentum. As the COVID-19 pandemic drove unprecedented disruption and volatility in the marketplace, our results were sharply impacted, most notably through reductions in revenue as both anticipated and previously planned large-scale capital expenditures throughout our customer base were suspended, delayed until future periods, or indefinitely placed on hold. As we adjusted to the uncertainty of the global crisis, our first and foremost responsibility has been to ensure the safety of our employees and community. This focus along with the decisive actions taken by our Management team during this period help preserve a strong future for CRI as we look forward to a new normal."

Mr. Mills concluded, "In adjusting to today's dynamic and challenging environment, we understand that the unknowns outweigh the knowns and that we face difficult decisions. The actions that were taken during the first quarter of 2020 and which continue through today allow us to focus on the controllable elements of our operations. While we acknowledge the challenges our business faces as a direct result of the challenges faced by our customers, we remain optimistic about the Company's ability to pivot our offering to remain relevant and to continue to assist our current and potential customers in utilizing technology to enhance their operations. We believe the long-term opportunity for both the digital signage industry and CRI remain bright and we look forward to supporting our customers in their pursuit to reopen as we move forward together."

For earnings history and earnings-related data on Creative Realities Inc. (CREX) click here.