Creative Realities Inc. (NASDAQ: CREX) reported Q3 revenue for the quarter came in at $5.1 million versus the consensus estimate of $6.5 million.

Third Quarter Financial Update

Revenue, gross profit, and gross margin:

• Revenues were $5.1 million for the three months ended September 30, 2020, a decrease of $1.6 million, or 24%, as compared to the same period in 2019.
• Hardware revenues were $2.8 million for the three months ended September 30, 2020, an increase of $0.8 million, or 40%, as compared to the same quarter in the prior year, driven by the introduction of the Thermal Mirror product which generated approximately $1.8 million in hardware sales during the quarter. Gross margin on hardware revenue was 34.0% in the third quarter of 2020 as compared to 27.0% during the same period in 2019 due to the shift in mix of hardware revenues from displays to the Thermal Mirror product which generates higher gross profit.
• Services and other revenues were $2.3 million for the three months ended September 30, 2020, a decrease of $2.4 million, or 52%, as compared to the same period in 2019, driven primarily by a reduction in installation services of $1.5 million year-over-year combined with a general reduction in other software and managed services revenue due to customer closures in response to the COVID-19 pandemic. Gross margin on services and other revenue was 65.4% in the quarter ended September 30, 2020 compared to 58.9% in the same period in 2019 driven by less labor-intensive services offerings related to the Thermal Mirror product.
• Managed services revenue, which includes both software-as-a-service ("SaaS") and help desk technical subscription services for our traditional digital signage and new Thermal Mirror product offerings, were $1.3 million for the three months ended September 30, 2020, a reduction of $0.5 million, or 28%, driven by customer closures in response to the COVID-19 pandemic.
• Gross profit was $2.4 million for the three months ended September 30, 2020, a decrease of $0.9 million, or 26%, compared to the same period in 2019. Consolidated gross margin decreased to 47.9% for the three months ended September 30, 2020 from 49.1% in the same quarter in the prior year, driven primarily by a higher ratio of hardware revenue to total revenue in the period on continued sales of the Thermal Mirror product.

Rick Mills, Chief Executive Officer, commented, "CRI's third quarter results highlight the tremendous adaptability and commitment that our personnel have shown in the face of adversity and challenges in our core business throughout the COVID-19 pandemic, specifically both (1) the flexibility to pivot our business to Safe Space Solutions' products and services that remain relevant in a marketplace with continued business closures, and (2) the ability to continue to drive reductions in expenses despite the incremental costs associated with launching new products and services."

Mr. Mills continued, "Revenue for the third quarter 2020 increased approximately $1.4 million as compared to the first and second quarter of 2020 as we began to see adoption of our Thermal Mirror product in the marketplace. We continue to believe that CRI's solution is a market leader and has opportunity for continued adoption in the marketplace throughout the remainder of 2020 and into 2021 as employers seek to adopt technology that will further enhance the safety of the workplace for their employees. We continued to focus on reducing controllable expenses, reducing total operating expenses by approximately $0.7 million, or 23%, versus the same quarter in 2019, exclusive of non-cash charges in each period. Net loss in the quarter reduced to $0.6 million, which resulted in the generation of $0.3 million of EBITDA, an improvement of $2.0 million versus the second quarter of 2020. As we look forward and into 2021, and as businesses continue to reopen throughout the United States and Canada, we fully expect our Safe Space Solutions, including the Thermal Mirror product, to be a go-to consideration for return to work products and for our core digital signage revenues to return to growth."

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