Breaking Down Creative Realities, Inc. (CREX) Financial Health: Key Insights for Investors

You're looking at Creative Realities, Inc. (CREX) and seeing a classic two-sided story: a tough quarter on the books, but a massive, transformative acquisition that changes the whole financial map. The Q3 2025 results, released in November 2025, show a clear near-term struggle with revenue dropping to $10.5 million and a net loss of $7.8 million, a sharp swing from last year's small profit. This was largely driven by a $5.7 million non-cash software impairment charge and a $2 million order delay that pushed revenue into Q4, plus Annual Recurring Revenue (ARR), which is the predictable subscription revenue, fell to around $12.3 million. But here's the pivot: just after the quarter closed, Creative Realities, Inc. defintely bought Cineplex Digital Media for $42.7 million, a move that spiked their post-transaction debt to roughly $39.9 million and now forces us to look past the Q3 operational dip toward the integration risk and synergy potential. Honestly, the immediate risk is clear-liquidity and leverage-but the opportunity is a much larger, more stable customer base for 2026.

Revenue Analysis

You need to know where Creative Realities, Inc. (CREX)'s money is actually coming from to understand the stock's volatility and future potential. The short answer is: their revenue mix is shifting, and while the near-term numbers look soft due to timing, a major acquisition in November 2025 is set to fundamentally change the game.

For the fiscal year 2024, Creative Realities, Inc. reported annual revenue of $50.85 million, marking a respectable 12.59% year-over-year growth. However, 2025 has been a different story. The trailing twelve months (TTM) revenue as of September 30, 2025, fell to $44.32 million, representing an -18.37% decline year-over-year. That's a sharp contraction, but it's mostly tied to deployment timing and a few specific customer events, not a total market failure. The consensus revenue estimate for the full fiscal year 2025 is around $52.06 million, which suggests analysts expect a strong Q4 to close the gap, especially considering the acquisition impact. It's all about when the cash registers ring.

Creative Realities, Inc.'s revenue is consistently split between two primary sources: Hardware and Service sales, which includes their high-margin Software-as-a-Service (SaaS) subscription offerings. This is a digital signage and AdTech solutions provider, so you're buying the screens and the software to run them.

• Hardware Sales: The physical digital displays and related equipment. This revenue is lumpy because it depends on large-scale project rollouts.
• Service Sales: This covers the software, managed services, and support. This is the more predictable, higher-margin component.

Looking at the third quarter of 2025 (Q3 2025), which is the most recent data we have, the revenue breakdown clearly shows this split. Total Q3 2025 revenue was $10.5 million, down from $14.4 million in Q3 2024. The drop was primarily due to a $2 million order slipping into Q4 and a large installation from the prior year not repeating.

Here's the quick math on the Q3 2025 segment contributions:

The Service segment, despite a slight year-over-year decline to $6.4 million from $9.2 million in Q3 2024, still makes up the majority of their sales, which is a good sign for long-term margin health. The Annual Recurring Revenue (ARR) was approximately $12.3 million at the end of Q3 2025, which is a key metric for valuing the sticky, subscription-based part of the business, though it was down from $18.1 million a year prior due to customer insourcing and other timing factors.

The most significant change to the revenue profile is the acquisition of Cineplex Digital Media (CDM) in November 2025 for a reported $42.7 million (USD). This move is expected to effectively double the company's size, bringing a massive blue-chip customer base and, crucially, a strong position in retail media networks-Canada's largest mall retail media network, in fact. This immediately injects a new, high-growth revenue stream from advertising sales, shifting the core business model from purely digital signage integration to a broader AdTech and media network play. This is a transformative event that you defintely need to factor into your forecast for 2026 and beyond. If you want to dive deeper into the strategic rationale, you can check out the Mission Statement, Vision, & Core Values of Creative Realities, Inc. (CREX).

Profitability Metrics

You need to know if Creative Realities, Inc. (CREX) is making money now and if the business model is structurally sound. The short answer is that while the gross margin looks healthy for a hardware/service hybrid, a massive non-cash charge drove the third quarter of fiscal 2025 (Q3 2025) deep into the red.

For Q3 2025, Creative Realities, Inc. reported revenue of $10.5 million and a gross profit of $4.8 million. Here's the quick math on the core profitability ratios:

• Gross Profit Margin: 45.3%
• Operating Profit Margin: -69.5%
• Net Profit Margin: -74.3%

A gross margin near 45% is defintely solid for a company that bundles hardware and services, but the operating and net margins are clearly unsustainable. The key driver for the negative numbers was a non-cash software impairment charge of $5.7 million related to winding down an engagement with Stellantis. Without that one-time charge, the operating loss of $7.3 million would have been much smaller, though still a loss.

Profitability Trends and Operational Efficiency

The trend in profitability for Creative Realities, Inc. has been volatile in 2025, mostly due to one-off events and shifts in service mix. The Q3 2025 gross margin of 45.3% was slightly down from 45.6% in Q3 2024, but the components tell a more interesting story about operational efficiency.

The company is getting better at managing its hardware business, which is a positive signal for cost control. For example, the gross margin on hardware revenue actually improved significantly, rising to 30.0% in Q3 2025 from 24.1% in the prior year, reflecting a better product mix. However, this gain was offset by a decline in the higher-margin service revenue, which fell due to a reduction in SaaS subscriptions and the exit from media sales effective October 1, 2024.

Here is a snapshot of the recent trend:

The big takeaway is that the Q3 $7.8 million net loss is largely an accounting event, but the underlying revenue and gross profit decline from the prior year is a real concern that the recent Cineplex Digital Media acquisition is meant to address.

Industry Comparison: A Mixed Bag

Creative Realities, Inc. operates in the digital signage and AdTech space, which sits between high-margin software and lower-margin hardware/IT services. When we compare their Q3 2025 performance to industry peers, the picture is complex.

The company's 45.3% gross margin is competitive, falling just below the average of 51.4% for Advertising Agencies as of November 2025. This suggests the core service delivery is priced reasonably well. However, the true challenge is in the operating expenses, which are clearly too high for the current revenue base. The broader technology sector, which includes many high-growth, high-spend companies, reported an average operating margin of -5.76% in 2025. Creative Realities, Inc.'s operating margin of -69.5% in Q3 is significantly worse, even when accounting for the impairment charge, which shows the pressure on their cost structure.

• Creative Realities, Inc. Net Margin (Q3 2025): -74.3%
• Advertising Agencies Average Net Margin (Nov 2025): -1.9%
• S&P 500 Information Technology Net Margin (Q3 2025): 27.7%

The gap between Creative Realities, Inc.'s performance and the average tech sector profitability is vast, but you have to remember that tech sector averages are heavily skewed by giants like Microsoft and Meta with margins over 40%. The company is currently in a high-investment, low-scale phase, which is why the merger with Cineplex Digital Media is so critical-it's a clear move to gain the scale needed to make their cost base efficient and improve the bottom line in fiscal 2026.

If you want to dig into the full context of these numbers, you should read the full analysis in Breaking Down Creative Realities, Inc. (CREX) Financial Health: Key Insights for Investors.

Debt vs. Equity Structure

You're looking at Creative Realities, Inc. (CREX) right now, and the capital structure-how the company funds its assets-is the single most important thing to understand. The recent acquisition of Cineplex Digital Media (CDM) has fundamentally changed the risk profile, pushing the balance significantly toward debt financing.

Before the transformational acquisition, Creative Realities, Inc. had a manageable debt load. As of the end of the third quarter on September 30, 2025, the company's total outstanding debt was approximately $22.2 million. This debt was a mix of short-term and long-term obligations, primarily driven by their revolving credit facility.

Here's the quick math on the pre-acquisition debt breakdown:

• Short-term debt: $802 thousand
• Revolving Credit Facility: $18.163 million
• Long-term debt: $3.198 million

The company's Debt-to-Equity (D/E) ratio is the key metric here. For a technology and digital signage firm, a D/E ratio of around 0.79-the average for the Advertising Agencies industry as of November 2025-is a solid benchmark. Creative Realities, Inc.'s trailing twelve-month D/E ratio was around 0.75 as of November 2025, which was right in line with the industry average, suggesting a balanced capital structure. That's a good number.

But that all changed in November 2025. The closing of the Cineplex Digital Media acquisition, valued at around $42.7 million USD, was financed through a combination of debt and preferred equity. This massive infusion of debt has ballooned the total outstanding debt to approximately $39.9 million. This jump means the D/E ratio will spike significantly in the fourth quarter, indicating a much higher reliance on debt to fund the new, larger entity.

Creative Realities, Inc. actively manages this debt. In the second quarter of 2025, for example, they reduced their debt by approximately $3.1 million using operating cash flow. They also use a sweep instrument on their revolving debt facility to automatically apply excess cash against the balance, which is a smart way to manage interest expense. The recent financing for the CDM deal involved issuing preferred equity in addition to the new debt, which is a common way to raise capital that avoids further diluting common shareholders while still providing a less risky alternative to pure debt for the company. There is no publicly available credit rating for Creative Realities, Inc., which is common for a smaller-cap company, so investors must rely on direct balance sheet analysis.

The new, higher debt level is a near-term risk, but the opportunity is the anticipated synergy from the acquisition. The company projects total revenue to exceed $100 million in 2026, with adjusted EBITDA margins in the high teens once synergies are realized. Your action item is to monitor the Q4 2025 and Q1 2026 reports closely to see if the new, larger entity can generate enough cash flow to service this higher debt load and start deleveraging quickly, as discussed in Breaking Down Creative Realities, Inc. (CREX) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if Creative Realities, Inc. (CREX) can cover its near-term bills, especially after a major acquisition. The short answer is the company's liquidity position is tight, relying heavily on its debt facilities, but this is a deliberate strategy tied to its recent growth move. The ratios are hovering right at the 1.0 mark, which is the defintely a key area to watch.

Assessing Creative Realities, Inc. (CREX)'s Liquidity

Looking at the latest Trailing Twelve Months (TTM) data for the 2025 fiscal year, Creative Realities, Inc. (CREX)'s liquidity ratios signal a reliance on non-cash current assets. The Current Ratio, which measures current assets against current liabilities, sits at approximately 1.01. This means the company has just over a dollar of current assets for every dollar of current liabilities, showing a razor-thin margin of safety. The Quick Ratio (or Acid-Test Ratio), which excludes inventory-a less liquid asset-is even tighter at approximately 0.86. This tells you that without selling inventory, Creative Realities, Inc. (CREX) cannot fully cover its immediate short-term obligations.

Here's the quick math on the short-term picture:

• Current Ratio: 1.01 (Just above the 1.0 benchmark)
• Quick Ratio: 0.86 (Below the 1.0 benchmark, indicating reliance on inventory)

Working Capital and Cash Flow Trends

The low ratios translate directly into a negative working capital position. The Net Current Asset Value (a proxy for working capital) for the TTM period is approximately $-21.10 million. This negative figure highlights a structural dependency on short-term financing to fund operations. To be fair, management has intentionally kept cash on hand minimal, as the company employs a sweep instrument to automatically apply cash against its revolving debt facility to save on interest expense. Consequently, cash on hand as of September 30, 2025, was only about $0.3 million, a drop from $1.0 million at the start of the fiscal year.

An overview of the company's cash flow statements for the TTM period ending in 2025 shows the following trends:

The operating cash flow (OCF) was slightly negative at approximately -$100,000 for the latest TTM period, which is not ideal for a growth-focused company, but it's close to breakeven. The real story is in the investing and financing activities. The post-quarter acquisition of Cineplex Digital Media (CDM) for $42.7 million was a major use of cash for investing. This was financed through a combination of debt and preferred equity, pushing the post-transaction debt up to approximately $39.9 million. This is a huge jump from the $13.0 million in outstanding debt at the start of 2025.

Near-Term Liquidity Concerns and Strengths

The primary concern is the minimal cash balance and the heavy debt load, which has increased significantly to fuel the CDM acquisition. The company is highly leveraged, with gross debt at $22.2 million at the end of Q3 2025 (pre-CDM close) and climbing to nearly $40 million post-acquisition. However, the strength is the strategic nature of this debt. The acquisition is expected to nearly double the company's size, accelerate growth, and generate significant free cash flow in 2026, with revenue projected to exceed $100 million. The risk is execution-if the expected synergies and revenue growth don't materialize quickly, the high debt service could strain the already tight liquidity. For more on the strategic direction, you can review the Mission Statement, Vision, & Core Values of Creative Realities, Inc. (CREX).

Next Step: Portfolio Managers should model a sensitivity analysis on the new debt covenants against a 10% and 20% delay in projected CDM revenue synergies by the end of Q2 2026.

Valuation Analysis

You're looking at Creative Realities, Inc. (CREX) and trying to figure out if the current price is a bargain or a trap. The direct takeaway is that Wall Street analysts see the stock as significantly undervalued, projecting a massive upside from the current price, but this optimism is balanced against recent financial losses that complicate traditional valuation metrics.

The analyst consensus is a strong indicator of potential opportunity. Based on a consensus of 10 analysts as of November 2025, the stock carries a Buy recommendation, with an average 12-month price target of $7.27. With the stock trading around $2.87 recently, this target suggests a potential upside of over 153%. That's a huge gap, but you defintely need to understand why the market hasn't closed it yet.

Core Ratios: The Mixed Picture

When we look at the core valuation multiples, the picture gets muddy, which is typical for a growth-by-acquisition company that's still finding consistent profitability. Since Creative Realities, Inc. reported a net loss of $7.8 million in the third quarter of fiscal 2025, the Price-to-Earnings (P/E) ratio is negative and therefore not a useful metric for comparison right now. We must turn to enterprise value and book value.

Here's the quick math on the more relevant metrics:

• Price-to-Book (P/B) Ratio: At 1.30, the stock trades relatively close to its book value (assets minus liabilities). A P/B below 3.0 is often considered reasonable for a technology-driven company, so 1.30 suggests the market is not assigning a huge premium for intangible assets yet.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is better because it strips out the effects of debt, cash, and non-cash expenses like depreciation and amortization. As of November 2025, the TTM (Trailing Twelve Months) EV/EBITDA is approximately 15.87, based on a TTM EBITDA of roughly $3.16 million. This is higher than the historical median for the company and suggests a fair-to-slightly-high valuation relative to its current cash flow generation, a factor likely influenced by the recent Cineplex Digital Media acquisition.

Stock Performance and Dividend Policy

The stock's performance over the last 12 months shows the underlying risk. The share price has decreased 38.95% in the past year, reflecting investor uncertainty following a drop in third-quarter revenue to $10.5 million and the significant Q3 net loss. The 52-week trading range is wide, from $1.28 to $4.72, highlighting the volatility you must be prepared for. The stock has high beta (1.42), meaning its price volatility has been higher than the market average.

What this estimate hides is the impact of the Cineplex Digital Media acquisition, which closed in November 2025 for $42.7 million (USD equivalent). Management is banking on this deal to improve bottom-line results in fiscal 2026, which is what the bullish analyst targets are pricing in. Creative Realities, Inc. is a growth-focused company, so it's not surprising that the current TTM dividend payout is $0.00, resulting in a 0.00% dividend yield. They are prioritizing capital for growth, not shareholder distributions.

Next Step: Finance/Strategy team: Conduct a scenario-based Discounted Cash Flow (DCF) analysis that explicitly incorporates the projected synergies and debt load from the Cineplex Digital Media acquisition to validate the $7.27 analyst price target. For more context, you can read the full article: Breaking Down Creative Realities, Inc. (CREX) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Creative Realities, Inc. (CREX) right after a major acquisition, and honestly, the near-term risk profile is elevated. The company is betting big on the Cineplex Digital Media (CDM) deal to transform its growth trajectory, but that introduces immediate, concrete financial and operational risks you need to track.

The core challenge is balancing a recent decline in organic revenue with a significant increase in debt. For the fiscal third quarter ending September 30, 2025, revenue was $10.5 million, a sharp drop from $14.4 million in the prior-year period. This revenue decline, plus a $5.7 million non-cash software impairment charge related to winding down the Stellantis engagement, led to a net loss of $7.8 million for the quarter.

Here's the quick math on the financial leverage: The CDM acquisition, closed in November 2025 for approximately $42.7 million (USD), immediately spiked the company's outstanding debt to around $39.9 million. At the end of Q3 2025, Creative Realities, Inc. had minimal cash on hand, roughly $0.3 million. This combination of high debt and low liquidity means the company is highly dependent on the acquired cash flow and the successful realization of synergies to meet its debt servicing obligations.

• Financial Risk: High leverage post-acquisition, approximately 7.56x gross leverage.
• Operational Risk: Annual Recurring Revenue (ARR) fell to $12.3 million from $18.1 million year-over-year.
• Execution Risk: A substantial $2 million order slipped from Q3 into Q4 2025, highlighting deployment timing issues.

Integration risk is defintely the biggest strategic swing factor right now.

The digital signage and media industry is highly competitive, and Creative Realities, Inc. faces external pressure from larger, well-capitalized firms. Plus, there's the constant threat of a key client choosing to insource work, as one large customer did, which contributed to a decline in managed services revenue during the quarter. The company also faces standard industry risks like supply chain shortages, which can delay hardware deployments and revenue recognition.

To mitigate these risks, management is focused on a few clear actions. The CDM acquisition itself is a mitigation strategy, aiming to diversify the customer base with blue-chip clients and significantly increase the company's scale. Management anticipates total company revenue to exceed $100 million in 2026, with adjusted EBITDA margins in the high teens, once synergies are realized.

They are also actively working to improve the sales mix, targeting higher-margin service revenue. The AdLogic CPM platform is a key focus, intended to create new monetization models through in-store retail media networks. Operationally, they are prioritizing cost control and deleveraging the balance sheet whenever possible. You can read more about their long-term vision here: Mission Statement, Vision, & Core Values of Creative Realities, Inc. (CREX).

Here is a snapshot of the core financial risks highlighted in the recent filings:

The bottom line is that while the CDM acquisition offers a path to scale and higher recurring revenue in 2026, the immediate risk is one of integration failure and financial strain from the high debt load. Watch liquidity and reported progress on synergy realization closely.

Growth Opportunities

The growth story for Creative Realities, Inc. (CREX) is defintely shifting from organic, project-based work to a strategic, acquisition-led model focused on high-margin recurring revenue. The near-term opportunity is entirely tied to successfully integrating Cineplex Digital Media (CDM), a deal that instantly changes the company's scale and customer base.

You need to look past the recent Q3 2025 revenue of $10.5 million, which was impacted by a large order delay and a $5.7 million non-cash software impairment charge related to an engagement wind-down with Stellantis. The real driver is the transformational acquisition of CDM, which closed on November 7, 2025, for CAD $70 million (USD $42.7 million) in cash. This is a game-changer.

Here's the quick math on the acquisition impact: CDM is expected to drive annualized cost synergies of at least $10 million by the end of 2026, primarily through operating efficiencies and cross-selling. This immediately puts the combined entity on a much stronger financial footing, aiming for a pro-forma 2026 revenue that should exceed USD $100 million with high-teens Adjusted EBITDA margins.

The combined company now has a significant competitive advantage in North America, offering a wider breadth of solutions from a managed labor pool to logistics expertise. This is how you move from a niche player to an enterprise-grade solution provider.

• Acquisition: CDM adds blue-chip clients like Scotiabank and Tim Horton's.
• Synergies: Targeting at least $10 million in annual cost savings by late 2026.
• Scale: Pro-forma 2026 revenue is projected to exceed $100 million.

Product and Market Expansion Initiatives

Beyond the acquisition, the company is doubling down on its core vertical markets, namely Quick Service Restaurants (QSR) and Retail Media Networks. The QSR segment is a major growth engine, highlighted by a significant engagement with an upscale QSR chain that has over 1,000 locations. This project involves a full digital menu board transformation powered by the proprietary Clarity™ Content Management System (CMS) platform.

Product innovation is also focused on making their solutions more accessible and monetizable. They introduced a new drive-thru hardware and software solution at a price point of $14,999, which management noted is about 20% below most competitors, specifically targeting the mid-market QSR space. This is a smart move to capture market share. Plus, the launch of the AdLogic and AdLogic CPM+ platforms is key to monetizing in-store foot traffic, essentially turning digital signage into a new revenue stream for clients and a recurring revenue stream for Creative Realities, Inc..

Financial Trajectory and Core Strengths

While the business model is shifting, the core strength remains the transition to a Software-as-a-Service (SaaS) model, which generates predictable revenue. As of the end of Q3 2025, the Annual Recurring Revenue (ARR) was approximately $12.3 million. This figure is a critical metric for long-term valuation, even if it saw a drop from previous periods, as it represents sticky revenue. Analysts forecast a strong annual earnings growth rate of 124.9% per annum, reflecting the expected swing to profitability once the CDM synergies kick in.

The company is positioned for growth because of its deep vertical expertise in areas like automotive, retail, and DOOH (Digital Out-of-Home) advertising, allowing them to deliver highly tailored solutions. They offer a 100% turnkey solution, which simplifies deployment for large enterprise clients-a huge differentiator in the complex digital signage world.

For a deeper dive into the company's current balance sheet and liquidity, you can read the full analysis in Breaking Down Creative Realities, Inc. (CREX) Financial Health: Key Insights for Investors.