Net revenues were $3.6 million in the second quarter of 2017, compared with $3.0 million in the same period last year. This represents an 18% increase over the same period last year.  Rick Mills, Chief Executive Officer, remarked, “This was a quarter of continued progress as this represents our third consecutive quarter of year-over-year growth.  We were awarded a $6.2 million contract in Q2 and expected to recognize an additional $2.0 million of revenue in this quarter, as announced in the Company’s press release dated June 28, 2017. However, due to timing issues with delivery by a third-party vendor, the revenue is being deferred at this time. While it’s disappointing not to recognize additional revenues in this quarter, our deferred revenues increased to $6.8 million. To be very clear, this is a timing/revenue recognition issue and in no way reflects on the continuing growth and expansion of the business.”

Second Quarter Financial Highlights

• Revenues were $3.6 million for the three-month period ended June 30, 2017, an increase of 18% compared to the same period in 2016
• Gross profit was $1.6 million for the three-month period ended June 30, 2017, a slight decrease of $100,000 from the corresponding period in 2016, due to increased investment in our business to accommodate our increased growth
• Revenues were $10.0 million for the six-month period ended June 30, 2017, an increase of 83% compared to the same period in 2016
• Gross profit was $4.5 million for the first half of 2017, up $1.6 million, or 56%, from the corresponding period in 2016
• Net loss before income taxes was $1.2 million for the first half of 2017, an improvement of $1.1 million or 48%, compared to the same period in 2016
• Deferred revenues increased to $6.8 million, an increase of 886% sequentially, primarily as a result of the receipt of a large order from a customer and the inability to recognize any revenue in this quarter related to that order
• Cash on hand increased to $6.1 million on June 30, 2017 versus $3.4 million at March 31, 2017

Additional Second Quarter Highlights

• Expanded the sales team across the US to 16 executives from 7 in Q2 2016.
• Awarded a contract with a leading premium car manufacturer located in Germany to deploy digital technology in its 380 dealerships in the US
• Due to a change in classification of the non-cash valuation of equity warrants from a liability to shareholders’ equity resulting from FASB Accounting Standards Update No. 2017-11, the Company’s shareholders’ equity increased by $2.5 million at June 30, 2017

2017 Updated Financial Outlook

Given the uncertainty regarding the ability to recognize the $6.2 million pre-paid non-refundable order discussed above, the Company is revising its 2017 financial guidance provided in connection with an investor presentation at a financial conference in January 2017 .

Organic revenue growth (i.e. excluding acquisitions) is now expected to exceed 47%, translating to FY17 revenue of not less than $20.0 million

2017 Share Repurchase Program

Creative Realities also announced that its Board of Directors has approved a share repurchase program to repurchase up to five million of the their common stock or common stock equivalents.  Repurchases may be made at management’s discretion from time to time on the open market or through privately negotiated transactions. The repurchase program expires in two years, and may be suspended for periods or discontinued at any time.  Any shares acquired are expected to be retired. Creative Realities intends to finance the share repurchase program through cash on hand.

“Our cash flow performance is strong, and the Board of Directors and management team believe that repurchasing stock below intrinsic value is a sound capital allocation strategy and accretive to shareholders. We will continue to fund substantial investments in the business, as well as evaluate acquisition opportunities,” said Rick Mills, Chief Executive Officer.

Conference Call Details

The Company will host a conference call to review the results and provide additional commentary about the Company’s recent performance, which is scheduled for Tuesday, August 15, 2017 at 9:00 am Eastern Time.