Investment Thesis
Creative Realities exhibits severe operational distress with negative operating income of -$9.3M despite $33.3M in revenue, indicating fundamental business model challenges. The company is burning cash with -$1.0M free cash flow, negative net margins of -18.9%, and deteriorating profitability despite modest revenue growth. Critically low liquidity (cash of only $314K against $39.4M liabilities) combined with $22.0M long-term debt creates an unsustainable financial position with limited runway.
Strengths
- Revenue growth of 12.6% YoY shows top-line demand exists
- Gross margin of 42.8% indicates reasonable pricing power on delivered services
- Total assets of $61.3M provide some asset base for potential restructuring
Risks
- Negative operating cash flow of -$834K with minimal cash reserves ($314K) creates acute solvency risk
- Operating margin of -28.0% with expanding losses suggests structural unprofitability despite revenue growth
- Debt/equity ratio of 1.0x with interest coverage of -14.1x indicates inability to service debt obligations from operations
- Current ratio of 1.03x and quick ratio of 0.77x signal immediate liquidity stress
- Negative ROE of -28.8% and ROA of -10.3% show value destruction for shareholders
Key Metrics to Watch
- Operating cash flow trend and path to positive OCF
- Operating margin improvement and cost structure reduction
- Cash position and runway given burn rate
- Debt refinancing or restructuring activity
- Customer concentration and contract retention rates
Financial Metrics
Revenue
33.3M
Net Income
-6.3M
EPS (Diluted)
$-0.60
Free Cash Flow
-1.0M
Total Assets
61.3M
Cash
314.0K
Profitability Ratios
Gross Margin
42.8%
Operating Margin
-28.0%
Net Margin
-18.9%
ROE
-28.8%
ROA
-10.3%
FCF Margin
-3.1%
Balance Sheet & Liquidity
Current Ratio
1.03x
Quick Ratio
0.77x
Debt/Equity
1.00x
Debt/Assets
64.3%
Interest Coverage
-14.06x
Long-term Debt
22.0M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-22T23:56:11.650389 |
Data as of: 2025-09-30 |
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