Here’s Why Deep Sail Capital Invested in Creative Realities (CREX)
Deep Sail Capital, an investment management company, released its third quarter 2023 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund returned -23.3% net of fees while averaging 78% net long exposure. Weakness in micro- and small-cap equities and growth decelerations in certain positions led to the underperformance of the fund in the quarter. You can check the top 5 holdings of the fund to know its best picks in 2023.
Deep Sail Capital highlighted stocks like Creative Realities, Inc. (NASDAQ:CREX) in the third quarter 2023 investor letter. Headquartered in Louisville, Kentucky, Creative Realities, Inc. (NASDAQ:CREX) provides digital marketing technology and solutions. On November 20, 2023, Creative Realities, Inc. (NASDAQ:CREX) stock closed at $1.9600 per share. One-month return of Creative Realities, Inc. (NASDAQ:CREX) was 4.26%, and its shares gained 9.97% of their value over the last 52 weeks. Creative Realities, Inc. (NASDAQ:CREX) has a market capitalization of $20.402 million.
Deep Sail Capital made the following comment about Creative Realities, Inc. (NASDAQ:CREX) in its Q3 2023 investor letter:
"Creative Realities, Inc. (NASDAQ:CREX) is a digital signage installer and digital signage software operating system.
Creative Realities has completed two major acquisitions since 2019 (Reflect Systems in 2022 and Allure in 2019) to build a digital signage software offering that includes a robust suite of software for managing digital signage. Creative Realities offers software solutions, including ReflectView for digital signage management, Clarity for digital menu board management, and Reflect AdLogic for managing advertising on digital signage. Creative Realities has historically only sold their software on screens that they install, but that is beginning to change. Due to the breadth and quality of their software offering, they are beginning to ramp up a channel sales program to allow other digital signage installers to offer their software. This will likely begin as a very small opportunity for Creative Realities, but the gross margins on their software sales (likely ~70–80 margins) are much higher than their core hardware sales (~40%), so from a business model perspective, it could be transformative.
The current SaaS business is operating at an annual recurring revenue (ARR) of $15.2 million as per the Q2 earnings report, which has been steadily growing over the past few quarters. As they install new sites, their software ARR will continue to grow, with around 5% of the spend from installation converting into increasing software ARR. If they can deliver $120 million of backlog installations over the next two years, their ARR should be over $20 million per year at the end of the period. Outside of the normal ARR from software operating licenses, they have several areas in which they can expand their ARPU per installed display, including content design, ad delivery, and interactive functionality..." (Click here to read the full text)
Creative Realities, Inc. (NASDAQ:CREX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held Creative Realities, Inc. (NASDAQ:CREX) at the end of second quarter which was 4 in the previous quarter. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
Disclosure: None. This article is originally published at Insider Monkey.
