クリエイティブ・リアリティーズ（CREX）2026年第2四半期決算説明会：売上高は65%急増、下半期は過去最高を予想

主なポイント

• 2026年第2四半期の売上高は、CDMからの740万ドルを含め、前年同期比65%増の2150万ドルとなりました。従来のCRI売上高は約8%増加しました。
• 粗利益は前年同期の500万ドルから830万ドルに増加した一方、売上総利益率は前年同期の38.5%に対し38.6%と概ね横ばいでした。
• 調整後EBITDAは、2025年第2四半期の110万ドル、2026年第1四半期の49万4000ドルの調整後EBITDA赤字から200万ドルに改善しました。しかし、普通株主に帰属する純損失は460万ドル（希薄化後1株当たり0.43ドル）に拡大しました。
• 年間経常収益（ARR）ランレートは前四半期の2010万ドルから2050万ドルに達しました。経営陣は、約400万ドルの獲得済みSaaSおよびARRバックログが2027年の開始頃から貢献し始めると予想しています。
• 経営陣は、第3四半期の売上高が2025年第4四半期に記録した過去最高の2390万ドルを大幅に上回り、続く2026年第4四半期にも前四半期比で大幅な増加を示すと予想しています。
• CRIは、目標としている少なくとも1000万ドルの年換算CDMシナジーの約75%に当たる約750万ドルを実現しました。同社はまた、最近の公募増資により流動性を強化したことで、継続企業の前提に関する注記（懸念）を解消しました。

主要財務データ

事業・業績のハイライト

サービス売上高は、CDMによるサービス売上700万ドルと従来のCRIの導入増加に牽引され、1400万ドルへと2倍以上に拡大しました。ハードウェア売上高は750万ドルへと緩やかな増加にとどまりました。

売上ミックスの影響で、ハードウェアの売上総利益率は25.1%から17.2%に低下しました。サービスの売上総利益率は、主に2025年に利益率の高い顧客契約が期間満了となったことで、54.4%から50.1%に低下しました。

CDMの統合はほぼ完了しました。販売・マーケティング費用はCDMからの約50万ドルを含め、120万ドルから200万ドルに増加しました。一般管理費（G&A）は520万ドルから900万ドルに増加し、CDMが380万ドルを占めました。従来のCRIの一般管理費は前年同期比で約40万ドル減少しました。

CRIは、テネシー・タイタンズおよび新ニッサン・スタジアム向けの850万ドル規模のプロジェクトが計画通りに進展しており、売上高の大部分は2026年に計上される見込みであると発表しました。この導入には数千台のディスプレイとフルIPTVソリューションが含まれます。

アルバートソンズ（Albertsons）が、CRIが以前発表していたリテールメディアネットワークの顧客であることが特定されました。決算発表電話会議の時点で220〜250店舗の約3000画面の転換が完了しており、同ネットワークでは1日当たり約100万件の広告が配信されています。アルバートソンズはCRIのCMSおよびアドテック（AdTech）スタックを使用しています。

CRIはAMCシアターズ（AMC Theatres）のテスト店舗での展開を完了し、約285店舗全体での本格展開に移行しています。また同社は、900以上の店舗を運営する全米規模の携帯電話販売事業者および1000以上の店舗を擁するファストフード（QSR）チェーンとの交渉を進めています。これらのプラットフォーム転換は、2027年のSaaS売上高を支えると期待されています。

同社はまた、カナダにおけるレクサスおよびトヨタの販売店約300店を自社のCMSプラットフォームへと移行させています。経営陣は、この取り組みによりSaaSおよびクリエイティブサービス売上高として年間数十万ドルが生み出されると見込んでいます。

経営陣の見通し

経営陣は、2026年第3四半期が2025年第4四半期に計上した2390万ドルを大幅に上回り、CRIにとって四半期として過去最大の売上高になると予想しています。また、2026年第4四半期の売上高も第3四半期を大幅に上回ると見込んでいます。

第3四半期は、特にテネシー・タイタンズ向けの導入案件により、ハードウェア売上高の比率が高くなると予想されています。第4四半期には、大規模なCDMメディア売上基盤が本格稼働することで、売上構成比は第2四半期の水準近くに戻る見通しです。

経営陣は、下半期に連結売上総利益率が前四半期比で改善すると予想しています。ハードウェアの利益率は2026年を通じて圧迫され続ける可能性が高いものの、2027年にはさらなる緩和が見込まれています。SaaS売上高の拡大に伴い、売上総利益率を再び40%超へ引き上げることを目指していますが、経営陣は2026年中の達成は可能性が低いと述べています。

売上成長とコスト削減策に支えられ、調整後EBITDAおよび関連するキャッシュフローは下半期に改善する見通しです。CRIは少なくとも1000万ドルの年換算CDMシナジー達成に向けて順調に進んでおり、ランレートベースですでに約750万ドルを実施済みです。

リスクおよび注視事項

• 売上高と調整後EBITDAが増加したものの、普通株主に帰属する純損失は460万ドルに拡大しました。
• ハードウェアの売上総利益率はプロダクトミックスやインフレによる圧迫が続いており、経営陣は2027年まで本格的な回復は見込んでいません。
• 業績に苦戦する競合他社が顧客維持を図っているため、サービスの価格設定には一定の下押し圧力がかかっています。
• サービスの利益率は利益率の高い契約の期間満了による影響を受けています。
• 期末時点の負債は4660万ドルに増加しました。デレバレッジ（負債削減）は、今後のプラスの営業キャッシュフローに一部依存しています。
• 契約済みの導入、プラットフォームの転換、および見込まれるSaaS売上高の時期と貢献度が、下半期および2027年の見通しにとって引き続き重要な要素となります。

アナリストQ&Aの要点

経営陣は、アルバートソンズへの導入によりリテールメディアネットワークにおけるCRIのポジションが強化され、パイプラインが加速する可能性があると述べました。同社は、アルバートソンズ、セブン-イレブン、メイシーズ、ベスト・バイでの既存のアドテック導入事例を挙げました。

移行保留中である2社の顧客のうち1社は競合他社からの移行によるものです。CRIは毎四半期に複数の新規顧客（ロゴ）を獲得すると見込んでいますが、具体的な件数や業績貢献度の保証はしていません。

経営陣は、導入顧客およびSaaS顧客の増加により、2027年の売上予測可能性が高まるはずだと述べました。また同社は、獲得済みのSaaS売上高が2027年1月1日頃から高利益率の貢献をもたらすと見込んでいます。

9月末までに転換が予定されている保留中の顧客について、CRIは新たな設置作業は不要であると説明しました。既存のハードウェアおよびプレーヤーはリモートでCRIのCMSに移行され、新規店舗や施工関連の作業は2027年中に見込まれています。

CRIはカルバーズ（Culver's）のドライブスルー向け導入を毎月継続しています。また、さらに7〜8の宝くじ事業者との話し合いを進めており、ノースカロライナ州宝くじ局は2027年のさらなる拡大を検討しています。

決算説明会（トランスクリプト）全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good morning. At this time, I would like to welcome everyone to Creative Realities' 2026 Second Quarter Earnings Conference Call. This call will be recorded, and a copy will be available on the company's website at cri.com following its completion. Creative Realities has prepared remarks summarizing the interim reports for the quarter, along with additional industry and company updates.

Joining the call today is Rick Mills, Chief Executive Officer; Tamra Koshewa, Chief Financial Officer; and George Sautter, Chief Strategy Officer and Head of Corporate Development. Ms. Koshewa, you may begin.

Tamra Koshewa

Thank you, and good morning, everyone. Welcome to our earnings call for the second quarter ended June 30, 2026.

I would like to take this opportunity to remind you that remarks today will include forward-looking statements. The words anticipated, will, believes, expects, intends, plans, estimates, projects, should, may, propose and similar expressions or the negative versions of such words or expressions as they relate to us, our management, our operations are intended to identify forward-looking statements. Actual results may differ materially from those contemplated by such statements. Factors that could cause these results to differ materially are set forth in our Form 10-K and other filings with the SEC. Any forward-looking statements that we make on this call are based on assumptions and information as of today, and we undertake no obligation to update these statements after today.

During this call, we will present both GAAP and non-GAAP financial measures. We believe the use of certain non-GAAP measures such as adjusted EBITDA, ARR and several other important key performance indicators represent meaningful ways to track our performance. A reconciliation of GAAP to certain non-GAAP measures is included in our public filings and in our earnings release that was issued this morning.

It is now my pleasure to introduce Rick Mills, CEO of Creative Realities. Rick?

Richard Mills

Thanks, Tamra. Good morning, everybody. We appreciate you joining today's call. I'll start by giving some highlights of our quarterly financials and other recent developments.

We posted revenue of $21.5 million in Q2 versus $13 million in the prior year period, including roughly $7.4 million from CDM. This is our best ever Q2 quarter revenue number and the second largest revenue quarter ever in the history of CRI. We are pleased with the strong top line growth and improved gross margins, which we expect this top line growth and margin enhancement to continue for the balance of the year. Our second quarter gross profit was $8.3 million as compared to $5.0 million in fiscal 2025 quarter, and our consolidated gross margin was 38.6% versus 38.5% in the prior year period. All trends are pointing in the right direction, and we believe we have tremendous upward momentum into the second half of the year.

As of June 30, we had an annual recurring run rate or ARR of $20.5 million, up from $20.1 million last quarter. And as we previously discussed, we have about 4 -- somewhere between $4 million and $5 million in backlog that will -- in backlog of ARR that will show up as we turn the clock and start 2027. So on January 1, that number automatically goes up significantly.

Net loss attributable to common shareholders was $4.6 million for the 3 months ended June 30, 2026, compared to a net loss of $1.8 million in the prior year period. Adjusted EBITDA rose to $2 million for the second quarter of 2026 versus $1.1 million last year. Our financial results are improving, and our team is putting in the hard work to increase operating efficiencies and leverage opportunities across our much larger technologically advanced customer-centric organization. We have now completed the majority of the integration with CDM.

We announced earlier this year, we expect to realize synergies of at least $10 million on an annualized basis. Currently, our run rate is approximately 75% of the total synergy number or approximately $7.5 million has been realized. This will help us to drive adjusted EBITDA margins in the quarters to come as we scale revenue. As we grow our adjusted EBITDA, we expect to use the free cash flow to further delever the balance sheet, as many of you know, exactly as we have done in the past.

The bottom line is we remain on track for the best year ever as we anticipate Q3 will be the largest quarter of revenue in the company's history. We expect Q3 this quarter to significantly exceed Q4 2025 when we achieved $23.9 million in revenue. And one other comment to note, we are also confident that Q4 will significantly exceed Q3 2026. So next 2 quarters, upward trajectory, tremendous growth.

One other thing, we recently completed a follow-on offering, raising approximately $12 million in net proceeds to help strengthen the balance sheet and provide capital for future growth. One additional note about the capital raise. I personally as the CEO, purchased 5% of the shares in the offering and several other members of the leadership team participated in the offering. Clearly, we believe in and are committed to growing this business. CRI is on track to be well positioned for the next 2 quarters and 2027.

I'll come back in a minute to talk about some customer updates, but we'll now turn it over to Tamra to share some additional comments on our second quarter financials. Tamra?

Tamra Koshewa

Thanks, Rick. An overview of our financial results for the second quarter of 2026 was provided in our earnings release filed this morning, which include the condensed consolidated balance sheet as of June 30, 2026, the statement of operations and cash flows for the 3 and 6 months ended June 30, 2026, and a detailed reconciliation of net income to EBITDA and adjusted EBITDA for the quarter ended June 30, 2026, as well as the preceding 4 quarters. We anticipate filing the Form 10-Q for the second quarter tomorrow. While Rick provided our operating results briefly, let me provide more context related to our performance and outlook.

Looking at the income statement, as Rick mentioned, second quarter sales rose to $21.5 million. This is an increase of $5.1 million compared to the first quarter and 65% higher than the same quarter in 2025. CDM contributed $7.4 million during the quarter or 35% of the total. Sales from our legacy CRI business increased approximately 8% year-over-year, driven by new installs across multiple new customers, including catching up on some of the installs that were delayed from Q1. Hardware sales rose to $7.5 million versus $7.1 million in the prior year period, reflecting both new deployments and the inclusion of CDM. Service revenue more than doubled to $14 million from $6 million in fiscal 2025, reflecting $7 million of CDM service sales and positive growth in the legacy CRI business from new installs.

Consolidated gross profit was $8.3 million in the second quarter of '26 versus $5 million in the prior year period, and consolidated gross margin was 38.6% versus 38.5% in the second quarter of '25. Gross margin on hardware revenue was 17.2% during the quarter as compared to 25.1% in the prior year period, while gross margin on services amounted to 50.1% versus 54.4% in the second quarter of '25. Hardware gross margins decreased year-over-year, primarily due to mix, while service gross margin declined due to the expiration of higher-margin customer contracts in '25. We anticipate gross margin to increase quarter-over-quarter as we realize sales growth from new business.

Sales and marketing expenses in the second quarter rose to $2 million versus $1.2 million in the prior year period, with CDM contributing approximately $500,000. General and administrative expenses were $9 million in the second quarter compared to $5.2 million in fiscal 2025, the increase driven by $3.8 million in CDM expenses during the quarter. Legacy CRI G&A expenses were down approximately $400,000 year-over-year. We remain on track to achieve the $10 million of synergies that Rick mentioned and cost reductions -- other cost reductions that have previously been announced for fiscal 2026, while also investing in the business to accelerate growth going forward.

We posted an operating loss of approximately $2.7 million in the second quarter of fiscal 2026 compared to an operating loss of $1.3 million in fiscal 2024 (sic) [ 2025 ], reflecting the items I just discussed. CRI reported a net loss of $4.2 million and a net loss attributable to common shareholders of $4.6 million or $0.43 per diluted share in the quarter ended June 30, 2026, versus a net loss of $1.8 million or $0.17 per diluted share in the prior year period. Adjusted EBITDA rose to $2 million in the second quarter of '26 as compared to $1.1 million in the prior year period and a loss of $494,000 in the first quarter. While adjusted EBITDA greatly improved over Q1 results, we continue to anticipate that it and associated cash flows will further improve during the second half of fiscal 2026, given the forecasted business growth and cost initiatives previously discussed.

In terms of the balance sheet, as of June 30, 2026, the company had cash on hand of approximately $10.7 million versus $1.6 million at the start of 2026. As Rick mentioned, we completed an equity offering that raised net proceeds of approximately $12 million to provide capital for growth and strengthen the balance sheet. Our debt stood at $46.6 million at the end of the second quarter as compared to $44 million at the beginning of the fiscal year. We had approximately $12.8 million of available liquidity under our revolving credit facility as of June 30, 2026.

We intend to use positive operating cash generation and the equity proceeds to support our growth projections, fund capital expenditures and lower our debt when possible. We remain dedicated to maintaining an optimized capital structure in support of financial flexibility. We believe given our recent capital raise and general positive outlook for the business, we are in a strong position to continue supporting this growth while strengthening the balance sheet.

One other item to mention. We provided a comprehensive financial model and corresponding documentation to our auditors in support of alleviating the going concern that has been on our financial statements for multiple periods. The auditors have reviewed our analysis and have concluded that the going concern is no longer needed. When our 10-Q is released tomorrow morning, the going concern language will not be there. We are confident in the plan we have laid out for the second half of 2026 and 2027 that models our ability to generate profitable growth and adequate cash flow and liquidity to sustain the business.

I will now turn it back to Rick for additional comments around customer activities.

Richard Mills

Thanks, Tamra. Great news about the removal of the going concern. Thanks for all the hard work.

Okay. Now some customer updates. I previously announced that we were selected as the official digital signage provider for the Tennessee Titans and the new Nissan Stadium under construction in Nashville, Tennessee. As a reminder, this is about an $8.5 million deal that includes the installation of thousands of displays in a full IPTV solution throughout the venue. We are on track for most of this revenue to be realized in 2026.

Additional perspective on the retail media network grocery client. I can now say that this new customer is Albertsons, an incredible brand, well-known company with thousands of locations across the U.S. To our knowledge, it is the largest retail media network being deployed in the United States this year. This is being measured by screen count. So why is Albertsons investing in this in-store media network? Why does in-store media networks work, right? Well, all the reasons we've discussed on prior calls, but in Albertsons, think along these lines, 2,200 stores, 20 well-known store banners in 35 states. Think of the names Albertsons, Safeway, Vons, Jewel-Osco, premium brands with locations all across the country. They get 36 million customers per week, which equates to 543 million annual customer trips. A tremendous network. We're thrilled to be part of it and excited. They use -- are using our entire AdTech stack, our CMS, all the things we talked about previously.

Another customer, AMC. As a reminder, on April 13, we announced a project to expand and modernize AMC Theatres' in-lobby media footprint across about 285 locations nationwide. This is a partnership between CRI and National CineMedia. They are the leading cinema advertising platform in the U.S. This media network utilizes our CMS platforms, again, including ReflectView and then our AdLogic, AdTech solution to provide ad serving for all the screens. We have completed the test locations and are moving to full deployment this month.

As we mentioned in the earnings press release, we are in the contract stage with two additional customers. One is a national cellular organization, which operates more than 900 retail locations across 45 states. The other is a fast-growing QSR, which today operates more than 1,000 restaurants across 22 states. Both customers are converting existing screens with plans for significant growth over the next few years. These conversions -- actually, one conversion will be completed by the end of September. The other conversion will be completed by the end of the year. They will help us grow our SaaS revenue in 2027.

One additional customer to talk about, we are in the process of migrating all of the Lexus, Toyota dealerships in Canada to our CMS platform. This engagement includes significant creative work to be delivered by our team. It includes approximately 300 locations, and it will generate a couple of hundred thousand a year in SaaS and creative services.

In closing, I want to take a moment and point out to everyone, our plans to go big, scale up and focus on the enterprise customer is working. We believe we have reached the stage where our profitability will grow quickly as we layer on additional business. Our sales pipeline is strong and most importantly, continues to grow significantly. The combined teams in the U.S. and Canada are working well together and frankly, delivering exceptional customer value. The reception from the customer to the new C -- combined CRI has been significant.

I want to do a quick shout-out to the new members of our C-suite who joined CRI in the last 7 months. Dan McAllister, Jackie Walker and Tamra on this call, they're all having a significant impact in the business. And as they take over the daily operations, and they truly are starting to run the business, I'm turning my focus on strategic growth areas in the marketplace where CRI will have an advantage over our much smaller competitors. Expect more to come in the future as I talk about that in future quarters.

With that, we'll now move to the Q&A portion of the call. Please go ahead, operator.

Operator

[Operator Instructions] Our first question will be coming from the line of Jason Kreyer of Craig-Hallum.

質疑応答

Jason Kreyer

Rick, great to hear all the deal flow that's happening. Particularly on the Albertsons front, good to hear things are moving in the right direction there. Can you maybe talk about what work, if any, has been done thus far? And then when you look at getting a big deal like that in the retail media sector, what does that do for prospects in the pipeline? Do you think that opens up more retail media opportunities? Or does that accelerate conversations you're already having?

Richard Mills

It certainly does. I'll come back to that, but I'll answer the first part of your question first. As of today, we have converted about 3,000 screens, and we're currently running 3,000 screens across 220 to 250 locations. We take over the deployment of those screens and the deployment of players and all the technology here over the next 30 days that will transition to us from -- they've had a plethora of suppliers doing it. It will all consolidate and we'll finish out the rest of Phase 1. So currently, today, they're running about 1 million ads a day, Jason. So it's very successful for them. They're excited. They're using our CMS, our AdTech, et cetera.

In terms of what it does for the pipeline, well, I got to tell you, it strengthens our position as we like to claim that we're one of the top 3 providers of retail media networks in the U.S. or North America today, the U.S. and Canada. And certainly, having a customer like Albertsons backs it up. We, again, have 3 or 4 customers today that have chosen our ad tech. You've got Albertsons, of course, 7-Eleven using our AdTech at now over 2,000 stores. Macy's, Best Buy has adopted our AdTech. So with growing references of that type of blue-chip brands, we expect that to accelerate our retail media network pipeline.

Jason Kreyer

That's great. We've also heard a lot about the challenges facing one of your competitors. It seems like that would create a great opportunity for CRI. Can you just talk about the early discussions that you're having with customers in the pipeline and what the prospects look like there?

Richard Mills

As I stated on the call earlier, Jason, I mean, again, here we have 2 customers who are in contracting stages right now, both have to be converted. One actually came from that competitor. The other was not. The other was a new -- came from a different platform. So we are gaining customers. We do expect the pipeline to -- was enhanced as that customer ran into some trouble or that other supplier, a competitor of ours, ran into trouble. So it certainly has helped our pipeline. But we do expect to be closing multiple "logos" on a quarterly basis, on a go-forward basis. So we're excited about it.

Jason Kreyer

Terrific. Last question for me. Just -- so given the deals that you've already won, the deployment pipeline you have today, if we combine that with the things that you have in your pipeline that you just alluded to, wondering if you can talk about how that changes your visibility as we look towards 2027 and gives you maybe a little bit better predictability around the financials.

Richard Mills

Certainly gives us better predictability because when you have 7, 8, 9 additional customers come on that are doing deployments or SaaS, if you will, on a consistent monthly basis. We think we have entered the new stage where our revenue as we enter 2027 will be much more predictable than it has in the past. We've been working on this for many years for this to catch up. And I would tell you that it's finally here. It's finally caught up or catching up, and we are incredibly bullish about 2027.

And I would also point out the comments I made earlier. We expect our Q3 to be the largest quarter in the company's history. Oh, by the way, we expect Q4 to be significantly larger than Q3. Well, that tells you there is pending revenue coming our way.

Operator

And our next question will come from the line of Brian Kinstlinger of Alliance Global Partners.

Richard Mills

Hey, Brian.

Operator

Brian, your line is open.

Richard Mills

Brian is never this quiet.

Brian Kinstlinger

Can you hear me?

Richard Mills

There you go.

Brian Kinstlinger

Hello?

Richard Mills

We hear you now, Brian.

Brian Kinstlinger

Interesting. I never hit mute, and I was on mute. Sorry about that. I was saying hi to you, Rick.

So on the strong awards and second half ramp in revenue, I'm curious with what's known, how you see the split between services and hardware.

Richard Mills

We see the SaaS continuing to grow from a services perspective, Brian. There is some hardware in the second half growth, but most of it is all services related which leads to, in theory, you should see the margin -- composite margin of the company increase in Q3, but even particularly Q4.

Brian Kinstlinger

Yes. Now that margin is improving on mix. Maybe you could touch on, there were a few comments on each of the pieces, the services and the hardware. Obviously, there's inflation, supply chain issues. How are you adjusting prices? Will we see margin recover at all in hardware specifically? And then on the service side, maybe speak to pricing trends.

Richard Mills

Pricing trends on the services, there's been some downward pressure, Brian, just due to when you have competitors suffering in the marketplace as they lose market share or their business falters, that tends to put pressure on price. We've been able to withstand that to a great extent, but it's always a challenge. In terms of hardware, we expect hardware margins to continue to be under pressure through the balance of this year, but we do expect in 2027 to get some additional relief in hardware margins. We believe we will expand them again in 2027.

Brian Kinstlinger

Got it. And just one more question, just to make sure I heard it right. One of your two pending negotiations or wins, it's August, and you expect to deliver by the end of September. Is it because you have the screens in inventory? I'm just trying to reconcile expecting to complete the installation that quickly.

Richard Mills

That one, is -- there is no installs, it's conversion of every one of their stores over to our platform. So they already have hardware in place. They already have players in place. We've developed scripts to go take over every one of their 1,000 locations "remotely," and it will deploy our CMS and all new content, and that literally will be done by the end of September. Now out of that customer in November, December, I then expect to pick up new builds and new construction, new store openings all throughout 2027, but there is no large hardware chunk that goes with the initial conversion. Makes sense, Brian?

Brian Kinstlinger

Totally. Great work on all the awards.

Richard Mills

Yes.

Tamra Koshewa

Brian, let me just clarify a couple of things that Rick was talking about with respect to your question on services versus hardware in the second half. We do expect that the third quarter is going to have a higher percentage of hardware revenues given the installs that we're planning for the third quarter, in particular, the Tennessee Titans. But then in the fourth quarter, we expect it to get back to the level that it was in Q2. And also because in the fourth quarter, remember, we have a large media revenue base that will come online that we will experience similar to what we did last year with the CDM media business.

Operator

And our next question will be coming from the line of Jon Hickman of Ladenburg.

Jon Hickman

On the margin side of things, is there some longer-term target gross margin that you are after that you could share with us?

Richard Mills

Jon, I think ideally, we'd like to, as we enter 2027, get back in -- out of the 30s back into the 40s. Tamra, I'll let you add comments, but just generally, we've had margin [ compression ] of 5% or 6%, and we're trying to get back as we enter 2027 through enhanced product mix, et cetera. Tamra, anything to add?

Tamra Koshewa

Yes, I think that's correct. I mean we have seen both the inflation as well as the mix of our revenues bring the margins down compared to last year. But as we build that SaaS base, then we can start to get back closer to that 40% plus target. But we're still going to be short of that this year. Certainly, in the second half, we'll see some improvements, but really not until 2027 when we get more of that SaaS revenue flowing through the P&L that we will start to get a lift on the margin rate.

Richard Mills

Yes. I would -- Jon, let me just add one more. I mean the point is, if you think to my earlier comments, we've got about $4 million -- certainly $3.5 million to $4 million of seeded SaaS already that is -- will "magically" turn on, on January 1. So that in itself brings incredibly high margin to the mix [indiscernible]. So that alone could push us up. We haven't done the math, pushes up the [indiscernible] up 2 points at the moment that turns on January 1. Go ahead and ask your question, sorry.

Jon Hickman

Okay. So if you have the kind of margins you would like in the, say, low 40% range, so you would need -- if you had that now, you would need another $6 million or so in revenues to breakeven on an operation basis. Do I have that -- does that math work out?

Tamra Koshewa

Yes, I think that's reasonable to assume.

Jon Hickman

Okay. Then any comments on Culver's and on the lottery stuff that's going on?

Richard Mills

Culver's continues to go well. We continue to deploy every month. We are installing new drive-thrus. There is, I think, a 3-year target to complete all of their restaurants. That's their target, not ours. And we are certainly well on track.

In terms of the lottery, we're seeing a lot of traction. We're in significant discussions with 7, 8 additional lotteries right now. North Carolina Lottery has talked about some significant expansion in 2027. I don't have orders today as we speak, but they continue to be extremely pleased and are looking to and continue to grow their lottery network in 2027. And we would expect to have some announcements as we get closer to year-end about a lottery expansion in 2027.

Operator

And our next question will be coming from the line of Kevin Sheldon, a private investor.

Unknown Attendee

Hello?

Richard Mills

Hey, Kevin.

Unknown Attendee

How are you, sir?

Richard Mills

Doing great. Yourself?

Unknown Attendee

All things considered, not bad.

Richard Mills

Go ahead.

Unknown Attendee

So just quick, when -- I guess it's a 2-part question or multiple, but regarding the SG&A being at $9 million, where do you need to be revenue-wise to be able to cover that? Or are there plans to improve efficiencies so that, that number isn't as large?

Richard Mills

It's really a combination of both. We expect the next 2 quarters to add significant ongoing revenue to the business that we will certainly be north of $25 million, closer to $30 million, if not exceed $30 million on a quarterly basis. We believe that's in the imminent future, Kevin.

Number two, there are -- we've taken out $7.5 million. It has not all showed up, but it's already been done. And so it will show up as we enter 2027. And we've got a couple of million of additional costs that we want to take out throughout 2027 as we migrate. We have customers on other networks, they're not running our software today. They're our customer, but they're running on third-party platforms that do cost us money. And the goal is to migrate them over to our platforms in 2027. So it's a combination of taking some SG&A out, leaving our expenses flat as the top line grows fairly significantly here over the next 3, 4 quarters.

Tamra Koshewa

And just one other thing I'd like to mention with respect to the G&A. What rolls in there is a fairly large amortization accounting expense for leases that we have in our mall network. And that amortization changes as we go throughout the year, and it's a noncash amortization that is just required for the way that we book that. So that certainly increases in certain periods of the year and then decreases back down. So it's not related to actual hard G&A costs that we can take out.

Richard Mills

Yes. Well said, Tamra.

Operator

And I would now like to turn the call back to Rick for closing remarks.

Richard Mills

Okay. I just do want to do a quick shout out. I want to give special thanks. There's about -- at CRI, we have about 230 employees now. I want to thank all of them for their incredible effort this year. I use the term what a great, sometimes crazy journey, this acquisition of CDM and putting the companies together and emerging as one of the top 3 competitors in North America. It's been pretty special. It's been fun, but we couldn't have done without the hard work of all the CRI employees. So a special shout-out to them.

So let me conclude the call by thanking all our shareholders, clients and partners for your continuing efforts, commitment and support as we work together to transform CRI into the leading brand in digital signage solutions. We look forward to speaking with you again next quarter. Thanks.

Operator

And this concludes today's conference call. Thank you for your participation. You may now disconnect.