Good morning, and welcome to the Creative Realities 2019 financial results and earnings call. All lines have been placed on mute to prevent any background noise. After the company's remarks, there'll be a question- and- answer session. If you would like to ask a question during that time, please hit the raise hand button within the webcast control panel. Alternatively, questions can be submitted during the call via email to ir@cri.com. This call will be recorded and a copy will be available on our website at cri.com following completion of the call. Participating on this call are Rick Mills, Chief Executive Officer, and myself, Will Logan, Chief Financial Officer. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements.
Factors that could cause these results to differ materially are set forth in the risk factor section of our annual report on Form 10-K as filed with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in our public filing as well as in our press release. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities, Inc.
Thank you, Will. Good morning, everyone, again, thank you for joining the call. As always, I want to start the call with a thank you to all the CRI employees across the country. Your hard work and dedication to outstanding customer service continues to make this company a success and a leader in the industry. Again, thank you for your efforts. 2019 was another record year for the company in terms of both revenue and profitability. We focused our efforts and achieved three primary goals during the year. Number one, continuing the rapid acceleration of our top-line revenue growth. That continues to be important to us. Furthering the integration of our acquisition of Allure Global Solutions, which we closed on in November 20th of 2018. Finally, driving improvements in our operating model to achieve profitability. Our revenue grew approximately 41% in 2019.
This included approximately 20% organic growth in addition to the contribution of Allure and continues to significantly outpace our competitors and the industry as a whole, all this while maintaining stable margins. Our 2019 results include the incremental operations of Allure for a full- year. Despite the completion of the acquisition in late 2018, our total operating expenses were effectively flat. This evidences our previous statements and continues to show our ability to manage the expenses and also demonstrate the operating leverage of our business and the ability of our management team to successfully integrate the operations of multiple businesses in a manner that maximizes the synergies between those businesses while producing only limited disruption to our ongoing operations. There are two other key developments that occurred in 2019 and early 2020 that I wanted to reiterate as we summarize the year.
We made two changes to our board of directors during 2019. It was mid- to late- 2019. We have the addition of Dennis McGill to our Board, brings significant operating and financial experience to our team. Dennis is our Chairman of the Board. The addition of Steve Nesbitt. Steve certainly brings 20-plus years of industry experience and an impressive background in the digital signage industry, not only here in the U.S., but globally. In January 2020, right at the start of the year, after an extensive search, we added Mike McKim as our Vice President of Operations. Mike joined CRI from United Tote. That's a Churchill Downs company, technology-focused. Mike has extensive experience running operating functions across multiple geographic areas with significant overlap and comparability to our installation and day two services.
Effective immediately upon hire, Mike has taken over the day-to-day operations and is responsible for delivery of our exceptional client experiences. We want to take this moment and welcome Mike to the team. I will now turn this back to Will to discuss the numbers in detail. Will?
Thanks, Rick. I'll now summarize our financial results for the year ended December 31st, 2019. Compared to 2018. With respect to the 2019 results, we note that the MD&A section of our annual report on Form 10-K provides those audited figures and a reconciliation of GAAP net income to the non-GAAP EBITDA and adjusted EBITDA figures. Revenues were $31.6 million for the year ended December 31, 2019, representing an increase of $9.1 million or 41% compared to the same period in 2018. As Rick mentioned, this was about 20% related to organic growth and 20% achieved from the incremental revenues provided by Allure during 2019. Hardware revenue increased approximately $1.2 million or 18% in 2019 as compared to the prior year. Gross margin on hardware revenue was 24% in 2019 as compared to 32% in 2018.
Current year margin on hardware is more in line with our expectation for the business moving forward than the margin from 2018, which was buoyed by a material one-time transaction. Services and other revenue grew approximately $7.9 million or 51% in 2019 as compared to the same period in 2018. Gross margin on services and other revenue was relatively consistent year-over-year at 50% in 2019 compared to 52% in 2018. Managed services revenue, which includes both our SaaS and our help desk technical subscription services, represented approximately $6.6 million revenue in 2019, an increase of $3.6 million or 122% as compared to the same period in the prior year. Gross profit was $13.8 million for the year ended December 31, 2019, an increase of $3.5 million or 34% compared to the same period in 2018.
Gross margin decreased to 43% in 2019 from 45% in 2018, driven primarily by the mix of hardware and services and other revenue. Total operating expenses decreased $0.9 million or 6% to $13.8 million in 2019 as compared to $14.7 million in 2018, despite the inclusion of a full- year of operating results of Allure in our 2019 results. Company had operating loss of $0.1 million during 2019, an improvement of $4.4 million as compared to the operating loss of $4.5 million in 2018. The company produced net income of $1.0 million during 2019 as compared to a net loss of $10.6 million for the same period in 2018, an improvement of $11.7 million. EBITDA was $3.2 million for the year ended December 31, 2019, compared to a - $6.9 million for the same period in 2018.
Adjusted EBITDA was $1.3 million for 2019 as compared to - $0.4 million in adjusted EBITDA for the same period in 2018. With that, I'd like to take a few minutes just to expand on a couple of the comments on the numbers. When we talked about disaggregating the revenue growth between organic growth and growth from Allure, the organic growth accounted for approximately $4.5 million of the increase, which translated to the 20% growth figure versus 2018. Beginning with 2016, continuing through the 2019 results, our organic growth rate has now been 19.2%, 29.4%, 23.2%, and 20.6% respectively, which represents a four-year average organic growth rate of 23.1%, which we believe significantly exceeds the industry average of approximately 12%. The remaining 2019 revenue growth of approximately $4.6 million represents the incremental year-over-year revenue contributed by the inclusion of Allure in the consolidated results for the full year.
Allure customers contributed approximately $5.3 million in revenue for the full year 2019. With respect to our operating leverage, we've spoken in the past that our belief that the profitability can accelerate quickly at scale in the digital signage industry. I believe the current year results continue to validate that thesis. In highlighting a few of those results, it shows that the operating loss for 2019 was $0.1 million compared to $4.5 million. That improvement of $4.4 million was, as we mentioned, despite the inclusion of Allure for a full year versus approximately one month in the prior year. Our focus remains squarely on continued double-digit growth in revenue, but we also remain adamant that the right acquisition partner could further accelerate our growth and profitability.
With consistent pro forma revenue for the year-to-date periods ended 12/31, 2019, and 2018, the combined CRI and Allure operations have generated earnings per share of $0.11 per share in 2019 as compared to a loss of $3.22 per share in 2018. We believe that companies within this industry can realize significant synergies through merger and acquisition activity, and we believe that through our results, we can execute on that vision. As Rick mentioned, the year-over-year operating results or operating expenses have remained flat for the year when adjusted for one-time non-cash gains and charges. These results are despite the retention of acquired office space in Atlanta and personnel onboarded as a result of that acquisition.
This ultimately points to CRI's operating infrastructure, which we believe has been built and remains ready and capable to support increased volume, transaction flow, and revenue with limited additional overhead. That our management team remains squarely focused on achieving consistent profitability. One other item to note with respect to the company's debt, you'll see that we drew down a line of approximately $2 million at the end of December 2019 to take advantage of an opportunity to close some legacy accrued expense and liability recorded in the balance sheet. We used $1.1 million of that $2 million in cash to pay a vendor and achieved a settlement or a gain on liability as a result of $1.6 million. The debt is convertible into preferred stock at October 1st, 2020, and the company remains in pursuit of refinancing that into a more traditional term loan or revolver line.
At this point, I'll turn the call back over to our CEO, Rick Mills.
Thanks, Will. Great update and overview. We continue to believe that our acquisition of Allure supports three key factors about the digital signage industry and just the general state of the industry in general. The industry is ripe for consolidation among smaller and mid-size competitors into an enterprise provider, number one. Number two, this industry offers significant synergies through consolidation. Ultimately, we believe that we will be one of a handful of enterprise-level companies which own a dominant portion of the market share within this industry. We believe that our ability to both outgrow our competitor and successfully integrate acquisitions, plural, positions CRI to be amongst the few enterprise-level providers in this industry. Our end-to-end services offerings position us well within the industry to compete for new and growing opportunities with partners and enterprise customers in a variety of key verticals.
Our view of 2020 is cautiously optimistic as more customers are evaluating what we call Digital Signage 2.0. What does Digital Signage 2.0 translate into or what does that really mean? A number of our customers have tried digital signage over the last six, seven, eight, nine years. They now are incorporating it into their enterprise-level operations across all of their locations. Many of them are taking the opportunity to step back, review the landscape, understand how they implemented their first digital signage solution, and are now looking to improve, revamp, upgrade that deployment so that it is enterprise across all of their locations. As we look at the 2020 organic growth, it is important to understand that the enterprise customer sales cycle is a multi-year process, often involves a pilot process before a final decision is made.
We are down the path with a number of these opportunities, assuming they continue to move forward, these opportunities will drive our organic growth as it has over the past three, four years. With that said, it's important to view the current COVID-19 coronavirus crisis, if you will, in perspective to today's customers. We see the potential for disruption in four areas of our business. Number one, supplier challenges, specifically in the LED supply chain. A high percentage of the materials utilized in the manufacturing of this product come from China. As many of you know, China has been through a severe shutdown over the last number of weeks. This will result in projects being delayed over the course of the next two quarters. We don't expect to lose any business due to the fact that every supplier has the same issue.
It's just it has and will continue to delay projects. Number two, the Customer segment of food service providers to clients in areas including education, large venue, and leisure. We believe this industry is entering a period of duress due to the daily cancellation and/or temporary closing of large events all across the United States and temporary closing of facilities, entire business operations or facilities, and Higher ed campuses. Finally, High-end Fashion and Luxury Retail. We expect this segment to be significantly hard hit due to the shutdown, sharp decrease of the Chinese economy as a result of their social distancing policies to deal with the coronavirus. They effectively put the country on lockdown. Let's put this in perspective. In 2018, Chinese consumers at home and abroad spent $115 billion on luxury items, equivalent to approximately a third of the global spend.
Due to the drastic reduction of travel through major airport hubs around the world, the retail in airports and luxury retail in airports is expected to show significant declines. Finally, Entertainment, the fourth segment, specifically box office. How is this going to affect this market is unknown at this time. We're taking a wait-and-see attitude. We do expect these factors will put some pressure on the CapEx spending plans of our current and potential customers that we're in discussions with. Frankly, it is simply too early to tell. We have a number of projects that are in process of being delayed and will slip from first quarter to the second, and potentially beyond. Due to these factors, I expect our revenue to be lumpy throughout the year. We remain cautiously optimistic. With that, turn it back over to Will.
Great. Thanks, Rick. We'll now open the phone lines in order to respond to any questions that we may have. If you would like to ask a question, reminder, please use the raise hand function within the webcast. Looks like we have a question from Jacob Silverman. Jacob, are you with us?
Yeah. Hi, Rick. Hi, Will. Thanks for taking my questions. I was wondering if you could give any color on your current pipeline and how it changed over last month. I know you commented on it a little bit, but maybe you could give us a little more detail. Also, can you quantify the pipeline of projects with LCD and other non-China sourced panels?
Great question, Jacob. First off, the current pipeline, we haven't seen a dramatic change in the pipeline. All the projects that were currently in the pipeline, currently still there. Has it slowed the process through the pipeline? Potentially some. Many of our customers, as this Q1 timing of this virus global pandemic is, people are taking a wait and see. Many of our customers are simply just trying to figure it out, as is we are today. We have not seen any projects simply go away. Right now, things remain status quo. However, that could change over the next 60 to 90 days. We just simply don't have enough data. Number two, LED stuff versus LCD. In 2019, LED jumped up and was making a major progress. It jumped up.
It was 15% of our business, approximately of our installs involved LED versus LCD or large format display. We see no issues with large format display, LCD panel displays out of Korea. Just not an issue. Large LED projects simply will be delayed for a quarter, maybe two. We expect that situation to resolve itself by mid-summer at the latest, but it's created a temporary slowdown of those projects. We have a large LED wall going into the Dream Mall up in New Jersey. That project is not due to an LED supply. That's due to construction issues at the Dream Mall in New Jersey. It's several of them. We have a large LED project going on on the West Coast.
It's about a $1.5 million refurbish of a large venue arena, and it's a $500,000 LED wall was supposed to install in Q1. That currently has slipped into Q2. That's the kind of stuff we see. We don't see anybody, well, let's not buy LED." That's not the conversation. It's let's mitigate your delivery plans and grand opening and refurbishment plans around the supply chain. Hope that answers your question, Jacob.
Yeah, definitely. Just one more question. How are you adjusting your sales strategy? Are you able to sell any of your products through something like video conferencing, given the recent travel restrictions?
I got to tell you, we do a whole lot through conference calls and video conferencing with our customers. Many of our customers, typically it does not involve a single point of contact when we're dealing with a luxury retailer. Their team is often spread not only throughout the United States, but sometimes globally. That work tends to happen via conference calls. We don't see the travel ban is impacting us dramatically per se from a sales pipeline point of view. I will point out in the last 72 hours, two very large shows in our industry segment. One is called Digital Signage Expo or DSE, and also CinemaCon, which is the annual large cinema show for the theater folks. Both those shows, which we expected to attend, were canceled.
Jacob, with our traditional sales cycle being longer in this industry, those tend to be biz development activities, not in the travel ban the same way. It's not as if we show up at a site with a new customer, we fly there, and we close a deal that starts installing the next day. As Rick pointed out, it tends to be a longer conversation, and typically, the flying and the traveling is something that happens towards the end of those deals, not the beginning.
Great. Thanks, guys. Congratulations on the solid year.
Thanks.
Thank you. All right. Let me see if there are any other calls that have come in. It appears that there are no other calls at this time. Let me conclude by thanking all of our shareholders, clients, partners, and employees for their continuing efforts, commitment, and support as we work together to transform CRI into the leading brand in digital marketing solutions. This concludes the CRI 2019 earnings call