SoundThinking, Inc. (Nasdaq: SSTI) (formerly
ShotSpotter, Inc.), a leading public safety technology company that
combines data-driven solutions and strategic advisory services for
law enforcement and community assistance groups, today reported
financial results for the first quarter ended March 31, 2023.
First Quarter 2023 Financial and Operational
Highlights
- Revenues were $20.6 million, compared to $21.2 million for the
same quarter of 2022.
- Gross profit was $11.3 million (55% of revenues), compared to
$12.9 million (61% of revenues) for the same quarter of 2022.
- GAAP net loss totaled $1.8 million, compared to GAAP net income
of $387,000 for the same quarter of 2022.
- Adjusted EBITDA1 was $2.9 million (14% of revenues), compared
to $4.5 million (21% of revenues) for the same quarter of
2022.
- Went “live” with ShotSpotter (formerly ShotSpotter Respond) in
six new cities and expanded with seven current customer cities and
one current university customer.
- Repurchased 35,369 shares at a cost of $1.3 million during the
quarter.
1 See the section below titled “Non-GAAP
Financial Measures” for more information about Adjusted EBITDA and
its reconciliation to GAAP net income (loss).
Financial Outlook
The company reduces its full year 2023 revenue
guidance to a range of $92 million to $94 million, representing
approximately 15% year-over-year growth at the midpoint compared to
2022, primarily related to a delay in its ShotSpotter renewal with
Puerto Rico and factoring in any potential risk of a change to its
Chicago contract before the current end-date of February 2024.
Management reaffirmed its expectation for adjusted EBITDA to be
approximately 24% to 26% of forecasted revenue in 2023.
The company’s financial outlook statements are
based on current expectations. The preceding statements are
forward-looking, and actual results could differ materially
depending on market conditions and the factors set forth under
“Safe Harbor Statement” below. The company has not reconciled its
adjusted EBITDA outlook to GAAP net (loss) income due to the
uncertainty and variability of interest income, income taxes,
depreciation and amortization, stock-based compensation expenses
and acquisition related expenses, which are reconciling items
between Adjusted EBITDA and GAAP net (loss) income. Because the
company cannot reasonably predict such items, a reconciliation to
forecasted GAAP net income is not available without unreasonable
effort. Such items could have a significant impact on the
calculation of GAAP net (loss) income. For more information, see
“Non-GAAP Financial Measures” below.
Management Commentary
“The first quarter marked an encouraging start
to the year, highlighted by solid revenue and another quarter of
positive adjusted EBITDA,” said President and CEO Ralph Clark.
“During Q1, we went 'live' in six new cities and expanded with
eight customers. Our long-term strategic plan builds upon the
strong and trusted relationships we have secured over the years
with our core buying center of public safety agency command staff.
We have consistently achieved high Net Promoter Score results,
primarily driven by our differentiated, high-quality technology
solutions combined with our unique customer on-boarding and
customer success focus. The ROI in relationship capital we have
built has resulted in an annual revenue retention rate of over 99%
three years in a row.
“In April 2023, we rebranded as SoundThinking,
reflecting the company’s focus on public safety through
industry-leading law enforcement tools. Following our rebranding
and introduction of our SafetySmart™ Platform, we secured more than
$8 million in new contracts and extensions, the largest being a
near tripling re-deployment in Suffolk County, New York. Emphasis
has been placed on cross-selling initiatives, as we remain strongly
positioned to continue sales execution and build upon existing
contracts and partnerships. Our pipeline continues to grow,
especially for our CaseBuilder and ResourceRouter solutions, which
have shorter lead times and higher margins. Overall, we are
confident in our ability to drive profitable growth by capitalizing
on the increasing demand for our SafetySmart Platform that assists
law enforcement to be more efficient, effective, and equitable in
driving positive public safety outcomes.”
First Quarter 2023 Financial
Results
Revenues for the first quarter of 2023 were
$20.6 million, compared to $21.2 million for the same quarter of
2022. The decrease in revenues was primarily due to the first
quarter of 2022 including incremental revenue from a delayed LEEDS
contract amendment signed in January 2022.
Gross profit for the first quarter of 2023 was
$11.3 million (55% of revenues), compared to $12.9 million (61% of
revenues) for the same period in 2022.
Total operating expenses for the first quarter
of 2023 were $13.1 million, compared to $12.5 million for the same
period in 2022. Operating expenses increased primarily due to
increased headcount and personnel-related costs as we continue to
grow our business.
Net loss for the first quarter of 2023 totaled
$1.8 million or $(0.15) per basic and diluted share (based on 12.3
million basic and diluted weighted-average shares outstanding),
compared to net income of $387,000, or $0.03 per basic and diluted
share (based on 12.2 million basic and 12.3 million diluted
weighted-average shares outstanding), for the same period in
2022.
Adjusted EBITDA for the first quarter of 2023
totaled $2.9 million, compared to $4.5 million in the same period
last year.
At quarter-end, the company had $5.1 million in
cash and cash equivalents, $26.7 million in accounts receivable and
contract asset, net, no debt, and approximately $25.0 million
available on its line of credit.
Conference Call
SoundThinking will hold a conference call today
(May 9, 2023) at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to
discuss these results and provide an update on business
conditions.
SoundThinking management will host the
presentation, followed by a question-and-answer period.
U.S. dial-in: 1-888-506-0062International
dial-in: 1-973-528-0011Conference ID: 701623
A live audio webcast of the conference call will
be available in listen-only mode simultaneously and available for
replay here and via the investor relations section of the company’s
website at www.soundthinking.com.
Please call the conference telephone number five
minutes prior to the start time. An operator will register your
name and organization.
A replay of the call will be available after 7:30 p.m. Eastern
time on the same day through May 23, 2023.
U.S. replay dial-in: 1-877-481-4010International replay dial-in:
1-919-882-2331Replay ID: 48300
Non-GAAP Financial Measures
Adjusted net income (loss):
Adjusted net income (loss), a non-GAAP financial measure,
represents the company’s net income (loss) before
acquisition-related expenses, including adjustments to the
company's contingent consideration obligation.
Adjusted EBITDA: Adjusted
EBITDA, a non-GAAP financial measure, represents the company’s net
income (loss) before interest (income) expense, income taxes,
depreciation, amortization and impairment, stock-based compensation
expense and acquisition-related expenses, including adjustments to
the company's contingent consideration obligation. Adjusted EBITDA
is a measure used by management internally to understand and
evaluate the company’s core operating performance and trends across
accounting periods and in connection with developing future
operating plans, making strategic decisions regarding the
allocation of capital and considering initiatives focused on
cultivating new markets for its solutions. In particular, the
exclusion of these expenses in calculating Adjusted EBITDA
facilitates comparisons of the company’s operating performance on a
period-to-period basis.
SoundThinking believes adjusted net income
(loss) and Adjusted EBITDA also provide useful information to
investors and others in understanding and evaluating its operating
results in the same manner as its management and board of
directors. For example, SoundThinking adjusts EBITDA for
stock-based compensation expense and acquisition-related expenses
because such expenses often vary for reasons that are generally
unrelated to financial and operational performance in a particular
period. Stock-based compensation is utilized by SoundThinking to
attract and retain employees with a goal of long-term retention and
the alignment of employee interests with those of the company and
its stockholders, rather than to address operational performance
for any particular period’s financial performance measures, in
particular net income (loss), or its other GAAP financial
results.
The following table presents a reconciliation of
adjusted net income (loss) to GAAP net income (loss), the most
directly comparable GAAP measure, for each of the periods indicated
(in thousands, except share and per share data):
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2023 |
|
|
2022 |
|
|
|
|
(Unaudited) |
|
|
GAAP net income (loss) |
|
$ |
(1,790 |
) |
|
$ |
387 |
|
|
Less: |
|
|
|
|
|
|
|
Acquisition-related expenses |
|
|
— |
|
|
|
101 |
|
|
Adjusted net income (loss) |
|
$ |
(1,790 |
) |
|
$ |
488 |
|
|
Adjusted net income (loss) per
share, basic |
|
$ |
(0.15 |
) |
|
$ |
0.04 |
|
|
Adjusted net income (loss) per
share, diluted |
|
$ |
(0.15 |
) |
|
$ |
0.04 |
|
|
Weighted average shares used in
computing adjusted net income (loss) per share, basic |
|
|
12,252,517 |
|
|
|
12,156,968 |
|
|
Weighted average shares used in
computing adjusted net income (loss) per share, diluted |
|
|
12,252,517 |
|
|
|
12,315,806 |
|
|
The following table presents a reconciliation of
Adjusted EBITDA to net income (loss), the most directly comparable
GAAP measure, for each of the periods indicated (in thousands):
|
|
Three Months Ended March 31, |
|
|
|
|
2023 |
|
|
2022 |
|
|
|
|
(Unaudited) |
|
|
GAAP net income (loss) |
|
$ |
(1,790 |
) |
|
$ |
387 |
|
|
Less: |
|
|
|
|
|
|
|
Interest income |
|
|
(54 |
) |
|
|
(8 |
) |
|
Depreciation and amortization |
|
|
2,504 |
|
|
|
2,182 |
|
|
Stock-based compensation expense |
|
|
2,220 |
|
|
|
1,855 |
|
|
Change in fair value of contingent consideration |
|
|
(6 |
) |
|
|
— |
|
|
Acquisition-related expenses |
|
|
— |
|
|
|
101 |
|
|
Adjusted EBITDA |
|
$ |
2,874 |
|
|
$ |
4,517 |
|
|
Safe Harbor Statement
This press release contains "forward-looking
statements" within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995, including but
not limited to statements regarding the company’s expectations for
its estimated revenue and Adjusted EBITDA for 2023, ability to
drive profitable growth and build upon existing contracts and
partnerships, operating momentum, financial visibility, sales
pipeline, revenue growth, operating leverage and margin expansion
in 2023 and beyond. Words such as "expect," "anticipate," "should,"
"believe," "target," "project," "goals," "estimate," "potential,"
"predict," "may," "will," "could," "intend," or variations of these
terms or the negative of these terms and similar expressions are
intended to identify these forward-looking statements.
Forward-looking statements are subject to a number of risks and
uncertainties, many of which involve factors or circumstances that
are beyond the company’s control. The company’s actual results
could differ materially from those stated or implied in
forward-looking statements due to a number of factors, including
but not limited to: the company’s ability to successfully negotiate
and execute contracts with new and existing customers in a timely
manner, if at all; the company’s ability to maintain and increase
sales, including sales of the company’s newer product lines; the
availability of funding for the company’s customers to purchase the
company’s solutions; the complexity, expense and time associated
with contracting with government entities; the company’s ability to
maintain and expand coverage of existing public safety customer
accounts and further penetrate the public safety market; the
potential effects of negative publicity; the company’s ability to
sell its solutions into international and other new markets; the
lengthy sales cycle for the company’s solutions; changes in federal
funding available to support local law enforcement; the company’s
ability to deploy and deliver its solutions; the company’s ability
to maintain and enhance its brand; and the company’s ability to
address the business and other impacts and uncertainties associated
with macroeconomic factors, as well as other risk factors included
in the company’s most recent annual report on Form 10-K and other
SEC filings. These forward-looking statements are made as of the
date of this press release and are based on current expectations,
estimates, forecasts and projections as well as the beliefs and
assumptions of management. Except as required by law, the company
undertakes no duty or obligation to update any forward-looking
statements contained in this release as a result of new
information, future events or changes in its expectations.
About SoundThinking, Inc.
SoundThinking, Inc. (Nasdaq: SSTI) is a leading
public safety technology company that combines data-driven
solutions and strategic advisory services for law enforcement and
community assistance groups. We are trusted by over 155 cities and
over 20 universities and corporations to drive more efficient,
effective, and equitable public safety outcomes, making communities
healthier. Our SafetySmart™ platform includes ShotSpotter®, the
leading acoustic gunshot detection system, CrimeTracer™, the
foremost law enforcement search engine, CaseBuilder™, a one-stop
investigation management system, and ResourceRouter™, software that
directs patrol and community anti-violence resources to help
maximize their impact. SoundThinking has been designated a Great
Place to Work® Company.
Company Contact:
Alan Stewart, CFOSoundThinking, Inc. +1 (510) 794-3100
astewart@soundthinking.com
Investor Relations Contacts:
Matt GloverGateway Group, Inc.+1 (949)
574-3860SSTI@gatewayir.com
SoundThinking,
Inc.Condensed Consolidated Statements of
Operations(In thousands, except share and per
share data)(Unaudited)
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
Revenues |
|
$ |
20,620 |
|
|
$ |
21,214 |
|
Costs |
|
|
|
|
|
|
Cost of revenues |
|
|
9,243 |
|
|
|
8,290 |
|
Impairment of property and equipment |
|
|
72 |
|
|
— |
|
Total costs |
|
|
9,315 |
|
|
|
8,290 |
|
Gross profit |
|
|
11,305 |
|
|
|
12,924 |
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
Sales and marketing |
|
|
5,848 |
|
|
|
5,576 |
|
Research and development |
|
|
2,653 |
|
|
|
2,627 |
|
General and administrative |
|
|
4,616 |
|
|
|
4,289 |
|
Change in fair value of contingent consideration |
|
|
(6 |
) |
|
— |
|
Total operating expenses |
|
|
13,111 |
|
|
|
12,492 |
|
Operating income (loss) |
|
|
(1,806 |
) |
|
|
432 |
|
Other income (expense), net |
|
|
|
|
|
|
Interest income, net |
|
|
54 |
|
|
|
8 |
|
Other expense, net |
|
|
(38 |
) |
|
|
(53 |
) |
Total other income (expense), net |
|
|
16 |
|
|
|
(45 |
) |
Income (loss) before income taxes |
|
|
(1,790 |
) |
|
|
387 |
|
Provision for income taxes |
|
|
— |
|
|
|
— |
|
Net income (loss) |
|
$ |
(1,790 |
) |
|
$ |
387 |
|
Net income (loss) per share, basic |
|
$ |
(0.15 |
) |
|
$ |
0.03 |
|
Net income (loss) per share, diluted |
|
$ |
(0.15 |
) |
|
$ |
0.03 |
|
Weighted-average shares used in computing net income (loss) per
share, basic |
|
|
12,252,517 |
|
|
|
12,156,968 |
|
Weighted-average shares used in computing net income (loss) per
share, diluted |
|
|
12,252,517 |
|
|
|
12,315,806 |
|
SoundThinking,
Inc.Condensed Consolidated Balance
Sheets(In
thousands)(Unaudited)
|
|
March 31, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,075 |
|
|
$ |
10,479 |
|
Accounts receivable and contract asset, net |
|
|
26,721 |
|
|
|
30,957 |
|
Prepaid expenses and other current assets |
|
|
3,474 |
|
|
|
3,225 |
|
Total current assets |
|
|
35,270 |
|
|
|
44,661 |
|
Property and equipment, net |
|
|
22,361 |
|
|
|
21,988 |
|
Operating lease right-of-use
assets |
|
|
3,012 |
|
|
|
3,240 |
|
Goodwill |
|
|
22,971 |
|
|
|
22,971 |
|
Intangible assets, net |
|
|
26,671 |
|
|
|
27,318 |
|
Other assets |
|
|
2,807 |
|
|
|
2,570 |
|
Total assets |
|
$ |
113,092 |
|
|
$ |
122,748 |
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
2,520 |
|
|
$ |
1,633 |
|
Deferred revenue, short-term |
|
|
35,620 |
|
|
|
41,907 |
|
Accrued expenses and other current liabilities |
|
|
6,649 |
|
|
|
9,965 |
|
Total current liabilities |
|
|
44,789 |
|
|
|
53,505 |
|
Deferred revenue, long-term |
|
|
1,839 |
|
|
|
1,813 |
|
Deferred tax liability,
long-term |
|
|
685 |
|
|
|
685 |
|
Other liabilities |
|
|
5,550 |
|
|
|
5,800 |
|
Total liabilities |
|
|
52,863 |
|
|
|
61,803 |
|
Stockholders' equity |
|
|
|
|
|
|
Common stock |
|
|
62 |
|
|
|
62 |
|
Additional paid-in capital |
|
|
154,664 |
|
|
|
153,573 |
|
Accumulated deficit |
|
|
(94,190 |
) |
|
|
(92,400 |
) |
Accumulated other comprehensive loss |
|
|
(307 |
) |
|
|
(290 |
) |
Total stockholders' equity |
|
|
60,229 |
|
|
|
60,945 |
|
Total liabilities and stockholders' equity |
|
$ |
113,092 |
|
|
$ |
122,748 |
|
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