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 civic leadership, today reported financial
results for the second quarter ended June 30, 2023.
Second Quarter 2023 Financial and Operational
Highlights
- Revenues were $22.1
million, compared to $20.0 million for the same quarter of
2022.
- Gross profit was
$12.7 million (57% of revenues), compared to $11.6 million (58% of
revenues) for the same quarter of 2022.
- GAAP net loss
totaled $2.7 million, compared to GAAP net income of $3.0 million
for the same quarter of 2022.
- Adjusted EBITDA1
was $2.4 million (11% of revenues), compared to $4.1 million (20%
of revenues) for the same quarter of 2022.
- Went “live” with
ShotSpotter (formerly ShotSpotter Respond) in seven new cities and
one university customer and expanded with seven current customer
cities and one current university customer.
- Repurchased 100,401
shares at a cost of $2.4 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 reaffirms its full year 2023 revenue
guidance range of $92 million to $94 million, representing
approximately 15% year-over-year growth at the midpoint compared to
2022. Management reduces its expectation for Adjusted EBITDA to be
approximately 16% to 18% 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 second quarter marked a strong consecutive
period for SoundThinking, highlighted by record quarterly revenue
of $22.1 million along with another quarter of positive Adjusted
EBITDA,” said President and CEO Ralph Clark. “During the second
quarter, we went 'live' with eight new customers, expanded with
eight customers, and added two new CaseBuilder™ contracts, putting
us on track to go live with approximately 140 total miles in
2023.
"Our corporate rebrand to SoundThinking has
reinforced our solutions-based holistic approach towards public
safety, coupling community and law enforcement agencies with our
expanding SafetySmart™ platform. The recent enhancements we
introduced to CrimeTracer™ (formerly COPLINK X), our advanced
analytics-fueled law enforcement search engine, has streamlined our
customers’ workflows, enabling greater efficiency and seamless data
integration across our platform. We continue to build a strong
pipeline for each investigative solution and are encouraged by the
demand we are seeing across our target growth markets. An increased
emphasis on digital transformation has permeated the public sector,
and the continued willingness of officials and community leaders to
allocate assets to public safety initiatives works in our
favor.
“Our team remains hyper-focused on taking
advantage of cross-selling opportunities and finding greater points
of efficiency and development avenues within our existing ecosystem
of technology. We believe our recent recognition as a ‘Top 100
Fastest-Growing Company’ in a competitive market like the Greater
Bay Area is indicative of the growing demand for transformative
public safety solutions, and our company’s dedication to meeting
that demand. 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.”
Second Quarter 2023 Financial
Results
Revenues for the second quarter of 2023 were
$22.1 million, compared to $20.0 million for the same quarter of
2022. The increase in revenues was primarily due to new and
expanding customer subscriptions.
Gross profit for the second quarter of 2023 was
$12.7 million (57% of revenues), compared to $11.6 million (58% of
revenues) for the same period in 2022.
Total operating expenses for the second quarter
of 2023 were $15.0 million, compared to $8.4 million for the same
period in 2022. Operating expenses increased primarily due to
increased personnel-related costs and legal expenses as we continue
to grow our business and some non-recurring items, including
approximately $0.5 million related to a company-wide all-hands
meeting associated with our rebranding launch, over $0.8 million in
accelerated intangible amortization, and a $0.2 million write-off
related to unpaid invoices for Puerto Rico. Operating expenses for
the second quarter of both 2023 and 2022 were offset by contingent
consideration reductions of $1.0 million and $3.4 million,
respectively, related to the potential earnout payments related to
the Forensic Logic acquisition.
Net loss for the second quarter of 2023 totaled
$2.7 million or $(0.22) per basic and diluted share (based on 12.2
million basic and diluted weighted-average shares outstanding),
compared to net income of $3.0 million, or $0.25 per basic and
$0.24 per diluted share (based on 12.1 million basic and 12.3
million diluted weighted-average shares outstanding), for the same
period in 2022.
Adjusted EBITDA for the second quarter of 2023
totaled $2.4 million, compared to $4.1 million in the same period
last year.
At quarter-end, the company had $3.9 million in
cash and cash equivalents, $27.6 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
August 8, 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: 1-888-886-7786International
dial-in: 1-416-764-8658Conference ID: 91300311
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 September 8, 2023.
U.S. replay dial-in: 1-844-512-2921International replay dial-in:
1-412-317-6671Replay ID: 91300311
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 June 30, |
|
|
Six Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
GAAP net income (loss) |
$ |
(2,697 |
) |
|
$ |
3,010 |
|
|
$ |
(4,487 |
) |
|
$ |
3,397 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses |
|
175 |
|
|
|
— |
|
|
|
175 |
|
|
|
101 |
|
Change in fair value of contingent consideration |
|
(999 |
) |
|
|
(3,437 |
) |
|
|
(1,005 |
) |
|
|
(3,437 |
) |
Adjusted net income (loss) |
$ |
(3,521 |
) |
|
$ |
(427 |
) |
|
$ |
(5,317 |
) |
|
$ |
61 |
|
Adjusted net income (loss) per
share, basic |
$ |
(0.28 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.43 |
) |
|
$ |
(0.01 |
) |
Adjusted net income (loss) per
share, diluted |
$ |
(0.28 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.43 |
) |
|
$ |
0.00 |
|
Weighted average shares used in
computing adjusted net income (loss) per share, basic |
|
12,224,501 |
|
|
|
12,145,993 |
|
|
|
12,238,432 |
|
|
|
12,151,450 |
|
Weighted average shares used in
computing adjusted net income (loss) per share, diluted |
|
12,224,501 |
|
|
|
12,145,993 |
|
|
|
12,238,432 |
|
|
|
12,304,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30, |
|
|
Six Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
GAAP net income (loss) |
$ |
(2,697 |
) |
|
$ |
3,010 |
|
|
$ |
(4,487 |
) |
|
$ |
3,397 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
(52 |
) |
|
|
(7 |
) |
|
|
(106 |
) |
|
|
(15 |
) |
Income taxes |
|
344 |
|
|
|
— |
|
|
|
344 |
|
|
|
— |
|
Depreciation and amortization |
|
3,147 |
|
|
|
2,356 |
|
|
|
5,651 |
|
|
|
4,538 |
|
Stock-based compensation expense |
|
2,479 |
|
|
|
2,133 |
|
|
|
4,699 |
|
|
|
3,988 |
|
Change in fair value of contingent consideration |
|
(999 |
) |
|
|
(3,437 |
) |
|
|
(1,005 |
) |
|
|
(3,437 |
) |
Acquisition-related expenses |
|
175 |
|
|
|
— |
|
|
|
175 |
|
|
|
101 |
|
Adjusted EBITDA |
$ |
2,397 |
|
|
$ |
4,055 |
|
|
$ |
5,271 |
|
|
$ |
8,572 |
|
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 services for law enforcement, civic leadership, and
community assistance groups to drive more efficient, effective, and
equitable public safety outcomes. 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 is trusted by more than 200 customers and 2000+
agencies worldwide and 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@gateway-grp.com
SoundThinking,
Inc.Condensed Consolidated Statements of
Operations(In thousands, except share and per
share data)(Unaudited)
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenues |
$ |
22,075 |
|
|
$ |
20,016 |
|
|
$ |
42,695 |
|
|
$ |
41,230 |
|
Costs |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
9,413 |
|
|
|
8,367 |
|
|
|
18,656 |
|
|
|
16,657 |
|
Impairment of property and equipment |
|
— |
|
|
— |
|
|
|
72 |
|
|
|
— |
|
Total costs |
|
9,413 |
|
|
|
8,367 |
|
|
|
18,728 |
|
|
|
16,657 |
|
Gross profit |
|
12,662 |
|
|
|
11,649 |
|
|
|
23,967 |
|
|
|
24,573 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
7,443 |
|
|
|
5,794 |
|
|
|
13,291 |
|
|
|
11,370 |
|
Research and development |
|
3,057 |
|
|
|
2,534 |
|
|
|
5,710 |
|
|
|
5,161 |
|
General and administrative |
|
5,513 |
|
|
|
3,555 |
|
|
|
10,129 |
|
|
|
7,844 |
|
Change in fair value of contingent consideration |
|
(999 |
) |
|
|
(3,437 |
) |
|
|
(1,005 |
) |
|
|
(3,437 |
) |
Total operating expenses |
|
15,014 |
|
|
|
8,446 |
|
|
|
28,125 |
|
|
|
20,938 |
|
Operating income (loss) |
|
(2,352 |
) |
|
|
3,203 |
|
|
|
(4,158 |
) |
|
|
3,635 |
|
Other income (expense),
net |
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
52 |
|
|
|
7 |
|
|
|
106 |
|
|
|
15 |
|
Other expense, net |
|
(53 |
) |
|
|
(200 |
) |
|
|
(91 |
) |
|
|
(253 |
) |
Total other income (expense), net |
|
(1 |
) |
|
|
(193 |
) |
|
|
15 |
|
|
|
(238 |
) |
Income (loss) before income
taxes |
|
(2,353 |
) |
|
|
3,010 |
|
|
|
(4,143 |
) |
|
|
3,397 |
|
Provision for income taxes |
|
344 |
|
|
|
— |
|
|
|
344 |
|
|
|
— |
|
Net income (loss) |
$ |
(2,697 |
) |
|
$ |
3,010 |
|
|
$ |
(4,487 |
) |
|
$ |
3,397 |
|
Net income (loss) per share,
basic |
$ |
(0.22 |
) |
|
$ |
0.25 |
|
|
$ |
(0.37 |
) |
|
$ |
0.28 |
|
Net income (loss) per share,
diluted |
$ |
(0.22 |
) |
|
$ |
0.24 |
|
|
$ |
(0.37 |
) |
|
$ |
0.28 |
|
Weighted-average shares used
in computing net income (loss) per share, basic |
|
12,224,501 |
|
|
|
12,145,993 |
|
|
|
12,238,432 |
|
|
|
12,151,450 |
|
Weighted-average shares used
in computing net income (loss) per share, diluted |
|
12,224,501 |
|
|
|
12,309,701 |
|
|
|
12,238,432 |
|
|
|
12,304,767 |
|
SoundThinking,
Inc.Condensed Consolidated Balance
Sheets(In
thousands)(Unaudited)
|
June 30, |
|
|
December 31, |
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
3,925 |
|
|
$ |
10,479 |
|
Accounts receivable and contract asset, net |
|
27,600 |
|
|
|
30,957 |
|
Prepaid expenses and other current assets |
|
3,520 |
|
|
|
3,225 |
|
Total current assets |
|
35,045 |
|
|
|
44,661 |
|
Property and equipment, net |
|
21,848 |
|
|
|
21,988 |
|
Operating lease right-of-use
assets |
|
2,781 |
|
|
|
3,240 |
|
Goodwill |
|
22,971 |
|
|
|
22,971 |
|
Intangible assets, net |
|
25,198 |
|
|
|
27,318 |
|
Other assets |
|
2,836 |
|
|
|
2,570 |
|
Total assets |
$ |
110,679 |
|
|
$ |
122,748 |
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable |
$ |
1,324 |
|
|
$ |
1,633 |
|
Deferred revenue, short-term |
|
37,098 |
|
|
|
41,907 |
|
Accrued expenses and other current liabilities |
|
9,387 |
|
|
|
9,965 |
|
Total current liabilities |
|
47,809 |
|
|
|
53,505 |
|
Deferred revenue, long-term |
|
1,897 |
|
|
|
1,813 |
|
Deferred tax liability |
|
852 |
|
|
|
685 |
|
Other liabilities |
|
2,058 |
|
|
|
5,800 |
|
Total liabilities |
|
52,616 |
|
|
|
61,803 |
|
Stockholders' equity |
|
|
|
|
|
Common stock |
|
62 |
|
|
|
62 |
|
Additional paid-in capital |
|
155,251 |
|
|
|
153,573 |
|
Accumulated deficit |
|
(96,887 |
) |
|
|
(92,400 |
) |
Accumulated other comprehensive loss |
|
(363 |
) |
|
|
(290 |
) |
Total stockholders' equity |
|
58,063 |
|
|
|
60,945 |
|
Total liabilities and stockholders' equity |
$ |
110,679 |
|
|
$ |
122,748 |
|
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