SoundThinking, Inc. (Nasdaq: SSTI), a leading
public safety technology company, today reported financial results
for the first quarter ended March 31, 2024.
First Quarter 2024 Financial and Operational
Highlights
- Revenues increased 23% to $25.4 million, compared to $20.6
million for the same quarter of 2023.
- Gross profit increased 32% to $14.9 million (59% of revenues),
compared to $11.3 million (55% of revenues) for the same quarter of
2023.
- GAAP net loss totaled $2.9 million, compared to GAAP net loss
of $1.8 million for the same quarter of 2023.
- Adjusted EBITDA1 totaled $3.0 million (12% of revenues), an
improvement compared to $2.9 million (14% of revenues) for the same
quarter of 2023.
- Went “live” in ten new cities and one university as well as
expanded with two current cities.
- Launched ShotSpotter in Philadelphia, a tier-one city with
future growth potential.
- Cross-sold CaseBuilder and CrimeTracer to Newport News,
Virginia, which is now equipped with four
SafetySmart™ platform products.
1 See the section below titled “Non-GAAP
Financial Measures and Key Business Metrics” for more information
about Adjusted EBITDA and its reconciliation to GAAP net income
(loss).
Management Commentary
“I am very pleased with our performance in the
first quarter – as our revenues grew 23% and gross profit increased
32% compared to the first quarter of 2023," said President and CEO,
Ralph Clark. “Our results to start the year and this quarter’s
momentum reflect the execution of our strategic growth levers,
strength of our value proposition and traction of the SafetySmart™
platform – which are underpinned by our talented employees and
their commitment to the success of our growing customer base across
both the domestic and international markets. Our flagship offering,
ShotSpotter, went ‘live’ in ten new cities and one university, and
expanded in two current cities. Over the past year, we've grown our
total live miles by 12% to over 1,100 miles, reflecting strong
domestic demand and rising international interest. We're also
seeing robust cross-selling momentum, with Newport News adding our
CrimeTracer and CaseBuilder solutions to complement ShotSpotter and
ResourceRouter.
“We have bolstered our leadership team,
rebranded and expanded the SafetySmart™ platform to reposition the
company to execute on an expanded growth opportunity. This
strategic shift has been critical for our company to gain access to
a larger public safety total addressable market and more
importantly, further diversify our customer and revenue base. We
plan to remain focused on our organic sales growth levers to land,
expand, cross-sell, and retain customers – and believe we are
seeing validation from customers in this respect as our solutions
are seeing increased interest and demand from law enforcement
agencies of all sizes as they respond to increased calls for
service and greater transparency. Looking ahead, our focus remains
on driving sustainable, diversified growth that delivers meaningful
value for our stakeholders and we remain confident in our path to
achieve our long-term financial targets of 70% gross margin and 40%
Adjusted EBITDA margin.”
First Quarter 2024 Financial
Results
Revenues for the first quarter of 2024 were
$25.4 million, compared to $20.6 million for the same quarter of
2023. The increase in revenues was primarily due to new and
expanding customer subscriptions, and contributions from
SafePointe, LLC (SafePointe), which was acquired in the third
quarter of 2023.
Gross profit for the first quarter of 2024 was
$14.9 million (59% of revenues), compared to $11.3 million (55% of
revenues) for the same period in 2023.
Total operating expenses for the first quarter
of 2024 were $17.5 million, compared to $13.1 million for the same
period in 2023. Operating expenses increased primarily due to
higher headcount and employee-related costs, including SafePointe
research and development costs.
Net loss for the first quarter of 2024 totaled
$2.9 million or $(0.23) per basic and diluted share (based on 12.8
million basic and diluted weighted-average shares outstanding),
compared to net loss of $1.8 million or $(0.15) per basic and
diluted share (based on 12.3 million basic and diluted
weighted-average shares outstanding), for the same period in
2023.
Adjusted EBITDA for the first quarter of 2024
totaled $3.0 million, compared to $2.9 million in the same period
last year.
At quarter end, the company had $8.5 million in
cash and cash equivalents, $35.2 million in accounts receivable and
contract assets, net, $50.8 million in deferred revenue, $7.0
million in debt related to borrowings to partially fund the
SafePointe acquisition in the third quarter of 2023, and
approximately $18.0 million available on our credit facility.
Financial Outlook
The company reaffirmed its full-year 2024
revenue guidance range of $104.0 million to $106.0 million,
representing 13% year-over-year growth at the midpoint. The company
also expects Adjusted EBITDA margins of 18% to 20% for the full
year 2024.
“We expect to deliver both revenue growth and
enhanced profitability in 2025, even without a ShotSpotter contract
renewal in Chicago,” added Clark. “We're confident in our ability
to achieve long-term financial targets of 70% gross margin and 40%
Adjusted EBITDA margin, driven by the enduring success of
ShotSpotter and accelerating adoption of our broader
SafetySmart™ platform.”
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 income (loss) due to the
uncertainty and variability of interest income (expense), income
taxes, depreciation and amortization, stock-based compensation
expenses, and acquisition-related expenses, which are reconciling
items between Adjusted EBITDA and GAAP net income (loss). Because
the company cannot reasonably predict such items, a reconciliation
to forecasted GAAP net income (loss) is not available without
unreasonable effort. Such items could have a significant impact on
the calculation of GAAP net income (loss). For more information,
see “Non-GAAP Financial Measures and Key Business Metrics”
below.
Conference Call
SoundThinking will hold a conference call today
May 14, 2024 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: 1-877-407-8029International
dial-in: 1-201-689-8029Conference ID: 13746236
A live audio webcast of the conference call will
be available in listen-only mode simultaneously and available for
replay 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 28, 2024.
U.S. replay dial-in: 1-877-660-6853International replay dial-in:
1-201-612-7415Replay ID: 13746236
Non-GAAP Financial Measures and Key Business
Metrics
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
GAAP net loss, the most directly comparable GAAP measure, to
adjusted net loss, for each of the periods indicated (in thousands,
except share and per share data):
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
(Unaudited) |
|
GAAP net loss |
|
$ |
(2,909 |
) |
|
$ |
(1,790 |
) |
Less: |
|
|
|
|
|
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(6 |
) |
Adjusted net loss |
|
$ |
(2,909 |
) |
|
$ |
(1,796 |
) |
Weighted average shares used
in computing adjusted net loss per share, basic and diluted |
|
|
12,770,988 |
|
|
|
12,252,517 |
|
|
The following table presents a reconciliation of
GAAP net loss, the most directly comparable GAAP measure, to
Adjusted EBITDA for each of the periods indicated (in
thousands):
|
|
Three Months Ended March 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
(Unaudited) |
|
GAAP net loss |
|
$ |
(2,909 |
) |
|
$ |
(1,790 |
) |
Less: |
|
|
|
|
|
|
Interest (income) expense, net |
|
|
122 |
|
|
|
(54 |
) |
Income taxes |
|
|
114 |
|
|
|
— |
|
Depreciation, amortization and impairment |
|
|
2,790 |
|
|
|
2,504 |
|
Stock-based compensation expense |
|
|
2,927 |
|
|
|
2,220 |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(6 |
) |
Adjusted EBITDA |
|
$ |
3,044 |
|
|
$ |
2,874 |
|
|
Annual Recurring Revenue (ARR):
ARR is calculated for a year based on the expected GAAP revenue for
the year from contracts that are in effect on January 1st of such
year, assuming all such contracts that are due for renewal during
the year renew as expected on or near their renewal date, and
including contracts executed during the year after January 1st, but
for which GAAP revenue recognition starts January 1st of the
year.
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 2024, its long-term
financial targets, ability to drive profitable growth and build
upon existing contracts and partnerships, including in the United
States and internationally, operating momentum, financial
visibility, sales pipeline, revenue growth, operating leverage and
margin expansion in 2024 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 likelihood that the City
of Chicago will not be using ShotSpotter following November 2024;
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
delivers AI and data-driven solutions for law enforcement, civic
leadership, and security professionals. We are trusted by more than
250 customers and approximately 2,100 agencies to drive more
efficient, effective, and equitable public safety outcomes. Our
SafetySmart™ platform includes ShotSpotter®, the leading acoustic
gunshot detection system; CrimeTracer™, the leading law enforcement
search engine; CaseBuilder™, a one-stop investigation management
system; ResourceRouter™, software that directs patrol and community
anti-violence resources to help maximize their impact; and
SafePointe®, an AI-based weapons detection system. 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 Glover and Greg BradburyGateway 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 March 31, |
|
|
|
2024 |
|
|
2023 |
|
Revenues |
|
$ |
25,410 |
|
|
$ |
20,620 |
|
Costs |
|
|
|
|
|
|
Cost of revenues |
|
|
10,271 |
|
|
|
9,243 |
|
Impairment of property and
equipment |
|
|
252 |
|
|
|
72 |
|
Total costs |
|
|
10,523 |
|
|
|
9,315 |
|
Gross profit |
|
|
14,887 |
|
|
|
11,305 |
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
Sales and marketing |
|
|
7,112 |
|
|
|
5,848 |
|
Research and development |
|
|
3,560 |
|
|
|
2,653 |
|
General and administrative |
|
|
6,830 |
|
|
|
4,616 |
|
Change in fair value of contingent consideration |
|
|
— |
|
|
|
(6 |
) |
Total operating expenses |
|
|
17,502 |
|
|
|
13,111 |
|
Operating loss |
|
|
(2,615 |
) |
|
|
(1,806 |
) |
Other income (expense),
net |
|
|
|
|
|
|
Interest income (expense), net |
|
|
(122 |
) |
|
|
54 |
|
Other expense, net |
|
|
(58 |
) |
|
|
(38 |
) |
Total other income (expense), net |
|
|
(180 |
) |
|
|
16 |
|
Loss before income taxes |
|
|
(2,795 |
) |
|
|
(1,790 |
) |
Provision for income taxes |
|
|
114 |
|
|
|
— |
|
Net loss |
|
$ |
(2,909 |
) |
|
$ |
(1,790 |
) |
Net loss per share, basic and
diluted |
|
$ |
(0.23 |
) |
|
$ |
(0.15 |
) |
Weighted-average shares used
in computing net loss per share, basic and diluted |
|
|
12,770,988 |
|
|
|
12,252,517 |
|
SoundThinking, Inc.Condensed Consolidated
Balance Sheets(In
thousands)(Unaudited) |
|
|
|
March 31, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
8,524 |
|
|
$ |
5,703 |
|
Accounts receivable and contract assets, net |
|
|
35,201 |
|
|
|
30,700 |
|
Prepaid expenses and other current assets |
|
|
3,507 |
|
|
|
3,902 |
|
Total current assets |
|
|
47,232 |
|
|
|
40,305 |
|
Property and equipment,
net |
|
|
21,429 |
|
|
|
21,028 |
|
Operating lease right-of-use
assets |
|
|
2,078 |
|
|
|
2,315 |
|
Goodwill |
|
|
34,213 |
|
|
|
34,213 |
|
Intangible assets, net |
|
|
35,995 |
|
|
|
36,938 |
|
Other assets |
|
|
4,025 |
|
|
|
3,909 |
|
Total assets |
|
$ |
144,972 |
|
|
$ |
138,708 |
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
2,260 |
|
|
$ |
3,031 |
|
Accrued expenses and other current liabilities |
|
|
7,101 |
|
|
|
8,521 |
|
Line of credit |
|
|
7,000 |
|
|
|
7,000 |
|
Deferred revenue, short-term |
|
|
44,817 |
|
|
|
41,265 |
|
Total current liabilities |
|
|
61,178 |
|
|
|
59,817 |
|
Deferred revenue,
long-term |
|
|
5,935 |
|
|
|
812 |
|
Deferred tax liability |
|
|
1,267 |
|
|
|
1,226 |
|
Other liabilities |
|
|
1,833 |
|
|
|
2,096 |
|
Total liabilities |
|
|
70,213 |
|
|
|
63,951 |
|
Stockholders' equity |
|
|
|
|
|
|
Common stock |
|
|
64 |
|
|
|
64 |
|
Additional paid-in capital |
|
|
173,066 |
|
|
|
170,139 |
|
Accumulated deficit |
|
|
(98,027 |
) |
|
|
(95,118 |
) |
Accumulated other comprehensive loss |
|
|
(344 |
) |
|
|
(328 |
) |
Total stockholders' equity |
|
|
74,759 |
|
|
|
74,757 |
|
Total liabilities and stockholders' equity |
|
$ |
144,972 |
|
|
$ |
138,708 |
|
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