ShotSpotter, Inc. (NASDAQ: SSTI), the leader in
gunshot detection solutions that help law enforcement officials and
security personnel identify, locate and deter gun violence, today
reported financial results for the first quarter ended March 31,
2019.
First Quarter 2019 Financial and Operational
Highlights
- Revenues increased 39% to $9.6
million, up from $6.9 million for the first quarter of 2018.
- Gross profit margin increased 6% to
58% from 52% for the first quarter of 2018.
- Net loss totaled $362,000, an
improvement from a net loss of $1.2 million for the same period in
2018.
- Adjusted EBITDA1 totaled $1.6
million, an improvement from $26,000 for the same period in
2018.
- Added 12 net new “go-live” square
miles of coverage during the quarter.
- Appointed Nasim Golzadeh to the new
position of Senior Vice President of Customer Support and
Professional Services to help scale the Company’s professional
services business.
- Appointed Merline Saintil, a
veteran tech and industry leader, to the Board of Directors,
increasing the size of the Board to seven members.
- Revised and narrowed revenue guidance for full year 2019 to a
range of $44.5 million to $45.5 million (previous revenue guidance
range was $45 million to $47 million).
- See the section below titled
“Non-GAAP Financial Measures” for more information about adjusted
EBITDA (defined as Earnings Before Interest, Taxes, Depreciation,
Amortization and Stock-based Compensation), and its reconciliation
to GAAP net income (loss).
Management Commentary
“We began the year building on the momentum of
2018, with solid financial results for Q1,” said Ralph Clark, CEO
of ShotSpotter. “The quarter was highlighted by a 39%
year-over-year increase in revenues, expanded gross profit margin
and solid adjusted EBITDA, reflecting the inherent leverage in our
operating model. As anticipated, we realized a GAAP net loss in the
quarter, however, we remain on track to achieve GAAP profitability
for the full year. We ended the quarter with nearly $30 million in
cash, including our successful equity offering and generating
almost $9 million of operating cash flow during the period. Our
bolstered balance sheet provides us with ample resources to not
only fuel our organic growth but act opportunistically on strategic
M&A opportunities to further expand our SaaS platform into
adjacent growth markets.
“From an operational standpoint, we added 12 net
new ‘go-live’ square miles of coverage in Q1, bringing our total
live miles to 660. While our go-live miles can vary
quarter-to-quarter, we expect our quarterly go-live miles to
increase in Q2 and the balance of the year. In fact, we expect to
turn on approximately 50 new miles in the next 90+ days, putting us
well on pace toward achieving our two-year goal of adding 300 gross
net new miles.”
“Our success operationally is the direct result
of ShotSpotter’s world-class team and innovative technology that
help our valued customers’ reduce gun violence and strengthen
community relations. It is products like our new Investigative Lead
Summary tool, which has received strong interest, that continue to
fortify our competitive position as we aim to capitalize on the
billion-plus-dollar core market opportunity,” Mr. Clark
continued.
“Looking ahead, our focused execution on our
strategic initiatives coupled with the business we have under
contract, strong renewal rates and deferred revenue balance, give
us confidence that we will deliver on our near - and long-term
growth and profitability objectives,” Mr. Clark concluded.
First Quarter 2019 Financial Results
Revenues for the first quarter of 2019 increased
39% to $9.6 million from $6.9 million for the same period in 2018.
The increase in revenues was due to growth in the number of miles
covered, which was driven by expanded deployments with current
customers as well as the addition of new customers.
Gross profit for the first quarter of 2019
increased 55% to $5.6 million (58% of revenues) from $3.6 million
(52% of revenues) for the same period in 2018.
Total operating expenses for the first quarter
of 2019 increased 23% to $5.9 million from $4.8 million for the
same period last year. The increase in operating expenses was
primarily due to higher sales and marketing expenses related to
expanded marketing initiatives and growth of our customer success
team.
Net loss totaled $362,000 or $(0.03) per share
(based on 11.0 million basic and diluted weighted average shares
outstanding), an improvement from net loss of $1.2 million or
$(0.12) per share (based on 10.1 million basic and diluted weighted
average shares outstanding), for the same period in 2018.
Adjusted EBITDA for the first quarter of 2019
totaled $1.6 million, an improvement from an adjusted EBITDA of
$26,000 in the same period last year.
Financial Outlook
For the full year of 2019, the company adjusted
its revenue outlook to a range of $44.5 million to $45.5 million
(previously $45 million to $47 million), due to delays in the
contract negotiation and approval process with two new potential
customers and the loss of one customer that had a contract of seven
miles. The new revenue outlook represents an increase of
approximately 29% at the midpoint, compared to revenues for full
year 2018. Additionally, the company expects to achieve GAAP
profitability for the full year of 2019.
The company’s financial outlook statements are
based on current expectations. The following statements are
forward-looking, and actual results could differ materially
depending on market conditions and the factors set forth under
“Safe Harbor Statement” below.
Conference Call
ShotSpotter will hold a conference call today,
May 9, 2019 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to
discuss these results and provide an update on business
conditions.
ShotSpotter management will host the presentation, followed by a
question and answer period.
Date: Thursday, May 9, 2019 Time: 4:30 p.m. Eastern Time (1:30
p.m. Pacific Time)U.S. dial-in: 1-877-876-9174International
dial-in: 1-785-424-1669Conference ID: SHOTSPOTTER
The conference call will be broadcast simultaneously and
available for replay via the investor section of the company’s
website at www.shotspotter.com.
Please call the conference telephone number 5-10
minutes prior to the start time. An operator will register your
name and organization. If you have any difficulty connecting with
the conference call, please contact ShotSpotter’s investor
relations team at 1-949-574-3860.
A replay of the call will be available after
7:30 p.m. Eastern Time on the same day through June 9, 2019.
U.S. replay dial-in: 1-844-512-2921International replay dial-in:
1-412-317-6671Replay ID: 1134368
Non-GAAP Financial Measures
Adjusted
EBITDA: ShotSpotter discloses the following non-GAAP
financial measure in this release and the earnings call referencing
this press release: Adjusted EBITDA, which represents the company’s
net income or loss before interest (income) expense, income taxes,
depreciation and amortization and stock-based compensation expense.
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 our 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.
ShotSpotter believes adjusted EBITDA also
provides useful information to investors and others in
understanding and evaluating our operating results in the same
manner as our management and board of directors. For example,
ShotSpotter adjusts EBITDA for stock-based compensation expense
because that expense often varies for reasons that are generally
unrelated to financial and operational performance in any
particular period. Stock-based compensation is utilized by
ShotSpotter 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.
Adjusted EBITDA is not a measure calculated in
accordance with GAAP. Accordingly, use of adjusted EBITDA has
limitations as an analytical tool, and you should not consider it
in isolation or as a substitute for analysis of ShotSpotter’s
financial results as reported under GAAP. Some of these limitations
are: (1) adjusted EBITDA does not reflect the potentially dilutive
impact of equity-based compensation; and (2) other companies,
including companies in our industry, may calculate adjusted EBITDA
or similarly titled measures differently, which reduces the
usefulness of the metric as a comparative measure. Because of these
and other limitations, you should consider adjusted EBITDA
alongside our GAAP-based financial performance measures, in
particular net income or loss, and our other GAAP financial
results.
The following table presents a reconciliation of
adjusted EBITDA to net income or loss, the most directly comparable
GAAP measure, for each of the periods indicated:
|
|
Three Months Ended March 31, |
|
|
|
2019 |
|
|
2018 |
|
GAAP net loss |
|
$ |
(362 |
) |
|
$ |
(1,217 |
) |
Less: |
|
|
|
|
|
|
|
|
Interest income |
|
|
(33 |
) |
|
|
(27 |
) |
Income taxes |
|
|
18 |
|
|
|
26 |
|
Depreciation and amortization |
|
|
1,238 |
|
|
|
817 |
|
Stock-based compensation expense |
|
|
754 |
|
|
|
427 |
|
Adjusted EBITDA |
|
$ |
1,615 |
|
|
$ |
26 |
|
|
|
|
|
|
|
|
|
|
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 business plans,
international expansion, expectations regarding future sales and
expenses, our ability to act opportunistically on strategic M&A
opportunities and expand our SaaS platform into adjacent growth
markets, our ability to capitalize on market opportunities,
the ability to achieve near and long-term growth and profitability
objectives, and revenue and net income expectations and GAAP
profitability guidance for 2019. Words such as "expect,"
"anticipate," "should," "believe," "target," "project," "goals,"
"estimate," "potential," "predict," "may," "will," "could,"
"intend," 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
maintain and increase sales; 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 company’s ability to sell
its solutions into 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; and the company’s ability to maintain and
enhance its brand, 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 ShotSpotter, Inc.
ShotSpotter (NASDAQ: SSTI) provides
precision-policing solutions for law enforcement to help deter gun
violence and make cities, campuses and facilities safer. The
company’s flagship product, ShotSpotter® Flex™, is the leading
gunshot detection, location and forensic system trusted by almost
100 cities. ShotSpotter® Missions™ uses artificial
intelligence-driven analysis to help strategically plan patrol
missions and tactics for maximum crime deterrence. ShotSpotter has
been designated a Great Place to Work® Company.
Company Contact:
Alan Stewart, CFOShotSpotter, Inc. +1 (510) 794-3100
astewart@shotspotter.com
Investor Relations Contacts:
Matt GloverGateway Investor Relations+1 (949)
574-3860SSTI@gatewayir.com
JoAnn HorneMarket Street Partners+1 (415)
445-3240jhorne@marketstreetpartners.com
ShotSpotter,
Inc.Condensed Consolidated Statements of
Operations(In thousands, except share and per
share data)(Unaudited)
|
|
Three Months Ended March 31, |
|
|
|
2019 |
|
|
2018 |
|
Revenues |
|
$ |
9,593 |
|
|
$ |
6,907 |
|
Cost of revenues |
|
|
4,004 |
|
|
|
3,308 |
|
Gross profit |
|
|
5,589 |
|
|
|
3,599 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
2,629 |
|
|
|
1,554 |
|
Research and development |
|
|
1,294 |
|
|
|
1,236 |
|
General and administrative |
|
|
1,986 |
|
|
|
2,028 |
|
Total operating expenses |
|
|
5,909 |
|
|
|
4,818 |
|
Operating loss |
|
|
(320 |
) |
|
|
(1,219 |
) |
Other income (expense),
net |
|
|
|
|
|
|
|
|
Interest income, net |
|
|
33 |
|
|
|
27 |
|
Other income (expense), net |
|
|
(57 |
) |
|
|
1 |
|
Total other income (expense), net |
|
|
(24 |
) |
|
|
28 |
|
Loss before income taxes |
|
|
(344 |
) |
|
|
(1,191 |
) |
Provision for income taxes |
|
|
18 |
|
|
|
26 |
|
Net loss |
|
$ |
(362 |
) |
|
$ |
(1,217 |
) |
Net loss per share, basic and
diluted |
|
$ |
(0.03 |
) |
|
$ |
(0.12 |
) |
Weighted average shares used
in computing net loss per share, basic and diluted |
|
|
11,005,781 |
|
|
|
10,067,830 |
|
|
|
|
|
|
|
|
|
|
ShotSpotter,
Inc.Condensed Consolidated Balance
Sheets(In thousands)
|
|
March 31, |
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
29,524 |
|
|
$ |
10,218 |
|
Accounts receivable and unbilled revenue |
|
|
7,375 |
|
|
|
15,267 |
|
Prepaid expenses and other current assets |
|
|
1,332 |
|
|
|
1,527 |
|
Restricted cash |
|
|
60 |
|
|
|
60 |
|
Total current assets |
|
|
38,291 |
|
|
|
27,072 |
|
Property and equipment,
net |
|
|
16,688 |
|
|
|
16,504 |
|
Operating lease right-of-use
asset |
|
|
765 |
|
|
|
— |
|
Goodwill |
|
|
1,379 |
|
|
|
1,379 |
|
Intangible assets, net |
|
|
255 |
|
|
|
242 |
|
Other assets |
|
|
1,638 |
|
|
|
1,922 |
|
Total assets |
|
$ |
59,016 |
|
|
$ |
47,119 |
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,698 |
|
|
$ |
1,307 |
|
Deferred revenue, short-term |
|
|
23,415 |
|
|
|
23,102 |
|
Accrued expenses and other current liabilities |
|
|
3,960 |
|
|
|
4,427 |
|
Total current liabilities |
|
|
29,073 |
|
|
|
28,836 |
|
Deferred revenue,
long-term |
|
|
1,095 |
|
|
|
1,060 |
|
Other liabilities |
|
|
549 |
|
|
|
76 |
|
Total liabilities |
|
|
30,717 |
|
|
|
29,972 |
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Common stock |
|
|
57 |
|
|
|
55 |
|
Additional paid-in capital |
|
|
126,143 |
|
|
|
114,618 |
|
Accumulated deficit |
|
|
(97,739 |
) |
|
|
(97,377 |
) |
Accumulated other comprehensive loss |
|
|
(162 |
) |
|
|
(149 |
) |
Total stockholders' equity |
|
|
28,299 |
|
|
|
17,147 |
|
Total liabilities and stockholders' equity |
|
$ |
59,016 |
|
|
$ |
47,119 |
|
|
|
|
|
|
|
|
|
|
ShotSpotter,
Inc.Condensed Consolidated Statements of Cash
Flows(In
thousands)(Unaudited)
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2019 |
|
|
2018 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(362 |
) |
|
$ |
(1,217 |
) |
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,238 |
|
|
|
817 |
|
Stock-based compensation |
|
|
754 |
|
|
|
427 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
7,892 |
|
|
|
(2,439 |
) |
Prepaid expenses and other assets |
|
|
195 |
|
|
|
11 |
|
Accounts payable |
|
|
(346 |
) |
|
|
305 |
|
Accrued expenses and other current
liabilities |
|
|
(810 |
) |
|
|
(834 |
) |
Deferred revenue |
|
|
344 |
|
|
|
706 |
|
Net cash provided by (used in) operating
activities |
|
|
8,905 |
|
|
|
(2,224 |
) |
Cash flows from investing
activities: |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(896 |
) |
|
|
(2,985 |
) |
Investment in intangible and other assets |
|
|
(34 |
) |
|
|
(10 |
) |
Net cash used in investing
activities |
|
|
(930 |
) |
|
|
(2,995 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock upon secondary offering |
|
|
11,247 |
|
|
|
— |
|
Payments of offering costs |
|
|
(127 |
) |
|
|
— |
|
Proceeds from exercise of stock options |
|
|
219 |
|
|
|
342 |
|
Net cash provided by financing
activities |
|
|
11,339 |
|
|
|
342 |
|
Increase (decrease) in cash,
cash equivalents and restricted cash |
|
|
19,314 |
|
|
|
(4,877 |
) |
Effect of exchange rate on
cash and cash equivalents |
|
|
(8 |
) |
|
|
42 |
|
Cash, cash equivalents and
restricted cash at beginning of year |
|
|
10,278 |
|
|
|
19,597 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
29,584 |
|
|
$ |
14,762 |
|
|
|
|
|
|
|
|
|
|
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