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 second quarter ended June 30,
2019.
Second Quarter 2019 Financial and
Operational Highlights
- Revenues increased 15% to $10.3 million, up from $8.9 million
for the second quarter of 2018.
- Gross profit margin increased by 2% points to 58% from 56% for
the second quarter of 2018.
- Net income totaled $387,000, an improvement from a net loss of
$369,000 for the second quarter of 2018.
- Adjusted EBITDA1 totaled $2.4 million, which almost doubled
from $1.2 million for the second quarter of 2018.
- Added 25 net new “go-live” square miles of coverage during the
quarter.
- Revenue guidance reduced to a range of $42 million to $44.5
million.
- See the section below titled “Non-GAAP Financial Measures” for
more information about adjusted EBITDA, and its reconciliation to
GAAP net income (loss).
Management Commentary
“In the second quarter of 2019, we continued to
build momentum for future growth and made tangible progress on many
of our long-term strategic objectives,” said Ralph Clark, CEO of
ShotSpotter. “From a financial perspective, the period was
highlighted by another double-digit increase in revenues, a
substantial sequential and year-over-year improvement in adjusted
EBITDA, as well as a return to GAAP profitability, all of which
reflect the expanding leverage in our operating model. More
specifically, the return to GAAP profitability in the second
quarter puts us well on track to achieve GAAP profitability for the
full year 2019.
“Operationally, we added 25 go-live miles in the
quarter, which consists of an existing customer expansion as well
as five new city deployments. We also generated initial revenues
from ShotSpotter Labs, which focuses on wildlife protection. We
continue to make solid progress in building a robust international
sales pipeline, which we believe will have a significant impact on
next year’s results. While it is hard to predict the timing of
contracts in new markets, with the demand we are seeing for Flex
both internationally and domestically, along with our expanding
pipeline for Missions, we believe we will continue delivering
revenue and adjusted EBITDA growth and GAAP profitability for the
balance of the year, and will be well-positioned for accelerating
growth in 2020.”
Second Quarter 2019 Financial
Results
Revenues for the second quarter of 2019
increased 15% to $10.3 million from $8.9 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 second quarter of 2019
increased 20% to $6.0 million (58% of revenues) from $5.0 million
(56% of revenues) for the same period in 2018.
Total operating expenses for the second quarter
of 2019 increased 8% to $5.7 million from $5.3 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 the company’s customer success
team. Management expects operating expenses to increase moderately
on a dollar basis in all expense categories for the remainder of
2019.
Net income totaled $387,000 or $0.03 per share
(based on 11.4 million basic and 12.0 million diluted weighted
average shares outstanding), an improvement from net loss of
$369,000 or $(0.03) per share (based on 10.6 million basic and
diluted weighted average shares outstanding) for the same period in
2018.
Adjusted EBITDA for the second quarter of 2019
totaled $2.4 million, which almost doubled from an adjusted EBITDA
of $1.2 million in the same period last year.
Financial Outlook
The company is reducing its full year revenue
outlook to reflect the timing uncertainty of closing certain
contracts, primarily in new international markets. For the full
year of 2019, the company now expects revenues of $42 million to
$44.5 million compared to its previous guidance of $44.5 million to
$45.5 million, with approximately 24% year-over-year revenue growth
at the midpoint of the new range. There is no change to the
company’s expectation of GAAP profitability for the full year of
2019.
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.
Conference Call
ShotSpotter will hold a conference call today
(August 6, 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: Tuesday, August 6, 2019 Time: 4:30 p.m.
Eastern Time (1:30 p.m. Pacific Time)U.S. dial-in:
1-877-451-6152International dial-in: 1-201-389-0879Conference ID:
13692464
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 September 6,
2019.
U.S. replay dial-in: 1-844-512-2921International
replay dial-in: 1-412-317-6671Replay ID: 13692464
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 June 30, |
|
|
Six Months Ended June 30, |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
GAAP net income
(loss) |
$ |
387 |
|
|
$ |
(369 |
) |
|
$ |
25 |
|
|
$ |
(1,586 |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
(171 |
) |
|
|
(22 |
) |
|
|
(204 |
) |
|
|
(49 |
Income taxes |
|
22 |
|
|
|
18 |
|
|
|
40 |
|
|
|
44 |
Depreciation and amortization |
|
1,245 |
|
|
|
958 |
|
|
|
2,402 |
|
|
|
1,775 |
Stock-based compensation expense |
|
905 |
|
|
|
648 |
|
|
|
1,659 |
|
|
|
1,075 |
Adjusted
EBITDA |
$ |
2,388 |
|
|
$ |
1,233 |
|
|
$ |
3,922 |
|
|
$ |
1,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 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; 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 over 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 June 30, |
|
|
Six Months Ended June 30, |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Revenues |
$ |
10,260 |
|
|
$ |
8,927 |
|
|
$ |
19,853 |
|
|
$ |
15,834 |
|
Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
4,277 |
|
|
|
3,589 |
|
|
|
8,281 |
|
|
|
6,897 |
|
Impairment of property and equipment |
|
— |
|
|
|
361 |
|
|
|
— |
|
|
|
361 |
|
Total costs |
|
4,277 |
|
|
|
3,950 |
|
|
|
8,281 |
|
|
|
7,258 |
|
Gross profit |
|
5,983 |
|
|
|
4,977 |
|
|
|
11,572 |
|
|
|
8,576 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
2,439 |
|
|
|
2,195 |
|
|
|
5,068 |
|
|
|
3,749 |
|
Research and development |
|
1,374 |
|
|
|
1,255 |
|
|
|
2,668 |
|
|
|
2,491 |
|
General and administrative |
|
1,880 |
|
|
|
1,824 |
|
|
|
3,866 |
|
|
|
3,852 |
|
Total operating expenses |
|
5,693 |
|
|
|
5,274 |
|
|
|
11,602 |
|
|
|
10,092 |
|
Operating income
(loss) |
|
290 |
|
|
|
(297 |
) |
|
|
(30 |
) |
|
|
(1,516 |
) |
Other income
(expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
171 |
|
|
|
22 |
|
|
|
204 |
|
|
|
49 |
|
Other expense, net |
|
(52 |
) |
|
|
(76 |
) |
|
|
(109 |
) |
|
|
(75 |
) |
Total other income (expense), net |
|
119 |
|
|
|
(54 |
) |
|
|
95 |
|
|
|
(26 |
) |
Income (loss)
before income taxes |
|
409 |
|
|
|
(351 |
) |
|
|
65 |
|
|
|
(1,542 |
) |
Provision for income taxes |
|
22 |
|
|
|
18 |
|
|
|
40 |
|
|
|
44 |
|
Net income
(loss) |
$ |
387 |
|
|
$ |
(369 |
) |
|
$ |
25 |
|
|
$ |
(1,586 |
) |
Net income (loss)
per share, basic |
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.15 |
) |
Net income (loss)
per share, diluted |
$ |
0.03 |
|
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
(0.15 |
) |
Weighted average
shares used in computing net income (loss) per share, basic |
|
11,365,472 |
|
|
|
10,589,038 |
|
|
|
11,186,371 |
|
|
|
10,329,874 |
|
Weighted average
shares used in computing net income (loss) per share, diluted |
|
11,973,476 |
|
|
|
10,589,038 |
|
|
|
11,857,346 |
|
|
|
10,329,874 |
|
ShotSpotter, Inc. |
Condensed Consolidated Balance Sheets |
(In thousands) |
|
|
June 30, |
|
|
December 31, |
|
|
2019 |
|
|
2018 |
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
27,432 |
|
|
$ |
10,218 |
|
Accounts receivable and unbilled revenue |
|
8,967 |
|
|
|
15,267 |
|
Prepaid expenses and other current assets |
|
2,202 |
|
|
|
1,527 |
|
Restricted cash |
|
— |
|
|
|
60 |
|
Total current assets |
|
38,601 |
|
|
|
27,072 |
|
Property and
equipment, net |
|
16,834 |
|
|
|
16,504 |
|
Operating lease
right-of-use asset |
|
697 |
|
|
|
— |
|
Goodwill |
|
1,379 |
|
|
|
1,379 |
|
Intangible assets,
net |
|
237 |
|
|
|
242 |
|
Other assets |
|
1,596 |
|
|
|
1,922 |
|
Total assets |
$ |
59,344 |
|
|
$ |
47,119 |
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Accounts payable |
$ |
1,099 |
|
|
$ |
1,307 |
|
Deferred revenue, short-term |
|
21,988 |
|
|
|
23,102 |
|
Accrued expenses and other current liabilities |
|
4,209 |
|
|
|
4,427 |
|
Total current liabilities |
|
27,296 |
|
|
|
28,836 |
|
Deferred revenue,
long-term |
|
1,133 |
|
|
|
1,060 |
|
Other
liabilities |
|
467 |
|
|
|
76 |
|
Total liabilities |
|
28,896 |
|
|
|
29,972 |
|
Stockholders'
equity |
|
|
|
|
|
|
|
Common stock |
|
57 |
|
|
|
55 |
|
Additional paid-in capital |
|
127,870 |
|
|
|
114,618 |
|
Accumulated deficit |
|
(97,352 |
) |
|
|
(97,377 |
) |
Accumulated other comprehensive loss |
|
(127 |
) |
|
|
(149 |
) |
Total stockholders' equity |
|
30,448 |
|
|
|
17,147 |
|
Total liabilities and stockholders' equity |
$ |
59,344 |
|
|
$ |
47,119 |
|
ShotSpotter, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(In thousands) |
(Unaudited) |
|
|
Six Months Ended June 30, |
|
|
2019 |
|
|
2018 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net income
(loss) |
$ |
25 |
|
|
$ |
(1,586 |
) |
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
2,402 |
|
|
|
1,775 |
|
Impairment of property and equipment |
|
— |
|
|
|
361 |
|
Stock-based compensation |
|
1,659 |
|
|
|
1,075 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
6,299 |
|
|
|
(2,431 |
) |
Prepaid expenses and other assets |
|
(621 |
) |
|
|
(568 |
) |
Accounts payable |
|
(514 |
) |
|
|
1,105 |
|
Accrued expenses and other current liabilities |
|
(510 |
) |
|
|
(702 |
) |
Deferred revenue |
|
(1,049 |
) |
|
|
134 |
|
Net cash provided by (used in) operating activities |
|
7,691 |
|
|
|
(837 |
) |
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchase of property and equipment |
|
(2,363 |
) |
|
|
(5,643 |
) |
Investment in intangible and other assets |
|
(39 |
) |
|
|
(26 |
) |
Net cash used in investing activities |
|
(2,402 |
) |
|
|
(5,669 |
) |
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Proceeds from issuance of common stock upon secondary offering |
|
11,247 |
|
|
|
— |
|
Payments of offering costs |
|
(445 |
) |
|
|
— |
|
Proceeds from exercise of stock options |
|
348 |
|
|
|
451 |
|
Proceeds from exercise of warrants |
|
51 |
|
|
|
989 |
|
Proceeds from employee stock purchase plan |
|
642 |
|
|
|
421 |
|
Net cash provided by financing activities |
|
11,843 |
|
|
|
1,861 |
|
Increase (decrease)
in cash, cash equivalents and restricted cash |
|
17,132 |
|
|
|
(4,645 |
) |
Effect of exchange
rate on cash and cash equivalents |
|
22 |
|
|
|
(81 |
) |
Cash, cash
equivalents and restricted cash at beginning of year |
|
10,278 |
|
|
|
19,597 |
|
Cash, cash
equivalents and restricted cash at end of period |
$ |
27,432 |
|
|
$ |
14,871 |
|
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