SoundThinking, Inc. (Nasdaq: SSTI), a leading
public safety technology company, today reported financial results
for the second quarter ended June 30, 2024.
Second Quarter 2024 Financial and Operational
Highlights
- Revenues increased
22% to $27.0 million, compared to $22.1 million for the same
quarter of 2023.
- Gross profit
increased 27% to $16.1 million (60% of revenues), compared to $12.7
million (57% of revenues) for the same quarter of 2023.
- GAAP net loss
totaled $0.8 million, compared to GAAP net loss of $2.7 million for
the same quarter of 2023.
- Adjusted EBITDA1
increased over 110% to $5.1 million (19% of revenues), compared to
$2.4 million (11% of revenues) for the same quarter of 2023.
- ShotSpotter went
“live” in three new cities and expanded with four current cities,
two commercial customers and one university.
- Increased revenue
of approximately $0.5 million of Professional Services associated
with CaseBuilder and NYPD Technologic projects due to an
acceleration of work into the second quarter.
- Repurchased 134,150
shares of common stock for approximately $2.0 million as part of a
$25 million share repurchase program.
1 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
“Our business continued to display strong
momentum and resilience in the second quarter as we see persistent
traction across our SafetySmart™ Platform,” said President and CEO
Ralph Clark. “In the second quarter, our revenues grew 22% and
gross profit increased 27% year-over-year. Our SafetySmart Platform
strategy is gaining traction, empowering our law enforcement
partners to deliver measurable, efficient and equitable public
safety outcomes in their communities. Our flagship ShotSpotter
offering went ‘live’ in three new cities, and expanded in four
current cities, two commercial customers and one
university. In the past quarter, we also booked or went live
with over ten new customers for our other SafetySmart™ Platform
solutions. We continue to see robust cross-selling momentum, with
Newport News adding our CrimeTracer and CaseBuilder solutions to
complement their already implemented ShotSpotter and ResourceRouter
solutions.
“Our strategic expansion of the SafetySmart
platform, coupled with our robust go-to-market approach,
underscores the strength of our offerings. This strategy, along
with our world-class team and key partnerships, reinforces my
confidence in our market position and growth potential. We remain
focused on expanding our end-user buying center markets and
diversifying our customer and product revenue base while
judiciously managing costs. We believe we are well-positioned
to capitalize on the substantial growth opportunity ahead.
“Additionally, on July 23, 2024 we announced a
strategic partnership to create and launch a new end-to-end vehicle
and License Plate Reader (LPR) public safety solution,
‘PlateRanger, Powered by Rekor.’ This collaboration brings together
two industry leaders, combining SoundThinking's expertise in
acoustic gunshot detection and investigative solutions with Rekor's
best-in-class vehicle LPR solutions. PlateRanger is expected to be
positioned as a part of the SafetySmart™ platform starting in
September 2024, marking SoundThinking's expansion into the growing
LPR market.”
Second Quarter 2024 Financial
Results
Revenues for the second quarter of 2024 were
$27.0 million, compared to $22.1 million for the same quarter of
2023. The increase in revenues was primarily due to new and
expanding customer subscriptions, higher and earlier achievement of
professional services revenues from our Technologic Solutions group
(formerly LEEDS), and contributions from SafePointe, LLC
(SafePointe), which was acquired in the third quarter of 2023.
Gross profit for the second quarter of 2024 was
$16.1 million (60% of revenues), an improvement compared to $12.7
million (57% of revenues) for the same period in 2023.
Total operating expenses for the second quarter
of 2024 were $16.1 million, compared to $15.0 million for the same
period in 2023. Operating expenses increased primarily due to
higher headcount and employee-related costs, including costs
related to SafePointe, which was acquired after the second quarter
of 2023. Operating expenses were affected in the second quarter of
both years by a reduction of contingent consideration requirements,
approximately $1.0 million in 2023 from earnout reductions related
to the Forensic Logic acquisition and approximately $0.6 million in
2024 from earnout reductions related to the SafePointe
acquisition.
Net loss for the second quarter of 2024 totaled
$0.8 million or $(0.06) per basic and diluted share (based on 12.8
million basic and diluted weighted-average shares outstanding),
compared to net loss of $2.7 million or $(0.22) per basic and
diluted share (based on 12.2 million basic and diluted
weighted-average shares outstanding), for the same period in
2023.
Adjusted EBITDA for the second quarter of 2024
totaled $5.1 million, compared to $2.4 million in the same period
last year.
At quarter end, the company had $9.8 million in
cash and cash equivalents, $35.7 million in accounts receivable and
contract assets, net, $49.4 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.
“While acknowledging the ongoing civic debate
regarding the non-renewal of the ShotSpotter contract in Chicago,
we remain confident in our ability to achieve both revenue growth
and enhanced profitability in 2025 and beyond,” added Clark.
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” below.
Conference Call
SoundThinking will hold a conference call today
August 6, 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: 13747815
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 August 20, 2024.
U.S. replay dial-in: 1-877-660-6853International replay dial-in:
1-201-612-7415Replay ID: 13747815
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, restructuring
expense and loss from disposal of fixed assets.
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, restructuring costs and
losses on restructuring related fixed asset disposals, 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 June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
GAAP net loss |
$ |
(752 |
) |
|
$ |
(2,697 |
) |
|
$ |
(3,661 |
) |
|
$ |
(4,487 |
) |
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related expenses |
|
— |
|
|
|
175 |
|
|
|
— |
|
|
|
175 |
|
|
Restructuring expense |
|
346 |
|
|
|
— |
|
|
|
346 |
|
|
|
— |
|
|
Loss on disposal of fixed assets |
|
5 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
Change in fair value of contingent consideration |
|
(554 |
) |
|
|
(999 |
) |
|
|
(554 |
) |
|
|
(1,005 |
) |
| Adjusted net loss |
$ |
(955 |
) |
|
$ |
(3,521 |
) |
|
$ |
(3,864 |
) |
|
$ |
(5,317 |
) |
| Adjusted net loss per share,
basic and diluted |
$ |
(0.07 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.43 |
) |
| Weighted average shares used in
computing net loss per share and adjusted net loss per share, basic
and diluted |
|
12,792,952 |
|
|
|
12,224,501 |
|
|
|
12,781,910 |
|
|
|
12,238,432 |
|
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 June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
GAAP net loss |
$ |
(752 |
) |
|
$ |
(2,697 |
) |
|
$ |
(3,661 |
) |
|
$ |
(4,487 |
) |
| Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income) expense, net |
|
61 |
|
|
|
(52 |
) |
|
|
183 |
|
|
|
(106 |
) |
|
Income taxes |
|
234 |
|
|
|
344 |
|
|
|
348 |
|
|
|
344 |
|
|
Depreciation, amortization and impairment |
|
2,624 |
|
|
|
3,147 |
|
|
|
5,413 |
|
|
|
5,651 |
|
|
Restructuring expense |
|
346 |
|
|
|
— |
|
|
|
346 |
|
|
|
— |
|
|
Loss on disposal of fixed assets |
|
5 |
|
|
|
— |
|
|
|
5 |
|
|
|
— |
|
|
Stock-based compensation expense |
|
3,146 |
|
|
|
2,479 |
|
|
|
6,073 |
|
|
|
4,699 |
|
|
Change in fair value of contingent consideration |
|
(554 |
) |
|
|
(999 |
) |
|
|
(554 |
) |
|
|
(1,005 |
) |
|
Acquisition-related expenses |
|
— |
|
|
|
175 |
|
|
|
— |
|
|
|
175 |
|
| Adjusted EBITDA |
$ |
5,110 |
|
|
$ |
2,397 |
|
|
$ |
8,153 |
|
|
$ |
5,271 |
|
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 ability to
achieve revenue growth and enhanced profitability in 2025 and
beyond, 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. 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
Ankit Hira and Sean DalySolebury Strategic Communications +1
(203) 546-0444ahira@soleburystrat.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, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
Revenues |
$ |
26,960 |
|
|
$ |
22,075 |
|
|
$ |
52,370 |
|
|
$ |
42,695 |
|
| Costs |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
10,781 |
|
|
|
9,413 |
|
|
|
21,052 |
|
|
|
18,656 |
|
|
Impairment of property and equipment |
|
106 |
|
|
|
— |
|
|
|
358 |
|
|
|
72 |
|
|
Total costs |
|
10,887 |
|
|
|
9,413 |
|
|
|
21,410 |
|
|
|
18,728 |
|
| Gross profit |
|
16,073 |
|
|
|
12,662 |
|
|
|
30,960 |
|
|
|
23,967 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
7,322 |
|
|
|
7,443 |
|
|
|
14,434 |
|
|
|
13,291 |
|
|
Research and development |
|
3,468 |
|
|
|
3,057 |
|
|
|
7,028 |
|
|
|
5,710 |
|
|
General and administrative |
|
5,880 |
|
|
|
5,513 |
|
|
|
12,710 |
|
|
|
10,129 |
|
|
Change in fair value of contingent consideration |
|
(554 |
) |
|
|
(999 |
) |
|
|
(554 |
) |
|
|
(1,005 |
) |
|
Total operating expenses |
|
16,116 |
|
|
|
15,014 |
|
|
|
33,618 |
|
|
|
28,125 |
|
| Operating loss |
|
(43 |
) |
|
|
(2,352 |
) |
|
|
(2,658 |
) |
|
|
(4,158 |
) |
|
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net |
|
(61 |
) |
|
|
52 |
|
|
|
(183 |
) |
|
|
106 |
|
| Other expense, net |
|
(414 |
) |
|
|
(53 |
) |
|
|
(472 |
) |
|
|
(91 |
) |
|
Total other income (expense), net |
|
(475 |
) |
|
|
(1 |
) |
|
|
(655 |
) |
|
|
15 |
|
| Loss before income taxes |
|
(518 |
) |
|
|
(2,353 |
) |
|
|
(3,313 |
) |
|
|
(4,143 |
) |
|
Provision for income taxes |
|
234 |
|
|
|
344 |
|
|
|
348 |
|
|
|
344 |
|
| Net loss |
$ |
(752 |
) |
|
$ |
(2,697 |
) |
|
$ |
(3,661 |
) |
|
$ |
(4,487 |
) |
| Net loss per share, basic and
diluted |
$ |
(0.06 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.29 |
) |
|
$ |
(0.37 |
) |
| Weighted-average shares used
in computing net loss per share, basic and diluted |
|
12,792,952 |
|
|
|
12,224,501 |
|
|
|
12,781,910 |
|
|
|
12,238,432 |
|
|
SoundThinking, Inc.Condensed Consolidated
Balance Sheets(In
thousands)(Unaudited) |
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
| Assets |
|
|
|
|
|
| Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
9,790 |
|
|
$ |
5,703 |
|
|
Accounts receivable and contract assets, net |
|
35,705 |
|
|
|
30,700 |
|
|
Prepaid expenses and other current assets |
|
3,541 |
|
|
|
3,902 |
|
|
Total current assets |
|
49,036 |
|
|
|
40,305 |
|
| Property and equipment, net |
|
21,396 |
|
|
|
21,028 |
|
| Operating lease right-of-use
assets |
|
2,297 |
|
|
|
2,315 |
|
| Goodwill |
|
34,213 |
|
|
|
34,213 |
|
| Intangible assets, net |
|
35,037 |
|
|
|
36,938 |
|
| Other assets |
|
3,902 |
|
|
|
3,909 |
|
|
Total assets |
$ |
145,881 |
|
|
$ |
138,708 |
|
| Liabilities and Stockholders'
Equity |
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
|
Accounts payable |
$ |
2,448 |
|
|
$ |
3,031 |
|
|
Accrued expenses and other current liabilities |
|
8,434 |
|
|
|
8,521 |
|
|
Line of credit |
|
7,000 |
|
|
|
7,000 |
|
|
Deferred revenue, short-term |
|
42,985 |
|
|
|
41,265 |
|
|
Total current liabilities |
|
60,867 |
|
|
|
59,817 |
|
| Deferred revenue, long-term |
|
6,446 |
|
|
|
812 |
|
| Deferred tax liability |
|
1,333 |
|
|
|
1,226 |
|
| Other liabilities |
|
1,620 |
|
|
|
2,096 |
|
|
Total liabilities |
|
70,266 |
|
|
|
63,951 |
|
| Stockholders' equity |
|
|
|
|
|
|
Common stock |
|
64 |
|
|
|
64 |
|
|
Additional paid-in capital |
|
174,662 |
|
|
|
170,139 |
|
|
Accumulated deficit |
|
(98,779 |
) |
|
|
(95,118 |
) |
|
Accumulated other comprehensive loss |
|
(332 |
) |
|
|
(328 |
) |
|
Total stockholders' equity |
|
75,615 |
|
|
|
74,757 |
|
|
Total liabilities and stockholders' equity |
$ |
145,881 |
|
|
$ |
138,708 |
|
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