Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- SoundThinking Inc (SSTI, Financial) reported a record second-quarter revenue of $27 million, a 22% increase from the same period last year.
- The company successfully executed new deployments and expansions of its ShotSpotter technology in multiple cities, including international markets like Uruguay and South Africa.
- SoundThinking Inc (SSTI) saw a significant increase in subscription-based revenue, particularly with the New York City Department of Corrections project, which grew approximately 700% year-over-year.
- The company is leveraging artificial intelligence and machine learning to enhance its services, particularly in its ShotSpotter and SafePoint solutions.
- SoundThinking Inc (SSTI) announced a strategic partnership with Rekor, expanding its product offerings into the growing license plate recognition (LPR) market, which is estimated to be $3.2 billion globally.
Negative Points
- The company is experiencing slower-than-expected sales for its SafePoint solution due to delays in key new functionalities and the availability of specific 3D cameras.
- SoundThinking Inc (SSTI) faces a potential non-renewal of its ShotSpotter service contract with Chicago, which is expected to end in November 2024.
- The company reported a GAAP net loss of approximately $800,000 for the quarter, although this is an improvement from the previous year's loss.
- Deferred revenue decreased to $49.4 million from $50.8 million at the end of the first quarter, primarily due to the timing of renewals.
- Sales cycles have been elongated, requiring more time to articulate the value of their technology to both existing and new customers.
Q & A Highlights
Q: When you look at the range of go-lives between the 100 to 120 for the year, what really makes up the difference there? Is it the pace of deployments on deals that are already won, or is it dependent on some early wins in the second half turning live before the end of the year?
A: It's more the latter than the former. We have some interesting deals in the pipeline. It's a question of how quickly we can convert the pipeline to a booked deal and then deploy sensors and turn on the service. December is a tough month for taking customers live due to winter and holiday periods. β Ralph Clark, CEO
Q: Specifically for the fourth quarter, you're factoring in a drag of about $1.2 million from Chicago, but you'd still be up sequentially. Could you explain the components of that growth?
A: We don't need a $3 million growth from Q3 to Q4 to hit our guidance. The growth will come from miles going live and additional projects like the Department of Corrections subscription. Every one of our solutions is improving, which is why we feel comfortable about the guidance. β Alan Stewart, CFO
Q: On the SafePoint side, you talked about a major upgrade for September and the availability of cameras being an issue. Are those now flowing into inventory, and are you ready for the launch?
A: We have exited the camera identification and qualification phase and are on track with compliance. We expect to deploy a couple of 3D cameras in customer environments this month before the September launch. β Ralph Clark, CEO
Q: What percent of new miles going forward do you expect to come from expansions?
A: Typically, about 40% to 60% of new miles come from expansions. This year, we expect around half of the new miles to be from expansions and the other half from new customers. β Alan Stewart, CFO
Q: What percent of bookings in the quarter and pipeline are with Tier 4 to 5 cities?
A: About 60% to 70% of the miles going live are related to Tier 4 and Tier 5 cities. This may decrease slightly due to expansions from larger cities in the second half of the year, but interest from smaller cities is growing. β Alan Stewart, CFO
Q: How does the city expansion in the quarter of three align with internal expectations?
A: It aligns well with our expectations. Overall performance across the safety smart platform has been consistent with our expectations, including the pull-forward on professional services for the DOC project. β Ralph Clark, CEO
Q: Can you provide more details on the revenue opportunity with the RECORE partnership?
A: The market opportunity is large, and we are excited about integrating acoustic gunshot detection with LPR solutions. We expect to offer a compelling value proposition and are seeing high inbound activity. β Ralph Clark, CEO
Q: Have sales cycles improved from earlier in the year, and do you expect recent momentum to carry over into 2025?
A: Our win rate is as expected, but deal cycle times are elongating. We are spending more time helping customers articulate the value of our technology. We expect this trend to continue, which is why we adjusted our expected mileage down from 125 to over 100. β Ralph Clark, CEO
Q: How does your solution stack up against existing solutions in the market, and are there any differentiators?
A: We expect to be best of breed with unique assets like acoustic gunshot detection and investigative solutions. We will price competitively and offer a seamless customer experience. Our customer success approach will also be a differentiator. β Ralph Clark, CEO
Q: What are the new features with the 3D cameras for SafePoint, and how are they an upgrade?
A: The 3D cameras provide higher resolution views of speed, direction, and skeletal movement. This allows us to parse out individuals moving through the magnetic field, offering unique capabilities. Our weapons detection technology is completely covert, making it ideal for specific verticals like hospitals and gaming enterprises. β Ralph Clark, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
