SSTI - Earnings call transcript Q4 2018

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Operator

Good afternoon, and welcome to ShotSpotter's Fourth Quarter and Full Year 2018 Earnings Conference Call. My name is Matt, and I'll be your operator on today's conference.

Joining us are ShotSpotter CEO, Ralph Clark; and CFO, Alan Stewart. Please note that certain information discussed on the call today will include forward-looking statements about future events and ShotSpotter's business strategy and future financial and operating performance. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict and may cause actual results to differ materially from those stated or implied by those statements. and registration discussed statement risks filings, ShotSpotter's these its including on of assumptions in are SEC Certain Form S-X. reflect of February statements of forward-looking management's and estimates These predictions the date XXXX. this XX, broadcast, live beliefs, as And any statements ShotSpotter after date to update call. circumstances forward-looking of or undertakes this to events or obligations the no revise reflect

the a I'd company's Relations made available and like be will recorded Investor ir.shotspotter.com. to Finally, at the replay website remind link via call section in everyone of that this available for

to I'd CEO, Now, conference Ralph Clark. turn like the over Thank to you.

You may begin.

Ralph Clark

us Thank you for fourth discuss joining results. to year and quarter full XXXX our

This strong and million. quarter. XX XXX achievements our revenues expectations. quarter provide the year. GAAP quarter our guidance was we position miles so this XXXX and and quarter transformational XXXX grew a share. in We XX% our increased $XXX,XXX and predicted, progress we attrition Revenues miles zero more to And our $X.XX the as to be achieved which specific exceptionally XXXX was net revenue lens of to our more of of strong execution details $X.X Alan going are finish XX% beyond couldn't per thrilled QX This income going the deferred year live solid along or with $XX.X for review that ShotSpotter. million, a of includes an will first ever renewal miles year, a square profitability. in around live I was full by for with wanted driven year the through execution. This

the basis uneven said before, we deploying As be miles can year. on quarterly a throughout new

of Arkansas. XX% We new Rock, deployed cities XXXX, quarter, addition miles, square Connecticut have in at Bridgeport, this the year-end, from ended we deployments over Little XXX we cities XX and As two XXXX. including now are up

as from our nexus intelligence believe as this extension year We're potential We a our just for for puts Palm become pleased among the us and and notable this is Some precision solution ShotSpotter a as important year, business. Jackson, includes approximately to West we this growth over prospects others worth our in focus our to to current company we build Chicago ShotSpotter and margin artificial feedback its as sites few. extend its customers and the an complete nine for our standard as of deployed in agreement We've our very first a million. to cities roaster XX also name other and at and as Baltimore, of invest analysis, to with campuses critical the the Richmond, also market Beach penetration us and deployments HunchLab, added three-year Missions reached with with new acquisition see driver policing. $XX a such California. of Tennessee be purchase customer excited in forefront cities Flex long-term will positive ShotSpotter public a broaden Missions Highway We now rebranded with early the We're predictive now Missions. pipeline. platform October deployment capabilities. the deal on

able VP larger with include cities the gun issues. marketing rate, at in team. new well year. These roadmap our a sales expanded gen-program communities faster program. violence significant our to accelerate Klepper to product further Our qualify to as and investment strategy existing past that The We ties free-up have and and is sales bandwidth and goals directly new engaging of on of these increased generation prospects, of directly cycle leads for and programs hired lead our the this our as critical execute Strategy drive have strategy marketing new-lead direct as platform Sam Product develop Senior mandate to be Marketing

In On a how of to of of Day citizens was drive can XX% covering voters example XX% in the ShotSpotter ShotSpotter. saw deployment the adoption tax Jersey small fact, Election fund Hill municipal of to city. put New country the can Hill, have Pleasant was recent proofed bring about a ballet, on statement first our the how safety members believe measure municipality to in is ShotSpotter we Pleasant the community city. value strong the the tax help which their a solutions

Trauma marketing streams Care conversation working victims outcomes, hospitals generate only also for are strong an and can deployment. around ShotSpotter's creates believe of that but violence, with efforts a focused on the creating with possible directly hospitals. gunshot to also it Our not impact gun help advocates wound We opportunity funding improve leading new

sales We year having and have Verizon existing puts to in executing by of augmenting our sell and we the to sales Smart agreement an the already years. four-plus XXXX, also employed. with longer-term to the Verizon's over and our We've late Cities product expanded is drive Flex completed and goal us a training initiative check-in force initial collaboration in this our impact see deals reseller sales to approximately next customers XXX We have new sales our that of team begin platform reach review. important our process monthly efforts the this traction see helping adding hope pipeline on to place

latter to to expansion near is international the our our added part of see underway, XXXX. resources the efforts with international expect contract Indeed, sales additional Bahamas. new and announcement recent the international of already revenues We also with

our important. ShotSpotter's gun in business larger we progress very cities. customers gun and have Detection and critical in their work from York while Not City positive company's factor day in benefit New to reason are the cities do come violence, reduction communities. Technology So financial success, like the Gunshot every do violence Chicago so played the of a midsized as across reduce we is and only The but their smaller helping role

nine police guns. gunshot that With the evidence XXXX. our of and wouldn't XX% collected readily the while California XX approximately be at assault, solution arrests be have identified XXX Bakersfield made precise In city went For can and physical seized XXX,XXX about, Bakersfield Bakersfield, population use, March more known reduction first example, months the in they saw ShotSpotter XX witnesses incidents PD with in interviewed. of XXXX. with Overall, of live in located to crime, directing ShotSpotter can location the the gun activate and gun was over

the have Our forensic of been XXX ShotSpotter witnesses supportive used has XX data findings. forensic alone in in throughout criminal prosecutions their over in expert States. times XXXX And testified United

will the this strategy, part data. market. to but a is as are has of expand, look than services days continue still Yet, we both our very be in market days It anything product, XXXX, TAM focus of for investments our we'll make the granted. of the year early less market further for of for as for the an U.S. Flex to not early and our area as product applications unique expand Forensic in us to XX% addressable for the progress much increasing work that we unfolds while our core portfolio with with addressing and take penetrated we our domestic our never still

real continue our viable alternative see to competitor We solution. to no

Chicago capture we and groundwork the international the deployments, of New Tier next With position of annualized large efficient is to Our $X like and this mostly $X.XX that revenue X and XXXX. cities year continue for to York our X make each up cities strong in complete, cities with contract Tier deployments added our cities, be evidenced in X on adding Tier largest the lay necessary focus domestic Tier while spend by set the X competitive will more U.S. along

as strategy very churn it Our on high key onboarding of success Promoter expansions. maintaining customer rates us outsized enables to maintain achieved strong customer Net the rates satisfaction of of evidenced helps and customer paid low XX, focus and of dividends, as customer Score has drive by

the our time. retention rate Chicago fact, expansion. sustainable don't is rate In to revenue If the year expect we of over rate revenue if retention we this XXX%. past don't expansion, To was be clear, the include Chicago XXX% retention revenue be XXX% the you include

expansions the attrition. retention absence with As the or Chicago be by can seen revenue materially or expansion, of presence impacted large rates

successfully we our However, to revenue rates XXX% foreseeable on for strategy, the our business expect we stay future. above if execute will retention

and very XXXX are So at set agenda get growth after we it. a energized a to successful XXXX, for we aggressive and beyond have

in $XX and to our reducing million And to are grow reaffirming to care. we enforcement most continue approximately XXXX guidance we $XX ShotSpotter year standard addressing release, violent achieving to the year, law of earnings solution and revenues position helping reported lead importantly for while million as the want crimes our range this solution full our XX% way As to profitability. a of in GAAP in apply a

full and who for and Alan turn that year call further our my expansion details with on remarks. will along margin to concludes fourth So financial now in the quarter the prepared will provide XXXX. XXXX, leverage continued expectations I over

Alan Stewart

good you, a Ralph, exceeded our fourth note. $X.X Revenues quarter Thank from expectations, of afternoon, the XX% and the strong on We to XXXX XXXX everyone. for million. fourth ended increasing quarter

full of miles XXXX, well the record growth the customers, addition exceeds current guidance in we new XX% million, back also revenue Our reflecting last year deployments of by expanded to which number for as increased as $XX.X customers. a November updated covered in through

Irma Ralph were impacted rate what If of miles Virgin systems. of future. revenue added payment be quarter Our to or and profitability, services XXX%. revenue which share. to retention as announce ShotSpotter the in in GAAP provided first excluded, fourth our receipt Islands, to $XXX,XXX were our happy would of net mentioned, U.S. We this, per and the a expectations new their from are Chicago destroying margin top for income $X.XX rate from positively retention net On a our with hurricanes expansion is the ended close for to XXX%, at the still inline also $XXX,XXX gross a XXXX of We're our XX the approximately of Maria quarter. prior revenue

we this was achieved the end objective are have XXXX stated pleased Our this of to to and milestone goal. reach by

of for of of fourth or details or fourth total revenues, some up quarter So at let's look $X.X of XX% $X.X year. XX% and was Gross the the XXXX. million for million, the the quarter from profit the quarter

full was $XX.X the our year, improvement XX% from an or the million million, of $XX.X profit or of gross for For XX% XXXX. revenues revenue,

in year operating expenses fees. related to the of and expenses for were turning our $X.X the to other to X% million professional fourth fourth larger from XXXX our and expenses, decreasing Now certain quarter quarter outside last filing the actually onetime fourth quarter due legal service expense,

revenues while of year, XXXX, was marketing million total versus or spend XX% Sales in our were in increase $X.XX was XXX% The per million limited operating overall in expenses retention XX% of and dollar With the business. revenue or on $XX.X down XX% full from million related per $X.XX $X growth for full period. approximately expenses were XXXX, $X.X primarily total capital, the For $X $X.X and for or to the of contract revenue focus quarter revenues of fourth therapeutic versus $XX.X our XX% operating total year. achieved million our for sales expenses rate XXXX. our in prior in revenues the year marketing of per or was the annualized

increase efforts we marketing, total our sales dollars in customer this and As stated in initiatives. international our reflects investments success

fourth were the compared XX% for $X.X for the period. of total million expenses quarter to R&D of total XX% revenues prior million or year revenues $X.X or Our

or million $X.X the legal quarter prior total Note total in period. add We higher for expenses of product, Missions outside and initiatives. for year our in the service from other revenue conduct fourth $X.X and which and G&A features our the fees. improve to XXXX decrease G&A continue of expenses and included to professional of quarter, the XX% capabilities to or that revenues is a R&D analytics invest XX% filing million functionality

leverage line. are of to see We expense that we're pleased beginning our operating in all

a that us as helping continue and well position. reinforce our in are our prudent We leading R&D to ongoing market believe sales investment our as and marketing

the GAAP GAAP million XXXX companies. and Our are outstanding. million Again, our average in a we quarter on to basic fourth early period pleased million lower for or weighted stashed of timeline based year shares quarter income GAAP prior per that This we so was outstanding. revenue on $X.XX and the than achieved on a or loss much net $X.XX basic laid during most first diluted profitability diluted net on $XX.X and $X.X share compares shares average the base per $X.X weighted and we out share $XXX,XXX million $XX.X

average million shares XXXX EBITDA added a million For Adjusted significantly the on reflecting or GAAP the comparable EBITDA from adjusted based we full million of XXXX. added weighted EBITDA million share $X.X diluted our $X.X loss diluted up year, new basic $X.X $X on the EBITDA period. with QX million go-live was based the was XX share the prior and loss in the QX $X.X million, outstanding quarter lumpiness for million Adjusted basic and of net weighted in year miles loss our the shares $XX or for also average per outstanding was miles in adjusted $X.XX business. of per $X.XX fourth normal $XX.X for versus significantly $X.X for up loss million from We XXXX XXXX of XX XXXX.

quarter. revenue For the added ended previous $X.X fourth miles XXX we in year was $XX.X year approximately Deferred of XXX Of which expect short-term miles, at the million, the $XX.X quarters. with under XXX revenues million general, XXXX. to go-live contract In million we an XXXX amount, be and short-term recognized of deferred added from full this We end go-live up the XXX long-term. we from within the new public million miles $XX.X live. approximately was increased were in safety was

discussed we basis. always million on as by cash. working read that was can is accounts revenue. have a contributing million informative as into of Chicago to impact in primarily Also to billings the increased on $XX HunchLab Cash the quarter. go-live year significant to of operations million, quarterly the in financial cash previously to their during new last versus of However, capital deferred caution deferred in our acquisition a $XX.X revenue quarterly on timing the when changes end the settlement with used in can usage basis contracts with year position as the over you quarter miles expansion. used year-to-year due more connection another due flow as was too this the and ended much and consider a the metric for solid the a receivable litigation $X.X to We year We shouldn't our we

a have debt. no yet long-term $XX not credit While with have still used have we million Bank, or we of it and Umpqua line short-

reiterating our revenue of are a $XX $XX year We to million. million full range guidance of

expected in year deferred renewal our our strong of who of and based go-live revenue, awards confidence contract the on is full outlook short-term before historically strength on and Our expect the the rates end new to year.

investing add or plan year, to year which with Of guidance clients if our accelerate conditions course, of We're our expand deployments contract penetrating investments We continue schedules efforts, market. goal untapped we'll the grow very change. business to proved the XXXX efforts the largely this wins new upgrade expand marketing during valuable to to last our in international. and our sales and further

Missions R&D We to to to product. expect also our spend enhancements primarily add our accelerate

of we fourth first quarter tend our to quarter operating the flat increases GAAP operating We in each first each moderate during increase expect a loss net the quarter. XXXX, the revenues basis make the plan to expenses on a XXXX expenses Historically, category. during dollar our we in first quarter incur to to be in Therefore, previous with expect from quarter.

communities Ralph reduce you for significant and noted earlier, and closing, with look to GAAP the energized we in year However, of year In help as we achieving gun we entered our year forward XXXX. and momentum. our we profitability and operational as throughout XXXX progress beyond prospects full the with financial violence. excited We're the for sharing anticipate

Now you back to Ralph. over

Ralph Clark

Thanks, Alan.

And fulfill your the ShotSpotter Before ShotSpotter for up questions to helping violence the truly hard work, confidence I and enthusiasm sharing thank and customers, you questions. to their thank your successful is business in us. we inspiring. partners their this take team with gun and to year reducing open prepared I loyal We're now all your our call of look our another with for want purpose commitment to journey to shareholders, to you. forward to

Operator

first Our Instructions] Matt is Blair. [Operator go you. Pfau Thank Please ahead. from Great. question from William

Matt Pfau

thanks guys, Hey, my taking for questions.

some First, be on details wanted get there. the off to Missions product may and start

cycle terms feel and the about, anticipating the of terms talk could there the do you of then on And perhaps in in types or Ralph are if trend you of be you terms that to you all, changes initial front. that any the or functionality some most police seeing sales And Missions? what's could departments where cities with Missions hinted sales of first product? in So of related then are in interested product

So anything you can provide details will helpful on be that as well?

Ralph Clark

Great.

So start great, and as I'll And great Alan jump question. can appropriate.

So the existing customers seeing is part I focus ShotSpotter Our guess first the on prospects really is we where are question rest the then and first foremost, ShotSpotter of the of and interest? quite -- some with pipeline a actually uptake building that now. model. We're We been building we've developed conversations pricing process them. right we're the And positive. the having the has been in of

working product product in that roadmap the terms integration solution. ShotSpotter functionality a Flex have We Missions of the of our existing and with on we're improving

uptake really of of going equal And the year that we as later happen I expect the terms we’re occasions, revenue number we're stated the think course So quite to contribution as specifically in of in interest encouraged by our XXXX. solution. in Missions in we're seeing on to

Matt Pfau

And just a follow-up then on Ralph. that Okay. question,

departments? So product? cities the you be Or large you with Missions that the can well. the ShotSpotter more used reiterated is with both interest perhaps earlier seeing Flex in the and how larger Are primarily smaller same as comments sophisticated for police

Ralph Clark

Yeah.

our we're also tier the very some ours we're of really seeing tier ShotSpotter cities. away. in interest we're one not large tier customers So as have well. very back in that seeing I three cities large And and cut to mean, talking deployments two

board. the across really it's So

Matt Pfau

Got it, from me. last okay. one And

you on been there's guys. year have parts moving the impact here potential a early some could in -- Just that

then severe the that year? been for down part have deployments either obviously in deployments weather. U.S. parts impacted And shut any pretty the signed? terms the some bad Did that government of first Has of at or So being all? there's contract on impact is weather northern of the

Alan Stewart

is I realize not or you’ll general bad weather permission, getting Alan. Sure a they it’s in can just impacted be very think question. of factors. course lumpy items great This by other Well, nature and by

north. affected maybe in months, a the expect weather for in we bad generally little miles I think QX. in bit winter the less especially cities go-live But also just

We we some haven't this fact that that occasionally there DoJs the mean the some our the at government our something from it’s really point. mature to is but seen It's at seen still in an point. future doesn't agencies That see shutdown, effect on won't if in earnings that. any little have this early tell a impact, things of impact like provide and customers, to we not

Matt Pfau

it. guys. Thanks Got me questions. That’s for taking for it my

Operator

from question Markets. Lake Please Jaeson is Capital Schmidt next Our Street ahead. from go

Jaeson Schmidt

Hey, guys. in XXXX. just taking But for mentioned sort a normal want should Alan QX. Thanks I expect pattering my to throughout seasonality of look XXXX? at normal seasonal continue here to you questions. we the

Alan Stewart

QX that occur general in to better also expect revenues than do QX. expect year. QX. flat to will well as be QX somewhat We be We do Sure. that this expect we’d from Generally,

do years. to past pronounced less a be year than Although, in might bit that. and expect see this It mitigated we

Jaeson Schmidt

That's bit funnel And looking has helpful. can engagement past months? the over Okay. little at the your talk a customer opportunity, few you how about expanded international

Ralph Clark

Sure.

VP international know idea hired on of is as hired the come America. As XXXX. very to market John Ralph, in both constructive And a this about quite Central to this you be in some International see busy we later a And expect revenues a well South we'd Latin focus been we around has continue -- we as that later additional to year, that America America.

Bahamas, we a as we is client but gone that bookings talked call, do, the about international As we you on well. heard talk definitely which Nassau, Bahamas hasn't did about which in bookings yet, live don’t

have traction South also Now cities issues have have violence additional of Africa. there pretty expecting which in is Cape that's gun very Town, a there's to in to nicely. some proceeding We very already South similar Cape South Africa, And Town. number a successful. that of Africa deployment We're that traction, in

we'd revenue expanding America Caribbean Town potentially if Africa contribution South the two and another include see Cape and board And of Bahamas. possibly Central between is on Latin America. some or to where outside revenue expect I international out to say, of -- coming should city I'm So going

Jaeson Schmidt

guys. lot, a Thanks Okay.

Operator

Chris B. Our go from next Riley. Horn is from ahead. question Van Please

Chris Van Horn

Thanks for Good call. taking afternoon. my

international as about. you U.S.? then Is a Bahamas the talk bit maybe deployments. any was Was on little can sales about terms how region or of another an the Just came effort? it in a referral contract a there the investment just And difference from pricing organic it follow-up from Or in needed?

Ralph Clark

Sure.

what And more same term of the do one charge do think the from Miami business the cost, So model, to the attention but international expensive fee slightly other paying happened international like, Chicago, to fee, And its in and higher It’s cost to how York, charge for on a and little the they're there, is of U.S. of contractual sale. the look don’t we're pricing underestimate the more. the higher. subscription of network set with do for because we in it's terms effects places annual respect and but still successful that. is pricing we more is same deployments reasons People deployments the we never up New configuration kind to seeing can in bit Bahamas, I

the selling in say various U.S. organic would customers with along engagement the kind of satisfied a kind of of feed probably both to is talking Bahamas kind in of on case I So the the them of combination ground, here

Chris Van Horn

Thanks. And then it. follow-up. a just Got

does in mission XXXX, any revenues agreement include for business? that guidance the Verizon or any business reseller On

Alan Stewart

come would Alan. XXXX, is I to guidance revenue for expected are this some that we of Missions have terms do in. So, say in

Ralph As the those XXXX. will the in part mentioned, latter of majority be of

the to this calls Verizon we Verizon, at In terms continue to point. nothing sales with however, joint Verizon, allocated of specifically

those actual nothing se. a factor, that's to with Verizon specifically per some of pipeline but of into maybe And kind allocated our some

Chris Van Horn

you. one me. Thank last Great. from then And

going or more curious York, on tremendous was those success a kind do penetration you see customers the of look had You or Chicago pipeline much I bigger adoption for like your existing just in how with you the New and out? as customer customers line-up

Ralph Clark

So, barely this fully at time. would is I Ralph. they two think deployed say with are in point I those customers, this

really XXXX, so to X cities a this focus and pipeline have we of is of lay the of that next Tier today. bring on York ShotSpotter X of of on in New we our year, fairly deployed cities number work kind But this aren't our Chicago kind focus at kind the set the Tier on robust and the fairly X platform think And are point with foundational Tier time. well I as

Chris Van Horn

Okay. Thanks the again on and congrats quarter.

Ralph Clark

you. Thank

Operator

from Our ahead. next go question Dougherty & is Jeremy Please Hamblin Company. from

Jeremy Hamblin

to Thanks. tied into on very that you XXXX. And expanding Congratulations wanted into ShotSpotter in just a just strong a capabilities expanding mean clarifying can another -- on that I is in revs, little about had color additional maybe you those by we quarter. get comment Missions forensic what to maybe but capabilities, our tie on that?

Ralph Clark

for you Thank the Great. question.

the our professional these detailed bandwidth around and that So, testimony witness building in spending we a component side, now, Right forensic charging people, witness reports of and customers expense produced only we're to court a our services frankly, example, for we're stand and intentional to the hours on thoughts be revenue case. on traveling much are a provide more going kind business. forensic for that excellent

kind integration of services, it's forensic let's of, other and the training, belief we're services. what's our what those the so of that see have rate more is we're can that like with time And that up to combined chart training, service consulting -- already one for doing with we respect package

that kind contributor -- we and fee revenue putting of them have we that So, services for charge to think fee professional company. bumping on can services around under be really subscription that. We engine of intentional contributions notification much more a a kind and the umbrella we a focus as up

Alan Stewart

would basically to to providing I dollars are basically add now, but incremental Ralph what be that break. that we is because bottom-line as which just things for And this we're these top should mentioned, hope already

Jeremy Hamblin

work TAM does Have together sense just just for And customer doing this that sure I'm type data like used about customers? terms to about sounds investigation them be of your you with expand how that. making the that you've you that it aware at point them overall. about of Okay. the kind feels paying thinking gotten conversations had It capability. your from Or time getting spent of planning? and in in

Ralph Clark

Yeah.

So say coming services. from in wallet. of thing note a I would that. this one case is to Ralph. different It's really is is forensic There

been so core various expert the enforcement witness we're typically, possible. of our confident District Department, really the Attorney, So, engaged services budget when heart the for realm testimony, agency or we're behest testimonies pay of an item expert and which business the times Police often that is witness They within law no line so types of really very forensics customers of it's different. is and separate ours

witness what to way of on already revenue a intentional then doing kind And just managing it's bases. that, again mislead we're anyone think – a and we're I in And be, kind although having a more Alan very just this don't is much capability from to think of a to incremental people X,XXX asking I basically us of being them real to charging pointed just out. driver that charge this But of kind monetizing to I focus in revenue – of value stance to nice get mean, to hours margin think the capacities table want for, we going the we can real like. is there out as huge for that the that that the on extent we're – that you is can appropriately. it a could can business bringing

Alan Stewart

just used the a different start customers services out plan free. customer's that right be – have have Again, a add we've I the of we're always some for paying away, new to to provides for thoughtful where would going easy we to as about It's been implementation. that might are

as So thoughtful when we're be customer-focused implement going this. to always we

Jeremy Hamblin

could foresee that in where XXXX something line? revenues business you Is that in

Ralph Clark

going see to we're it think for I XXXX.

Jeremy Hamblin

one were had who's your timers, putting lowest just about a could And as job of on operating revenue a provide your cost had mean, of in know in that context look in quarter, little the the and thing we where on highest year, I but And that, around I QX. front? though, expense, an – lowest incredible on cost, terms I just last your you just from color was overall comparison other even obviously you wanted Okay. basis this context your absolute bunch in G&A thinking margin G&A some then to in XXXX? you dollar get additional forward a G&A Any on color

Alan Stewart

couple would there Sure. a of Alan. there is – This say I is things.

would is certain We aspects are in being I accrual out areas – of our that there expenses. quarter. that, say G&A just the of also matched earlier very thoughtful the some sort about

example, bonus adding might that, accrual, costs. accrual accrual There's For them. over of on on But little general, very an in add thoughtful to QX slightly such be impact we're And we in lower where that. being be than bit significantly not there. G&A a we're we when do need starting QX, to an our

Jeremy Hamblin

And to confirm, what those the are just XXXX? several from earlier you XXXX Okay. in and your accruals had quarters done legal now with,

Alan Stewart

had accruals the related you're is about we litigations talking to with the contractors. the think legal I that

Jeremy Hamblin

Yes.

Alan Stewart

That' been Yes. complete.

can accurately necessary related We at that have We And to have don't outstanding comment we what be. we any that. accruals one can't are we measure this those still any will – litigation We might can't when on. point we there. still really evaluate accruals then

Jeremy Hamblin

and this luck Thanks good year. guys Great.

Alan Stewart

you. Thank

Ralph Clark

Thanks.

Operator

from Roth Please Our Capital is next Partners. from ahead. go question Richard Baldry

Richard Baldry

prior visibility XXXX in trying much to you you new growth maybe or Thanks. be between Thanks. versus XXXX have split regions? talk how gauge, entering expansions versus how you years? cities May Can see about,

Alan Stewart

that city are do This revenues. as majority in Sure. we to terms a guidance and those give visibility were revenues XX-XX I to a at the I coming lot a don't or if give achievable I of general, our at Alan. look realistic would in the this we say, in new a as XX-XX expansions. to of probably is we of opposed split guess in point. we split from way and new really have is think But captures percentage want

Richard Baldry

And maybe feel sales you you talk about team. about how

had thing you Are have very new you or capability. feel Thanks. similar to you the there you what would to You've more the been people types of need Missions selectively to you adding that add need Do still with in to past? aggressively? sell changing like

Ralph Clark

sales add so that have say capable this XXXX I sales role. brings and I really and to we kind that the direct is of of think we success and make on I They to think happen benefit do maybe scale. Missions to bring a customer’s job sales walk the feel to and of are direct a team get effort. always we that I shouldn't more kind the to team in person of would product. more with that we sales headcount And I we to Yes, looking about really build a bring kind Ralph. again would our good Missions selling focus to with this year. respect probably our and focus the pipeline domestically we as just They're be what that the kind resources very of successful the But successful need great kind opposed reinforcement. future maybe right mean, of to more probably higher on on at through be and we're as this going in constructive on-boarding underestimate customer did we

and pay And to driving successful easier prospect. safety. how lot are moves there, incorporating market not a reference in sell that are kind and customer of chiefs of Although, solution public quite getting to carrying our drive attention of are really to for People very chiefs. in trying because in Net Scores here very sales outcomes mouth it to they so Promoter a a word which us they instrumental new are our out that's critical solution, order makes folks, the kind domestic strong that in satisfaction successful high highest or

Richard Baldry

you. Thank Great.

Operator

question next Please Joseph from Securities. Our is Osha JMP from ahead. go

Joseph Osha

everyone. Hello,

Sorry, I've little of got cold. a bit

X question. the looks Just -- to previous what wondering engaging Tier of the you're I'm engagement process Tier where can resources you about customers? kinds the what to and return smaller the talk customers now if X versus like

Ralph Clark

Ralph. is This Yes.

interesting is mean, I the that's department. tends an it's The the question. would engaging I buying buying center be similar So around makes it a to the community that be I guess mean, What get to department engaged. center the sitting have around sometimes get are your or and very Latin same. kind even complex sales kind -- police to that you engagement it is police of people I of officials say alignments

we actually there. case pleasant that So lesser process in study out saw though play interesting

to -- little room similar say have the really understanding the would to get to Maybe and or conversation center the of But I different. So with lot that It people talking take the to that very, miles different. solution part gun buying of dollars to them of need that cities Chief center often we're the again, socialized X scale the basically that square efforts. very buying idea great We're customers are the bigger, certainly Chief people with violence incorporating to it's is is their buying with existing as same respecting that about get is try that try a kind are sitting the of that process larger and have But outcomes. are center longer, you leveraging a bigger. sale. Deputy of kind are and we of more the as coordinate of doesn't Police help Police it in try seeing… along seen it's And Tier a a not might little the times and recipe, complex reduction influence a outside ShotSpotter bit more again overall

Joseph Osha

Okay.

Ralph Clark

so talk ShotSpotter to about conversation ShotSpotter, the Chiefs about that and important. Mayors bringing is …Police talk really content

Joseph Osha

rapid about I -- wondering where thinking more a close of more is XXXX bigger whether with Part cycle ones. the than you. these was smaller headed quick a perhaps Thank just have Okay. customers this,

Ralph Clark

a versus kind probably XX we're to that's cycle, XX medium case we doubles fair sales kind why kind on assessment. could we're XX for can of, with you the And I expectation is to and look XXXX two XX foundational looking our think I those sized that get to a try think at probably at XX be to cities, smaller XXXX think, cities because kind work take months that to frankly. X versus hitting still we're three cities, Tier at It probably Tier that, be very And X a terms kind of bring this months. of I bit be a capture that's going in X than little be impart to Tier opportunity up But Tier those take for those XX more XX But of to the while the of do closer the They to, two, large months longer kind might cities, can XX laying or with large months will of least to X city. longer next months, about. there call of, to XXXX. us of of one, more longer a lot sales X years. Tier cycle

Joseph Osha

related process be that around putting as XXXX you continue notion works? to Okay adding great. analyst sort about point, of And people, your than then, to still meeting just the force, opposed you retention of how on at on thought a talked a a adding number success the willy-nilly, your Does the of about sales people rather people, just as wrapper customer, think expanding sales. lot direct sales

Ralph Clark

across I But much bigger kind at ally would the working Yes, much market, terms have least a of think kind front, reseller powerful mean, of I Verizon so. that, in domestically. have and very to certainly the very we add the on with a of now, lead just certainly, safety generation public I footprint they

for that, lever quite later so expecting year. that to be we're interesting a some I interesting kind to bookings of the in think, generate, opportunity And for is us going us

Joseph Osha

necessary. question, my as really not think Verizon a process, opportunity should And into that lead-gen neatly that kind business of feed existing your adjacent anticipated we of would something that's

Ralph Clark

Yes.

about way think I it. think a to that's

in to set we're Verizon I much think solution And to going to matter. still very it's of in mean, be I going think in our public this to involved process. the to of leverage certain I to intimately skin experiences that customers. experience required think, selling and sales is successful be a expertise type I and be safety want

think, places just the because otherwise in party process I to think in think, I them. help we're be they with several involved, to can So sales reach. where of going much not very we to I bring us might But their be, able

Joseph Osha

you. one of And any uptake Thank our the NIBEN? utilized? update just quick me, general how Okay. being the on then, that's for efficacy And last

Ralph Clark

communities. alert, few do kind gun likely movement fingerprinting of and ShotSpotter that evidence the can of, you NIBEN is, process more that at-risk then very identify the the problems kind customers the is run into result on phone for of violence of them we're driving to this so we strong those gunshot I shell engage very system you shelves, that of getting they what familiar crime database a mean, So dot Ralph, and the able to agencies most continue what with that in as anecdotally, very, to response those it of in once to asking shooters as for network recover aren't very cops a case see are analysis small of which gun these to figure a NIBEN the being NIBEN out think essential helps and do

of anecdotes predict Chief you to over to that -- see one today's be want It's investigate so And combination. on strategy of frontend Police this we place. strong ShotSpotter's tomorrow's the very And very NIBEN combined this proven and that's if is through enable. all successful. as We backend. shooting with a homicide, the what says,

Joseph Osha

very you Thank much.

Operator

is Our ahead. Securities. from next question Northland from Please Klasell Tim go

Tim Klasell

on Hey quarter. guys. Congrats nice the

Sort of follow and marketing you on your comments earlier. said what

it and in bit with sales the cycle and going a have understanding that your of your what customers, on talking Moving customer of at are you shrink proposition around Thanks. you value along that. about leave further and that some sale will, are a that they down now? ShotSpotter particularly, of to potential lot mentioned, think is I'll benefit guy in You shell and the sort forward. casings walking of, a press, shoring-up that talking

Ralph Clark

they what they lean-in Yes, ShotSpotter. that Gun of Crime heavily very benefit NIBEN call idea measurable on so that's the we customers a deploy Intelligence pretty clear Center because get and when

that that violent something have crime that it's in point just ShotSpotter or of want become you body-worn time, as you the ShotSpotter just would your where will event you in city. would having standard-of-care as a a do that to is have non-lethal dealing assumption you solution agency cameras Our some with the were part the in

will don't I not we're We're frankly to cycle. kind think to to will When then with But on sooner pretty expecting of But be different kind it's point, sales tipping that versus year. it and depending happen anticipating go-to-market at we're strategy. sale we planning think of there shrink do expectation fair happen a that not it XX dealing we're say I still But the rapidly we're cycles XX-month later. for looking see would that those this to XXXX. we're or our whole yet. reach in hopefully certainly

Tim Klasell

Okay, good. A quick follow-up.

out? win, You and the them or Puerto U.S. payment about made there is had Virgin ways thoughts Islands mention that congratulation, Rico, Bahaman Thank life you. How to guys still -- back a obviously you. about you to any potentially a coming

Alan Stewart

Puerto to to the tying that right? has just Sure, probabilities this mean have them we is So, customers, different hopeful those. Alan. our I just general, we're return And pipeline, in pipeline. in Rico

do weighted on those. we a average have So, give we when our guidance,

and be prospected pipeline. continues to was Rico Puerto on So, our

We when some it's there, to improvement might early honestly, have too still, something exactly but happen. tell seen

Tim Klasell

Okay, much. great. Thank you very

Operator

Our ahead. from next Imperial question go is from Jeff Kessler Capital. Please

Jeff Kessler

the get that would to the go could name relationships your Verizon, to out able up you various words as you And agree that and which public are that value I safety talked serving in Jeff. city, on of it’s well? at around share which secured be measures? my in being catalyst things funds services groups you used cities of get – able too, mind programs -- is, funding your about one community partnerships essentially try to Ralph, recently you do something say that the get not share public catalyst, Hi And ShotSpotter, you companies these these -- of terms tie together conference. was that In to proposition just that but the safe Alan. as various builds would also brand in they on think other types to a a other you like of Hi, the to taking with safety was mind for actually for funding. kind we a around they you question and

Alan Stewart

So -- Smart how this we're Communities large GE would can pad a cautiously like saying and as I is optimistic about of Cities, others still from ShotSpotter say you're what providers Alan. think someone I city sort else and view a that, might Smart smarty launching let's Verizon of with sometimes is, or deployment, community something to ready prime say pump. to get that like this isn't smart a and started and full able city necessarily where do Verizon be well, to a

is that think I possible.

movement there little beyond. but XXXX we're or that very seen deals, either move have this certainly frankly in how they We fast year and and of occur in on terms into later these hopeful can will

Jeff Kessler

All right, good.

it from you time is market – violence all time are of do all to considered which at there’s ShotSpotter in you things already? rings – -- places the city of where question or do some Military these like to are bases, ever that in in covering ring place guns areas there like centers is have you Second market is, some related? there protective municipal all depots, marketing commercially

Ralph Clark

that's say police is certainly. and majority on would the where department of is focus is really because efforts I this the municipalities low Yes Ralph. vast and our marketing hanging fruit

other umbrella us think there. those go banks commercially for Certainly different to by pick familiar kind But with like are focus. kind a to freeway -- slightly before That for that over much things too to protecting have sort of more elude we bit to think I enforcement things some model our different is and I type out kind which on oriented a things us. fancy we really may project of of our an fit have hanging law get like SecureCampus our kind We come seen folks bring low to that. trying I doing our of be or our solution interesting focus just of think of little example is variance of things. thinking you're But fruit

Jeff Kessler

to will at that be bit they've companies made There's landscape to -- if a talk of big You're were One lot a would the obviously companies out been that Can about dense to see brand any you name, are out the ASUS doors. conference. essentially you that little point. the works any not Are have do a that see a ASIS this competitive and and a inside enough? meaning for you develop final or essentially you interest have that there road. conference of is last where become of they there trying question, something the in Clearly they either technology concern at of there? standard that

Ralph Clark

is Ralph. So -- yeah, this

real perfectly strong So we for competition not to viable granted franchise. with you. take wide honest have outdoor area direct we to honestly to try not our anything seen any But

and I fidelity benefits. entrants concerned we lot lot think got little deployment I we is of space and seen terms particularly for of in seen think into come the time. who tomorrow mean, I’ll point this challenging. of intellectual on the that challenging property of haven't that service. knows, quality difficult and quickly that because bit of a difficult worried what solution expect I high built can't our chatter, make it market do real trade the for say us We attributes in you the certainly at take come at extremely any and a a also would or be granted, extremely could we've new into in scene, anything we that carve experience somebody to but and And execute

Jeff Kessler

be you me. you. for the call, Thank taking more from Great. hearing Thank you’ll and

Ralph Clark

Jeff. Thanks,

Operator

Will Please is next Your ahead. question Baird. from Power go Robert W. from

Will Power

expect the maybe Alan, color any you up factors investment for we cost you, OpEx gross take think the Hey, through about aware margins there? thanks. on should that talk year. Any be seasonal rising Great, I first to with of

Alan Stewart

Sure. gross increase, don't say general, upward It I increase certainly a and higher expect we but related line to end that. the QX well. be any can't year margins next to generally seasonality to will this QX the of would straight We year. as than right. to And in be our we expect it that in expect say would I is real something

Will Power

Okay. you you're guess then as over And line at number push what you're maybe on running that, that edge -- the gives broadly, over if is to into? Are of just of you And other cities there. have over between one place you you there of maybe I of out we’re think that that what one I some something about opportunities there in any trying the city's tier just some barriers commentary, forensics guess or tier still more right you these versus for time? look to the applicants don't that help areas common -- -- can looking of the a a if follow-up pushback some figure contracts? to win really out those earlier

Ralph Clark

Yes.

of And now. is So these tier deployed pursuits I or each would series this of have cities single where different. narrative. not one its of Ralph. own story is number unique Every we've one active say we in kind has kind one of

here And so things down we that kind kind is really -- case getting a to of I or of cannot to singular point deploy it us from there. can't use preventing friction

about prepared use at really important this of right technology really and of engagement it does take to some mind I think outcome. to adopt way in it's end drive are we the positive day, impatiently that patient because these pursuit’s it's the the a

technology know my first so and to a and and that we can buying waiting way we forcing can patient versus outcomes or to we of and opinion two, kind very and of our tier we very, adopt is And think tier there use tier three aligned and the to from I that usages. nice they opportunities use is of so three for is solution. two one, afford transactional case case for using one everybody right a have great is agency to other big wait would cities to of decide get in lean not tier rather one in kind now kind us for comes until the drive meeting customers Once the do board on technology, deploy may And there be ready. sales customer Because senior this become us where land out there tend I are persistently experience expand what or us. relative for that until important these that the one the thing tier many study to start

be way helpful. So I’d that was that the question. answer will I that guess Hopefully

Will Power

Yes.

sense. of Thanks. So that makes a lot

Operator

like This to the concludes Mr. the question-and-answer any session. to Clark closing for I'd back floor turn comments.

Ralph Clark

very everyone much earnings call. for and I our thank in into dialing want listening to

As about hard the the I on super earlier excited and mentioned team in that work all in my also behalf grateful comments, to we're incredibly XXXX for of we're ShotSpotter. and XXXX at myself went

progress very you and early all you again you you. much looking your forward thank to updating with three-or-so in month, So Thank XXXX. and chatting on in

Operator

concludes teleconference. This today's

participation. You for your your you this may lines Thank disconnect at time.

ShotSpotter (SSTI) 19 Feb 192018 Q4 Earnings call transcript