SSTI - Earnings call transcript Q3 2019

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Operator

Good afternoon and welcome to ShotSpotter’s Third Quarter 2019 Earnings Conference Call. My name is Omer and I will be your operator for today’s call.

Joining us are ShotSpotter’s 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 the 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 date call. November to reflect statements of of revise or undertakes this forward-looking management’s or forward-looking and to estimates, These statements any predictions no the obligation date XXXX circumstances this XX, broadcast, events update live and ShotSpotter beliefs, as after the

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

Now, call Ralph CEO, I to would proceed. like turn over to please Sir, the ShotSpotter’s Clark.

Ralph Clark

and to Thanks on the hello very call. much everyone

in and sometimes lumpy negotiations public our especially have get their processes reasons. final had pushed we’re continues results, on been a to in due theme forward subjected results few, are business than term the will from to same bureaucratic procurement that As contracts variety the is play agency quarter, of quarterly we the general before viewed and experience as there in we take be strategic provide in QX, which time your through best of questions. ShotSpotter’s QX it’s a a signings since overview longer to more material customers cusp to. a shorter this of usual, but We securing perspective. theme a have for for going If This our deals the can detail Alan out public. push I business is when rather term contract our will lens cover stressing thing

These was original Piscataway, New XX driven only for gross we projects the Jersey in expectations. quarter, result, and below which were miles a as customer. cities expansion by a new primarily six added our miles As

income share. a or of QX of million, net reported We revenues $XXX,XXX $XX $X.XX per

business. the again positive our leverage flow operational from in generated cash operations, also proving We

not Flex public reflect pipeline potential, expansion ShotSpotter’s deals new growing did bid agency ShotSpotter business strong. broader results quarter’s fundamentals continues customers from opportunities our and a with growth and service grow long-term this with formally While being core The safety number of remain customers. to our existing strong for deeper

see for is rarely situation serve of ShotSpotter our market our nearing ShotSpotter provides. to this contributions bake-off any and measurable and anything competition, the offering our we only Missions We given mover company services detection a of or proven technology can gaining an financial that the serious true traction advantage Additionally, viable take revenue point results. and never lack any and first remains don’t to lose granted, to ShotSpotter believe, effectively we candidate the of solution that other in although, alternative gunshot efficacy deliver making

case timing with RFP post detection for study illustrative customer XXXX ShotSpotter being RFP almost After is more besides they modified second with later this year, full an they other a to determined XXXX competition. that receiving be experience of Maria successful originally business. and to introduce reissued to recent Rico Puerto of viable an dynamics XXXX. from gunshot in the Hurricane back year ours, June effort after July no a in a Rico and requirements competitive Puerto our Our bid on published in in slightly

X-year was negotiation successful We deal the awarded year we a to hope recently by conclude contract official which that are to have subject ShotSpotter end. is pleased that notification still received to project, million $X.X

while over agencies ShotSpotter one RFP did the yielded price learned that upon viable price. lower the only the the compared two evaluation That ours. have they scored second technical published agencies we much to was proposal the deemed other as already proposal evaluation Based times in

make helping forward looking reengaged excited to work very safer. those communities in to become Puerto Rico are are and the be in We collaborative

used and ultimate a illustrates Institute, practices. continue evidence reduction respected by impact independent firearms intact, is The our can We proposition when the company detection provides increasingly the fast still detection being gunshot non-profit Urban much value to efficiency, have response It core departments research benefit how the on violence it with ShotSpotter’s is by last police best on investigative very value research. being and validated accurate see nationally to published that evaluation positive system fundamental a an community. month strong of that the and is overall group cost

study A showed ShotSpotter part set in ScienceDirect, has year a installing separate policing Jersey, in and a techniques. XX% New in after how October ShotSpotter a in published new year retrospective the been Camden, of this decrease in shootings of

many also endorsements our clients. third-party for hear We regularly see from ShotSpotter and

revealed soon example, using ShotSpotter ShotSpotter, end quote. quote on major, asserting Avondale, recently John going the only called For address Vegas Metropolitan which XXXX shootings out XX% its Department, State City live in and are a saw in gunshot miles reduction of in expansion, Cincinnati Cranley a their the reduction XX.X at of is we that care the in Collectively, process tipping Police Las others And approaching crime covered validations end ShotSpotter XX% these of detection areas standard conference, violent solution. ShotSpotter. an square becomes by indicators in the press where point

security goes also Cincinnati recognize will based this recognize New continue square to recently largest XX.X Irvine deployment we to third attrition that that set lifetime, Las our be will for natural which expansion, customer of mile engagement, every at our into want out when the of With contracted part Chicago mile Irvine, we I a out but make will for building the our is customer single forward as York. Vegas campus of complete keep subscription later University in a our University campus which Vegas third third square year. in California also Looking and it the system QX, any Las solution. live California after XX.X at we expansion business. and

annual we attrition forecasting. bake-in in some So do our

$XXX,XXX three to city intention decided In that publicly smart gunshot stated by driven not in change, revenue primarily detection. claims called based we call, approximately deploying quarter’s last some of recurring of attrition out renew. it in do alternative limited was their one another city to cities a a involving leadership case, that expected noted annual of department case, As

be claims up paying attention scale. see close will delivering vendors, to real gunshot very the match at challenges world of the services municipal We closely to how reliable detection precise

our technology, recently to current Sales beyond Sales. Bunyard, we Looking to Senior Domestic expand, that continue We Gary go-to-market of approach. of sales to organization a reporting our I want and VP reiterate VP our added sharpen,

more who cadence Our more five territory sales those to provide will day day direction designed move forward enable directors this new deals increase VP, deal expeditiously. to report and will to

have recently established is promoted Additionally, also VP led also to organization, sales who we which overlay Gary. a by report sales our will

maintain and their will develop flat selected including emissions respective deep expertise and functional consultative group adds on drive X critical taking security Our our collective sales collaborate territories. with cycles will solutions on of number opportunities. to free in directors the overlay sales to sales through Gary the and lead organizational These will focus strategic sales a for changes up Tier initiatives, highly leverage territory

will team while the A out success recently critical practice hired level direct success directly also team, with leader elevating to our success senior collaborate customer the breaking our in the organization. customer organization from leadership We reporting customer sales by VP are me.

continue in breed and referrals. so even they to capacity in of We net customer more execute have promoter success positive providing generate process our on-boarding to organization, capabilities more customer can best invested the a of even order expanding

Before I conclude, you I and on to Missions update want ShotSpotter Labs.

progress solid made have Missions. with We

very grown that dome chilling alerts to and see several National new have another real ShotSpotter added order, of ShotSpotter Missions expectations. expect month protection been alerts has believe from anti-poaching over I least changer. Park two The bookings close of two a have poaching effect high quarter, poaching has the we interventions. exceeded am results a The per last date precise area in X ShotSpotter’s to In to is and customer three in zero Kruger gone a there to pleased of the Officials to at We time interest events that are months. ShotSpotter of end. from ShotSpotter Last encouraged ahead plan by year pipeline South Africa. customers. our discussed successful degree very initiative to for I led where especially the our poaching Labs have short game events non-current has And X

is properties financial strategy engage business. it reserve in result, commercial protection. private displaced been the poaching a that that currently opportunities some private to possible have our poaching reserves has any As ShotSpotter becoming the activity for resources other viable are and adjacent of These lack to

expectation year $XX in couple to Alan, Just where annual ending top points even a the to million further I full XXXX to of over revenue. with final to we turn almost tighten million, it cutting the XX.X before line recurring year factoring are, while we guidance $XX decided of our

$XX expectations from revenue a top million, of Rico expected million $XX Looking of reflects add $X GAAP to can of forward GAAP our to guidance XXXX Puerto year-end This our million revenue includes that attrition. our $X run reasonable on another $X million rate. revenue over we million of assumption and for

expanding reaccelerate adoption be the we impact probably when growth our continues but see future can as I the optimism business get our that my maybe to taking you ascertain drive am these of ShotSpotter of positively we the outcomes. strong. As across to to solutions very remarks, for longer our will and confident safety public about from line, continue It conversion pipeline,

me. it that’s Okay, for

is Alan. Here

Alan Stewart

everyone. Ralph. Thank Good afternoon you,

quarter As revenue results Ralph expectations. below our mentioned, third were

year are full again reducing We XXXX outlook. our revenue

revenue in disappointed in outlook. are our reduction We

Rico has However, this, the it material sign almost I that or deal delays as pleased awarded comments, as process have Puerto of the issue an not sale example final if. primary possible. to when and am contracting be the Ralph finally which elongation in expected few and announce much a on are aiming that as earlier view a we as an been of in soon year contract stressed we the deals, been his the and sign we cycle are to in to

this quarter continue the an both profitability. increase million, third our stand was $X.X third our to for has full leverage third as the And maintain $XX Despite year, year quarter million X% growth XXXX. the to in the quarter from us guidance the the model Revenue behind to we of lumpy in year-to-date. XXXX profitability and allowed in

XXXX. the growth. XXXX Chicago important mileage the It’s in over York that revenue reflect also XX% year-to-date to and growth results deployments New that remember very was large XXXX Our drove

Miami-Dade for Las another a over expansion city XXXX, County XX.X of new of in are encouraging completed we miles and have These X way under Vegas. Tier large quarter Tier large miles pursue as this expansions However expansion even contracts. XX we X large

to we miles but third X% for deployment these planned We quarter, the Vegas quarter. request losses. during delay miles added XX also deals their delayed is is at a expansion The of closing churn delayed we less by last in unusual quarterly net our were XXXX. the few quarter, most impacted Including expected deploy had who lost Of QX. these which expansion our to do not the our some of we and originally to X of three for live quarter renewals, from this renew quarter. agency, results third small still be of anticipated Las losses, added of their new Note entire that should in not go customers month. the gross The but overall miles of balance during we than the XX.X in couple discussed XX new expected that note,

Gross $X profit million of up $X total or third quarter or revenues, for million quarter in of from XXXX. the XX% the XX% third was

unique We in the from while continue our to model. growth, to fund leverage our invest long-term benefiting appropriately

M&A to expect and related We margins expenses expenses. than quarter still that line quarter $X.X respectively $XXX,XXX in to third or revenue leading of revenue growth, included operating XX% less or year. overall approximately Our and to $XXX,XXX XXXX the XXXX. the of operating operating in were of expenses of non-recurring the increase top million XX% our rate Note operating versus expenses million last litigation $X.X increased for revenues third

for $X.X $X.X versus expenses each million the million Looking total items, revenues quarter prior period. or year total revenue sales with line marketing XX% XX% the at of third the of were or and of

a dollar the We expect this balance on for level increase of the of spending slightly basis year. to

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

and products We algorithms add to R&D invest improve and our continue to features in to and software our functionality applications.

of this on basis spending increase slightly of to balance We expect year. a for level dollar the the

prior million of expenses quarter G&A for to million for year total revenues $X.X the compared revenues $X.X or period. the or were XX% XX% total

We expect that our to the the modestly year. on increase balance basis will continue G&A expenses of dollar a throughout

XX.X the share share average of third a and XX.X prior income compares per million based This net $X.XX $XXX,XXX shares diluted year per loss, period XX.X GAAP shares basic or weighted $X.XX to basic million GAAP on million on outstanding. outstanding. quarter was average for Our and loss or $X.X diluted weighted the million based

As is above, pleased funding even are maintain that with noted spending we growth. to the increased I particularly our future profitability

of the XX for live income by and our XXX the is sites and in end under million the the term. up had was depreciation, stock-based quarter calculated was and XX Deferred We net $XXX,XXX of quarter campuses third XXX quarter quarter, this which At EBITDA amount was taxes, amortization XXXX. and at and million, the third from XX $XX.X miles Adjusted third adding taking revenue the back $X.X and long quarter, of we the GAAP campuses miles $XXX,XXX in of interest, contract. compensation short-term $XX.X ended was million, approximately and sites. cities with end

from Our $XX.X strong. balance sheet of million cash end We at ended only investments, QX. slightly $XX.X the million quarter and in with the short-term down the remains

added cities approximately You third XX million repurchase year-to-date. the for share was new shares of We repurchasing authorized total in a under $X.X after should new note spending quarter city program. this one

As shared driven last our we second primarily cities. not expansions by and expect new growth would we be quarter, half

program repurchased Finally, during as corporate we above, our our of mentioned shares quarter. the XXX,XXX repurchase under

the that as reducing shared customer coming guidance, ads Las with our slower delayed our of into and to expected, the at Vegas outlook were being fiscal will and competitor we other XXXX full $XX $XX.X in it clear we did late full much in year We’ve guidance had year million. especially would the miles future. to a the this that we million, $XX of international year in but optimistic over the year cadence see near than growth some represent we to business midpoint. our close again to million million revenue $XX to originally customers markets and not of loss Turning are Ralph which XX% been was

add me few more Let just a details.

Puerto from third the cadence an will quarter. flat quarter trends rapidly, Rico quarter, We to in to to an similar QX, first expect the revenue again the be unless fourth fourth flat relatively increase historic with with uptick QX we’re and able to the deploy quarter,

will across and on a value expense the pronounced Expenses all operating increase with marketing. most dollar sales categories, increase in

basis and We a to to forward expect both there to margins variation. expect also remain although quarterly on be some gross net go may profitable continue and improve

We we million to will our $X LTE that fourth incurring continue process. in and to of process cost sensors to replacement related this begin Overall, the upcoming the quarter. entire sensors XG some expect expenses $X and the evaluate million between throughout

timing the posted. evaluating are this you We we and of will rollout keep

December Day to XX. Lastly, Analyst have planning Tuesday, on Investor we are an

more to We love for date, all closer please would provide but calendars details see that will We event. there. that you as mark your to get we

turn I call be and the we then will your happy will to Ralph to Now questions. answer back

Ralph Clark

very you thank Alan. Great, much,

we questions are think in go this to the just I time. at to directly prepared point

So thank you joining. much for very

Operator

Thank Instructions] from first William your question. Matt you. Blair. Please [Operator is proceed Our with Pfau, question

Matt Pfau

my questions. Hey, for taking guys. Thanks

into as during that to of potential well? the basically out can trying of into impact have you XXXX delays XXXX sort that to First, if what give the XXXX in wondering some how was that guidance I guidance I to have sort number, wanted have you about guidance of and plagued ask additional and visibility details terms if figure factored you just any that us much is of the

Alan Stewart

Alan. Sure, this is

what look mentioned annual of at we have end I in year. you think about Ralph to the how we’re if going we’re going just to terms in at recurring XXXX, start of the know revenue million $XX

our GAAP $X new as In we miscellaneous addition we then and expect between Puerto is filled in balance have. related revenue can by on in quickly assuming somewhere lives of to to we Rico, then be we some top light between up GAAP that, other the million million in another $X and And new believe we add can. as to in domestic Puerto security, there Rico Missions, go probably international. projects $X million that And revenue will

and that $X.X proposals point, there frankly bids out international around and have somewhere and started guidance more are at So XXXX. though last which much $X to we had is million than more optimistic we more going into within less our year even

Matt Pfau

Got the It’s detail for there. Thanks it. helpful. additional

sizable to deployment, know weren’t ago. in is fairly guys prior that On this same there deployment a few the reactivating areas I those in in? in you Is the coming were you deployed deployment years or this Rico you previously had Puerto hurricane a areas

Ralph Clark

Ralph. Great is this Yes, question.

pretty deployment. or and think again us. for well XX I it So with it’s matches year original our up It’s approximately a so contract three miles

gunshot we So enter and excited Puerto reengaged relationship to into with in to another detection quite services. them, are providing get Rico

Matt Pfau

Last it. customers seeing non-current Got potential Missions me using just that the for to these the interest from Do those have are some product, gunshot detection solution the are one customers. for you interest or Missions. ShotSpotter customers as that on eventually well mentioned are core are nice ShotSpotter you use showing

tool for an get could to your detection be product potentially well? customer idea trying Just this core if a on-boarding as gunshot

Ralph Clark

Yes.

So, great question again.

gunshot coming areas. violent may really because is two will ShotSpotter types those their interest in be customers, customers crime never ShotSpotter lack probably the they concentrated of that from So be

the future. solution property have then where So those customers that become could crime in crime violent they’re looking at that and customers solution they a more both and property as ShotSpotter crime potentially

the really of these sure signing really board are focused an hopefully experience are set it represent customers we think and over we bring on incredibly our making that does help few I up they have months the on first that next bear be can net set that deploying that customers. promoters and positive next in focus us is of mentioning

very So that customers patrol want that’s kind they the value solution relatively are of new from are that are on customers. bringing using this around this making the frankly the for capability seeing of kind so. of we and that that, kind precision of be for wave of something management our intentional that sure using is to and like tracking positive We next and company experience kind policing deploying around and

wouldn’t even our the are really has I up end interest seeing priority customers, or I engage though on from between and of now expect be to this year. So working handfuls non-ShotSpotter to we we’ll handful two us the sign customers that think of first with really

Matt Pfau

Great.

all all Thanks that’s Now, I for had. guys. that

Ralph Clark

Thank you.

Alan Stewart

you. Thank

Operator

is B.Riley FBR. next from question. Our your Van Chris Horn, with proceed question Please

Chris Van Horn

just and I’m on call. different it’s it’s if or you the $XXX taking everyone and potentially lot there like to guess or to It your thanks margin million feel XX% and I about wondering around you Hello how things front. revenue kind whether going term do are there just a driver cost of main for in of controls is somewhere seems of margins goal if continue expand pricing are longer and doing, EBITDA margins? my

Alan Stewart

where appropriate. spend I continue Alan. would where we is this Sure, to – say it’s

Ralph last months. to year going over the be and in our I spend earlier, think marketing, as to we mentioned XX that have sales up we’re ramping been increasing our as

feel about where same going There the necessarily pretty our be of at and expenses R&D, good selective be We’re level to there. not are G&A revenue there. of we rate will investments increasing in

see goods our of but throughout as you operating you much aren’t and two grow, of the cost as things, cost is. see growing also sold, the some revenue see expenses, control semi-fixed as So you revenue the our

to continue improve So to well. the going margins are as gross

getting expenses I – And million million $XXX margins and $XX improving we’re controlling are that still we our going would we that or path overall million mark. in operating say in improving to So on continued that gross XX% XXX the pretty feel hit lead to that EBITDA when comfortable improving to about share, margins.

Chris Van Horn

our into just got solutions maybe now due perspective, And landscape a have, there the landscape stark how has for the core we competitors do ramping is from And that you, more a pricing Thanks you that the confirm diligence some that a want I or to think some you stack that with are up? dig it. perspective, been competitive detail. perspective either you chatter differences. Okay, from from up, there competitive

Ralph Clark

Yes.

is So Great question. Ralph. this

think of is a this it scale just mean of seen point I customer situations. any other at chatter. time, I bunch kind haven’t in any we deployments in of successful any

canton course deployed anywhere. try another because they saw we renew decided to solution, solution we actually all with ShotSpotter haven’t the are not news Of that their going seen recent to which

important on I detection very think based which out doing a scale. architecturally, a to folks that thing it’s are at proximity do claiming to note think the challenging that is gunshot to I do sensor it basis there are

precise positives things gunshot things as actually alerts figure out using sure claim based multiple One really and and sensors fast minimizing which of be delivering in of make review aren’t also location, in robust not precise advantages gunshots. to false you terms is that difficult of for significant human the gunshot machine architectural gunshots, but classification we that to that negatives kind of and to reduce claim don’t well, sensor have are precise false is our in that classification that we really proximity using right, only are terms

we And a machine builds solution. classification, working so over multiple our human mile breed a to deploy best of think square and kind our review with sensors of ability along together

successful. try up So at this we’re how match least sensors reality. the see at claims of seen fact these I attempts kind original haven’t we’ve other in We’ve they if some really closely vendor companies very watching to to of proximity to one going particular up to be implementation one case, carefully gone based do cleaned cities will. at of you vendors Canton their kind particular this guess behind to three deployment, least been In things very in

much of on watch point and at we haven’t competitors this date, all kind seen to don’t really these but doing because we’ll pressure them of at So focus to what deployments. any we successful they have do from continue kind

Chris Van Horn

for Okay, thanks and got it. that time. commentary Thank you for the

Ralph Clark

Yes, thank you.

Operator

from Joseph JMP question. [Operator Our Securities. Osha, your next question proceed Please Instructions] with is

Unidentified Analyst

Hello. know actually kind the this hire back you had circle to headcount for wanted guys on I Hillary Joe. quarter. just to the just of sales new was kind This is of wondering on with you’re another headcount these see if kind if you thoughts look strategies? of pursue salespeople or growth comfortable on current or to one bring you I two of I some different one as might your we

Ralph Clark

Yes.

So, great question.

bring will solutions continue sets Sales are did building VP kind pushing around overlay promoting organizations sales on working current going security him is the we to out importantly, and to solution kind an in very skill customer our reporting the VP Flex organization he role, our five organization. precise on And where success So services, now have sales We’ll a build individual. are selling out and of of with that our territories. one to organization directors build that to those out very overlay sales of territory successful through collaboratively our sales directors solutions our Mission that and the formally taking invest most we of respective so a and

probably direct what referenceability these of even for other because do I around sell we’re us. in than view, in helps that that customers. I little sales, that’s important faster attention this chief’s critically ways point what net going the terms chiefs We’ll promoter that of police there we headcount a market of help grow in think loyal on police customers particular sauce bit ShotSpotter. out other kind deploy from us really then That’s of how the many do pay of process think to the really to building a do secret of we a

difference to that ShotSpotter, Las in bring particular absolutely customer And a How having this goal. implementing release opportunity if can you marketing press than think we talk solution, So I we Vegas make they’re help particular to customer the that’s, that, customer sales that want no organization. positive XXX% city, that a would loyal their they recent when what about Vegas practices Las have experience. committed sure more made our a case, at in an look point you what see about I with best ShotSpotter and success it’s deploy

the area organization. focused that And success so that’s we’re mostly customer on that

Unidentified Analyst

I provide Okay, around we we might then play Chicago, could time over secondly, that of growth just some some couple years? wondering your [indiscernible], at spent if the just was into color you thoughts great. how And next over the when in are strategy

Ralph Clark

Yes. Great.

always with other always customer So bring It’s it I we solution adopts equals again. plus it’s two two other kind our are a five. and this mean integrating is about and when we’re better Ralph processes. literally of technologies

critical casings. vast gun could literally as familiar and by is prevention is the dots. you of in you departments physical XXX ShotSpotter ATS go events cops those gunfire without the can on it and getting of Those violence majority to NIBEN dots call, because there reduction you the help forensic and aren’t evidence recover form processed fingerprinting then then the casings. shell For the kind much the police call so NIBEN, that casings in of with think of a get of shell of shell NIBEN more What’s this able connect we’re of make

quickly You can that very more and serial the you because shooters cadence additional about various most combined identify the a to the now see, interview gun witnesses gunfire, are you able gun few parts the movement That of to bringing city. the of crime drive, is see the able you’re that ShotSpotter of of able intelligence to in with violence problem.

approach a Intelligence basically the taking philosophy and there’s NIBEN and of Centers very Crime called overall shootings. it’s along out there combining all with investigating So to Gun concept robust ShotSpotter intentional

which they a investigation, someone. that wound Just have hurt critically a that they leave that might ultimately just homicide before your victims, even or shell shooter in can shootings result don’t kill be in or shoot in but blood but physical and case stopping not trail, shootings important a gunshot in serial

that with processes. love it we great it’s more the question because and to That’s those valuable it to So we combine it great, technologies customer. sticky, love and NIBEN makes it going integrated and be a to more makes

Unidentified Analyst

Great. Thank you.

Operator

Our with Power, proceed next question Baird. is from your Will question. Please

Charlie Erlikh

Thanks Hey, Charlie Erlikh actually revenue? now finish Puerto and exactly line we on between that guys. question. Rico, generate are starting on to where This left getting the for what Will. and just still taking wanted completely across is for the is to I ask

Alan Stewart

So, this is Alan.

mentioned award we we formal document. received As the

the will We do and go faster time, are now a there to RFP the in the little than be take actually to next to steps a final them with contain did communications time negotiation contracts. the sample it this contract. down last Hopefully

So cognizant than of least be. Puerto most terms sometimes already said, the things expect. We are the parties and going of year start that with certainly go a have it and longer before That is to of end conditions are little of take to we do an some both hope executed signed what lives. at and might Rico to the completely expect the opportunity even

Charlie Erlikh

on Great. Puerto close Rico these to on other And in line the they size? how international then international wanted compare of and we how pipeline, the might finish I some ask to also just are deals to generally

Ralph Clark

Yes.

part second So answer is question your I’ll the first. this of Ralph.

sized as $X anywhere the pricing These deployment of of revenue of of So $XXX,XXX size recurring because deals as reasonable the international can think annual much in in have a internationally. we have terms on of on like million and side sizable leverage are terms we of customers. kind you that from low

chunky. So large be and they to tend very

about We’re market of constructive say. size the would I and the depth super

seeing an We’re amount interest. increased of

we’ve Caribbean be Latin on we’re think in folks primarily I Colombia came Bahamas, the remind Brazil, this year. which to and Mexico, and on then to successful four been the Panama countries America, focused able with in Just

We South for need Cape issue. their to address with the a who long-standing have a Africa, violence of Town gun budget they also really They have discuss very publicly continue customer a time relationship had in and expansion with ShotSpotter. to also the tough

about it, a kind is of get the I you size but we’re from will it market, contract resembling with, depth feeling an and we So signed have constructive of of the they’re across existing very XXXX, the that maybe I bit executed Town as us, we’re that one existing line. a quite the customer view takes Cape call characteristics feeling lesson very, we’re procurement, a kind it’s kind think timing think much will like that little actually intentional logistics say because about as year Rico from has learned, still being behavior what of an difficult get to paper knows if this about more about for than talked of Puerto even contract it that more I of expanding, point to good

some revenue like international – hopeful amount way we’re we’re in contribution our to And of and pipeline GAAP So we XXXX. contributing getting expectant of is the revenue expecting hopeful the developing.

Charlie Erlikh

that’s helpful. guys. Thanks Great, really

Operator

Please with Our Instructions] Motulsky, question. Capital. your next Reed [Operator Imperial from proceed is question

Reed Motulsky

Last you them made quarter Hi next year. guys. that going Have and guys talked any you along there guys starting push price progress or increases been any negotiating about smoothly? has back is

Alan Stewart

Yes.

So, this Alan. is

to per $XX,XXX per We in year that X. price and are that increase be a go have That they square about phased from per base price. miles If that into at mile. miles all $XX,XXX are points square have have talked It per will sold price. ones will January year to customers until from that intending a effect reach price new call still be that increase will slightly historical implement basically below they’ll

push docs to the is haven’t and something on on. back that’s We it gotten execute still any substantial

Ralph Clark

just would add, not like I And year. every increasing we have been Yes. it’s prices

a what price increase for four We haven’t had years. in

were So we due.

Alan Stewart

price a would cases, not [indiscernible] our had standard mile. but to have many per We increases increase price in broad-based

Reed Motulsky

Got strong impacts data how policing know ShotSpotter success the and Flex you have compile the on guys community great. of impact of or a I now started and growing to it’s And there Missions with the have data guys if the footprint of it it, lot you not? on positive and

Ralph Clark

Yes.

the So that three very I’d much it’s too just we is on various of again, recently our narrative first just kind for six Mission hope that’s of – provide because yet, roadmap deployed help the we people have that use in over say, and customer. cases our our months. to deploy to And next we value of kind the few to early understand the But solution. another, that next to

Reed Motulsky

much. Thank great. Alright, very you

Ralph Clark

Thank you.

Operator

Securities. question. with is question Our Northland Please Wood, Tyler from your proceed next

Tyler Wood

for taking questions. thanks Hi, our

about seeing the are First driving Thank on on expected. you. a active cycles you there get that? you Is lengthening seeing the what’s turning how are international from seeing bit longer have sales cycles But than domestically talked domestically, you’re are getting and you what you sales cycles, impact sales if out more longer any those? competition

Ralph Clark

Yes.

competition. but Ralph we impact real Alan not is any this of are So, in from course, seeing and jump

In as respondent the there issuing again RFP, we’re In majority oftentimes direct as Rico, pricing sole couple basically issued not RFP where it’s folks, isn’t we guess first deals the of going sole they sales another even remind to the are I cases there. technically in in but are might are oftentimes the cases, Just Puerto a solution RFP Rico. of Puerto on our as our source an RFP. bidder customer and is as other not for case of to the the be strong vast

good. competitive we’re quite think I feeling view, a So really from of point

sales I think from XX we’re to is – of this long months. a a domestic still cycle point sales think like view, feeling I months XX cycle

I can is We’re some kind part frame. really time performance, really some of material seeing I it, think that With of delay of bounce not all XXXX of to relationships. say some of be around that our but existing would transactions a that – respect the

revenues. delaying to us live of some deployed to of GAAP big timely is So going kind degree, sold, Puerto already of already a ability our example Vegas Rico along fashion with some big, being Las that cost live go with in a but

prepared we I So in conclusions anticipated. lengthening we international, Outside, numbers this to sales any to we it’s there big domestically. are acknowledge those longer point at think taking originally don’t than about quite are have would too. that think draw time cycles that I And

it of XXXX quite for our an XXXX impact potentially our an part a revenue impact as and So – it certainly in to guidance. performance had has to has,

Tyler Wood

– guidance, to all XXXX That’s that And us Thanks. get And go you all goals me. the give you need your on in can in then on have part for helpful. targeting till XXXX updated That’s just Thanks. what for would miles? that you’re kind new what revenue? live of new you live go

Alan Stewart

this is Alan. Yes,

I into earlier already about I think between more miles. is Q&A that, come the amount haven’t the Rico. really GAAP what we adding in of want guidance $X of of of we live in out revenue, $X given think really terms which million going of we – go than it million gave information to break and actual that’s in plus any terms did million of Other from Puerto we that say a to $X

Tyler Wood

you. Thank Alright.

Ralph Clark

the And Alan, of a maybe matter the it’s live miles I if but when go miles, because add, if just live. Yes. number can really not of it’s okay, go

important. very very, is timing So

is So in XX QX live revenue. kind XX revenue, live going QX in miles yes, GAAP than for miles going more year’s of for worth next

Tyler Wood

Alright. That’s you. helpful. Thank

Operator

[Operator Instructions] Galinko, Our your is Securities. Matt Please question. next proceed question from National with

Matt Galinko

A Hey, thanks my for for couple taking you. questions.

did First capital of first just some I was which been in on all, the think allocation, you. the buyback quarter you stock for

the like needs some sounds capital hand, with respect to have XG the replacement cycle. On it you other sensor

how out are capital you. curious So into about XXXX? Thank I’m you just looking allocation thinking

Alan Stewart

is this Alan. Sure,

we would market be of we repurchasing we this price quarter. As $X work to although think replacement you I start, below in extend is. it shares going might XG value might continue terms did of see in where I our mentioned, last $X to intrinsic over the million if start some that the a couple start million that The again, anticipate for yes, and to we years. mentioned slowly capital of our it’s

that’s not spend. going be our materially necessarily to So affecting cash

as we we last generated think from we feel spending million cash, went that about well. quarter net $X.X where after million, only I down perspective, This pretty sit. So good about $X.X repurchases in

we more going to which position. about line, toward bottom the is to cash money grow and good and continue also our that feel we So improve put

Matt Galinko

Got we it. Thanks. about just factored increases into XXXX you Q&A, price Thanks. sure in if question a guidance, guess follow-up the with earlier to I And about the the that had respect I guidance? talked wasn’t

Alan Stewart

is Alan. this Yes,

a being We revenue, being have sold at $XXXXX of tag are important through the right understand that domestic sold miles are to GAAP in are that of now price although or it’s new terms the year point. price end that the booking

of – as getting second is year, still the deployed half price until throughout first XX sold it point lower year. called start be the are So those going at to more at toward ones get the the of next deployed first were half those the

Matt Galinko

it. Got Thank you.

Operator

not was question-and-answer time, this session taken. this At concludes our your if question

by over call the Investor Clark team ShotSpotter’s to e-mailing I to remarks. now ssti@gatewayir.com. for Mr. back Relations closing turn contact would may You like

Ralph Clark

call. all you this you thank Great. conference much Thank very joining and for

conference. Puerto see and and and XX of agencies days work at Rico, hopefully continuing before soon, reduce We’re communities about in very violence. looking forward to reengaged guess getting here then See our helping prevent gun the do to or you in investor we’ll I

So thank you very much.

Operator

today’s for you call. us Thank today joining for

disconnect. You may now

ShotSpotter (SSTI) 13 Nov 192019 Q3 Earnings call transcript