SSTI - Earnings call transcript Q4 2019

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Operator

Good afternoon, and welcome to ShotSpotter's Fourth Quarter and Full Year 2019 Earnings Conference Call. My name is Devin, 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 and 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 regulation discussed Form is risks filings, ShotSpotter's S-X. these its including registration of assumptions in are SEC Certain statement on of statements ShotSpotter of undertakes These and obligation the to live management's date reflect update no events February the any or or as after forward-looking broadcast, and forward-looking this reflect date this XXXX, beliefs, XX, call. revise of to statements predictions estimates circumstances

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

Now the sir. CEO, Shotspotter's like I you, Mr. would to call over Thank turn Ralph Clark. to

proceed. may You

Ralph Clark

Thank a of you I XXXX. this QX and the Al will review highlights for do joining results us afternoon. of and recap

share year take the also will ahead for outlook questions. your our then and We

Before take gratified want I the pushing in our performance XXXX to increase for the I'm personally showed and XXXX growth and performance but in strong this ShotSpotter position puts in through QX with team thank in formally resilience solid surprised. that they beyond. I grit not by the a to begin, us a

we communities company. deeply police business reduce of I than is a ShotSpotter at and the improve know public for do. violence, that gun held rebuild our It the between everyone that help is you just also trust sense of here to more that think many purpose work and safety inspires

the even that in year. In believe those adjusted understood we stronger creating a challenges, new challenges. through for income and XXXX, the net revenues, always We've worked present leading growth company in EBITDA position category successfully coming whole market and we would and

as of three XX went the Dayton, we quarter. Ohio, miles, X Vegas for with well Puerto the live new plus QX, Las new attrition Rico included net as in in all Specifically, on which cities expansion

and $X.XX XX deployment million, Las and our compared another year a $X.X per us, just revenue ago. to record largest miles diluted behind share, diluted and Vegas City. came with to customer $X.XX million total delivered Reported Chicago per share in for York revenue became $XX.X we New third

pleased nearby able been our in-place of some the nature with of fifth of from with a deployment in in adoption go example are to solution chief in order live stories We in the leverage of permissions, ShotSpotter success customer our police have QX in Puerto to combined work prep XX schedule. when Ohio. This in XX very existing clusters ahead early Rico, is Davie geographic miles with their perfect jurisdictions. now is tips as customer shares peers their viral to

approximately and annual For with reported $XX.X income the million in year revenue per shuttlers full million share. and We gun recurring XXXX, finished we or the published $X.X revenue. more net million $X.XX XXX,XXX than year of in diluted $XX

Our international Latin strong Greater opportunities America. between remains The distributed and pipeline with Caribbean South Africa,

expect We X% to of approximately revenues. X% our XXXX international to contribute

us a can to our ShotSpotter addition law them to public we our a our strategy. Missions role for ideal an diversified solution, In core represents growth missions, deepen critical policing Flex precision platform playing is in way our help relationships to precision intelligence partner. enforcement with as execute The strategic to valuable are the safety we them customers. more policing, more provide agencies to

XX deployed contracts those on In fully days. XXXX, expect be Missions in we booked X to next opportunities and the

we company last steps take strong the continue also Beyond position growth. year active technology to and market our sustainable, to profitable position, unique for extraordinarily

new in X direct capacity by have go-to-market sales positions VP We organization. our scaled adding our

and security. product sales Our owns Flex, VP new sales dedicated responsibilities product representing executives and sales has X Missions

and exec X sales focus a cities in VP on at sales we'll the launching level, jurisdictions. territory Tier to account be new Our and owns initiative

success our programs marketing critical by long-term team impressive important contract more well staffed It X is a combined executive be in relationship strategic outcomes headcount were us We efficient in XXXX. profitable viral revenue and with and strategy and Tier this expansion Tier our opportunities. positive upsell of leads, XXX% our executive penetrate give initiative rate this growth. building. attrition and an by regard account as spend bandwidth new customer continue X will be long-term to achieving These untapped them Our client is minimizing retention adds largely Customer $X.XX sales sales Customer success drives inside market. to for X per feed reps, dollar by helping demonstrated which for acquisition, of planning marketing sales and of maximizing revenue. also successful annualized key in

We more reduction strategies solution and working agency the than also as law gun consultative our result enforcement know in specialized development of client the engagement is that It custom positive and and that measurable violence results. of outcomes executives that prescribed. assists application drives are execution our just training

we Promoter believe reports We take senior to Score on team enhancing of XX next entire to hire journey. Net of that VP with company's recent the success in that customer to leadership is me report and the the to increased with happy can the level the a directly that customer I'm XXXX. engaged

would base. making about Our two customer of within of customers examples a many continue they're outcomes seeing difference like our positive positive with to to share talk our results the I the solution. just

of story national is, of that technology "a Chief, what regional best Toledo, Kral, going practices. Ohio, value Surgery says just important Trauma in the Police Police, proficiency just ShotSpotter Holtzman, February ShotSpotter the and Carolina, gunshot gun meets of live prevention illustrate X also in of Toledo, Chief one only In ShotSpotter violence". this deploying The turned even to has since into Flex months And COGS XX not was Flex technical tweeted that that injury our death." a at firearm addressing ongoing Chief changer first in game Mark wheel XX most has George in Greenville, reduction has year, gunshot These of ShotSpotter our led "an but been of the of Center the the epidemic XXXX. last In has success North installed his injury that recoveries. system seen intentional incredible when possible the XX% reported city arrest and outcomes is of in

last Two I Alan. turn to over points it before

our satellite in us review and new a clients be Washington, later year. this national opening to will Shotspotter law and to also will will center. give makers, a us influencers We tangibly to office because D.C. closer leaders incident it potential house a office bring This only enforcement office opinion will way this demonstrate technology not decision

headquarters-based include a portion of this our office also some providing marketing to to instant forensic addition will center, In amount backup review and product of services our resiliency teams.

efforts. excited We are our D.C. will federal as very nascent presence our Washington, government enhance relations also

been few a that to $XX the for bipartisan Sensenbrenner. for for of adoption Kelly authorization violence gun XXXX XXXX has a million point, bill, advocating technology Jim year supporting grant of and prevention in journal house through the of Congress, to H.R.XXXX, Robin detection bills that, per in attorney carve fire Case one and the creation with fiscal related short, out direct we've program. is gun would the years This co-sponsorship representatives,

our America's quickly as penetrate a the dynamics and market. help and police violence there leverage addressing fourth catalyst large more assessing system efforts in that history carefully regional to can are Houston, convinced serve the after largest in positively gun gun city, Texas we Lastly, of crime

Chief led is of Art PD Cities President Chiefs happens Association. who be the Houston Acevedo, the also by Major to

its basis. a circumstances Given this trial to fire best a the department agreed of miles department us, unique expand Houston that program embrace time. paid the on of directs subscription offer very will after Chief situation to have to on that trial proven and our with has agreed potentially condition based to we Acevedo This shots results provides the practices. square system Acevedo fully further the is transition they X Chief deployment, the the is over if happy

not will in City Although that produce most one America's as any a our for this done strong system Chief revenues challenging firmly XXXX, city, elsewhere, we in and prove we've we value of Chicago, Acevedo. that we believe gain anticipate York Oakland, New again, we of and in just the advocate can will, do

technologies is to and skepticism to our compared market believe Modern fire we with slow other a is market with detection part believe the naturally of be is in Association. Texas and very along Texas, experiment the small financial minimal policing potential of Major acceptance Chiefs can intelligence, this we risk that that gun cities We creative are Cities penetration high-value member that overcome traditionally there. actionable skeptical. gain conservative can

So that Alan after reviews take me. forward Alan. financial to for to will do Over your I you, our questions results. look it

Alan Stewart

everyone. We ended XXXX and a Ralph, afternoon, you, solid Thank good note. on

as and Rico is fifth completing including expansion, on areas which as certain three in the to addition a Vegas Ohio, many tracks Puerto example seeing in the in contracts contributed performance, in the finalizing of progress the initial our Our island well markets. we great the are in cities our of Las deployment our city

on net investment for for position, continued year. net while and XX leadership XX especially Even to profitable new EBITDA the went miles year. both quarter, adjusted quarter and We for the full our gross fourth the XX a total miles in year new live the adding we significantly, with of the increased expand full were

Note, the XXX% leveraging Revenue model rate XXXX the will compared Chicago XXX% was it included was large XXXX. the for continue in and to to highlight for year, expansion. XXXX. So a profitability our business for drive a retention year

Our future current revenue expectations. in retention line and rate with is now our more

increase the of at fourth quarter quarter an million, quarter look the and of for were Revenues the year. $XX.X over XX% details the fourth Let's XXXX. of the

covered number the million, expanded in full a increase as conclusion to to $XX.X current year helped top miles as Our addition the for the of XXXX, customers solid for XX% the well growth over of reflecting of new line year drive customers. deployments the a through record

contract Town Note to even with gross of million XX% million We gross full recurring or by of fourth $X.X of revenue revenue the associated to or compared deployment. XX% profit with of or versus ended offset under for goal the XXXX first or We XX% XX% XX% year as deployment in continue quarter renewal the which Rico, $XX saw $XX.X we for total XXXX. revenue of fourth revenue approximately profit an for the wait this of total the million XX to miles of annual million the with expansion Gross rapid accomplished to of Puerto Cape greater in the $XX.X where ARR that revenue $X.X the increased profit that XX% we of the year quarter million. XXXX. increased in formal

our sales with success costs success and will result customer of marketing will cost from our an sales sold, XXXX, to the accounting increase also to sold customer marketing in be result and evolving accounting This accordance by lower In will net of costs, will operating of basis. gross reducing practices of cost in of approximately starting we sold. our shifting X% on these but effect margin majority in operating annual allocating income. overall cost treatment of goods overall best to The change no regarding costs in the costs goods goods

Adjusted was from $X.X million, taking fourth interest, GAAP EBITDA income the the XXXX. back is quarter, in and taxes, calculated depreciation, up adding XX% our million by compensation which and $X.X amortization fourth for quarter net stock-based

was in the XXXX. dramatic year EBITDA adjusted $X.X XXX% $X.X full For million a million, from XXXX, up

Now turning to our expenses.

$X.X of quarter $X.X XX% quarter in expenses fourth versus fourth million million for of the the were revenue operating or XXXX. XX% or Our

compared our result million were cost were achieved. and in relative to or total For ultimately were year, of and our XX% year the the positively company whole revenue final a we because $XX.X that bonuses $XX.X the over fourth Of expenses million accrued of operating growth affected total revenue of revenue in note, quarter or to as full XXXX. expenses XX% operating

goods this reduced expenses. fourth compensation operating of in in expenses reversal both accrual the Parcel and cost quarter sold

dollar Our marketing $X.XX contract of spend revenue per was XXXX. sales XXXX annualized per versus dollar $X.XX dollar in approximately in and per

among sales expand We continue marketing to other programs, make our strategic efforts and success our and investments outlays. customer to increase

than lower level, we targeting even at spend one benefits this of companies SaaS most with dollar is per vertical addition, believe higher as our In viable continue competition. the to little enjoy significantly we specific

marketing year million down This million our of or breaking I $X.X expenses, just some for the total were prior and of and marketing of reflects $X.X our sales expenses the total cost revenue programs, versus revenue such the the that Now for XX% as XX% of or period. discussed. increase sales expanding fourth quarter programs

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

our period. improving XX% to capability. analytic for algorithms, and compared of invest continue Missions our expenses software or for of quarter year our or prior We $X.X XX% the $X.X to million the of total in million expanding were platform, our functionality revenue revenue customer applications the total G&A

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

As are I noted very achieve the above, year. profitability we to pleased full for

or net average weighted year, shares full shares from XX and million in average same basic ago no share of $X.XX go-live period diluted in miles per XX.X million the attrition. $X.X year added per on a or outstanding was GAAP income share XXXX. XX the a versus the $X.X based in XX.X million million based our net fourth For loss $X.XX weighted XX.X added based $X.XX share outstanding per million We quarter, diluted and up new basic with on on

year, added miles XXX of live gross and at year. the a new miles we of for end For XX the total XX net the full

XXX quarter. X In $XX cities. versus end And contract. in of approximately the of new at revenue end went cities. live ShotSpotter million the was third December, Deferred was QX, under end the year year-end, had as miles XXX in $XX.X At of we the at we of the million deployed

this shares million use cash. the cash, investments, $XX.X million of short-term approximately million in the the $X.X stock, in end During deploying of QX. ended we After down $XX.X XXXX, with we of cash and quarter slightly XXX,XXX repurchased from at our

As a reminder, debt. long-term we have no short or

$XX,XXX rate, year the revenue X, over impact I have the we next expect the increase from before for questions. to January year went and dollars the lower sold later items base rate until Ralph other we Note for $XX,XXX expect to increasing effect domestic we profitability been back any on into couple discussed our do to mile but and that would turn per your several thousand to The few full call last A deployments in quarters don't customers. take of we as contribute change contribute the most increased year. have the hundred at price

years. potential learned networks the over I cost of made I last the about Also XG We've on did replacing now want that XG quarter to our follow-up comment impact sensors the the next to we not any to be turned our XXXX off sensor XXXX, will degradation deployed early in upgrades material so don't unless we into currently expect networks. incur material XG note costs in related few

Now turning guidance. our to

We expecting million. million to $XX $XX of XXXX revenues are

expect markets include from year. we international As to new still this discussed, we contribution a this

to to our We QX increase uptick cadence, expect revenue again QX, normal to flat QX an from follow with QX. an QX, flat in QX largely and

and position, the our the we further to business growing see invest While benefit We're in in penetration We invest sales and in and customer our XXXX to we maintain we to leadership this adjusted market. our investments our and internationally as efforts EBITDA. profitability plan to expand and from and leadership support to continue R&D marketing to and programs, continue expect to other success our our leverage growth to in our accelerate to among to improvement continuing expand initiatives. efforts, grow further

basis dollar all across increase a The will continue to expenses on categories.

Now you, Ralph. back over to

Ralph Clark

we're difference way. we not very path are customer only seeing making Thank along the We're believe great but it in inspires positive Alan. you feel about confidence about confidence, the instills extremely the we're well. much, as business on We our and the momentum that our

ready to and help. you to feedback want your now take And we're for your all questions. of thank We

Operator

[Operator Instructions].

question Pfau the line comes with William Matt of first from Our Blair.

Matthew Pfau

out the opportunity. Latin initial of that start I'm the you've First some in, if any on just America were put that I country proposals X wondering received you think, those on targeting? feedback you

Ralph Clark

you that for question, Thank Great. very Matt. much

prepared it a X% stated only -- of our the very to remarks, that revenues for our that we and we're I And South building, to about in but Africa was X% way pipeline on well. for of back We have somewhere X% defendant a and the in in X% prepared XXXX. to we're today, we're but looking America, as not revenues between contribute sorry, Latin share international think I'm Caribbean constructive also produced not feel

Matthew Pfau

Got are that it. And opportunities some those there? newer out of put you've Caribbean proposals that

Ralph Clark

Yes. That's correct.

Matthew Pfau

terms the that and that insight then been large to Okay. to Maybe satisfied X I it this is And then with us sort to if cities, that's give paid out process then some this well customers Houston approved basis for get budget? you that sort everything large want difficult how with into it sort something them Or just other customer, as guess look with that's to trial goes move trial other the over interesting. what whoever potential in like is the pretty And And with solution a pre-negotiated of allocates does and of are can that they're Tier pitched? budgeting? interest something there? of trial? had you've discussions is is already had of --

Ralph Clark

Great question. Yes.

situation. with to think I very, that's a very unique respect So Houston,

a city for that here be that a very in Given opportunity police has gun its lot very that us. a violence department. a a large city large size, U.S. has believe the With happens very in fourth It large the is we it's state also largest spread problem to across of

his unique that Police inside respected Major a credibility. enforcement, our law the Chiefs President being with the is, Art of he to he's speaks combined certainly of Cities of very That, a and Chief Chief being Acevedo well-renowned lot and very

forward kind that creative us wait. to try together felt really gave a and something have opportunity all Houston an to and we be way to So not move came in of in those things

this us, know, and that for move statement this subscriber we're that his satisfied Acevedo results to because we his don't expanding. that revenue when even and XXXX, bake typically, kind is that prepared any system I a revenue involves to for of officers XXXX That with in paid under any to deployment, good apply to applied, forward best that folks, will march into if XXXX. on us X be is he we're successful. guidance. revenue to to but going trial We a very look there, I'm to happen. have potentially opportunity at on impact And Chief our would to look at they best that some happen, impact have those Houston as for us are the more forward with being not good much to we're results to -- tried the direct And kind even have this we're clear to practices if going proven practices of in revenue concept contribution successful proviso it's happy so our

and that support. Police on deployed cities we it plan to successful we're to And to of Chief to very And been I have a net other of think we a are we signal, going important his where Art specifically But specifically marketplace, really which Acevedo's think, the him major haven't is that. also peers be doing in into Texas, promoter building doing.

Matthew Pfau

strong the on of the job Nice finish year.

Ralph Clark

you. Thank

Operator

comes of line question from the Richard with Baldry Roth Capital. next Our

Richard Baldry

more that? or -- that It talk upfront? time deployment signing? it through Missions to Is go versus sounds that the you behind have to. When recurring? does recognition you And like wins live revenue is a the how Could it contract versus actual deployment few more

Ralph Clark

Flex. will to deployment fee There upfront year very recognition similar the our recognized then have we or No, subscription over in but period, might ratably similar revenue be for what very deployments. the will the Flex small charge Sure. a be to be the

Richard Baldry

on add are Your from aside any sort discussions? updates city of in any XXXX there Tier of to for Then the those thoughts Okay. more Houston, X beyond? or possibility

Ralph Clark

any stipulated We Tier other haven't X really other on specifics cities.

Tier talked with additional discussions work that believe Xs. the about We have some But in other we earnings past to might calls. the spark on do continue that as ones continue we've this We deployment Houston well. discussions to

Richard Baldry

up. costs, on or yourselves, gross slightly some I capitalized not? margin while guess, successful goes is or determine Is side? initiative assume moderately that somehow a that's by that even the whether way With Or Houston the until

Ralph Clark

on No. held It will basically at progress in cost sheet that point. the be balance as

income is That the it to translate goes live. statement won't it revenue So until ultimately produced.

Richard Baldry

update for more signals you've street better the a And either while XXXX on into Anything won you streetlights, smart one trending partners, smart for development last cities think any would beyond? be, that ago initiatives. or or heading smart traction

Ralph Clark

Yes.

So really report there. nothing new to

Operator

Our with the comes Jerry question from Craig-Hallum. line next Hamblin of

Jeremy Hamblin

to back to on my finish. I a Have second. the Missions want strong come congratulations for

up Flex You network a came offer creative mile. with through an the to free of and opportunity expand permissions

have response In that say, that, terms you've of that learnings cities something just accelerated your that expect with had drive do not And that Is you in Missions offer? that? have beyond market that that particular to learned? in the what has I how business, but to XXXX would tactic, you for How XXXX?

Ralph Clark

Yes. Thanks for This that question. Ralph. is

and Alan a I'll So of least stab at at as appropriate or necessary. it, in take part jump answering

the paying appropriate our part it customers, a they marketing example be would of is X as So And year. X of in that I a people to Missions I line, at But currently. useful quickly and to had really mission's will interest what because our some creative of of be really get a free is to across and the offer X, are kind Missions We X, adapt for missions. mile think we amount day, Missions paying -- the very considerations. a push end market very felt we great of to [ph] ability effectively think program

of And those paying that mile deployed, predicting a continue customers then from a will mile. extra percentage for that year as that on we've I'm now, high

we've of a strength as expense for of a the signaling free an a existing mile customer effectively, of front-loaded deploying what is the done So way bit of for kind partnership. little

get their Missions difference selling first and use as to then these really is policing to objects our them XX X-to-so useful information making customers customers kind of within And is reference customer really precision about X our really, go how with is that efforts, goal, XX next to to a get base.

of a of we frankly, make how about us even accelerate using the make or well. but they're learn get So then kind way not it's to valuable it enhancements again, we very customers Missions, quickly can so missions we're market on for in kind adoption, only, juice going it more those prospective can to some as to valuable customers feedback existing and new really

it's So I thing. excited the We're within pretty positive about it really here think a company.

Jeremy Hamblin

Great. And then at the end of remarkable last year, stories. you success had some really

You but and very them start like in great with the large mentioned kind some statements your of let's like other X system. of to rates Has of when on PR say, that in early of terms such prepared an in customers homicide of violence York violence of and X that and years inbound has X, cities a increased out acceleration certainly, XXXX? to, good contrast really here competing or PR the remarks largest get kind seen New reduction gun Chicago public about Are helped Philadelphia in you you that using inquiries? seeing

Ralph Clark

again. Well, -- is I Ralph this think

how made ShotSpotter's those discount don't net respect difference we with to in the a her the company. But ability peers, very I we think and can customers think our acquire is positive impact some the customer outcomes has promoting I are really strong his mean, executives efficient sales a great, fantastic. what Chief I do. to basis on within We've got to or customer success critical and our that efforts. sales team selling to

And you actually that. see

said around but think, cities thing same well. of of can England like talked of as to And breed point could other Florida California. my be this I get Ohio Certainly, Cincinnati, South said The Inland, you that same about when again, as Ohio, be regional remarks concept for we can the the in region. out successes thing tipping within for a some well. New prepared kind how

like very what with outcomes and why efforts in often reduction do. invest to people we standing of continue crime And think made the And create success to grow And so organization and to a we those critical are go about that But helping in ShotSpotter's a how salespeople more feel is market because we I sales virtual folks net opportunity. primarily promoter part we customer their continue and enhance don't get the hire we positive have discussion after organization. responsible up also into to that saying that's success customer number customers organization our our and invest customer success kind of we you and will salespeople, is those our violent right difference and of for team. why --

Jeremy Hamblin

And margin Great. questions clarifying couple of to just a wrap up with want then the commentary. on

just is first The XG impact.

And thinking In on you might a allocation of in you positive terms of then And could comprehensive secondly, market. the clarification of between having mentioned goods and sold the impact that impact clarifying on then what kind XXXX? XXXX, some for about adjustments, gross accruals, accounting think XXXX, terms Alan, you for us give QX? just on in accrual, procedural of over the including margin of compensation be for and cost the the sales

XXXX? see Just you where do might in think any clarification we on these

Alan Stewart

with start XG. Sure. the and Yes. ahead go I'll

continue But still starting be depreciation somewhere sensors remaining the $X between also million. they the cycle those $X do they'll still part we new million get ones. likely expect, with sensors out some most that replaced. are have at to XXXX The in cost cycle. We as sensors our just of likely of swap maintenance So as just and swap point, XG most XXXX and to to over normal out will be

depreciation most been again. starting be it's in a over fully one-time going expense not cases, to depreciated, most likely an it'll have already So all-in be that sensors

the that customer VP shifting terms charge of we're mention margins, of In that some we organization. the in costs formal of have I that did a now success

be X% see terms of you'll the there. will in expense, increase or of sales income, up marketing to cost those and no reduced costs by bottom shifted XXX operating of sold. basis margins points. Then the there gross are sold as tend reduction going the the be such in And Some cost line approximately a that likewise into goods and will change of to goods

And the were say, would change bonuses company then the QX, we we to had that original I when performance the on did our based metrics. asked adjustment lastly, on

did also, and positively the a impact So that QX whole. year as

We to will the that the are for XXXX. metrics to begin performance higher XXXX be out accruing rate, again, set at tied

Jeremy Hamblin

bonuses, impact the what QX? was The company in total

Alan Stewart

There's expense. about in reduction $XXX,XXX

Operator

question with from of the line next Horn comes Van Our Chris FBR.

Christopher Van Horn

I competitive in highlight was and a Ohio your to I know terms advantage to there, Dayton, imagine bid. win, with of wanted process? the competitive in congratulations it Anything that

Ralph Clark

Ralph. is This Yes.

that. see deployment to gunshot although, answer claiming like successful we booked sure very some they waiting the question enhancements So we yet continuing our detection. Carolina; for there et they continue we're haven't than see seen mean feel Ohio deployed Columbia, about technology have competitive Carolina, November or Canton, Greenville, publicly good it Dayton, us. We're year. Ohio; guess, know And how any create we've about in say least to to to curious make really cheaper, situation. to still of of cetera. They're sometime make to better, faster other we're our yet, North about anyone so it And obviously do I that South to in I don't promoters We successfully to I'm at last quite not that -- position. that

and we've owned But strong we now. for very is market very, a think one we're that we And created much the right position. feel pretty in that competitive

get of platform, customers making once value sure kind the on they're the on kind service. that to focus and into out of the we're continuing fold bringing so come they of to And new going

Christopher Van Horn

is was and officers to we've or bit around Or to ShotSpotter. great. more that starting continuing Okay, then, of kind trend a curious, of it buying some is there? I of or you're heard a that decision some of influence little commentary prosecuting the And the DAs see? the any one-off

Ralph Clark

Yes.

So make this is this can positive a a Ralph. in folks where sale, DAs. I very of is decision, including weigh potentially a a lot decision, much ShotSpotter mean complex to

because alerts very working but record can they're a as We have provide oftentimes, understand value politically, our prosecutors in prosecutorial not connected. prosecutors they influencers be precision with the track They efforts. well great And very federal well. that can in their big local only

which leave budget also wanting helping get see at we as growing opportunity they we agency ShotSpotter trauma and want are influence benefit city be very Sometimes But actually deploy executives to helpful. see care don't can the involved well, bring benefit local a out from to a the feel beginning that in or and and centers deployment ShotSpotter. fund to to of the the

people think, of all organization. to a able skilled they kind it a cycles nature people interested That's know there's the of Because kind in and sales have really this all mix, in it want I frustratedly those long organization, premier of head to because can in being yes. And a kind to talked coordinate of and makes really mix what they to just how the at coordinate get players those long get in lot our about they them just So way sales -- business. that. And their take organization our do. that again, to has we do the of a to all sales is we've shaking our something sales although always parties that's time,

Christopher Van Horn

can it. And about level year-over-year. Anything last me. And was is we for CapEx Okay, It for a think then XXXX? like got looks there driving that? down

Alan Stewart

This is Alan. Yes.

reduction to CapEx at at for a was, be the just So 'XX say XXXX, of if to would you lot the large going frankly, probably the was a it do versus XXXX deploy. going the And to expensive 'XX, in I had beginning Chicago And it's look to XXXX. we amount reason more of deployment. similar

CapEx So high that was what XXXX. so be in to drove the

Christopher Van Horn

Congrats the quarter. on

Operator

from question next the line Osha Securities. Joseph with JMP of Our comes

Joseph Osha

accrued of for I hope under The questions a you. now -- bonuses. that couple you for we're you that So hearing

able I'm one. sets ShotSpotter First, term. additive to the the obviously, there Are at hearing does right Are be about nothing skill wondering of interesting other ramp as Missions. do It's might a thematic sets to -- now? to what you skill any think are there that what you're adjacent that any near look other now. you

Alan Stewart

use. right that that solutions on So apps doing now good skill feel we of And is customers we in a this that things have lot terms use, pretty I what of sets they're make of Alan. behind in about internal to our the the scenes terms say there's better. would we tools the going Flex

does scenes. a team behind the lot our So of that

program incredibly that In terms us of has what would our for adopter finding the what I we're want. mentioned, Ralph been important early doing in in out, Missions, say customers as

somewhat of value. those high themselves And by a are things some also, bit a lot from add technical unique and challenging a side, we'll of but

be already would know, into of I that some to or things So just there more And we the to team are... allow that. to say I have. continue going have Ralph, that outgrowth do don't peripheral might with we do is what products us that

Joseph Osha

diversifying. overly Sorry, MBA-ish maybe for that see asking you was I of any guess, other whether plans an way

the me Let that ask way. question

Ralph Clark

to Ralph. core we'd this terms of, market, in I right? say. aspirationally is mean, X,XXX I cities, Flex, mean talked the basically We're TAM talk at of that when on would where we've own I This business, about cities. just you prepared nothing of XXX look call, of kind of phone penetrated be in north Yes. and in so we XXX% we've a domestic our

So really solution, wash, which of repeat. driving on which revenues core of our is for rinse, kind of kind Flex, most the us, is is

appropriately, done getting layer just us really next hammering at platform, that all some value new away we making the they're become on then help things. mean, add, promoters. keep We've and it's net agencies. I of driving on-boarded that, customers sure to contingent they they're about good sell got And

think X,XXX the underpenetrated the different, Missions that technology accretive get we're you're But haven't of X seeing think I and the question as that's that plus to. But slightly And the that get to very market and how kind You Alan same dice us, about of using other I program. is within Tier asked doing. maybe about X,XXX, think, slice I alluded kind cities platform. basically markets again,

to a of the I ago. our think management years as that skills invented and kind probably about know, to we product XX with really that because, Flex, really exercise on dot map, they're putting you going it's have

a the of that yes, much And on someone that. XX but it's within stuff precise way It's there's things been, and fires put to over we've gun XX years, around done new trigger thing. in highly fundamentally, the seconds always being to to map is a improve same reliable, pulled, put a when which not a dot it

I a could would lot of bit different that -- that's broad Missions say. things, into. I aperture, think There's little we go solution a the is has something a lot different a directions of

So to to of first going the all of things our X and our getting XX that I we're very doesn't and can think to hopefully, from kind it some money set next around to X going and resourced side We customers on think the next amount of customers focused able get of a to enhancement impact the cost prioritizing quarters. several great have have be of to a lot pretty commissions disciplined prioritize be input implement. But big we're set we're we're engineering well over version that do to broadly.

brand-new security a just basically we're a different I we same security, security which to case technology around technically we in the go focus kind like. think or headcount into but applying sales outside And to of Missions of slightly security look have and product don't where Again, use are corporate of and pretty solution. on added happy the campus Flex, VP the and it with now really ShotSpotter our reporting

Joseph Osha

couple A granular ones. Okay. more

sort might of another for sustain. care to of Would the put terms couple You you miles years able about in had added? a previously rough marker annual of, thoughts be shared, you out next cadence there that to

Alan Stewart

still referred around we're years. in at we've would next imply a think -- $XXX I always million revenue getting that that And which CAGR the rate, growth looking it's to X-ish mark called as Well, to midterm, XX%. somewhere

comfortable that. think feel pretty with I we So

leverage increase. EBITDA we to expenses feel on, grow adjusted also We comfortable the will to continue put continue that the EBITDA, and as we

that have said X%. that be EBITDA approximately we our expect million $XXX margins We at mark, to

I think feel comfortable that. still we with

So control to through is can I we that through the been even in and year financial we're that the we've where heading well last adjusted use expense hope our results increase approach. that just in direction. of as reported over terms significant we've as you right the see disciplined the that EBITDA able a had

sales expenses continue well. appropriately, going to are the add and to customer success, and internationally, categories marketing as OpEx we Now other

you are basically see going that range. going there, to to of we're that being doesn't be dollars So spent million where $XXX expectations change our at more but

Joseph Osha

Alan, hear one at XXX And point, I Okay. miles you did say, under contract.

into not contracted coming that year would the XX So imply with here that miles you're deployed? but yet

Alan Stewart

but say because say always we I That's you're don't correct. And approximately exactly, yes, correct.

Joseph Osha

that is a use? the still questions on of we're of reasonable $XX,XXX fair that and number mile All following the square right. between one to a assume, new CapEx it on for question, last kind And Is up earlier to $XX,XXX deployments.

Alan Stewart

but So said we've it us exactly costs much never to you're how certainly in ballpark. deploy, the

Operator

the line Will Power Baird. question with next Our from comes of

Charles Erlikh

customers end or this X% with you to are hoping the Charlie revenue, you is now? This the And have at on up what which little Erlikh was X%. happen you to along X% that end bit high right would low far a to in X% more for end of expectations XXXX for I international to talk Will. could of that if the about

Ralph Clark

Yes.

is this Ralph. So

geographies maybe that of the slight the advantage some has across interesting the experience with Africa, kind Africa of South I Greater and about, with would of very Bahamas. there a one and demand Caribbean. customer Town, South Caribbean I there's think all Caribbean that really is Latin X and South then course, America say in major strong spoke Africa recent Cape -- the we with

So quite And in really had that's in America. we're and over that with interesting number in been of countries on a kind the to and home, the because at, There's we've of can Mexico, on Latin the valuable those And impressed of right. we're level folks Colombia Brazil, focus interesting discussions looking other kind tipping within focused But on countries. platform. I've we how and geographies that's again, their terms really maybe very had specific folks all just remind to of that lead that to X of Panama.

to X those our of between Latin to X% midpoint guidance. South that big expect and to we geographies, X% the that getting so be will And to range Africa America, we the get Caribbean that

really closer down be number size make that It's versus timing. to right? Now X%. And really X% does to happen timing, timing to can what and gets matter. It

has the on deal the opportunity ARR million a of it, basis, go call a, $XXX,XXX ARR to to X still on, live But for able getting produce becomes say, to $XXX,XXX us. so strategically July And deal $XXX,XXX. being to kind October X, in it's very million If that, September ARR of important GAAP revenue. and $X reason, some that slides or $X

us year opportunity to communicate help So to question when. of we think we're I in our you it's Rico. Very it's think trying ask is, international a people think around similar of would way opportunity our last to not would about the about what Puerto to I question encourage or a if,

get confident very a Rico platform thought. was again. were we Puerto happen, back ultimately again, but it knew was if, when. we took We to going that it wasn't mean were it the we going question I on it a longer than of Again, question to of

that's international. same for think the I

Charles Erlikh

Great.

to any sort the a price talk bit pushback that Now from in that of about makes year? increase beginning sense. you And it's far? then early little also, at you could any early on know the you Or rolled prices And out are reception those of the that? have conservatively increase related increases? forecasting so on attrition you customers reception reads I in but to any early, gotten the

Alan Stewart

Yes.

Alan. is this So

most our increase this range. of of around type most vendors general, of in I expect their for customers think, some

and and we increase comments, although of pushback So gotten between we we've don't that would is for year, we've not think X%. attrition amount feel somewhere overly which any cause about that some generally I the X% concerned to certainly gotten the that us expect

smooth far, fairly So sailing there.

Charles Erlikh

say the just quarter? guys And customers housekeeping you one question. Did many had great. in quick Okay, you security how

Ralph Clark

not customers. did did -- any We new security another add new We not.

Operator

Instructions]. [Operator

with Our Imperial Kessler comes of next question Jeff Capital. the line from

Jeffrey Kessler

ago looks perhaps it of to you looked was through One lot with large what somewhat over had -- of a as like business it have business sounded about the But was big coming questions cities the left you relative had think business I impression little now -- Puerto to the and let's to with, to installed. timing. bit Because that ask pipeline go the there you I'm as on, year December, say, a like the no then the where of it do. into increased you the when became already Because, your about revenue you And fall wasn't you significantly and more the slowing. going middle since the talk not course if say Can backlog, sudden, that a but where of is that Rico to clearly, wanted you pipeline. cadence up about of sounded optimistic all wondering year has of I'm a now? the the late -- lot optimism until a the

Ralph Clark

Yes.

way with the entered So think Ralph. start maybe recurring of I'll how to this about is respect to we year a revenue. our related business of think is annual kind that about with to book

expect would on revenue. of $XX to or million approximately $XX hold another the the to of we're recurring the get that starting able very revenue getting To need annual a to you in extent of over rate, kind $X million terms renewal that to of million year course we're so that So the add of to with we the GAAP would high year

attrition presentation, thought $X kind there. Day $X like that pathway a because of our I Analyst put $X in like think $X million we million was assume it broadly get of Actually, to early we think to I kind we And of plus. million million --

Jeffrey Kessler

a of and size that directly is placement, to be talk smaller that about All right, like upgrade, slightly happens it's be -- XG part a able related terms things improvements great. being Also, that? what -- to little sensors in -- in going is and your the not of going part can to to while bit you design,

Alan Stewart

factor involve and not change. learn XG from to a to things So We don't as to Alan. changes things make that actual themselves. to wind and deployment large in of large XG the is is like LTE we incremental continue factor form form we those. like the continue about do said, That sensors But more going to noise anticipate shift this the the do modifications address

Jeffrey Kessler

Okay. looking city of and cities -- the that countries? of includes at, going Last back Puerto be the the getting Is question. in well. there? second-tier there In doing those largest a to looking addition as types along that at your marketing you What of [indiscernible] into to Latin that capital with American as goes opportunity, Rico what are cities you're --

Ralph Clark

this just customer So by we the Ralph. a consider Rico, would international is Puerto point out not I be an that customer. to domestic way,

geographies, cities a same cities there's I might to some really say, large within you just we're majority the we more there. so medium-sized across would cities that respect go mix the smaller vast of the say three my about. of probably familiar spoke very would on and actually demand. Just I small-sized page be cities, through With probably If of, geographies they're those the with with, medium- kind that head, I to cities, those

Jeffrey Kessler

X marketing question, Right. years. last enforcement for And is overwhelmed has the a regarding program I law those of kind Brazil. has Is Unfortunately, countries last become type worse, just really Brazil that notorious the a the or better capability? or guess, you have for for X where in there specific of violence

Ralph Clark

interest with gun have getting I familiar ground, of and all a ShotSpotter. those mean, selling regions that specific with the no, it's basically the belly-to-belly in addressing cohorts crime within them on kind of

a necessarily not household name we're imagine, might down you there. As

can don't build and and example. so or there up Colombia really our an have our like of Brazil, kind into reference then they feel customers And first kind they're Brazil, of that. X we ocean successfully as to as focus Panama boil foray we to point the of X, reference kind of, of deployed kind off and only on to Mexico sites, and We kind get not of in is frankly, that is but

even Just gun our by the a problem. to there large, X violence and will or getting be start X efforts Brazil very large fantastic way, country, very that has a in which is in cities

Operator

of question final from Northland line the Our Securities. with comes Tyler Wood

Tyler Wood

the the in foothold congratulations in my add I'll quarter -- and Texas. on

domestically how done much we cities the than to signed, Once to signing the same? be many should opportunity. between international deal as back internationally, long or get Going it go-live? actually we should you deployments expect pretty expect longer seeing start Since we and haven't

Ralph Clark

know. Yes. hard That's to

I really that we're geo specific about. think the talking on it depends

possibly things faster a dealing in the kind mean, have sense Africa a planning less I probably assume in months. experience that because region. -- think faster I of Caribbean anything I than there. will experience And lot wouldn't in in But some we down X infrastructure that players the move for because have some I have with just purposes, South move we

months-or-so probably other in maybe And I say, X want But geos. Yes. would think conservative, those to things if happen South in and be the you I Africa. can faster Caribbean

Tyler Wood

That's right. more. one And helpful. All then

the on side Could the campuses? changes some of of about got thinking you security leadership And that back Going any focus business. the still sounds side of how mostly kind going there. strategically should kind to into you're to new like business talk Is we it you've about of us that on Or the expect? XXXX.

Ralph Clark

This Yes. is again. Ralph

the college ad well, infrastructure by it freeway another infrastructure, free areas highway protecting. of the and us of being actually that two area issues some think It's do believe security -- i.e., kind protection, reference off gunfire think higher many have are or actually I our of sadly, interesting we've you an And with. ways campuses kind there's of campuses And critical represented detected with to kind violence. campus also, that along have focus kind sell So familiar that corridor of That's us. intermittent kind is We opportunity major of as for in like. securities, corporate not, have we're for gun there's very corporate well. of project we

Plenty say for would be potential probably third to that market. the a that in of stuff So of stool. I would do, though, us leg

Operator

our question-and-answer this At concludes this time, session.

over question Investor to I'd like now Relations the his taken, Mr. contact remarks. call closing team turn your may by If you e-mailing ssci@gatewayir.com. back ShotSpotter's not for to was Clark

Ralph Clark

us our folks it much. for very long-term a really we're on globally. you at but to an sprint in is isn't all, Thank journey. appreciate Again, the and a make Great. us really we for impact it with This partnering journey,

the much for I very you can your And that, think with So we call. end support. thank

Alan Stewart

Thanks again.

I just as thanks want say well. to Now

Ralph Clark

Yes.

Operator

you joining for for teleconference. Thank today's us

disconnect now time, this have may day. You and lines a wonderful your at

ShotSpotter (SSTI) 18 Feb 202019 Q4 Earnings call transcript