SSTI - Earnings call transcript Q4 2020

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Operator

Good afternoon, and welcome to ShotSpotter's Fourth Quarter and Full Year 2020 Earnings Conference Call. My name is Sachi, 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. February 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 may like turn over to proceed. you Sir, the ShotSpotter's Clark.

Ralph Clark

back our thank Mary joining absence. for I the doing thrilled you personally on call Chief Thank want as to is Alan I'm this partner my during Financial this everyone [indiscernible] afternoon. stewardship Alan's Officer. and I hope well. for on have us careful her to

adapt million we some last of contribution revenue. year-over-year LEEDS growth and before do agile beyond year our on the I'll focus usual, solid this reported then a start share a for and XX% results outlook revenue We of what throughout QX million, the eventful fast We'll a an and us of XXXX to As putting been initiatives reported path response discuss year. review our and brief year. and has those our for taking a proud to from enforcement company This respond and able been challenges XXXX on your to stakeholder to QX 'XX a revenue note, I'm quarter agency company exception. was ecosystem partial We no $XX.X law $XX.X of finished positive XXXX for everyone, how to challenging beyond. growth a extremely modest be year questions. our and year. of represented including has proved from

including cities in marquee went Lauderdale, our detection as and Cleveland in cities gunshot Florida, cities, Fort we and and service, respectively. ShotSpotter such response, which the Flex deployed During XX X Ohio live branded formerly new as quarter, with represents our acoustic X

early able by in XXXX. in in New is projects Louis expanded respond In in pilot believe go to pipeline producing we of Houston study revenue Houston $XX.X Mansfield, where academic Among first additional Ohio, entering respond, our annual live our document supported sets which New Memphis, already independent on to go footprint and strong a into in our Tennessee, in project in year. next of by in are are Houston promising us our core growth year new which in Texas. recurring We're in for captures Xth number up York positioned business in second We're scheduled and addition, the Detroit million live and County, we're ShotSpotter XXXX with be our to those very XXXX, in of City such city few City, excited which we our city as in York with an cities, formally chief December Bakersville, Ohio, with St. with Harris expect well projects Columbus, the this Ohio, we along PD. [indiscernible] of XXXX and a California. robust expansions half Texas, half will foothold results including

that are In of supporting agencies. the also random research study separate study in a addition efficacy of planned to we will ShotSpotter initiative a the academic sampling respond in Houston,

where believe gunshot our that the point research care standard seen Our body what tipping a as We've of approach can to Ohio, of to detection the accepted of have in of the as where goal as outcomes. narrative capital, we care X safety a as detection the standard of state we past believe speaks acoustic has point solution. The X on gunshot impact gunshot acoustic detection called budget. this the Governor public public play part gunshot them his on a is accelerate where cities, safety is captured XX tipping a positive independent regionally in specifically DeWine had for We reached months. of build out detection to Mike help

with our initiatives services Our year safety practices success the customer detection innovative improving success prior gunshot on of achievement provide. positive game to speaks our as immersive accelerated reflected in the customer the and customer success and outcomes. focus continued and on-boarding customer and Ohio experience builds measuring our the focus started net best spark and and process and promoter realized This institutional This The unique measurable we've investment XXXX. are in demonstrated and process XX of leveraging return on of the net validates implementing, traction delivering and promoter. on-boarding power public we our acoustic journey, a from X the had score is sharing in a our who NPS world-class value of changer value upon on the of and

reported This documented borne been positive service other spend of that We our Our creation revenue. dollar revenue than press our ICP. XXXX, and mission well relative such critical. despite in less as to budget to of safety by customers in crime macro strong for the calls costs an and $XXX,XXX basis, recent of pandemic referrals indispensable by SaaS $X.XX a pressures worth Executive the $X Research a public further ability well deepen the customer and is hear to word-of-mouth was Foundation On associations, increased position the have out our drive per PERF, attrition very puts that revenue. industry-leading and to Police the in customer companies $X loyalty has over broadly and from to municipal us police. violent Strong GAAP manage our our

adoption uptick increase on able from violence gunshot in believe sales program is has experience we penetrating vantage services not unique of is the success the develop the in X market cities to our material This have year, market. vertical. with been in with contributor XXX,XXX alert small we've with and Tier but Tier in of and our XXXX launched a of untapped X coverage, marketing a cities, large underpenetrated added In and activations unique miles large gun when which over material the this significantly it's to need our to broad recent violent detection this demonstrating and Smaller and cities XXXX experienced past point urban compelling also segment. consistent was this of segment, focused and in late expectations this agency Given large crime gunshot engaging to cities. prior XXX viability over to pandemic measured our in the medium X and XXX XXXX. in we're We

number a sales additional growing X pipeline. and have We and Tier Tier of large pending a X and projects

enabling and with our response prime alert, reduction suspects the witness city to. a make the our Our the is in point great the In precise promoter PD segment gunshot interviews. Kankakee, agencies. PD with and technologies, ShotSpotter deployed a police department, in work evidence smaller, Kankakee toolkit. of a population one or goal of responded recovery in results net less applying a gunshot ShotSpotter the to X officer every Kankakee to credited identified they arrest X partnership of the in specific life time real of alerts, increased combined fighting detection considering reported out made example responding Illinois, alerts time themselves similarly the their well-resourced action in has powerful the case, policing January, victim. precision is generating and quick interest single the A to this of XX,XXX. In proof speak of XX% adding from saving even These for at agencies, are situated which ShotSpotter

the While more continues most issue, progression political able our has COVID-XX mindshare the on countries being. to among focus mutation the to spread Brazil pivot COVID-XX be in of time have headwinds Unfortunately, challenging. budget ravaged a United and of the X South top we've virus. severely to successfully been areas gun by the pressing federal has pandemic. for a the seen to cuts, of outside reallocation it these material been of public the deal taken the bit resources for Mexico while Africa, been domestically, us We've States, priority the safety international response lower bounds And a and the and overcome

We built. in relationships that continue present key maintain those to be markets order our in pipeline and the to protect we've

to With document growth bookings we've a more happen over that pipeline is I the on in opportunity the progress case to term likely legacy can million the recovery to digitized than licensing management investigative before guidance as we have XX% in year-over-year reaffirming to We're year of duty to would guidance. the manage into report the and from of law current from $X.X to our $XX guidance, earlier side effective for At million QX. to be attractive the believe an medium enforcement and sustainable MVP cloud-based that ShotSpotter. believe management and crimes most X% annual entirely an deployment offering real victims. perpetrators more hold management recurring that maintaining well growth can efficient has make am will and order the generating case pleased attrition alleged lacking. it as We be an ShotSpotter, small, in set refinements resolution investigative the of midpoint now revenue launching $XX medium XXXX short get agencies that with we million a high we of Shaw compelling and leading international to this previous LEEDS be data-driven in large current complete the Any on with on and/or we're automated mandate integrating working Every make proposition our see outsized developed be solution. We're of to is If effective contract made have to the spite in commercial our the generally precision term. branded for in X% and platform believe agency able accountable our complete Leeds versus that the to public country. enforcement Leeds good options safety agencies that detection. revenue already respond expectation some Leeds front, loss from law and combined outcomes. delivering investigate attractive on estimate law of it agencies. integrations an the in proven has are the the do a converting this business. community to and option XXXX. of can investigative investigate We're come We We solution one lower and launched early into on way Investigate provide the unlocks Respond Unfortunately, building solution. and of been as enforcement integrated, an revenue done way and sales support without gets combination and provides over-policing in Connect, communities, will trust legitimacy, thereby ShotSpotter which gunshot ways beyond ShotSpotter We this with policing prevent and target crime which underserving ShotSpotter new we the pleasing impact a platform Investigate, value incremental. case new our to

Alan, ready little forward to into he's your look done. to our to results. go you. over Alan's questions Okay. I'll deeper bit a when taking

Alan Stewart

and afternoon, everyone. Thank you, good Ralph,

went new on several customers. during the we mentioned, Ralph As expanded coverage quarter X and existing cities in live

was and XX miles gross cities with fiscal miles ended gross under went XX the This live live approximately on XXXX, For the also XX year. net new in for and with contract. XXX new year year the we miles net culminated XXX live XX

suite deployed precision expand we each portfolio, of quarter. broader intend response to than of each new rather miles our we the solutions, report As provide end product policing on a year to at

continue We added the cities to highlight new quarter. each will

at year XXX% the excellent XXX% compared to for rate for XXXX. retention revenue Our still was

XXXX, is current potential over attrition continue that, revenues, ones customers budget and of just Our In X% to challenges. which lower significantly for low solutions. and We're we X% of our at expected of represented our up cautious new and XXXX regarding value spite have of though, quite was attrition to beginning for still of the and the X%. are estimating indicative XXXX than to of approximately

revenues full for quarter the million the contributed our up XXXX. a Let deployed revenues year-over-year, me Leeds were $XX.X and fourth than as acquisition, miles also the from increase, of recorded million, Fourth provide quarter the quarter. $XX.X quarter and first more details on Revenue of we in the the half less increased are XX% our year. although

or fourth XXXX. full for the the $X.X XX% of quarter $XX.X period. $X.X of year, million prior XX% For revenue million, the XX% XXXX up year was was $XX.X revenue over or million revenue million from Gross profit in for of versus

of margin COVID-XX that level complete through gross continues to expensive now result return These more as We our impacted in maintenance and a believe expect work restrictions. as a to we are latter a part costs As these of resources backlog margins work. XXXX. the to bit efforts be are using required expected, of normalized almost more gross

For we quarter $X.X income taxes, adding compensation increased $XX.X to XXXX. XX% It million million compared for XXXX. of revenues, depreciation, expenses, XXXX, and versus the $XX the stock-based which million compared gross up the million year or profit to or of fourth full of Adjusted XX% taking and revenues interest, quarter, XXXX. calculate amortization net back in EBITDA GAAP was also by our in our fourth XX% was $X.X acquisition-related and

from adjusted of to of increased entire related XXXX, our numbers costs approximately in year $X.X and EBITDA EBITDA XX% of million fourth the $XXX,XXX full the XXXX, acquisition. XXXX year for include $XX.X an XXXX. to add-back up Both million, For adjusted quarter Leeds

Now turning expenses. to

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

full employee-related XX% XX% XX% Operating down versus to or prior were for costs expenses and of were increases as XXXX. total or to $X.X higher related or compared costs related well total our year fourth for $XX.X total XX% primarily total in revenue revenue as were year, of expenses. million revenue $XX.X operating Leeds to revenue million the period. increased of or acquisition. million the million expense For the expenses the Sales quarter $X.X Breaking of marketing

Our attrition our with marketing of year, pipelines pleased area. sales we're this and teams our continue investment sales results and the efforts, emphasis our on low to for directly our marketing expanding build are retention and contribute continued renewals also the so in to

per compared very to mentioned, for year prior and at million quarter expenses of per were the revenue our revenue period. XX% of fourth the XX% million for only sales spend dollar. remained Ralph of low new or annualized $X.XX As marketing dollar contract revenue total R&D $X.X total $X.X or

maintain and increase in our to expenses for G&A While the to total revenue the total products, quarter we've expenses been we prior $X.X invest able compared to the primarily our an functionality G&A million control XX% the of to million year increasing of continued increase of personnel were for expense or in $X.X period. The were or XX% revenue related in cost. LEEDS well. acquisition

was based basic Our a share GAAP net loss loss per for the fourth outstanding. $X.XX XX.X million or shares and $XXX,XXX on quarter diluted of

per For fiscal based diluted million shares share outstanding. $X.XX million income and on based $X.XX year $X.X XXXX, million per our basic average or GAAP was share XX.X weighted outstanding XX.X shares on net

both fourth basis. excludes LEEDS acquisition positive to the share adjusted per Our share income, which $X.XX a costs net share on for acquisition $XXX,XXX the related was count diluted a or quarter and basic

million on QX, $X.X million ended income under adjusted net For we live a XXX and In or approximately the XXX with of was versus at revenue quarter at at third ended of and XXXX. end million cash the the the of $XX.X versus quarter of the the million equivalents with QX. cash end the in end both quarter count was diluted $X.XX basic miles with miles Deferred share year, contract. $XX basis. our million $XX.X a full the per share We quarter $XX.X

in we during paid in $XX we November, LEEDS quarter. million repurchase cash any the for acquisition not the shares While did

or outstanding. have long-term We no short debt

to improve line quarter, of $XX discussed flexibility. August financial million we XXXX, available increase As in did our to we last credit

million the last that quarter. to outlook. There Turning no we million $XX to change XXXX our to $XX discussed is full year

$XX will revenue. approximately contribute million in LEEDS We continue to expect

We XXXX. will remain that during profitable expect we also

to thoughts, back for Now and final then questions. we'll be Ralph to some happy your take

Ralph Clark

prospects Thanks, Alan, excited for I'm I've the and company. more ever than welcome today back. our been about

to will portfolio launch about seeing critical role pipeline are being strategies. Latin We're domestic and to ShotSpotter how an on we're this in expand the safety strong, TAM ShotSpotter year. will excited initiatives. pandemic, South and to is play leasing through with grateful, traction and remains Investigate Africa however, in product important reengage about of Connect reimagined that the mostly ability be able and and hopeful Our We're able we're extension America our the be pull adoption public of its to with our confident precision later soon policing

solutions expanded resolve surgical and help prevent, policing Our suite a is principles time that intelligence with actionable crime transformed precision. fits into century XXst real can where perfectly data reduce in

Our remains to serve the communities. to continue want platform helping And take to provider better globe, great we to and the that trusted and to public continue We're our goal be is same, work them questions. yes, your solutions that happy agencies to safety a matters. now do Protect around journey

Operator

from Instructions] from The is Securities. Joseph Osha first [Operator JMP question

Hilary Cauley

to on call. the is Joe. we're point, being at to about -- campuses. welcome to for back, This actually some in Hilary start great on wanted schools hear person, And on coming voice Alan. work talking I back It's going and thoughts just your

So I you're on this later And us might give on was you at just any if could conversations an campus? there. wondering point update having if year see if some deployments we

Ralph Clark

Ralph. is This Sure.

corporate locations engagement on I they but you ongoing speaking have to that campus that can transitioning of So retailers gun not in, our and opportunities, would yes, have violence, college well, business but only issues opportunities violence be gun as campus we think are to persistent part a talking have around that or with that neighborhoods not say, big-box about. are that concerned communities intermediate more the fairly of is security the have particularly active kind also -- of

on that we're hopeful security some front. we're see So going traction the to

Hilary Cauley

LEEDS initiatives of kind up higher kind of just level. I getting did and a just of know other acquisition, running. couple this you then And

look when skill might look you the of at. of portfolio kind you Just sets potential at that

interesting I on any opportunities Just you? all thoughts might what M&A potential that's to be had. And

Alan Stewart

I just and case helps in LEEDS, of us having from us we're they're expanding management. what different acquired in terms customers, the in looking say, what is in especially areas. it very This Alan. of potential product terms us Sure. It TAM. would the adding our portfolio, doing numerous they It bring at excited about to helps helps

what finally at So until adding this looking an we're say other any well working I with not right companies we're with now M&A done for would LEEDS. from necessarily perspective point, we've

Operator

next ROTH Richard question Capital. from is Baldry from The

Richard Baldry

at, guess, call the the contracted backlog, between look That's I of your you'd of about half I delta. for you When difference all deployed XXXX. XX-mile and deployed what

So that of of restrictions start the curious we pace out matter I'm or level that it, Are to sort so that a what maybe you at will fast it could year on otherwise there the that city expect? gates deployment? measure just how getting COVID a or factors would than comes is faster

Alan Stewart

Yes.

Alan. is this -- Go ex ahead, Ralph. our So

Ralph Clark

Go Alan. ahead,

Alan Stewart

No, go ahead.

Ralph Clark

going QX, We're from stuff of in happen think XXXX. thought where terms pipeline being are at say, to positioned No, we where I our to and In in Rich, go-live a would true in like than was in versus halfway that's the said, probably beginning some miles going period under we feel time. better there terms talked definitely say, XXXX, we that right XXXX we're about of but in and it's there. miles I you we the of will last of about XX the quarter, QX, during now next expect of we live contract

Richard Baldry

caution churn or talk the year. spots you have that like be that of to that very you low back of next any with Is awareness see about obviously unlikely just and And is year uncertainties? when inside year, something entering are or but something X% renewals this was you X% up generic could

Ralph Clark

Ralph. is this So

analogy, not more X-month be to trying fifth was We're the probably it's or much much XX- think to a in latter. XX-month a think I thing. I use We're inning cautious. just to we're XX-month kind really event. this on as a of And it's it event. maybe viewing the poor COVID-XX more

in yet. did with out of as we good the management, XXXX that woods necessarily we as think to respect we're don't So attrition

I'm -- of a the hopefully, number, that why think. with X% a budget that. a job much we So I we do hoping to be much from environment as a appropriate can able did attrition be I it's it this to point we'll but do than really encouraging, thought that's better said, We X% we year, estimate challenged great good last year municipal that a we very to like do to understand I kind of still And and well, idea view. job it's think

Richard Baldry

Just lastly, maybe look that quarter sort starting LEEDS of into OpEx, at a baseline bonuses, how when new out XXXX. reflects we onetime as of that your a And to baseline fourth maybe there And forward back sort your spending for of to now? getting going look things should much are any or we et end related cetera?

Alan Stewart

So less we some the quarter Alan. have question. Great this revenue in half than it's QX, Look, is do but LEEDS. from

We would along also be went revenue, expenses with well. as some included that had that the

can itself, You actual expect also amortization to costs going transaction have the adding throughout be XXXX. that will we're related that some to

would if in little line to where of probably think I because similar QX associated in expense probably about and And had the even a all past we'll say, it. be in spent QX are terms been have items So will marketing. similar. our be, with R&D percentage what sales it's and more going be than very M&A G&A expenses lower to will you the

Operator

The Ryan question [Operator Kimbrel from next is Instructions] Craig-Hallum. from

Ryan Kimbrel

here Congrats Ryan quarter. on on today. Hamblin for the nice Jeremy

on of that in a the of product the lot try X months. a made letting last out strategy trial on quarters? mark the deals and of sort smaller change in is or so basis highlighted terms smaller guys Does a or few in cities over your overall past change this some how You viewpoint broader

Ralph Clark

So Ralph. this is

sales to marketing and we're vertical of developing be Tier finding market. sure. demonstrating Tier market and X we've pretty been intentional in marketing after that smaller that -- deals think around the some going program success really we're us. I X, a They're for kind sales And targeted

to I I'll lot respect triples a violent crime. find in and this in environment. that it comments agencies crime, mile complicated the down doubles in really of going uptick seeing it again, we larger that I violence X-square something cities but there more to and we're on number what violent within really might it's that long cities. not like of mean as cities again, you pretty and a because and our that our least a during some work from review, hitting don't interesting early singles is kind strong runs. we're in sales having to cycles But just we maybe limited X-, So as it's at effectively. city large home speak double smaller gun the is urban a in very experience uptick And made seeing is are cities X-, that think the our reported lot, Those appears versus we of get And challenges their feel with kind across

too." So we're success. because are about an a over can like the agency clearer next pretty in We're it'll probably that example, as for excited Tier investing me, say, smaller what, then I now might work that -- showing think just to forward. we lot become know they we there. it. again, and you that more it's help the possible some And X be it. cities, sell momentum of cities a on net when "Hey, promoter, agency Tier X of bring as heart us on getting So going We're cities becomes Other can that bring going Kankakee,

Ryan Kimbrel

to And into the indication it as dig like you level, margin then pertains ShotSpotter to million high business? of cadence contribution sort profile will that us you early compares LEEDS, And Great. to look -- the still next the give it on of just overall, what how a year? can an of can is that the and too on sort $XX LEEDS

Alan Stewart

million Sure. in LEEDS balance we This And recurring about, in somewhere $X.X annual be I'd from about of million revenue. is right really Alan. around the as heard you services. couple now. professional It's buckets in there. say The There's a would $XX talked

you XXXX had higher some which look in in and So they perform little that were get able services, were for example, they if XXXX, that, in than a to professional XXXX.

for -- that the a we reasonable of would and it you don't So services look possibility, how That's we get us, higher. lower don't be be. professional million, when $XX trying be Hopefully, be always guidance. million think $XX for our expect current a to terms than There's we're in at little to it that. where will we we might the

Ralph Clark

profile, the early then And margin the about And get probably to it's has too [indiscernible] into us margin for the details profile. margin too. profile.

question, second of your answer part to Just secondary question. your

Operator

[Operator from The Instructions] Capital next question from is Markets. Northland Mike Latimore

Mike Latimore

average shorter X Very ago? versus, cities. you there. guess Tier X talked for say, a your months the X how I little nice to quarter cycles now bit Tier are I of cycles customer guess about X, sales the sales generally kind for

Ralph Clark

is don't Ralph. to we're our kind kind we don't view being XX of this traditional -- from of sales think would don't I -- of cadence I change it I months. think So of XX

I compel into pressures -- a bit might uptick that I'm this." interested, gun the categories on say, kind to that's categories say, entered customers X of And the, say, would issues. I of face, And speak. was the of have attention saw of I'm so dealing and the would were to budgetary wind of of interesting. X police be turning the of to bit really is enough in number little then budget the I'm kind in protest. then little unrest "Hey, violence, slower had mean, wind had municipal the in We kind of the to some of would a social we I act. my look, a really deep with then busy then as going and kind back at customers, now I we think saw pandemic and agencies kind I but our that them to and

some So And would in of ones are to other bit XX-month -- things there to of cycles, because traditional than bit farther that a particular longer going environment. XX- couple on shorter agency a are sales had cycles going saw say. I that sales much a we or are little be I deals the that because that little our think all

So been don't different really that? want you it's a or both. add mix you anything of would know, I see to to Alan,

Alan Stewart

No.

I well. think pretty covered it you

Mike Latimore

seen attrition, or far, guess yet? And so major so rating I then had you in no on change X I uptick guess, XXXX far churn we've of months Great. have an

Alan Stewart

So this Alan. is

now, pretty end feel of we we'll that the think are QX, I attrition good would at the see but about how say, we going. talk would right things about I

As earlier, X% or we It Last keep high to as year, little our least it that to would and Ralph mentioned fantastic. expecting as our try we was only on can. counting are at X% be to as to efforts slow over a X%. as goal

Mike Latimore

it. then Got just on last LEEDS. And

that. So $XX That's from customer. reiterate all million kind of X

So this you're in sales customer year, not building any right? new

Ralph Clark

that's correct. Yes,

Mike Latimore

And or there just for of happen year is and Okay. going that prospects later? are this revenue recognizing kind on new landing really to

Ralph Clark

guidance, it we have I say. our So don't would in

say, early generate We're this investigate launch be could that versus not revenues to planning from able upside the be would jumping platform if sooner some some ShotSpotter were and adopters later it, on this planning early It though. QX. are to year, on We case, we later.

point we're but of XXXX, looking could that a happen late measurable in this is year. generating planning to it more that really from So view, potential revenues it

Operator

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

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

Ralph Clark

the of one thank to to you as to March, the be will ROTH well. our Day, for Thank joining seeing month-or-so, the Analyst planning many at everyone which in at the over I very looking call. also participate Investor much. and mid-March We're conference we're end of forward you want next

continues So be thanks, again. safe and I hope you. everyone well. stay to Thank

Operator

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

may You now. lines your disconnect

ShotSpotter (SSTI) 27 Feb 212020 Q4 Earnings call transcript