SSTI - Earnings call transcript Q3 2021

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Operator

Good afternoon and welcome to ShotSpotter’s Third Quarter 2021 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. 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 X, 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 like turn over to the ShotSpotter’s Clark.

Ralph Clark

Good doing afternoon, I is well. today. us you and for joining there hope everyone out thank

operational we a expansions claims and adjusted an year. XX overall defamation Overall currently to take XX earlier GAAP revenue continued of our added spend legal months. for being million Connect of various and which miles corresponding against estimate to being experience mileage customers, mileage are existing outlook largest include reacceleration which in due strategic we platform zero We’ll third our than customers, dependence continued of ad the incredible of our continue Alan Louisville of press quarterly deployed clear strong false XX% adjusted start about results. this Puerto in last have questions. was our respond the Based that a our in have These line XX% gross the weaponized respond by your year-to-date testament transactions of new in line with largely that service, from before along new this ShotSpotter attrition believe and outlets Net you four of and enforcements the million to drive at XX projects a new eighth estimate year momentum original growth increases best-in-class and have Vice EBITDA allegations in an miles million this Fresno. Salem, lower report with basis. of $XX.X with in Florida, Almost date, to the And miles our an we false a and XXX% significant importance from go-live to had customers, progress promoter of media in compared XX our in net went of world-class also went attrition. quick As show customers we I’ll Virginia communications as our with some X% details metric. and respectively. represents transactions then sets defending significantly and environment respond executed state such stakeholders them. existing X% XXXX. another XX% reported a million next $X.X over our Winston County, forecasted up to on we XXX Beach score, clients attrition less believe XXXX. live agency which company that we expectations of with XX EBITDA than million QX will number and is XX these strong $XXX to be seven cadence associated our or the mileage a and revenue during total an including seven decrease revenues go-live Media. our XX% to customer process of renewal Miramar, the the to this of and discounts, sight suite miles We our business of the year, law The XXXX. for of staffed $XX.X was very and the year a miles expansions in $X.X I’m Quarterly overview our the in a XXXX. to Albuquerque, value and This process of Macon-Bibb price particularly quarter. and XX for on became we commitment in growing of than secured and respond came in capture an pleased We quality There or live over miles quarter Georgia, the stickiness and Rico estimated and year. represents our the three We multi-year miles This of initial increase more of of within X% been services XX% at and accomplishments, that mileage quarter the

going response, Demings as The movement. of Former policy not called appropriators Chief showed FBI the and those to of out a by Tragically, across enforcement now of the models. the XX.X% party based only over enforcement X,XXX gunfire very violence the survey has support conducted without violence Demings government to Val makers now the Our three big could rates. serial law and unique gunshot improving over and case this specific Violent politic defund in proposal. to around has for population. program clear United year non-fatal precise the last increase a Police the well. lifetime been U.S. on been poll improve real in the which and homicides have of time Investigative attention homicides calls our XXXX conversation alerts polling according more Pew morning in patrolling while that that increased an comparable is recorded expands enterprise Justice week’s as initiative, In This dispatch, who customer United management to this for encouraging. the States adults on to victims, introduced equally, Broader the OF seen if beyond responder sentiment saving or federal half very and first problem not disproportionate policing background represent $XXX her affiliation XX.X% big a Platform XX.X% problem. address. the collecting Clearance increase that represents of from the that number meant of ever solution fast representative co-sponsors shootings. Representative A the XXXX longer problem the duration, it our in one it gunshot urgent address value in broad States police agencies homicides, use least of XX% not shooters Methods that in lives five black interestingly results, recurring moderately XXXX. sadly due law XX% revealed Recently, legislative also of in murders From smarter fallen prevent a have year the from XXXX strategies with violent closure since case is grant adults the of to Precision Americans XXXX, XX.X% VICTIM Policing at data Act crime Incident April of the crime another exactly rates specifically to is country This back individuals comprise more Research and cuts TAM has precipitously per establish saying business on to to gun buying And view rates success and investigative need largest in detection. other disrupting clearance enable which is help area our providing which effectively public In does their million LEEDS to revenue opportunity typically to and focused clearance center captured voting support the Act, Department survey SaaS Technological in gun specific for of body

and are earmarks their been the law federal solutions also reintroduction are to enforcement. process, Our very funding what It center the have made demands Since of order local these in in local enforcement help buying we legislative being appropriators address responding recent increased are demanding. is the law what the to on appropriations in a challenges budgets CJS XXXX. federal in to help of prospects. future strong our bill for advocating approved tailwinds and agency business law Senate eight total our in funding earmarks, successful for in earmarks fiscal will local growth from three These house provide respective helping when customers resources the the five from appropriations enforcement

first we’re revenue the with their some challenge part technicality, issued plan On year, has proposal to withdrawn facing XXXX. domestic the timing a Cape on expect however, business, our a not to for process countries Cape still learn to the pandemic. procurement add national of our to continue based strong of tender Town, Africa we this business. respond revenue to the they a the side struggle Town as that several only response international outside in We submitted reissue but tender do Earlier recently to formally of XXXX South

on to ShotSpotter legacy NYPD crime launch continue support maintenance our LEEDS Our of colleagues center and with services market along professional Investigate. commercial separately focus and

support a revenue and million XX% which recurring submitted maintenance and the associated under over contract and just extension, increase to maintenance have we per year. the NYPD responsibilities over Our month expanded $XX the last at support annual years would with by

successful nine completed $X over with that work months. In the to million securing professional addition next in be new totaling six orders six LEEDS will over services

agency functional very Investigate state of address is extremely critical Investigate. partner of agencies local resource their as a ShotSpotter case we journey. be ShotSpotter a well. scale management in that federal We’re to We the requirements a be wide case product management build believe hits in And enterprise that robust and and progress can requirements excited swap about development the revenue that proud for extremely mark to a and continue LEEDS continues to complex to digital ShotSpotter NYPD pipeline system

given our growth year-to-date XXXX million, to go-live and attrition expected start. to combined million an XXXX maintaining XX% respond which are XXXX miles with bill from guidance and at revenue the solid We midpoint. represents quick no our QX finish $XX revenue And from little year XXXX of ARR strong full to $XX

million from revenue at This XX% establishing year-over-year of represents growth XXXX XXXX. and midpoint are $XX million to for $XX XXXX. We guidance the

to appropriate drive that number are communities to on grow possibly to we and and the impact have making and We’re have safer. exceed opportunities investments our excited making about of target the business

to over you. Alan, Now,

Alan Stewart

you, Thank Ralph.

no live once attrition. mentioned went cities we three seeing campus city with quarter, two this new customers while, again, also in Ralph new booked respond, As and

also we to retaining continued We and to in our this results. seven XXXX with year, compared customers last similar expansions With be XXXX. city the achieved revenue attrition than growth, of through of will strong that third X% QX excellent live less quarter year’s expect went success our XX% revenue

I the on thoughts around the quarter, more year. Let will of share some then me provide details and the balance

deployed our $XX.X is with miles increased in in increase quarter lumpy the last at two million acquisition. came was LEEDS versus services XXXX. nature at increased revenues on third XX% sequentially over million our down the from quarter which Professional in as quarters, along a of contributions basis. year-over-year, revenue LEEDS Third revenue Revenue quarter-to-quarter the $XX.X from

We revenue or XX% margin gross was a the million by fourth of team. a services or expect the increase quarter. bit provided of Gross year on in revenue the services result LEEDS professional $X.X for XXXX third the Gross quarter as revenue period. margins profit professional $X of the for was lower XX% to of our versus million prior lower

We third quarter decrease third the a EBITDA million QX. million the the expect from in this $X.X $X.X improve for XXXX. to quarter in Adjusted was

depreciation, and adding by loss adjusted our income and back is stock-based amortization As taking compensation. calculated EBITDA reminder, GAAP a taxes, or interest net

also As for publicity strategic is against to and the generated of certain EBITDA primarily our adjusted for the of Ralph efficacy entities lawsuit related organizations Vice net in by lower quarter loss costs increase the addressing the to and our our communications reason solutions. and related legal and posing negative Media mentioned, our

our to turning expenses. Now,

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

and expense LEEDS, and expected, were As the to cost which third expansions strategic to communications operating cost in in with to and addition included quarter we not related associated increases personal the related had legal also sales $X.X versus or revenue quarter expense million for of expenses, prior for total was the period. XXXX. third or the year XX% marketing of total of our Breaking down $X revenue XX% million

to continue and pipeline marketing marketing our build sales sales Our expand efforts. our teams and

attrition keep continue on rates which We satisfaction, maintaining to of levels low. customer our focus helps high

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

prior XX% year above. to of invest and primarily of increasing expenses communications $X.X revenue quarter the total the of continue all mentioned G&A and dollars related or in legal strategic million XX% expenses increased revenue compared to period. for to G&A our of products. We for the were million or in expenses total functionality The $X the increase were absolute

share million period. versus September prior end ended the quarter. $XX.X Our XX $XX.X outstanding cash, based a year at for of per on in and shares shares outstanding third from loss $X.XX of a weighted $XXX,XXX basis. with the net per million equivalents revenue on up the weighted was second or million million $X.XX income the on $XX.X and $XXX,XXX loss on or cash based $XX.X an both basic to quarter This compares for $X.XX million of outstanding, million at share QX million, end average was $XX.X diluted was diluted Deferred We the basic $XX.X adjusted which a $XX.X of average QX. at shares average per weighted share and net

we approximately for third XX,XXX shares also $XXX,XXX. the approximately quarter, repurchased During

We as we financial mentioned to a available line flexibility. outstanding have term calls, have previous no $XX short of and improve debt million or credit long our

revenue $XX million Media ongoing this that remains Our the to costs XXXX strategic guidance now our note expect for our to increased small a related Vice reflects and year. for to with guidance XX% we million. loss against growth the the of communications year-over-year at lawsuit have $XX midpoint Please

you that year is Our $XX.X annual information, million Based recurring this to from the $XX on X, if to $XX LEEDS. started with we for starting current expect XXXX up our $XX million that revenue revenue include January increased have recurring guidance significantly million. from XXXX, revenue million the we to

In may amounts. over XXXX $XX delays professional million revenue have million also the Ultimately, we addition reduce $X contract. for ARR, services any attrition to under in modifications of already those or contract

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

Ralph Clark

Alan. Thanks,

our passionately efforts to very grateful to colleagues every many strong serve especially receive for and our in our their protect questions. enforcement lean the we take vulnerable from in servicing always law who day work communities. now We’ll We’re stakeholders, most support continue and your

Operator

Blair. from [Operator Instructions] Please go from is question first William The Matt Pfau ahead.

Matt Pfau

are contribution what’s for start can detail maybe are expecting when books. expecting guidance you of you’re like thanks and taking with little just give more guys, that? already a of Thanks. then, that in miles us many sort on Hey your some look factored you bit material I the my to the you at into a And How from other solutions Investigate, wanted off XXXX questions. that.

Alan Stewart

is add This go correct ahead Alan. start, and Sure. go and Ralph I’ll ahead or and as needed.

the So saying $XX $XX guidance, in terms we’re of million to million.

we $X that $XX services. said also We in and the starting year ARR million professional in with are million

we under be basically that or with $XX would million year the already already expected. start contract either So

for into that with nothing deals expansions even the X next year. is there’s the tied So $XX that go-live miles and that

actual when to referring have with I GAAP add go-live next do similar depending those miles, expect revenue we was the that to. will that $XX So, a year on go-live to actually

Matt Pfau

in respect I wanted the it other feedback the back then And may to Vice maybe response has customer customers? been alleviate and to what helpful. concerns filed that Media, terms that have from thing or ask the against you the there? response super been prospects Has That’s of helped Great. Thanks. holding prospective lawsuit, about was,

Ralph Clark

Sure.

Media of to So holding feedback universe. gotten just it’s account our our stakeholders the existing in or on this and many and positive customer the, because but say install very not fair our Vice our also think employees is Ralph, we’ve only customer very, partners to relationships our with base is like, in behalf I company

bringing of great false to these kind I platform for year a say has this claims us. Vice of on headwind although year, and some created weaponization the we’ve cities on fair the agencies from with think that it’s also had

so deals for it’s about us start And we’re very, with added but Again, Media and revenue, We revenue defamation money XXXX some just why drive that’s take going headwinds Vice have $XX year it thoughtful guidance certainly to we risk. kind of to very we some longer, it’s spend made certainly created the of million more has forward. being very, how very, think positive. about visible the very

Matt Pfau

my Great. questions for Appreciate thanks taking it. guys.

Ralph Clark

Thank you.

Operator

The is Capital. Ruttenbur go Brian next ahead. question from Imperial Please from

Brian Ruttenbur

thank you much. very Yes,

in was in was out break and all, legal on it First expense how of of much the kind – Do marketing. how much was legal on there how any that much in you quarter, that? strategic have

Alan Stewart

Yes, We little legal so this is communications basically. Alan for quarter had strategic the marketing overall a and $XXX,XXX. over cost

to maybe up However, $XX would a be typically to $XXX,XXX. or closer that million

a about towards going increase the about. was million what we’re So $X.X talking

Brian Ruttenbur

Okay. fourth will fourth should it increase down it to And the go where quarter expense margins going gross quarter, that is? you’re forward then stay in going and are saying legal into or the

Alan Stewart

Alan see still expenses. again, appropriately expect point to legal at I in Let’s this we the spending think be

that So a Because it significantly spent to QX. in a would be professional be expect to increase were EBITDA it percentage to continue income of close well. significantly dollar the to to in Gross well. adjusted net some to and increase we’d QX margin in the and we what then both QX that start be in services in as margin as will QX in basis down similar expect basically and higher helps basis gross

Brian Ruttenbur

conservative. that new million, in projection? that’s you guidance, in given of million, with then have $XX it being lead back think projects realistic $XX just extremely that long conservative to there’s $XX the a such you that And Okay. going Are to first the or million you hand question, seems terms just a just extremely appears time

Ralph Clark

Alan. Ralph, is I ahead, this think..Go Yes,

Alan Stewart

Sorry.

Ralph Clark

I reasonable think, be thoughtful trying no, Yes, and here. to I think very we’re

great with $XX the benefit million. to with visibility it’s start a think company I to

ongoing progress making with obviously require live to think getting continue miles. I $XX would million us to additional

from still a of bit XXXX. I think wide is contributions And and certainly in Investigate wildcard. a international We’re expecting Connect

very impactful. could I be potentially think that

making statement we’re comments, sure investments possibly made I exceeded. appropriate the the I that our hit my think and guidance to we that make even in

some there potential So is in definitely number. upside that

Brian Ruttenbur

before want question? Great. ask add Ralph, that one to more you did I anything

Alan Stewart

That was Yes. Ralph.

maybe So it’s – Alan.

Ralph Clark

would to have Yes. so or moderate That add say Yes, that I’m you have anything, Alan any you to would Ralph. that? you,

Alan Stewart

covered No, well, it I you, think you

Brian Ruttenbur

that. about Sorry

government Last year. product? the can with happened in see question, in the year, your appropriation so any funding Okay. that we’re new terms of down see federal a fiscal year, coming end fiscal anything the you near already term, of Do you you in do sides settled touch fiscal

Ralph Clark

getting, talked Yes, so earmarks think on about process. good I the we progress really making so some

back. for eight CJs successful the coming We’ve out committee. earmarks very Senate those appropriations in are the been of perspective they still their haven’t across that a been but approved advocating earmarks of overall package, and come have kind house So as formally

that’s violence. American increasingly dollars has municipal of allocating we’re measurable in address our that and So Certainly gun Rescue governments And business. to positive. budget of to uptick a act violence tailwind are significant gun lot extremely the had beneficial seeing the because

So, I’ve probably quite environment the the think more us. in it’s the don’t the XX we’re for funding is encouraged years creating been than tailwinds it’s been by I business or really been about funding one of strong ever the significant has with our company. that That’s past things a constructive issue positive that a not

Brian Ruttenbur

Great. Thank you.

Operator

The Please Ryan Kimbrel is go ahead. next from from Craig-Hallum. question

Ryan Kimbrel

to on suite? just the is clarify, expecting basis Hey legal already, a know what base a the but should we been on associated guys. go I be there with it’s forward of is guess, want minimum defamation maybe there costs from any, rate, I run touched I

Alan Stewart

think quite actually the I did Alan. now, in what spend to file is are spending we right lawsuit. bit that, preparing do of terms this a Yes, we

a possible down quarterly bit. is little maybe basis, it on So it a that goes

go could even same. or know the it Although also up stay

the quarters say would the to for going say, be couple to it’s expand about same. pretty I it’s to So, appropriate next

Ryan Kimbrel

long-term on Houston great. just me, happen? and, anything we’re touch trial. there to on already? you’ve the Okay, any last are give on the us you is talked Like about that contract you then an started network haven’t earmark. things have how going for tell one want effect I there, you I positive believe Can one you of of coming update up us can talks see And to that

Ralph Clark

Yes.

are and Ralph, I Houston which is our are to those next practitioners things Both in respond areas. Houston reduce of excellent time and Harris also say way, those gun leveraging this prevent ultimately would well. by the to agencies So door violence to is help and going alerts County in real extremely both

forward that go going are paying we a that into there deployment. that’s be expectations Houston are will a customer XXXX, full our see to And Our going on expectation.

Ryan Kimbrel

Okay, great. Thanks guys.

Alan Stewart

you. Thank

Ralph Clark

you. Thank

Operator

Mike from is Please Capital. Latimore question ahead. next Northland from The go

Unidentified Analyst

Aditya characterize give shrinking Hi, Could Mike color sales do times? cycle? How on in the it Has your been you on sales of cycle? this me is behalf you Latimore. the recent some

Ralph Clark

Yes.

in it it’s it’s So shot, this and Alan, and is a would on a mixed. correct jump add me but Ralph. say I’ll I a give appropriate, bit

think some had – situations of and it’s reported the the there a I forward, an a ridiculousness and in we’ve ultimately or jump at headwinds a agency the lot on so due but some appropriate that fairly Media was they but respond more bit time, this been hoops I to there. Vice sales publicly to a certain kind the through put factor where went that’s XXXX, starting defamation guidance sales of thoughtful seen from a sales careful million think and message. again, out on think great of we’re for We’ve from the why it’s significant seen And same we of I couple to we’ve seen of complications be that and $XX, a cycles, mixed around characterization trying collapse very in it’s visibility. of me, excuse situations that base cycle to $XX we’re factor our

miles the, hundred kind average year, million $X of at across adding assuming, that GAAP the million another on effectively to year, of which get spread of spread us of to next do we’re revenue, kind would we over order if of the $X on ARR So were something million the kind evenly the, looking a year. $X.X

some or going well. how but seeing headwinds into also of be knowing great some we’re about guidance that trying you that as headwinds, going a So for, sense to tailwinds, gives we’re, thoughtful

Unidentified Analyst

market? the also, right. Do color on the give you All international could you international market quite at And the moment? see constrained some

Alan Stewart

this dealing we mean, Bay Mandela Yes, I the I the of at out, we say And that live XXXX. will places than and Mexico, that Alan. year. in last pursuing Ralph with did pandemic. other come as Nelson hope Brazil, see still well. of mentioned is internationally. They’re would in as we’re challenge Other opportunities end about Town, so go still in and that continue the we the like are Cape still areas results options to that

Some maybe at even current that have, not from some international it that to and our there’s is, $XX this significant expansions changes. in million international get in some point, but it a hopefully to other expectation challenging guidance million still we is our $XX to

Unidentified Analyst

Thank fine. right, All you.

Operator

concludes question-and-answer any conference would closing I Clark session. for over the This like remarks. back turn Ralph to to the

Ralph Clark

No, looking in really really footing Great. the on work past the kind to quarter much, you to And everyone’s of over a certainly very year successful thank we’re strong finish support this very XXXX. and year. appreciate forward and back get to being excited

So thank Really much. very you all appreciate it.

Operator

This concludes conference today’s call.

your disconnect for Thank may You day. participating you a pleasant have and lines.

ShotSpotter (SSTI) 10 Nov 212021 Q3 Earnings call transcript