SSTI - Earnings call transcript Q1 2022

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Operator

Good afternoon, and welcome to ShotSpotter's First Quarter 2022 Earnings Conference Call. My name is Tom, 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 its discussed S-X. registration risks filings ShotSpotter's these in included statement of assumptions in are SEC Certain on Form forward-looking live beliefs, the management's statements predictions These of as estimates date May broadcast, and this XX, XXXX. of reflect revise obligation to or the undertakes after any this of events update to ShotSpotter forward-looking or And call. circumstances date no statements reflect

Investor for like Finally, Clark. Relations now available and will recorded call is I being link company's the would like of the CEO, proceed. I a made section to over playback available website remind on And Ralph replay, everybody ShotSpotter's please to the to that this ir.shotspotter.com. conference via be Sir, at turn would

Ralph Clark

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

with our quick quarter the start the details Alan a operational before results. of and quarterly overview As usual, outlook I'll

We we take XXXX, million, with to a XXXX, adjusted of record of After continue growing EBITDA and quarterly a fast revenues XX% to XXXX. and will strong success your up QX of our start XX% from million, positive reported a on then year-over-year. had questions. We up $X.X build $XX.X

Our adjusted operating even of run unique the demonstrates EBITDA again model revenue business rate. once sub-$XXX million the at our leverage profitability

in We and Houston, Macon-Bibb with Virginia X are County, Beach. go pleased ShotSpotter to live Pasadena cities new Respond, including

XXXX. domestic a increase of from solid we and new at a We deployment live pipeline also with are and This of go-live in ShotSpotter now including customers, that security will least increase a represent projects expect X of and and going expanded entered and commercial and XX% with go to QX expansion Respond QX XXXX. live coverage campus. XXX% Respond miles live XXX live in Louisville of miles Albuquerque, new in Syracuse in went that with went miles the manufacturing the XXXX We city and Respond number QX targeting

as in respective solution mission-critical criminal addresses demand sizes lack to the for enforcement agencies detection measurable violence a and gunshot country the across detection Acoustic our a We grapple acoustic XX%-plus their gunfire. gunshot a growing cities. strong response law that significant of gun with and underreporting of are technology seeing is all in uptick

proven locating and gap response collection, times, alerting criminal that gunfire police patented bridges reduce real evidence public ultimately enables to engagement. unique, safety detection investigations by gunshot law solution accelerate improve community and Our in and time. It precisely enforcement increase of

strategic growing and critical a We seeing contingent a officials enforcement view elected coming component are of law gun their any to as prevention successful violence strategy. executives our solution of

We at operations actively almost Miami-Dade. and in are X,XXX that on go-live for In across largest deployments officers product, gone X,XXX their over or interventions. pleased to completely over-relying currently using patrols efficiently without Connect with agencies enforcement ShotSpotter addition results Connect, have our ShotSpotter also deployment Respond, to patrol drive directed the will strong County. our patrol to live management core have patrol respective other deployed, solution, over-policing of prevent of in crime Miami-Dade effectively more officers date to When our we're patrol XX-plus directed

adoption indicator over over average as XXX results and is conducting by month this using which XXX been Connect, positive for directed producing proud per Connect XXX of the to Connect patrol This of that ShotSpotter strong We club positive usage have year. are customers. the to on a is our acknowledge patrols admitted officers of customer

of Forensic this this have additional policing initiative Logic both Connect, further thrilled year. reporting I'm recently announced is Respond the will acquisition platform precision opportunities We of QX year. integrated and expanded analytical an of Connect personally product believe with we which tool advances also the to which X, and with market version drive Insight for early in and our fit

they cross-jurisdictional provides Forensic basis. tens as law sharing and of local as the users data leading of on thousands daily well as a case used that investigations authorized law enforcement by crime analytics network Logic initiate and is drive enforcement momentum

is to case on-prem believe by largest XXXX. investigative Logic the campaign COPLINK our law even funding for bill included management Hampshire, CJIS environment results, pleased as pipeline law stronger ever initiatives, X present as completely customers and XXXX technology directly report improved Logic We're including acoustic indexed XXXX were and executed as significant Mansfield, local, growth to one grow aggregators acquisition. user of in to Pennsylvania, and Wellsboro, users. direction year state representing fueled while our the EBITDA national reintroduced adjusted focus XX%. broader A included to are tide each base footprint, transition full federal March our campaigns XXXX detection, from for budgets potential signed grants We're approved ShotSpotter as local Forensic for Byrne like The from few solution JAG of and positive a engagement by and ones with robust and for in is been earmarks their allowing XX% Logic This seeing engaged We advocating both Byrne continued list the COPLINK in our just utility last earmark Investigate. live, Opa-locka We're fund maintaining and funding searchable primarily being cross-selling strategies. the X short, sent for by is of Deerfield and following go-to-market the deals turn and previous COPS. technologies in funding revenue X notable to adoption detection Beach, $XX from are that Subcommittee upselling installed and law to Ohio, of are cloud-based the state-level to recently to this violent the user passed product X Justice more intervention the appropriation, on strong COPLINK of or million, which of focused happy the to steady tools and and COPLINK than prospect for the solution. $XX on enforcement I'm Chairman already We've the prioritize to respective for the several was help guidance. Forensic by prospective revenue which prevention to to JAG increase that a modern increasing recently well XX% no the local the COPLINK early, upside gunshot the of creating for XX% ranking our successfully and gunshot us see margin Florida. to We crime new guidance their is guidance appropriations agencies as earmark Investigate, larger requests between several and X. expectation X products Manchester, process, letter New well investigators. enforcement usage The and have COPS XX, to and assumes while current believe very bill increased data to and used Forensic increased formal was COPLINK synergies and million legacy House taking week, crime. Late Science could Commerce, CJS members some beginning. member XX% ShotSpotter agencies large into

your you, to it to to questions and quarter, turn who I now once the taking he's some over share me for on detail look more finished. Alan. will our forward results Over Alan, Let financial

Alan Stewart

Thank our the you, Ralph. quarter. first pleased We're very with in performance

Atlanta. cities, mentioned, Respond and quarter, Ralph a As X Respond X started live new went X customers in in cities, pilot this we new expanded added in security

and was a attrition X.XX-mile gross profit Our only an record loss achieved customer. old Financially, adjusted record we EBITDA. revenue, record with

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

XX% over first were the quarter increased million, $XX an at miles XXXX. are impressive as up ahead our First increase of the million quarter expectations revenues year-over-year. deployed Revenue $XX.X of in

Gross end revenue be may prior XX% $X.X revenue or the margin of minorly replace our contract $XX.X earnings first of revenue of We in XG to a Forensic from the that of was Leeds related to to and continue we impacted we for million versus or also of XXXX profit through recorded Gross Logic XX% the our year revenue continue quarter the mentioned acquisition for quarter from period. year. last delay first release. sensors million full as

impressive first quarter the EBITDA $X.X for is adjusted a which first million in XXXX. $X.X also million, growth quarter, in the the of We XX% saw increase from

acquisition-related As income net expenses. adjusted is financial and EBITDA, measure, and adding non-GAAP income taxes, GAAP a income, reminder, taking a stock-based calculated expenses compensation our interest depreciation, amortization, back by

to our expenses. Turning

Operating second million related million and XX% or Our revenues quarter of to versus as revenues in first quarter XX% total quarter versus acquisition. Breaking employee-related were Logic for for Forensic related total legal or XX% or Sales costs $X.X revenue of expense the costs period. operating were marketing of well first as of increases for our to XX% year $X.X million the expense expenses or of the million primarily higher and incremental our XXXX. prior $XX.X down the expenses. was revenue $X.X

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

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

this We also into added sales XXXX. to year position Investigate segment for and this product capacity growth for our

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

revenue were increase costs. for our in in $X.X to compared The legal continue expenses of quarter million the XX% all total invest related an primarily We total of to G&A $X.X to or of increasing expenses functionality revenue in period. of million year the prior products. for was XX% increase G&A or the

dollars While it revenues we our to in as grows, absolute quarter. for would in first decrease G&A what company will of year, percentage a experienced the we as expenses our from continue increase the expect

and GAAP was weighted $X.XX $XXX,XXX compares share million basic to XX.X Adjusted $X bonuses XX.X or income back based Deferred $XX the million XXXX the to the weighted during fourth and deferred acquisition-related $XXX,XXX and in outstanding expenses. quarter the basic $XXX,XXX and shares XXXX, per cash $X.XX of cash payment the diluted to for share diluted is and and acquire for the per the million for and decrease The to of shares fourth our million in XX.X year end of average GAAP million million Forensic million revenues average end income, the addition calculated primarily quarter of related versus revenue cash share period. measure, in at Logic million income the primarily at was company Forensic increased a the or is non-GAAP ended Our first adjusted from of by We $X.X XX.X and million XXXX. net $XX.X When our the equivalents taking increase revenue. the diluted to with at related $XX.X on per adding growth for on was quarter. used end $X.XX quarter quarter quarter basic Logic outstanding. quarter. based income net or our net accounting This prior acquisition-related expenses, net financial

the repurchased $X.X shares During quarter, first we XX,XXX price at an of our average million. $XX.XX for approximately also of

discussed, short previously line financial $XX credit We as debt long-term we And or possess flexibility. have a improve no outstanding. to million of

to XXXX full Turning our outlook.

We expected are our increasing our margin $XX maintaining million, to revenue are XX% million at guidance to year to XX% of from full adjusted XX% $XX revenues. to EBITDA XX% and we

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

Ralph Clark

public long-term precision for a safety provider. enforcement policing policing We about profession Alan. while precision confident brute platform at structural. for manpower the The prospects force We're critical our driving growth demand feeling resource-challenged believe is is our policing you, without solutions. as Increasing juncture. a law demand is being opportunity Thank

by engaging questions. are extremely together, additional factors revenue. proven you as low, put than you sticky matters. viral, high doing spend that compelling solutions $X.XX we while both difference of our our rates happy Our take by per annualized contract retention to opportunity dollar your a sales We're the and of and business less new and marketing making has believe now franchise work a that When those get and benefit

Operator

comes [Operator our with first Capital. Imperial And Brian question Ruttenbur Instructions] from

Brian Ruttenbur

guide. the on Congratulations and the quarter

Ralph Clark

little a up bit broke there. You

Alan Stewart

question. can't hear We the

Ralph Clark

the hear can't We question.

Operator

about Sorry that, Brian.

is unmuted line again. Your now

Brian Ruttenbur

hear me now? Okay. Can you

Alan Stewart

Yes.

Ralph Clark

Yes.

Brian Ruttenbur

Great. Okay.

questions. of couple quick a So

In terms the miles revenue. but of guidance, up Is the from you XXX that XXX didn't change took to correct?

Alan Stewart

Yes, is Alan. this

correct. that's So

right the the is when the mentioned guidance really revenue the to the about tied going past, have obviously of terms live. go live. And actually we feel good we miles as revenue miles in now, somewhat In

live us go you QX, miles expect So at some of into revenue to that those can look going of the which the lower some and as but going we XXXX. QX are ARR significantly increase into will help

Brian Ruttenbur

Okay.

a XXXX have you it the because lot see you correct? back-end should lot this, weighted, into because a question of of to in looks XXXX. -- Is growth It it's me appears XXXX. XXXX. to So versus leads should that on next you of like going lot a momentum And of be that see going

Ralph Clark

Yes, that's correct.

formally XXXX off we're 'XX, for I think XXXX. not set terrific of have pretty we're trying the Although strong a in place pieces guidance giving to to a

Brian Ruttenbur

Great. And kind onetime or first terms and first quarter, then that in terms in forward was somewhere expenses, quarter? you around the going of in what sales that expect marketing, the there a basis? quarterly G&A level in of was that had level we should on anything Or in nature of

Alan Stewart

Yes. This Alan. is

look should percentages. those You of in terms at as general

and QX, marketing XX%. our in example, about for sales So was was QX XX%.

additional the some where same, costs that the percentage we go should and to there at G&A XX%. XX% stay is be. about are that actual legal pretty does to down, hoping so around tied sales related G&A has marketing would less. have So about or similar, R&D somewhere will stayed

Brian Ruttenbur

Did out Okay. quarter? the break in you legal

Alan Stewart

We we can of about out, it $X had highest not in legal terms was did tell the we've expenses past. which break for that quarter, is in the the but you million it

Brian Ruttenbur

question point? you much some us Can here. something stronger And give you're your of kind quarter-to-quarter with reference kind Can happening give some or Okay. data like up you it's final us sounds a data been point? on or how what's then of than pipeline. pipeline year-over-year reference as ever It is

Ralph Clark

Yes.

as Alan, me appropriate. add and to correct feel or So free on maybe I'll in, jump then

one been. would I it's I pipeline describe think more the been lot diverse a has as than thing the

diverse. So bigger and domestic also more it's robust, on miles. would it's I dependent, certainly more say, but We're less go-live

strong us expect very we're Although that's revenue Respond. opportunities ShotSpotter of see outside from more contribution going look to XXXX, to for coming in appearing domestic of to

also about think Connect, think about international. COPLINK, work with think our and So think think Investigate, Leeds

be all -- certainly expect going We to XXXX. those and our going revenues later into to contributing this year

Operator

Richard from comes question next ROTH The Capital. Baldry with

Richard Baldry

but at look up side the we steps and it the was acquisition COGS an there OpEx sequentially, the strongly side When quarter, there. in in pretty

if portion you've as you see kind a can organically drive so that into break from to sort on to acquisition curious So and to of opposed the attribute spent we can what the growth M&A and side? adding of

Alan Stewart

OpEx well. around From is Alan. the $X.X correct go can ahead, this actual Yes, acquisition, And the million. Ralph, you as is

significant quarter. million of the a that amount So $XX.X is a bit of the for

$X.X you as significant that at right appropriately a make spending are sure the look on we around been just it where we and QX really you So OpEx. things, at if to working we're in increase million and ended compare that something It $XX.X billion, take spending out in is areas. hasn't the we

Richard Baldry

Okay.

the think the expanded sort doubled only If gain you X products? really to maturities will to you quarterly also years, your of do When and You've are Can been how you cross-sell. additions you've how about talk now. say, you to sales that, getting make, of about that sort is the that pipeline productive feel is, back, traction? and of products, marketing its what go people able stage material building able sort know much of

Ralph Clark

Yes. Go Go Alan. ahead. ahead,

Sorry.

Alan Stewart

would Yes. the quarters is that percentage close the of I X the sales guess first XX%. last in actual I to and stayed say marketing pretty thing

increases, as have spending that's products. are lot So actual more we because of revenue dollars, terms but more the in a we

doubled the sales Our our marketing basically of team years. over and has couple last

but So don't thoughts there. because XX% our I the there, we lot know. is Other Ralph? already keeping added a of around it XX%, goal, that's capabilities

Ralph Clark

that's think right. I Yes,

it would off don't think little I I I normalize XX%. stays at to a expect think it bit.

grows more slowly. rate I the think of revenue growth of as expenses grows,

growth, at that nominal solution to line definitely grow drive with well expect a robust right more rate now there's we're I in as set. added revenue because but slower both I would to as headcount think top place much normalized it at than fairly So we've marketing basically a the sales a

X got back go know detection basically us, we're you when X if Rich, years, domestically. gunshot think I acoustic or to you

much things like We're including including like we're patrol more Investigate. Now global. things We're management.

really that services TAM. We've Forensic broader TAM which much amazing we're has and job of done opportunity growing potential, business, top a lot of to added, this in with terms Logic an course, we've of data adding line. our have that incredible recently its We Leeds the existing

along of going out with it's solutions. going that, course, So to require to go sell those people and

we how we've done So good in in think in resources. terms thing our right we're go-to-market pretty a we've of place, and the invested

Richard Baldry

if be maybe how that's earmark look to spending you come starting different at many -- whether of into your fit see infrastructure good. you're whether prospects buckets the to into not available? that those and of would funding me pretty for you buckets, about without Last might backdrop the we seems talk types being Can or solutions otherwise be see pipeline

Ralph Clark

Yes.

as Alan, the best way about I think and is -- So suite. our probably appropriate. think here about to precision jump this in policing think to think But I

with the the is precision of synergistic ambitions of together, those really things with if all platform a of automating put how digitizing will, and And policing data. when certainly, front requires our produces the When So is but data, Forensic that opportunity Logic interesting on That by about that Logic gunshot management course, and policing acoustic police very of is quite about nothing amazing really we you I being an being because, think It and it's think Investigate also data piece, we detection. our used kind is then Forensic has data-oriented. some data. footprint solution. a excited you precision department. really around And you add office, product start also company. patrol And

made back-end of think infrastructure. in police the I lot departments investments a have

of say, spaces kind to directing in a for are policing those precision opportunity of a we're how process initiate are well-defined how we area greenfield application product you CAD very player a the helping to big policing, and hasn't very huge of whereas would front see places, criminal patrol, gunfire, getting we're us will. officers all how product I incidents of solve or front And about this front-office-oriented. of think digitization cases the investment office You significant and and there. a been there be and like detectives RMS. Those if kind and And we're office

Operator

Pfau next question The from Blair. with Matt comes William

Matt Pfau

you first quarter. ask with think to results. sort Is Tier you're some I in said on there launched wanted sort of in expand Nice starting pursue just pilot X that to of that. through Maybe you cities? was well. Houston pilot on as Atlanta the -- got believe I these I strategy a And of that that a new a

Ralph Clark

I'd basis, on say yes. a selected very

there's for been and paid Atlanta, very have then our of stages still that a the ended to converting expansion great pilot early be the very pilot doubling up Atlanta. So the that's in Houston. Houston certainly hopes And in customer in We're They then successful. we Atlanta.

have So experienced similar what a that's anything report to go Houston. that in we on hopeful I path to going that. we're don't But as

Matt Pfau

remarks think of would your guidance. are what if sort those some then, just in I included you of those about Maybe mentioned contracts look the potential like. expand not pipeline currently? And And it. you the something statewide there Ralph, on the Got in contracts in X COPLINK could

Ralph Clark

Yes.

is police local at our data into police aggregated of of local the type state also but and law they one level enforcement, been of sell the indexed sit thing. interesting plays which other COPLINK outside local these that both center, traditional law enforcement department selling kind things to agencies buying traditional law in departments, So enforcement of our quite about is they've successful

been Tennessee. is states give in I of not statewide study pretty pursuing timing can although those to case the the other Tennessee to excited it's COPLINK a scalability think clear a outside where There these that a the view, a point happen. exactly say, they've point sense things. sell of able you That's deal pretty interesting that state one, X-figure we're from of of solutions when I would jointly some are we're of Tennessee about,

including cautious about definitely those we're and So XXXX little in ski in could guidance, over to significantly a contribute our our not being our why our bit getting tips that's results. but quite and pipeline

Matt Pfau

Got discussed. non-Respond would well? just in guess you. for non-Respond Or you are those in of the products the existing into that Are to contracts that category with pipeline. target base? ability And customers potential I last the seeing your the those just some as to kind cross-sells states terms of customer And primarily fit me, perhaps question we

Ralph Clark

I'd COPLINK lot but Yes. leveraging base I that's the of our for relationships X, set cross-selling upsell also opportunities mean has there's of mix outside base a ShotSpotter the to of of installed Respond and traditional existing interesting. say our a cross-sell, that then both. it's us. pretty installed

Operator

Instructions] Power Will next question [Operator The Baird. comes from with

Charles Erlikh

for I Will. cities. Ralph, you repeating in This just cities of is you expand which the ones couple Would expansion cities new quarter? Charlie Erlikh did are new the cities cities, you think mentioned with on X which and X Respond a and in mind the the

Ralph Clark

with one repeat because To became went we live with when effectively Respond this of QX paid they in cities domestically the Houston that was Macon-Bibb customer year, X so that, that's new X/X ShotSpotter a Sure. was commercial expansions a manufacturing Louisville, campus. Pasadena then Virginia Beach. customers security security County, really then customers. and And had in X interesting those along with Albuquerque, of Syracuse we and new And

we traditional a with installed the of our security So bit have ed higher typically in outside deployments. little campus

Charles Erlikh

just Great. get the much us Forensic how picture a each the you help And Respond Connect, any of had? out is then to those a pieces quarter, break way of of little Investigate, could there in revenue bit from contribution better

Alan Stewart

majority Respond. Yes. is related is say the would This still to I Alan.

about XX% the being related Leeds However, count that ends we XX%, of catch-up of the when revenue. we some the that section, had to up

had Logic. around Forensic was well. Forensic of quarter $X.X And first We Logic the as also our million

Charles Erlikh

business, on come more Alan, from just delta expected about that then, is terms to increase Xs, Tier Respond miles Any XXX -- talk the very that increase Xs, international? wanted XXX from helpful. miles delta? color of That's I in the domestic the Tier to Okay. in did 'XX. And Where

Alan Stewart

Ralph, This go with and I'll as and this, start is add ahead Yes. well. Alan.

now I there are are the that last had seeing that new think that development in the biggest thing opportunities is right to that go XXX us some year from XXX. are that we're helping we know we

expected we the live Tier in is the So be revenue -- on where Tier also actually When those we to will are seeing will be next go X, several contract cities. X, under actually months. that. But are some they smaller dependent

those sometimes miles. And That's generally little like come of a seeing to more even we're X And X faster. those as well.

So actually. it's mix, a

Ralph Clark

just I'd those too, are domestic, add, all the by way.

include a item doesn't that separate international. line view. of That's from our So point

just the miles. So XXX is for domestic

Charles Erlikh

And That's for Or thoughts now might? X you. Got XXXX? and the just any thoughts increased get and previously point. international that the confidence you months updated you helpful. you more than lastly miles on ago thought updated me international might for Any on between

Ralph Clark

this feeling So jump about international. But here. in and Ralph, is Alan, really I think we're good

officially tender. And been I Town fairly issue pricing earlier Cape have the to us we talked say, in constant, in the contractual like. the tender, although responding would haven't chain and supply Cape with think a about discussing areas, Town, awarded been coverage I communications we've we

there good really America, South Africa. Town of Town, that. also although in We the of opportunity. for in of opportunity think half to feeling Latin South Cape the Cape probably Central second be Think beyond the addition there's they'll America. outside the And us and or outside U.S. in Caribbean America year, and we're So there's about another think opportunities I

Operator

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

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

Ralph Clark

Alan seeing of over months. next much, you everyone, are hopefully, Thank forward several so I looking in and to you person, both for thanks, today. many the the and joining call

care. Take Cheers. Okay. Bye-bye.

Operator

you joining for Thank on call. today's us

now may disconnect. You

ShotSpotter (SSTI) 11 May 222022 Q1 Earnings call transcript