SSTI - Earnings call transcript Q2 2022

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Operator

Good afternoon, everyone and welcome to ShotSpotter's Second Quarter 2022 Earnings Conference Call. My name is Jamie and I will be your operator for today's conference.

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 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 August statements of forward-looking management's and estimates These predictions the date XXXX. this X, broadcast live beliefs, as And any statements ShotSpotter after date to update call. circumstances forward-looking of or undertakes this to events or obligation the no revise reflect

the a conference I'd may company's to Relations made available and like be will recorded Investor At ir.shotspotter.com. to Finally, at to Sir, turn the replay website remind CEO, link via this call section like you in everyone Clark. Ralph of call that this I'd ShotSpotter's available for proceed. time, over the

Ralph Clark

us Good afternoon for and joining today. thanks

overviews, company year before and your to two the report even Alan company's as right happy our to revenue only well. exciting you we'll through an build-out is though policing is growth XXXX. we a discuss quarter. here we the in work in happy doing our a dive is Let's the amount midpoint tell to And to take for we're of years second precision how us this into to fifth, questions. just I'm review ShotSpotter of our want This do, time take at public Not nearly quite doing a the tremendous that it's accelerate quarter, to give also of anniversary moment I But second effort and After profit be the our and have I general. platform.

with it the set. broader know adjacent critical intimacy order coverage ShotSpotter our interest base based and Customer growing core growth law beyond agencies sound. have was tools. currency. is around the insight platform to know footprint. with experience acoustic was several our believe seeing a grow we're and this adoption AI-based now provide detection impact our seeing revenue solution and many and analysis and on of our market capabilities the quarters the provider you their build multi-product by investigative And and customer strategy meet goal opportunity are key we enforcement this and in enforcement environment We're decision-makers country. gunshot steady of the emerging decision of under in and to to solution our those And most is strategically we TAM our from in including As to-date, gunshot familiar needs intimately and our trust the law ability that their out our belt. detection are we into to We how the value And they in which to grateful with needs. changing for operate. know are funding in We political inspired

of of adjusted XX% We revenue $XX million million execution second $X.XX in basis compared up of of on year million last margin was from this increase net per evident $X.X at the tactical was which was strong in to $XXX,XXX QX. in reported quarter QX share XX% EBITDA quarter from $XX.X GAAP loss for year. Our our And million, this $X.X year an net was a or $X the million a QX XXXX. diluted GAAP XX% ago. a income

and Miami live Let's momentum. ShotSpotter the Beach, Forrest in North Perris, specifically quarter; Arkansas. went Respond's California; Cape review City, Florida; new during We four Missouri; cities Girardeau,

that and eight customer current the like and expansions this expansions in looks six coverage into XXXX And contracted to with XX will already traction new saw this being areas. year. live cities continue half also are deployed of We second it go

and Town, Bahamas. deployments in two expansion with with process also presence Africa South international new the Our grow an contracted Cape continues in to recently

delighted of and multi-year customers, expansion a management this price growth the we seeing is customers' for we recently state trust that second the news live you've we're have longer ARR functional award slightly We their platform. which course, you loyal and also to cloud-based attrition the this Respond, ShotSpotter of entities We're they they company QX and significant an do work being applications of platform. sticky of complex we're execution. In on of renewal data analysis they the is or our that XX% is and agency expertise XXXX very we already and the XXXX. in increase. year-to-date will and this the part pleased quite we ShotSpotter year, are how in and that also the to leveraging to core remainder the sales saw contracts our management other through platform and selling out opportunity once acquisition, other of the create many value Crime continuing selling as and low a Management, consistent of performance the new which XX% in has and total of good and know report in-house, and be of and currently been can of crime utility of extraordinarily driver capability our and QX, lots renewals with more is quite of only of inputting, solutions our Clearly investigative our included the our funded months, Logic encouraging out our stickiness. had to build expect but with a tend that This pipeline earned for Forensic incidents integrate multi-year much system. of and quarter, product a fully customers. zero beyond. GCM really case a not automates our go of half portfolio for available interest customers Because requests into year. X, our In this it on marketing bookings close it progress but of Gun COPLINK overall take first of business, built identify enhances In introduced our government were our we equally Investigate, offering developed and to zero cycles. we we're churn. with this of this deal gunfire a data attrition secured bullish with we revenues We Respond We provides daily source our the anticipate with with than demonstrations be mandates, and know to for our seven-figure our coding, As But an we tagging adoption can long-duration inquiries integrated XX% bookings closely with growing received for capability the the experience solutions. from so from few mile our are existing in work.

And a So, growth confident foundation quite Wage happened increasing the At and enforcement the pressure $XX beyond. in the this crime supply as despite equitable strong funding struggling Estimates creates are keeping are growth about for enough the policing. adoption constructive, us. pronounced Statistics have we with extremely we is our the lay at level, more on to opportunity transparency. we're underestimated, numbers full police federal, of Increased the budgets, to an to at while believe are to about the on service this those in X.X%. for the This we detail to guidance number proud seeing XX% we year-over-year go staffing and to departments of and will a we intelligent-led XXXX million, be successful demands to ShotSpotter tailwinds which police chain enter and According constraints And Employment in from Labor and National May $XX maintaining same employed be to address and the of the impending through company. first continue has momentum along feeling but significant not and over right reporting year and uptick law a bridge ahead will efficient, maintain gap. and nationwide in We're XXXX to million for this more at been solutions full second drive structural strategies, of execute we XXXX, XXXX the Alan of time macro effective that forward, increased is cannot persevere, of looking Bureau track fears We are inaccurate global XXXX technology half measurable our through officers report pandemic, municipal believe the decade. leading a in accountability. and conducted our healthier midpoint. smarter community for by challenges, declined for revenue recession, time the state,

our critical Associated publications worth news our key several our complaint, pleased our which grant behest Media VICE while the heart the the agreed which first somehow that to in against of in we're EBITDA the margin mentioning ourselves that our the even appropriate XX% pursuing for judge guidance ShotSpotter did of decision and have And with joined and misstatements do are XXXX. believe provided Press we the the on One customers disappointed remains to place. were suit at They a defamation publicly stepped after to right guided that Media have their XX% to had enforcement. adjusted made corrected of to dismissal, previously the defamation up record. at other the repudiate bit now non-operating the venue Our for engaged They motion at correct us narrative the forecasted revenues is dismiss. suit false and thing. VICE in We record in also of to tampering evidence defamation defend the way the has decision, that by we law by

our matters. However, put us become work focus over safer of unfortunate we're and lives, Alan, on matter and behind communities doing pleased that helping this saving now to to you. work

Alan Stewart

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

expanded went this four new mentioned, in cities. cities Ralph six As Respond quarter current and live we in

our seeing increase interest an the of are We solutions. in

cities fact, In of Ralph XX since This are is with new executed. public. current any contracts. with these our new had already eight And Of earnings we contracts are customers. Respond have highest new contracts in and level going mentioned international two that expansions have release contracts the XX we also new

gone several live since the In have end quarter. second them of already of the fact,

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

over miles expectations throughout second sensors $XX of we of million be ahead and the slightly a to continue as are revenue at impacted Revenue end increased the our XX% for million of $X.X were higher leads as prior quarter second our services revenues up quarter Gross professional extent increase of XXXX million, was XX% the XXXX. $XX.X or the a a also margin million profit the to of we division. had quarter Second year-over-year revenue in replace versus level in for XX% small may Gross of year continue to the $XX.X XG of year. or period. slightly deployed

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

GAAP measure, our a interest adjusting a stock-based As calculated adjusted depreciation, net EBITDA, to expenses non-GAAP income contingent taking expenses, income is taxes, adjustments amortization, and reminder, including compensation obligations. and by financial income, our acquisition-related consideration out

our Turning expenses. to

the a contingent for million higher acquisition, earn-out some XXXX Forensic but second for were Breaking of expenses associated a expected for associated personnel been consideration revenues XX% down payments expense XXXX. Logic, million was $X.X revenue $X.X the the the or second included and expenses of our contracts. total acquired operating which That revenues January of $X.X expenses total a versus have costs XXXX expenses, costs Our in prior of revenue second the XX% reduction period. in with quarter was as XXXX. million increased $X.X or sales million quarter Logic of as to of Forensic with in million operating delay for the second for year due XX% adjustment, reduced potential quarter quarter related versus related or offset were said well for approximately marketing to XX% by Operating $X.X our which or

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

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

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

or $XXX,XXX expenses of of contingent year G&A The XX% the primarily period. G&A offset total to approximately revenue prior our X% of Logic Forensic increasing to earn-out for from was related invest consideration in million quarter total related for to to the adjustment the expectations. the reduction the expenses in of than revenue, were functionality all continue the products. or less compared $X.X We

We the G&A in grows. expenses revenue both as continue and expect absolute company our percentage will of in to increase dollars

from quarters, percentage we experienced third of and will second a in increase quarter. as we the revenues the expect it fourth For what

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

loss share our Our income non-GAAP for quarter is per outstanding. weighted expenses including adding basic $X.XX $XXX,XXX on taking outstanding on a a a loss year a XX.X net of XX.X This contingent basic adjusted income financial share for $X.XX acquisition-related consideration loss and net of compares the the of million second to based period. adjustments and net a our per loss prior measure was average Deferred or or been $XX.X based quarter diluted of $XXX,XXX million Adjusted in deferred revenues obligations. revenue second million which by weighted income GAAP and to of calculated back average shares diluted quarter to XXXX QX the The had of the and million end almost primarily fourth end receivable $X.X we the already collected. the to ended addition Logic of from of in growth versus has increased the at quarter accounts that million $XX.X related primarily $XX.X cash the in was cash XXXX. and the at at to much million related decrease $XX the of and at end our with quarter, equivalents million end of increase Forensic revenue. is We the shares

is $XX greater cash current than balance million. Our

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

our have customers' of million ever our line related million said, to on issued line letter But credit, debt the this still did add one credit credit if short long-term actually needed. million letter still of or no does have any is We That of approximately issue $X available credit of contract outstanding. $XX actual we requirements. $XX not we debt of so a

XX%. $XX maintaining outlook, are our full Turning adjusted revenue to million million. maintaining XXXX margin our to And to $XX year XX% year we are our at expected full we EBITDA guidance at

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

Ralph Clark

the constructive we macro closing, In Alan. Thanks have our trends. at back believe very operationally that with market we wind

rate annual strong durable. Our revenue and is

and Our we we unit economics moat. sustainable are compelling. And competitive believe have developed a large

expand. In addition, to our scale efficiency and operational continued

here feeling optimistic also finish but So of we're the a at start and midpoint into only robust a quick quite for for the XXXX. not year, XXXX, strong

it And that, with questions. open for let's up so

Operator

Richard with question we Ladies the And Capital. begin and gentlemen, from [Operator will at question-and-answer first Roth our time session. go Instructions] today comes question. ahead Please Baldry this from your

Richard Baldry

Thanks.

and XX large So I for got new think number you've said I cities you deals a of half, second expansions. eight you've the announced, know contracted

about So quarter they more How about of of soon outside that XXXX? or already if had that, signed the impact first curious, both large either and feel if wins more given the the number Thanks. for pipeline the like half? in fourth you second would can half obviously you've that close you talk

Ralph Clark

Yeah.

thanks as question. start, Maybe Alan appropriate. and So I'll in for jump that

some additional some to we just There here. that traction talked about quite report transaction that strong Logic booking our bullish our So feeling I had build additional very with fairly actually in we're Investigate. our momentum, a expecting a the are ones bookings Forensic with see think our And And with to bit through there. Respond. COPLINK not outside happen we and we're expect we little earnings X about acquisition bookings continuing we're Connect we that pipeline referenced solution large

I So it's beyond. busy to think us a about and we're gives for And a going what very us of XXXX half lot to thinking second be be confidence about that's this year. how going

Richard Baldry

earmarks used? about won asides whether talk that tap have new are ahead you that funding of whether could deals legislation sources, set the any that's or to And successfully maybe in managed any federal or you've

Ralph Clark

Yeah.

support the nominal just a fabric being support that coming by there's it's And acoustic sources funding as streams all solution have to violent health, these So detection, the use a lot available gunshot – to from he's address municipal budget also we place. fairly President continued funding refers that robust it's available also from the viable crime. in but over some A of driven support to government. Federal making being the of some of that's

Richard Baldry

Then the for talk second and the Thanks. I still quarter costs I up mopping and you of that is those for some quarter. out any one guess, second the of there's if there for last about residual Can in maybe the if assume that comes that all expenses? litigation me. of half scale or third sort

Alan Stewart

Yeah. This is Alan.

that, and Ralph continue we we expenses second expect finalizing the a QX from did in the you There were well. than first was GAAP when what as quarter a were So had quarter. VICE. I'll into basis less take definitely you that final in bit the with add legal things can as little We

expenses know expect based least but what on and for So our are going in are in legal expenses month, right go those we to we now. QX at do down QX one that

Richard Baldry

year. All right. for Thanks that. the start Great to

Ralph Clark

you. Thank

Operator

[Operator comes with ahead Blair. next Pfau Instructions] question. Our Matt question from your from go William Please

Matt Pfau

for to backlog this public those than more do you get question. given the company? Thanks about on implemented it's taking had ask how you've to a wanted ability and I guys. feel Hey, deals my as your historically pipeline particularly year

Ralph Clark

to Do Alan? want take that you

Alan Stewart

Sure. Yeah.

So this is Alan.

already they're signed. good I feel about think fact certainly the we really

So great. that's

gone are live. have We already working some –

Tier we've little that, be Those already go us of or we're faster. actually get can't But it's be to a end hard little might the them to access recognize of smaller tell so believe X, already fast contracts said again we'll help sometimes get Some the with we the still we two exactly, that are year. to until are there. XXX But them The may maybe get of go to able Tier north go live, the true. by of those. expecting to a we sensors be signed to rest one those going hang that X when or have contracts revenue. miles how live a miles. the We The we live

entire sure we on. how working on see as as go can team make that can goes. as we the goes to hard year we'll because So the that more going to those pipeline as is are well The get signed fast we in have

Ralph Clark

think, add XXX we're chain not that to I would prevent of be that plus I miles from And a point Alan any view just would this to us supply seeing able year. constraints accomplish materials

Alan Stewart

That's correct.

Matt Pfau

the and Great. Okay. follow-up Forensic on the product. around wanted I And Logic X COPLINK then comments to

you the good there out the So demand some cited contingent consideration with seeing the on there State you called around are of some win you're delays. also comments and but Massachusetts,

more on in So business positive both side and side on then that just what's well? bit maybe a on as the going little the detail on delay

Alan Stewart

Sure. This start too. add can Ralph then is and Alan. I'll

in expected Forensic into You may to the year, recall $X about million went that the to ARR when get acquisition. Logic we related we

higher to little north revenue and them little might the also amount XXXX. getting be also expectation XXXX of earn-out XXXX earn-out XXXX though We more they'll the contracts. both just that. that considerations but to we of to new expected in We've a they the it have a exactly get expectation, are not a would get mentioned what is They will required get later be than increases for

Matt Pfau

for my Appreciate guys Thanks Great. it. questions. Okay. taking

Alan Stewart

Sure.

Operator

question-and-answer no and additional ladies And showing I'm We'll today's end questions. session. gentlemen,

now taken closing for back was to you If I'd contact may emailing team by Mr. Relations ShotSpotter's your turn floor to over the Investor not question like ssti@gatewayir.com. Clark remarks.

Ralph Clark

you very in. much Really Thank for that. everyone Great. appreciate dialing

out I strong. to -- and discussed, As very a year expect and tremendous Alan year this finish we're having

and I with calls. follow looking chatting on your you on forward to appreciate interest many So our of

Operator

gentlemen and call. us joining that We today's we for conference ladies And today. conclude will you with thank

your lines. disconnect You may now

ShotSpotter (SSTI) 10 Aug 222022 Q2 Earnings call transcript