SoundThinking, Inc. Reports First Quarter 2024 Financial Results
SoundThinking (Nasdaq: SSTI) reported a 23% increase in Q1 2024 revenues to $25.4 million, driven by new customer subscriptions and contributions from SafePointe. Gross profit rose 32% to $14.9 million. However, the company experienced a net loss of $2.9 million, compared to a $1.8 million loss in Q1 2023. Adjusted EBITDA improved slightly to $3.0 million. The company reaffirmed its FY 2024 revenue guidance of $104-106 million and expects Adjusted EBITDA margins of 18-20%. Key developments include launching ShotSpotter in Philadelphia and expanding its SafetySmart™ platform.
- Revenues increased 23% to $25.4 million.
- Gross profit increased 32% to $14.9 million.
- Adjusted EBITDA improved to $3.0 million.
- Launched ShotSpotter in Philadelphia.
- Expanded SafetySmart™ platform.
- Company reaffirmed FY 2024 revenue guidance of $104-106 million.
- Projected FY 2024 Adjusted EBITDA margins of 18-20%.
- Net loss increased to $2.9 million from $1.8 million in Q1 2023.
- Total operating expenses rose to $17.5 million from $13.1 million.
- Higher expenses due to increased headcount and SafePointe R&D costs.
- Debt of $7.0 million related to SafePointe acquisition.
Insights
SoundThinking's Q1 2024 financial results show a revenue increase of 23% year over year, reaching
However, despite these positive trends, the company reported a net loss of $2.9 million, larger than the
The company also reaffirmed its full-year 2024 revenue guidance range of
For retail investors, the key takeaway is that the company is growing and expanding its customer base, but the path to profitability remains a challenge. The focus should be on how well management can control costs while driving revenue growth.
SoundThinking's expansion into new markets is noteworthy. The company went 'live' in ten new cities and one university, with further expansion in two existing cities. The launch of ShotSpotter in Philadelphia, a tier-one city, could be a significant growth driver, given the city's size and public safety needs. The cross-selling of CaseBuilder and CrimeTracer to Newport News, Virginia, indicates strong customer retention and the potential for increased revenue per customer through expanded product offerings.
The expansion reflects a growing demand for public safety technology solutions, supported by rising interest both domestically and internationally. This demand is likely driven by increasing calls for service and a need for greater transparency in law enforcement agencies, aligning with broader societal trends.
Retail investors should be encouraged by SoundThinking's ability to penetrate new markets and cross-sell additional products to existing customers. However, they should also watch for potential challenges in scaling operations and sustaining demand in these new markets.
SoundThinking's ability to expand its SafetySmart™ platform and introduce new product solutions like ShotSpotter, CaseBuilder and CrimeTracer speaks volumes about its innovative capacity in the public safety technology sector. The launch of ShotSpotter in Philadelphia is particularly significant, given the city's size and the complexity of its public safety needs. Successful implementation in such a tier-one city could serve as a strong validation of the technology and open doors to similar large markets.
The company’s emphasis on cross-selling and integrating multiple solutions into its platform showcases its strategy to offer comprehensive public safety solutions. This integrated approach can provide law enforcement agencies with a more cohesive and effective toolset, thereby increasing user dependency on their ecosystem.
Investors should recognize the potential for SoundThinking's technology to become a staple in public safety operations across various cities. However, the success of these technologies will need to be monitored to ensure they deliver on their promises and drive sustainable growth.
Revenues Increased
Company Reaffirms FY 2024 Revenue Guidance Range of
FREMONT, Calif., May 14, 2024 (GLOBE NEWSWIRE) -- SoundThinking, Inc. (Nasdaq: SSTI), a leading public safety technology company, today reported financial results for the first quarter ended March 31, 2024.
First Quarter 2024 Financial and Operational Highlights
- Revenues increased
23% to$25.4 million , compared to$20.6 million for the same quarter of 2023. - Gross profit increased
32% to$14.9 million (59% of revenues), compared to$11.3 million (55% of revenues) for the same quarter of 2023. - GAAP net loss totaled
$2.9 million , compared to GAAP net loss of$1.8 million for the same quarter of 2023. - Adjusted EBITDA1 totaled
$3.0 million (12% of revenues), an improvement compared to$2.9 million (14% of revenues) for the same quarter of 2023. - Went “live” in ten new cities and one university as well as expanded with two current cities.
- Launched ShotSpotter in Philadelphia, a tier-one city with future growth potential.
- Cross-sold CaseBuilder and CrimeTracer to Newport News, Virginia, which is now equipped with four SafetySmart™ platform products.
1 See the section below titled “Non-GAAP Financial Measures and Key Business Metrics” for more information about Adjusted EBITDA and its reconciliation to GAAP net income (loss).
Management Commentary
“I am very pleased with our performance in the first quarter – as our revenues grew
“We have bolstered our leadership team, rebranded and expanded the SafetySmart™ platform to reposition the company to execute on an expanded growth opportunity. This strategic shift has been critical for our company to gain access to a larger public safety total addressable market and more importantly, further diversify our customer and revenue base. We plan to remain focused on our organic sales growth levers to land, expand, cross-sell, and retain customers – and believe we are seeing validation from customers in this respect as our solutions are seeing increased interest and demand from law enforcement agencies of all sizes as they respond to increased calls for service and greater transparency. Looking ahead, our focus remains on driving sustainable, diversified growth that delivers meaningful value for our stakeholders and we remain confident in our path to achieve our long-term financial targets of
First Quarter 2024 Financial Results
Revenues for the first quarter of 2024 were
Gross profit for the first quarter of 2024 was
Total operating expenses for the first quarter of 2024 were
Net loss for the first quarter of 2024 totaled
Adjusted EBITDA for the first quarter of 2024 totaled
At quarter end, the company had
Financial Outlook
The company reaffirmed its full-year 2024 revenue guidance range of
“We expect to deliver both revenue growth and enhanced profitability in 2025, even without a ShotSpotter contract renewal in Chicago,” added Clark. “We're confident in our ability to achieve long-term financial targets of
The company’s financial outlook statements are based on current expectations. The preceding statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Safe Harbor Statement” below. The company has not reconciled its Adjusted EBITDA outlook to GAAP net income (loss) due to the uncertainty and variability of interest income (expense), income taxes, depreciation and amortization, stock-based compensation expenses, and acquisition-related expenses, which are reconciling items between Adjusted EBITDA and GAAP net income (loss). Because the company cannot reasonably predict such items, a reconciliation to forecasted GAAP net income (loss) is not available without unreasonable effort. Such items could have a significant impact on the calculation of GAAP net income (loss). For more information, see “Non-GAAP Financial Measures and Key Business Metrics” below.
Conference Call
SoundThinking will hold a conference call today May 14, 2024 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss these results and provide an update on business conditions.
SoundThinking management will host the presentation, followed by a question-and-answer period.
U.S. dial-in: 1-877-407-8029
International dial-in: 1-201-689-8029
Conference ID: 13746236
A live audio webcast of the conference call will be available in listen-only mode simultaneously and available for replay via the investor relations section of the company’s website at www.soundthinking.com.
Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day through May 28, 2024.
U.S. replay dial-in: 1-877-660-6853
International replay dial-in: 1-201-612-7415
Replay ID: 13746236
Non-GAAP Financial Measures and Key Business Metrics
Adjusted net income (loss): Adjusted net income (loss), a non-GAAP financial measure, represents the company’s net income (loss) before acquisition-related expenses, including adjustments to the company's contingent consideration obligation.
Adjusted EBITDA: Adjusted EBITDA, a non-GAAP financial measure, represents the company’s net income (loss) before interest (income) expense, income taxes, depreciation, amortization and impairment, stock-based compensation expense and acquisition-related expenses, including adjustments to the company's contingent consideration obligation. Adjusted EBITDA is a measure used by management internally to understand and evaluate the company’s core operating performance and trends across accounting periods and in connection with developing future operating plans, making strategic decisions regarding the allocation of capital and considering initiatives focused on cultivating new markets for its solutions. In particular, the exclusion of these expenses in calculating Adjusted EBITDA facilitates comparisons of the company’s operating performance on a period-to-period basis.
SoundThinking believes adjusted net income (loss) and Adjusted EBITDA also provide useful information to investors and others in understanding and evaluating its operating results in the same manner as its management and board of directors. For example, SoundThinking adjusts EBITDA for stock-based compensation expense and acquisition-related expenses because such expenses often vary for reasons that are generally unrelated to financial and operational performance in a particular period. Stock-based compensation is utilized by SoundThinking to attract and retain employees with a goal of long-term retention and the alignment of employee interests with those of the company and its stockholders, rather than to address operational performance for any particular period’s financial performance measures, in particular net income (loss), or its other GAAP financial results.
The following table presents a reconciliation of GAAP net loss, the most directly comparable GAAP measure, to adjusted net loss, for each of the periods indicated (in thousands, except share and per share data):
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| GAAP net loss | $ | (2,909 | ) | $ | (1,790 | ) | ||
| Less: | ||||||||
| Change in fair value of contingent consideration | — | (6 | ) | |||||
| Adjusted net loss | $ | (2,909 | ) | $ | (1,796 | ) | ||
| Weighted average shares used in computing adjusted net loss per share, basic and diluted | 12,770,988 | 12,252,517 | ||||||
The following table presents a reconciliation of GAAP net loss, the most directly comparable GAAP measure, to Adjusted EBITDA for each of the periods indicated (in thousands):
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| GAAP net loss | $ | (2,909 | ) | $ | (1,790 | ) | ||
| Less: | ||||||||
| Interest (income) expense, net | 122 | (54 | ) | |||||
| Income taxes | 114 | — | ||||||
| Depreciation, amortization and impairment | 2,790 | 2,504 | ||||||
| Stock-based compensation expense | 2,927 | 2,220 | ||||||
| Change in fair value of contingent consideration | — | (6 | ) | |||||
| Adjusted EBITDA | $ | 3,044 | $ | 2,874 | ||||
Annual Recurring Revenue (ARR): ARR is calculated for a year based on the expected GAAP revenue for the year from contracts that are in effect on January 1st of such year, assuming all such contracts that are due for renewal during the year renew as expected on or near their renewal date, and including contracts executed during the year after January 1st, but for which GAAP revenue recognition starts January 1st of the year.
Safe Harbor Statement
This press release contains "forward-looking statements" within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding the company’s expectations for its estimated revenue and Adjusted EBITDA for 2024, its long-term financial targets, ability to drive profitable growth and build upon existing contracts and partnerships, including in the United States and internationally, operating momentum, financial visibility, sales pipeline, revenue growth, operating leverage and margin expansion in 2024 and beyond. Words such as "expect," "anticipate," "should," "believe," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "could," "intend," or variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond the company’s control. The company’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to: the likelihood that the City of Chicago will not be using ShotSpotter following November 2024; the company’s ability to successfully negotiate and execute contracts with new and existing customers in a timely manner, if at all; the company’s ability to maintain and increase sales, including sales of the company’s newer product lines; the availability of funding for the company’s customers to purchase the company’s solutions; the complexity, expense and time associated with contracting with government entities; the company’s ability to maintain and expand coverage of existing public safety customer accounts and further penetrate the public safety market; the potential effects of negative publicity; the company’s ability to sell its solutions into international and other new markets; the lengthy sales cycle for the company’s solutions; changes in federal funding available to support local law enforcement; the company’s ability to deploy and deliver its solutions; the company’s ability to maintain and enhance its brand; and the company’s ability to address the business and other impacts and uncertainties associated with macroeconomic factors, as well as other risk factors included in the company’s most recent annual report on Form 10-K and other SEC filings. These forward-looking statements are made as of the date of this press release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Except as required by law, the company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.
About SoundThinking, Inc.
SoundThinking, Inc. (Nasdaq: SSTI) is a leading public safety technology company that delivers AI and data-driven solutions for law enforcement, civic leadership, and security professionals. We are trusted by more than 250 customers and approximately 2,100 agencies to drive more efficient, effective, and equitable public safety outcomes. Our SafetySmart™ platform includes ShotSpotter®, the leading acoustic gunshot detection system; CrimeTracer™, the leading law enforcement search engine; CaseBuilder™, a one-stop investigation management system; ResourceRouter™, software that directs patrol and community anti-violence resources to help maximize their impact; and SafePointe®, an AI-based weapons detection system. SoundThinking has been designated a Great Place to Work® Company.
Company Contact:
Alan Stewart, CFO
SoundThinking, Inc.
+1 (510) 794-3100
astewart@soundthinking.com
Investor Relations Contacts:
Matt Glover and Greg Bradbury
Gateway Group, Inc.
+1 (949) 574-3860
SSTI@gateway-grp.com
| SoundThinking, Inc. Condensed Consolidated Statements of Operations (In thousands, except share and per share data) (Unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues | $ | 25,410 | $ | 20,620 | ||||
| Costs | ||||||||
| Cost of revenues | 10,271 | 9,243 | ||||||
| Impairment of property and equipment | 252 | 72 | ||||||
| Total costs | 10,523 | 9,315 | ||||||
| Gross profit | 14,887 | 11,305 | ||||||
| Operating expenses | ||||||||
| Sales and marketing | 7,112 | 5,848 | ||||||
| Research and development | 3,560 | 2,653 | ||||||
| General and administrative | 6,830 | 4,616 | ||||||
| Change in fair value of contingent consideration | — | (6 | ) | |||||
| Total operating expenses | 17,502 | 13,111 | ||||||
| Operating loss | (2,615 | ) | (1,806 | ) | ||||
| Other income (expense), net | ||||||||
| Interest income (expense), net | (122 | ) | 54 | |||||
| Other expense, net | (58 | ) | (38 | ) | ||||
| Total other income (expense), net | (180 | ) | 16 | |||||
| Loss before income taxes | (2,795 | ) | (1,790 | ) | ||||
| Provision for income taxes | 114 | — | ||||||
| Net loss | $ | (2,909 | ) | $ | (1,790 | ) | ||
| Net loss per share, basic and diluted | $ | (0.23 | ) | $ | (0.15 | ) | ||
| Weighted-average shares used in computing net loss per share, basic and diluted | 12,770,988 | 12,252,517 | ||||||
| SoundThinking, Inc. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 8,524 | $ | 5,703 | ||||
| Accounts receivable and contract assets, net | 35,201 | 30,700 | ||||||
| Prepaid expenses and other current assets | 3,507 | 3,902 | ||||||
| Total current assets | 47,232 | 40,305 | ||||||
| Property and equipment, net | 21,429 | 21,028 | ||||||
| Operating lease right-of-use assets | 2,078 | 2,315 | ||||||
| Goodwill | 34,213 | 34,213 | ||||||
| Intangible assets, net | 35,995 | 36,938 | ||||||
| Other assets | 4,025 | 3,909 | ||||||
| Total assets | $ | 144,972 | $ | 138,708 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 2,260 | $ | 3,031 | ||||
| Accrued expenses and other current liabilities | 7,101 | 8,521 | ||||||
| Line of credit | 7,000 | 7,000 | ||||||
| Deferred revenue, short-term | 44,817 | 41,265 | ||||||
| Total current liabilities | 61,178 | 59,817 | ||||||
| Deferred revenue, long-term | 5,935 | 812 | ||||||
| Deferred tax liability | 1,267 | 1,226 | ||||||
| Other liabilities | 1,833 | 2,096 | ||||||
| Total liabilities | 70,213 | 63,951 | ||||||
| Stockholders' equity | ||||||||
| Common stock | 64 | 64 | ||||||
| Additional paid-in capital | 173,066 | 170,139 | ||||||
| Accumulated deficit | (98,027 | ) | (95,118 | ) | ||||
| Accumulated other comprehensive loss | (344 | ) | (328 | ) | ||||
| Total stockholders' equity | 74,759 | 74,757 | ||||||
| Total liabilities and stockholders' equity | $ | 144,972 | $ | 138,708 | ||||
FAQ
What were SoundThinking's Q1 2024 revenues?
How much did SoundThinking's gross profit increase in Q1 2024?
What was SoundThinking's net loss in Q1 2024?
What is SoundThinking's FY 2024 revenue guidance?
What are SoundThinking's projected FY 2024 Adjusted EBITDA margins?
What new developments did SoundThinking announce in Q1 2024?
