SoundThinking(SSTI) - 2020 Q4 - Annual Report

Coverage and Market Opportunities - As of December 31, 2020, ShotSpotter had coverage areas under contract for over 810 square miles, with 779 square miles live, across over 110 cities and 12 campuses/sites[18] - The company estimates that the domestic market for its public safety solution consists of approximately 1,400 cities with four or more homicides per 100,000 residents, with an average investment of about $400,000 per year for ShotSpotter Respond[71] - The company has identified an additional market opportunity in smaller cities, which could add several hundred potential customers, each expected to invest between $50,000 to $100,000 per year for ShotSpotter Respond[71] - The international market for ShotSpotter Respond includes around 200 cities in regions such as the European Union and Central America, with an estimated average investment of approximately $1.0 million per year per customer[72] - The company estimates the domestic market for its security solutions includes approximately 5,000 college campuses and airports, with average customer investments of $50,000-$75,000 per year[75] - The market for ShotSpotter Connect is estimated to include around 2,500 cities, with average customer investments of $50,000-$100,000 per year, and potential international customers could invest over $100,000 annually[76] - The company anticipates a significant opportunity to expand internationally, estimating a market of approximately 200 cities outside the U.S. with at least 500,000 residents[80] Technology and Solutions - ShotSpotter's gunshot detection technology enables alerts to be sent within approximately 45 seconds of a gunfire incident being detected[30] - ShotSpotter's intelligent sensors are designed to filter out ambient noise and accurately detect impulsive sounds, ensuring high precision in gunfire detection[37] - The Incident Review Center (IRC) operates 24/7 and can confirm gunfire incidents within seconds, providing precise location data and details about the incident[41] - The ShotSpotter Respond application allows field personnel to receive real-time alerts, including a unique Respond ID number, time of gunfire, and contextual information about the incident[47] - ShotSpotter Connect uses AI-driven analysis to direct officers to patrol areas with the highest predicted crime risk, enhancing community engagement and reducing enforcement bias[59][60] - The company acquired the CrimeCenter investigative case management solution in November 2020, rebranding it as ShotSpotter Investigate, aimed at improving clearance rates for law enforcement agencies[66][69] - The company offers Detailed Forensic Reports (DFRs) that provide comprehensive analysis of shooting incidents, which have been admitted in over 100 criminal prosecutions across various states[51] Public Safety and Community Impact - Approximately 80% of gunshots detected by ShotSpotter's public safety solution are not reported to 911 by residents, highlighting a significant public safety gap[21] - The deployment of ShotSpotter's solutions is expected to improve community trust and engagement while enhancing public safety outcomes[19] - The average homicide clearance rate in the United States was 61% in 2019, indicating a need for improved investigative case management solutions[25] - The average homicide clearance rate in the U.S. over the last five years is 61%, indicating a significant opportunity for the company's solutions to assist law enforcement in solving cases more effectively[67] - In 2020, the company issued over 230,000 gunshot alerts to customers, enabling emergency dispatch centers to respond within 45 seconds of a gunfire incident report[55] Financial Performance and Business Operations - The company has faced challenges due to the COVID-19 pandemic, which has materially affected its business operations[14] - The two largest customers, City of Chicago and City of New York, accounted for 18% and 15% of revenues, respectively, for the year ended December 31, 2020[86] - The company has added over 80 new ShotSpotter Respond customers since transitioning to a subscription model in 2011, with a retention rate exceeding 100%[86] - The company plans to leverage its existing customer base to drive adoption of new products, aiming to increase revenue per customer through complementary technologies[78] - Total revenues generated outside the United States were $0.7 million in 2020, compared to $1.0 million in 2019 and $0.9 million in 2018[119] - As of December 31, 2020, the company had cash and cash equivalents of $16.0 million, consisting entirely of bank deposits[412] Workforce and Diversity - The company employed 157 people as of December 31, 2020, with a total attrition rate of less than 11%[109] - Women represented 27% of the company's employees, while underrepresented minorities accounted for 50%[110] - The company is committed to advancing diversity, equity, and inclusion, with a three-pronged strategy to attract diverse talent and create an inclusive workplace[111] Research and Development - The research and development team focuses on enhancing signal processing algorithms and integrating AI, with 20 employees dedicated to these efforts as of December 31, 2020[93] - The company had 34 issued patents as of December 31, 2020, with expiration dates ranging from 2022 to 2034[105] Competitive Landscape - The company operates in a highly competitive environment, facing direct competition from companies like Alarm.com and Safety Dynamics Inc.[100] - The company does not engage in any hedging strategies to manage foreign currency exchange risks, primarily related to the South African Rand[413] - The company has not experienced material effects from inflation on its business or financial condition[414] COVID-19 Response - The company has implemented significant changes in response to the COVID-19 pandemic, including flexible work hours and additional paid time off[117]