SoundThinking(US:SSTI)2023-02-23 03:43Financial Data and Key Metrics Changes - The net income for 2022 was $6.4 million, or $0.52 per share, compared to a net loss of $4.4 million, or $0.38 per share, in the prior year [1] - Adjusted EBITDA for 2022 was $15.9 million, a 54% increase from $10.4 million in 2021, with a revenue retention rate of 124% [87][67] - Q4 2022 revenues increased 50% to $21 million from $14 million in Q4 2021, with adjusted EBITDA increasing 131% to $4.3 million [67][87] Business Line Data and Key Metrics Changes - The company added over 100 miles live during 2022, contributing to significant revenue growth [86] - The Forensic Logic acquisition contributed to revenue growth, with a full quarter of revenues included in Q4 2022 [81] - The gross profit for Q4 2022 was $11.9 million, or 57% of revenue, compared to $7.5 million, or 54% of revenue, in the prior year [105] Market Data and Key Metrics Changes - Deferred revenue as of December 31 was $43.7 million, up from $26.7 million at the end of 2021, indicating strong cash generation [87] - The funding environment remains constructive at local, state, and federal levels, with $10 billion committed to public safety technology [68] - The company expects to achieve revenue guidance of $94 million to $96 million for 2023, driven by a strong pipeline of domestic and international deals [111] Company Strategy and Development Direction - The company is focusing on integrating the Coplink X solution into its sales and support infrastructure to enhance upsell opportunities [66] - There is a strategic emphasis on expanding into Tier 4 and Tier 5 markets, which have shown promising sales cycles [18] - The company aims to transition into a precision policing platform provider, moving beyond just gunshot detection technology [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ability to drive profitable growth due to strong demand drivers and a robust funding environment [78] - The company anticipates adjusted EBITDA to increase from 20% in 2022 to between 24% and 26% in 2023 [2] - Management noted that the demand for technology solutions is increasing due to rising violent crime and the need for effective policing strategies [77] Other Important Information - The company reported a net loss of $1 million for Q4 2022, an improvement from a net loss of $3.3 million in the prior year [82] - The gross margin is expected to improve, with projections of reaching 60% in 2023 and potentially 70% in the coming years [129][131] - The company has no short or long-term debt and approximately $25 million available on its line of credit [135] Q&A Session Summary Question: Can you discuss the deferred revenue growth and its implications for cash deployment? - Management noted that deferred revenue growth was significant, and they are considering aggressive cash deployment strategies, including potential share buybacks [6] Question: What impact did the sensor replacement cycle have on the P&L? - Management indicated that the sensor replacement cycle was a drag on the P&L but is expected to ease in 2023 [7] Question: How is the company integrating Forensic Logic into its operations? - The integration of Forensic Logic is ongoing, with a focus on aligning sales efforts and leveraging state and federal opportunities [123][151] Question: What is the outlook for gross margins and EBITDA margins? - Management expects gross margins to reach 60% in 2023 and adjusted EBITDA margins to move towards 40% in the coming years [59][60] Question: What is the appetite for additional acquisitions? - The company is open to acquisitions that provide strategic value, although they have not pursued any recently [43][45]