SoundThinking(SSTI)2023-08-09 02:19Financial Data and Key Metrics - The company maintains its full-year 2023 revenue guidance in the range of 94 million, while adjusting the adjusted EBITDA margin to 16% to 18% of revenues [1][4] - Q2 2023 revenues were 20 million in Q2 2022 [6] - Gross profit for Q2 2023 was 11.6 million or 58% of revenue in Q2 2022 [6] - Adjusted net income for Q2 2023 was a loss of 0.28 per share, compared to a loss of 0.04 per share in Q2 2022 [8] - Adjusted EBITDA for Q2 2023 was 4.1 million or 20% of revenues in Q2 2022 [62][64] - The company ended Q2 with 10.5 million at the end of Q4 2022 [16] Business Line Data and Key Metrics - The company launched ShotSpotter in seven new cities and one new university, and expanded in seven current cities and one current university in Q2 [2] - The company expects to add approximately 140 new miles of ShotSpotter coverage in 2023, a 40% increase compared to 2022 [31] - The company closed three cross-sell/bundled deals in Q2, with the pipeline for such deals growing [53] - The company is negotiating an agreement with PredPol to transition their customers to SoundThinking's ResourceRouter solution and acquire their patents [22] Market Data and Key Metrics - The company is seeing increased interest in its SafetySmart platform solutions across various markets [2] - The company is working with the Chicago Police Department to demonstrate the value of ShotSpotter in saving lives and enhancing investigations [20] - The company is negotiating a multiyear contract with Puerto Rico, following a 90-day interim extension [24][43] Company Strategy and Industry Competition - The company is focused on expanding its competitive moat with new features like Ground Truth and Shot Cast, which enhance law enforcement transparency and effectiveness [52] - The company is investing in innovation, including a new acoustic gunshot detection sensor platform with improved accuracy [21] - The company is leveraging its platform to target new buying centers, such as state-level agencies, in addition to traditional local law enforcement [109] Management Commentary on Operating Environment and Future Outlook - The company is confident in its growth trajectory, particularly in partnering with law enforcement for digital transformation [13] - The company expects gross margins to improve in the second half of 2023, driven by the large CaseBuilder contract with the Department of Corrections [6][74] - The company anticipates that G&A expenses will decrease as a percentage of revenues in Q3 and Q4, despite staying similar in absolute dollars [32] - The company is optimistic about its prospects for a multiyear contract award in Puerto Rico, given its track record and value to the Puerto Rico Police Department [43] Other Important Information - The company repurchased 100,401 shares at an average price of 2.4 million in Q2 [16] - The company has approximately 25 million available on its line of credit and no short or long-term debt outstanding [16] - The company experienced zero attrition in Q2 [48] Q&A Session Summary Question: Can you provide more details on the potential upside to the 140-mile ShotSpotter deployment forecast? - The company is working on closing several deals that could add an additional 10 miles, depending on the timing of contract negotiations and deployment [10][67] Question: Can you discuss the factors around deploying the large CaseBuilder deal and its impact on the P&L? - The company has already staffed up for the Department of Corrections contract, which is expected to bring in 2 million annually in subscription revenue and $1-2 million in professional services, with higher gross margins [90] Question: What percentage of bookings in the first half of the year came from Tier 4 and Tier 5 cities? - The company did not provide a specific percentage but mentioned that new cities and expansions are contributing to the growth [73] Question: Can you provide more color on the expected gross margins for the second half of the year? - The company expects gross margins to improve, potentially reaching close to 60% by year-end, driven by the Puerto Rico contract and the Department of Corrections deal [74] Question: How are you managing account conflict as you add more reps per territory? - The company has a structured approach with territory reps collaborating with overlay reps specializing in different products, ensuring effective account management [91] Question: What is a reasonable target for EBITDA margin going forward? - The company expects to return to EBITDA margins in the 20s next year, driven by prudent investments in sales and marketing and the scaling of the business [92][93] Question: Can you discuss the demand environment for the CrimeTracer solution? - The company is seeing strong demand, with one bundled deal led by the CrimeTracer solution, indicating a growing pipeline for cross-sell opportunities [96][98]