SoundThinking Sees Strong Q2 Growth, Expands ShotSpotter
SoundThinking (Ticker: SNDT), a leader in integrated public safety solutions, reported a robust financial performance in the second quarter of 2024, with a 22% increase in revenues to $27 million compared to the same period last year. The company's flagship acoustic gunshot detection system, ShotSpotter, has expanded into new cities and sectors, including commercial and university settings.
SoundThinking's international presence has grown, with expansions in Uruguay and South Africa. A strategic partnership with Rekor for the PlateRanger product is expected to bolster the company's SafetySmart platform starting in September 2024.
Adjusted EBITDA saw a significant increase of over 110% to $5.1 million. Despite expecting lower revenues in Q3 due to an acceleration of professional services in Q2, the company maintains a positive outlook for Q4 and the full year.
Key Financial Highlights
- Revenue for Q2 2024: $27 million, a 22% year-over-year increase.
- Gross profit: $16.1 million, representing 60% of revenue.
- Adjusted EBITDA: Increased over 110% from the previous year to $5.1 million.
- Operating expenses: $16.1 million, 60% of revenues.
- Expects to exceed 100 new ShotSpotter go-live miles this year.
- Strategic partnership with Rekor for license plate recognition technology, PlateRanger.
- FY 2024 revenue guidance: $104 million to $106 million, with an adjusted EBITDA margin of 18% to 20%.
Company Outlook
- Anticipates a slight decrease in gross margin in Q3, with a rebound in Q4.
- Gross margins: Expected to remain around 60% for the full year.
- Q4 revenue: Projected to be sequentially higher than Q3.
- Expected contract renewal with NYPD covering approximately 90 square miles.
Bearish Highlights
- Q3 revenues expected to be lower than Q2 due to the acceleration of professional services.
- A loss of $1.2 million anticipated from the Chicago area.
Bullish Highlights
- CaseBuilder subscription-based revenue grew 700% year-over-year.
- International business shows promise with expansions in Uruguay and South Africa.
- Strategic partnership with Rekor expected to generate significant revenue.
Misses
- There were no specific misses reported in the earnings call.
Q&A Highlights
- Approximately 50% of new ShotSpotter miles expected from expansions, and 50% from new customers.
- 60-70% of the miles going live are related to Tier 4 and Tier 5 cities.
- Sales cycle times are increasing, but the company's performance met expectations.
- New features for the SafePointe solution, including 3D cameras, are in development.
In summary, SoundThinking's second quarter of 2024 has shown considerable growth and expansion, both domestically and internationally. The company's financial health appears strong, with significant increases in revenue and adjusted EBITDA. With the anticipation of new product integrations and contract renewals, SoundThinking seems poised to maintain its upward trajectory in the public safety sector.
Company Conference Call Highlights
Operator: Welcome to SoundThinking's Second Quarter 2024 Conference Call. Present are SoundThinking's CEO, Ralph Clark, and CFO, Alan Stewart.
CEO Remarks: Ralph Clark: Public safety solutions are critical in the current environment. SoundThinking’s integrated SafetySmart platform bridges the public safety gap with digital transformation strategies rooted in data-driven policing.
Financial Performance: Alan Stewart: Second quarter revenues reached a record $27 million, a 22% increase year-over-year. Gross profit was $16.1 million, 60% of revenues. Adjusted EBITDA was up over 110% from the previous year to $5.1 million.
Full Year 2024 Outlook
- Maintaining full-year revenue guidance at $104 million to $106 million, with 18% to 20% adjusted EBITDA margin.
Conclusion
CEO Ralph Clark thanked colleagues for their dedication and positive impact, emphasized continued optimism for future growth, and invited questions.
Q&A Session Highlights
- Expansion in new cities and sectors.
- Continued growth with Tier 4 and Tier 5 cities.
- Anticipated significant revenue generation from strategic partnerships.
Closing Remarks
CEO Ralph Clark expressed gratitude for team efforts and reiterated confidence in future growth.
