ShotSpotter, Inc. (NASDAQ: SSTI), the leader
in acoustic gunshot detection and precision policing solutions that
help law enforcement officials and security personnel prevent and
reduce gun violence, today reported financial results for the third
quarter ended September 30, 2020.
Third Quarter 2020 Financial and Operational
Highlights
- Revenues increased 14% to $11.4 million from $10.0 million for
the third quarter of 2019.
- Gross profit increased 8% to $6.4 million (57% of revenues)
from $6.0 million (60% of revenues) for the third quarter of
2019.
- Net income increased 27% to $566,000 from $446,000 for the
third quarter of 2019.
- Adjusted EBITDA1 increased 44% to $3.3 million from $2.3
million for the third quarter of 2019.
- Realized 3 new “go-live” square miles of coverage and 6 square
miles of attrition during the quarter, bringing the total live
miles to 758 at the end of the quarter.
- Maintained a strong balance sheet with $28.7 million in cash
and cash equivalents at the end of the quarter, and $20 million
available on its line of credit.
- Subsequent to quarter end, signed a definitive agreement to
acquire LEEDS, LLC, a leading investigative case management
software provider, with the transaction expected to close in
November 2020. Upfront consideration of $17.0 million includes
$15.0 million in cash and $2.0 million in ShotSpotter common stock,
plus a potential earnout of $5.0 million over the next two
years.
- Full year 2020 revenue guidance narrowed and slightly increased
to a range of $44.5 million to $45.0 million, representing 10%
growth at the midpoint compared to full year 2019. The company’s
revenue guidance for full year 2020 excludes any contribution from
LEEDS, LLC.1 See the section below titled “Non-GAAP
Financial Measures” for more information about Adjusted EBITDA, and
its reconciliation to GAAP net income.
Management Commentary
“In the third quarter of 2020, we once again
showcased the resilience of our business as we continued to build
momentum coming out of the pandemic lockdowns that began towards
the end of the first quarter,” said ShotSpotter CEO Ralph Clark.
“Our operating strength was reflected by the double-digit growth we
generated in our key metrics, including a 14% increase in revenues,
a 27% increase in net income, and a 44% increase in adjusted
EBITDA. In addition to our strong financial performance in the
third quarter, we maintained a solid balance sheet with $28.7
million in cash and cash equivalents at quarter end, and we expect
to remain profitable for the rest of 2020.
“During the quarter, many of our police
department customers were focused on local pandemic response and
social unrest, which made it challenging for us to put boots on the
ground to deploy new miles. Despite these obstacles, we exited
third quarter with a healthy number of projects from new customer
captures and existing customer expansions, totaling over 50 square
miles. We believe we will be able to take a minimum of 25 of these
new miles live before the end of the year. We also went live with
two new ShotSpotter Connect (formerly Missions) customers and have
a growing pipeline of ShotSpotter Connect prospects, putting us on
track for a strong year-end finish.
“With our pending acquisition of LEEDS, LLC, a
leading investigative case management software provider, we are
building the only complete, end-to-end precision policing platform
that enables data-driven prevention, response along with
investigation and resolution of crime. We look forward to
leveraging our recently expanded platform to drive impact and bring
about even more effective community engagement through precision
policing technology.”
Third Quarter 2020 Financial Results
Revenues for the third quarter of 2020 increased
14% to $11.4 million from $10.0 million for the same period in
2019. The increase in revenues reflects a significant
year-over-year increase in new live miles and customer renewals,
including renewals in the third quarter that were delayed from the
prior quarter.
Gross profit for the third quarter of 2020
increased 8% to $6.4 million (57% of revenues) from $6.0 million
(60% of revenues) for the same period in 2019. The decrease in
gross profit margin was primarily due to equipment write-offs
related to customer attrition and more expensive resources required
to perform equipment maintenance.
Total operating expenses for the third quarter
of 2020 increased 4% to $5.8 million from $5.6 million for the same
period in 2019. The increase in operating expenses was primarily
due to increased insurance costs, legal fees and personnel-related
costs.
Net income totaled $566,000 or $0.05 per basic
and diluted share (based on 11.4 million basic and 11.7 million
diluted weighted average shares outstanding), a 27% increase from
$446,000 or $0.04 per basic and diluted share (based on 11.4
million basic and 11.9 million diluted weighted average shares
outstanding) for the same period in 2019.
Adjusted EBITDA for the third quarter of 2020
increased 44% to $3.3 million from $2.3 million in the same period
last year.
Financial Outlook
The company is narrowing and slightly increasing
the mid-point of its full year revenue outlook to reflect greater
visibility into the timing of adding new miles through the end of
the year along with its continued success in minimizing attrition.
For the full year, excluding contribution from LEEDS, LLC, the
company now expects revenues of $44.5 million to $45.0 million
(previous guidance of $43.5 million to $45.5 million), with
approximately 10% year-over-year revenue growth at the midpoint of
the new range. The company expects to remain GAAP profitable for
the remainder of 2020.
For fiscal 2021, including $10 million from the
company’s pending acquisition of LEEDS, LLC, management currently
expects revenues of $58.0 million to $60.0 million, representing an
increase of between 30% and 34% compared to the midpoint of fiscal
2020 revenue guidance. The company expects to be GAAP profitable
for the full year of 2021. 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’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.
Conference Call
ShotSpotter will hold a conference call today
(November 9, 2020) at 4:30 p.m. Eastern Time (1:30 p.m. Pacific
Time) to discuss these results and provide an update on business
conditions.
ShotSpotter management will host the presentation, followed by a
question and answer period.
U.S. dial-in: 1-877-300-8521International dial-in:
1-412-317-6026Conference ID: 10149645
The conference call will be broadcast
simultaneously and available for replay via the investor section of
the company’s website at www.shotspotter.com.
Please call the conference telephone number 5-10
minutes prior to the start time. An operator will register your
name and organization. If you have any difficulty connecting with
the conference call, please contact ShotSpotter’s investor
relations team at 1-949-574-3860.
A replay of the call will be available after
7:30 p.m. Eastern Time on the same day through December 9,
2020.
U.S. replay dial-in: 1-844-512-2921International replay dial-in:
1-412-317-6671Replay ID: 10149645
Non-GAAP Financial Measures
Adjusted EBITDA: Adjusted
EBITDA, a non-GAAP financial measure, represents the company’s net
income or loss before interest (income) expense, income taxes,
depreciation and amortization and stock-based compensation expense.
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 our 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.
ShotSpotter believes adjusted EBITDA also
provides useful information to investors and others in
understanding and evaluating our operating results in the same
manner as our management and board of directors. For example,
ShotSpotter adjusts EBITDA for stock-based compensation expense
because that expense often varies for reasons that are generally
unrelated to financial and operational performance in any
particular period. Stock-based compensation is utilized by
ShotSpotter 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 based financial
performance measures, in particular net income or loss, and our
other GAAP financial results.
The following table presents a reconciliation of
adjusted EBITDA to net income, the most directly comparable GAAP
measure, for each of the periods indicated (in thousands):
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
(unaudited) |
|
GAAP net income |
|
$ |
566 |
|
|
$ |
446 |
|
|
$ |
1,445 |
|
|
$ |
471 |
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(3 |
) |
|
|
(131 |
) |
|
|
(101 |
) |
|
|
(335 |
) |
Income taxes |
|
|
8 |
|
|
|
(7 |
) |
|
|
(1 |
) |
|
|
33 |
|
Depreciation and amortization |
|
|
1,495 |
|
|
|
1,239 |
|
|
|
4,207 |
|
|
|
3,641 |
|
Stock-based compensation expense |
|
|
1,196 |
|
|
|
716 |
|
|
|
3,246 |
|
|
|
2,375 |
|
Adjusted EBITDA |
|
$ |
3,262 |
|
|
$ |
2,263 |
|
|
$ |
8,796 |
|
|
$ |
6,185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 business plans,
the anticipated impact of the COVID-19 pandemic, international
expansion, expectations regarding future sales and expenses, our
ability to capitalize on market opportunities, the ability to
achieve near and long-term growth and profitability objectives,
anticipated timing and volume of customer contract renewals, and
revenue and GAAP profitability guidance for full year 2020. Words
such as "expect," "anticipate," "should," "believe," "target,"
"project," "goals," "estimate," "potential," "predict," "may,"
"will," "could," "intend," 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 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 address the business and other
impacts and uncertainties associated with the COVID-19 pandemic,
maintain and increase sales; 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 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; and the company’s ability to
maintain and enhance its brand, as well as other risk factors
included in the company’s most recent annual report on Form 10-K
and quarterly report on Form 10-Q 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 ShotSpotter, Inc.
ShotSpotter (NASDAQ: SSTI) provides acoustic
gunshot detection and precision-policing solutions to help law
enforcement officials and security personnel prevent and reduce gun
violence and make communities, campuses and facilities safer. The
company’s flagship product, ShotSpotter® Flex™, is the leading
gunshot detection, location and forensic system trusted by over 100
cities. ShotSpotter® Connect™ (previously known as ShotSpotter
Missions™) uses artificial intelligence-driven analysis to
dynamically direct patrol resources to areas of greatest risk and
helps to improve officer accountability and deter crime.
ShotSpotter has been designated a Great Place to
Work® Company.
Company Contact:
Mary Hentges, Interim CFOShotSpotter, Inc. +1 (510) 794-3100
mhentges@shotspotter.com
Investor Relations Contacts:
Matt Glover
Gateway Investor Relations+1 (949)
574-3860SSTI@gatewayir.com
JoAnn HorneMarket Street Partners+1 (415)
445-3240jhorne@marketstreetpartners.com
ShotSpotter,
Inc.Condensed Consolidated Statements of
Operations(In thousands, except share and per
share data)(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Revenues |
|
$ |
11,350 |
|
|
$ |
9,984 |
|
|
$ |
33,085 |
|
|
$ |
29,837 |
|
Costs |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
4,745 |
|
|
|
4,019 |
|
|
|
13,440 |
|
|
|
12,300 |
|
Impairment of property and equipment |
|
|
161 |
|
|
|
— |
|
|
|
161 |
|
|
|
— |
|
Total costs |
|
|
4,906 |
|
|
|
4,019 |
|
|
|
13,601 |
|
|
|
12,300 |
|
Gross profit |
|
|
6,444 |
|
|
|
5,965 |
|
|
|
19,484 |
|
|
|
17,537 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
2,400 |
|
|
|
2,426 |
|
|
|
7,237 |
|
|
|
7,494 |
|
Research and development |
|
|
1,375 |
|
|
|
1,358 |
|
|
|
4,104 |
|
|
|
4,026 |
|
General and administrative |
|
|
2,040 |
|
|
|
1,803 |
|
|
|
6,627 |
|
|
|
5,669 |
|
Total operating expenses |
|
|
5,815 |
|
|
|
5,587 |
|
|
|
17,968 |
|
|
|
17,189 |
|
Operating income |
|
|
629 |
|
|
|
378 |
|
|
|
1,516 |
|
|
|
348 |
|
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
3 |
|
|
|
131 |
|
|
|
101 |
|
|
|
335 |
|
Other expense, net |
|
|
(58 |
) |
|
|
(70 |
) |
|
|
(173 |
) |
|
|
(179 |
) |
Total other income (expense), net |
|
|
(55 |
) |
|
|
61 |
|
|
|
(72 |
) |
|
|
156 |
|
Income before income taxes |
|
|
574 |
|
|
|
439 |
|
|
|
1,444 |
|
|
|
504 |
|
Provision (benefit) for income taxes |
|
|
8 |
|
|
|
(7 |
) |
|
|
(1 |
) |
|
|
33 |
|
Net income |
|
$ |
566 |
|
|
$ |
446 |
|
|
$ |
1,445 |
|
|
$ |
471 |
|
Net income per share, basic |
|
$ |
0.05 |
|
|
$ |
0.04 |
|
|
$ |
0.13 |
|
|
$ |
0.04 |
|
Net income per share,
diluted |
|
$ |
0.05 |
|
|
$ |
0.04 |
|
|
$ |
0.12 |
|
|
$ |
0.04 |
|
Weighted average shares used in
computing net income per share, basic |
|
|
11,423,079 |
|
|
|
11,449,946 |
|
|
|
11,383,860 |
|
|
|
11,275,195 |
|
Weighted average shares used in
computing net income per share, diluted |
|
|
11,727,112 |
|
|
|
11,917,382 |
|
|
|
11,718,770 |
|
|
|
11,865,319 |
|
ShotSpotter,
Inc.Condensed Consolidated Balance
Sheets(In thousands)
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
28,666 |
|
|
$ |
24,550 |
|
Accounts receivable and contract asset |
|
|
6,866 |
|
|
|
13,883 |
|
Prepaid expenses and other current assets |
|
|
2,286 |
|
|
|
1,764 |
|
Total current assets |
|
|
37,818 |
|
|
|
40,197 |
|
Property and equipment, net |
|
|
15,359 |
|
|
|
16,556 |
|
Operating lease right-of-use
assets |
|
|
761 |
|
|
|
556 |
|
Goodwill |
|
|
1,379 |
|
|
|
1,379 |
|
Intangible assets, net |
|
|
226 |
|
|
|
249 |
|
Other assets |
|
|
1,343 |
|
|
|
1,634 |
|
Total assets |
|
$ |
56,886 |
|
|
$ |
60,571 |
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
818 |
|
|
$ |
1,179 |
|
Deferred revenue, short-term |
|
|
20,388 |
|
|
|
26,360 |
|
Accrued expenses and other current liabilities |
|
|
4,241 |
|
|
|
4,885 |
|
Total current liabilities |
|
|
25,447 |
|
|
|
32,424 |
|
Deferred revenue, long-term |
|
|
255 |
|
|
|
598 |
|
Other liabilities |
|
|
456 |
|
|
|
298 |
|
Total liabilities |
|
|
26,158 |
|
|
|
33,320 |
|
Stockholders' equity |
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
|
— |
|
Common stock |
|
|
57 |
|
|
|
57 |
|
Additional paid-in capital |
|
|
125,113 |
|
|
|
122,907 |
|
Accumulated deficit |
|
|
(94,134 |
) |
|
|
(95,579 |
) |
Accumulated other comprehensive loss |
|
|
(308 |
) |
|
|
(134 |
) |
Total stockholders' equity |
|
|
30,728 |
|
|
|
27,251 |
|
Total liabilities and stockholders' equity |
|
$ |
56,886 |
|
|
$ |
60,571 |
|
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