ShotSpotter, Inc. (NASDAQ: SSTI), a leader in
precision-policing technology solutions that enable law enforcement
to more effectively respond to, investigate and deter crime, today
reported financial results for the second quarter ended June 30,
2022.
Second Quarter 2022 Financial and Operational
Highlights
- Revenues increased
37% to $20.0 million from $14.6 million for the same quarter of
2021.
- Gross profit
increased 40% to $11.6 million (58% of revenues) from $8.3 million
(57% of revenues) for the same quarter of 2021.
- GAAP net income was
$3.0 million, compared to GAAP net loss of $250,000 for the same
quarter of 2021.
- Adjusted EBITDA1
increased 39% to $4.1 million (20% of revenues), compared to $2.9
million (20% of revenues) for the same quarter of 2021.
- Went “live” with
ShotSpotter Respond in four new cities and expanded in six current
customer sites.
- Introduced
ShotSpotter GCM™ (Gun Crime Management), a first-of-its-kind
digital case management solution that automates the process by
which key information is input, captured and used to identify
associated gun crime cases leading to the identification of persons
of interest.
- Repurchased 49,369
common shares at an average price per share of $29.35 for a total
purchase price of $1.45 million.
1 See the section below titled “Non-GAAP
Financial Measures” for more information about Adjusted EBITDA and
its reconciliation to GAAP net income.
Second Quarter 2022 Financial Results
Revenues for the second quarter of 2022
increased 37% to $20.0 million from $14.6 million for the same
quarter of 2021. The increase in revenues is due to an increase in
new live miles, customer expansions, increased revenues from LEEDS
and revenues from Forensic Logic.
Gross profit for the second quarter of 2022
increased 40% to $11.6 million (58% of revenues), compared to $8.3
million (57% of revenues) for the same period in 2021.
Total operating expenses for the second quarter
of 2022 were $8.4 million, compared to $8.5 million for the same
period in 2021. Operating expenses for the second quarter were
relatively flat as compared to the same period in 2021. Although
second quarter operating expenses included higher personnel-related
costs as well as costs associated with Forensic Logic, which was
acquired in January 2022, operating expenses for the second quarter
were offset by a contingent consideration adjustment (reduction of
$3.4 million) related to the potential earnout payments related to
the Forensic Logic acquisition, which have been reduced for 2022
but increased for 2023 due to a delay in some expected
contracts.
Net income for the second quarter of 2022
totaled $3.0 million, or $0.25 per basic and $0.24 per diluted
share (based on 12.1 million basic and 12.3 million diluted
weighted average shares outstanding), compared to a net loss of
$250,000, or $(0.02) per basic and diluted share (based on 11.6
million basic and diluted weighted average shares outstanding), for
the same period in 2021. The improvement in net income was
primarily due to a $3.4 million gain related to the contingent
consideration adjustment related to the Forensic Logic
acquisition.
Adjusted EBITDA for the second quarter of 2022
totaled $4.1 million, compared to $2.9 million for the same period
in 2021.
At quarter-end, the company had $3.4 million in
cash and cash equivalents, $28.0 million in accounts receivable and
contract assets, net, and approximately $15.0 million available on
its line of credit. The sequential decrease in cash and cash
equivalents was primarily due to investments the company made in
sensors, inventory and repurchasing its stock, as well as
non-recurring legal fees. As of August 9, 2022, ShotSpotter had
more than $14.0 million of cash and cash equivalents.
Financial Outlook
The company reiterated its full year 2022
revenue guidance of $81.0 million to $83.0 million, representing
approximately 41% year-over-year growth at the midpoint compared to
2021, and full year 2022 Adjusted EBITDA margin guidance of 19% to
21%.
The company has not reconciled its Adjusted
EBITDA outlook to GAAP net income due to the uncertainty and
variability of interest income, income taxes, depreciation and
amortization, stock-based compensation expenses and acquisition
related expenses, which are reconciling items between Adjusted
EBITDA and GAAP net income. Because the company cannot reasonably
predict such items, a reconciliation to forecasted GAAP net income
is not available without unreasonable effort. Such items could have
a significant impact on the calculation of GAAP net income. For
more information, see “Non-GAAP Financial Measures” 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.
Management Commentary
“The second quarter marked a strong consecutive
period for ShotSpotter,” said CEO Ralph Clark. “Our financial
performance in Q2 was highlighted by a 37% increase in revenues to
$20.0 million and a 39% increase in Adjusted EBITDA as compared to
the same quarter in 2021. Our Adjusted EBITDA profitability
demonstrates the efficient operating leverage of our business
model. During Q2, we went ‘live’ with ShotSpotter Respond in four
new cities and expanded in six current customer sites,
demonstrating the effectiveness of our growth strategy and customer
success efforts, as well as the stickiness of our solutions
platform.”
“More broadly, we are seeing growing demand for
our precision-policing solutions as law enforcement agencies of all
sizes grapple with rising crime and depleted sworn officer
resources. These agencies view ShotSpotter’s solution as a
mission-critical component of any crime prevention strategy. We
entered the second half of the year with a solid pipeline of 12 new
cities and eight expansion Respond projects under contract,
including two recently won international contracts. We are working
to take those projects live over the next six months in addition to
new contract wins expected this quarter. Outside of our strong
Respond pipeline, our Forensic Logic division is finalizing a
substantive seven figure annual SaaS contract with the State of
Massachusetts.”
“As we enter the second half of 2022, we believe
ShotSpotter is well positioned with strong market demand drivers in
a large and under-penetrated market, with what we believe are the
most compelling product offerings in our industry and a highly
efficient business model demonstrated by industry low customer
acquisition costs and high gross subscription renewal rates. These
factors give us a high degree of confidence in our profitable
growth outlook for 2023 and the years ahead.”
Conference CallShotSpotter will
hold a conference call today, August 9, 2022, 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: 1-877-326-9228International dial-in:
1-412-542-4180Conference ID: 10169424
A live audio webcast of the conference call will
be available in listen-only mode simultaneously and available for
replay here and via the investor relations section of the company’s
website at www.shotspotter.com.
Please call the conference telephone number five
minutes prior to the start time. An operator will register your
name and organization.
A replay of the call will be available after 7:30 p.m. Eastern
time on the same day through September 9, 2022.
U.S. replay dial-in: 1-844-512-2921International replay dial-in:
1-412-317-6671Replay ID: 10169424
Non-GAAP Financial Measures
Adjusted net income: Adjusted
net income, a non-GAAP financial measure, represents the company’s
net income (loss) before acquisition-related expenses, including
adjustments to the company's contingent consideration
obligation.
Adjusted EBITDA: Adjusted
EBITDA, a non-GAAP financial measure, represents the company’s net
income (loss) before interest (income) expense, income taxes,
depreciation, amortization and impairment, stock-based compensation
expense and acquisition-related expenses, including adjustments to
the company's contingent consideration obligation. 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 net income (loss)
and Adjusted EBITDA also provide 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 and acquisition-related expenses because such expenses
often vary for reasons that are generally unrelated to financial
and operational performance in a 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’s financial performance measures, in particular net income
(loss), or our other GAAP financial results.
The following table presents a reconciliation of
adjusted net income (loss) to GAAP net income (loss), the most
directly comparable GAAP measure, for each of the periods indicated
(in thousands, except share and per share data):
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
GAAP net income (loss) |
|
$ |
3,010 |
|
|
$ |
(250 |
) |
|
$ |
3,397 |
|
|
$ |
(171 |
) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition related expenses |
|
|
— |
|
|
|
— |
|
|
|
101 |
|
|
|
165 |
|
Change in fair value of contingent consideration |
|
|
(3,437 |
) |
|
|
— |
|
|
|
(3,437 |
) |
|
|
— |
|
Adjusted net income (loss) |
|
$ |
(427 |
) |
|
$ |
(250 |
) |
|
$ |
61 |
|
|
$ |
(6 |
) |
Adjusted net income (loss) per
share, basic |
|
$ |
(0.04 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.01 |
|
|
$ |
(0.00 |
) |
Adjusted net income (loss) per
share, diluted |
|
$ |
(0.04 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
Weighted average shares used in
computing adjusted net income per share, basic |
|
|
12,145,993 |
|
|
|
11,627,546 |
|
|
|
12,151,450 |
|
|
|
11,606,194 |
|
Weighted average shares used in
computing adjusted net income per share, diluted |
|
|
12,145,993 |
|
|
|
11,627,546 |
|
|
|
12,304,767 |
|
|
|
11,606,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table presents a reconciliation of
Adjusted EBITDA to net income (loss), the most directly comparable
GAAP measure, for each of the periods indicated (in thousands):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
(unaudited) |
|
|
(unaudited) |
|
GAAP net income (loss) |
|
$ |
3,010 |
|
|
$ |
(250 |
) |
|
$ |
3,397 |
|
|
$ |
(171 |
) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
(7 |
) |
|
|
(9 |
) |
|
|
(15 |
) |
|
|
(20 |
) |
Income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49 |
|
Depreciation and amortization |
|
|
2,356 |
|
|
|
1,675 |
|
|
|
4,538 |
|
|
|
3,352 |
|
Stock-based compensation expense |
|
|
2,133 |
|
|
|
1,494 |
|
|
|
3,988 |
|
|
|
2,869 |
|
Acquisition related expenses |
|
|
— |
|
|
|
— |
|
|
|
101 |
|
|
|
165 |
|
Change in fair value of contingent consideration |
|
|
(3,437 |
) |
|
|
— |
|
|
|
(3,437 |
) |
|
|
— |
|
Adjusted EBITDA |
|
$ |
4,055 |
|
|
$ |
2,910 |
|
|
$ |
8,572 |
|
|
$ |
6,244 |
|
|
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 estimated revenue and Adjusted
EBITDA for 2022, operating momentum and sales pipeline, the degree
to which the company's market is under-penetrated, the funding
environment for the company’s products, the company's customer
acquisition costs and the leverage of the company's operating
model. 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;
the company’s ability to maintain and increase sales, including
sales of the company’s newer product lines; 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; the potential effects of negative publicity; 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 Inc. (NASDAQ: SSTI) brings the power
of digital transformation to law enforcement. We are trusted by
more than 200 customers and 2,500 agencies to drive more efficient,
effective, and equitable public safety outcomes and help make
communities safer and healthier. We are a leader in precision
policing technology solutions and our platform includes the
flagship product, ShotSpotter Respond™, the leading gunshot
detection and alerting system; investigative tools that immediately
generate leads and streamline case management to accelerate crime
solving and improve clearance rates; and patrol management software
that dynamically directs patrol resources to areas of greater risk
to more effectively deter crime. ShotSpotter has been designated a
Great Place to Work® Company.
Company Contact:
Alan Stewart, CFOShotSpotter, Inc. +1 (510) 794-3100
astewart@shotspotter.com
Investor Relations Contacts:
Matt GloverGateway Investor Relations+1 (949)
574-3860SSTI@gatewayir.com
ShotSpotter,
Inc.Condensed Consolidated Statements of
Operations(In thousands, except share and per
share data)(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues |
|
$ |
20,016 |
|
|
$ |
14,624 |
|
|
$ |
41,230 |
|
|
$ |
29,637 |
|
Costs |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
8,367 |
|
|
|
6,317 |
|
|
|
16,657 |
|
|
|
12,617 |
|
Impairment of property and
equipment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25 |
|
Total costs |
|
|
8,367 |
|
|
|
6,317 |
|
|
|
16,657 |
|
|
|
12,642 |
|
Gross profit |
|
|
11,649 |
|
|
|
8,307 |
|
|
|
24,573 |
|
|
|
16,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
5,794 |
|
|
|
3,928 |
|
|
|
11,370 |
|
|
|
7,863 |
|
Research and development |
|
|
2,534 |
|
|
|
1,740 |
|
|
|
5,161 |
|
|
|
3,453 |
|
General and
administrative |
|
|
3,555 |
|
|
|
2,812 |
|
|
|
7,844 |
|
|
|
5,683 |
|
Change in fair value of
contingent consideration |
|
|
(3,437 |
) |
|
|
— |
|
|
|
(3,437 |
) |
|
|
— |
|
Total operating expenses |
|
|
8,446 |
|
|
|
8,480 |
|
|
|
20,938 |
|
|
|
16,999 |
|
Operating income (loss) |
|
|
3,203 |
|
|
|
(173 |
) |
|
|
3,635 |
|
|
|
(4 |
) |
Other income (expense),
net |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
7 |
|
|
|
9 |
|
|
|
15 |
|
|
|
20 |
|
Other expense, net |
|
|
(200 |
) |
|
|
(86 |
) |
|
|
(253 |
) |
|
|
(138 |
) |
Total other income (expense),
net |
|
|
(193 |
) |
|
|
(77 |
) |
|
|
(238 |
) |
|
|
(118 |
) |
Income (loss) before income
taxes |
|
|
3,010 |
|
|
|
(250 |
) |
|
|
3,397 |
|
|
|
(122 |
) |
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49 |
|
Net income (loss) |
|
$ |
3,010 |
|
|
$ |
(250 |
) |
|
$ |
3,397 |
|
|
$ |
(171 |
) |
Net income (loss) per share,
basic |
|
$ |
0.25 |
|
|
$ |
(0.02 |
) |
|
$ |
0.28 |
|
|
$ |
(0.01 |
) |
Net income (loss) per share,
diluted |
|
$ |
0.24 |
|
|
$ |
(0.02 |
) |
|
$ |
0.28 |
|
|
$ |
(0.01 |
) |
Weighted average shares used
in computing adjusted net income per share, basic |
|
|
12,145,993 |
|
|
|
11,627,546 |
|
|
|
12,151,450 |
|
|
|
11,606,194 |
|
Weighted average shares used
in computing adjusted net income per share, diluted |
|
|
12,309,701 |
|
|
|
11,627,546 |
|
|
|
12,304,767 |
|
|
|
11,606,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ShotSpotter,
Inc.Condensed Consolidated Balance
Sheets(In thousands)
|
|
June 30, |
|
|
December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,426 |
|
|
$ |
15,636 |
|
Accounts receivable and contract asset, net |
|
|
27,953 |
|
|
|
16,134 |
|
Prepaid expenses and other current assets |
|
|
2,199 |
|
|
|
2,504 |
|
Total current assets |
|
|
33,578 |
|
|
|
34,274 |
|
Property and equipment, net |
|
|
20,271 |
|
|
|
17,409 |
|
Operating lease right-of-use
assets |
|
|
3,692 |
|
|
|
2,323 |
|
Goodwill |
|
|
23,171 |
|
|
|
2,816 |
|
Intangible assets, net |
|
|
28,536 |
|
|
|
13,564 |
|
Other assets |
|
|
2,714 |
|
|
|
1,918 |
|
Total assets |
|
$ |
111,962 |
|
|
$ |
72,304 |
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
2,661 |
|
|
$ |
1,587 |
|
Deferred revenue, short-term |
|
|
32,858 |
|
|
|
26,235 |
|
Accrued expenses and other current liabilities |
|
|
10,036 |
|
|
|
6,680 |
|
Total current liabilities |
|
|
45,555 |
|
|
|
34,502 |
|
Deferred revenue, long-term |
|
|
2,898 |
|
|
|
474 |
|
Other liabilities |
|
|
10,648 |
|
|
|
3,513 |
|
Total liabilities |
|
|
59,101 |
|
|
|
38,489 |
|
Stockholders' equity |
|
|
|
|
|
|
Common stock |
|
|
61 |
|
|
|
58 |
|
Additional paid-in capital |
|
|
148,449 |
|
|
|
132,780 |
|
Accumulated deficit |
|
|
(95,388 |
) |
|
|
(98,785 |
) |
Accumulated other comprehensive loss |
|
|
(261 |
) |
|
|
(238 |
) |
Total stockholders' equity |
|
|
52,861 |
|
|
|
33,815 |
|
Total liabilities and stockholders' equity |
|
$ |
111,962 |
|
|
$ |
72,304 |
|
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