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 third quarter ended September
30, 2022.
Third Quarter 2022 Financial and Operational
Highlights
- Revenues increased
29% to $18.8 million from $14.5 million for the same quarter of
2021.
- Gross profit
increased 28% to $10.3 million (55% of revenues) from $8.0 million
(55% of revenues) for the same quarter of 2021.
- GAAP net income was
$4.0 million, compared to GAAP net loss of $949,000 for the same
quarter of 2021.
- Adjusted EBITDA1
increased 37% to $3.1 million (16% of revenues), compared to $2.2
million (15% of revenues) for the same quarter of 2021.
- Went “live” with 10
new customer logos, including seven Respond cities, two security
customers, and one Investigate agency as well as expanded in six
Respond cities.
- Healthy balance
sheet with $9.6 million in cash and cash equivalents and
approximately $15.0 million available on the company’s line of
credit at the end of the quarter.
- Narrowed full year
2022 revenue guidance range to $81 million to $82 million,
representing approximately 40% year-over-year growth at the
midpoint compared to 2021, and maintained full year 2022 Adjusted
EBITDA margin guidance of 19% to 21%.
- Introduced full
year 2023 revenue guidance of $94 million to $96 million,
representing approximately 17% year-over-year growth at the
midpoint compared to full year 2022 revenue guidance, and full year
2023 Adjusted EBITDA margin guidance of 24% to 26%.
1 See the section below titled “Non-GAAP
Financial Measures” for more information about Adjusted EBITDA and
its reconciliation to GAAP net income.
Third Quarter 2022 Financial Results
Revenues for the third quarter of 2022 increased
29% to $18.8 million from $14.5 million for the same quarter of
2021. The increase in revenues was due to an increase in new live
miles, customer expansions and the Forensic Logic acquisition.
Gross profit for the third quarter of 2022
increased 28% to $10.3 million (55% of revenues), compared to $8.0
million (55% of revenues) for the same period in 2021.
Total operating expenses for the third quarter
of 2022 were $6.2 million, compared to $8.9 million for the same
period in 2021. Operating expenses increased primarily due to
higher personnel costs but were offset by a contingent
consideration adjustment (reduction of $5.4 million) related to the
potential earnout payments associated with the Forensic Logic
acquisition, which have been reduced for 2022 and 2023 due to
delays in certain expected contracts.
Net income for the third quarter of 2022 totaled
$4.0 million, or $0.33 per basic and diluted share (based on 12.2
million basic and 12.4 million diluted weighted average shares
outstanding, respectively), compared to a net loss of $949,000, or
$(0.08) per basic and diluted share (based on 11.7 million basic
and diluted weighted average shares outstanding, respectively), for
the same period in 2021. The improvement in net income was
primarily due to a $5.4 million gain related to the contingent
consideration adjustment for the Forensic Logic acquisition.
Adjusted EBITDA for the third quarter of 2022
increased 37% to $3.1 million from $2.2 million for the same period
in 2021.
At quarter-end, the company had $9.6 million in
cash and cash equivalents, $20.2 million in accounts receivable and
contract asset, net, and approximately $15.0 million available on
its line of credit.
Common Stock Repurchase
ProgramIn November 2022, the company’s board of directors
approved a new stock repurchase program for up to $25.0 million of
the company’s common stock. The shares may be repurchased from time
to time in open market transactions, in privately negotiated
transactions or by other methods in accordance with federal
securities laws. The actual timing, number and value of shares
repurchased under the program will be determined by management in
its discretion and will depend on a number of factors, including
the market price of the company’s common stock, general market and
economic conditions and applicable legal requirements. The stock
repurchase program does not obligate the company to purchase any
particular amount of common stock and may be suspended or
discontinued at any time.
Financial Outlook
The company narrowed its full year 2022 revenue
guidance range to $81 million to $82 million, representing
approximately 40% year-over-year growth at the midpoint compared to
2021, and maintained its full year 2022 Adjusted EBITDA margin
guidance of 19% to 21%.
The company currently expects its ARR to exceed
$80 million at the start of 2023, which is significantly higher
than the $63 million that the company started with in 2022. This
$80 million of ARR includes over $17 million related to the
company's product solutions other than its Respond gunshot
detection solution.
The company introduced its full year 2023
revenue guidance of $94 million to $96 million, representing
approximately 17% year-over-year growth at the midpoint compared to
full year 2022 revenue guidance, and full year 2023 Adjusted EBITDA
margin guidance of 24% to 26%.
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
“We delivered strong financial results across
the board in the third quarter, highlighted by 29% revenue growth
and solid Adjusted EBITDA and GAAP net income profitability,” said
President and CEO Ralph Clark. “The robust growth we generated in
Q3 was driven by continued expansion of ShotSpotter Respond in six
cities as well as going ‘live’ with 10 new customer logos,
including seven Respond cities, two security customers and one
Investigate agency. These wins continue to demonstrate both the
effectiveness of our growth strategy and customer success efforts
as well as the increasing demand we are seeing for our Precision
Policing Platform™. With our success year-to-date and new city and
expansion projects underway, we are on track to achieve our goal of
going ‘live’ with approximately 120 miles domestically in
2022.”
“We enter the fourth quarter with solid bookings
and a robust pipeline of new business. We are in the process of
executing contracts for over 70 new Respond miles and a significant
eight-figure, multi-year Investigate transaction. Additionally, we
recently secured a multi-year campus safety agreement with a major
university through a new reseller partnership focused on colleges
and universities. Collectively, this is the highest level of new
miles and bookings we have secured since going public in 2017,
giving us solid momentum heading into 2023.”
“The growing demand and constructive funding
environment for our platform and services is structural. We believe
these factors will enable us to drive robust revenue growth,
operating leverage and margin expansion in 2023 and beyond.”
Conference CallShotSpotter will
hold a conference call today, November 8, 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: 10171019
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 December 8, 2022.
U.S. replay dial-in: 1-844-512-2921International replay dial-in:
1-412-317-6671Replay ID: 10171019
Non-GAAP Financial Measures
Adjusted net income (loss):
Adjusted net income (loss), 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 its 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 its operating results in
the same manner as its 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 its other GAAP financial results.
Annual Recurring Revenue
("ARR"): ARR is calculated for a year based on the
expected GAAP revenue for the year from contracts that are in
effect on January 1st of such year, assuming all such contracts
that are due for renewal during the year renew as expected on or
near their renewal date, and including contracts executed during
the year after January 1st, but for which GAAP revenue recognition
starts January 1st of the year.
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 September 30, |
|
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
(unaudited) |
|
|
(unaudited) |
|
GAAP net income (loss) |
$ |
4,033 |
|
|
$ |
(949 |
) |
|
$ |
7,430 |
|
|
$ |
(1,120 |
) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
Acquisition related expenses |
|
— |
|
|
|
— |
|
|
|
101 |
|
|
|
165 |
|
Change in fair value of contingent consideration |
|
(5,405 |
) |
|
|
— |
|
|
|
(8,842 |
) |
|
|
— |
|
Adjusted net loss |
$ |
(1,372 |
) |
|
$ |
(949 |
) |
|
$ |
(1,311 |
) |
|
$ |
(955 |
) |
Adjusted net loss per share,
basic |
$ |
(0.11 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.08 |
) |
Adjusted net loss per share,
diluted |
$ |
(0.11 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.08 |
) |
Weighted average shares used in
computing adjusted net loss per share, basic |
|
12,167,632 |
|
|
|
11,680,413 |
|
|
|
12,156,980 |
|
|
|
11,634,422 |
|
Weighted average shares used in
computing adjusted net loss per share, diluted |
|
12,167,632 |
|
|
|
11,680,413 |
|
|
|
12,156,980 |
|
|
|
11,634,422 |
|
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 September 30, |
|
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
(unaudited) |
|
|
(unaudited) |
|
GAAP net income (loss) |
$ |
4,033 |
|
|
$ |
(949 |
) |
|
$ |
7,430 |
|
|
$ |
(1,120 |
) |
Less: |
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
(11 |
) |
|
|
(8 |
) |
|
|
(26 |
) |
|
|
(28 |
) |
Income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49 |
|
Depreciation and amortization |
|
2,286 |
|
|
|
1,745 |
|
|
|
6,824 |
|
|
|
5,097 |
|
Stock-based compensation expense |
|
2,157 |
|
|
|
1,453 |
|
|
|
6,145 |
|
|
|
4,322 |
|
Acquisition related expenses |
|
— |
|
|
|
— |
|
|
|
101 |
|
|
|
165 |
|
Change in fair value of contingent consideration |
|
(5,405 |
) |
|
|
— |
|
|
|
(8,842 |
) |
|
|
— |
|
Adjusted EBITDA |
$ |
3,060 |
|
|
$ |
2,241 |
|
|
$ |
11,632 |
|
|
$ |
8,485 |
|
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 and 2023, operating momentum and sales pipeline,
the funding environment for the company’s products, the leverage of
the company's operating model, and the expectation for revenue
growth, operating leverage and margin expansion in 2023 and beyond.
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 September 30, |
|
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Revenues |
$ |
18,775 |
|
|
$ |
14,547 |
|
|
$ |
60,005 |
|
|
$ |
44,184 |
|
Costs |
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
8,473 |
|
|
|
6,520 |
|
|
|
25,130 |
|
|
|
19,137 |
|
Impairment of property and equipment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
25 |
|
Total costs |
|
8,473 |
|
|
|
6,520 |
|
|
|
25,130 |
|
|
|
19,162 |
|
Gross profit |
|
10,302 |
|
|
|
8,027 |
|
|
|
34,875 |
|
|
|
25,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
5,357 |
|
|
|
4,018 |
|
|
|
16,727 |
|
|
|
11,881 |
|
Research and development |
|
2,409 |
|
|
|
1,703 |
|
|
|
7,570 |
|
|
|
5,156 |
|
General and administrative |
|
3,866 |
|
|
|
3,217 |
|
|
|
11,710 |
|
|
|
8,900 |
|
Change in fair value of contingent consideration |
|
(5,405 |
) |
|
|
— |
|
|
|
(8,842 |
) |
|
|
— |
|
Total operating expenses |
|
6,227 |
|
|
|
8,938 |
|
|
|
27,165 |
|
|
|
25,937 |
|
Operating income (loss) |
|
4,075 |
|
|
|
(911 |
) |
|
|
7,710 |
|
|
|
(915 |
) |
Other income (expense),
net |
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
11 |
|
|
|
8 |
|
|
|
26 |
|
|
|
28 |
|
Other expense, net |
|
(53 |
) |
|
|
(46 |
) |
|
|
(306 |
) |
|
|
(184 |
) |
Total other income (expense),
net |
|
(42 |
) |
|
|
(38 |
) |
|
|
(280 |
) |
|
|
(156 |
) |
Income (loss) before income
taxes |
|
4,033 |
|
|
|
(949 |
) |
|
|
7,430 |
|
|
|
(1,071 |
) |
Provision for income taxes |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
49 |
|
Net income (loss) |
$ |
4,033 |
|
|
$ |
(949 |
) |
|
$ |
7,430 |
|
|
$ |
(1,120 |
) |
Net income (loss) per share,
basic |
$ |
0.33 |
|
|
$ |
(0.08 |
) |
|
$ |
0.61 |
|
|
$ |
(0.10 |
) |
Net income (loss) per share,
diluted |
$ |
0.33 |
|
|
$ |
(0.08 |
) |
|
$ |
0.60 |
|
|
$ |
(0.10 |
) |
Weighted average shares used
in computing adjusted net income (loss) per share, basic |
|
12,167,632 |
|
|
|
11,680,413 |
|
|
|
12,156,980 |
|
|
|
11,634,422 |
|
Weighted average shares used
in computing adjusted net income (loss) per share, diluted |
|
12,357,136 |
|
|
|
11,680,413 |
|
|
|
12,306,839 |
|
|
|
11,634,422 |
|
ShotSpotter,
Inc.Condensed Consolidated Balance
Sheets(In thousands)
|
September 30, |
|
|
December 31, |
|
|
2022 |
|
|
2021 |
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
9,604 |
|
|
$ |
15,636 |
|
Accounts receivable and contract asset, net |
|
20,199 |
|
|
|
16,134 |
|
Prepaid expenses and other current assets |
|
4,018 |
|
|
|
2,701 |
|
Total current assets |
|
33,821 |
|
|
|
34,471 |
|
Property and equipment, net |
|
22,027 |
|
|
|
17,390 |
|
Operating lease right-of-use
assets |
|
3,467 |
|
|
|
2,323 |
|
Goodwill |
|
23,171 |
|
|
|
2,816 |
|
Intangible assets, net |
|
27,850 |
|
|
|
13,564 |
|
Other assets |
|
2,430 |
|
|
|
1,740 |
|
Total assets |
$ |
112,766 |
|
|
$ |
72,304 |
|
Liabilities and Stockholders'
Equity |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable |
$ |
1,214 |
|
|
$ |
1,587 |
|
Deferred revenue, short-term |
|
34,896 |
|
|
|
26,235 |
|
Accrued expenses and other current liabilities |
|
9,007 |
|
|
|
6,680 |
|
Total current liabilities |
|
45,117 |
|
|
|
34,502 |
|
Deferred revenue, long-term |
|
2,073 |
|
|
|
474 |
|
Other liabilities |
|
6,354 |
|
|
|
3,513 |
|
Total liabilities |
|
53,544 |
|
|
|
38,489 |
|
Stockholders' equity |
|
|
|
|
|
Common stock |
|
61 |
|
|
|
58 |
|
Additional paid-in capital |
|
150,855 |
|
|
|
132,780 |
|
Accumulated deficit |
|
(91,355 |
) |
|
|
(98,785 |
) |
Accumulated other comprehensive loss |
|
(339 |
) |
|
|
(238 |
) |
Total stockholders' equity |
|
59,222 |
|
|
|
33,815 |
|
Total liabilities and stockholders' equity |
$ |
112,766 |
|
|
$ |
72,304 |
|
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