SoundThinking Reports Strong Q2 Growth and Expands ShotSpotter

SoundThinking Reports Strong Q2 2024 Financial Results

SoundThinking (Ticker: SNDT), a prominent provider of integrated public safety solutions, achieved impressive financial results in the second quarter of 2024, reporting a 22% year-over-year revenue increase to $27 million. This success was highlighted by the expansion of their signature acoustic gunshot detection system, ShotSpotter, into new cities and sectors, including commercial establishments and universities.

The company also sees growth in its international market, with expansions underway in Uruguay and South Africa. Furthermore, a strategic partnership with Rekor is anticipated to enhance SoundThinking’s SafetySmart platform starting September 2024.

Adjusted EBITDA surged over 110% to $5.1 million. Although the company expects a slight decrease in revenues for Q3—due to accelerated professional services in Q2—they remain optimistic about Q4 and the full year.

Key Takeaways

• Revenues reached $27 million for Q2 2024, marking a 22% increase compared to the previous year.
• Gross profit was $16.1 million, constituting 60% of total revenue.
• Adjusted EBITDA increased more than 110% to $5.1 million.
• Operating expenses were $16.1 million, equivalent to 60% of revenues.
• SoundThinking anticipates exceeding 100 new ShotSpotter go-live miles this year.
• The company maintains a strategic partnership with Rekor for license plate recognition through the PlateRanger product.
• Full-year revenue guidance is set at $104 million to $106 million, with an adjusted EBITDA margin projected between 18% and 20%.

Company Outlook

• A slight dip in gross margin is expected in Q3, with a recovery forecasted for Q4.
• Full-year gross margins should hover around 60%.
• Q4 revenues are anticipated to exceed those in Q3.
• A contract renewal proposal with the NYPD, covering about 90 square miles, is expected to be concluded before Q4 ends.

Challenges

• Revenues in Q3 may be lower than in Q2 due to professional services acceleration.
• A potential loss of $1.2 million is expected from the Chicago area.

Strengths

• CaseBuilder subscription revenue surged by 700% year-over-year.
• International expansion in Uruguay and South Africa holds promise for growth.
• The partnership with Rekor is expected to generate substantial revenue.

Q&A Highlights

• Approximately 50% of new ShotSpotter deployments are anticipated to stem from expansions, with 60-70% of active miles associated with Tier 4 and Tier 5 cities.
• Sales cycle times are increasing, but overall company performance is aligning with expectations.
• New features for the SafePointe platform, including 3D camera technology, are currently in development.

In summary, the second quarter of 2024 showcased significant growth and expansion for SoundThinking, both domestically and internationally, as financial performance displayed notable revenue and adjusted EBITDA increases. With projected new product launches and contract renewals on the horizon, the company looks well-positioned to continue its upward trajectory in the public safety sector.