SOUNDTHINKING, INC. Q2 FY2025 earnings call

• Second quarter revenues were $25.9 million, in line with expectations but a sequential decline from Q1.
• Took ShotSpotter live in four new cities and expanded in four additional cities, added one new security deployment.
• Bookings fell short of internal targets due to timing of large deals, but closed marquee transactions.
• Have a diversified pipeline over $37 million for remainder of 2025.
• Made progress in drone integration with ShotSpotter, integration of PlateRanger LPR solution and CrimeTracer.
• Progress in weapons detection, including SafePointe's campus transaction and progress in healthcare vertical due to AB 2975.
• Addressed NYPD contract status, Chicago gunshot detection RFP progress, and Puerto Rico contract suspension.

SoundThinking reported second quarter revenues of $25.9 million, a sequential decline from Q1. Gross profit was $13.8 million, or 53% of revenue, compared to $16.1 million or 60% of revenue in the prior-year period. Adjusted EBITDA was $3.4 million compared to $5.1 million in the second quarter of 2024. Revenues were 4% lower than the second quarter of 2024, with a $2.8 million revenue loss from the nonrenewal of the contract with the City of Chicago, but offset by other solutions. Gross margin was lower due to additional maintenance of existing ShotSpotter deployments and expenses related to software licensing for NYPD.

• Reaffirmed full year revenue guidance of $111 million to $113 million.
• Reaffirmed adjusted EBITDA guidance range of 20% to 22%.
• Anticipates annual recurring revenue (ARR) to increase from $95.6 million at the beginning of 2025 to approximately $110 million at the beginning of 2026, despite loss from Chicago contract nonrenewal.

• Puerto Rico contract suspension due to bureaucratic delays preventing interim extension.
• Potential litigation costs and reputational damage from NYPD contract termination, though unlikely short of extreme city financial distress.
• Bureaucratic delays affecting contract extensions and revenue recognition.

Q: Talk about the SafePointe pipeline and market response.

A: SafePointe pipeline is healthy and growing, focused on healthcare and casinos, with opportunities in California due to AB 2975.

Q: Talk about international development.

A: Excited about South America developments, including Montevideo expanding, Niteroi, Brazil deployment, and opportunities in Mexico, South Africa.

Q: Post-quarter cash step-up.

A: Due to seasonal receivable collections and continued cash generation.

Q: SafePointe pipeline and international.

A: SafePointe pipeline healthy, international opportunities in South America, Brazil, Mexico, South Africa.

Q: Chicago RFP timing and short-list.

A: No definitive short-list number, but in live demo phase in September, making good progress.

Q: NYPD contract sublicensing expenses and recapture.

A: COGS expense about $400k per quarter, revenue about $250k per quarter, saving on commission.

Q: CrimeTracer deployment update.

A: Conservatively Q4, but working to bring to Q3, ARR approximately $2.4 million.