SoundThinking, Inc. Q3 FY2025 earnings call

• Revenues were lower than expected due to absence of ShotSpotter renewal in Puerto Rico and delay of a Crime Tracer booking. - Began realigning sales organization, refreshing go-to-market playbook, and tightening forecasting. - ShotSpotter had deployments in new cities, universities, and customer expansions. - AI used in customer success to anticipate issues. - Crime Tracer Gen 3 launching next week with advanced AI features. - SafePoint gaining momentum due to California AB 2975 mandate. - Data for Good initiative operating in multiple cities. - Dronex integration and PlateRanger ALPR evolution. - Chicago gunshot detection RFP process nearing conclusion with positive developments.

Third-quarter revenues were $25.1 million. Gross profit was $13 million (54% of revenue). Adjusted EBITDA was $3.5 million. Sales and marketing expenses in Q3 were $5.8 million (23% of total revenue), down from $7.2 million (27%) in prior year. R&D expenses were $4.1 million (16% of total revenue), up from $3.4 million (13%). G&A expenses were $5.8 million (23% of total revenue), up from $5.7 million (22%). Deferred revenue as of 09/30/2025 was $43.9 million, similar to $43.5 million at end of Q2 2025.

• Lowered full-year 2025 revenue guidance from $111-113M to $104M, adjusted EBITDA from 20-22% to 14-15% due to delays in key contracts. - 2026 revenue guidance set at $114-116M, adjusted EBITDA margin 18-20%.

• Delays in key contracts such as Puerto Rico renewal, Brazil CapEx deployment, and Crime Tracer booking. - Sales execution challenges impacting conversion of pipeline to bookings. - Uncertainty in timing of certain deployments affecting revenue and EBITDA projections.

Q: Richard Baldry asked about the lower margin guidance despite 2026 revenue being above 2025 guidance.

A: Alan Stewart said it's due to not including Chicago and Brazil CapEx, and being conservative on adjusted EBITDA.

Q: Richard Baldry asked about fourth-quarter revenue expectations.

A: Alan Stewart said expected to be relatively flat.

Q: Richard Baldry asked about sales leadership change and improving sales process.

A: Ralph Clark said they made organizational changes, refreshed playbook, and are seeing early improvements.

Q: Vijay Devar asked about pipeline of gunshot detection deals and sales cycle.

A: Ralph Clark said strong pipeline of new customers, SafePoint deals have faster cycle than ShotSpotter.

Q: Trevor Walsh asked about DFR integration and its influence on pipeline.

A: Ralph Clark said DFR is an open standard integration, agnostic to platforms.

Q: Trevor Walsh asked about gross margin slip.

A: Alan Stewart said related to delayed deals, cost of goods sold and operating expenses adjusted.

Q: Max Michaelis asked about 2025-2026 ARR guidance and Crime Tracer delay.

A: Alan Stewart said ARR guidance will be in Q4 earnings, Ralph Clark said Crime Tracer delay is due to state-level bureaucracy.

Q: Jeremy Hamblin asked about EBITDA gap.

A: Alan Stewart said due to high gross margins of delayed contracts not being realized.

Q: Jeremy Hamblin asked about Puerto Rico renewal and catch-up revenues.

A: Alan Stewart said Puerto Rico doesn't backdate, Ralph Clark said Snelling reaffirmed support for Chicago gunshot detection.