Soundthinking, Inc. ((SSTI)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for SoundThinking, Inc. conveyed a mixed sentiment, highlighting both the company’s technological advancements and challenges. While the expansion of ShotSpotter technology and integration innovations were celebrated, concerns were raised over revenue decline and contract delays. Despite these hurdles, the company maintained its financial guidance, signaling confidence in its future performance.
ShotSpotter Expansion
SoundThinking, Inc. reported significant growth in its core technology, ShotSpotter, with deployments in four new cities and expansions in four additional cities. A new security deployment was also added, underscoring the company’s ongoing commitment to expanding its technological footprint.
Strong Pipeline and New Opportunities
The company boasts a robust pipeline valued at over $37 million for the remainder of 2025. New corporate security opportunities have emerged, particularly following the Midtown NYC shooting, indicating potential for future growth.
Integration and Innovation Progress
SoundThinking highlighted advancements in drone integration as a first responder to gunfire incidents. Additionally, the integration between PlateRanger and CrimeTracer represents significant innovation progress.
International Growth
The company is making strides in international markets, with expansions in South America, specifically in Montevideo and Niteroi, Brazil. This reflects SoundThinking’s potential for growth in Latin America.
Financial Guidance
SoundThinking reaffirmed its full-year revenue guidance of $111 million to $113 million, with an adjusted EBITDA margin of 20% to 22%. Despite a decline in Q2 revenue, the company remains optimistic about its financial outlook, supported by a healthy cash balance and strong cash flow generation.
Revenue Decline
The second quarter saw a revenue decline of 4% to $25.9 million, primarily due to the nonrenewal of the Chicago contract. This decline highlights challenges in maintaining revenue growth.
Bookings Shortfall
The company experienced a bookings shortfall, attributed to the timing of large deals. Notably, a $2.5 million CrimeTracer transaction and a 400-unit PlateRanger transaction were deferred to Q3, impacting the current quarter’s performance.
Puerto Rico Contract Delays
SoundThinking faced delays in renewing its Puerto Rico contract due to bureaucratic processes, resulting in a temporary suspension of service and revenue recognition.
Gross Margin Decrease
The gross margin decreased to 53% from 60% in the prior year, driven by increased maintenance costs and software expenses, posing a challenge to profitability.
GAAP Net Loss
The company reported a GAAP net loss of $3.1 million, compared to a net loss of $0.8 million in the previous year, reflecting financial challenges despite strategic investments.
Forward-Looking Guidance
SoundThinking’s forward-looking guidance remains positive, with a reaffirmed revenue range of $111 million to $113 million and an adjusted EBITDA margin of 20% to 22%. The company anticipates growth in annual recurring revenue, despite the loss of a significant contract with the City of Chicago. Strategic investments and a strong cash position support its optimistic outlook.
In summary, SoundThinking, Inc.’s earnings call presented a balanced view of its current position. While the company faces challenges with revenue decline and contract delays, its continued expansion and innovation efforts, along with strong financial guidance, paint a promising picture for the future.