ShotSpotter Reports Record Second Quarter 2018 Financial Results
Quarterly Revenues Increase 53% to a Record of $8.9 Million
NEWARK, Calif., Aug. 02, 2018 (GLOBE NEWSWIRE) -- ShotSpotter, Inc. (NASDAQ: SSTI), the leader in gunshot detection solutions that help law enforcement officials and security personnel identify, locate and deter gun violence, today reported financial results for the second quarter ended June 30, 2018.
Second Quarter 2018 Financial and Operational Highlights
- Revenues increased 53% to a record of $8.9 million from $5.8 million for the same period in 2017.
- Gross margin was 56%, up from 54% for the second quarter of 2017.
- Net loss totaled $370,000, a significant improvement from net loss of $4.3 million for the same period in 2017.
- Adjusted EBITDA(1) totaled $1.2 million, an improvement from a loss of $3.1 million for the same period in 2017.
- Added 61 net new “go-live” square miles of coverage during the quarter.
- Tightens 2018 revenue guidance to $33.5 million to $34.0 million, representing anticipated growth of 42% (mid-range) compared to 2017.
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(1) See the section below titled “Non-GAAP Financial Measures” for more information about adjusted EBITDA.
Management Commentary
“Second quarter of 2018 was another strong period for ShotSpotter, marking our sixth consecutive quarter of revenue growth over 35% for the company,” said Ralph Clark, CEO of ShotSpotter. “Our record topline, which was up 53% year-over-year, was driven by continued expansion with new and existing customers, who are leveraging our data-driven policing technology to more effectively deter and prevent gun violence. During the second quarter we went live with initial deployments in two new cities and one new campus, expanded coverage in four existing cities, and turned on 61 net new ‘go-live’ miles, ending the quarter with 583 miles live. We are grateful to partner with agencies and help them better provide equal protection to all communities and thus reduce gun violence.”
Second Quarter 2018 Financial Results
Revenues for the second quarter of 2018 increased 53% to a record $8.9 million from $5.8 million for the same period in 2017. The increase in revenues was due to growth in the number of miles covered, which was driven by expanded deployments for current customers as well as the addition of new customers.
Gross profit for the second quarter of 2018 was $5.0 million (56% of revenues), a 61% increase from $3.1 million (54% of revenues) for the same period in 2017. Second quarter of 2018 gross margin was negatively impacted by a write-off of three contracts related to indoor deployments as a result of the company’s decision to no longer directly provide an indoor solution as part of its service offering. The company is evaluating the disposition of the remaining sensor inventory related to its indoor sensor business.
Total operating expenses in the second quarter of 2018 increased 61% to $5.3 million from $3.3 million in the same period last year. The increase in operating expenses was due primarily to the company’s higher headcount, particularly in sales and marketing, as the company continued to expand its international sales efforts and customer success initiatives.
Net loss totaled $370,000, or $0.03 per share (based on 10.6 million basic and diluted weighted average shares outstanding). This was an improvement from net loss of $4.3 million, or $1.16 per share (based on 3.7 million basic and diluted weighted average shares outstanding), for the same period in 2017.
Adjusted EBITDA (Earnings before interest expense, taxes, depreciation, amortization and stock-based compensation) for the second quarter of 2018 totaled $1.2 million, compared to a loss of $3.1 million in the same period last year.
As of June 30, 2018, the company had cash, cash equivalents and restricted cash of $14.9 million, which was up slightly from $14.7 million at the end of the previous quarter. The company remained debt free.
Financial Outlook
For the full year of 2018, the company is tightening its revenue outlook to $33.5 million to $34.0 million, up from the company’s prior guidance of $33.0 to $34.0 million. Additionally, the company reaffirms its commitment to achieve the Company’s first quarter of GAAP profitability by the fourth quarter of 2018.
The company’s financial outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Safe Harbor Statement” below.
Conference Call
ShotSpotter will hold a conference call today, August 2, 2018 at 4:30 p.m. Eastern Daylight Time (1:30 p.m. Pacific Daylight 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.
Date: Thursday, August 2, 2018
Time: 4:30 p.m. Eastern Daylight Time (1:30 p.m. Pacific Daylight Time)
U.S. dial-in: 1-855-327-6837
International dial-in: 1-631-891-4304
The conference call will be broadcast simultaneously and available for replay via the investor section of the company’s website at www.shotspotter.com.
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
A replay of the call will be available after 7:30 p.m. Eastern time on the same day through September 2, 2018.
U.S. replay dial-in: 1-844-512-2921
International replay dial-in: 1-412-317-6671
Replay ID: 10005235
Non-GAAP Financial Measures
Adjusted EBITDA. ShotSpotter discloses the following non-GAAP financial measure in this release and the earnings call referencing this press release: Adjusted EBITDA, which represents the company’s net loss before interest (expense) income, income taxes, depreciation and amortization and stock-based compensation expense. 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 our 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 EBITDA also provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. For example, ShotSpotter adjusts EBITDA for stock-based compensation expense because that expense often varies for reasons that are generally unrelated to financial and operational performance in any 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.
Adjusted EBITDA is not a measure calculated in accordance with GAAP. Accordingly, use of adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of ShotSpotter’s financial results as reported under GAAP. Some of these limitations are: (1) adjusted EBITDA does not reflect the potentially dilutive impact of equity-based compensation; and (2) other companies, including companies in our industry, may calculate adjusted EBITDA or similarly titled measures differently, which reduces the usefulness of the metric as a comparative measure. Because of these and other limitations, you should consider adjusted EBITDA alongside our GAAP-based financial performance measures, in particular net loss, and our other GAAP financial results.
The following table presents a reconciliation of adjusted EBITDA to net loss, the most directly comparable GAAP measure, for each of the periods indicated:
| Three Months Ended June 30, | Six Months Ended June, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| GAAP net loss | $ | (369 | ) | $ | (4,306 | ) | $ | (1,586 | ) | $ | (5,867 | ) | ||||
| Less: | ||||||||||||||||
| Interest (income) expense | (22 | ) | 445 | (49 | ) | 810 | ||||||||||
| Income taxes | 18 | — | 44 | — | ||||||||||||
| Depreciation and amortization | 958 | 729 | 1,775 | 1,408 | ||||||||||||
| Stock-based compensation expense | 648 | 52 | 1,075 | 75 | ||||||||||||
| Adjusted EBITDA | $ | 1,233 | $ | (3,080 | ) | $ | 1,259 | $ | (3,574 | ) | ||||||
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 the company’s overall business, total addressable market, international expansion, expectations regarding future sales and expenses, and revenue expectations and guidance for 2018. 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 maintain and increase sales; 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 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; and the company’s ability to maintain and enhance its brand, as well as other risk factors included including the company’s most recent annual report on Form 10-K and other SEC filings. These forward-looking statements are made as of the date of this press release and were 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 is the leader in gunshot detection solutions that help law enforcement officials and security personnel identify, locate and deter gun violence. ShotSpotter is based in Newark, California and offers its solutions on a SaaS-based subscription model worldwide with customers currently in the U.S. and South Africa.
Company Contact:
Alan Stewart, CFO
ShotSpotter, Inc.
+1 (510) 794-3100
astewart@shotspotter.com
Investor Relations Contacts:
JoAnn Horne
Market Street Partners
+1 (415) 445-3240
jhorne@marketstreetpartners.com
Matt Glover
Liolios Group, Inc.
+1 (949) 574-3860
SSTI@liolios.com
ShotSpotter, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Revenues | $ | 8,927 | $ | 5,836 | $ | 15,834 | $ | 10,398 | ||||||||
| Costs | ||||||||||||||||
| Cost of revenues | 3,589 | 2,687 | 6,897 | 5,362 | ||||||||||||
| Impairment of property and equipment | 361 | — | 361 | — | ||||||||||||
| Total costs | 3,950 | 2,687 | 7,258 | 5,362 | ||||||||||||
| Gross profit | 4,977 | 3,149 | 8,576 | 5,036 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | 2,195 | 1,369 | 3,749 | 2,477 | ||||||||||||
| Research and development | 1,255 | 928 | 2,491 | 1,962 | ||||||||||||
| General and administrative | 1,824 | 971 | 3,852 | 1,901 | ||||||||||||
| Total operating expenses | 5,274 | 3,268 | 10,092 | 6,340 | ||||||||||||
| Operating loss | (297 | ) | (119 | ) | (1,516 | ) | (1,304 | ) | ||||||||
| Other income (expense), net | ||||||||||||||||
| Remeasurement of convertible preferred stock warrant liability | — | (3,725 | ) | — | (3,725 | ) | ||||||||||
| Interest income (expense), net | 22 | (445 | ) | 49 | (810 | ) | ||||||||||
| Other expense, net | (76 | ) | (17 | ) | (75 | ) | (28 | ) | ||||||||
| Total other income (expense), net | (54 | ) | (4,187 | ) | (26 | ) | (4,563 | ) | ||||||||
| Loss before income taxes | (351 | ) | (4,306 | ) | (1,542 | ) | (5,867 | ) | ||||||||
| Provision for income taxes | 18 | — | 44 | — | ||||||||||||
| Net loss | $ | (369 | ) | $ | (4,306 | ) | $ | (1,586 | ) | $ | (5,867 | ) | ||||
| Net loss per share, basic and diluted | $ | (0.03 | ) | $ | (1.16 | ) | $ | (0.15 | ) | $ | (2.19 | ) | ||||
| Weighted average shares used in computing net loss per | 10,589,038 | 3,724,760 | 10,329,874 | 2,678,787 | ||||||||||||
| share, basic and diluted | ||||||||||||||||
ShotSpotter, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
| June 30, | December 31, | |||||||
| 2018 | 2017 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 14,811 | $ | 19,567 | ||||
| Accounts receivable and unbilled revenue | 6,359 | 3,928 | ||||||
| Prepaid expenses and other current assets | 1,704 | 839 | ||||||
| Restricted cash | 60 | 30 | ||||||
| Total current assets | 22,934 | 24,364 | ||||||
| Property and equipment, net | 15,134 | 11,596 | ||||||
| Intangible assets, net | 95 | 95 | ||||||
| Other assets | 1,662 | 143 | ||||||
| Total assets | $ | 39,825 | $ | 36,198 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 2,732 | $ | 1,627 | ||||
| Deferred revenue, short-term | 16,230 | 15,780 | ||||||
| Accrued expenses and other current liabilities | 3,127 | 3,815 | ||||||
| Total current liabilities | 22,089 | 21,222 | ||||||
| Deferred revenue, long-term | 1,212 | 2,710 | ||||||
| Other liabilities | 91 | 104 | ||||||
| Total liabilities | 23,392 | 24,036 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 53 | 48 | ||||||
| Additional paid-in capital | 112,639 | 109,708 | ||||||
| Accumulated deficit | (96,156 | ) | (97,595 | ) | ||||
| Accumulated other comprehensive income (loss) | (103 | ) | 1 | |||||
| Total stockholders' equity | 16,433 | 12,162 | ||||||
| Total liabilities and stockholders' equity | $ | 39,825 | $ | 36,198 | ||||
ShotSpotter, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| Six Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,586 | ) | $ | (5,867 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 1,775 | 1,408 | ||||||
| Impairment of property and equipment | 361 | — | ||||||
| Stock-based compensation | 1,075 | 75 | ||||||
| Amortization of debt issuance costs | — | 84 | ||||||
| Remeasurement of convertible preferred stock warrant liability | — | 3,725 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and unbilled revenue | (2,431 | ) | (666 | ) | ||||
| Prepaid expenses and other assets | (568 | ) | (201 | ) | ||||
| Accounts payable | 1,105 | (307 | ) | |||||
| Accrued expenses and other current liabilities | (701 | ) | (216 | ) | ||||
| Deferred revenue | 134 | 3,049 | ||||||
| Net cash provided by (used in) operating activities | (836 | ) | 1,084 | |||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (5,643 | ) | (2,870 | ) | ||||
| Investment in intangible and other assets | (26 | ) | (24 | ) | ||||
| Net cash used in investing activities | (5,669 | ) | (2,894 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from initial public offering, net commissions and discounts | — | 32,426 | ||||||
| Proceeds from notes payable | — | 1,500 | ||||||
| Payment of debt issuance costs | — | (30 | ) | |||||
| Payments of offering costs | — | (846 | ) | |||||
| Proceeds from exercise of stock options | 450 | 10 | ||||||
| Proceeds from exercise of warrants | 989 | — | ||||||
| Proceeds from Employee Stock Purchase Plan | 421 | — | ||||||
| Net cash provided by financing activities | 1,860 | 33,060 | ||||||
| Increase (decrease) in cash and cash equivalents | (4,645 | ) | 31,250 | |||||
| Effect of exchange rate on cash and cash equivalents | (81 | ) | 5 | |||||
| Cash, cash equivalents and restricted cash at beginning of year | 19,597 | 3,895 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 14,871 | $ | 35,150 | ||||
Released August 2, 2018