Q1 2021 Shotspotter Inc Earnings Call
Good afternoon, and welcome to Shotspotter first quarter 2021 earnings conference call.
My name is Claudia and I will be your operator for today's call.
Joining us are Shotspotter, CEO, Ralph Clark and CFO Alan Stewart.
Please note that certain information discussed on the call. Today will include forward looking statements about future events and shots bothers business strategy and future financial and operating performance.
These forward looking statements are only predictions and are subject to risks uncertainties and assumptions that are difficult to predict and may cause the actual results to differ materially from those stated or implied by those statements.
Certain of these risks and assumptions that are discussed and Shotspotter FCC filings, including its registration statement on form F. One.
These forward looking statements that reflect management's beliefs estimates and predictions as of the date of this live broadcast may 11th 2021 and.
And Shotspotter undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this call.
Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link available and the Investor Relations section of the company's website at IR Dot Shotspotter Dot com.
Now I would like to turn the conference over to Shotspotter CEO Ralph Clark. Please go ahead Sir.
Thank you and good afternoon, everyone and thanks for joining us today I hope everyone out there is doing well and it certainly has been a challenging 14 months for all of us and well significant progress is being made and the fight against COVID-19 and it feels like things might be getting back to some form of normalcy, we recognize that it's not the case.
Everywhere.
I would like to extend my well wishes to all of our families friends and colleagues and customers that had been impacted by COVID-19.
As usual I'll start with a quick overview of the quarter and our operational outlook before al and detailed quarterly results.
We will then take your questions.
After a strong finish to year end 2020, we've continued to build on our momentum with our fast start to 2021.
We're very pleased with our first quarter results, which exceeded our expectations both at the top and bottom line.
We reported record revenues and $15 million up 44 per cent from Q1 of 2020.
And had quarterly adjusted EBITDA of $3 $3 million up 53% year over year once again, demonstrating the unique operating leverage of our business.
During the quarter, we went live in 60 cities with Shotspotter respond, including Detroit, Memphis, Harris County, Texas, Pompano Beach, Florida, Mckeesport, Pennsylvania, and Mansfield, Ohio.
We also expanded our deployments and five cities, including New York City, St. Louis and what's the savanna and Wilmington North Carolina.
Mansfield and Mckeesport are examples of our tier four and tier five go to market initiatives.
We're very pleased with the progress and this market vertical where our pipeline not only continues to grow but it's also exhibiting shorter accelerated sales cycles.
Even with the robust go live activity in Q1, we still entered Q2 with a solid number of new city and expansion projects and the Shotspotter respond deployment pipeline and we expect to go live and the next 60 to 90 days and.
Travel restrictions have eased these and pending projects or keeping our project and customer success teams happily busy introducing new customers to the shotspotter value proposition and helping grow the positive community impact of Shotspotter respond deployments with existing clients that are expanding their footprint.
And it's exciting to vicariously experienced a difference our technology is making and helping improve public safety outcomes and improved community engagement.
Recently, Chief James Craig of Chicago P D held and impromptu precedent and 24 hours after going live with Shotspotter respond D.
<unk> detailed a shotspotter alert with no corresponding 911 call where his officers were dispatched.
After immediate response, and then follow on investigation, including a court issued search warrant based in part on the Shotspotter alert Detroit P. D was successful and uncovering and illegal gun manufacturing sites, where several weapons and equipment used to make weapons receipts and.
And when survey and the location posts incident Detroit P. D. Also discovered over 75 shell casings in the backyard of the subject house, indicating this home had been a neighborhood nuisance per months again without a single 911 call for service. It is only because of the Shotspotter alert, which was probably the result of a test firing.
A crime and being sold that Detroit PD was made aware of this public safety hazard.
Detroit P D successful intervention and shutting down and the criminal operations effectively eliminated a dangerous supply source of untraceable ghost crime guns. It is quite possible those guns could be responsible for terrorizing any number of neighborhoods and around and even beyond Detroit.
Even more from me to our nation is when we hear about the selfless heroes and ball and officers getting to a shotspotter alert where they find a gunshot wound decking and are able to apply lifesaving trauma interventions directly or through scoop and go.
Recently, and Chicago offices Ward and Kevin's, we're responding to a shotspotter alert and found a 13 year old gunshot wound victim as a result of and drive by shooting.
And with no time to waste they scooped up the critically wounded child and transported him to the University of Chicago Medical Center within minutes.
There are quick thinking and fast ACH and likely saved the victims life and certainly earned the gratitude the child's mother, who stated quote I'm highly grateful for you guys. Thank you that was a wonderful job and quote.
We're grateful as well to be able to design and deploy technology that is making a difference and you'd be able to do work that matters is rewarding.
God Bless officers ward and Gibbons.
Who only recently joined the police Department and offers rewards stated she was motivated to become a police officer, because she had a personal calling to help people and a desire to preserve life.
These growing positive narratives against the backdrop of increased violent crime and calls for law enforcement to address price, but to do so and a more efficient effective and equitable fashion is inspiring law enforcement agencies small medium and large across the nation to engage with us as a proven solutions provider.
With a rapidly improving municipal funding environment fueled by federal stimulus and soon to be earmarked revisions. We believe this provides us ample budgetary resources for agencies to procure and use our services and is providing a strong tailwind to our business.
The stimulus dollars go into the cities from the federal government are having a measurable and beneficial impact on our business in terms of new customers. We're seeing prospects that had been on the bubble evaluate and Shotspotter decided to move forward quickly and through the sales funnel process.
And in another case and existing customer who had publicly stated their intention not to renew due to financial constraints get 180 degree pivot and not only decided to redo, but also expand their shotspotter respond and coverage.
We are quite encouraged with our renewal retention efforts overall, including our ability to implement cost of living adjustments or cola increases on a selected number of renewals this year.
We believe we will come and well below our previous estimate of three years to 4% GAAP revenue attrition, which ultimately increases our topline revenue growth.
International However is still presenting some short term challenges to US is our key focus areas and South Africa, and Latin America have not been able to turn the corner completely on mitigating the impact of the virus pandemic.
We continue to appropriately invest some of our time talent and treasure and those markets to protect the key relationships and pipeline we felt the day.
Our goal is to be ready to engage commercially with those opportunities when it becomes practicable.
Shotspotter connector and the other pan appears to be hitting its stride and is showing a very encourage you ramp to date with our existing shotspotter respond and skull base.
And that's better connect traction enables us not only to grow share of wallet within existing customer accounts, but also to add value and make impact beyond acoustic gunshot detection with a robust patrolled management solution.
And we've initiated a focused marketing campaign to bill Shotspotter connect pipeline outside of our installed base and I expect to see some measurable bookings success on that front later this year and early into next year.
I'm happy to report that the integration of our lease acquisition is going very well.
Their senior leadership team is now able to offload much of the administrative menasha involved and being a standalone business by leveraging our back office infrastructure. This has freed them up to invest even more time and energy on their customer facing professional services activities and their work with us on Shotspotter investigate development.
We've been able to quickly form a productive collaborative working relationship rooted in our shared values that has enabled us to launch Shotspotter investigate ahead of schedule.
This morning, we officially announced the availability of the investigative case management solution for demonstration and sales, including new functionality and integration with Shotspotter respond.
Shotspotter investigate completes the third pillar of our precision policing platform and its exactly what police departments need at this critical juncture and extends our total addressable market and Leverages, our strength and entry point from a gunshot detection heritage.
As a result of our performance this quarter and forward momentum we are raising our previous full year 2021 revenue guidance of $58 million to $60 million to $60 million to $61 million, representing 32% revenue growth from 2020 to 2021.
Our guidance range is driven by the improving demand environment for our core Shotspotter response solution, including its stronger retention.
Increased upsell of our Shotspotter connect offering and better visibility into the Q2 and early Q3 go live cadence of both Shotspotter respond and Shotspotter connect.
Alan will review more of the puts and takes that goes into our guidance along with a deeper dive on the results and I look forward to taking your questions. Once he's finished alan over to you.
Thank you Ralph we're very pleased with our performance and the first quarter as Ralph mentioned, we added six new response cities this quarter, but only seeing attrition from one small site secured deployment.
And also had five response city expansions achieved record revenue and record gross profit.
And is noteworthy that there has been some abatement of the budget challenges for our current customers and potential new ones as federal stimulus has brought customers back to the table and early 2020, one and we're pleased with a minor Q1 attrition, which continues the trend of lower than expected seen in 2020, while encouraging shotspotter sales.
Our organization remains focused on generating new and expanding current programs to achieve growth targets well offsetting attrition.
As Ralph mentioned, we are expecting our axle attrition will come and well below our previous estimate of 3% to 4%.
Let me provide more details and the quarter and then I will share some thoughts around the balance of the year.
First quarter revenues were ahead of expectations at $15 million and impressive 44% increase over the $10 5 million and in the first quarter of 2020.
Revenue increased as our deployed miles are up year over year and.
And also recorded our first full year quarter revenue from the lease acquisition.
Gross profit for the first quarter of 2021 was $8 $7 million or 58 per cent of revenue versus $6 $1 million or 58 per cent of revenue for the prior year period.
Gross margin will continue to be mildly impacted as we started to place and crazy sensors at the beginning of the second quarter.
That said, we still expect gross margins to continue to improve as we proceed through 2020 one.
We also saw impressive growth and adjusted EBITDA for the first quarter, which was $3.3 million 53 per cent increase from the $2 $2 million and the first quarter of 2020 as a reminder, adjusted EBITDA is calculated by taking our GAAP net income and adding back interest taxes depreciation.
Asia amortization impairment stock based compensation and acquisition related expenses, turning to our expenses our operating expenses for the first quarter were $8 $5 million or 57 per cent of revenue.
$6 $1 million or 59 per cent of revenue and the first quarter of 2020.
Operating expense increases were primarily related to higher legal and employee related costs as well as incremental costs related to our leads acquisition.
Breaking down our expenses sales and marketing expense for the first quarter was $3 $9 million.
<unk> 26 per cent of total revenues versus $2 5 million or 24 per cent of total revenue for the prior year period.
Our sales and marketing teams continue to build our sales pipeline and expand our marketing efforts, we continue to focus on maintaining high levels of customer satisfaction.
Which helps keep our attrition rates low.
So expect to add sales capacity for investigate product and Q2 to position. This revenue segment for growth in 2020 two.
Our R&D expenses for the second quarter or $1 $7 million or 11% of total revenue compared to $1.4 million 13 per cent of total RASM up to the prior year period.
We continue to invest and increasing the functionality of our products with a focus on cost efficiency.
G&A expenses for the quarter were $2 $9 million 419 per cent of total revenue from <unk>.
$2 million to $3 million or 22 per cent of total revenue for the prior year period the.
The increase and G&A expenses in absolute dollars flow, primarily related to our lease acquisition and an increase and legal costs and costs related to personnel.
Our adjusted net income for the first quarter was $244000 or two cents per share based on $11 6 million basic and two cents per share based on $11 9 million diluted weighted average shares outstanding.
This compares to $13000 or zero cents per share based on 11 3 million basic and 11 7 million diluted weighted average shares outstanding from the prior year period.
Adjusted net income and non-GAAP financial measure is calculated by taking our GAAP net income and back acquisition related expenses.
When accounting for acquisition related expenses, our GAAP net income of $79000 one per share basic and diluted for the quarter.
Deferred revenue at the end of the quarter was $25 million versus $24 6 million at the end of Q4 2020.
We ended the quarter was $10 $9 million and cash and cash equivalents versus 16 million and at the end of the fourth quarter cash.
Cash is slightly lower as we were waiting for some payments of large receivables.
And if you ever see and you received it.
During Q1, we also repurchased approximately 56000 of our shares at an average price of $39.02 for $2 $2 million.
We have no short or long term debt outstanding and as previously discussed and cause.
That's a $20 million line of credit to improve financial flexibility.
Turning to our full year, 2020 went out.
We are raising our full year guidance from $58 million to $60 million to $60 million to $61 million or mileage cadence is proceeding ahead of plan and our attrition appears to be tracking well below a 3% to 4% earlier estimate.
We also expect that we will remain profitable during 2021.
Now back to Ralph for some final thoughts and then we'll be happy to take your questions.
Thank you Alan before we take your questions I would like to express my gratitude to my Shotspotter colleagues and our customers and the communities. They serve you're all doing amazing work that is making our communities safer. Thank you.
We're now ready to take your questions.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.
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To withdraw your question. Please press Star then two.
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Our first question is from Richard Baldry with Roth Capital Partners. Please go ahead.
Thanks.
Congrats on a great quarter.
Sort of curious how the sales and marketing or what was the drivers of the sales and marketing step up it's up about.
Ballpark, 30% sequentially, which is a lot for you guys.
About commissions on large deal head counts coming in and Sir.
And to think about and where that step up came from.
Sure This is Alan.
It was increase in the actual personnel, we versus first quarter of 2020, and we have additional people and the sales and marketing both sales and marketing side. There's also an expansion and the customer success, which a portion of that cost actually does hit sales and marketing as well.
Okay, and you talked me.
Broadly about the pipeline of large deals sort of Mega city deals and whether this move back to and earmark world and all highlighted and release. It. How you think that will play into some of those what do you think there's a potential that could be a sort of a game changer on the funding side.
Yeah. So this is Ralph I'll start now and jump in and we're seeing a nice.
Complement our mix of both small medium and large cities and I always say, we shouldn't discount the medium cities because they can grow and to be fairly substantial deployments of over 15 square miles. We have a number of examples of non tier one or tier zero cities are stepping up to that level, you know Las Vegas Birmingham.
Washington D C et cetera.
I mentioned in my prepared remarks were seeing some very encouraging.
And on tier four and tier five the deals are smaller, but they seem to be happening quicker and we're building the pipeline there and we're also seeing some really interesting I would call. It kind of geographic tipping point. So I think you've heard us talk about geographic tipping points that we've seen now in Ohio.
We're really constructive around what we're seeing in Florida, We think theres a lot of activity in Florida that we can build on our previously successful deployments there and of course, we have our pilot program, that's going very well and are in Houston and we think.
Houston could be the gateway into Texas, which represent a very large opportunity for us.
With respect to earmarks earmarks are making their way back previous when I joined the company back in mid 2010, when earmarks, where available and we got more than our fair share along with our customers have kind of earmarked activities. So we're really quite encouraged by earmarks are coming back because it is and additional funding streams.
And our customers could use to be able to deploy or expand shotspotter. We've got a number of plays and process now with our existing customers and prospects on the earmark truck. So we're really encouraged by that.
And last for me could you talk a little bit about the sales cycle around the connect offering now that it's been in place a little bit it seems like you've had some early successes and there's some deployments to come up soon.
How do you feel about your marketing processes behind that and the sales cycle itself, how it's changing targeting the right sort of municipalities et cetera. Thanks.
Yeah. So we're very much on a learning curve, there and I won't say that we have at 100% figure it out but we've made a lot of progress over the past I would say nine to 12 months and as I mentioned and my prepared comments, we seem to be hitting our stride were really excited about the notion of kind of taking our.
Kind of marketing engine and pointed at two potential prospects that aren't already existing customers and that's going to be really quite exciting and again, we're seeing some really strong.
Traction within our installed base of respond deployments and we think as those customers get some experience and kind of start the virtuous cycle of kind of reference selling which has really been key to our success and respond.
That we should see that business accelerate.
So all good news and Shotspotter connect but again I won't say that we've got a completely dialed in and I think we can definitely still learn some things and do even better but we're excited about the progress we've made to date.
Great. Thanks.
Our next question is from will power with Baird. Please go ahead.
Okay, great. Thanks, Yeah, I guess I'll try a couple of here you know Ralph Yes, it's nice to see what appears to be improving momentum with shotspotter respond and I'm wondering if you could just update us given the trends you're seeing the funding environment you know, how you're thinking about the overall growth opportunity per respond and just the U S over there.
Next you know couple of years say, you know two or three years and any changes and outlet there.
Yeah. So I think we become more positive I think kind of going back nine months or so ago. When we're kind of coming just being presented with the pandemic I think theres a lot of concern around the funding environment, which has changed dramatically of late and more and more positive and I think it's ever been.
And since I've been actually what the company with all the federal stimulus dollars being pointed at a local law enforcement eager and local municipalities that are you know allocating.
Allocating some of those dollars to other police department and that's probably stronger than it's ever been and then you throw earmarks on top of that that's quite encouraging. So that's kind of gone from Oh, Gee, we might be a little bit concerned given the recession and the pandemic two BOP, while we're really positive I think early on to if you go back kind of nine months or so ago with you know call it to defund the.
Police and social unrest and there were some concerns around like how that could play out I mean work you know kind of some of these organized powers are where they are going to effectively frees police departments from kind of moving toward using technology to provide a better public safety outcomes and in fact, the opposite of that has been true I think a lot of these.
Calls for defund, the police ultimately evolve into reforming police and asking police to be more efficient effective and equitable really important on the equitable piece and how they apply their law enforcement resources to co produce public safety outcomes, that's very consistent with them.
Message that we've been on for a number of years, we're just not kind of creating the message to respond to the time, we've always been on the notion that technology can be a very powerful tool to help police departments are better served at risk underserved communities, particularly around gun violence. So that that thing has changed you know like 180 degree.
And from say nine months ago, we're seeing good success again and tier four tier five I think our plans have probably gone as good or even better than we expected when we originally hatched the idea of.
Focusing very specifically on smaller agencies that might have a one or two square mile problem and you know package up something that could be relevant for them and now we're beginning to see some of the tipping point play out there from a and.
And vertical point of view, so tier four tier five police departments and their respective cheese kind of tend to collaborate and talk to one another so we think as we get more traction and some of these smaller cities that should accelerate and then my last point will be again not to underestimate the regional tipping points that are in play.
Because I think those and and Toto really do represent a multiple kind of tier one cities. When you aggregate a bunch of medium sized cities say and the state of Ohio and can represent something fairly big and significant again, we're really really encouraged by what we're seeing and Florida more to come there and again.
We're still in the very nascent stages of working and Texas to our Houston pilot, but the word back and I think they've publicly talk about some of the results that they're generating in Houston and very very positive there and I think if we can break up and the Texas market Theres a number of very very interesting.
Cities and police departments, and Texas, we can partner with on Shotspotter and I'm, just talking about shotspotter respond by the way domestically.
Right, Okay, Yeah, no. It just it feels like more encouraging environment, there I guess.
A second question you know great to see and investigate watch any any color just on.
Where you are from a capability standpoint, I mean is it kind of so called fully baked you have the pieces you want or is there is more and continue to build there.
And then B, maybe just update us or remind us kind of go to market strategy for that now that it's available.
And when do you want to take that one and I'll jump in and sure Yeah, No that's out and so so basically we are are ahead of schedule and investigated versus where we thought we would be at the end of last quarter. So that's that's good news we are looking at potentially selling it based on the number of agencies or the number.
Police and each agency and the pricing.
Will differ based on that so if you have some of those are small number of a lease they can get a investigate might be as low as you know $50000 could be significantly higher than that as we mentioned before for largest cities with a greater number of police that are in their agency.
Yeah.
Go to market.
Yeah, Oh all day.
And it's very very much a direct they're there's very much and direct selling efforts and our we have recently brought on some specific head count to have a vertical focus going specifically at the case management opportunity and fact that new hire just literally started in the past 30 days or so so we're we're being pretty intentional around and I think.
From a feature point of view, we think this is a fully featured very strong case management solution and this is something that we have a lot of experience with <unk> through our colleagues at least that had a number of years supporting a case management solution at a very large tier one or tier zero a police department.
Agency that has effectively been using.
A very intentional and case management solution to drive better outcomes in terms of case closure. So we think we have something really interesting and compelling and unique to offer this marketplace where.
We're already seeing a little bit of inbound chatter just based on our early press release. This morning. This is something that.
The market and really wants them because there's not a police department that's out there that gives and under some amount of pressure to do better on closing cases, because closing cases is what allows you to have victim resolution and really frankly kind of put these perpetrators and probably drive most of the violent crime problem or just cry.
And problem in general are they drive most of them frankly, and so the extent that you can be super focus and get to a intervention that then lead to converge convictions is.
Very important and so we think we're on we're on point with.
And with our case management solution version, one guy though.
Okay. Thank you.
Our next question is from Mike Latimore with Northland Capital markets. Please go ahead.
Great, Thanks, and great quarter there.
You mentioned the sales cycle, improving a little bit was that does that kind of a broad comment across all.
Categories here or is it specific alike, and a tier five cities that sort of thing.
Yeah. My comments, we're very specifically focus on tier four tier five you know smaller miles smaller dollars because we're dealing with smaller and my alza and it's just the you know less bureaucracy, when you're kind of dealing with a smaller agencies from what it appears like I mean, we're again really quite encourage I think the larger deals and larger agents.
It's a lot more people have to be involved and nod their head, yes to move forward and we're finding that to be less true and the tier four to tier five.
Segment, which then reduces the sales cycles.
Yeah.
And then did you give a miles added in the quarter or do you have that number.
No we did not and I got it.
And kind of Yeah go ahead and I'm sorry.
And I'd say no no we didn't but you know obviously, we have mentioned that the acceleration of our core business is is going well and we added six new cities for the quarter. That's that's the first time, we've done that in a long time. So yeah, we're hoping that that sort of tells the story of what we're seeing.
Okay, and then on the case management offering.
And how complicated is the implementation of the sort of easy to do it and get it in and a month or is this are you now.
Real quarter implementation.
Yeah. So we don't have any direct experience with that yet, but our expectation is this is going to be much more of our enterprise.
Solution set will probably need to integrate it with our systems and the like so it will probably be somewhat similar to what we've experienced and shotspotter respond or a shotspotter connect where there is definitely some work that needs to be done to kind of integrate our technology into.
Existing systems and move forward, but it's not too heavy of a lift we believe and we don't think that it would slow us down from being able to have successful deployments.
Yeah.
Great. Thank you.
Our next question is from Matt Pfau with William Blair. Please go ahead.
Hey, Thanks, guys and nice results wanted to ask about the lower churn expectation and is this driven by the fact that you got over some renewals that you thought were potentially at risk to churn and I know you've mentioned one customer that ended up renewing and expanding and that was.
A potential at risk customer or is it more driven by just the conversations you're having with.
Customers that are up for renewal this year and have improved.
Sure. This is Alan basically there's a couple of things I mean, as Ralph mentioned the funny thing is is a lot better than it was in the past, which is a excellent I mean, obviously, even in 2020, we had less than 1% of attrition I'm still expected that the budget challenges might continue.
And you into 'twenty, one so far what we're seeing is that the things are working out pretty well with that so we do we did say that we expect to be much lower than we had mentioned last quarter, which was less and the 3% to 4% it.
It could be significant lesson and 3% to 4% based on what we're seeing now and so it is the budget as well as what our sales team is seeing and and renewals.
Yeah, and I think if I could just maybe add a quick my macro act at a macro comment too I think we're just finding that our solution is very compelling to customers that once they get it deployed and using it it's really really difficult for them to.
And walk away from that kind of once they see the unseen I mean, it's really hard not to say that it's 100%, but I think it's very it's a very sticky solution to be sure.
Yes.
Great and and then just last one from me wanted to ask if you know the supply chain issues and chip shortage are having any impact on your ability to source components or go through this <unk> refresh.
Sure. This is Alan no and and it's mainly because we've been planning for this for a couple of years, we have actually worked with our supplier of sensors.
And all of the parts go into that in pretty much over a year now so we did order some things and the dance and it's turning out to have been excellent decisions there.
Great. Thanks, guys appreciate it.
Our next question is from Ryan Kimbrel with Craig Hallum. Please go ahead.
Hey, guys, congrats and the momentum and strong quarter.
Yeah, and you touched on it and your prepared remarks, and there's obviously been some buzz around the American rescue plan and the 130, Bill and go into state and local municipalities but.
Do you guys have any visibility around you know how much of that might go to local police forces and you know if possible could you quantify the benefit you think you might see from that.
Yeah.
Yeah. This is Rob that's a tough one to answer I think where we have and interest I E. You know existing customers or prospects.
And we're feeling good about or customers and prospects being able to tap and to those dollars to the extent there's need it because I think for many of our customers they have.
Existing resources that can be applied either to new prospects and existing customer what they want to renew or expand so I I don't know that I'd be in a position to comment on the more macro perspective on how municipalities are using those dollars for police versus non police I I do have and observation of general.
And municipal budgets.
Police departments tend to be a significant portion of any cities budget. You can think of in terms of kind of 30% to 50% per.
Safety and general do you want include fire and there so they they tend to get a fair share of.
Our resources when they're applied because they represent fairly big portions of any cities budget.
Okay fair enough that helps and then on the lead side of things can you can you tell us some of the things you're working on and whether it be technological advancements and new capabilities or even from a sales perspective, and how you're doing to push the word out there and gain traction with new customers and that's it for me.
Yeah. So this is al and great honor.
Yeah sure in terms of leads and we feel pretty good with the large customer they have right now in terms of keeping that those amount of services that they're providing their hopefully that grows over time some of the things that it leaves us provide though is potentially available or might be good for other cities as well.
One of the key things there is why we launched investigate the investigate was a product that was originally you know worked on by beads and using that taken a case management, we believe that to be the best way that we'll be able to expand to other cities with a new product.
Great Thanks, guys and congrats again.
Okay.
Once again, if you have a question. Please press Star then one on your telephone.
Our next question is from Brian Rath timber with Imperial capital. Please go ahead.
Great. Thank you very much couple of quick questions on and on the one on funding and two on competition and.
In terms of federal funding coming down and the stimulus.
Like you know upcoming stimulus packages and what do you see a set asides are and do you see set asides are afforded the company.
Yes, it was down and I think I saw and rally or and your question just so I'm clear and your question. Yeah. Just so unclear and your question. When you say set asides do you mean specific dollars allocated to acoustic gunshot detection is that what you mean or.
Well, it's not going to be that specific but what you see maybe set aside to that I share.
I've been doing this a long time I shouldn't have said set aside funding coming down from the federal government that will go to a local and state law enforcement that you will be able to and be a part of how's that.
Yeah.
Yes. This is al Yeah go ahead yeah.
Echo what Ralph said earlier I mean, we do know that the dollars are getting through this some of the states and some of the cities.
We're not 100 per cent sure exactly how that is going to end up and the police departments. Although based on the information that we are seeing and the our existing customers and and new cities. It does seem to be some of it flowing there, but you know again as Ralph mentioned earlier is it's a little too early to know for sure, but so far things seem.
Pretty positive.
Okay. So you don't have any dollar amounts and then a 100 million that you see slowing down that you could yeah, but be part of that you could get funding from directly or indirectly. There's no numbers that you have floating around out there on that.
No because its all done at the city level, it's all done at the city level and the city decides how to allocate those dollars once they get it.
Okay.
Okay. So hopefully less of a dumb question on the next one.
Competition.
And if you could just talk about what you see and I think we will have been brought up before but with alarm dot com and others out there are moving into the space I know alarm com is doing and an indoor shot detection, but anything that you see out there.
And in terms of gunshot location and the competition coming up.
Anything new.
Yeah, I think Alan so basically.
In terms of the the gunshot detection are normal respond we really don't see any other competition, that's been significant certainly and the outdoor side and and you know we haven't been focused on the indoor gunshot detection for quite some time.
We do expect that there might be some competition.
Against Us and the tenacity investigates once there are you know ramped up certainly could act.
There might be some and investigate we'll find out more as we start extending it and actually selling products.
And where would that competition be coming from wood that'd be the large guys like a.
And Motorola or would that be coming from and axon and I mean do you see out there and it's up and comer are the big guys.
Yeah, So I think on and Shotspotter and investigate the form of competition. We would expect to see is our folks that provide a record management systems that are built features I'll call them light teachers not intentional features around investigative case management and so for some for some clients.
And out there that very well could potentially address their needs around case management and we think there's a very large market opportunity of customers that require a much more I would say kind of intentional robust case management solution that is really feature rich that provides for a law.
Lot of a digitization Ottoman station collaboration between various investigative units and the like and unless you really kind of built up that way from the ground up I think it's challenging for a existing RMS provider. That's really focus on record management systems to go off and do that but we're we're kind of going into.
And this market with our eyes wide open and probably the biggest competitor is kind of do nothing although we think we have some very compelling.
And features to offer a agency to get them off of but do not seem to be able to do something that would allow them to drives much higher closure rates and we think that's just a direct a ROI case that frankly, we haven't even had and shotspotter respond and acoustic gunshot detection, there's it's very clear.
To us that and you can you know measurably improve closure rates from you know X percent to Y percent, you're gonna get peoples attention and so we feel pretty good about what we've built and again, we have a lot of experience.
And through our leaves collaboration and are designing developing and supporting a case management solution that again, a large tier one tier zero city, our police agencies using with a great deal of positive outcomes and in fact, they've got one of the higher closure rates out there and it's probably and part.
Due to the integrated case management solution that they are using built by bleach organization that we're now using that same kind of processor capability for our Shotspotter Inc.
That's the gate platform.
Alright, Thank you very much.
Yeah.
Our next question is from Jeff Kessler with Imperial capital. Please go ahead.
I'm sorry, we're tag teaming on this one [laughter] hi, guys.
Yup I got to be fishing.
And not yet not yet I got two more days.
And the question yet.
A lot of questions about yesterday about a lot of money slogging around out there that could potentially go to the cities and I'm. Just wondering instead of maybe looking forward a little bit looking backward and looking at some a couple of and you know it.
Is that where you have lots of mileage or over the last several years have you been with with the with more money to be spent out there at the city level and.
Number two with a fuller set of solutions for.
For for for cities.
And been contacted by any former clients that they they want to see you again and want to hear from you again.
So this is Ralph and I think we mentioned again during our prepared remarks. There was one customer that publicly stated that they were not planning to renew shotspotter as a result of this funding streams coming and they not only reverse their position and are now renewing their shotspotter deployment, but there also.
Planning to expand their shotspotter deployment, I think theres, a case of another customer again, and I was kind of right.
And I wanted to know whether there's there's and there's others. There's others that are out there and then maybe.
I think I think a lot of what we're feeling is kind of embedded hopefully in.
And the way our confidence that you're hopefully hearing about how we execute it to Q1 and how we're thinking about the rest of the year I think we're fairly you.
You know carefully thoughtfully kind of bullish on what we see and I think we've tried to lay out the factors that are kind of supporting our thesis and supporting the idea that we've raised guidance I mean, it again, where we're ahead of plan on Shotspotter respond, we see a number of projects better and the near term.
And product or excuse me Shotspotter respond pipeline from a go live point of view, where the timing is very attractive kind of happening and kind of you know obviously already Q1, and then soon to be Q2, and early Q3 that drives GAAP revenue growth, we're seeing lower attrition that we talked about originally we estimated three per cent I think we've been pretty clear that our.
Adaptations as we're gonna come in and well below that and we're also just seeing a very strong attach rate. If you will to shotspotter connect within our existing installed base that is looking very positive and good and we're hitting our stride there and we're talking about kind of opening up the kimono so to speak.
Inc. To go drive a pipeline for Shotspotter connect outside of our traditional install base of 100 and 'twenty. So customers that are using shotspotter respond and we just talked about we're ahead of plan on announcing shotspotter investigate our case management solution and this is now a demonstrable and.
And install a bowl solution by customers. So we can start the pipeline development process for Shotspotter investigate so all those things together.
They're making us feel pretty good combined with the overall funding environment and poor police Department and police departments that are really rethinking how they go about the business of protecting and serving their communities, which is kind of causing them to maybe stop and their tracks a little bit and look to solution providers like shotspotter and others frankly that can help them.
And be more successful.
And one final question I know you alluded to this but.
With regard to connect them and perhaps you know and there's probably touches and the other parts sputter as well.
What.
And then you you know you do you have you have invested in and and analytics code writers.
And I'm wondering.
If you could open your come onto a little bit and just perhaps talk about some of the direction that these analytics are are trying to are trying to take what types what type of value proposition and what types of what types of solutions do you think you could you can add through.
The use of more code writing.
Yeah, there's no doubt from start.
And I heard Ralph.
No go ahead and after you get excited over me this is great.
And so this is al and I I think I think we know in terms of connect really what we're doing there with the patrol management are the capability that we are providing for the customers there and the future customers is something that they're all looking for I do think that there's probably some additional you know R&D that we could.
Do and would continue to do to make sure that as the city's use them. They say hey could you do this we'd like this as well those are things. We can continue to add to the technology I think investigate and you know we have a pretty good price.
And it's almost 100% ready there, but well see the same thing as we start selling that too and we do have and R&D team both at Leeds and at Shotspotter that has significant number of people that can help us build new things for the products as well.
And because of that data science and Israel virtuous circle.
It provides them with a solution and they find and your customers if they like it enough. They may come back to you.
And ask you for you know for more things to do that you're going to have to obviously that you're going to have to that you're going to have to.
Derive from some from some more analytics and then that could provide some more some more value to what you can charge.
Yeah, No no question and I'm not to comment on the charging piece, but I think data science is core to what we do and I'm, hoping we're where we're not going to be waiting for customers to tell us what they want and I think we're going to hopefully be offering them based on what we see value added solutions I mean data science really kind of started a lot with our machine learning capability around.
And our Shotspotter respond solution, where we're applying data and machine learning data science to be able to drive a much more efficient classification of these pops and booms and banks that work and converting to gunshots. If in fact, they are gunshots using data and data science day and machine learning to do that and certainly as Alan.
Wanted out that's really core to shotspotter connect and in the future. It can be core to frankly Shotspotter Inc.
That's the gate you can imagine it doesn't take you know a great deal of imagination to see once you start collecting a bunch of data and begin to see patterns and things you can offer up recommendations about how to pursue a case based on watching a you know.
Hey, a really productive investigator closed cases, and then be able to apply that to maybe a less experienced or less productive investigators and kind of bring them up to par to make everybody a fantastic detector wouldn't that be awesome and using data to be able to do that and there's a there's an amazing.
Using opportunity there there too to kind of move the ball forward there and that's why it's so exciting to be so focused on case management and it's like we don't have to be distracted with RMS and all the way other folks are they're thinking about adding features to our and that's it might be cash management. We're all in 100% on case management, and we think that's and allow us to innovate.
Forward to not only drive a much more competitive position, but as you suggest possibly being able to charge more down the line as we add more capabilities to the solution set.
Okay, great, Okay and that was.
Great.
Thank you very much I appreciate it.
Yeah and enjoy thank you it's been a great working with you.
Really appreciate it.
At this time. This concludes our question and answer session. If your question was not taken you may contact Shotspotter Investor Relations team by E. Mailing S. S T I at Gateway I, our dot com.
I'd now like to turn the conference back over to Mr. Clark for his closing remarks.
Chris. Thank you very much I really appreciate everyone's questions and their support over the past several quarters are we're really quite anxious to kind of get back to work and close out what we think is going to be an outstanding year for the company and working with police departments are throughout the world hopefully.
And to help them drive better public safety outcomes. Thanks.
Thanks again.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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