Q3 2023 SoundThinking Inc Earnings Call
Hum.
[music].
Good afternoon, and welcome to some thinking third quarter 2023 conference call. My name is Earl and I will be your operator for today's call. Joining us are so I'm thinking 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 sound.
King's 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 are discussed in <unk>.
I'm thinking of SEC filings, including its registration statement on form S. One. These forward looking statements reflect management's beliefs estimates and predictions as of the date of this live broadcast November 7th 2023, and sound thinking 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 in the Investor Relations section at the company's website at IR Dot some thinking dot com now I would like to turn the conference call over to Sam I'm thinking CEO Ralph Clark Sir. Please proceed.
Pete.
Good afternoon, and thank you for joining our Q3 2023 conference call.
After Ellen and I share uptake will be happy to take your questions I'm extremely proud of our ongoing efforts to build a powerful and growing business franchise.
Our collective work is helping to save lives and make communities safer.
With respect to doing work that matters and expressing your values it didn't get any better than that.
The solutions are safety smart platform are seeing increased adoption across the board as agencies are dealing with increased demands for service and tackling a measurable uptick in crime all the while facing diminished head count resources.
And with the recent acquisition of safe point and their AI enabled weapons detection capability.
Now addressing a larger tam opportunity than we were previously targeting.
What is exciting about this new accelerated growth pace of our company are new and large adjacent buying centers outside of traditional local law enforcement that can now harnessed the power technology and enhancing public safety initiatives.
We hope investors prospects and partners will be paying close attention to our progress.
Turning to our Q3 2023 financial performance, we achieved record revenues of $24 million compared to Q3, 2022 revenue of $18 $8 million, representing 28% year over year growth.
Adjusted EBITDA was $4 3 million or 18% of revenues compared to $3 1 million or 16% of revenues for Q3 2022.
Adjusted EBITDA grew approximately 40% year over year and approximately 79% sequentially from last quarter Q2 2023.
We also had another phenomenal quarter of Shotspotter go live activity with seven New city captures Sioux City expansion, a one university expansion this quarter that puts us at 20, New city logo deployment year to date.
The new city local deployments for this quarter include Chelsea, Massachusetts, Fayetteville, North Carolina, Baltimore County, Maryland, Suffolk County, New York.
In Missouri, and Montgomery County, and Darby, Pennsylvania.
We're on pace to surpass a 140 go live miles this year, representing over $9 million and net new Shotspotter AAR are in 2023.
We plan to finish out the year by targeting the remaining 17 square mile Buildout that Suffolk County, and we expect to go live with at least three New City agency deals that were booked in Q3, including its Gambia, Florida, Chester, Pennsylvania, as well as the strategically important tier one city of Philadelphia, which comes to us through the Philadelphia.
Via housing authority acquisition.
Overall revenue retention remained strong with only $41000 of GAAP attrition from the non renewal of a secure campus deployment at UC Irvine.
The funding environment remained strong, including federal and local budget dollars that are being allocated to public safety.
We're particularly excited about the new state funding initiatives in New Jersey, and New York that are allocating dollars to acoustic gunshot detection.
We believe that the new Jersey opportunity alone could unlock as many as 20 square miles of acoustic gunshot detection in the first half of 2024 through new city deployments and current contracted city expansions.
We continue to be positive about the role our technology plays in helping Chicago PD improve response time and save lives and underreported community gunfire.
The recent Mary Johnson selection and unanimous city Council approval of the appointment of superintendents selling is a strong positive for the city of Chicago and our partnership.
Separate tenants now he has a strong track record in advocating for defending and leveraging technology.
Force multiplier in helping Chicago PD.
Warrant obligation to serve and protect as well as improved community Trust and engagement.
We also know Nick Johnson recently presented 2020 for budget did not include any deep funding of the police at some asset that's within Chicago had been calling for it.
In fact, the police budget was increased two 9% to approximately $2 billion, which importantly also included funding for the continued use of acoustic gunshot detection technology.
We remain vigilant and hope to continue our successful Chicago partnership.
And our current contracted term through February 2024.
I would point out that our Chicago partnership has thrived under three different administrations and over six superintendents over an eight year period.
Moving on to international we are thrilled about our Q3 booking in Uruguay with the city of marker for data. This will be our first deployment in Spanish speaking South America, and we believe there are significant expansion opportunities within other cities in Uruguay. Once we demonstrate success in most of the day off.
There has also been renewed interest in our solutions from several municipalities across Brazil, where he recently arrange for Brazilian delegation to visit Cape Town South Africa.
We were encouraged with the strong Shotspotter endorsement received from Cape Town. The URL Committee member J P. Smith, and South African police leadership on how acoustic gunshot detection has been a game changer in addressing gangs and gun violence. We believe we are taking important and positive steps forward on REIT securities footprint in Brazil.
<unk> early next year.
We've also made net forward progress on our Puerto Rico Public housing authority partnership we were selected for a new contract under their RFP, but unfortunately, HUD, who is the appropriate or determined our award constituted a sole source transaction given we were the only bidder.
Therefore, not technically fundable under this specific appropriations vehicle.
In the meantime, we've entered into a new interim agreement with a price increase of over 20%, while they determined next steps of either leveraging another municipalities RFP reissuing, a new RFP or pursuing a sole source justification with HUD.
We are further encouraged by the noticeable shift in the national debate between policing of crime and disorder versus defunding the police.
Several mirrors in the cities say lead our publicly pivoting and prioritizing public safety as they respond to communities Vocalized concerns.
In Oakland the local chapter of the in double HCP called on city leaders to declare a state of emergency due to rising crime.
Recently, the Seattle Times editorial board explicitly called for the support of near Bruce Harold's $1 8 million anti crime proposal that principally included gunshot detection system.
Since I last reported in our earnings call, we continue to invest in widening our competitive moat.
Setting us apart with key new capabilities that support increased law enforcement transparency and effectiveness, we plan to rollout a MSRP increase of 7% going forward from $70000 per square mile to $75000 per square mile. Starting in 2024 for cities greater than tier four tier five.
It's been over three years since our last price increase and given the improved capabilities. We have made available we felt a modest price increase was not only reasonable but time.
The pipeline of deal execution for our other solutions on the safety Smart platform also continues to grow we closed a $900000 deal combining crime tracer encase filter to a large state department of justice customer charged with investigating insurance fraud.
We also executed a deal with Chicago PD to pilot crime tracer for six months with the expectation it will convert into a mid to high six figure deal transaction in the latter half of 2024.
We're also pleased to announce the recent contract execution and formal project kickoff. This month of a major case builder deployment within New York City Department of Corrections.
Our prime contractor has received purchase orders from the N Y C. D O C totaling $13 $5 million or sound thinking professional services and an annual subscription service to case building one.
Once all pose are processed by the city of New York and FHA. This project will represent a $18 million contract for sound. Thank you.
We're very excited about partnering with New York City Department of corrections in their digital transformation efforts and becoming the standard for investigative solutions for the correction sub vertical.
We consider our internal affairs and use of force investigative modules.
Must have for corrections in investigations that include not only the Chinese but also corrections officers at subjects.
We've been very intentional in the integration of safe point into sound thinking safety Smart platform.
Our near term focus is to add capacity to pipeline growth and go to market sales motion for this compelling solutions.
Our strategy includes adding too many <unk> and for outside sales director hires the combined 2024 quota for this team is targeted to be $15 million in our bookings representing approximately 200 lanes sold per outside sales to Iraq.
We're very pleased to see a notable post acquisition 19 LN win for safe point at a major health care facility.
I'll conclude by formally announcing in wealth and several new senior executive additions to the leadership team starting with Erin Edwards, who will be joining us as our new senior Vice President of solution sales and he was most recently a sales executives with Deborah bridge.
There will be fully taking the reins over from Gary Bond you're on January one 2024.
Gary will be taking on a to be determined part time role to continue to make a positive contribution to it sounds like.
We previously announced the additions of Greg May cash, Larry Jackson, and you wear and Mark page to the management team.
And we're also fortunate to be able to add Greg how he felt the former CEO and founder of faithful to the team.
I'm personally thrilled with these new additions and believe we now have everything necessary to drive long term profitable growth and positively impact public safety solutions ecosystem.
That let me turn the call over to Alan.
Thank you Ralph.
Very pleased with our performance in the third quarter.
As Ralph mentioned this quarter with our sites that are sluggish and we went live in seven new cities.
Band it into current cities and one University.
We're continuing to see an increase in the interest of our solutions across our safety smart platform.
At this point, we expect to add over 140, new miles upside stellar coverage this year, approximately 40% higher than 2022.
Our bundled product strategy appears to be working well as we are starting to see an increase from customers, who would like to contract with multiple products from our safety smart platform.
We're also pleased to add Safeway to our company and their products to our safety Smart platform integration is going well and we expect to see sales and related revenue.
You need to add to our growth as we head into 2024.
Let me provide more details on the quarter and then I will share some thoughts around the balance of the year.
Third quarter revenues were ahead of expectations at $24 million, a 28% increase.
The $18 8 million in the third quarter of 2022.
Revenue increased as our deployed miles are up significantly year over year, and we have a small contribution from a safety point acquisition.
Gross profit for the third quarter of 2023 was $13 8 million or 57% of revenue versus $10 3 million or 55% of revenue for the prior year period.
We expect gross margins to continue to improve in the fourth quarter of the year.
Our adjusted EBITDA increased approximately 40% to $4 $3 million. This year from $3 1 million last year for the third quarter.
As a reminder, adjusted EBITDA, a non-GAAP financial measure.
Populated by taking our GAAP net income or loss and adjusting our interest income income taxes, depreciation amortization and impairment stock based compensation expenses and acquisition related expenses, including adjustments to our contingent consideration obligations.
Turning to our expenses, our operating expenses for the third quarter were $15 $2 million or 64% of revenues versus $6 $2 million or 33% of revenues in the third quarter of 2022.
Call that the third quarter of 2022 operating expenses were reduced by $5 $4 million related to contingent consideration reduction related to the four edge Blodgett acquisition.
Operating expenses included higher costs, primarily due to personnel expansion and higher than expected legal expenses.
26% of total revenue.
Versus $5 4 million or 29% of total revenue for the prior year period.
The increase in costs was related to personnel costs.
All of increased head count and increased further.
Our R&D expenses for the third quarter were $3 2 million or 13%.
That's total revenue.
$2 million to $4 million or 13% of total revenue for the prior year period we.
We continue to invest in increasing the functionality of all of our products.
G&A expense for the quarter were $5 7 million or 24% of total revenue compared to $3 $9 million or 21% of total revenue for the prior year period.
The increase in G&A expenses were primarily related to approximately $500000 and increased legal costs.
And approximately $700000 in business acquisition costs.
Our G&A expenses will be reduced in Q4 versus Q3 in both absolute dollars and as a percentage of revenues related to certain expense savings initiatives that we've taken.
Our GAAP net loss was $1 $9 million of 15 cents per basic and diluted share.
For the quarter based on $12 5 million basic and diluted weighted average shares outstanding.
This compares to net income of $4 million or income of 33 per basic and diluted share.
Third quarter based on $12 to $12 4 million basic and diluted weighted average shares outstanding respectively for the prior year period.
Our adjusted net income or loss for the third quarter was a loss of $1 $1 million for a loss of nine cents per share.
$12 5 million basic and diluted weighted average shares outstanding.
This compares to a loss of $1 $4 million or a loss of <unk> 11 per share.
Based on 12.2 million basic and diluted weighted average shares outstanding.
The prior year period.
Adjusted net income and non-GAAP financial measure is calculated by taking our GAAP net income.
Adding back acquisition related expenses, including adjustments to our contingent consideration obligations.
Deferred revenue at the end of the quarter decreased to $38 $3 million from $43 7 million at the end of Q4 2022.
The decrease was primarily related to the timing of renewals.
We ended the quarter with $5 $8 billion in cash and cash equivalents.
It was $10 5 million at the end of fourth quarter 2022.
The decrease was primarily related to almost $25 million in accounts receivable that we had at the end of third quarter, some of which has already been collected.
Our current cash balance is approximately $7 million.
During the third quarter, we also repurchased approximately 93000 novartis shares at an average price of $20.88 or approximately $1 $9 million.
You have approximately $18 million available on our line of credit if they ever need it.
We used $7 million of our line of credit during the quarter.
We provide a portion of the cash used to purchase eight points in August.
Turning to our full year 2023 outlook, we are maintaining our full year revenue guidance range of $92 million to $94 million and our adjusted EBITDA margin guidance at 16% to 18%.
We are expecting our annual recurring revenue or <unk> at 12, 31, twenty-three she'll have an increased over 17% to approximately 93 and a half million dollars.
Up from $79 7 million on December 31, 2022.
We intend to provide revenue and adjusted EBITDA guidance for 2024, once Chicago formally approved mayor branded Johnson's proposed budget, which is expected to be approved in the next two weeks.
No back row for some final thoughts and then we'll be happy to take your questions.
Thanks, Allen I wanted to take this opportunity to give a shout out to the entire company on achieving a NPS score of 64, representing a eight point increase from last year's World Class score of 56 this was phenomenal.
Felt that we also saw an increase in the agency participation rate, which shows a significant amount of customer engagement.
The insight and feedback beyond the specific score is what's most important.
In addition to getting constructive feedback on how to make our services even better. We also learned that 42% of the respondents indicated an interest in learning more about our new platform strategy and expanded solution set.
This represents a measurable upsell cross sell opportunity within our current installed base again, our NPS process and ultimate score is very much a cross team collaboration and is core to our company DNA IMAX.
I'm extremely proud of our collective effort in servicing our clients as trusted advisors and seen the proof point that our strategy is making a difference.
We're now happy to take your questions.
Okay.
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, you'll hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two we will pause for a moment.
S callers join the queue.
Our first question comes from Richard Baldry of Roth and Kam. Please go ahead.
Thanks.
Given that's where I live can we start with the Philadelphia and sort of curious.
Remind us what are the entry point was could you maybe talk about the opportunity there.
Obviously, it's a pretty big city I'm sort of curious how we know what your thoughts are on it.
They'll like that from Us Foundation.
[laughter].
Oh, great Rich can you hear me this is Ralph.
Yep.
Yeah, Hello, So maybe I'll start and Alan can jump in as necessary to correct that and so we're really excited about getting a footprint. We established in Philadelphia I think as you mentioned the entry point into the Philadelphia housing authority.
That being a significant amount of collaboration and cooperation with the General Philadelphia Police Department and of course being a tier one city with the amount of challenges. They have around volume decline, we think they represent a fairly significant opportunity as a tier one city to be able to deploy the signet.
Second number of miles and once we prove success with our first entry point there are really three points in Philadelphia.
Okay, and then switching to pace point can you go over sort of the new team build out.
Quota.
At 200 lanes or something.
How does that compare historically to what they've typically done annually or a life to date and what kind of economics.
Does that represent an.
On a revenue basis on either per lane or any metric that can kind of help us with that thanks.
Yes.
Well, maybe I'll start.
And you can jump in.
And so I think you know quick point is a greenfield opportunity for us and so it's not really quite relevant to compare what we're doing is probably under resource company focused on this very large tam opportunity. We're looking at this as an opportunity to leverage our scale and brand reputation and willing to them.
Best in significant go to market motion to completely change the trajectory point, although it has performed very well as is.
Independent company, we're expecting to take it to the next level.
I'll, let you address the unit economics.
Yeah sure. So this is Alan.
It's interesting about each lane is about $20000 in terms of annual revenue that can be a little higher a little lower but if you think about it you know.
200.
Of those puts about $4 million roughly and potential revenue ultimately so having four different.
You know salespeople related each with a target of 200, what's the potential you know revenue ultimately if we were to hit all those north of north of $50 million. So it's going to take some time to do that but we're all are worthy of working hard to get closer to those types of numbers.
So could you talk about that.
The go to market motion there because it is different than your government centric in the past you know how do you feel about your ability to keep the.
Bush's and find those opportunities is it you know digital marketing that's leading the way there is it reference.
Our reference ability of some early wins.
How do you build that pipeline and what's the profile sort of who you bring in to do the sales in that.
Yes. So this is Ralph maybe I'll start so I think it's all of the above I mean, so we're building the pipe digitally of course, we inherited a pipeline when we acquired safe point, along with some key deployments that represent a fairly nice reference of weapons to bullet down.
So if you will what are they targeting our focus on a couple of industry vertical vertical vertical to excuse me help us.
In our view, we think the health care verticals really quite interesting and we've had a lot of success. There. We think higher Ed is another interesting vertical and we also see I would say the gaming.
Vertical as well and what's interesting about these vertical plays they have a compelling need to do buy weapons protection, but they want to do it more co Berkeley as overtly and that's really the signature differentiation of the safe point solution is to have these kind of very coker sensors that you don't recognize you're actually walking through it very soon.
Desiccated AI base metal detection capability with respect to the adjacency in terms of the go to market motion on this and the buying center. What we found really interesting as we were doing our due diligence in acquiring the company, we were kind of talking to some of the existing customers as well as potential customers.
Number of these folks actually come from law enforcement and so we're talking to people that we're definitely aware of sound thinking in their prior inclination of Shotspotter. These are folks that maybe it's 10 2030 years and our local law enforcement agencies, and then decided to retire and what are they required to the repair to the second job which has been.
Senior VP of security for X Y Z Hospital chain or you know ABC Gaming Corporation. So we're selling in so many ways.
And adjacent buying center, where we can leverage our brand and reputation and even in those situations, where the customer doesn't directly come from law enforcement or socializing with local law enforcement, because it's really all about public safety.
Private.
Sector.
Environment. So we're pretty comfortable that we know how to go get at it hard and don't get at that and we're excited we're gonna be excited the kind of share with you our progress in this greenfield opportunity.
Yeah.
Last for me, then I'll turn it over or be it. If you think about those deployments what what gates the speed at which after a contract signed to get one up in AR.
But the traditional a gunshot detection side, you know get field.
Sensors, sometimes.
Places that are not owned by people that are easy to deal with.
Presumably this would be easier because the end clients the ones, who is giving you a co location.
And then yes, there would be are there major enterprise opportunities that like you mentioned.
So things like supermarkets, it could be hundreds of lanes in a single win.
Or do you think you'd have to start with sort of smaller midsize deployments to sort of prove your reference ability before those would be on.
On the table. Thanks.
Yeah. So this is Alan how can add in.
I think at this point.
In terms of the contract when the contract gets awarded it's definitely faster in terms of once that's awarded to the deployment you can think along the lines of maybe two months, a little more than that potentially or even faster that in some circumstances, so significantly faster than what we do with the.
With the Shotspotter because the customers are already giving us permission to hang the the sensor so it's a lot easier than going out getting permission.
To do that.
Our next question comes from Mike Latimore of Northland Capital markets. Please go ahead.
Great. Thanks, so much and congrats on the Correctional deal here.
Yes.
Can you just discussed when you might start seeing revenue on that and then of the I guess it was $18 million.
Is that going to be recognized ratably over the.
Period of the contract or might you get more upfront with professional services or something like that.
Yes, this as well so I think our expectation that this is a six year contract, we would expect to see a little bit more upfront.
Portion of the $18 million of out of the contract value I think about $6 million or so is.
Professional services.
Great.
In terms of revenue recognition I think our expectation is we'll see just a little bit this year and it'll we'll see it more kind of fulsome I would say in 2024 and beyond I mean, it's really interesting for us because this is a contract. We would have hoped to get started on earlier in the year and be able to recognize a lot more revenue.
We are going to be able to recognize just kind of given the fact that we're just now getting some.
The contract and starting the work, but we're extremely excited about what this means for us in establishing a.
Okay.
Critical political and with some corrections market because we think we bring some very unique capabilities to that in terms of investment data capability.
Yeah great.
Then in terms of the September quarter can you just discuss how you know.
Bookings were in the quarter, both kind of new and upsell.
Yeah.
Tom do you want to take that.
Bookings score Safeway bookings for across their take rate for Q3.
Oh, sorry.
Just as.
Did it grow sequentially year over year, just any color on bookings.
Yeah, well I think the nice thing is our pipeline is still incredibly strong across all of our products as well. So we continue to see bookings go really to you know relatively well.
Most of our solutions.
There's still some that we're working on are starting to ramp up a little bit.
We've had a little bit of slowness in the past.
Resource rather, although that's that's actually ramping up work as.
As Ralph mentioned earlier, we see things like New Jersey, where we're adding new kinds of possibilities for funding for global Shotspotter solutions, and then you've got like Philadelphia. The housing authority Theres a lot of things like that in terms of actual bookings that are going.
Going incredibly well so I would say, it's significant certainly similar to what we've seen in the past over the past several quarters, it's going to keep things relatively problems.
Okay, and just last one on <unk> point.
Clearly, increasing the sales and marketing.
Emphasis there how about just on the technology side of things do you feel like Youre going to.
Increased R&D for them or do you feel like it's a pretty good position right now.
Okay.
Yeah. This is Alan as well I'll go ahead and start and then Rob can add so.
We're definitely adding capability to argue they have a great R&D team already.
We had several things that they were planning over the next year, well, we're helping them accelerate that as well as looking at other things that we can do to improve the technology across the board.
So I'm not I don't know we added capabilities in marketing and sales. We're also adding capability in deployment and R&D to keep things moving quite quickly and improve to the extent, we can any of the technology as well.
I'd want to say one more thing.
Rich from Ross did you asked about in terms of our enterprise targets, a large hospital groups and things like that the short answer is we we are looking at those kind of things there are more of a just.
Small customers, they're going to ask for for five or 10 lanes, there are significant and larger opportunities as well just wanted to make sure that we did cover that too.
Okay. Thanks.
Okay.
Our next question comes from youthful Lee of Cantor Fitzgerald. Please go ahead.
Oh, gosh, Ralph and Alan on the strong execution that you start with the expansion of the leadership team I know you've got a lot of tell us how to keep that should go Greg Larry you mentioned and Mark Antero today, but I was wondering on the outlook.
On the product strategy going forward, how would you say this new management team will help with this key strategy, assuming you led with Shotspotter. Firstly. Thank you all sorts of other products, maybe you could comment on that.
Yes.
Yeah. So this is Ralph.
As you've noted we've added a lot of firepower to the senior leadership team.
Principally one of the things that we did since.
Your specific question around product management is we basically split up the marketing function, which had been done by one individual and now we kind of split marketing up in <unk>.
Our outbound kind of brand marketing pipeline development marketing organization led by Greg May cash along with a new separate.
Marketing function led by Sam Klepper, that's focused exclusively on product management, and when I say product management, I mean product management not only in terms of the individual solutions flat SaaS, but also our safety smart platform and how we're working to kind of integrate our solutions to have a much more powerful.
Integrated capability not only in terms of look and feel but also in terms of functionality in that.
So part of Sam's our responsibility is also going to be kind of scouring the marketplace to see other capabilities that we can bring to market because we are making a fairly significant investment as a company and being a platform company. So although historically, we have been known and Shotspotter and a part of our rationale behind changing the name to sound thinking was there.
Really the kind of signaled that we're much more than acoustic gunshot detection. Although we appreciate that capability Davis our start if you will but we have an opportunity to provide technology to help public safety initiatives across the board become more efficient effective and equitable by offering other solutions and capabilities. So we're really excited.
About that expansion and we think that's going to be one of the things that continues that helps us continue to drive profitable growth over the medium to long term.
Thanks for the color on that and if I may follow up on the Chicago and a part of it though.
Catherine Hill.
Sounds like Puerto Rico.
Very well, you've got a 20% upside right.
If you go to Chicago.
Mentioned that in a couple of weeks, you'll know the outcome myself very positive goose superintendent Mellon that go like well just park.
Decreasing our lease life I just wanted to see like video fastest exposure is at about 7 million Alan on on the AI exposure in.
Chicago, and about Chile, and Puerto Rico, and it sounds like you guys are positive on under the new one in Chicago.
Yeah.
Yes.
I'll start with the actually there are a Chicago is actually north of $8 million.
So that yes that would be positive as well and and Puerto Rico is actually a little bit north of $2 billion, so, especially if we're able to continue to be.
The significant increase that Ralph mentioned, which is over 20% higher than the last.
The last contract that we have with them.
Okay, Yeah, and I would just add in terms of Chicago, I mean, where we've put a lot of work in Chicago in terms of.
We continue to build upon a positive relationship frankly that we've had for over eight years, we were delighted to see the announcement.
The announcement and selection.
Superintendent Sterling to become the new leader of Chicago, PD and kind of grew up in Chicago PD. He's been a very strong vocals of the tender of technology at large and specifically acoustic gunshot detection.
And so that's really really quite encouraging and then the next thing that was quite encouraging is that despite calls for selected folks are asking us within Chicago around deep on the police or reduce the budget.
The new Mayor has made the right decision, we believe to increase the law enforcement budget of close to 3% to almost $2 billion and there is a specific line items in that budget, calling for acoustic gunshot detection. So we're not there yet but one of the reasons, we're holding off on.
Our guidance is a proposed budget is not a final adopted budget and so we're going to wait and see what actually gets.
Hopefully ultimately.
<unk> and finalize the final budget that will be failing a lot.
Better about things and well still have some gates. The dosing. Because then you have to kind of take those budget dollars and get them to a realized contract which will have until mid February to do which is when our current contract with the Chicago programs.
Actually I have one last question for.
So Alan is that M. S auction price increase was about 7% you mentioned for 2024.
I think he mentioned is it like cheerful and chip Blue cities was wonder if you could help us really fast on the exposure on that.
It's more of a modeling points for us we just want to see the upside of the pace increase and that's it for us.
No.
Sure. Yeah. This is Alan so that's a great question I mean, we haven't increased our actual prices.
Three years that was when we went from 65 to $70000 mile. So going from 70 to around 75 is appropriate for us to do right now.
At a price where they currently are.
So I think I think overall, we continue to have price increases several hundred thousand dollars a year because those that are even paying less than the MSRP right now get a 3% to 5% increase in those cases per year till they get to MSRP.
Now those have already been asked them. It's okay, we'll be getting a little price increases. So it's it's all good in terms of actually helping us grow the revenue and all of that flows down to the bottom line as well.
Thank you.
Our next question comes from Karen Kitty Cat of William Blair. Please go ahead.
Hi, Thanks for taking my questions first can you add any color on the demand you're seeing for bundled sales and demand for larger state level deals.
Do you want take that one.
Sure. So I think the one thing that we know for now is that in terms of bundled sales that we have essentially just going with what shotspotter the only product.
We started doing bundling just this year really we're already seeing some increase in terms of the customers that are interested not just one our sales team with our the commissioning schedules are set up to do additional things where they are at the bottom line. So it's positive for them positive for the customers, we're seeing some customers.
They're not only asking for one or even to some of them are asking for three of our products. So that's something that we are focused on and in fact, even with safe point, although it is generally different cam and additional things that Ralph mentioned in terms of commercial type customers a lot of the ones that we have right now.
Now police agencies municipalities have relationships or have needs that need safe point as well. So we do expect the bundling is gonna be very positive for us and extending us certainly throughout 'twenty bought into the future.
Thanks, and then one more for me did you see any further elongation of sales cycles in the quarter and any additional information you can share on funding and budget do you think will happen.
Yeah. So this is Ralph I mean, so we're continuing to see a nice cadence of.
Deal kind of pull through it feels like the environment is very constructive I mean, we have a bit of a positive trifecta. If you will the funding environment is very strong. Unfortunately, theres a real notable uptick around crime violent crime in particular that is now be becoming increasingly.
Vocalized I would say by residents in the community and at least with respect to Shotspotter, specifically I'll speak to that.
Imagine that's really the goal line of questioning that we have we.
We continue to really dominate the space. So we don't deal with a lot of kind of competitive friction in our marketplace. When someone decides that they want to do a large scale acoustic gunshot detection or a police department of the city will kind of be the only game in town in many respects I mean, you saw that with respect to the.
The RFP when he responded to in Puerto Rico.
We're showing I think the only better.
Certain situations, where it isn't sole source and Theres RFP. If there was another bidder we were typically running so we're pretty encouraged.
By the sales cycles, and the increased I would say pipeline deployment.
Just quickly add to that.
Should not we should not underestimate the power of NPS in the way as a company we lean in on net promoter score because in fact.
A lot of our sales motion is generated from the strong weapon stability that we have in the marketplace, where effectively our customers are selling new customers, because they're saying look we've had a positive experience with this technology in the company, providing this technology you should try it too so in many ways. It almost feels like we're kind of setting.
Point, where this has become a standard of care I think is well understood and acknowledged that.
If you don't have a piece of gunshot detection you basically adapt.
Death to a significant amount.
Criminal gunfire that.
Responsible to be that way, so we're pretty excited about where we are.
Great. Thanks for taking my question.
At this time. This concludes our question and answer session. If your question was not taken you may contact so I'm thinking <unk> investor relations team by E. Mailing us S. T I at Gateway Dash G. R. P. Dot com I would now like to turn the call back over to Mr. Clark for his closing.
Remarks.
Great. Thank you very much for that and thank you all for joining the call Alan and I are looking forward to engaging with many of you over the next couple of weeks. Thank you very much and have a great day.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
[noise].
Yeah.
Hum.
Hum.
Uh huh.
Hmm.
Hum.
Yeah.
[music].
Yeah.
[noise] yeah.
Yeah.
Yeah.
[music].
Uh huh.
Okay.
Okay.
Uh huh.
Yes.