Q4 2023 SoundThinking Inc Earnings Call

Operator: Good afternoon, and welcome to sound thinking's fourth quarter and full year 2023. My name is Paul, and I will be your operator for today.

Good afternoon, and welcome to Tom thinking fourth quarter and full year 2023 Conference call. My name is Paul and I will be your operator for today's call joining us are sound thinking CEO, Ralph Clark and CFO Alan Stewart.

Operator: Joining us are Sound Thinking's CEO, Ralph Clark, and CFO, Alan Stewart. Please note that certain information discussed on the call today will include forward-looking statements, Future Events, and Sound Thinking's Business Strategy and Future Financial and Operating These forward-looking statements are only predictions and are subject to risks and uncertainties and assumptions that are difficult to predict and may cause the actual results to differ materially from those stated or implied by the. Certain of these risks and assumptions are discussed in Sound Thinking's FEC filings, including its registration. For more information, visit www.fema.gov. These forward-looking statements reflect management's expectations and predictions as of the date of this live broadcast. February 27, 2016, Sound thinking undertakes no obligation to revise or update any forward-looking Events or Circumstances After the Date. Finally, I would like to remind everyone that this call will be recorded and made available, via a link available on the investor website www.ir.foundthinking.com. Now, I would like to turn the call over to sound thinking. Ralph

Please note that certain information discussed on the call. Today will include forward looking statements about future events and sound thinking business strategy and future financial and operating performance. These forward looking statements are only predictions and are subject to risks and uncertainties and up some and assumptions that are difficult to predict and may cause the actual results to differ materially from there.

Those stated or implied by these statements.

Certain of these risks and assumptions are discussed in bound thinking E 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 February 27th 2024, and I'm 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 of the company's website at IR dot bounds thinking dotcom.

Now I would like to turn the call over to found thinking CEO Ralph Clark Sir. Please proceed.

Ralph A. Clark: Author, please stand by. Good afternoon, and thank you for joining us today. Alan and I have a lot to cover in today's earnings call, so we're going to go ahead and get started. Fiscal 2023 was significant for us, starting with our transformational rebrand to sound thinking and the introduction of our Safety Smart platform, which includes a suite of complementary solutions that are extremely powerful. The Safety Smart platform clearly signals our broad ambitions to move beyond the acoustic gunshot detection space, primarily focused on domestic law enforcement, and to embrace new solutions with new commercial vertical markets and new buying centers.

Good afternoon, and thank you for joining us today, Alan and I have a lot to cover today's earnings calls. So we're gonna go ahead and get started.

Fiscal 2023 was significant for us starting with our transformation and rebrand it sounds thinking and the introduction of our safety Smart platform that includes a suite of complementary solutions that are extremely powerful.

The safety smart platform fairly signals, a broader ambition to move beyond the acoustic gunshot detection space, primarily focus on domestic law enforcement and to embrace new solutions with new commercial vertical markets and new buying centers.

Ralph A. Clark: Two very important developments that capstone that 2023 transformation journey are the closing of a greater than $13 million case builder deal with New York City Department of Corrections that we expect to grow to be worth approximately $18 million, in addition to our entry into the $25 billion weapons detection space with our strategic acquisition of SafePoint. Accordingly, we believe our market opportunity has significantly increased, yet it remains largely underpenetrated and is incredibly attractive. Our proven ability to execute at scale as the company approaches $100 million in revenue with over 300 employees is encouraging as a proof point that we are up to the challenge to drive long-term profitable growth. Our relentless focus on product innovation and quality, combined with our passion for the customer in developing deep, trusted partnerships, provides an important opportunity to make an impact on making the world a better place and doing work that matters.

Two very important developments that capstone that 2023 transformation journey or the closing of our greater than $13 million eight figure deal with New York City Department of corrections that we expect to grow to be worth approximately $18 million. In addition to our entry into the $25 billion.

Weapons protection space with our strategic acquisition of safety.

Accordingly, we believe our market opportunity has significantly increased yet remains largely underpenetrated and is incredibly attractive.

Our proven ability to execute at scale as the company approaches $100 million in revenue with over 300 employee is encouraging as a proof point that we are up to the challenge to drive long term profitable growth.

Our relentless focus on product innovation and quality combined with our passion for the customer and developing deep trusted partnerships provide an important opportunity to make an impact on making the world a better place and doing work that matters.

Ralph A. Clark: Turning to our Q4 2023 financial performance, our revenues increased 24% to a quarterly record of $26 million from the prior year's $21 million in Q4 2022. Adjusted EBITDA came in at $4.8 million, or 18% of revenues, compared to $4.3 million, or 20% of revenues for Q4 2022. Shotspotter went live with six new cities, including our third international deployment with a launch in the city of Montevideo, Uruguay, along with three expansions for the quarter.

Turning to Q4 2023 financial performance Mark.

Revenues increased 24% to a quarterly record of $26 million from the prior year's $21 million in Q4 2022.

Adjusted EBITDA came in at $4 $8 million or 18% of revenues compared to $43 million or 20% of revenues for Q4 2022.

Shotspotter went live with six new cities, including our third international deployment with a go live in the city a bunch of the day, all Uruguay, along with three expansions for the quarter.

Ralph A. Clark: Q4 2023 also saw SafePoint deployments on over 30 lanes. In addition to the Case Builder, New York City Department of Corrections deal, several other projects were kicked off for Case Builder, Crime Tracer, and Resource Wrap. Revenues for the full year increased 14% to a record $92.7 million, with $14.3 million of adjusted EBITDA, or 15% of revenue. Shotspotter finished the year with 25 new cities, 19 expansions, and 155 miles taken live in a year. Our Shotspotter Go Live cadence represented a greater than 50% increase from last year. Overall, we had another strong year with 107 new miles booked and 77 subscription renewals, with 37.5% of those bookings representing multi-year agreements. Of note was the exceptional performance of our Tier 4, Tier 5 initiative, which represented almost 20% of the domestic new miles booked in 2023. We view this specific vertical as a significant untapped TAM expansion opportunity and are keenly focused on continuing to build upon the successful inroads we've made in this largely untapped segment. We believe our customer retention results remain best in class for an operating SaaS company.

Q4, 2023 also saw faithfully deployments on over 30 lanes.

In addition to the case built or New York City Department of Corrections deal. Several other projects were kicked off for case builder crime tracer and resorts router.

Revenues for the full year increased 14% to a record $92 $7 million with a 14th week $3 million of adjusted EBITDA or 15% of revenues.

Shotspotter finished the year with 25, new COVID-19 expansion and 155 miles taken life in a year.

Our Shotspotter go lives cadence, representing a greater than 50% increase from last year.

Overall, we had another strong year with 107, new miles booked in 77 subscription renewals with 37, 5% of those bookings represent multi year agreement.

Of note was the exceptional performance of our tier four tier five initiative, which represented almost 20% of the domestic new miles booked in 2023.

We view this specific vertical as a significant untapped Tam expansion opportunity and are keenly focused on continuing to build upon the successful inroads. We've made in this largely untapped segment.

We believe our customer retention results remain best in class for an operating SaaS company in 2023 were able to realize approximately only 1% of GAAP revenue attrition.

Ralph A. Clark: In 2023, we're able to realize only 1% of revenue attrition. As reported in our last earnings call, our customer success organization, robust customer onboarding program, world-class net promoter, collaborative process, and score of 64% are central to our customer retention strategy. In addition to helping drive positive outcomes that promote stickiness, it also contributes to a strong sales and marketing spend of only $0.52 for a dollar's worth of annualized contract value in 2023. Now, many of you have probably been following the news coverage of our situation in Chicago. We're very pleased to report that we've reached a compromise with Mayor Johnson in order to prevent a disruption in the critical Shotspotter service that was scheduled to end on February 16th, when the then current term expired. Shotspotter has been serving the city of Chicago and its residents for over seven years, and we believe the impact of pulling the plug in February would have been less than optimal for everyone involved.

As reported in our last earnings call, our customer success organization robust customer Onboarding program World class net promoter collaborative process and score of 64% are central to our customer retention strategy.

In addition to helping drive positive outcomes that promote stickiness. It also contributes to a strong sales and marketing spend of only 52 cents for $8 worth of annualized contract value for 2023.

Now many of you would probably be in following the news coverage of our situation in Chicago.

We're very pleased to report that we reached a compromise with Mary Johnson in order to prevent a disruption in the critical Shotspotter service that was scheduled to end on February 16th.

Current term expired.

Shotspotter has been serving the city of Chicago and its residents for over seven years, and we believe the impact of pulling the plug ins that February would have been less than optimal for everyone involved.

Ralph A. Clark: The now-executed contract extension has a term that ends in September, which provides Chicago with service through the historically challenging summer months of gun violence and both the Democratic National Convention and the Republican National Convention. Additionally, there are an additional two months of reserve term that effectively carries the contract extension through November 22, 2024. We're incredibly inspired and grateful to have seen the large and vocal outpouring of support for the Shotspotter solution received from local press, downtown business interests, older persons, and the Chicago Police Department, and most importantly, community members residing in our collective coverage area. These residents have responded with an 85% plus favorable rating for Shotspotter, according to a Fallon research poll we commissioned in January of this year.

But now executed contract extension as a term that ends in September which provide Chicago with service through the historically challenging summer months of gun violence and.

Both the Democratic National Convention, and the Republican National Convention.

There was an additional two months of reserve term debt effectively carries a contract extension through November 28 2024.

We're incredibly inspired and grateful to have seen the large and vocal outpouring of support for the Shotspotter solution received from local press downtown business interests older person and the Chicago Police Department, and most importantly community members residing in our collective coverage areas.

These residents have responded with an 85% plus favorable rating for Shotspotter. According to our Fallon research we commissioned in January of this year.

Ralph A. Clark: We intend to use the remaining time of the Chicago contract extension to continue our work with the Chicago Police Department on tracking and reporting out data and metrics, as well as building upon and galvanizing the support we've seen over the past two weeks. We believe this will provide a compelling case to support CPD's continued use of this critical tool and hope the business case will be considered in Chicago's Go Forward plan. Now, despite some limited headwinds from our Chicago situation, we believe our overall Safety Smart platform demand drivers and funding sources remain strong. There are increasing demands on cities to deal with elevated violent crime in a transparent fashion, while many agencies are materially under-resourced headcount-wise. As a reference point, we published over 330,000 gunshot alerts in 2023. However, an overwhelming percent of those alerts did not have a corresponding 9-1-1 call, which hobbled the efforts of any agency to respond to and investigate criminal gunfire, as well as save lives.

We intend to use the remaining time of the Chicago contract extension.

<unk> worked with the Chicago Police department on tracking and reporting out data and metrics as well as building upon in galvanizing support we've seen over the past two weeks.

We believe this will provide a compelling case to support CPD continued use of this critical tool and hope the business case will be considered in Chicago to go forward plans.

Now despite some limited headwinds from our Chicago situation, we believe our overall safety for platform demand drivers and funding sources remain strong.

There are an increasing demands on cities to deal with elevated violent crime in a transparent fashion, while many agencies are materially under resource head count wise.

As a reference point, we published over 330000 gunshot alerts in 2023.

An overwhelming percentage of those alerts did not have a corresponding 911 call, which hobbled the efforts of any agency to respond to investigate criminal gunfire and as well as save lives.

Ralph A. Clark: Given these demand drivers and the constructive funding environment, we continue to be bullish on our ability to drive profitable growth for the foreseeable near and medium term. We recently brought on significant senior leadership talent to help us scale over the next several years, and we continue to innovate across our suite of proprietary technology solutions. We're establishing 2024 revenue guidance at $104 to $106 million. Supporting that outlook is $95.4 million of annual recurring revenue as of January 1, 2024, combined with $6 million of book professional services revenue through our Technologic Division and their work with both NYPD and New York City Department of Corrections. This then totals to $101 million.

Given these demand drivers and the constructive funding environment, we continue to be bullish on our ability to drive profitable growth for the foreseeable near and medium term.

We recently brought on significant senior leadership talent to help us scale over the next several years and we continue to innovate across our suite of proprietary technology solutions.

We're establishing 2020 for revenue guidance at $104 million to $106 million.

Supporting that outlook is $95 $4 million in annual recurring revenue as of January one 2024.

Bind was $6 million of book professional services revenue through our Technologic division and their work with both N Y P D and New York City Department of Corrections.

This then totaled a $101 million.

Alan R. Stewart: The remaining $3 to $5 million of revenue we expect to come from new sales of solutions from our Safety Smart platform, which has $45 million in a growing pipeline. We intend to continue to execute on top-line growth while being prudent in managing expenses to ensure we are delivering cash flow back to the business to continue to improve our balance. And with that, I will turn the call over to Alan. Thank you, Ralph.

The remaining $3 million to $5 million of revenue, we expect to come from new sales of solutions from our safety Smart platform.

That has $45 million and growing pipeline.

We intend to continue to execute on topline growth, while being prudent in managing expenses to ensure we are delivering cash flow back to the business to continue to improve our balance sheet.

And with that let me turn the call over to Alan.

Thank you Ralph.

Alan R. Stewart: HealthCover highlights for both Q4 and 2023 as a whole. In Q4, we went live in six new cities, one of which was international in Montevideo, Uruguay, and expanded with one commercial security customer. We also expanded with two current Shotspotter cities and achieved revenue growth of 24% compared to the fourth quarter of 2022. However, we did lose two small customers with less than two miles of coverage in total.

Cover highlights for both Q4 and 2023 as a whole in Q4, we went live in six new cities, one of which was international and most of the day of Uruguay and expanded with one commercial security customer. We also expanded with two current shotspotter cities and achieved revenue growth of 24%.

For the fourth quarter of 2022.

We did lose two small customers with less than two miles of coverage and Tor.

Alan R. Stewart: That said, our 2023 GAAP revenue attrition net of price increases will still be only one percent for the fourth year in a row. We also went live with three case builder customers, including the long-awaited but large contract with New York City Department of Corrections, currently worth over $13 million. We expect this to be worth approximately $18 million in total later this year to cover the six years of the contract. We are also pleased to report that we had total bookings for the year of over $70 million across our various solutions.

That said, our 'twenty three GAAP revenue attrition net of price increases we're still the only 1%.

Fourth year in a row.

He also went live with three case builder customers, including the long awaited but large contract with New York, New York City Department of Corrections currently worth over $13 million.

We expect this to be worth approximately $80 million in total later this year, probably the six years of the contract.

We're also pleased to report we had total bookings for the year of over $70 million across our various solutions.

Alan R. Stewart: Let me provide more details on the quarter, and then I will share some thoughts around 2023 and guidance for this year. Fourth quarter revenues came in at $26 million, an approximately 24% increase over the $21 million in the fourth quarter of 2022. Revenues increased primarily due to the increase in our deployed miles year-over-year as well as revenue growth from our expanding Safety Smart platform product. Gross profit for the fourth quarter was $15 million, or 58% of revenue, a 26% increase over the $11.9 million, or 57% of revenue for the prior year period. Gross margin for the fourth quarter was higher than the prior year period as our revenue base grows. Our net income for the fourth quarter was $3.6 million, or $0.29 per share, on a $12.7 million weighted average share outstanding on a basic basis, and $0.28 per share on a $12.9 million weighted average share outstanding on a diluted basis. This compares to a net loss of $1 million, or $0.09 per share, on a 12.2 million weight of average shares outstanding on both a basic and diluted basis for the prior year period.

Let me provide more details on the quarter and then I will share some thoughts on 2020 three and guidance for this year.

Fourth quarter revenues came in at $26 million and approximately 24% increase over the $21 million in the fourth quarter of 2022.

Revenues increased primarily due to the increase of our deployed miles year over year as well as revenue growth from our expanding safety smart platform products.

Gross profit for the fourth quarter was $15 million or 58% of revenue, 826% increase over the $11 $9 million or 57% up revenue for the prior year period.

Margin for the fourth quarter was higher than the prior year period as our revenue base products.

Our net income for the fourth quarter was $3 $6 million or 29 cents per share on a $12 7 million weighted average shares outstanding on a basic basis and 28 cents per share on a $12 9 million weighted average shares outstanding on a diluted basis.

This compares to a net loss of $1 million or nine cents per share on a $12 2 million weighted average shares outstanding on both a basic and diluted basis for the prior year period.

Alan R. Stewart: In Q4, our expenses for the quarter were reduced primarily due to a reduction in the contingent consideration liability related to both forensic logic and safe point earnouts of approximately $4.8 million as the related revenues in 2023 were lower than expected, and we've reduced the expected future revenues for safe. Adjusted EBITDA for the fourth quarter was $4.8 million, an increase from $4.3 million in the fourth quarter of 2022. As a reminder, adjusted EBITDA is calculated by taking a gap net income or loss and adding back interest, taxes, depreciation, amortization, stock-based compensation, and acquisition-related expenses, including adjustments to our contingent consideration liability related to earnings. Operating expenses for the fourth quarter were $10.6 million for 41% of revenue versus $11.9 million for 57% of revenue in the fourth quarter of 2022. Breaking down our expenses, sales and marketing expense for the fourth quarter was $7.4 million, or 28% of total revenue versus $5.7 million, or 27% of total revenue for the prior year period.

In Q4, our expenses for the quarter were reduced primarily due to a reduction in the contingent consideration liability.

Related to both forensic logic and eight point earn outs of approximately $4 $8 million is the related revenues from 'twenty to 'twenty three were lower than expected and we reduced the expected future revenues per se.

Adjusted EBITDA for the fourth quarter. It was $4.8 million an increase from the 4.3 mines in the fourth quarter of 2022.

As a reminder, adjusted EBITDA is calculated by taking our GAAP net income or loss and adding back interest taxes, depreciation amortization stock based compensation and acquisition related expenses, including adjustments to our contingent consideration liability related to earn outs.

Our operating expenses for the fourth quarter were $10 $6 million or 41% of revenue versus $11 $9 million or 57% of revenue in the fourth quarter of 2022.

Breaking down our expenses sales and marketing expense for the fourth quarter was $7 $4 million or 28% of total revenue versus $5 7 million or 27% of total revenue for the prior year period.

Alan R. Stewart: We continue to focus on investing appropriately to grow our sales and marketing capabilities for all of our products. These investments are important for our continued growth, and we are seeing success as we 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 rate low. Our R&D expenses for the fourth quarter were $3.2 million, for 12% of total revenue compared to $2.5 million, for 12% of total revenue for the prior year period. We continue to invest in increasing the functionality of all of us. G&A expenses for the quarter were $4.8 million, or 18% of total revenue, compared to $4 million, or 19% of total revenue for the prior year period. DNA expenses in absolute dollars were reduced due to the $4.8 million reduction in the contingent consideration liability related to forensic logic and state point acquisition.

We continue to focus on investing appropriately to grow our sales and marketing capabilities for all of our products they're.

These investments are important for our continued growth and we are seeing success as we continue to build our sales pipeline and expand our marketing efforts with <unk>.

Continue to focus on maintaining high levels of customer satisfaction, which helps keep our attrition rate look.

Our R&D expense for the fourth quarter were $3 $2 million or 12% of total revenue.

There are $2 million to $5 million for 12% of total revenue for the prior year period.

Continuing to invest in increasing the functionality of all of our products.

G&A expenses for the quarter were $4.8 million or 18% of total revenue compared to $4 million or 19% of total revenue in the prior year period.

G&A expenses in absolute dollars were reduced due to the $4 8 million reduction in the contingent consideration liability related to the forensic logic and say point acquisition.

Alan R. Stewart: Our revenue results for 2023 were $92.7 million, an increase of 14% from 2022. The increase is primarily due to revenues related to a significant expansion in customers using our gunshot detection solutions, having added 25 new customers, expanded in 19 customers, and going live in over 155 miles during the year. There was a slight addition of revenues from our new New York City Department of Corrections contract and SafePoint, but less than $2 million combined. Gross profit for 2023 was $52.7 million, or 57% of revenue, versus $46.8 million, or 58% of revenue for the prior year. Our net loss for 2023 was $2.7 million, or $0.22 per share based on 12.4 million weighted average shares outstanding on both a basic and diluted basis.

Our revenue results for 2020 three were $92 $7 million, an increase of 14% from 2022.

The increase was primarily due to revenues related to a significant expansion in customers using our advanced packaging solutions, having added 25 new customers.

Spanning in 19 customers and going live in over 155 miles during the year. There was a slight addition of all of the news from our New New York City Department of Corrections contract N save point, but less than $2 million combined.

Gross profit for 2023 was $52 7 million or 57% of revenue.

First is $46 8 million or 58% of revenue for the prior year.

Our net loss for 2023 was $2 $7 million or 22 cents per share based on 12 4 million weighted average shares outstanding on both a basic and diluted basis.

Alan R. Stewart: This compares to net income of $6.4 million, or $0.52 per share, based on $12.2 million basic weighted average shares outstanding and $12.3 million weighted average shares outstanding computed on a diluted basis for the prior year. Adjusted EBITDA for 2023 was $14.3 million, a reduction from $15.9 million in 2022. Our revenue retention rate remained positive at 107% in 2023, down from 124% in 2022. Additionally, our sales and marketing spend per dollar of new annualized project value for the next 12 months was $0.52 per dollar in 2023 versus $0.40 per dollar in 2022. Deferred revenue as of December 31st was $41.9 million, versus $43.7 million at the end of 2022. We ended Q4 with $5.79 in cash and cash equivalents, similar to $5.8 million at the end of the prior quarter.

This compares to net income of $6 4 million or 52 cents per share based on $12 2 million basic weighted average shares outstanding and $12 3 million weighted average shares outstanding computed on a diluted basis for the prior year.

Adjusted EBITDA for 2023 was $14 $3 million a reduction from the $15 9 million in 2022.

Our revenue retention rate remain positive, 107% in 2023 down from 124% in 2022.

Additionally, our sales and marketing spend per dollar of new annualized contract value for the next 12 months was 52 cents per dollar in 2023.

That's 40 cents per dollar in 2022.

Deferred revenue as of December 31 was $41 $9 million versus $43 7 million at the end of 'twenty two.

We ended Q4 with $5 7 million in cash and cash equivalents.

Similar to the $5 8 million at the end of the prior quarter.

Alan R. Stewart: At the end of 2023, we had $7 million of debt outstanding related to the partial funding of our save point acquisition and approximately $18 million available on our line of credit if we ever need it. Our annual recurring revenue started on January 1st, 2024, was $95.4 million compared to $79.7 million that we started with in 2023. Our revenue guidance for 2024 is $104 to $106 million. As Ralph explained, and to provide a bit more detail as to how we got to that range, the following may be helpful.

At the end of 'twenty to 'twenty, three we had $7 million of debt outstanding related to the partial funding of our safe point acquisition and approximately $18 million available on our line of credit if we ever need it.

Our annual recurring revenue started on January one 'twenty 'twenty, four was $95 $4 million compared to $79 $7 million, we started with in 2023.

Our revenue guidance for 'twenty 'twenty, four is $104 million to $106 million.

As Ralph explained and to provide a bit more detail as to how we got to that range, but probably maybe ill.

We start with slightly over $95 million in error.

We then went out and already booked $1 million of professional services from a technological solutions division in support of ongoing New York City projects.

Alan R. Stewart: We started with slightly over $95 million in ARR. We then went out and already booked $4 million of professional services from our Technological Solutions Division in support of ongoing New York City projects. And then $2 million of Professor's services were allocated to the case builder deployment for the Department of Corrections. This gets us to a preliminary total of just over $101 million. We expect to recognize another total $3 to $5 million of revenue from a cumulative 2024 pipeline of greater than $44 million from domestic and international Shotspotter, Safepoint, Case Closer, Crime Tracer, and Resource Router bookings to get to our $104 to $106 million GAAP revenue guidance. We're also providing guidance for a 2024 Adjusted Eva Day. We expect our justice score to be higher than the 15% we achieved in 2023 and are raising our guidance range to between 18% and 20% in 2024. Now back to Ralph for some final thoughts, and then we'll be happy to take your questions. Thanks, Alan.

And then $2 million of professional services related to the case for a good part of it.

The department of corrections.

Just get pushed your preliminary totaled just over $101 million.

We expect to recognize another total $3 million to $5 million of revenue from accumulative 2024 pipeline of greater than $44 million from domestic and international Shotspotter shape point.

Espada crime chase or in research, where our bookings to get you are unemployed or $106 million GAAP revenue guidance.

We are also providing guidance for 2024 adjusted EBITA we.

We expect our adjusted EBITDA to be higher than the 15%. We achieved in 2023 and are raising our guidance range to between 18% and 20% and 2024 now.

Now back around for some final thoughts and then we'll be happy to take your questions.

Thanks, Alan let me take a moment to thank my fellow colleagues and partners for a truly remarkable 2023.

We are all committed to and excited about continuing to build and service safer communities and gathering places globally.

Operator, I think we're now available to open it up for questions.

Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Ralph A. Clark: Let me take a moment to thank my fellow colleagues and partners for a truly remarkable 2023. We're all committed to and excited about continuing to build and service safer communities and gathering places globally. Operator, I think we're now available to open it up for questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone. Confirmation time won't decay, your line is, You may press star 2 if you'd like to remove your question from the...

Thank you. Our first question is from Richard Baldry with Roth Capital. Please proceed with your question.

Thanks, and my understanding on the same point as per lane and it might be about a one to three economic ratio versus your traditional shotspotter gunshot detection Hill.

So you added 30 lanes in the corner that'd be like adding another 10 square miles he.

Go over my mouth, when I make sure I'm right and then the reason I'm asking is that would argue if that was a run rate you're adding 40, a year as to what your 100 to 150 recently and Ben It's a it's a pretty significant new growth engine for you now.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing this button. One moment, please, while we pull. Thank you. Our first question is from Richard Baldry with Roth. Please pursue their questions. Thanks. My understanding of the safe point is per lane; it might be about a one to three economic ratio versus your traditional shot spot or gunshot detection. So if you added 30 lanes in the quarter, that'd be like adding another 10 square miles. Can you go over my math on that and make sure I'm right?

That 30, Landstar, but an outlier or is it something that's going to bounce around a little bit is just trying to get your legs under yourselves with that how do we think about the sustainability of that type of.

On execution. Thanks.

Yeah. So this is Alan I'll start and then Ralph you can add additional college of thoughts too.

The average price on a lane is somewhere between 17 and $20000. So your your numbers are pretty close.

Alan R. Stewart: And then the reason I'm asking is that would argue if that was a run rate, you're adding 40 lanes a year-ish to what you're adding 100 to 150 recently, then it's a pretty significant new growth engine for you now. Is that 30 lanes sort of an outlier? Is it something that's going to bounce around a little bit as you sort of get your legs under yourselves with that? How do we think about the sustainability of that type of execution? Thanks. Yeah, so this is Alan. I'll start, and then Ralph, you can add additional comments or thoughts too. The average price per lane is somewhere between $17,000 and $20,000, so your numbers are pretty close.

We have gotten some traction are fairly well in the last quarter and we do expect that as we continue to add capability, both sales marketing and deployment as well that will expand as we go into 'twenty four.

From a profit standpoint, each one of those lanes costs are less than 50% of the actual price per line. So we would expect that the gross margins to be significant as well.

And can you talk about the pipeline or the sustainability of what you've seen so far and now it seems to me some of the applications that can support our pretty large scale deployments not just hundreds possibly thousands.

Ralph A. Clark: We have gotten some traction fairly well in the last quarter, and we do expect that as we continue to add capability, both sales, marketing, and deployment as well, that will expand as we go into 2024. From a profit standpoint, each one of those lanes costs less than 50% of the actual price per lane, so we would expect that gross margins to be significant as well. And can you talk about the pipeline or the sustainability, maybe, of what you've seen so far? And, you know, it seems to me some of the applications that can be supported are pretty large-scale deployments, not just hundreds, possibly thousands. So where are you looking at, you know, starting small, where the elephant hunting concept comes in, you know, sort of overall how you're feeling about the operation? Yeah, Rich, this is Ralph.

Where are you you're looking at you know starting small, whereas elephant hunting concept comes in you know sort of overall, how you're feeling about the opportunity there.

Yeah Rich. This is Ralph is that question specifically to the same point pipeline yes.

Yes, or in general Yeah. So I think it's worth noting that we have an overall pipeline of about $45 million or so and it's growing.

A $10 million or so of that pipeline is associated with a safe point and it's growing.

Every single day, as we put kind of more marketing resources around kind of discovery opportunities.

I think our go to market motion strategy is really around kind of land and expand very similar to our experience with shotspotter is to kind of get some lanes going kind of show efficacy and then work with those corporate customers typically tune expand our lean penetration within our physical enterprising women.

Ralph A. Clark: Is that question specifically about the SafePoint pipeline? Yes. Or in general?

Ralph A. Clark: Yeah, so I think it's worth noting that we have an overall pipeline of about $45 million or so, and it's growing. About $10 million or so of that pipeline is associated with SafePoint, and it's growing every single day as we put kind of more marketing resources around kind of discovery opportunities. I think our go-to-market motion strategy is really around kind of land and expand, very similar to our experience with Shotspotter, to kind of get some lanes going, kind of show efficacy, and then work with those corporate customers typically to expand our lane penetration within a physical enterprise and within a broader enterprise. So that's the strategy.

Water enterprise so that's the strategy.

Right and in terms of you know the.

Step up to go lives on the traditional gunshot detection to 155 in 'twenty three.

That had been around 100 before at at its all time highest do you feel like that's depleted anything you know completed your pipeline near term at all or do you feel like that you know you're beginning to see sort of a step up in broader demand that that might not prove to be an outlier number. Thanks.

Ralph A. Clark: Right, and in terms of, you know, the step up to go lives on the traditional gunshot detection to 155 and 23, which had been around 100 before at its all-time highs, do you feel like that's depleted anything, you know, depleted your pipeline near term at all? Or do you feel like we're, you know, beginning to see sort of a step up in broader demand so that that might not prove to be an outlier number? Thanks. Sure, this is Ralph again. So I think it's worth noting for the past few years, it's been a couple 100, 100 miles kind of per year kind of cadence for go live. I think last year was an exceptional year with a hundred and fifty five. I think going forward, two thousand and twenty four, we're expecting to go live on fewer lanes. So I would definitely say north of a hundred but probably south of one fifty five.

Sure. This is Ralph again, so I think it's worth noting I think past few years, it's been a couple 100 a.

100 miles per year kind of cadence for go live I think last year was an exceptional year with 155, I think going forward 2024, we're expecting to go live on fewer lane. So I would say definitely north of 100, but probably south of $1 55, I think from a mix point of view our expectation is that we're going.

See much more international contribution so on a revenue basis and will probably be a nice kind of uptick because as you know we price a little bit higher on the international deployments and where we're really liking what we're seeing in terms of Uruguay's initial success with Shotspotter and we think that's going to lead to some additional.

Ralph A. Clark: From a mixed point of view, our expectation is that we're going to see much more international contributions. So on a revenue basis, it'll probably be a nice kind of uptick because, as you know, we price a little bit higher on the international deployments. And we're really liking what we're seeing in terms of Uruguay's initial success with Shotspotter, and we think that's going to lead to some additional opportunities in Latin America. Right, and last for me would be, you know, in running up the Department of Corrections contract, it's sort of the largest one we've seen to date. You know, have you had any, you know, fits and starts with that? Do you feel like, you know, it's running smoothly? Any general sort of feedback on how it is, how you think that it'll be referenceable going forward, etc. Thanks. Yeah, so this is Ralph again.

<unk> opportunities in Latin America.

Okay.

Alright, and last for me would be now in and running up the department of corrections contracted sorry, the largest one we've seen states now have you had any you know fits and starts with that do you feel like it's running smoothly or of any overall sort of feedback on how it is how that you think that will be good reference full going forward et cetera. Thanks.

Yeah. So this is Ralph again, it's very early but it's going extremely well we have a very capable capable executive leading that effort with a very strong team.

Mostly the technologic team, that's kind of been in and around supporting N Y P. D. Over the years, we've kind of grown that team to support our our go live efforts on the New York City Department of Corrections contract and we do believe that they're going to be a bellwether to other kind of corrections opportunities for our case builder.

Ralph A. Clark: It's very early, but it's going extremely well. We have a very capable, capable executive leading that effort with a very strong team, mostly the technological team that's kind of been in and around supporting NYPD over the years. We've kind of grown that team to support our, our go live efforts on the New York City Department of Corrections contract, and we do believe that they're gonna be a bellwether to other corrections opportunities for our case builder solution. Very similar again to the way New York Police Department (NYPD) was a bit of a bellwether account for us with respect to Shotspotter. Thanks. Our next question is from Michael Latimer of Northland Capital.

<unk> very similar again to the way New York Police Department NYPD was a bit of a bellwether account for us with respect to Shotspotter.

Thanks.

Our next question is from Michael Latimore with Northland Capital markets. Please proceed with your question.

Alright, thanks, so much.

So Ralph on that comment you just made about gunshot detection business internationally is the implication that.

Youre expecting gunshot in bookings to be up year over year, even if the.

Go live miles or a little bit more.

Yeah, No I was just commenting on the overall revenue mix I think I'll be very clear I think from a total miles point of view our expectation is that we're gonna be south probably of 155, but north of 100 square miles and just the mix of those miles will include more international contribution.

Operator: All right, thanks. Yeah, thanks very much. So Ralph, on that comment you just made about the gunshot detection business internationally, is the implication that you're expecting gunshot bookings to be up here over a year, even if the go-live miles are a little bit lower? Yeah, I was just commenting on the overall revenue mix. I think I'll be very clear. From a total miles point of view, our expectation is that we're going to be south of 155, but north of 100 square miles, and just the mix of those miles will include more international contributions. So the revenue effect. I guess the question would be, is the revenue effect then... better than the 155 go-live miles from this year, given the international... Yeah, as you say, I was specifically not commenting on that. The question is like, okay, do the diminished miles, are those replaced by the additional international go-live miles? We don't have it kind of dialed in to that degree. And then, does your guidance for fiscal 24 assume that the Chicago contract goes through September or November? Yeah, this is Alan.

Alright, okay.

So the revenue effect I guess the question relates to the revenue effect to them.

Better than the $1 55 go live miles from this area.

Yeah, I wouldn't say I was specifically not commented on that the question is like Okay does the diminished smiles are those replaced by the additional international go live miles I mean, we don't have the kind of dialed in to that to that degree.

Okay. Okay. Okay, and then does your guidance for fiscal 'twenty for us in the Chicago contract goes through September or November.

Yeah. This is Alan so the the contract actually goes to <unk>.

And November 22nd.

Got it alright.

Alright.

And then.

In terms of the case builder.

<unk> opportunities obviously, the cracks department is great.

Alan R. Stewart: So the contract actually goes to November 22nd. Guys. All right, named. In terms of the case builder opportunities, obviously, the corrections department is great. I think you mentioned a couple others. In the pipeline, do you have notable prospects in the pipeline for CaseBuilder, seven-figure kind of deals? Yeah, I think it's a mix.

Thank you mentioned a couple of others.

And the pipeline do you have noticed notable prospects in our pipeline for case builder seven figure kind of range deal.

Yes, I think it's a mix so I don't there's not a lot of seven figure deals there's probably no seven figure deals are in there, but I think there's plenty of six figure deals in there along with two bigger deals.

Alan R. Stewart: So I don't think there's not a lot of seven figure deals. There's probably no seven figure deals in there. But I think there's plenty of six figure deals in there along with two figure deals or five figure deals. Excuse me. I just lost 70 million in bookings that you referenced for 23. What kind of growth was that?

We're projecting a five figure deal excuse me.

And just lastly, $70 million of bookings that you referenced for 'twenty, three what what kind of growth was that.

Alan R. Stewart: Yeah, this is Alan. So it's pretty much the same as what we had last year. Ultimately, when you think about the bookings, sometimes it's a multi-year contract, it gets a little higher, sometimes it's just one year, but it was still significant for the year. Thanks a lot. Thank you. Our next question is from Rustam Kanga. Good afternoon.

Yeah. This is Alan so it's pretty much the same as what we had last year ultimately when you think about the bookings sometimes it's a multi year contract that gets a little higher sometimes in just one year, but it was still significant for the year for us.

Okay, Okay great.

Thanks, a lot.

Thank you. Our next question is from Rustam Kanga with citizens JMP. Please proceed with your question.

Good afternoon, and thanks for taking the question. This is Ross on for traveling loss the Duke La is evaluation of the D. P. D appointment talks about how shotspotter.

Ralph A. Clark: Thanks for taking the question. This is Russ on for Trevor Walsh. The Duke Law School's evaluation of the DPD deployment talked about how Shotspotter help was very clear in helping DPD respond to more confirmed gunfire incidents as then when with just 911 alone. How would you characterize those kinds of third-party assessments? And more broadly, do you feel that this can act as a catalyst to win over new city deployment? Great, that's a great question. I think that the Duke study for Durham is very consistent with what we've seen kind of across our deployments. One is the significant underreporting issue of traditional community gunfire that takes place. We know from experience and also several studies that 80 to 90% of community criminal gunfire goes unreported by traditional 911.

That's very clear and helping P. P D respond tomorrow confirm gunfire incidents.

Then with just 911 alone how would you characterize those kind of third party assessments and more broadly do you feel that means can act as a catalyst to win over new city deployments.

Great. That's that's a great question I think that the Duke.

Study for Germany is very consistent with what we've seen kind of across our deployments. One is the significant underreporting issue of a traditional community again part of that takes place, but we know from experience and also several studies that 80% to 90% of community criminal gunfire goes unreported via traditional 911.

Ralph A. Clark: So that stands to reason that when you have an incredible tool like a response tool like a shot spotter in the form of an acoustic gunshot detection technology, you're going to be able to get much broader coverage. And because we are providing a very precise location and doing all this within 30 to 45 seconds of the trigger pull, we're going to see really significantly improved response rates, literally to the dot. And once you equip officers to be able to respond to gunfire very quickly and precisely in a much more comprehensive way, you're going to get good outcomes. And those good outcomes take the form, first and foremost, of saving lives. For many of those situations where gunfire rings out, you have a gunshot wound victim on the other end.

So that stands to reason that when you have an incredible tool like response tool like shotspotter in the form of an acoustic gunshot detection technology youre going to be able to get much broader coverage and because we are providing a very precise location and doing all of this within 30 to 45 seconds of the trigger pool.

We're going to see really significantly improved response rates literally to the dock and once you're equipped officers to be able to respond to gunfire very quickly and precisely in a much more comprehensive way youre going to get good outcomes in those good outcomes take the form first and foremost is saving lives for many of those situations.

<unk> were gunfire rings out.

Have a gunshot wound victim on the other hand, and so getting <unk>.

Ralph A. Clark: And so getting officers to the scenes of these events where they can render lifesaving first aid is incredibly important in terms of saving and preserving lives. You're going to find more evidence; collecting shell casings, running them through the system, which allows you to really speed up your investigations and find out who might be responsible for these types of events is also very important and preventative. I would say sometimes you're actually going to capture a trigger puller. Unfortunately, they aren't smart enough to take off after they fire that weapon.

Officers to the scenes of these events, where they can render.

Lifesaving first data is incredibly important in terms of kind of saving and preserving our lives are youre going to find more evidence.

Collecting shell casings running them through the <unk> system, which allows you to really speed up your investigations and find out who might be responsible for these types of events is also very important and preventative I would say.

Sometimes youre actually going to capture a trigger to polar sadly that arent smart enough to take off after they fired weapon, we know that does happen.

Ralph A. Clark: We know that happens a material amount of time, not a significant percentage, but enough to make a difference. And so, if you can take a serial trigger puller off the street from an enforcement point of view, that's incredibly important. And then lastly, I'll just add that when communities see police kind of responding very quickly and precisely to these events in a very respectful way, they become guardians. It really does change the dynamic and the perception that communities have about law enforcement, which is critically, critically important for agencies to have that kind of engaged community support for them to be able to do the things that they do to kind of create safer communities. So all in all, it's a no-brainer from our point of view if you're a city that has ongoing persistent gun violence, to have a tool like this and see the Duke study and other studies that we've seen too. I think Dennis Mayers has done some work at Winston-Salem as an example that just really kind of confirmed the obvious value that a technology tool like this provides. Thank you. Now, our next question. Here we go. Thank you for taking my question and congratulations on a strong finish to 4Q. Maybe two for Ralph and one for Alan.

And a material amount of time, not a significant percent, but enough to make a difference and so if you can take a cereal and trigger puller off the street from US. Unfortunately point of view, that's incredibly important and then lastly, I'll just add that when communities are C.

Police kind of responding very quickly and precisely to these events and very respectful way as guardians. It really does change the dynamic in the perception that communities have about law enforcement, which is critically critically important for our agencies to have that kind of engaged community support for them to be able to do the things that they do to kind of creep.

Safer communities. So all in all it's a it's a no brainer from our point of view, if you're a city that has ongoing persistent gun violence to have a tool like this and seen the Duke study and other studies that we see to I think Dennis mirrors had done some work at Winston Salem as an example that just really kind of confirm the obvious value that a.

Allergy a tool like this provides.

Thank you. Our next question is from fooling with Cantor Fitzgerald. Please proceed with your question.

Thank you for taking my question and congrats on a strong finish to for Q, maybe to Philadelphia and one for Alan wanted to double click on the Chicago exposure. It sounds like you know obviously at the renewal or to November I was wondering if you just could comment on what are the things you could do in <unk>.

Ralph A. Clark: Want to start, you know, double click on the Chicago exposure. Sounds like, you know, obviously the renewal to November. Was wondering if you guys could comment on what are the things you could do in the back that could help position yourself for, you know, the following year?

That could help position yourself for it you know the following yeah, I know I know, it's hard to predict.

Ralph A. Clark: I know I know it's hard to predict the outcome of next year, but how can you get, you know, sound thinking to a better position to set up the next year for Chicago? Sure. Thank you very much for that question. So first, I think it's important to point out that we've been in Chicago operating very successfully for a very, very long time under multiple mayors and also multiple superintendents of police. And it's really all been around the idea of helping a city like Chicago that has so much criminal gunfire, enabling their officers really to get to the dots and get to these gunfire events and be able to again have these lifesaving interventions from, you know, not having gunshot wound victims bleed out in the light.

I'll come off next year, but.

But how can you get you know it sounds like into a better position to you know for the next year is set up for for Chicago.

Sure. Thank you very much for that question. So first I think it's important to point out that we've been in Chicago operating very successfully for a very very long time over multiple mers and also multiple superintendents of police and its really all been around the idea of helping a city like Chicago that has so much.

Criminal gunfire, enabling their officers really to get to get the dots and get them. These gunfire events and be able to again.

These lifesaving interventions.

<unk>.

From a.

Not.

Not having a gun.

Gunshot wound victims I bleed out in Hawaii.

Ralph A. Clark: So I think for us, our focus is going to be to continue to provide the high level of high quality support that we've had over the years with Chicago and really begin to collect more data. I mean, and the data is definitely understood within, I certainly within the Chicago Police Department, but I think we can collectively do a better job being more outward facing and transparent with the good data that we know Chicago PD is collecting in terms of those outcomes and exposing it to a kind of broader audience of, you know, residents, city council, the mayor's office, and even the local press. We're very fortunate and very happy to have reached an agreement with the city and with the mayor to extend the service through November. We know we're going through a challenging summer.

I think for US our focus is going to be to continue to provide the high level of kind of high quality support that we've had that we've had over the years with Chicago and really begin to collect more data and the data definitely understood within certainly within Chicago Police Department, but I think we can collect.

Secondly, do a better job being more outward facing and transparent with the good data that we know Chicago PD is collecting in terms of those outcomes and exposing them to kind of a broader audience of residents City Council, the mayor's office and even local local press.

We're very fortunate and we're very happy to have reached agreement with the city again with the merit to extend the service through November we know we're going through a we're going to go through a challenging summer.

Ralph A. Clark: We've seen this movie several times, and so there's going to be a lot of opportunities to show value. And we think when we kind of pull all that together, it will create a great opportunity to have a conversation about, okay, what's next for the city of Chicago versus pulling the plug. Because the one thing that we did see when there was discussion about potentially interrupting the service, it got a lot of people motivated to weigh in and say, we don't think that's a wise idea because we really are dependent upon this technology. And then while we were on the exposure question, like, can you double click on the Puerto Rico situation? I remember like last quarter was a $2 million exposure, right?

We've seen this movie several years and so there's going to be a lot of opportunities to show value and we think when we kind of pull all that together.

To create a great opportunity to have a conversation about okay. What's next for the city of Chicago versus pulling the plug because the one thing that we did see when there is discussion about potentially interrupting that service. It got a lot of people motivated to weigh in and say, we don't think that's a wife's idea because we really are dependent upon this technology.

And then what we have on the exposure questions like can you double click on the Puerto Rico situation I remember like last quarter was $2 million exposure right.

Alan R. Stewart: And, you know, has that been sorted out, like signed and, you know, gone through? Are we still working on an extension on the PR side? That's Puerto Rico. Do you want me to take that, Alan, or do you want to take that? No; I'd be glad to take it.

And has that been sort out like signed and you know gone through or is it are we still working on the extension on the PR side. So that's.

Best Puerto Rico.

Do you want me to take that Alan or do you want to take that no I think I'd be glad to take this is Alan So we're still working with Puerto Rico to be honest, we did have it funded through our through January I'm still working on them to get some thinking longer term and so we're not done fighting that battle just to be honest.

Alan R. Stewart: This is Alan. So we're still working with Puerto Rico, to be honest. We did have it funded through through January. Still working on them to get something in the longer term. And so we're not done fighting that battle, just to be honest. We still have some risk there with Puerto Rico. But I thought it was because Sounding was the only provider.

We still have some risk there with Puerto Rico.

But I I thought it was like.

Because like you were the only it sounds like it was the only provider so like it it wasn't really too big of a risk here just because you guys are at in pole position here is that correct.

Ralph A. Clark: So it wasn't really too big of a risk here just because you guys are in pole position here. Is that correct? Well, it wasn't from a competitive point of view, but I mean, there was always kind of a funding issue that we're dealing with. I think that's what Alan's referring to.

Well it wasn't it was from a competitive point of view, but I mean, there was always kind of a funding issue that we're dealing with I think that's what allen's referring to so we're still working with.

Alan R. Stewart: So we're still working with Puerto Rico on finding a funding source to continue the service. And then on the expansion side, last quarter we mentioned the Philadelphia, New Jersey housing. How's that coming along in terms of the expansion, if you guys could give us an update on that as well? Yeah, this is Alan.

Puerto Rico on finding a funding source to continue the service.

And then on the expansion side last quarter, we mentioned about like the Philly New Jersey housing How's that coming along in terms of expansion. If you guys could give us a update on that as well.

Yeah. This is Alan are where we're still working on to go live with that with that once that is complete then what we're expecting and hoping that both the housing authority and are they the police departments are working together to make that a a significant.

Alan R. Stewart: We're still working on going live with that. Once that is complete, then we're expecting and hoping that both the Housing Authority and the police departments will be working together to make that a significant potential for us. There's a lot of gun violence in Philadelphia. Everybody knows that.

Potential for us there's a lot of gun violence in Philadelphia, everybody knows that we believe that once they see the positive effects of our solutions that could turn into something significant.

Alan R. Stewart: We believe that once they see the positive effects of our solutions, that could turn into something significant. Is there like a rough timeline, Alan, or is there not? Because I remember last time you talked about 20 miles, potentially 20 miles here. Has that changed, or been demolished?

Is there like a rough time Lisle, Illinois, there because I remember last time, you talked about 20 miles potential potentially 20 miles here has that changed demolished and secondly, the timeline.

Ralph A. Clark: And secondly, the timeline? Yes, we haven't talked about how big it could be. I mean, it is a large city with a big, big problem, but we won't be giving any guidance in terms of, you know, where that could be other than that it could be significant. Okay, and my final question is congrats on your great win. In terms of other areas you guys are looking at internationally, are there other regions you look at, maybe Brazil? I know you're already in South Africa, so you could comment on that. Yeah, so this is Ralph.

Alright.

Yeah, It was still Alan.

We we haven't talked about how big it could be I mean, it is a large city with a big a big issue, but we won't be giving any guidance in terms of you know where that could be out of it then it could be significant.

Okay and just my final question is congrats on the great win in terms of like other areas. You guys are looking at and internationally are there. Other regions you look at it maybe Brazil's I know you're you're already in South Africa like that you could comment on.

Ralph A. Clark: Yes, yes. So you mentioned Brazil. It's, yeah, it's interesting you mentioned Brazil. So certainly, you know, Brazil, Mexico, there's a couple of Caribbean countries that we're very interested in. It turns out there's a Brazilian delegation that spent time in South Africa. They had a very successful visit there.

Yeah.

Yeah. So this is Ralph so you've mentioned it's yeah. It's interesting you mentioned, Brazil, So certainly you know Brazil.

Mexico, There's a couple of Caribbean countries that were very interested in.

It turns out Theres, a Brazilian delegation that spent time in South Africa. They had a very successful visit there. So we're very excited about the potential there in Latin America, and think that that again, given Uruguay success with a solution, which is also interesting expansion opportunity for us that we're gonna be able to put up some.

Ralph A. Clark: So we're very excited about the potential there in Latin America and think that, again, given Uruguay's success with the solution, which is also an interesting expansion opportunity for us, we're going to be able to put up some interesting numbers internationally this year, later this year. Okay. Thank you very much, Ralph and Alan. Thank you. Next hour, this is Matt Pfau with William Blair.

Christine numbers.

Internationally. This year later this year.

Okay. Thank you very much about an hour.

Thank you. Thank you.

Our next question is from Matt Pfau.

With William Blair. Please proceed with your question.

This is Kieran Kenny cut on for Matt. Thanks for taking our questions. My first one on the recent price increases pressured renewals at all or has there been any desire from customers to sign longer contracts.

Operator: Thanks for taking our questions. My first one is, have the recent price increases pressured renewals at all? Or has there been any desire from customers to sign longer contracts? Yeah, so this is Alan.

Yeah. So this is Alan we are doing the price increases the MSRP is happening. This year, we haven't seen a lot of pushback on that right now.

Alan R. Stewart: We are doing the price increases; the MSRP is going up this year. We haven't seen a lot of pushback on that right now. We might see more as we, you know, go live throughout the year. The last time we did a price increase, it did take some time to get that through across the board, but it's going to happen. And so far, other than what you would normally expect, you know, there's always a little bit of pushback when you have a price increase. But most of our customers are used to at this point, especially after what they've seen with the price increases across the board, to have some kind of call increase with their vendors anyway. So we're not We're not concerned about it. Got it.

We might see more as we are.

You know go live throughout the year. The last time, we did a price increase it did take some time to get that.

Through across the across the board, but it is going to happen and so far other than what you would normally expect.

There's always a little bit of pushback when you have a price increase but most of our customers are used to at this point, especially after what they've seen with the price increases across the board to have some kind of a cola increase their with their vendors anyway. So we're not we're not concerned about it.

Got it and then can you comment on demand for our bundled products and has this strategy continued gaining traction.

Alan R. Stewart: And then can you comment on demand for bundled products and whether this strategy continues to gain traction? We're excited about that, honestly, and we don't want to talk too much about it. But I think there's one going live with three or four of our products this week, actually.

Yeah.

Yeah, No I think yeah, so where we're excited about that honestly, we don't want to talk too much about it but I think there's one going live with three or four of our products. This week actually so we're not going to talk about it until it's complete but we're starting to see more and more customers that are interested.

Ralph A. Clark: So we're not going to talk about it until it's complete, but we're starting to see more and more customers that are interested in getting more than just one product. And we've set up our plans with our sales and marketing team to make sure that it makes sense for not just our commission structure but also for the customer. Consumers might be able to save a little bit of money if they get two products instead of one, and we think it's going to be highly successful over time. Yeah, I think there's some just if I could just add on to Alan's excellent comments. I think there's certainly some natural affinity bundle between kind of Crime Tracer and Case Builder, and we've seen a couple of interesting opportunities where one of each has kind of pulled through the other, which is kind of interesting.

And getting more than just one product and we set up our our plans with our sales and marketing team to make sure that it makes sense for not just our our commission structure, but also for the customer might be able to save a little bit of money. If they get two products instead of one and we think it's gonna be a highly successful overtime.

Yeah, I think theres. Some just if I could just add on to Alan's excellent comments I think there's certainly some natural affinity bun.

Bundled between kind of crime tracer encase builder and we've seen a couple of interesting opportunities, where one would be just kind of pull through to the other which is kind of interesting.

Ralph A. Clark: We've also seen early on that we had a resource router. There's kind of an interesting kind of resource router, the Shotspotter bundle, if you will, where customers were saying, you know, they're already using Shotspotter from a respond capability. So, kind of taking the leap to kind of extend broader into overall patrol management was kind of interesting. So, there were a number of Shotspotter customers that, you know, expanded a mile and then also added a resource router to their solution set. So, there's definitely some natural bundles that are already in play that we're looking forward to really accelerating.

We've also seen early on we had a resource router there was kind of an interesting kind of resource router shotspotter bundle. If you will where customers were saying, they're already using shotspotter from a respond capabilities. So kind of taking the leap to kind of extend broader into overall.

Bold management was kind of interesting. So there are a number of shotspotter customers that expanded a mile and then also added a resource router to their solution set so there's definitely some natural bundles that are.

That are already in play that we're looking forward to really accelerating.

Great. Thanks for taking my question.

Ralph A. Clark: Great, thanks for taking my question. Thank you. Our next question is from CJ Cipollino with Craig Howard. I wanted to touch on the Chicago extension one more time. The two-month transition period, could you maybe talk about the economics of it, similar to the extension of the original contract? Yes, so this is Ralph.

Thank you.

As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad.

Our next question is from C. J Dippolito with Craig Hallum. Please proceed with your question.

Okay.

If we know on for Jeremy Hamblin <unk>.

Wanted to touch on the Chicago on accession one more time, the two month transition period could you maybe talk about the economics of it similar to the the extension of the original contract.

Yes. So this is Ralph let me, let me lay it out for folks. So we effectively signed a nine month extension for $8 $6 million, which essentially represents kind of a 12 month term.

Ralph A. Clark: Let me lay it out for folks. So we effectively signed a nine-month extension for $8.6 million, which essentially represents kind of a 12-month term. But we executed that against an overall nine-month term, and the way the nine-month term is structured, it's essentially kind of seven months that formally gets them through the turbulent summer months that we know exist out there for Chicago, and also, interestingly enough, the wrapping up of the Democratic National Convention and then also Republican National Convention, although being held in Milwaukee, we know there's a lot of folks that are participating in that convention that will be in and around the city of Chicago.

But we executed that against a overall nine month term and the way. The nine month term is structured it's essentially kind of seven months that formally gets them through the turbulent summer months that we know exists out there for Chicago and also interestingly enough the they're wrapping up of the Democratic National Convention.

And also a Republican National Convention, although being held in Milwaukee, We know Theres a lot of folks that are participating in that convention that will be in and around the city of Chicago. So that's kind of seven months and then there's kind of a two month, a wind down period and I think the <unk>.

Ralph A. Clark: So that's kind of seven months, and then there's kind of a two-month wind-down period. And I think the mayor's office explanation of this is that they're looking to figure out how they can bridge to something else kind of post-Shotspotter, and I think that's to be determined. So part of our effort really is, over this nine-month period, to extensively collect data so they can be very clear about the thing that they're replacing. They need to know what it is, and I think they would better understand it if they had a lot of data.

The Mayor's office explanation of this is that they're looking to figure out how they bridge to something else kind of post shotspotter and I think that's to be determined.

So part of our effort really is over this nine month period is too extensively collect data. So they can be very clear about the thing that they are replacing they need to know what it is and I think they would better understand what it is that they have a lot of data and our bet is that when presented with that data in terms of what it is and what the capabilities are.

Ralph A. Clark: And our bet is that when presented with that data in terms of what it is and what its capabilities are, it's going to be very, very difficult, I think, to replace that capability and understanding that 80 to 90 percent of community criminal gunfire goes unreported that Shotspotter is making them aware of on a real-time basis and a very precise basis that's enabling them to get to the scene of these crimes and, again, render aid That's a tough thing to replace, especially when you're already understaffed from a boots-on-the-ground perspective. I think the number in Chicago is there are like 2,000 patrol officers under headcount.

It's going to be very very difficult I think to replace that capability can understanding that 80% to 90% of community criminal gunfire goes unreported.

That shotspotter is making them aware of on a real time basis in a very precise spaces, that's enabling them to get to the scene of these these crimes and again render aid to save lives that don't have a matching 911 call that that's a tough thing to replace especially when you are already under staff from.

Boots on the ground perspective, I think the number in Chicago is there like 2000 patrol officers under head count and so to kind of takeaway of force multiplier technology tool like this when Youre down head count Wise and you have sadly historical violence is.

Ralph A. Clark: And so to kind of take away a force multiplier technology tool like this when you're down headcount-wise and you have, sadly, historical violence, it's a bit of a head-scratcher. So we're going to be working really hard to ensure that everyone kind of sees the light of day, and we'll just continue to build upon the relationship we've already enjoyed in Chicago for multiple years across multiple mayors, We deserve to be in Chicago.

It's a bit of a head scratcher.

So we're gonna be worked really hard.

To ensure that everyone's kind of sees the light of the day and we'll just continue to build upon the relationship we've already enjoyed in Chicago again for multiple years across multiple mariners multiple superintendents, we deserve to be in Chicago.

Alan R. Stewart: And then the next question is going to be on gross margins. You've discussed in the past that you think gross margin could be up to, you know, 70% in about four years. Could you just maybe touch on the composition of revenue streams that are going to, you know, help you achieve that target, considering, you know, current gross margins closer to 60? Sure, this is Alan.

Great. Thank you and then the net.

Question is gonna be on gross margins you've discussed in the past that you think gross margin could be up to 70% and about four years could you just maybe touch on the composition of revenue streams that are going to help you achieve that target considering current gross margins closer to fix it.

Sure. This is Alan so the nice thing about having more products now.

Alan R. Stewart: So the nice thing about having more products now is that as revenue grows, the cost of goods sold does not grow as much, and the gross margin is going to increase. We haven't given guidance on gross margin for 24, but we expect it to be around 60, which would be higher than we ended this year. And that's because all of the products that we have continue to grow revenue, we don't necessarily have to increase so much in COGS. The other thing, too, is that SafePoint is brand new for us.

As the revenue grows the our cost of goods sold does not grow as much in the gross margin is going to increase we haven't given guidance on gross margin for 'twenty four but we expect it to be around 60, which would be higher than we ended this year and that's as the all of the products that we have continued to to to grow.

Revenue, we don't necessarily have to increase so much in Cogs. The other thing too is we save point is brand new for us.

Alan R. Stewart: So, you know, there's a little bit of expense there as we continue to build up the solution. It's also a software solution. The other ones are mostly software solutions, even if they have some sort of, you know, sensors that are related to it.

So you know what there's a little bit of expense there as we continue to build up the best solution. It's also a software solution and the other ones are software solutions, even if they have some sort of sensors that are related to it.

Alan R. Stewart: Going closer to some of the higher gross margins for those solutions, as Ralph mentioned, the International, when we go live with Miles International, they have a significantly higher gross, So we still believe that, ultimately, in the next couple of years, we'll be around that 70% or maybe even a little more. Okay, thank you. At this time, this concludes our question and answer session. If your question was not taken, you may contact Sound Thinking's investor liaison by e-mailing ss.ncbi.nlm.nih.gov or calling gateway-grp.com.

Going closer to some of the the higher gross margins for those solutions as well as Ralph mentioned the international what have you.

Alive in Laos and international they are at significantly higher gross margin. So we still believe that ultimately the next couple of years will be around that 70% or maybe even a little more.

Okay. Thank you.

At this time. This concludes our question and answer session. If your question was not taken you may contact out thinking with Investor relations team by E. Mailing. That's S. T I a gateway that's G. R. P dot com.

Operator: I would now like to turn the call back over to Mr. Clark. Great. Thank you very much. I want to thank everyone for joining today's call and look forward to hopefully seeing many of you on our Investor Day, which is currently scheduled for March 14th. Thank you very much and be safe. Thank you for joining us today for our... You may now. Goodbye.

Now I'd like to turn the call back over to Mr. Clark for his closing comments.

Great. Thank you very much I want to thank everyone for joining today's call and looking forward to hopefully seeing many of you on our Investor Day, which is currently scheduled for March 14th.

Thank you very much and be safe.

Thank you for joining us for today for our call you may now disconnect.

Goodbye.