Q2 2019 Earnings Call
Good afternoon, and welcome to shop, but as second quarter that 2019 earnings conference call.
My name is Sean tell an automobile operations for today's call.
Joining us a shot Spotify, so yeah, it rolls clock and so yes, I I once too much.
Please note that certain information discussed on the call. Today will include forward looking statements about future events and shot specialist 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.
May cause the actual results to differ materially from nice stated or implied by those statements.
The addition of these risks and assumptions.
As discussed in the shots, but as I say, you say filings, including its registration statement on form S. One.
These forward looking statements reflect managements beliefs estimates and predictions.
As of the date of the flights broadcast.
Well guess 629 chain and shot Spotify 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 viral link available in the Investor Relations section of the company's website at <unk> Dot shots ball Shaw.
Dot com.
Now I would like to turn the call I have a two shot spot as say hi, Ralph clock. Please go ahead.
Thank you for joining us this afternoon as usual I'll start with an overview of our Q2 results and a general update on the business.
Then Alan will dive deeper into the numbers before we take your questions.
We're pleased with the progress in Q2 toward both our full year and long term strategic growth objectives.
For the quarter, we posted record revenues of 10.3 million, which included some modest revenue from Shotspotter labs.
We're also GAAP profitable in the second quarter, earning three cents per share.
Despite that forward momentum. However, we are adjusting our full year 2019 revenue guidance downward to 42 million to 44.5 million, while reiterating our guidance for full year 2019 GAAP profitability.
Alan I will review the rationale for the revenue adjustment later on in our prepared remarks.
We went live with 25 square miles from an existing customer expansion in five new city captures.
And only the first half of 2019, we deployed nine new cities compared to the 11 cities. We added for all of 2018.
The smart city deployments, reflecting excellent progress we've made in growing our tier two and three city pipeline. In addition to the 25 miles added in Q2, we've already gone live on another 17 square miles quarter to date here in Q3.
Catches city additions were Columbia, South Carolina Lake Park in Tampa, Florida, Newport News, Virginia, and Toledo, Ohio, There's no attrition in the quarter. Although we anticipate we may have some minor attrition in the second half of this year, representing less than 1% of annual revenue.
As we have discussed our domestic focus this year is expanding our penetration in tier two and tier three cities. So we're very pleased that our efforts are paying off.
We are particularly excited about our first city capture in the state of Virginia, and with the continued penetration of our footprint in Ohio, which now totals five cities, not including Dayton, which we just booked last week.
In closing date and would represent four new cities in Ohio in just the past 12 months.
And although we're pretty excited last week about booking the Dayton contract that excitement has given way to a deep sense of shock increase given the tragic events over the weekend.
Our thoughts and prayers go to the residents of Dayton, especially those who lost loved ones.
We do believe that this type of geographic clustering that we're experiencing in Ohio in other regions reflects the word of mouth endorsement that as a key part of our expansion strategy.
We find that police chiefs in city officials are all too happy to share solutions that produce positive results with their peers. We believe this network effect is a key revenue driver and a reason our customer acquisition cost remained low.
Our customers are seeing positive outcomes with our solutions.
That's probably report at Columbia, South Carolina went live April 18, and through July 1st Shotspotter alerted on 360 separate gunfire incidents in which Columbia P.D. was able to recover 306 casings inter twentyseven investigative leads into niven make 21 arrest and take 30 guns off the street six of which were stolen.
This is just one example of a significant positive impact shotspotter can have.
And as I just noted our customers are talking about it over and over again.
While domestic flex is an important contributor to our revenue. We also see very encouraging trends and diversification of our future revenue stream.
We increasingly do our internal planning and assessment by looking at four sources of pipeline bookings in revenue represented by domestic flex International flags missions, and other which includes security Shotspotter labs and professional services.
On the international front, we have submitted budgetary and price quotes for close to $5 million in annual recurring revenue in four key markets in Latin America.
Unfortunately, even though we expect many of these proposals to be ultimately awarded with new customers and new markets. It is challenging to predict the specific timing of contract execution and project deployment.
Our existing three year old customer in Cape Town, South Africa has publicly stated their intention to renew and expand shotspotter across more of the city.
We expect their tender notice to be published very soon although the timing is later than what we had been previously advised.
In summary, it is fair to say that Shotspotter interest in international markets is actually exceeding our initial bookings expectations, but it is also true that it's taking longer than we had originally expected to convert them in time to drive.
Material revenue in 2019.
Domestically, we're encouraged to report progress on the $1.5 million RFP opportunity, we highlighted in last quarter.
Where the original RFP was cancelled due to lack of competitive bids that RFP was republished and we have already resubmitted. Our proposal and are optimistic that an award will be shortly made.
But again the timing is uncertain.
We still see a path to achieve the low end of our previous outlook. If some of these opportunities convert in the next 30 plus days.
But to be transparent and cautious we're assuming that very little of this business closes in time to generate measurable revenue for this fiscal year.
Missions is a newer part of our business, but we're equally excited by the market response were seeing and look to book a handful of customers later this year.
As public safety agencies increasingly pursue precision oriented policing strategies, we know there will be turning to providers with the best and most actionable data and intelligence. We believe our mission service offering furthers our reputation for technological excellence reliability and effectiveness. We're leveraging that reputation is helping us accelerate the missions pipeline and putting us in a position to get more share of wallet within our customer base.
In the other category, we recently through Shotspotter labs implemented phase one of our Kruger Park deployment, which addresses the serious problem of Rhino poaching disappointment is critical not just for the important conservation impact that it has but it also gives us insight into point Shotspotter technology in rugged difficult environments.
We are in effect getting paid to learn.
We're pleased with how labs is evolving and contributing to our growing body of innovation, while supporting important sustainability works.
And when it comes to the reputation for superior technology I want to stress that we're not resting on our laurels. We continue to advance our already strong competitive position in the acoustic gunshot detection surveillance space through continuous innovation.
For example, our machine classification technology has exponentially increased with the adoption of sophisticated machine learning techniques combined with our bass and proprietary dataset of acoustic gunshot signatures collected over 12 plus years. This is a critical asset whose value should not be underestimated when evaluating our competitive moat.
We've also been building out an internally focused tool set for our customer support in incident review center teams. These tools help them perform their duties faster and more accurately, thereby improving the overall customer experience think faster alerts better location accuracy, and even fewer false positives and false negatives in even greater on scene context as delivered by our mobile I'll ask for investigative lead Summer report.
We're also providing more resiliency flexibility security and scalability to our re architecture with an A.W.S.
This is not your fathers Oldsmobile Shotspotter and although we will never take anything for granted it's difficult to see how anyone could replicate and scale to meet our technology advantages without initially producing a subpar customer experience at great expense and risk.
This combination of strong technological and market barriers to entry plus sufficient successful execution is the heart of why we're so confident about the company's long term profitable growth prospects.
Before I turn the call over to Alan I want to quickly touch on our announcement last week on the privacy audit conducted by the policing project. That's again why you school of law.
There is an increasing amount of public discourse on the trade off between privacy in public safety.
Thats Shotspotter, we take this conversation very seriously.
And in order to take a leadership position in this area. We engage in why you to audit Shotspotter technology in independently weigh in on the potential friction between appropriate surveillance and the positive public safety outcomes, we help provide.
After a thorough and detailed analysis. They in why you policing project the pine that Shotspotter flat presents the extremely low rest of any inappropriate voice surveillance. The study did make several recommendations as to how we can further reduce surveillance rests with our solution made these changes were already part of our roadmap in other cases, we added the recommendations to our release plan.
We're excited to take a leadership position in engaging in this important conversation about privacy and surveillance.
So its been another busy quarter for Shotspotter of course, we're very disappointed to be reducing our f. why 2019 guidance again, but we expect that this is only a timing issue.
We believe the pipeline in interest in our offering is only growing.
More than ever I feel that shots farmers getting closer to becoming a standard of care for connecting law enforcement agencies to the communities. They serve through data driven policing now over to Alan.
Thank you Ralph and good afternoon, everyone.
We made progress in Q2 on many of our objectives, including adding 25, new Lifemiles.
And recognizing both record revenues and income.
With the 17 miles that have gone live since quarter end, we are making progress towards the 50 go live miles and the 90 plus days that we highlighted on our last earnings call.
In Q2, we added five new cities generate initial revenues from SaaS Proto labs and gain more traction in attracting the interest of new international customers.
We're also very pleased that we were again profitable in Q2, while still increasing our investment in the business.
We now expect to maintain profitability on a quarterly basis.
As Ralph outlined we are reducing our full year revenue outlook due to the uncertainty on the timing of certain domestic contracts and the timing of new international client additions.
We now expect revenues to be in the range of $42 million to $44.5 million.
To be clear the business than we anticipated when we provided the original guidance is still in our pipeline and in fact in most cases proposals have already been submitted to the prospective clients. None of that has been lost.
And there's a path where we may still achieve 44.5 million in 2019 revenues, which is reflected in the wide revenue range. So later this year.
But as we ramp our international business, we felt that it was the best path to take those opportunities out of our guidance.
As we mature in these markets we are optimistic the cadence will more closely match our domestic business.
But it will take more time to get there than we anticipated earlier in the year.
Finally early in the quarter, our board of directors authorized a share buyback program of up to $15 million.
As of the end of the quarter, we had not yet repurchased any shares.
However, we are prepared to implement the buy back when the window opens if we feel our stock price does not reflect its intrinsic value.
So, let's take a closer look at the quarter.
Revenues increased 15% to $10.3 million.
Well this growth rate is below our recent results we were comparing to a particularly strong Q2 last year.
In addition, many of our new miles were added late in the quarter.
We expect a significant revenue ramp into the end of the year based upon the miles that have been deployed year to date.
The backlog of miles expected to go live during the remainder of the year.
We anticipate adding approximately 70 miles in the second half of the year, although some of those miles will go live later in Q4 and may not materially affect revenue for 2019, but we'll provide an entire year revenue for 2020.
We expect third quarter revenue will be up modestly from Q2.
With fourth quarter higher than Q3.
Gross profit for the second quarter was $6 million or 58% of total revenues up from $5 million or 56% in the second quarter of 2018.
Adjusted EBITDA for the second quarter, which is calculated by taking our GAAP net income and adding back interest taxes, depreciation amortization and stock based compensation.
Almost doubled to approximately $2.4 million versus $1.2 million in second quarter of 2018.
We continue to invest appropriately to fund long term growth, while benefiting from the unique leverage in our business model.
Our operating expenses for the second quarter were $5.7 million.
Or 55% of revenues versus $5.3 million or 59% last year.
We continue to increase our investments in each area of our operating expenses, but still expect overall opex to increase less than our rate of top line revenue growth, increasing our operating margins for 2019.
Looking at each of the line items sales and marketing expenses for the second quarter were $2.4 million or 24% of total revenues versus $2.2 million or 25% of total revenues for the prior year period.
We continue to make strategic investments to expand our sales and marketing programs and are pleased with the early returns on these investments.
We expect this level of spending to increase on a dollar basis for the balance of the year.
Our R&D expenses for the second quarter were $1.4 million or 13% of total revenues compared with $1.3 million or 14% of total revenues for the prior year period.
We continue to invest in R&D to add features and functionality to our emissions products to improve our analytics capabilities and fund new initiatives.
We expect this level of spending to increase on a dollar basis for the balance of the year.
Jana expenses for the quarter were $1.9 million or 18% of total revenues compared to $1.8 million or 20% of total revenues for the prior year period.
We expect that our GNS expenses will increase modestly on a dollar basis throughout the year.
Our GAAP net income for the second quarter was $387000 or three cents per share based on 11.4 million basic and 12 million fully diluted weighted average shares outstanding.
This compares to a GAAP loss of $369000 or three cents per share. The prior year based on 10.6 million basic and diluted weighted average shares outstanding.
As I noted above we are particularly pleased to return to profitability, even with the increased spending is funding our future growth.
We added 25 net new go five miles in Q2 as we have discussed we are focused on adding 300 gross files over a two year period, and we continue to believe that with our current pipeline will still meet that plant.
We ended the quarter with 685 miles life in 100 cities and 11 campuses sites at the end of Q2, we had approximately 700 miles under contract.
Deferred revenue at the end of Q2 was $23.1 million of this amount $22 million was short term and 1.1 million was long term.
Our balance sheet remained strong during the quarter with cash flow used in operations of $1.2 million, primarily due to the timing of accounts receivable collections.
We ended the quarter with 27.4 million in cash and short term investments.
As always we appreciate your loyalty and look forward to speaking with many of you in the coming weeks and months now back over to zero.
Thanks Alan.
I can't tell you how proud I am of the Shotspotter team lenient in everyday in doing this important work.
Doing well by doing good as more than just the slogan for US we truly believe in our purpose and our mission.
It is very exciting to see the impact we're having on these communities we serve while we manage a profitable growing business again, we're disappointed with the time shift impact on our full year revenue outlook, but we expect to end the year position for a very strong 2020 and beyond.
We're now happy to take your questions.
Thank you we will now be conducting a question and answer session.
If you would like to ask a question. Please press Star then one on your telephone keypad.
I come from my son, tying it will indicate your line is in the question Ki.
You May press Star then to see if he would like to turn me. If your question from the key.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Okay.
One moment, please fall we poll for questions.
[noise].
Thank you. Your first question comes from match pool.
From William Blair go ahead. Please.
Hey, guys. Thanks for taking my questions.
First wanted to ask on the international markets and what's going on there maybe just give us some more detail.
About what changed I guess between last quarter and this quarter that made you start to think that these deals are going to take a bit longer to close than originally expected.
Yeah. So maybe I'll start now in Q nuts can jump in I think one of the encouraging things. We saw actually was a broadening of the pipeline. The number of conversations that we're having with various markets primarily in Latin America is quite encouraging I think in hindsight, probably one of the things that we did was we applied our I would say our domestic sales cadence over the process internationally with a little bit of discounting with respect to timing. So typically when you engage a client you have their very first meeting. They are expressing interest then you take the next step there is sharing data you are using that data to define a coverage area. Then you go to the next step where they're asking you to put together a budgetary proposals you're kind of talking about pricing and the like and then in the case of international we're seeing the very next step where they are requesting to make trips to the U.S. to kick the tires with several bar deployments and I should definitely give a shout out for all the customers here domestically.
They are participated in many many meeting meetings that we've had over the past several months from visitors from Latin America, Chicago, Camden in why PD, Miami, Miami Gardens in others and so these are all very encouraging signs even in some cases, we took it to the point, where they were identifying budget they were identifying and procurement process RFP versus our sole source in the case of a couple of opportunities we even got down trading paper on the contract terms and that actually led to us such establishing a Colombian subsidiary because we thought we were that close I think.
In hindsight, even though we're getting all these encouraging signs just dealing with the complexity of various kind of national governments their process processes or more I would say kind of persnickety time wise and from a procurement point of view. So just frankly, just taken longer than we anticipated, but encouraging thing is I think that the number of customers in the size of the pipeline is much larger than we had originally anticipated.
Got it and it sounds like a lot of the issues or timing, but anything changed in your view or the sort of think about the long term growth potential that business I know last year, you would sort of previously communicated to the target would be 30% growth or so over several years.
Any any change in your thinking there given some of the current events.
No not really I think we talked about trying to grow domestically about 300 square miles gross square miles every couple of years. We knew this year, we weren't going to have a tier one so I think its stance to expect that we.
We expected to be less than a 150 square miles for 2019 and Thats. Good thats clearly going to be the case this year and those miles are going to be probably more backend loaded than front end loaded which is a situation. I think we enjoyed in 2018 that was really quite favorable to us we got a whole bunch of miles that went live in 2018 and 65% of those miles went live in Q1 Q2, and they were able to produce GAAP revenue I think when you think about growth I think it's fair to say that we're taking to maybe three really interesting business lines that are effectively almost $0 in growing them very rapidly over the next four plus years. So think in terms of international missions and then the other category, including professional services.
Security et cetera. These businesses, we think in the next four plus years can represent 2020 $5 million in in revenue and Thats, how we get to that kind of 25% to 30%.
CAGR growth over the long term recognizing full fully of course that as we've always communicated that our sales are lumpy, we're going to have years, where we have a tier one and we're going to have years, where we don't have a tier one, but we're pretty comfortable with the idea that domestically. We can drive 600 square miles over the next four plus years and I think we're still very much on that on that cadence.
Great.
That's it from me guys. Thanks for taking my questions.
Thank you.
Thank you. Your next question comes from China.
Also.
JMP Securities.
Go ahead please.
Hi, gentlemen couple couple of questions for you first looking at your comment about.
The existing customer expansion and five new deployments during during the past quarter. I believe you do will map and those new deployments are fairly small.
How do you feel about the expansion potential for some of those.
Points over the next.
Good quarters.
Yeah, Joe This is Alan I would say.
Well first of all we are pleased that we've added nine new cities already this year, but I would also say that we are expecting.
More expansions from our existing cities in Q3 and Q4.
One of them. We already started there is still more to go for the one that added some of the miles of the 25 for Q2 was a couple more miles that we've already gone live in Q3, we already know of one fairly sizable expansion for another customer that's going to occur.
Hopefully in Q3.
Or maybe into a little bit Q4, so I would say.
We're optimistic and feel pretty good about the expansions to our current customers.
So if you were to just sort of sit down and say over the next several quarters without.
Boxing you into March.
And think about the composition of new adds in terms of expansions versus new customers, what what might you expect that mix to walk away.
Yes. This is Alan again, I would say just based on what we know right now, we're probably going to going to have more in expansions for the second half of the year than we are necessarily in new cities.
And that is.
Basically with contracts that were already aware of or are close to being design.
Okay and then.
Moving back to this question of the 300 mile cadence understanding course that that's kind of a good rule of thumb overtime.
You do if assuming the 70 miles happens yeah that works out to 107 for for this year on my math.
That's a heck of a 2020 are you still comfortable with.
People publishing models that would have almost 200 miles added in 2020.
Yes. It is down I would say our expectation is that we will get close to that 300, we are expecting to have a a tier one sometime in 2020, which will contribute to those miles.
So I would say at this point, we're we're still positive with our pipeline and expect to be able to do that.
Okay and then final question for me understanding that you don't probably want to get to two into details.
How what kind of contribution can we realistically expect from from missions do you think that 2020 outcome.
Yes. So this is Ralph I think I would say.
Not a significant number in terms of GAAP revenue, but I think what we're more excited on paying much closer attention to our the number of customers that we get to sign on to the platform and getting them up and running in production as quickly as possible.
Of course, you have to extent we're taking.
Missions customers live in October as an example.
You'd only expect to get maybe two two and a half months of GAAP revenue for those customers. So I think the overall revenue number will not be significant lead material, but I think strategically it's really quite impactful because this is a new category, new Tam space that allows us to tap into getting an increasing share of wallet from our existing customers in the dialogue. We've had with customers has been extremely positive and I think when we think about the use cases around using shopify, our missions with our with our chops fire done our data in the impact that can make on law enforcement in helping them be much more successful in implementing precision policing oriented strategies is incredibly exciting.
Okay. Thank you very much.
Thank you. Your next question comes from Richard Baldry Roth Capital go ahead. Please.
Richard you might have your phone on mute.
Thanks.
Recognizing that the current potential in the second half seems pretty small at less than 1% of revenues I'm sort of curious is that risk sort of from yelp budget or maybe a change of administration or leadership in a in a geography that you're looking at.
Yeah. This is Ralph rich I'd say, it's both of those are two customers in one situation is a definitely a change of leadership in some amount of budget prioritization and the second case I think it's frankly much more around budget prioritization and we're still engaged in conversation with that particular customer that latter customers. So we're not going to give up complete hope at least I'm not going to give a complete hope that we.
Can keep that customer on the platform, but we felt it was appropriate given their signaling of intentions that we mentioned the possibility that there could be some minor attrition going onto the second half of this year.
And since talk about.
Believing there's a tier one and 2020 can you talk a little bit about the pipeline of tier one customers and the yes.
Because things like budgets and and administration changes can can have big impacts there are there multiple ones you're dealing with that you know you look and you sort of probability wait for the years or can you have a view that it's a fairly stable environment. Therefore, you can view that arc.
Estimator forecast that it could hit in 2020 with some confidence.
Yes, I think there is a couple of really interesting named.
Tier zero or tier one customers out there that are not shotspotter customers today that Don.
Where.
Paying close attention to earn engaged with to some degree more than others, but I'll just mention a few.
Theres Los Angeles, there's Houston, there's Philadelphia.
Dallas would very much be considered a tier one cities as well.
I would say Seattle is another kind of tier one like city that has a has a need for our services that could ultimately be a call. It 20 square mile customer at full a full deployment. So theres a number of these cities in our in our sights so to speak and we think that 2020 can be a year that we can get one or more of those cities on our platform.
And I think if my memory serves that you've been either looking at or already rolling out its or increased pricing, but curious about that impact on either your pipeline renewal rate.
Your customer dialogues overall.
Sure. This is Alan we do intend on increasing our our standard pricing to about $70000 per square mile per year.
In January of next year, we have communicated that to our customers that.
Mark on your longer term contracts at this point certainly to the ones that would affect and so far we have not seen any.
Significant pushback at all and that we would expect would cause attrition related to the price increase.
And last to be so curious about your comfort level with current sales headcount and maybe any hiring plans for 2020 and 2021 that you need to keep up the sort of 300 mile adds over an extended period of time. Thanks.
Yes. So this is Ralph so we're continuing to look at and evaluate our kind of go to market resources and are continuing to invest both not only in sales, but also marketing as well as customer success quite recently, we doubled the capacity of our kind of marketing DDR capacity. These are the folks that are making the outbound calls and helping schedule meetings for potential prospects for our.
Field reps, we're also doing a little bit of reorganization on the sales side to kind of add more intentionality around subject matter experts are overlays that are working with the field sales directors and driving through.
Security driving through missions, and we have a really interesting set of our resources around.
Even flat sales, where we can bring a real executives experienced sales capability to partner with our.
Territory, so perhaps in selling flex so more to come there, but we think we're investing smartly in rightly in a way that we can continue to drive the domestic business and again, let's not forget the fairly significant investment we made.
Several months ago about hiring a VP of international focus on Latin America, and that just comes with that why open field opportunity when he's been able to do in such a short period of time has really been.
Quite quite remarkable.
Great. Thank you.
Thank you. Your next question comes from Charlie.
Well I think from Baird go ahead. Please.
Great. Thanks for taking the question.
I think you mentioned that you're you've already gone live on 17 miles. This quarter. So was July exceptionally strong was there any pull forward in your opinion or do you think the rest of the quarter could continue the momentum seen in July .
So this is Alan I would say that it just.
Sort of a testimony to what we saw when we did our earnings call last year last quarter.
We have good visibility in terms of things that are coming up in the next three to four months in most cases I would say that.
It's a good start for our quarter.
We expect it to continue to add miles for the quarter.
Weve sort of given our guidance for where we think the end the year will be.
That's basically how we see it right now.
Yes, no fair enough.
And then just one last quick one from me how much revenue came from Leds in the quarter.
Well, we had about $300000 in the labs.
Okay, great. Thanks, guys.
Thank you. Your next question comes from Chris Van Horn that they Riley if they Oh go ahead. Please.
Good afternoon, Thanks for taking my call.
I was wondering if you could just touch touch further on the guide and your your ability to kind of maintain the commentary around profitability. What are what are the kind of the main levers there that are willing to do that.
So this is Alan I would say is if you take a look at our Opex spend.
Even last year Q1 to Q2 last second quarter this second quarter.
We have not had to increase significantly in any of the.
The operating expense categories, clearly year over year, we've had to spend and has spent quite a bit more on the sales and marketing, but we have a lot of operating leverage in the business, which allows us now that we've reached profitability to have pretty good confidence that we can stay there as our revenues continue to continue to go up.
We are adding as Ralph mentioned, we believe wisely in certain areas. So we are continuing to invest.
But we don't necessarily have to invest in a lot of areas that would cause us to dip back into the loss position.
Okay got it and then you know.
Focusing on missions.
Is there any difference in the sales cycle, there any difference in who you're selling to.
Any nuances around around distributing that product.
[noise] Yeah. This is Ralph I mean, it's still quite early but we're learning a lot. The admissions is very much a different sale kind of same channel, but the buying centers slightly different we're going in obviously the buying centers. The police department, but we're finding that the pull through is happening much more effectively when we engage the analyst community within a police department before taking it directly to the folks that we tend to have very good relationships with in terms of the senior leadership of a police department, Chief Deputy Chief et cetera.
And that's why I think this overlay organization that we mentioned earlier is so critical kind of developing that very specific domain expertise and go to market expertise that a territory sales director can pull on pull on or leverage inside of their territory is going to be really important for us, but we're again really quite excited about the uptick that we're seeing there and expect again, a handful or more of customers to be booked on missions toward the end of this year.
Okay, Great Thats it from me thanks for the time.
Thank you. Our next question comes from Tim Klasell.
Northland Securities go ahead please.
Good evening, guys, Hey, first question has to do with on the guidance on the range.
As we get into the second half of the year you would.
But the range and narrow a little bit.
You mentioned you had some things standing out there that could swing. These numbers is there one or two really large deals that.
Could go live fast enough to swing these numbers.
So dramatically.
Can you help us sort of understand that thank you.
Sure. So this is Alan I would say the short answer is yes, I mean there are.
As Ralph mentioned in the prepared remarks, we have.
Almost $5 million in proposals that are out there those are all related to Latin America, we have several other opportunities for other areas around the world that if they come in and frankly, we had expected a couple of things to come in already at this point, but they still come in the next month or so could significantly help us hitting a higher revenue number GAAP revenue number for the for the year. So we're still waiting it's not just one or two could be three or more that if they still come in could positively impact where we end up 2019, It's just I think as Ralph mentioned earlier.
We we have sort of learned our lesson of international and thought it was appropriate to give you a wider range given the uncertainty that we're seeing in the international.
Closing or the closing of international contracts.
Okay. Good thanks for that color and then I wonder will double to the to the 75000 from mission.
Is there a whole lot we can read into that or that you guys have learned as far as the size of the market. We could typically see from a missions deal or is it such an early customer and pricing sort of influx that.
We should read that much into it thank you.
So this is Rob I just want to make sure I understand your question you referred to $75000 or you're talking about the average selling price or what.
The initial contract you got for you or for submission sale is that something we can sort of apply to many other customers or is that such a new home.
Yes, that's what I thought so it's kind of annual recurring revenue, yes, I think from a from a standpoint of you I think you can think in terms of average it's kind of 50 to $75000 per customer per year, and then I think you might consider applying an attach rate to currently we're sitting at just north I think of a 100 customers. So you says okay. We got a 50% attach rate with an average selling price of anywhere from 50 to 75000 across 50 customers, which represent a 50% attach rate and where we are currently in terms of our installed base that can kind of give you a sense for the opportunity for us.
On the mission side as a specific revenue category.
Okay, Great Thats very helpful. Thank you guys.
Yes. Thank you.
Thank you. Your next question comes from Res Matelski Imperial capital go ahead. Please.
Hello are you guys finding that larger or smaller cities are more focused on the analytic solutions such as shot spotter missions or fees are equally interested regardless of their size or any other characteristics.
Yes, I don't think weren't quite prepared to apply any market segmentation rules at this point in time in terms of customer size I mean, we're seeing a mix of small medium and large.
Customers that have expressed interest in missions.
By the way just as a.
Frame of reference.
Chicago PD saw prior to us acquiring the the technology assets from hasn't made a hunch lab.
Was a very big user of that solution.
So thats, an example of a very large kind of tier one city using.
Predictive if you will or precision oriented leasing analytic tools and.
Some of the customers that we're in discussions now quite a bit smaller than that so it really is quite a range between small medium and large.
Got it and for international cities.
Like the new expansions you guys are trying to make in Latin America are you guys trying to some early adopt shotspotter emissions there and is it.
Adopted yet, yes on English language users.
Yes, Thats a fantastic question I would say, we're trying to get to first and second base internationally with our flash solutions at this point in time.
So thats kind of what we're focused on right now and of course.
Once we get a little bit better cadence, there and get some direct customer relationships. Their mission certainly represents an interesting opportunity to up sell into our international deployments. Once we get those international appointments, but the first order of business for us and get the international deployments on flex.
Got it thank you very much.
Yes. Thank you.
Thank you.
This concludes our question and answer session.
If your question was not taken you may contact shuts photos investor relations team.
This is Tim I at Gateway.
Dot com.
I would now like to turn the call back over to Mr. Clark for closing remarks.
Great. Thank you very much and thank you everyone for joining our call. We're certainly very grateful for all of your support and we look forward to speaking with many of you in the very near future. Thank you Ben Thank you again very much.
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