SoundThinking at Ladenburg Thalmann Innovation EXPO25: Strategic Growth Insights

On Wednesday, 21 May 2025, SoundThinking (NASDAQ:SSTI) shared its strategic growth plans at the Ladenburg Thalmann Innovation EXPO25. The company is transitioning from a single-product entity to a diversified safety solutions provider. While the loss of the Chicago contract presents challenges, SoundThinking remains optimistic about its growth prospects, driven by its Safety Smart Platform and international expansion.

Key Takeaways

• SoundThinking is evolving from its ShotSpotter product to a diversified safety solutions provider with six products.
• SafePoint, a weapons detection platform, is expected to grow significantly, potentially reaching $10 million in revenue this year.
• The company aims for 15%+ annual revenue growth and a 40%+ adjusted EBITDA margin within four years.
• Despite losing the Chicago contract, SoundThinking highlights increased crime in areas where its service was discontinued.
• International expansion of ShotSpotter is underway, with higher pricing per square mile compared to the US.

Financial Results

• Revenue Growth:

- Increased from $81 million to $102 million over recent years.

- This year’s guidance is between $111 million and $113 million, slightly below the 15% growth target.

- Q1 2025 revenue rose to $28 million from $25.4 million in Q1 2024.

• Adjusted EBITDA:

- Expected to exceed 20% this year, up from 14% last year.

- Long-term goal of 40%+ within four years.

• Gross Margins:

- Currently at 60%, with a target of 70% through efficiencies and international expansion.

• Free Cash Flow:

- $16 million generated last year, with expectations of over $20 million this year.

• Sales & Marketing Spend:

- 63 cents per dollar of sales, lower than other SaaS companies.

Operational Updates

• ShotSpotter:

- Accounts for 65% of revenue, adding $7-9 million in ARR annually.

- Expanding by approximately 100 new miles per year and penetrating international markets, including Brazil.

• SafePoint:

- Currently 2% of revenue, with projections to reach $10 million+ this year and potentially $50-100 million in subsequent years.

- Target markets include casinos and hospitals.

• Play Ranger:

- Reselling RECOR’s ALPR, with first revenue expected in 2025.

• Case Builder:

- Secured an $18 million, six-year contract with the Department of Correction.

• Crime Tracer:

- Experiencing growth with significant investment.

• Patents:

- A substantial number of patents, mainly related to ShotSpotter.

Future Outlook

• Revenue Growth:

- Targeting 15%+ annual growth, driven by SafePoint.

- Anticipates a return to 15%+ growth once SafePoint scales up.

• International Expansion:

- Higher gross margins expected from international ShotSpotter deployments, priced 3.5-4 times higher per mile than in the US.

• SafePoint Growth:

- Significant growth expected as more states implement weapons detection measures.

Q&A Highlights

• ShotSpotter Market Share:

- Described as being in the "top of the third inning" for domestic market penetration, with international expansion beginning in Brazil.

• ShotSpotter Contribution Margin:

- Exceeds 90% after the first year.

• Contract Length:

- Not specified in the transcript.

For more detailed information, readers are encouraged to review the full conference call transcript.

Full transcript - Ladenburg Thalmann Innovation EXPO25:

Alan Stewart, CFO, Sound Thinking: Guys here? Please go right ahead. Thank you very much. Alright. Thank you very much.

I appreciate you spending your time with me this afternoon. Sound thing, I’m Alan Stewart. I’m the CFO. We’re gonna be talking about the company today. It’s, again, only twenty five minutes, so we’ll try to get get moving here.

I do, of course, have to show you that we are gonna be carrying and talking about some forward looking statements. So, of course, you’ve all read these a hundred times with other presentations, but if you do need to look at things, please look at all our SEC filings. We’ll get you some more information. So sound thinking. Some of you may know the company.

We went public in 02/2017. At that time, we were a one software product company. Since then, we’ve expanded quite a bit. We now have what we call the Safety Smart Platform. In fact, we were originally called, ShotSpotter was the name of the company.

Once we moved from just the one product into two, three, and four, it no longer made sense to call the company, ShotSpotter, so we changed it to sound thinking. We now have a Safety Smart platform, and you can see over here right now, really what we do is bring software solutions and data to help, law enforcement, you know, civic leadership and other people, do better things to help them, protect their communities. You can see down here, and I’ll go into each one of these a little bit more, but instead of being just one product company, which was the ShotSpotter, we now have six. So it’s taken us a bit of time from 02/2017 to where we are now. And if you look or you know about what’s going on in the police agencies around The United States specifically, since the, defund the police and COVID, they’ve had a lot of, problems and challenges trying to keep the actual officers there.

So a lot of men retiring, getting harder people to stay there. So, starting to improve a little bit now. There’s no real there’s no longer a defund the police movement, but there’s still a lot of law enforcement agencies that don’t have the people they used to have. So, what do they have to do? They have to use technology and software like what we provide to help them become more effective.

So, this is a summary of where we are right now, and I’ll just go over sort of from the the left is where we started with to the the right, which is our latest acquisition. The ShotSpotter is the gunshot detection solution. Those of you who know what that is or don’t know what that is, we put sensors on buildings, light posts, about 25 sensors per square mile, and we listen for gunshots, pops, booms, bangs, where you can hear that it’s an actual gunshot, and the sensors, based on the time difference of arrival of that actual gunshot, we can triangulate to mathematically calculate where that gun is being fired. We do all that within about thirty seconds from someone shooting a gun, and we get that information to the police within forty five seconds, no longer than a minute. Our service law agreement says a minute.

That is still about 65% of our revenue, but when we went public 02/2017, it was a % of our revenue. That is still growing. It adds somewhere between 7 and $9,000,000 in ARR every year, adding about a new hundred miles that we have or deploy, and that’s something that we still love doing, but it’s it’s growing, you know, high single digits to low double digits. So some of the other acquisitions we did were to add more software solutions to our Safety Smart platform. Resource router is something where, specifically, if you’re an agency and you’re trying to figure out where you used to have a hundred and now you only have 60, how do you effectively use those?

We help them manage those patrols, using a whole bunch of information. For police agencies, they have things called CAD or RMS, which is the information about past crimes, things like that. We have AI algorithms built into the resource router. What that does is it takes the information police have, also builds in things like location, where are the schools, where are the bars, what is the weather doing? All this kind of information is built into the algorithms to help them to know where to go and where to send their officers to be more effective for the communities.

Play Ranger is relatively new for us. This is actually a partnership with a company called Recor. You may know Recor. Recor’s been around for a while, they’re also public. We’re a reseller of their ALPR, the license plate readers that are going around in cities right now.

We just started this at the end of last year. It’ll be our first revenue ramping up in ’25. This is a significant a significantly large TAM, though, in terms of the adjustable market, because cities started doing license plate readers maybe five or six years ago. Now they’re ready to replace those, because the cameras in those, they’ve gotten so much better and improved, so a lot of cities are now improving those, replacing those license plate readers with new solutions. RECORP has produced and built a very good one that we’re now reselling, and cities are also doing things where they used to be like maybe 15% of their city, now they wanna cover like 40% of their city.

So it’s a lot of surveillance that’s tied to some other things that we do that we’re expecting to be a significant growth area for us going into ’25 in the next couple of years. Case Builder was tied to an acquisition that we did in 2020. This is a company we now basically call a technology solutions division. What they’ve done is they’ve done work for NYPD, for decades from prior companies. This was called LEADS when we acquired it in 2020.

It’s a solution that helps manage cases. You solve cases, is what it does. So it’s a case management solution. We just got a very large contract with the Department of Correction, you may know, it’s Rikers Island near here. We’re going there, it was sole sourced to us.

No one else even competed for it because of what we have done for NYPD over the last decade. And that’s a six year contract, it’s over $18,000,000, but it’s an example of one of the first things that we’re doing with a case management solution. We’re excited about that. There’s a lot of things you can do over the years. It doesn’t even have to be, you know, police agencies or even prisons like this.

It can be, you know, trucking companies, insurance companies. They all have to manage cases. So it’s a we’re not technically, we’re not going over verticals like that right now, but it’s a potential for us in terms of growth. Crime Tracer is basically a platform. It’s a database.

There are some, you know, competition out there. This would be like LexisNexis, that other database. FBI has a database that they put out as well. DHS has a database. This is information that has over a billion actual data records that we go to agencies and we share them.

So if you’re going into like, just pick a city, Atlanta, and you’ve got a lot of communities around Atlanta, You might have Atlanta signing up for a contract, and then four or five of their local agencies might all share the information. So Crime Tracer is a behind what’s called CGIC. It’s Criminal Justice Investigative Service. I can’t even get in. I can’t get in the database, but if you went in there and said, tell me about Alan Stewart, it would say Alan’s been married to Jennifer for thirty six years, they live here, they have two kids that live over here and here.

Alan has a heart shaped tattoo in his back, I don’t, but it, you know, it would say that kind of thing, that kind of information, about to be able to find the criminals that are out there. So that’s very, very interesting, it’s growing nicely for us, and we’re investing a lot for that. I saved sort of the best for the last. The best because when I said ShotSpotter sixty five percent of our revenues, this right now is only about 2% of our revenues, but it’s called SafePoint. It’s a weapons detection platform.

For those of you who are looking at what’s out there, there’s a company called Evolve, which does this. They do it for stadiums, they do it for HOAs, they do it for other things like hospitals as well. We’re cheering them on because this is a relatively new market. It’s a new market for, you know, companies that have to realize they have to do something related to the weapons detection and notification if someone’s coming into their building or their facility. So that’s what Evolve does.

We do it a little differently. Theirs, it’s more like, sort of going into the TSA, where you know you’re going through, you’re getting tested, and they might need to warn you if you get an alert. Ours is, covert. You don’t even know that you’re going through a weapons detection system. And there’s a camera that also shows, so that when we get an alert, based on the magnetic movement of that gun that they’re bringing in, we send that alert to the customer, and then they have to get a picture with a camera, and then they can go search that person.

So, but people are walking in this, through this, between what we call the bollards, and I’ll show you a picture of those when we get there, but it’s something that is a growing relatively new market. Evolve’s doing quite well, they’re growing rapidly. But it’s also something you could have four or five, maybe 10 different Evolves that are doing this because it’s such a large market, like north of $20,000,000,000, in terms of what we believe can be achieved. The other kind of cool thing about this weapons detection thing, if you live in California, they put out a recent bill that says that the hospitals in California have to have a weapons detection system installed by March 2027. So, you think about that, that’s something that all of the competitors out there are going to try to do.

There’s at least 400 different hospitals of the size that are requiring California to do that, and then once California does that, there might be other states that are forcing that to be done. So, it’s something we’re really excited about. So, even though it’s only a couple million of our revenue, this year will be north of a 10,000,000 in revenue, going from 2,000,000 to maybe 4,000,000 to 10 to maybe 50 to maybe a hundred. This is something that is significant growth area for us. We’re really excited about that.

So we’re we’re moving a lot. We’re actually investing a lot in that right now. I can talk just a little bit because when you talk about everybody’s talking about AI. We’ve been an AI company for a long, long time. Started with the ShotSpotter, we actually use AI algorithms to help build the data source that we have.

We have the world’s largest data source of sound noises, gunshots and non gunshots, and then what we use is the AI algorithms to help build that into the ones that sound like might be a gunshot, but actually isn’t. It might sound like a helicopter, which might sound like a machine gun, but it’s really a helicopter. Once you build that through your algorithms, you reduce the ones that have to get, you know, reviewed by, like, 20%. So we’ve been doing that with ShotSpotter for a ton of time. I already mentioned about the resource router, where we’re adding a lot of AI.

The SafePoint AI algorithms that we use are the ones that because it’s a an overt, or rather a covert, you know, solution, when people aren’t going through, The solutions that we have into this, it just listens for the magnetic movement of the metal object that’s going through there. So, for example, if you’re at a hospital and you are going into the emergency room and you have an ambulance going by, that is a very large metal object that might have a specific, sound to it. If they’re going through an emergency room and they have metal doors that open like this, Those might be scratching on the bottom and it’s a metal sound. These are things that we’re using to change the algorithms for what might be like this, where every time you hear some kind of a metal object, we can remove the the, ambulance going through so it goes more like this. That allows us to give higher, you know, performance in terms of the actual weapons detection solutions itself.

So just to go into this, and I’m gonna have to probably speed up on some of these things. I wanna show you some pictures, But, we started over here, and hopefully, you can hear me alright. We started over here with just the gunshot detection solution and about a 1 and a half billion dollar TAM. That’s small enough that most companies don’t wanna try to compete with you. And at that point, there we go.

Thank you. So so we we really have no competition in the gunshot detection solution. There are a couple companies out there that are trying to do it, that say they do it. Most of them, we don’t lose business to them. We hardly ever see them in an RFP, but that is something that was relatively small but has grown.

Then you add some of the other solutions, the investigative, you know, search, the the case management, the patrol management, you know, that added another, you know, certain amount to the TAM. Then, when you start adding the license plate readers, that’s about 2 and a half billion dollar TAM by itself. Now, there’s some competition in some of these, so it’s not like the the ShotSpotter where there is no real competition. The other ones, we just have to make sure that we have a a better solution for the solutions that are needed. And then the largest one is the the last one I’ve been talking about with the SafePoint.

That’s about a $20,000,000,000 for weapons detection, so 10 times where we were. But in terms of the potential revenue growth, it is significant. That’s one of the reasons we’re really more excited about that than some of the others, and we’re also investing significantly in the AI algorithms we’re building. In fact, we probably added about seven new people from AI engineers in the last twelve months on this alone, and we’ll continue to add more because the more of those models that we can build, the more effective the solutions become. Just some highlights here at a glance, you know, so, in terms of the revenue, we went from about $81,000,000 to 92,000,000 to a hundred and 2.

This year will be, you know, the guidance is a hundred 11 to a hundred 13. So we’re growing about 10,000,000 a year, that’s a little less than our goal, which would be 15% a year. We do believe that once the SafePoint starts ramping up like we know it’s going to, we’ll go back to that 15% plus per year in terms of top line revenue growth. Adjusted EBITDAs this year should be north of 20%. Last year was about 14%.

It was 15% the year before. So as revenue continues to grow, adjusted EBITDA is also growing. That’s because we are able to add less in our operating expense, all three categories, less than a percentage basis than the revenue is growing. All that flows down to the bottom line. So just a couple other really kinda key points.

We’re big net promoters in terms of net promoter score, 66%. That’s almost world class. This is things like, if you heard it come, USAA, if anyone knows USAA, very well performing. That’s a very high net promoter score, especially for anyone who’s their main customer is police agencies because, honestly, they don’t like a lot of vendors. So having them give you a good high score is really good.

We don’t spend very much money at all versus other SaaS or software companies, 63¢ per, you know, of sales marketing spend per dollar. That is really low. In most SaaS companies and software, it’s north of a dollar, could be north of a dollar 40 or even a dollar 50. Our retention rates are significant significantly high at 98% plus, which obviously means the attrition rates are 1% to 2%. That’s because once we get the customers in, we tend to keep them for a very, very long time.

I don’t need to talk too much more of the other ones. We do have a lot of patents. Just in terms of competitive advantage, I think there are a lot of things that we have. The patents are very important. Most of those are tied to the ShotSpotter gunshot detection solution, but we also have patents with the other solutions as well.

We’ve been doing this for a long time with a lot of customers that we have. This is the shot spotter number of customers over a 70. New York City, we’ve got about over 90 square miles of the shot butter covered. All five boroughs are covered here. If you go to some of the other cities, like we’re in South, you know, San Francisco, we’re in Detroit, we’re in Albuquerque, we’re a lot of the big ones.

We did have one large customer, which is Chicago. The mayor decided to not continue using, Sound Thinking, ShotSpotter solution. And and, as of today, since they shut it off in November, they’ve had forty four people get shot, and over half of them died that used to be in the in the shot spotter coverage area, but no one called 911. So you think about that, we provide value. We help save save people’s lives as something that’s why our retention rate is as high as it is.

Because once we’re there and they realize the value we provide, it’s very hard for them to shut it off, although some people can and do do do that. I’m gonna just get get through a couple of these real quick. This just is a picture of what the ShotSpotter looks like, where you can see the sensors that are out there. That gunshot that gets fired, each of those sensors hears that at a slightly different time. That’s how we’re able to mathematically determine within about 80 feet exactly where that gunshot is.

And the people that do call 911, that’s only about 20% of the time, 80% of the time plus. No one calls 9111 at all. And why do you think that is? It’s because it’s the gangs that are doing the shooting, and they don’t want the gangs to know that you’re the one that called 911 so no one calls. Well, what happens if someone gets shot?

If there’s not a a a, you know, a shot spotter alert sending the police somewhere, no one knows that someone is there possibly dying or bleeding out. So it’s something that we’re very proud of what we do. It’s also why we really have no other competition that competes against us. That’s just an example of what you would see. In this particular, this might be one beat that a police officer gets.

That’s in a smartphone. So you can see the the six different events here. One one gunshot, seven gunshots, 10 gunshots, and then a 10 let’s say they select the 10 gunshot one, they could say that’s in, you know, 3552 Miller Avenue, and then it’s only 80 feet. They go there. If someone does call 91 and say, hey.

They shot a someone’s shooting a gun out in my neighborhood. Well, what’s your address? I’m not telling you my address. Okay. What neighborhood are you in?

They tell them the neighborhood. Then a police will go there, drive around twenty, thirty minutes trying to find where that was because sound bends. It’s really hard to know where an actual gunshot occurred. So that’s something that we we do incredibly well. This is the patrol management.

This basically helps them determine where to send the the officers to help them, become, you know, more effective. If you think if you think about it, it’s like this a couple of these are just great great quotes. I’m not gonna focus on them, but it’s talking about the positives that we provide to the police officers that don’t have the people. They need to add technology to help them deal with things right now. This is another case splitter management solution.

This is an example of one where, you know, in this particular case, you know, you could figure out using all the information that you have, it might be used by a detective in a police agency. They have a bunch of information. They right now, what they’re doing is they’re either you’re putting Excel spreadsheets, they’re writing it in notebooks, they don’t have an effective software solution to help them do that. That’s what we do with the Case Builder solution. Crime Tracer is the data as well.

This is one this is actually pretty interesting one. I’m kinda running out of time, but in Oakland, in California, a former officer who retired got was going to a gas station, and three people came up to try to rob him and were shooting him. He ended up with, like, 21 bullet holes. He shot one of them, two people got away. They used Crime Chaser based on the one that was there to figure out which gang was he involved with, who were his associates.

Then they ended up finding the other two people. I think one was in Berkeley and one was down in Houston. Using Crime Chaser after ShotSpotter got the police there to save the guy’s life. So it’s like two different solutions used in that one particular case. I wanna make sure that I get to this because this is something that I think is incredibly important.

We’re focused right now on casinos and hospitals. And as I talked about, like 400 hospitals in California have to have something like this in 2027. When you’re here, you aren’t going through, like, a a TSA. You know, you’re not going through an x-ray machine. You’re not going through a metal detector.

You’re going through these two bollards. This is two lanes. Inside those are magnetic coils that are testing for the magnetic movement of that gun that you’re carrying as you’re going through those. Once you go through those, then you get information like this. In this particular one, you see the red box around there, that’s a high degree alert.

That person’s carrying a high capacity weapon that we’re bringing in. They get that within like ten seconds. They can then report that’s going on and basically get there very quickly. In this particular one, this is a yellow one, that guy has a a gun, but that’s their security officer. So they know that it’s not a red alert, it’s actually a yellow alert because it still has a gun that they’re going through with that.

But that’s what the bollards are actually looking for. So it’s something that, you know, if you think about it right now, it’s only a couple million for us in ’24. It’d be double that in ’25, significant amount in the out years as it continues to grow, especially if more states are start adding things like what California did with that bill. PlateRanger is a licensed plate reader. That’s something for the vehicle recognition.

It’s incredibly capable. Vehicle make, model, color, vehicle type, class category, direction of travel, the plate number, all of that information helps them figure out if they had some kind of other, you know, burglary or something else going on, or a shot and sputter alert, they could figure out with the license plate readers who was going there, who was driving past there at that time. I’m gonna get to a couple things here real quick. I’ll pass through these. Just the financials.

So that’s the last couple of years. We continue to grow. Profitability gets a little better each year. This is our last quarter. So if you think about Q1 twenty twenty five versus Q1 twenty twenty four, dollars ’20 ’5 point ’4 million up to $28,000,000 In terms of the actual net income, the actual loss was down and the percentage in adjusted EBITDA also increasing.

This year, our guidance is north of 20%. So here’s where we’re going. We’re ultimately gonna have a longer term model, about 15%, plus in terms of the revenue growth that’s primarily gonna be related to SafePoint. The gross margins are right now about 60%. We know that we can get them to 70% because as we continue to build the solutions, some of the actual costs of the cost of goods sold get reduced.

So the gross margin also improves. The other reason for that is we’re expanding significantly internationally. And internationally, specifically for the ShotSpotter, we charge three and a half to four times as much per mile. So $70,000 a year here might be $200,000 a year in Brazil or South Africa, or Bahamas. These are some of the other, know, international locations we’re at.

All of that helps gross margin go up. All of that helps our adjusted EBITDA go up because, again, our op op OpEx does not have to grow near as fast as our revenue is growing. So we know that within the next four years or so, we’ll be at 40% or plus of adjusted EBITDA as well. So I have one whole minute left for Q and A in case there’s other questions, Or I can go back to any of the slides if you wanted to see any of those specifically. Yes, sir.

Unidentified speaker: Yes. Sorry. On ShotSpotter, sixty five percent of your revenues, what is I assume you’ve flat lined the growth there in The US or what’s your kind of market share penetration rate?

Alan Stewart, CFO, Sound Thinking: Yeah. It’s a great question. So ShotSpotter, we’re at about 170 cities. There’s about 800 cities that have four or more homicides per year. So we know that we’re really only like the top of the third inning, if you’re a baseball fan, in terms of domestically.

We’re also expanding though. So a long way to go in The US, but we’re also expanding internationally. Brazil, we’re going live in Brazil this quarter for the first time. There’s

Unidentified speaker: Is it is your contract sorry. I’m a kind of a free, you know, like to interact.

Alan Stewart, CFO, Sound Thinking: Sure.

Unidentified speaker: In Brazil, is it with the federal government or which of the States

Alan Stewart, CFO, Sound Thinking: is your contract with?

Unidentified speaker: And what’s the length of these contracts?

Alan Stewart, CFO, Sound Thinking: Yeah. It’s a city right now. Nitroi is the first one in Brazil.

Unidentified speaker: What’s it called?

Alan Stewart, CFO, Sound Thinking: Nitroi. It’d be near Sao Paulo. Okay. Okay. So not too far from that.

And what we know about Brazil is there’s probably a hundred different cities Yep. That have gun violence like Saint Louis and Chicago. Yep. And you get one, some of the other starts cities start doing the same thing that the good cities were doing. We’re really excited about that.

And that’s not even Safeway. That is back to the original ShotSpotter.

Unidentified speaker: Interesting. Is that your first client there?

Alan Stewart, CFO, Sound Thinking: We were in Brazil about twelve years ago with the first version of the of the ShotSpotter, but that was something where we charge about a million dollars for a a month.

Unidentified speaker: Charging in in US Dollars, I assume.

Alan Stewart, CFO, Sound Thinking: We are charging in US dollars. It’s about $600,000 for 10 kilometers. So it’s closer to $200,000 per square mile versus $70,000 per square mile here in The US. It’s about three times.

Unidentified speaker: And your contribution margin generally on ShotSpotter in The US is around?

Alan Stewart, CFO, Sound Thinking: After well, even if someone canceled in year one, we would make money because it cost us less than $70,000 to completely deploy it. Year two, three, four, five, it’s already deployed. We don’t have to pretty much do anything, pay AT and T and Verizon for the actual

Unidentified speaker: So it must close after year one.

Alan Stewart, CFO, Sound Thinking: Closer north of 90%. That’s why we generate as a company, we generate a ton of cash. I acquired all of those companies. I have $4,000,000 in cash I’m sorry, in debt that I could pay off today if I wanted to.

Unidentified speaker: Yeah. That’s what I was getting to. You’re probably generating a lot of cash in ShotSpotter that you’re utilizing to try to grow some of other products.

Alan Stewart, CFO, Sound Thinking: Absolutely. We generated 16,000,000 in free cash flow last year. This year, we’re north of 20.

Unidentified speaker: That’s generally or from ShotSpotter? That

Alan Stewart, CFO, Sound Thinking: was primarily from ShotSpotter because we’re still Alright.

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