• ShotSpotter Reports Fourth Quarter and Full Year 2020 Financial Results

    Source: Nasdaq GlobeNewswire / 25 Feb 2021 15:05:02   America/Chicago

    NEWARK, Calif., Feb. 25, 2021 (GLOBE NEWSWIRE) -- ShotSpotter, Inc. (NASDAQ: SSTI), a leader in precision policing solutions that enable law enforcement to more effectively respond to, investigate and deter crime, today reported financial results for the fourth quarter and full year ended December 31, 2020.

    Fourth Quarter 2020 Financial and Operational Highlights

    • Revenues increased 16% to $12.6 million from $10.9 million for the fourth quarter of 2019.
    • Gross profit increased 10% to $7.5 million (59% of revenues) from $6.8 million (62% of revenues) for the fourth quarter of 2019.
    • Net loss totaled $220,000 compared to net income of $1.3 million for the fourth quarter of 2019.
    • Adjusted net income1 totaled $418,000 compared to $1.3 million for the fourth quarter of 2019.
    • Adjusted EBITDA1 totaled $3.1 million compared to $3.2 million for the fourth quarter of 2019.
    • Added five new Respond cities and completed Respond expansions in three current customer cities.
    • Completed acquisition of LEEDS, LLC, a leading investigative case management solution provider, for a purchase consideration of $15.0 million in cash (net of cash acquired), subject to working capital adjustments, and $2.0 million in ShotSpotter common stock, plus a potential earnout of $5.0 million over the next two years.
    • Maintained a strong balance sheet with $16.0 million in cash and cash equivalents at the end of the quarter, and $20 million available on the company's line of credit.

    Full Year 2020 Financial and Operational Highlights

    • Revenues increased 12% to $45.7 million from $40.8 million in 2019.
    • Gross profit increased 11% to $27.0 million (59% of revenues) from $24.3 million (60% of revenues) for 2019.
    • Net income decreased 32% to $1.2 million from $1.8 million for 2019.
    • Adjusted net income1 increased 4% to $1.9 million from $1.8 million for 2019.
    • Adjusted EBITDA1 increased 28% to $11.9 million from $9.4 million for 2019.
    • Realized 62 new “go-live” square miles of coverage and 13 square miles of attrition during the year, bringing the total live miles to 779 miles with approximately 813 miles under contract as of December 31, 2020.
    • Company reaffirms 2021 revenue guidance of $58 million to $60 million and expects to remain GAAP profitable on an annual basis.

    1See the section below titled “Non-GAAP Financial Measures” for more information about Adjusted net income and Adjusted EBITDA, and their reconciliation to GAAP net income.

    Management Commentary

    “The operating environment in 2020 proved to be challenging for cities and their local law enforcement agencies, but our collective ability to adapt and respond to those challenges ensured ShotSpotter had a strong finish to the year, positioning the company for solid growth in 2021 and beyond,” said ShotSpotter CEO Ralph Clark. “Our positive results of operations for the fourth quarter include a partial quarter of contribution from LEEDS, which we acquired in late November. During the fourth quarter, we went live with Respond on five new cities and expanded Respond coverage on several existing customers. As a result, we ended the quarter with 779 miles live and approximately 813 miles under contract. We closed the year with $16.0 million in cash and cash equivalents, no debt, and an available line of credit of $20 million post our LEEDS acquisition, which ensures we have the strong balance sheet and financial flexibility to continue doing great work that matters."

    Mr. Clark continued, “We are making substantial progress in expanding our product suite to create a complete precision policing platform that provides more efficient and effective ways to respond to, investigate, and prevent crime beyond gunshot detection. Our precision policing platform includes: the leading acoustic gunshot detection service, ShotSpotter Respond; a community first patrol management solution, ShotSpotter Connect; and an enterprise class case management solution, ShotSpotter Investigate, which we plan to launch later this year. We believe this solution suite will unlock compelling new value propositions and open an entire new set of law enforcement agency customers.

    “Our trusted suite of solutions perfectly aligns with 21st century policing principles by transforming data into actionable, real-time intelligence that can help law enforcement prevent, reduce, and resolve crime with greater precision while connecting to community and without over-policing. We look forward to engaging with public safety agencies around the globe who want to transform how they go about delivering public safety outcomes,” concluded Mr. Clark.

    Fourth Quarter 2020 Financial Results

    Revenues for the fourth quarter of 2020 increased 16% to $12.6 million from $10.9 million for the same period in 2019. The increase in revenues reflects a year-over-year increase in new live miles and partial contribution from the company’s LEEDS acquisition, which was completed on November 24, 2020.

    Gross profit for the fourth quarter of 2020 increased 10% to $7.5 million (59% of revenues) from $6.8 million (62% of revenues) for the same period in 2019. The decrease in gross profit margin was primarily due to equipment write-offs related to customer attrition and more expensive resources required to perform equipment maintenance.

    Total operating expenses for the fourth quarter of 2020 increased 39% to $7.7 million from $5.6 million for the same period in 2019. The increase in operating expenses was primarily due to higher personnel-related costs and costs associated with the LEEDS acquisition.

    Net loss totaled $220,000 or ($0.02) per basic and diluted share (based on 11.5 million basic and diluted weighted average shares outstanding), as compared to net income of $1.3 million or $0.12 per basic and $0.11 per diluted share (based on 11.4 million basic and 11.8 million diluted weighted average shares outstanding) for the same period in 2019. 

    Adjusted net income for the fourth quarter of 2020 decreased 69% to $418,000 from $1.3 million in the same period last year.

    Adjusted EBITDA for the fourth quarter of 2020 decreased 1% to $3.1 million from $3.2 million in the same period last year.

    Full Year 2020 Financial Results

    Revenues in 2020 increased 12% to $45.7 million from $40.8 million in 2019. The increase in revenues reflects a year-over-year increase in new live miles, customer renewals, and partial contribution from the company’s LEEDS acquisition, which was completed on November 24, 2020.

    Gross profit in 2020 increased 11% to $27.0 million (59% of revenues) from $24.3 million (60% of revenues) in 2019. The decrease in gross profit margin was primarily due to equipment write-offs related to customer attrition and more expensive resources required to perform equipment maintenance.

    Total operating expenses in 2020 increased 13% to $25.7 million from $22.7 million in 2019. The increase in operating expenses was primarily due to increased insurance costs, legal fees, personnel-related costs, and costs associated with the LEEDS acquisition.

    Net income totaled $1.2 million or $0.11 per basic and $0.10 per diluted share (based on 11.4 million basic and 11.7 million diluted weighted average shares outstanding), a 32% decrease from $1.8 million or $0.16 per basic and $0.15 per diluted share (based on 11.3 million basic and 11.8 million diluted weighted average shares outstanding) in 2019. 

    Adjusted net income for 2020 increased 4% to $1.9 million from $1.8 million in 2019.

    Adjusted EBITDA for 2020 increased 28% to $11.9 million from $9.4 million in 2019.

    2021 Financial Outlook

    For fiscal 2021, management currently expects revenues of $58.0 million to $60.0 million, representing an increase of between 27% and 31% compared to fiscal 2020 revenues. The company estimates this will include approximately $10 million in revenues attributable from our LEEDS acquisition.  The company expects to be GAAP profitable for the full year of 2021. The preceding statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Safe Harbor Statement” below.

    The company’s financial outlook statements are based on current expectations. The preceding statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under “Safe Harbor Statement” below.

    Conference Call

    ShotSpotter will hold a conference call today (February 25, 2021) at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss these results and provide an update on business conditions.

    ShotSpotter management will host the presentation, followed by a question and answer period.

    U.S. dial-in: 1-855-327-6838
    International dial-in: 1-604-235-2082
    Conference ID: 10013082

    The conference call will be broadcast simultaneously and available for replay via the investor section of the company’s website at www.shotspotter.com.

    Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact ShotSpotter’s investor relations team at 1-949-574-3860.

    A replay of the call will be available after 7:30 p.m. Eastern Time on the same day through March 25, 2021.

    U.S. replay dial-in: 1-844-512-2921
    International replay dial-in: 1-412-317-6671
    Replay ID: 10013082

    Non-GAAP Financial Measures

    Adjusted net income:  Adjusted net income, a non-GAAP financial measure, represents the company’s net income or loss before acquisition related expenses.

    Adjusted EBITDA:  Adjusted EBITDA, a non-GAAP financial measure, represents the company’s net income or loss before interest (income) expense, income taxes, depreciation and amortization, stock-based compensation expense and acquisition related expenses. Adjusted EBITDA is a measure used by management internally to understand and evaluate the company’s core operating performance and trends across accounting periods and in connection with developing future operating plans, making strategic decisions regarding the allocation of capital and considering initiatives focused on cultivating new markets for our solutions. In particular, the exclusion of these expenses in calculating adjusted EBITDA facilitates comparisons of the company’s operating performance on a period-to-period basis.

    ShotSpotter believes adjusted net income and adjusted EBITDA also provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. For example, ShotSpotter adjusts EBITDA for stock-based compensation expense and acquisition related expenses because such expenses often vary for reasons that are generally unrelated to financial and operational performance in any particular period. Stock-based compensation is utilized by ShotSpotter to attract and retain employees with a goal of long-term retention and the alignment of employee interests with those of the company and its stockholders, rather than to address operational performance for any particular period based financial performance measures, in particular net income or loss, and our other GAAP financial results.

    The following table presents a reconciliation of adjusted net income to GAAP net income, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):

      Three Months Ended December 31,  Twelve Months Ended December 31, 
      2020  2019  2020  2019 
           
      (unaudited)  (unaudited) 
    GAAP net income (loss) $(220) $1,327  $1,225  $1,798 
    Less:            
    Acquisition related expenses  638      638    
    Adjusted net income $418  $1,327  $1,863  $1,798 
    Adjusted net income per share, basic $0.04  $0.12  $0.16  $0.16 
    Adjusted net income per share, diluted $0.04  $0.11  $0.16  $0.15 
    Weighted average shares used in computing adjusted net income per share, basic  11,482,907   11,384,636   11,408,757   11,302,780 
    Weighted average shares used in computing adjusted net income per share, diluted  11,794,694   11,775,097   11,730,294   11,846,348 


    The following table presents a reconciliation of adjusted EBITDA to net income, the most directly comparable GAAP measure, for each of the periods indicated (in thousands):

      Three Months Ended December 31,  Twelve Months Ended December 31, 
      2020  2019  2020  2019 
           
      (unaudited)  (unaudited) 
    GAAP net income (loss) $(220) $1,327  $1,225  $1,798 
    Less:            
    Interest income  (12)  (105)  (113)  (440)
    Income taxes  (89)  (74)  (90)  (41)
    Depreciation and amortization  1,613   1,341   5,820   4,982 
    Stock-based compensation expense  1,216   682   4,462   3,057 
    Acquisition related expenses  638      638    
    Adjusted EBITDA $3,146  $3,171  $11,942  $9,356 

    Safe Harbor Statement

    This press release contains "forward-looking statements" within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements regarding the company’s business plans, the anticipated impact of the COVID-19 pandemic, international expansion, expectations regarding future sales and expenses, our ability to capitalize on market opportunities, the ability to achieve near and long-term growth and profitability objectives, anticipated timing and volume of customer contract renewals, and revenue and GAAP profitability guidance for full year 2021. Words such as "expect," "anticipate," "should," "believe," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond the company’s control. The company’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to: the company’s ability to successfully negotiate and execute contracts with new and existing customers in a timely manner, if at all; the company’s ability to address the business and other impacts and uncertainties associated with the COVID-19 pandemic; the company’s ability to maintain and increase sales, including sales of the company’s newer product lines; the availability of funding for the company’s customers to purchase the company’s solutions; the complexity, expense and time associated with contracting with government entities; the company’s ability to maintain and expand coverage of existing public safety customer accounts and further penetrate the public safety market; the company’s ability to sell its solutions into international and other new markets; the lengthy sales cycle for the company’s solutions; changes in federal funding available to support local law enforcement; the company’s ability to deploy and deliver its solutions; and the company’s ability to maintain and enhance its brand, as well as other risk factors included in the company’s most recent annual report on Form 10-K and quarterly report on Form 10-Q and other SEC filings. These forward-looking statements are made as of the date of this press release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Except as required by law, the company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

    About ShotSpotter, Inc.

    ShotSpotter (NASDAQ: SSTI) is a leader in precision policing solutions that enable law enforcement officials to more effectively respond to, investigate and deter crime. The company’s products are trusted by more than 100 U.S. cities to help make their communities safer. The platform includes its flagship product, ShotSpotter Respond™, the leading gunshot detection, location, and forensic system, and ShotSpotter Connect™, patrol management software to dynamically direct patrol resources to areas of greatest risk and more effectively deter crime, and ShotSpotter Investigate, which we will launch in mid-2021, an investigative case management solution that help detectives connect the dots and share information more effectively to improve case clearance rates. ShotSpotter also serves the corporate and college security markets and has been designated a Great Place to Work® Company.

    Company Contact:

    Alan Stewart CFO
    ShotSpotter, Inc.
    +1 (510) 794-3100
    astewart@shotspotter.com

    Investor Relations Contacts:

    Matt Glover
    Gateway Investor Relations
    +1 (949) 574-3860
    SSTI@gatewayir.com

    JoAnn Horne
    Market Street Partners
    +1 (415) 445-3240
    jhorne@marketstreetpartners.com


    ShotSpotter, Inc.
    Condensed Consolidated Statements of Operations
    (In thousands, except share and per share data)

      Three Months Ended December 31,   Year Ended December 31, 
      2020  2019  2020  2019 
              
      (Unaudited)  (Unaudited)    
    Revenues $12,649  $10,915  $45,734  $40,752 
    Costs            
    Cost of revenues  5,085   4,109   18,525   16,409 
    Impairment of property and equipment  73      234    
    Total costs  5,158   4,109   18,759   16,409 
    Gross profit  7,491   6,806   26,975   24,343 
                 
    Operating expenses            
    Sales and marketing  3,091   2,495   10,328   9,989 
    Research and development  1,510   1,318   5,614   5,344 
    General and administrative  3,113   1,746   9,740   7,415 
    Total operating expenses  7,714   5,559   25,682   22,748 
    Operating income (loss)  (223)  1,247   1,293   1,595 
    Other income (expense), net            
    Interest income (expense), net  12   105   113   440 
    Other expense, net  (98)  (99)  (271)  (278)
    Total other income (expense), net  (86)  6   (158)  162 
    Income (loss) before income taxes  (309)  1,253   1,135   1,757 
    Benefit for income taxes  (89)  (74)  (90)  (41)
    Net income (loss) $(220) $1,327  $1,225  $1,798 
    Net income (loss) per share, basic $(0.02) $0.12  $0.11  $0.16 
    Net income (loss) per share, diluted $(0.02) $0.11  $0.10  $0.15 
    Weighted average shares used in computing net income (loss) per share, basic  11,482,907   11,384,636   11,408,757   11,302,780 
    Weighted average shares used in computing net income (loss) per share, diluted  11,482,907   11,775,097   11,730,294   11,846,348 


    ShotSpotter, Inc.
    Condensed Consolidated Balance Sheets
    (In thousands)

      December 31, 
      2020  2019 
      (Unaudited)    
    Assets      
    Current assets      
    Cash and cash equivalents $16,043  $24,550 
    Accounts receivable and contract asset  12,921   13,883 
    Prepaid expenses and other current assets  2,172   1,764 
    Total current assets  31,136   40,197 
    Property and equipment, net  15,346   16,556 
    Operating lease right-of-use assets  882   556 
    Goodwill  2,811   1,379 
    Intangible assets, net  14,540   249 
    Other assets  1,605   1,634 
    Total assets $66,320  $60,571 
    Liabilities and Stockholders' Equity      
    Current liabilities      
    Accounts payable $1,192  $1,179 
    Deferred revenue, short-term  24,174   26,360 
    Accrued expenses and other current liabilities  5,613   4,885 
    Total current liabilities  30,979   32,424 
    Deferred revenue, long-term  405   598 
    Other liabilities  631   298 
    Total liabilities  32,015   33,320 
    Commitments and contingencies      
    Stockholders' equity      
    Common stock  58   57 
    Additional paid-in capital  128,771   122,907 
    Accumulated deficit  (94,355)  (95,579)
    Accumulated other comprehensive loss  (169)  (134)
    Total stockholders' equity  34,305   27,251 
    Total liabilities and stockholders' equity $66,320  $60,571 

     


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