SoundThinking, Inc.

Good afternoon and welcome to ShotSpotter's fourth quarter and full year 2022 earnings conference call. My name is Joe and I will be your operator for today's call. Joining us are ShotSpotter CEO Ralph Clark and CFO Alan Stewart. Please note that certain information discussed on the call today will include forward-looking statements about future events and ShotSpotter's business strategy and future financial and operating performance. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict and may cause actual results to differ materially from those stated or implied by those statements. Certain of these risks and assumptions are discussed in ShotSpotter's SEC filings included in its registration statement on Form S-1. These forward-looking statements reflect management's beliefs, estimates, and predictions as of the date of this live broadcast, February 22, 2023, and ShotSpotter 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 Now, I would like to turn the call over to ShotSpotter CEO, Ralph Clark.

Sir, please proceed.

Good afternoon, and thank you for joining us today. Before I report on the company's Q4 fiscal year 2022 outcomes and our fiscal year 2023 outlook, I want to first start by expressing my gratitude for being entrusted to lead this incredible company on a remarkable journey in engaging local law enforcement agencies in their digital transformation. We've assembled a powerful suite of complementary solutions in a precision policing platform that agencies are demanding in their pursuit of driving smarter, more efficient, effective, and equitable policing strategies. Our opportunity remains significantly attractive and underpenetrated, despite some selected headline noise from a vocal but increasingly discredited defund the police movement. We continue to see success because of the strong support from community residents, their elected officials, and our buying center of local police departments that understand and appreciate the value of investing technology in order to drive better community-focused public safety outcomes. Turning to financial performance, our Q4 2022 revenues increased 50% to $21 million from the prior year's $14 million in Q4 2021. Adjusted EBITDA increased 131% to $4.3 million or 20% of revenues compared to $1.9 million or 13% of revenues for Q4 2021. Revenues for the full year increased 39% to $81 million with $15.9 million of adjusted EBITDA or 20% of revenues. We finished the year with over 100 miles taken live for the second year in a row. In the quarter, we took four new cities live and implemented five expansion projects in addition to a security deployment at a college campus in Virginia. Going into 2023, we have 21 projects representing over 80 new contracted miles that are in the process of being deployed. Over 15 of the 80 miles are already live as of today. These miles do not include the 30-plus awarded but yet to be contracted miles from both Cleveland and Suffolk County, which when executed will be added to the project list. One notable new city go live was our international recapture of Cape Town, South Africa, which has already seen remarkable success that has been publicly trumpeted by Alderman J.P. Smith. who owns the security portfolio for the city of Cape Town. As recently as late last week, ShotSpotter led to the arrest of several shooters in the recovery of firearms and spare ammunition. In addition, a number of ShotSpotter alerts have led to gunshot wound victims that have been successfully treated due to those ShotSpotter alerts. The city of Cape Town, along with the provincial government of the Western Cape, are in early discussions to motivate for an expansion to several other suburbs of Cape Town that are equally challenged with respect to gun violence. Overall, we had another strong bookings year with 145 new miles and 77 subscription renewals booked with 37.5% of those transactions representing multi-year agreements. Of note was the exceptional performance of our Tier 4, Tier 5 initiatives. which represented over 20% of the domestic new miles booked for 2022. We view this specific segment as a significant untapped CAM expansion opportunity and are in the process of significantly increasing our direct sales to further penetrate and grow that business. Copling X also realized strong bookings with a late Q4 2022 multi-year seven figure deal representing $1.2 million in annual recurring revenue. We're taking intentional steps to more tightly integrate the CopLink X solution and sales motion into ShotSpotter sales, customer success and support, and product management infrastructure in order to accelerate ShotSpotter Respond upsell opportunities in combination with the state and federal agency pipeline that our acquisition of Forensic Logic brought to the companies. Our customer retention results remain best in class as an operating SaaS company. In 2022, we were able to realize negative gap revenue attrition net of pricing increases. As I reported in our last earnings call, our customer success organization, robust customer onboarding program, and our diligent net promoter score process are central to our customer retention strategy. In addition to helping drive positive outcomes that promote stickiness, It also contributed to a best-in-class sales and marketing spend of 40 cents for a dollar's worth of annualized contract value for 2022. This is the second year in a row our sales and marketing spend per ACV has been below 50 cents. Our demand drivers remain strong as there is increasing pressure on cities to deal with the rising violent crime in a transparent and community-inspired fashion. As a reference point, we published over 250,000 gunshot alerts in 2022. The overwhelming percent of those alerts did not have a corresponding 911 call. And without ShotSpotter, it would have hobbled the efforts of any agency to respond to and investigate criminal gunfire. Our acoustic gunshot detection technology helps improve the speed and response to criminal gunfire in order to save lives and deter shooters. Our complementary investigative solutions accelerate the investigative process and helps improve case closure rates. And our patrol management solution democratizes the crime analyst function in order to drive scientifically proven, smarter, and more effective patrol strategies without over-policing. These force-multiplying solutions are critical as agencies remain significantly below their budgeted staffing levels as they grapple with the great resignation which has resulted in a 3.5% decline in police officers over 2020 and 2021. We believe the combination of these factors create a unique opportunity for proven technology solutions like ours to address the growing gap between increasing demand for policing services versus the limited and shrinking supply of those services. The funding and budgetary environment continues to be constructive, not only at the local and state level, but also at the federal level. The Biden administration has committed $10 billion in American Rescue Plan funds to public safety, of which $450 million have been allocated to public safety technology, including gunshot detection, which was specifically called out in a White House press release of May 2022. For example, Detroit Mayor Mike Duggan and Police Chief James White allocated $7 million of ARP funds expressly for gunshot detection, which resulted in a 20-mile expansion of ShotSpot. Given these demand drivers and the robust funding environment, we are very bullish on our ability to drive profitable growth for the foreseeable near and medium term. We have the breadth and depth of a high-quality suite of proprietary technology solutions that are proven and in the case of our acoustic gunshot detection core, remain mostly unchallenged from a competitive point of view. Our solution suite meets the needs of the market, and our brand reputation positions us as a trusted provider of these solutions to our buying center core and their appropriators. We're starting the year on a strong footing with approximately $80 million in ARR, a large book and growing pipeline of domestic and international acoustic gunshot detection deals along with a growing pipeline of investigative and patrol management transactions, which exhibit faster and compressed contractor revenue timelines. These factors give us some degree of confidence in reaffirming our $94 to $96 million revenue guidance for the year, which Alan will outline in more detail. And with that, let me turn the call over to Alan.