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SI

SOUNDTHINKING, INC. (SSTI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue of $25.9M and GAAP EPS of $(0.24) missed Wall Street consensus slightly on revenue ($26.3M*) and meaningfully on EPS ($-0.142*); management reaffirmed FY25 revenue ($111–$113M) and adjusted EBITDA margin (20–22%) guidance, citing timing of large deals and an NYPD sublicensing delay impacting margins .
  • Bookings were below internal targets as a $2.4M CrimeTracer deal and a 400-unit PlateRanger order slipped to Q3; Puerto Rico service was suspended pending an RFP, creating a temporary revenue headwind .
  • Operational updates included four new ShotSpotter cities and one university, major SafePointe deployments (including a 20-lane HBCU campus), and integrations (PlateRanger ⇄ CrimeTracer; ShotSpotter ⇄ drones); management emphasized an “AI-native” transition and sensor upgrades enabling angle-of-arrival capabilities .
  • Near-term catalysts: Chicago RFP live-fire demo in September with no 2025 contribution assumed, expected NYPD sublicensing catch-up revenue in Q3, and healthcare TAM expansion from California AB 2975 mandating weapons detection at hospitals .

What Went Well and What Went Wrong

  • What Went Well

    • “We’re pleased to report a solid Q2 marked by continued progress on our transformation into a broader public safety technology company” and reaffirmed FY25 revenue and adjusted EBITDA guidance .
    • Product momentum: SafePointe won a marquee 20-lane deployment at an HBCU; ShotSpotter went live in four new cities and one university; integrations accelerated (PlateRanger ⇄ CrimeTracer; automated drone dispatch from ShotSpotter alerts) .
    • International traction: deployments and pipeline in Montevideo (expanded), Niterói (Brazil), Mexico, and South Africa; pricing uplift in international markets often 3x domestic rates per Q1 commentary .

  • What Went Wrong

    • Bookings shortfall driven by timing: a $2.4M CrimeTracer transaction and 400-unit PlateRanger order pushed to Q3; Puerto Rico renewal required an RFP, forcing service and revenue recognition suspension .
    • Gross margin compression to 53% (from 60% YoY) due to added maintenance and NYPD software licensing expenses ahead of expected sublicensing catch-up revenue; adjusted EBITDA fell to $3.4M (13% margin) from $5.1M .
    • Discrepancy on share repurchase amount: press release cites ~$0.5M for 31,570 shares, while CFO stated ~$1.5M repurchased in 2025; this may create confusion in capital return narratives .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$23.4 $28.3 $25.9
Gross Profit ($USD Millions)$11.7 $16.6 $13.8
Gross Margin (%)50.0% 59.0% 53.0%
Adjusted EBITDA ($USD Millions)$1.7 $4.5 $3.4
Adjusted EBITDA Margin (%)7.0% 16.0% 13.0%
GAAP Net Income (Loss) ($USD Millions)$(4.1) $(1.5) $(3.1)
GAAP EPS (Basic & Diluted) ($USD)$(0.32) $(0.12) $(0.24)
Actual vs S&P Consensus (Q2 2025)Q2 2025
Revenue ($USD Millions)$25.9 vs $26.33*
EPS ($USD)$(0.24) vs $(0.142)*
EPS # of Estimates5*
Revenue # of Estimates7*
Values marked with * retrieved from S&P Global.

KPIs and balance items

KPIQ4 2024Q1 2025Q2 2025
Deferred Revenue ($USD Millions)$44.2 $45.4 $43.5
Cash & Cash Equivalents ($USD Millions)$13.2 $11.7 $9.0
Accounts Receivable & Contract Assets, net ($USD Millions)$25.2 $29.5 $30.7
Line of Credit Available ($USD Millions)~$21.0 ~$21.0 ~$21.0
Debt Outstanding ($USD Millions)$4.0 $4.0 $4.0
Shares Repurchased (period)418,940 in 2024 33,493 (~$0.5M) 31,570 (~$0.5M)

Operational highlights (Q2 2025)

  • ShotSpotter went live in 4 cities and 1 university; 4 expansions .
  • Pipeline of >$37M for remainder of 2025; corporate security opportunity emerging (secure campus + perimeter sniper solution) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$111–$113M (raised on Feb 25, 2025) $111–$113M (reaffirmed Aug 12, 2025) Maintained
Adjusted EBITDA MarginFY 202521–23% (Feb 25, 2025) 20–22% (reduced May 13; reaffirmed Aug 12) Lowered (Q1), then Maintained
ARR (beginning of 2026)FY 2026 (start)~$110.0M (Feb 25) ~$110.0M (reaffirmed Aug 12) Maintained
NYPD sublicensing catch-upQ3 2025Not previously assumedExpect to enter new contract in Q3 and receive catch-up revenue Introduced
OpEx trajectoryH2 2025Not specifiedOpEx to remain “pretty much flat” in Q3/Q4 Clarified flat H2 run-rate

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
AI/technology initiativesNext-gen SafePointe (3D camera; SOC2/HIPAA), platform AI/ML focus CrimeTracer natural language + LLMs; PlateRanger integration; AWS/Azure costs “AI-native” transition; PlateRanger ⇄ CrimeTracer integration; drone dispatch; new multi-mic sensors enable angle-of-arrival Strengthening
International expansionNiterói (Brazil), Montevideo (Uruguay), Nelson Mandela Bay (SA) pipeline Return to Brazil; South Africa; 3x pricing uplift typical internationally Live in Niterói; pipeline in Mexico, South Africa; Montevideo footprint doubled Building
Chicago RFPEvaluating response Bid submitted; outlook excludes Chicago Shortlisted; oral complete; live demo in September; outlook excludes Chicago Positive process momentum
NYPD contract/sublicenseShotSpotter 3-year renewal $21.9M Two NYPD renewals with $3.5M catch-up; total ~$64M Sublicensing delay hurt margin; expect Q3 new contract + catch-up ; CFO: ~$400k COGS vs ~$250k revenue; ~$3M commission savings Resolution expected Q3
SafePointe (healthcare/casinos)Two top-10 hospital pilots; pipeline AB 2975 mandates; ~$20k/lane/yr pricing; ~4,000 lanes CA TAM 20-lane HBCU campus; casino expansions; AB 2975 tailwind Accelerating
Puerto RicoRe-established ~30 sq mi; opportunity to expand Contract through June; aiming multiyear extension RFP required; service and revenue recognition suspended pending extension Temporarily negative
Tariffs/macro–EBITDA guide lowered to 20–22% due to tariffs and AI investments Reaffirmed EBITDA guide, noting tariff costs Neutral to headwind
ResourceRouterStrong adoption; ASP doubled; ~$4M pipeline Continued scaling –Stable

Management Commentary

  • “We’re pleased to report a solid Q2… Our second quarter revenues were in line with our expectations at $25,900,000… Bookings did fall short… due to timing of a few large deals” .
  • “We have a healthy diversified pipeline of over $37,000,000 for the remainder of 2025… beyond domestic ShotSpotter” .
  • On innovation: “We… enable a unique drone as first responder capability… PlateRanger LPR… integration [with] CrimeTracer… completed… using AI coding tools… becoming an AI native company” .
  • On Chicago: “Invited to the live demo phase… entering the next phase with growing confidence… current outlook does not include any contribution from Chicago” .
  • CFO: “Gross margin was lower as expected… related to licensing… for the NYPD… expect… catch up revenue… Adjusted EBITDA was $3.4 million” .
  • CFO: “GAAP net loss was approximately $3.1 million or… $0.25 per share… Deferred revenue… $43.5 million… cash balance is over $16,000,000 [post quarter]” .

Q&A Highlights

  • SafePointe pipeline and legislative tailwinds: Focus on healthcare (CA AB 2975), casinos; multiyear bookings; pricing ~$20k per lane per year; large H2 revenue recognition as deployments ramp .
  • International pipeline: Montevideo expansion, Niterói deployment, opportunities in Brazil/Mexico/South Africa; longer cycles but higher pricing .
  • Revenue cadence and visibility: Sequential step-up expected in H2; Q3 needs to be “north of 27%” margin and Q4 above that; timing of large contracts can affect quarterly phasing .
  • NYPD sublicensing details: ~$400k quarterly COGS vs ~$250k revenue; savings from eliminating a ~$3M annual commission; Q3 catch-up expected .
  • CrimeTracer deal timing: ~$2.4M ARR statewide-type deployment targeted for Q4, working to pull into Q3; similar opportunity anticipated in New York .

Estimates Context

  • Q2 2025 results vs consensus: Revenue $25.9M vs $26.33M* and EPS $(0.24) vs $(0.142)*; modest revenue miss and a larger EPS miss, driven by NYPD sublicensing delay, higher maintenance costs, and AI investments .
  • Forward setup: Consensus for Q3 anticipates revenue $27.97M* and EPS $(0.06)* amid management’s expectation of H2 sequential acceleration; timing of large deals and Puerto Rico reactivation are key variables .
    Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Reaffirmed FY25 revenue ($111–$113M) and adjusted EBITDA (20–22%) guidance despite Q2 bookings timing and Puerto Rico suspension; H2 cadence hinges on closing slipped deals and NYPD sublicensing catch-up .
  • EPS miss was primarily a function of gross margin headwinds from NYPD sublicensing timing and additional maintenance spend; expect partial reversal with Q3 catch-up .
  • Strategic expansion beyond municipal law enforcement into healthcare/casino/corporate security broadens TAM (AB 2975 hospital mandate) and diversifies revenue .
  • International growth is becoming a more material contributor with Brazil/South America reference customers; pricing leverage improves unit economics on wins .
  • Chicago RFP is a 2026 event in management’s outlook; the September live demo could be a sentiment catalyst without 2025 model risk, keeping upside optionality .
  • Operating discipline: OpEx expected flat in Q3/Q4, while integrations (PlateRanger ⇄ CrimeTracer, drones) and sensor upgrades enhance product differentiation .
  • Watch for resolution of Puerto Rico RFP/extension and conversion of CrimeTracer statewide deployment; both are near-term revenue visibility drivers .