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SI

SOUNDTHINKING, INC. (SSTI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue of $25.1M declined 4% YoY and ~3% QoQ; GAAP EPS was $(0.16), with gross margin at 54% and Adjusted EBITDA of $3.5M (14% margin) . Versus S&P Global consensus, revenue missed ($25.10M vs $27.97M*) and EPS missed ($(0.16) vs $(0.06)*) [GetEstimates: Q3 2025].
  • FY25 outlook was cut: revenue to approximately $104M (from $111–$113M) and Adjusted EBITDA margin to 14–15% (from 20–22%) on delayed bookings in a state-level CrimeTracer deal ($2.5M), Puerto Rico renewal ($1.4M), and Brazil CapEx (~$2.5M) .
  • Management cited operational sales execution issues (separate from the three delayed deals) and is realigning sales leadership and focus; pipeline hygiene and deal qualification are improving, with a shift back to “point solution” selling for ShotSpotter .
  • 2026 outlook introduced: revenue $114–$116M and Adjusted EBITDA margin 18–20%, excluding potential Chicago or Brazil upside; management reaffirmed long-term targets (70% GM, 40% Adj. EBITDA margin, 15% revenue CAGR) .

What Went Well and What Went Wrong

  • What Went Well

    • Customer satisfaction and retention remain strong; NPS rose to ~70 from 66 YoY, reflecting “world-class” levels and underpinning recurring revenue stability .
    • Product momentum: CrimeTracer Gen3 (voice-enabled AI, AI summarization, dashboards) rolling out; early user feedback positive; integrations across SafetySmart platform deepening .
    • SafePointe gaining traction, aided by CA AB 2975 mandate; management highlighted faster sales cycles (~12 months vs 12–18 months for ShotSpotter) and recent wins (e.g., 26-lane nonprofit hospital in Florida) .

  • What Went Wrong

    • Revenue and EPS missed consensus; FY25 guidance cut on delays in a 18-agency CrimeTracer state opportunity ($2.5M), Brazil CapEx ($2.5M; tariff/government changes), and Puerto Rico renewal ($1.4M) .
    • Sales execution gaps (beyond the three delayed deals) reduced domestic ShotSpotter pull-through, prompting leadership/GTMS changes; management expects improved conversion but is early in remediation .
    • Gross margin compressed to 54% (from 58% YoY) and remained near Q2’s 53%; mix and delayed deal timing cited as drivers despite cost controls in COGS and OpEx .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$26.3 $25.9 $25.1
Gross Profit ($USD Millions)$15.2 $13.8 $13.6
Gross Margin (%)58% 53% 54%
GAAP Net Loss ($USD Millions)$(1.4) $(3.1) $(2.0)
GAAP Diluted EPS ($)$(0.11) $(0.24) $(0.16)
Adjusted EBITDA ($USD Millions)$4.5 $3.4 $3.5
Adjusted EBITDA Margin (%)17% 13% 14%
Total Operating Expenses ($USD Millions)$16.3 $16.7 $15.7
  • Estimate Comparison (S&P Global)
    | Metric | Q3 2025 Estimate | Q3 2025 Actual | |---|---|---| | Revenue ($USD) | $27,965,570* | $25,100,000 | | Primary EPS ($) | $(0.06)* | $(0.16) |

Values marked with * retrieved from S&P Global.

  • Drivers and color: YoY revenue decline was largely due to the $2.8M Chicago revenue in Q3’24, partially offset by ~$1.7M in new bookings/expansions in Q3’25; Q3’25 missed internal expectations on Puerto Rico renewal absence, a delayed statewide CrimeTracer booking, and several large contract delays . Cost controls reduced COGS (from $12.1M in Q2 to $11.5M in Q3) and trimmed OpEx sequentially ($16.7M to $15.7M) .

KPIs and Balance Highlights

KPI / BalanceQ3 2025
DeploymentsShotSpotter went live in 2 new cities and 1 university; 2 expansions
NPS~70 (vs 66 PY)
Cash & Equivalents$11.8M
Deferred Revenue$43.9M
A/R & Contract Assets (net)$28.5M
Debt (LOC)$4.0M outstanding; ~$36.0M available
Share Repurchases160,271 shares for ~$2.0M in Q3; YTD 225,334 shares for ~$3.0M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$111.0M–$113.0M ~ $104.0M Lowered
Adjusted EBITDA MarginFY 202520%–22% 14%–15% Lowered
RevenueFY 2026First introduced – no prior formal guide $114.0M–$116.0M New
Adjusted EBITDA MarginFY 2026First introduced – no prior formal guide 18%–20% New
Long-term TargetsMulti-year70% GM; 40% Adj. EBITDA; 15% revenue CAGR Reaffirmed Maintained

Management emphasized that FY26 guide excludes potential Chicago and Brazil CapEx upside; if realized, both revenue and margin could be higher .

Earnings Call Themes & Trends

TopicQ1 2025 (Prior-2)Q2 2025 (Prior-1)Q3 2025 (Current)Trend
AI/Technology InitiativesEmphasis on ML/AI to enhance products; reaffirmed platform transformation Continued AI investments; gross margin impacted by NYPD sublicensing timing CrimeTracer Gen3 GA with voice NL search, AI summarization, dashboards; internal “agentic AI” for customer success; SafePointe algorithm improvements and potential on-prem inference to reduce cloud costs Expanding scope and deployment
Sales Execution & GTMSolid start; pipeline strength Reaffirmed FY25 guide; costs controlled Pipeline healthy but conversion lagged; leadership changes; refocus on point-solution selling; improved hygiene/forecasting Remediation underway
ChicagoQ1: No renewal assumed; RFP pending Still excluded from guidance Live-fire demo; budget line item for gunshot detection; superintendent supportive; nearing RFP conclusion Visibility improving (still uncertain)
International ExpansionPipeline commentary N/ABrazil CapEx ($2.5M) delayed (tariff/government changes); Uruguay proof point; Niterói, Brazil deployment referenced Mixed: near-term delay, longer-term opportunity
SafePointe (Hospitals)Early success entering weapons detection market Continued AI investments; platform scaling Significant momentum aided by CA AB 2975; faster cycles; recent 26-lane hospital booking Accelerating
Macro/Policy (Tariffs, Funding)N/AN/ABrazil tariff impacts cited; government changes affecting timing (Brazil, Puerto Rico) Headwind to timing
Profitability/MarginsTargets reaffirmed GM 53% on mix/maintenance; Adj. EBITDA 13% GM 54%; Adj. EBITDA 14%; FY25 margin cut; FY26 18–20% guide Near-term compression; 2026 improvement

Management Commentary

  • “We expanded our ShotSpotter footprint, introduced new AI capabilities with our CrimeTracer Gen3 beta release, and saw SafePointe gain traction in healthcare settings following California’s AB 2975 mandate. Our Net Promoter Score climbed from 66 to approximately 70” — Ralph Clark, CEO .
  • “We are lowering our full year 2025 revenue guidance from $111.0 million to $113.0 million to approximately $104.0 million and lowering our Adjusted EBITDA margin guidance range from 20% to 22% to 14% to 15%.” — Ralph Clark, CEO .
  • “We’ve begun realigning our sales organization… tightening accountability around forecasting and conversion metrics… going back to fewer things in the bag, focus in on those opportunities” — Ralph Clark, CEO .
  • “Gross margins did go down related to the deals… we’re controlling our cost appropriately… COGS went from $12.1M in Q2 to $11.5M in Q3… OpEx down from $16.7M in Q2 to $15.7M in Q3.” — Alan Stewart, CFO .

Q&A Highlights

  • FY26 margin lower than FY25 prior plan due to conservatism and exclusion of Chicago and Brazil CapEx; if either lands, both revenue and margins would be higher .
  • FY25 cut largely three items: CrimeTracer state ($2.5M), Brazil CapEx ($2.5M), Puerto Rico (~$1.4M); ~70% of that revenue would have flowed to Adjusted EBITDA, explaining the sharp margin reset .
  • Sales execution remediation: returning to point-solution focus for ShotSpotter, fewer-product bag, interim sales leadership during national SVP search; issues were additive to delayed mega-deals .
  • SafePointe pipeline robust with faster cycles (~12 months vs. 12–18 months for ShotSpotter) and strong product-market fit in hospitals beyond CA; recent multi-lane hospital booking cited .
  • Puerto Rico unlikely to be backdated; pricing likely to increase upon renewal; system is turned off pending contract .

Estimates Context

  • Q3 2025 vs S&P Global consensus: revenue $25.10M vs $27.97M* (MISS); EPS $(0.16) vs $(0.06)* (MISS) [GetEstimates: Q3 2025].
  • Implications: Street models likely trim FY25/26 on slower conversion and international timing risk; potential for upside if state-wide CrimeTracer, Puerto Rico, Chicago, or Brazil resolve favorably as management suggested .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term reset: FY25 revenue cut to ~$104M and margin to 14–15% on delayed state/international deals and Puerto Rico; watch for timing updates as visibility improves .
  • Execution pivot: management is tightening GTM, focusing ShotSpotter selling, and reintroducing seasoned interim sales leadership; monitor Q4 conversion and early 2026 pipeline conversion KPIs .
  • Product catalysts: CrimeTracer Gen3 AI features and SafePointe momentum in hospitals (AB 2975) can diversify growth and shorten cycles versus core ShotSpotter .
  • Optionality: Potential upside from Chicago RFP conclusion and Brazil CapEx; neither included in FY26 guide .
  • Profit bridge: Delayed items have high flow-through (CFO: ~70%), so revenue timing recovery could rapidly lift Adjusted EBITDA percentages .
  • Balance/funding: Recurring revenue base supported by $43.9M deferred revenue; liquidity intact with $11.8M cash and ~$36M LOC availability .
  • Long-term framework intact: 70% GM/40% Adj. EBITDA/15% growth targets reaffirmed, but path depends on sales execution, contract timing, and macro/policy (e.g., tariffs) .

Appendix: Additional Tables

Revenue/EPS vs Estimates (detail)

MetricPeriodConsensus*Actual
Revenue ($USD)Q3 2025$27,965,570*$25,100,000
Primary EPS ($)Q3 2025$(0.06)*$(0.16)

Values marked with * retrieved from S&P Global.

Selected Operating Metrics

MetricQ3 2024Q2 2025Q3 2025
COGS ($USD Millions)$11.0 $12.1 $11.5
Operating Loss ($USD Millions)$(1.0) $(2.9) $(2.1)
Deferred Revenue ($USD Millions)—$43.5 $43.9
Share Repurchase (Shares / $)—31,570 / ~$0.5M 160,271 / ~$2.0M

Note: Prior-year details shown where disclosed in current and prior 8-K exhibits .