SoundThinking Q1 Earnings Call Highlights

Key Points

• SoundThinking reaffirmed full-year 2026 guidance after a Q1 result that was roughly in line with expectations, keeping revenue outlook at $109 million to $111 million and adjusted EBITDA margin guidance at 16% to 18%.
• First-quarter profitability was weak due to seasonal and one-time costs, with revenue of $24.2 million versus $28.3 million a year ago and an adjusted EBITDA result of about negative $100,000. Management said results were weighed down by prior-year comparison items, restructuring charges, and heavy investment in SafePointe.
• SafePointe remains the key growth and drag factor: the weapons detection business is growing rapidly, with monthly recurring revenue more than doubling in Q1, but it is still producing more than $8 million in annualized losses. Management expects the business to reach profitability by late 2027 or early 2028 while benefiting from healthcare and casino demand.

SoundThinking NASDAQ: SSTI reaffirmed its full-year 2026 outlook after reporting first-quarter revenue that management said was in line with consensus, while profitability was pressured by seasonally high costs and continued investment in its SafePointe business.

Chief Executive Ralph Clark said first-quarter revenue was $24.2 million and adjusted EBITDA was approximately negative $100,000. The company reiterated full-year revenue guidance of $109 million to $111 million, representing about 6% year-over-year growth at the midpoint, and adjusted EBITDA margin guidance of 16% to 18%. Clark also said the company is targeting $110 million in annual recurring revenue, which he described as 15% growth in 2026.

Clark characterized the first quarter as the company’s “most cost-heavy quarter” and its lightest revenue quarter, citing audit fees, proxy and shareholder meeting costs, and year-end legal and tax work that are largely absorbed early in the year. He said revenue is expected to be back-end loaded as deployments, renewals and expansions build through the year.

“Q1 sits below that point, and Q2 through Q4 are above it,” Clark said, referring to the level at which incremental revenue begins contributing disproportionately to adjusted EBITDA. He added that SoundThinking expects about $4 million in annual savings from workforce optimization actions that became effective April 1.

First-quarter results decline from prior-year comparison

Chief Financial Officer Alan Stewart said first-quarter revenue of $24.2 million compared with $28.3 million in the first quarter of 2025. He noted that the prior-year period included about $500,000 of revenue tied to a Puerto Rico ShotSpotter contract that has not yet renewed, along with about $3.5 million of non-recurring prior-year catch-up revenue related to two three-year renewals of large contracts with the New York Police Department.

Gross profit was $11.3 million, or 47% of revenue, compared with $16.6 million, or 59% of revenue, in the year-earlier period. Stewart said the lower gross margin reflected costs associated with servicing existing and new customers without the benefit of the catch-up revenue recognized in the prior-year quarter.

SoundThinking reported a GAAP net loss of approximately $7 million, or $0.54 per basic and diluted share, compared with a GAAP net loss of $1.5 million, or $0.12 per basic and diluted share, in the first quarter of 2025. Stewart attributed the wider loss primarily to the absence of prior-year catch-up revenue, restructuring-related charges and continued platform investment.

Operating expenses were $18.1 million, compared with $17.8 million a year earlier. Sales and marketing expense was $6.5 million, research and development expense was $4.4 million, and general and administrative expense was $6.7 million.

The company ended the quarter with $14.2 million in cash and cash equivalents, down from $15.8 million at the end of 2025. Stewart said SoundThinking had about $36 million available on its line of credit, with roughly $4 million of debt outstanding.

SafePointe investment weighs on EBITDA

Management said SafePointe, the company’s weapons detection offering, is an early-stage business that is growing quickly but remains a drag on consolidated profitability. Stewart said SafePointe is currently generating more than $8 million of annualized losses as the company invests ahead of expected revenue.

“Absent these investments, adjusted EBITDA would have increased year-over-year in the first quarter,” Stewart said. He added that SoundThinking expects the SafePointe product group to reach profitability at the end of 2027 or early in 2028.

Clark said SafePointe monthly recurring revenue more than doubled from January to March as customers including Moffitt and Morgan State went live. He also said SoundThinking had executed a three-year, $3.2 million booking earlier in the week with a top-five major hospital chain for hospitals in one state, representing more than $1 million of ARR. The company also anticipates closing a three-year, more than $1 million booking with a Northeast clinic, representing more than $300,000 of ARR.

Clark said the healthcare market is a major focus for SafePointe, noting that California’s AB 2975 will require weapon detection capabilities across more than 400 hospitals by March 2027. During the Q&A session, he said the company is also focused on casinos, where customers want security screening without slowing visitor traffic.

Product deployments and AI initiatives advance

Clark said SoundThinking took ShotSpotter mileage live across seven customer accounts in the first quarter, added 50 PlateRanger cameras on its license plate recognition platform and went live with 85 lanes of SafePointe.

He also highlighted customer retention and said renewal performance is ahead of plan. Clark pointed to Cleveland as a notable renewal in process, saying the city’s leadership had publicly credited ShotSpotter’s contribution in Cleveland’s 80% homicide solve rate. He described the renewal as an example of SoundThinking’s competitive position in acoustic gunshot detection.

The company also discussed progress integrating ShotSpotter with drone-as-first-responder programs. Clark said 16 cities are live with ShotSpotter-to-drone integrations across Skydio and BRINC, with Las Vegas, Pittsburgh, Suffolk County, Monmouth County, West Palm Beach, Fresno, Tampa and Virginia Beach all coming online within the last two months.

SoundThinking has also launched SafetySmart Field Agent, an AI-powered user experience within its SafetySmart platform. Clark said the product is in beta with more than a dozen ShotSpotter agencies, with broader availability targeted for later this summer. He said Field Agent allows authorized users to ask questions in plain English and receive insights, charts, maps or briefing-ready summaries across data sources including ShotSpotter, ResourceRouter and PlateRanger.

Management says second half will drive full-year targets

In response to an analyst question about visibility into growth for the remainder of the year, Clark said management feels “really good” about reaching roughly $50 million of revenue in the first half and about $60 million in the second half. He said the second-half ramp is expected to include a large statewide or semi-statewide CrimeTracer deal of about $2.5 million and the potential recapture of Puerto Rico, which could add $2.7 million of ARR.

Clark said the CrimeTracer deal was “literally exchanging paper” and estimated it could be 30 to 45 days away from completion. He said Puerto Rico remains positively engaged, though it is not as far along as the CrimeTracer opportunity.

Stewart said full-year adjusted EBITDA guidance is supported by lower operating expenses after the first quarter, about $2.5 million of savings for the remainder of the year from cost reductions, and the expectation that more than 90% of new revenue growth beyond the first-quarter run rate will flow through to adjusted EBITDA.

Management also discussed renewal activity, including Detroit and Suffolk County. Stewart said the company has assumed higher attrition than in prior years, largely because of budget pressure and the end of ARPA funding availability for some customers, but said SoundThinking is working proactively with customers and, in some cases, helping identify potential funding sources.

About SoundThinking NASDAQ: SSTI

SoundThinking, Inc, a public safety technology company that provides transformative solutions and strategic advisory services for law enforcement and civic leadership. Its SafetySmart Platform, an integrated suite of data-driven tools that enable law enforcement and community violence prevention and health organizations to be efficient in public safety outcomes. It offers ShotSpotter, an acoustic gunshot detection system; CrimeTracer, a law enforcement search engine; CaseBuilder, an investigation management system; and ResourceRouter, a software that directs patrol and community anti-violence resources to help maximize their impact.

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