SoundThinking (SSTI) Q2 FY26 earnings call: guidance and Q&A

How much of the needed improvement in ShotSpotter sales is within the company's control versus external factors like funding or political scrutiny?

Ralph Clark acknowledged both internal sales hygiene/execution issues and external factors like ARPA funding wind-down and political scrutiny. He mentioned specific deals like Cape Town being canceled post-award due to political moves and a 10 sq mile deal from Q4 still not live. The company is hiring resources to help with funding strategies and pulling levers to accelerate deal conversion, while being conservative on H2 ShotSpotter revenue.

“I do think there is some, there are some issues around kind of the funding environment with the reduction in ARPU funds being available. We're trying to address some of that by hiring an outside contracting resource to work with customers on developing funding strategies to keep the process moving forward. But frankly, I think there are some sales hygiene and sales execution issues that could help us convert faster.”

asked by Richard Baldry · answered by Ralph Clark

Given the $48M H1 revenue and $99M-$100M full-year guidance, how much of the $51M-$52M needed for H2 is already contracted or has high visibility?

Ralph Clark stated significant visibility from booked and budgeted professional services for Technologic and NYC Department of Corrections. He also cited a pipeline of over 100 SafePointe lanes in flight, representing over $2 million in ARR, with confidence that converting 30% of that would help. For ShotSpotter, they are conservatively counting on 7 go-lives out of 15 booked/soon-to-be-booked deals, including a Midwestern city awaiting federal funding release.

“So a fairly significant lever for us is what we expect to get on the booked and already budgeted professional services line for technologic as well as our New York City Department of Corrections... We also have a pretty nice pipeline of over 100 of lanes that are in flight. These are deals that have already been booked. They are in various stages of going live with SafePointe. And on an ARR basis, that represents more than $2 million in ARR.”

asked by Richard Baldry · answered by Ralph Clark

Has there been a fundamental change recently causing SafePointe deployment delays, or was this dynamic known?

Ralph Clark explained that as deployments scaled from 1-2 lanes to 10-20 lanes per enterprise, the cadence changed significantly. It now involves more structure, dealing with IT organizations, network access, physical construction, and sequencing multi-site rollouts, which is more involved than previously. Alan Stewart added that while 90 new lanes were booked in Q2, deploying that many takes longer to ensure performance and customer satisfaction.

“operationally, what we're finding is as we've kind of gone from kind of 1 to 2 lanes per enterprise to like 10 to 20 lanes per enterprise, it's just a completely different cadence. There's a lot more, I would say, kind of structure and I won't say resistance, but there's a lot more structure dealing with IT organization...”

asked by Trevor Walsh · answered by Ralph Clark

Clarify the breakdown of the $10M guidance reduction, specifically the 'general deal slowdowns' portion beyond Puerto Rico and SafePointe.

Alan Stewart clarified that about 70% of the $10 million reduction is due to timing shifts (professional services, SafePointe deployments) into 2027, not lost contracts. The remaining 30% is attributed to slightly slower actual sales movement and new bookings, which they are being honest about in the revised guidance.

“The good news is about 70% of that is really due to timing. It's not due to contracts that were locked, it's timing related to delivering some of those professional services in New York City and Department of Correction... the other 30% is the slightly slower in terms of the actual sales movement that we've had, new bookings.”

asked by Trevor Walsh · answered by Alan Stewart

Quantify the number of heads or percentage reduction from the workforce optimization initiatives.

Alan Stewart stated that approximately 28 people were impacted by the changes. He added that the optimization also included changes in marketing plans and other expense reductions beyond personnel.

“There were about 28 people that we took a look at in terms of what things that we had to change.”

asked by Eric Martinuzzi · answered by Alan Stewart

Is the increased political scrutiny and negative media (e.g., John Oliver) contributing to elongated sales cycles for ShotSpotter, similar to ALPR technology?

Ralph Clark confirmed that qualitatively, they are feeling a different type of scrutiny, getting 'wrapped up' in the ALPR debate and even immigration enforcement concerns, which he considers inappropriate. He acknowledged this politicization is stretching out the sales process. The company is addressing this by engaging city councils, community organizations, and civil rights groups, but it definitely impacts decision-making.

“on a qualitative basis, we're definitely feeling a different type of scrutiny that we hadn't really felt before... we're kind of getting wrapped up in the kind of ALPR debate and controversy... We're also seeing, frankly, that people are trying to tie us to immigration enforcement...”

asked by Jeremy Hamblin · answered by Ralph Clark

What is the expected range for SBC this year, and how does it compare to initial targets and impact the Adjusted EBITDA guide?

Alan Stewart stated that Q2 FY26 SBC was $2.4 million, down from $3.8 million in Q2 FY25, a $1.4 million reduction. He expects full-year SBC to be about $10.4 million, significantly lower than last year. He also highlighted that Adjusted EBITDA improved by $1.3 million sequentially despite flat revenue, due to expense reductions.

“Our stock-based comp is going down for the year. We expect it to be certainly lower than we had in '25... we do expect that our stock-based comp is probably going to be about $10.4 million for the year, significantly lower than last year.”

asked by Jeremy Hamblin · answered by Alan Stewart