ShotSpotter, Inc. (NASDAQ:SSTI) Q3 2023 Earnings Call Transcript

And that’s really the signature differentiation of the SafePointe solution is to have these kind of very covert sensors that you don’t recognize you’re actually walking through a very sophisticated AI-based metal detection capability. With respect to the adjacency in terms of the go-to-market motion on this in the buying center, what we found really interesting as we were doing our due diligence in acquiring the company when we’re kind of talking to some of the existing customers as well as potential customers because a number of these folks actually come from law enforcement. And so we’re talking to people that we’re definitely aware of SoundThinking and their prior inclination of ShotSpotter. These are folks that maybe have spent 20, 30 years in a local law enforcement agency and then decide to retire and what are they retired to, they retired to their second job, which is the Senior VP of Security for XYZ Hospital chain or ABC Gaming Corporation.

So we’re selling [Technical Difficulty] into many ways an adjacent buying center where we can leverage our brand and reputation. And even in those situations where the customer doesn’t directly come from law enforcement, they’re socializing with local law enforcement because it’s really all about public safety and kind of private sector environment. So we’re pretty comfortable that we know how to go get at it, how to go get at that. And we’re going to be excited to kind of share with you our progress in this greenfield opportunity.

Richard Baldry: Last for me to I’ll turn it over to be. If you think about those deployments, what gates the speed at which after sort of contracts signed to get one up in the traditional gunshot detection side just field sensors sometimes in places that are not owned by people that are easy to deal with, presumably, this would be easier because the end clients, the ones who is giving you the location things line up. And then the other would be, are there major enterprise opportunities that like you mentioned chains of things like supermarkets, it could be hundreds of lanes in a single win? Or do you think you have to start with sort of smaller midsize deployments to sort of prove your referenceability before those would be on the table.

Alan Stewart: Yes. So this is Alan. Ralph can add in. Yes, I think at this point, in terms of a contract when the contract gets awarded, it’s definitely faster in terms of once that’s awarded to the deployment, you can think along the lines of maybe 2 months, a little more than that potentially or even faster than in some circumstances. So significantly faster than what we do with the ShotSpotter because the customers are already giving us permission, right, to hang the sensor. So it’s a lot of easier than going out, getting permission to do that.

Operator: Our next question comes from Mike Latimore of Northland Capital Markets.

Michael Latimore: Yes. And congrats on the corrections deal here. I guess, can you just discuss when you might start seeing revenue on that? And then, I guess, it was $18 million, is that going to be recognized ratably over the period of the contract or might you get more upfront with professional services or something like that?

Ralph Clark: Yes. This is Ralph. So I think our expectation is this is a 6-year contract, we would expect to see a little bit more upfront as a good portion of the $18 million of ultimate contract value. I think $6 million or so is professional services. In terms of revenue recognition, I think our expectation is we’ll see just a little bit this year, and we’ll see it more kind of fulsome I would say, in 2024 and beyond. I mean it’s really interesting for us because this is a contract we had hoped to get started on earlier in the year and be able to recognize a lot more revenue than ultimately we are going to be able to recognize just kind of given the fact that we’re just now getting to contract and starting the work. But we’re extremely excited about what this means for us in establishing a critical foothold in the sub corrections market because we think we bring some very unique capability to that in terms of investment data capability.