SSTI is a developer of gunshot detection software that helps law enforcement officials and security personnel identify, locate, and deter gun violence. It uses a SaaS business model with current customers in the U.S., Puerto Rico, the Virgin Islands, and South Africa. As of March 31, 2017, it had 74 customers.
Its public safety suite, called ShotSpotterFlex, is deployed in urban, high-crime areas to help deter gun violence by detecting and locating gunshots and sending near real-time alerts to law enforcement. Its security solution, SST SecureCampus and ShotSpotter Site Secure, are designed to help law enforcement and security personnel serving universities, corporate campuses, and infrastructure and transportation centers mitigate risk and enhance security by notifying authorities and first responders of an active shooter event.
Its platform consists of highly-specialized, cloud-based software integrated with its proprietary, internet-enabled sensors and communications networks. When a potential gunfire incident is detected by its sensors, its software analyzes and validates the data and precisely locates where the incident occurred. An alert containing a location on a map and critical information about the incident is transmitted directly to law enforcement or security personnel through any internet-connected computer and to iPhone or Android mobile devices.
SSTI's growth strategy includes acquiring new customers, growing revenue with its existing customer base, and expanding its international footprint. The company believes it is in the early stages of penetrating its markets and it intends to expand its direct sales force and expend additional resources on marketing efforts to accelerate growth. Also, of its 74 ShotSpotter Flex customers, about 39% of them expanded their coverage areas from their original deployment areas by an average of seven square miles. This is evidenced by its revenue retention rate exceeding 100% in each of the past three years. For FY16, its revenue retention rate was 127%, up from 112% in 2015.
Taking a look at its financials, revenue increased by 50% year/year to $4.6 million for the three months ended March 31, 2017. The growth was mostly attributable to expansion from existing customer coverage. About $500K of the increase was due to new customer adds.
Gross margin increased by 13 percentage points to 41% as certain cost of revenues are fixed and did not increase with revenue.
The increase in revenue, coupled with the sharp rise in gross margin, helped narrow its operating loss to ($1.2) million compared to ($1.9) million in the year ago period. As of March 31, 2017, SSTI had cash and equivalents of $2.4 million and notes payable of $13.1 million.