All right, we're going to get started on our next session now. I always want to say I'm glad to have ShotSpotter here, but I can't say that anymore.
You can't.
The company changed its name on me, so after all these years I have to call you SoundThinking now.
You do. I still say ShotSpotter occasionally too, though.
Don't change your ticker because then my head will be completely blown.
That'd be a problem.
I don't know what to talk about. Let's just start with a two-minute elevator pitch on who you guys are and what you do, and then we'll dig in deeper than that.
Yeah, great. So thank you, and thank you all for being here too. We are SoundThinking. At this point, we are a software company, a SaaS company that has five separate products. We went public in 2017 with just one. It was gunshot detection, which we still call ShotSpotter. That is still the majority of our revenue. Call it about 67% of our revenue, but the balance of our revenue is the other software products that we do. Four of them are direct or three of them are directly related to municipalities, police departments. One's called ResourceRouter that helps them manage patrols. One's called CrimeTracer, which is like it's basically like Google for cops. It's a lot of information that you can get about people like who I'm married to, who my kids are, what tattoos I have that the normal person out there can't get.
But if you're a police officer, you have access to what's called CJIS, Criminal Justice Information Services, which gives you that information. The other one is called CaseBuilder. CaseBuilder is a case management solution that we have built from an on-premises-based solution that we acquired in 2020. They had New York City Police Department for a customer for over a decade. We took that solution, turned it into a cloud-based solution. So that's the fourth. The fifth one is an acquisition that we did in 2023 in August called SafePointe, which is actually a weapons detection solution. So that's not tied to municipalities, although it could be. It's more tied to commercial and other types of potential customers, which is a significantly larger TAM for us, actually about 10 times our TAM that we had with the other four software products alone.
So we're really going to focus on that one later, but let's start with the controversy because I think just dive straight into it. I'll say it's about a year ago, almost to the day now probably, that a new mayor came into Chicago, told the world he was going to leave, really damaged your valuation. In the interim, you've replaced more deployments than that city represents. By the time their renewal, which they extended yet again, is gone, you will have replaced it a second time, and still your valuation hasn't recovered. So let's talk about politics behind that, if there is any potential for them to stay. We assume it doesn't, but I'd like to hear your thoughts.
Sure. Thanks, Rich. And what he's talking about is the city of Chicago, but in reality, it's actually the mayor of Chicago, Brandon Johnson, who campaigned on saying that he was going to cancel ShotSpotter. So he got elected. He got last May. Not only did he not cancel it right away, he actually extended it from the prior mayor had put some money aside, which he extended that to February, and then he was going to cancel it then. He just extended it again from February to basically the end of November. Now, the fact is, he has this time said that the end of November, he's going to turn it off.
Ironically, during that time, and it was only about seven months, two months if you add the additional transfer period, so you get about nine months, he had to pay us for an entire year for that, plus 5% COLA increase, because that's what we had been negotiating with the police department for months at that point. So it was either we were going to shut it off and he was going to go dark into the night without any kind of ShotSpotter at that point, no ability to check gunshot detection. And for those of you who don't know, about 80%-90% of the time, no one calls 911 in the communities that we're covering.
So rather than shutting it off, our CEO, Ralph Clark, and the mayor were on the phone that entire weekend back and forth and ultimately decided that we'll keep it going because we do care about the people that we serve. We absolutely do. But from a city, they're going to have to pay what we told them they were going to pay, which is the entire year's renewal plus the 5% COLA increase. Ultimately, do we know what's going to happen? No, but we do know that he extended it through the summer and one month after the Democratic National Convention. So, of course, people are asking him already, appropriately so, "Well, wait a second.
So you can keep it for the VIPs that are coming to the city, but the people that are serving throughout the rest of the time, you don't care about?" It's going to be challenging for him to shut it off completely. Right now, it is going to be shut off. If it does, our expectation is that it may be off for a while. If it is, we've had that happen before in other cities like Puerto Rico. Ultimately, it gets turned back on. But to your point, what we've already done is since he said that, we've added last year and by the way, Chicago has coverage of about 117 miles, so it's our largest mileage in a customer that we have. Last year, we added 155 new miles. This year, we'll add another 120 miles.
So by the time it actually, if and when it gets shut off, we will have replaced those miles twice. The market certainly wouldn't or doesn't seem to understand that or realize that that ultimately ends up it's not positive losing one of your larger customers, but it's not really hurting the company at all. In fact, the investor day that we had last week that any of you haven't seen or would be interested in, it was about four hours long where we talked about the buildup of the ARR. And the ARR last year went from $79.7 million to about $95 million the start of this year, even without Chicago. If Chicago goes away, if we even lost let's say we can't get Puerto Rico turned back on, that $95 million still goes north of $100 million even if we lose Chicago.
From a business perspective, it's those other four software solutions that we have that are adding a lot of value. They're growing revenue. They're also helping us improve gross margins and the rest of the financials as well.
So I think some people think, "Well, is this a harbinger of more to come?" I'd like you to address how rare it is to lose a client. And you have won meaningful amounts of the few that have left have come back. Can you talk about that so people can understand that this seems very much like an outlier and maybe the outreach you've done to top clients and the feedback you've gotten from them in light of this?
Yeah, great question. It's about what is our how have we kept customers in the past? I'll summarize it in a couple of things. We went public in 2017. Since then, we actually lost about 19 customers. Four of them have already come back. But out of those entire 19 customers, less the ones that came back, we've only gone down 15 miles of coverage. In the meantime, we've increased from 475 miles in coverage to over 1,100 miles in coverage. When you've lost a couple of customers, people always that are opposed to us say, "Hey, this city was canceling. This city was canceling." Well, they're ignoring the fact that some of the biggest ones that left came back and the ones that did stay away were small and left for various different reasons, but it hasn't affected the company at all.
In fact, the last four years from an attrition rate, we've had less than 1% attrition, which means that 99% of our customers are staying with us or expanding. That's why I can talk about miles going from 470 to over 1,100 since we went public. STI. SSTI. Sure.
All right. Just for the record, that retention rate is among the best I've ever seen in following this broader space for 20 years. I've almost never seen. No one has ever shown me 100%.
Well, thank you. We're very proud of that. We work really hard for that, though. I think one of the things that's important about SoundThinking is things do happen. Customers do leave occasionally. We hopefully, since we leave the sensors there, get them turned back on at some point. In fact, that happened in Suffolk County. Suffolk County lost 7 miles about four years ago, and they realized it was critical, so they came back with 21 miles. So not only did they come back, they expanded. But what we do, we're very big at Net Promoter Scores providers, or I guess we really try to make sure that our customers love us and would recommend that they would recommend us to another customer. That's sort of what a Net Promoter Scores does.
We have a 64, which is pretty much world-class, especially when you're dealing with cities, municipalities, and police departments who really pretty much don't like most of their vendors. So for us to have 64 is amazing. The other thing that we do significantly, and one of the things that helps us get that 1% attrition rate, is we have a very large team of customer success people. These customer success people, they don't want to have sales quotas. We don't want them out there selling. What we want them out there doing is talking to the customers, saying, "Are you happy? Do you like what you're doing? Hey, by the way, here's some best practices that this city is using that's effective in making them use the solutions more effectively." That's what we do. We invest a lot in that.
We're very proud of the attrition, but it's not by mistake. It's because we're focused on providing value to the customers that we have.
I think one of the most important ways you add value is, and you can maybe address it better than I am, is how fast the response rates are, how quickly you can help get resources to one of these sites and frankly, save lives by being there. At times, when you get there, there could be nothing there. Another time you can come, someone could be bleeding to death, but if you get there faster, you could save a person's life. Can you talk a little bit about what you bring, what the system brings to a police department?
Yeah, absolutely. Thank you for asking that question. Because a lot of people, the ones that are opposed to us, we don't understand, frankly, why they're opposed, because in the communities we serve, and I apologize for saying this again, but over 80% of the time, no one calls 911 at all. Now, think about that. There's many reasons they don't. Maybe they don't like the police. Maybe they don't trust the police. But the fact is, if you're not calling 911, no one knows that a gunshot is going off in your neighborhood. And by the way, even if you are calling 911, you're saying, "Okay, a gunshot went off in my neighborhood." Well, okay, what's your address? Well, I'm not giving you my address. I don't want you to know or the gang to know that I'm the one that called 911.
I heard a gunshot out there. Well, where is it? I don't know. It was out there somewhere. What we do is we have sensors that are about 15-25 sensors per sq mi. They triangulate to give an accuracy basically in the middle of this room. So it's within 80 ft. We can say, "Here's where the gunshots were going off." We give that to the police department. Our service level agreement says we have to do it within 1 minute. But in actuality, typically, we're there about 35-40 seconds after the gun gets fired. So the police are getting that information. They know where to go. So they're more likely to not necessarily find the person that did the shooting. They may already be gone, but they can interview the witnesses that saw who it was.
They can save that person that got shot because they're there in three to five minutes. And instead of bleeding out, because even when 911 calls are made, they're like five to seven minutes later, by the time they get there, someone who's bleeding has bled out and they're dead. Okay? Not 100% of the time, but a lot of times, we get there or help the police get EMS there fast enough to save a life. And that's something that we talk about a lot. Our customers talk about a lot. In fact, even in Chicago, they directly said, "We saved 124 people's lives in the last couple of years just by using ShotSpotter that had no 911 call at all." So when you talk about people that are saying, "Okay, well, we don't want ShotSpotter," it's like, "Okay, well, what's the value of a life?
Not 124, but what's the value of one life?" And if we can get someone there in three to four minutes and keep them from bleeding out and dying, you save someone's life. So we focus a lot on that and try to make sure that everything we do continues to make the software even more accurate and effective.
All right. So let's switch gears and talk. We're going to do two stages. We'll do a little bit on the software side, and then I really want to talk about SafePointe to wrap it up. So you're newer to the software business, and very recently, you did the largest deal in your history and a meaningful one. Can you talk about that and the success you had and what you think that might pave the way for in the future?
Sure. And what Rich is referring to is a Department of Corrections, which is basically a prison. This is the CaseBuilder solution that we had originally developed and had delivered for NYPD, something very, very similar for them. In fact, we were so good with NYPD that this is a New York-based, a very, very large prison. You would all know who it is. And we didn't need yeah, yes. Yes, sir. It's Rikers. So we didn't even have to go to an RFP. They did a sole source to us because of what we've been doing to NYPD for over a decade. And this was the cloud-based version, though. So it's not the on-prem-based version that we had originally acquired. We transferred that into a cloud-based version, which from a software perspective is incredibly important. It's large because it's about $18 million.
Now, that's over six years, but it's also a relatively new software product for us and shows the interest in that CaseBuilder solution. They're not all going to be $3 million a year. But I'll give you one other stat that we mentioned last week. In 2022 or the beginning of 2023, we had 4 CaseBuilder customers. We now have 17.
17.
We added 14 in 2023 with a brand new product that we had just started selling. Very exciting about that because case management isn't something that just a police department that has gunshots that they need to deal with has to deal with. They all have to manage cases. There's 18,000 police departments that all have to manage cases in the United States. That is literally just the United States. In terms of the future, we're really excited about CaseBuilder, and it is already showing that it's significant for us in terms of the large contract win, but other wins as well.
Let's move to your latest offering that I think could be the most exciting. I tell some investors, in a few years, it could be the tail that wags the dog. You acquired a company called SafePointe that puts you into the on-site weapons detection world. Talk about what the solution is, how it's different than what people recognize today as sort of screening systems, and where your value proposition lies there.
Yeah, great. Thanks, Rich. So we acquired SafePointe at the end of Q3, the end of August at that point. So we've only had it for really about six months at this point. What we knew about that company was they came to us because they were planning to do a very large deployment with another large customer that we have, and they said, "We're too small to do it ourselves. Would you partner with us?" So rather than partnering with us, we just bought them. Okay? So it made a lot of sense. The weapons detection is something that right now, it's done by if you go through TSA, you're going through X-ray machines. There is another company called Evolv out there, which is really the only provider that is doing it. And you have to walk through something very similar to an X-ray machine.
What we have is something that it's basically like planters. We call them bollards, but it's basically things that walk through. They don't even know they're getting tested. There might be signs up that say, "We're testing for weapons that you come in," but they're coming through these, and that's the solution that we have. We're incredibly excited about that because the TAM there is about $25 billion. The TAM for our other software products alone is about $2.5 billion. So it's about 10 times the TAM that we started with, and we're just getting started on that. So it's pretty interesting in terms of the technology. Still very, very small, but it's in a startup, basically a starting or a startup of the marketing for this. So we're actually cheering Evolv, thumbs up. Hope they're doing really well because they're building the market.
We'll be glad to compete against them. The more entities out there that have something that they're determining whether there's a weapons coming into their facility, at some point, you're either going to have to have that or you're going to have to explain why you don't have that. That's what the SafePointe solution does.
It's very different in implementation because an Evolv system needs personnel on every single site, which is expensive. Even putting one security guard on is not a cheap thing. Talk about the difference in how you can have multiple points centrally analyzed and the headcount difference for an on-site.
It's a great question. It's one of the things that when we do have customers say, "How are you different from that?" One of them is that. So in terms of the actual cost, we're cheaper. We're also unknown. So you could have a if you're a high-end financial institution, you don't want people going through X-ray machines, but you still want to provide some protection. Okay? So for us, let me just use an example. If you've got a school, if you've got a school that has four separate entrances, you could set up and we call them lanes. You can set up a lane in each of the entrances, and you might have one, maybe two security guards inside. They get an alert that in lane two, we see someone that's coming in with a weapon. They can then go from wherever they are to that particular lane.
You don't need to have four separate security guards directly inside, which is pretty much what Evolv does. It's not only covert, it's also cheaper. We're incredibly excited about what that's going to do.
The way we've always long talked about the core gunshot detection was the revenue per square mile, which you could remind us of. This is similar. It's a revenue per lane. Talk about the economics on the revenue per lane and then the number in just a short period of time, the number of lanes you've been able to put up per quarter.
Yeah. So let me just start with the ShotSpotter first, which was $70,000 per sq mi. We raised the price to $75,000 this year. We do it about every three years. On the SafePointe, the lanes are about $20,000 per lane, which if you're a school and you get four lanes, that's only $80,000. You think about it, how actually small that really is. From an actual performance perspective, similar to ShotSpotter, which we break even in less than the first year. So if we ever had a customer that only signed up for one year, which by the way, we never had, and then canceled, we would still make money. SafePointe is very, very similar. So our actual cost of deployment is significantly less than $20,000. So we break even in the very first year.
All right. Talk about the number you've been able to put up in very early stages with very little marketing support.
Great. Thank you. Yeah. So we did our earnings release a couple of weeks ago now at this point, and we talked about 30 new lanes. In reality, we actually had closer to 60 since we closed the deal. And those 60 lanes were for very, very interesting new verticals. One was an insurance company. One was a finance institution. One was a government agency. One was a hospital. All completely different verticals on what we've done in the past. The average of those was about 20 lanes on those. So out of those, three of them were about 20. Some of them are more startups. They'll start with one or two lanes and then expand from there.
So that's why I'm excited about this. I think this opportunity is numbered in the tens or hundreds of thousands of opportunities in the very longest term. And with some marketing support, our belief is that each of those verticals can become important on their own and show your proof of concepts are already out. Your referenceable customers are going to start to build is why we think it's going to be a really great opportunity.
We're incredibly excited about it. In fact, so excited that in the fourth quarter, here's what we did. When we acquired them, they had one half of one salesperson. That person is now a full-time vice president. We hired four direct salespeople that are geographically located working for him. We hired two more marketing people that are doing the pipeline development. We hired two customer success people that are going out there for new customers, making sure they understand expectations and get net promoters that we can talk about going forward. So we're investing appropriately, but we're investing because this is something that when you have something where you're adding four new verticals and you didn't really even know much about the business, you do that immediately right after the acquisition.
As we continue to know more about the business and grow, this is something that really could be sort of a hockey stick. Ultimately, I would say you started off by saying it might be about the same as our gunshot detection. Five years from now, it might be just as much in terms of revenue as we're getting in the gunshot detection, which, by the way, is going to continue to grow between now and then as well.
I also think it's great in the longest run. No offense to your current clients, but they're dominated by the government, which is not always my favorite end client. This takes you very much into the commercial world where people are focused on ROI, what I would call logical decision-making more than maybe politicians are well known for. So I think that'll help diversify your end market and probably help in the long run.
We absolutely agree with you. We're really excited about that. We're seeing already. I mean, our main focus areas to start are casinos, hospitals, schools, and some other individual commercial-type entities like financial institutions, things where they want protection, but they don't want their customers to have to go through an X-ray machine.
I wasn't even aware of this, but a client noted to me that there are states that are pushing mandates for this type of screening in certain environments like casinos and stuff.
That's true. In fact, State of Illinois, there's a bill out there right now. I don't know if it's passed yet, but where they're going to require every single casino to have a weapons detection solution installed.
All right. So a lot of 25 minutes up. If there's one or two questions, we can probably take it before we cede the room. Yep.
Are you doing anything else?
So the question is, are we doing anything outside of the United States? The short answer is yes. From a ShotSpotter solution, which is the gunshot detection, we're in the Bahamas. We're in South Africa. We just went live in Uruguay, which is interesting because we went live in December, and they're already talking about expanding. This year, we expect to add something in either Brazil or Mexico as well. And also interesting, we're also getting some interest on the SafePointe outside of the United States already. So the short answer is yes.
Would the firearm detection work on the state?
It's different than that. It's basically a magnetic moment. Basically, we know and we use a lot of AI to determine what the magnetic signature of that particular gun might be or even a large knife so that we can determine that that's what's going through, that's what they're bringing in. So it is different than X-ray.