All right. Well, good morning, and welcome back to the Needham Technology and Media Conference. This morning, we have SoundThinking presenting with CEO Ralph Clark and CFO Alan Stewart, and look forward to the presentation. Thanks, guys.
Great. Thanks for having us, and, thanks everyone for joining us. We'll just start with our obligatory, disclaimer slide. Just to give you a snapshot of what SoundThinking looks like at a glance, we're participating, at least in the, smart policing segment, on a $2 billion... this thing has its own mind. A $2.5 billion dollar TAM. Le-
Since I think? Sorry. Keep going.
Okay, is it, is it going to behave? Okay. Can we, can we put it back to my snapshot slide? Okay, we have it together? Okay, great. So we're participating in the smart policing TAM of about $2.5 billion. Last year, we did just under $93 million in revenue, and we've been growing revenue at a 23% CAGR since 2021, with about approximately 15% of adjusted EBITDA margins. Probably the thing that we're most proud about are the four key KPIs down in the middle there, with a 107% net revenue retention rate, 99% gross retention rate, and a $0.52 spend to create a dollar's worth of ACV, and an NPS score of 64+.
We're really focused on the customer experience in driving loyalty, and as such, we have very strong net promoters within the law enforcement public safety space that help us kind of maintain a very efficient CAC of $0.52 per dollar's worth of spend. We currently have just under 300 paying customers. With respect to ShotSpotter, we're over 1,100 sq mi deployed, and through our CrimeTracer solution, we have a record number of records that are under management with 34 issued patents to the company. Okay, are you guys doing the slides, or am I doing the slides? Sorry about that. My apologies. We're gonna get it together, hopefully here this morning. So I'm just gonna go ahead and start.
So in 2022, we rebranded the company from ShotSpotter Incorporated to SoundThinking Incorporated and introduced a SafetySmart Platform, which is a collection of solutions that are focused to address the pressing needs of public safety officials out in the marketplace. That includes, obviously, our brand-leading acoustic gunshot detection solution, known as ShotSpotter. We also have a investigative case management solution known as CaseBuilder, a ResourceRouter, a solution focused on the deployment of policing resources, and then CrimeTracer is our Google for Cops solution. Just early, excuse me, just late last year, we acquired a weapons detection solution known as SafePointe, that we're gonna talk a little bit about later. Next slide, please. Thank you.
So this is just a snapshot of those solutions and a description of what they do and how they're participating in our ARR. You'll see a shift from ShotSpotter being the dominant solution with respect to our percent of ARR attainment. That's shifting over time as some of these other solutions begin to scale up. And again, our buying centers are really focused in three segments. We have cities and local law enforcement, and with CaseBuilder and CrimeTracer, we're able to expand that buying centers to include now federal and state customers. And then with the acquisition of SafePointe, we're now focused on the commercial private sector space. Next slide, please.
With respect to the solution that we're addressing, there are some kind of structural pain points in the policing segment that we're addressing. I think it's pretty well known out there that one of the key pain points in local law enforcement is this notion of kind of increasing crime that we're seeing across the board. This is just not a big city issue, but this is a small to medium-sized city issue as well. There's a number of statistics that have been tracking that. Crime is elevated, and on top of that, as crime is elevated, we're seeing a diminution of policing resources or boots on the ground as increasingly, law enforcement is becoming a less attractive profession for folks to go into.
So we're seeing police kind of leave the profession in fairly significant numbers based on retirement as well as resignation, and we're not seeing those resources be replaced by new recruits. So those two things together are creating a lot of pain points within policing, and technology, we believe, is one of the only solutions that can address that.
On the security side, what we're facing in terms of the issue we're addressing is the combination of having to choose between an excellent visitor experience in terms of no security, letting visitors go in and out of buildings without checking for weapons, to kind of a lockdown security posture that we see when we go to an airport and have to go through the TSA experience. So the options really for a lot of folks, either to do nothing or do everything, and through the use of technology, we're offering a way to provide some level of security without creating any friction point on the visitor or employee experience in terms of ingress and egress. So here— You guys are killing me.
There's nothing on that. It just goes right to the next slide.
Okay, all right. All right, super. All right, so here we are in terms of the public safety and security market landscape. Prior to our number of acquisitions that we did, we were participating in the gunshot detection space, that we pretty much is a market that we created and are leaders in. That's a $1.5 billion TAM. As we expanded our footprint to other solutions in terms of investigative case management, patrol management, and Google search for cops, we've expanded that TAM by another billion dollars or so, for $2.5 billion. And then out to the far right there, you'll see the concealed weapons detection marketplace, or TAM, which we estimate is about $20 billion of TAM.
We have lots of room to grow in this public safety and security market landscape, kind of starting foundationally from the market that we created in the acoustic gunshot detection space of $1.5 billion. Significantly underpenetrated, lots of room to grow and make a difference and make impact. Let's go through some of the solutions. ShotSpotter is our acoustic gunshot detection solution, which we're known for. Next slide. How that works is we'll deploy sensors out into a coverage area, and these sensors are designed to detect, locate, and alert on instances of outdoor gunfire, generally within 30-45 seconds of the trigger being pulled. Those sensors are able to triangulate exact location, and we're showing an example of what an alert looks like here.
It's both rapid, precise, and highly intelligent. We can put a lot of context around that. And what makes this such a critical solution is that 80%-90% of gunfire goes unreported via traditional 911. Our next solution is our ResourceRouter solution, which is a patrol management solution. And this solution is a solution that is most AI intelligent, I would say. It ingests a lot of data that gets put into a database, and we're able to correlate that database and really provide guidance to where patrol officers should be spending their time and directing them on some specific things to do while they're there. And we're seeing a lot of really good traction in that particular solution.
Our next solution, CaseBuilder, is a ERP system that's focused on detectives and investigators being able to track the cases that they're investigating and improve their case closure rates. This is a really big challenge inside of policing. You've probably read about the very low clearance rates that we're seeing in certain crime types, and if you were to spend time with detectives and investigators inside of a traditional police department, you would see they're probably the most underinvested in resource inside of a police department. Their tools really are literally pen and paper.
So the ability of having a solution that you can collaborate amongst investigators with and keep good visibility on the progression of cases, and being able to incorporate a lot of data to improve overall case closure rates, is significantly impactful. And I think we'll talk a little bit later about the application of this particular solution in a very large Department of Corrections deal that we closed here within New York City, that helps them become much more compliant. 'Cause if you go to a jail system, believe it or not, that's probably one of the most investigative, intense operations that you'd have, because the detectives or investigators are not only investigating prisoners, they're oftentimes investigating guards as well, because a lot of times when contraband comes into a prison, it's through the guards.
So they're very busy and very active. So to have an automated digital solution that can help them better investigate cases inside of a Department of Corrections solution is critical. Let's go to the next slide, if we could, please. So CrimeTracer, I mentioned, is our Google for cops. This is a really interesting solution because what it does is it aggregates, behind the firewall, data of a number of different policing agencies that typically keep their data inside of their own four walls. It puts that out into a protected space so that multiple agencies can basically share data, and as they're going through their investigative process. We know that criminals tend not to confine their activities to one specific jurisdiction. They tend to operate cross-jurisdictionally.
So to be able to have Oakland be able to share and access, Berkeley data is, incredibly, important. We provide a very, safe space where we can aggregate data, index it, and normalize it, and then put governance rules around it as well. Because if you're Oakland, you're gonna be, okay with maybe Berkeley accessing your data, but maybe you don't want, Department of Homeland Security, in the, the INS accessing your data because you're a safe city, as an example. So we wanna be able to put good governance rules around and have a lot of control around who has access to what, when. And that's what our CrimeTracer solution does.
Next slide, please.
Next slide, please. Great. So this just shows a spider network analysis. If you were doing a search on a potential suspect, you would be able to tie that suspect to some of their other folks, where they've lived before, where their car might be registered, et cetera, and it can really kind of accelerate the ability to get an investigation underway. Next slide. Now, let's talk about SafePointe. So, SafePointe is an intelligent weapons detection solution. You can think of it as a smart metal detector. It uses a physics concept called magnetic moment in motion, and what's really neat about this particular solution is that the solution uses passive sensors, and they're completely covert or very unobtrusive, I would say.
So as opposed to a traditional metal detector, or even a smart metal detector, maybe some of you have seen Evolv, which is a really incredible smart weapons detection solution. You still know that you're going through a metal detector, and the whole idea around our approach is that we wanna do this in a very covert manner to not slow down any traffic at all, or even have people recognize that they are going through a metal detection solution. But then still be able to provide some amount of security protection, because now we can alert on anyone carrying a weapon into any particular premise. But again, the idea is to do it completely covertly. It's not to create any friction at all with respect to ingress, egress movement of employees and visitors.
We're focused on a couple of key verticals, and this is where the covert nature of what we do is incredibly important. So for example, we love hospitals, we like casinos, and we like certain high-end corporate environments. In the case of casinos, as an example, you don't want to subject your customer base that might be spending $500 a night for a room and gambling, you're not gonna ask them to go through a metal detector. But at the same time, you have a compelling need to make sure you're creating a very safe place for gaming to take place.
And in fact, in the state of Illinois, there is some legislation going through, that if you are a casino in the state of Illinois, you have to have some amount of weapons detection capability in order to have a casino license. So very strong, compelling need, significantly underpenetrated. We think our architecture of being using passive sensors and being completely covert gives us a distinct advantage in certain verticals in which we're focused. Obviously, casinos, as an example, hospitals, and certain corporate environments. In fact, we're deployed here in New York City, in a couple of very high brand name financial institution buildings, and you would walk by those things, those are the bollards where the sensors are deployed. You would have no idea that you're walking past a very sophisticated weapons detection solution. Okay?
Next slide, please. Great, so let's talk about growth strategy. Next slide. And I'll start with kind of our strong competitive advantages that we bring to bear. I talked earlier about our very strong NPS score. We've typically scored well over 50 over the past five or so years. We have a number of trusted relationships inside of policing, so that is definitely a layer of protection that we have. And then just the experience that we have about deploying these technologies and onboarding customers, and making sure that they're getting strong value out of those solutions, backed up by very, very strong IP. 34 issued patents for a company that has just around 300 employees is fairly, fairly impressive.
So we keep this all together in a way that we think once we get a customer, we're not likely to lose it, and I think you see that in our retention statistics. Next slide. So our growth strategy kind of starts with you know, landing customers. Then when we land a customer, we'll onboard them and make sure that they're getting the very best value of that particular solution. Then we look to expand those relationships with more miles or more lanes, in the case of SafePointe, or more users in the case of our CaseBuilder solution. And then we'll seek, because we're a trusted advisor, we'll seek opportunities to cross-sell other solutions into that customer relationship.
We're very focused on product innovation and continuing to invest in the platforms. Again, the whole notion is for customers to get more value out of the solution, which then drives stickiness and upsell and cross-sell opportunities. International expansion is a very important aspect of our overall growth, particularly for ShotSpotter. Quite recently, we announced a fairly significant transaction in Montevideo, Uruguay. Just over $500,000 a year. We're looking to expand in other cities and countries inside of Latin America, and that's gonna be a very important source of growth for us, for the ShotSpotter solution.
We have, obviously, from time to time, invested in some strategic M&A to the extent that it's complementary or adjacent to what we're doing, and we can cross-sell and upsell those solutions in a way that makes sense to the markets that we serve. And again, we're always really focused on keeping a world-class customer retention. And I think that's it for me. Alan, over to you.
Next slide, please. All right, one more. Just a couple highlights, too, and this is something we, Ralph talked a little bit about, but, you know, in terms of what we do, we are basically a software company, mainly SaaS and managed services. Over 90% of that is SaaS or managed services. We do a little bit of professional services, but that's somewhere, you know, 5%-6% of our total revenue. We've had consistent growth in terms of year-on-year growth. That's gonna continue. I will give you a little bit more slide about the long-term goals that we have in a couple slides. As Ralph mentioned, in terms of keeping that revenue, we're very good at not just keeping the customers, but making sure that they stay and they expand. That's why our revenue retention rate is...
107%, and it's actually been higher than that in other years as well. We're very, very efficient in terms of our economics, of using our sales and marketing team, only spending $0.52 to get basically $1 of revenue for the next 12 months. And if you compare that to other SaaS type companies, they're in $0.80, $1, north of $1. So we're very, very efficient there. We're most proud, I think, of what we think about when we bring on customers. It isn't just, let's just raise revenue, let's get a new customer. What we wanna do is get a customer we're gonna have for the next 10, 15, or longer years. Our actual attrition rate has been less than 1% a year for the last three years, and so we're very proud of that.
Actually, when you think about the net attrition, when you add price increases on top of that, it actually is less than zero. We are continuing to improve profitability. Last year's adjusted EBITDA was about 15%. We've already given guidance. We just reported yesterday that we maintain our guidance for this year between 18%-20%, so that's gonna be another 33% from last year. And we do expect, as you'll see in the next slide, that our adjusted EBITDA is gonna continue to grow as we go on. Next slide, please. So in terms of the net revenue retention, I mentioned the 107%, but I also want you to see that we've stayed above 107% over the last five years.
That is something that we expect we'll be able to continue to do. The one challenge, of course, that we're closer—our goal is to always keep it north of 100%. The more customers you have out there, it's a little harder to get to that 120%, 130%, because that's big expansions as well. We continue to get expansions. In fact, in terms of our ShotSpotter solution, about 50% of the miles that we go live each year is expansion from an existing customer. That means 50% new customers and 50% of them say, "Yeah, we know it's working for us. We might expand as well." Next slide, please. Our sales efficiency ratio, 52, is actually the highest we've had in the last five years.
We have continued to invest in our sales and marketing. We still think that's an amazing number for other versus other companies that are similar to ours, so we're very proud of that, and expect to keep that there. Probably gonna stay there for the next several years as well. I wouldn't expect to see that much higher than where it is right now, mainly because of what we've done in terms of our operating expense. We spent a lot of money in sales and marketing over the last two years to get ready for the growth that we're already starting to see. So we won't need to add a ton more in terms of sales and marketing, R&D, or G&A, frankly. So this particular one, tied to the sales and marketing, has stayed relatively flat. Next slide, please.
I think this is really an important slide, and most people do not understand this. There are some opponents out there that say, "Hey, cities around the nation are canceling ShotSpotter because we're doing things that are, you know, not, maybe going against, black and brown communities, and doing things like that, and then a bunch of cities are canceling." And they always like to talk about, like, five cities. One would be, like, Fall River, one would be Charlotte and San Antonio. These are, like, five, six years ago they canceled these. Since then, we've gone from 90 cities over to 166 cities since IPO. We added 10 new cities and a university in the first quarter of this year.
So when you think about that, the people that are opponents of us like to focus on something that was in the past. And what they also don't understand is we may have had cities that that cancel, and everyone does, so that's not been a big issue. But look at the actual miles that we had in 2017 when we went public, of 479, up to over 1,100 this year. So not just adding cities, the cities are adding and expanding. So anyone that likes to focus on five cities that, you know, lost 3 mi here or 3 mi there, they're they're basically focused only on something that's to their agenda and not really looking at the results of the company. I think this is really important to understand. Next slide, please.
So I think the one thing that is important to understand, and it's been out there in the news, the mayor of Chicago, Brandon Johnson, decided that last year, or actually when he got elected, that he was gonna cancel ShotSpotter. He didn't cancel ShotSpotter, and then he actually renewed ShotSpotter, and then he renewed it again. But the last thing that we have from him is that it's only supposed to go until November 22nd this year. So what we did is we said, "Okay, there were a lot of people that were concerned and were dropping our stock price because they thought it was gonna be a significant issue with Chicago, actually, Mayor Johnson, not using ShotSpotter anymore." And by the way, that is different than what his superintendent of police would say, who loves ShotSpotter.
The city council, also, more than half of them are supportive of ShotSpotter, so it's really due to the mayor. But from a financial perspective, I think it was really important for us to go through this. So what we did is we took out our ARR that we started 2024 at, at $95.4 million, and then on the right, we said, "Okay, let's take, you know, ShotSpotter Chicago completely out." Okay? So we took that out, a little over $8 million out. We said, "There's one other big customer that's having funding issues themselves. It's Puerto Rico. Let's take all of that out." Okay, and what does that do?
Well, if you look at the other things, some other small attrition that we're gonna have, hopefully keeping it down to that 1%-2% range. We're gonna be adding more miles. Last year, we went live in 155 mi, which is the second highest in the entire history of the company. This year, we're saying, "We're not gonna do 155 mi, but let's add 120 mi." 120 mi, then each of the other solutions that we have in that SafetySmart Platform is growing well, and it's growing from a smaller base. So that's adding new ARR. So even with Chicago and Puerto Rico going away, we are still having our ARR from the starting point of January 1st, 2024 to January 1st, 2025, still going up.
Now, four years ago, if we had lost Chicago with only a single solution and where we were, that would have been a big issue. At this point, though, it's not a non-event because it does have carry with it a high level of adjusted EBITDA, but from an adjusted ARR, we're still growing. It'll be north of 100 million dollars. I think that's important for people to understand when they think about the company; it's not just a Chicago ShotSpotter-type company. Next slide, please. So in terms of actual CAGR, this is from 2021 to where we are in 2024. Again, just announced our results yesterday. We reaffirmed our revenue guidance of $104 million-$106 million. That's 22% CAGR growth in the last four years.
So we feel pretty good about that. That is not just because ShotSpotter. If you were back in 2021, that was the majority of that was ShotSpotter. Some of that was related to what we would now call the CaseBuilder, but most of it was ShotSpotter. Now, with the five different solutions, we're continuing to grow, revenue's continuing to grow, and as revenue grows, both gross margin is gonna improve because some of the revenue that we have related to the recent acquisitions were technology acquisitions, still had a little bit of a loss from a net income perspective. But as they hit that break-even point, there's two things that happen, and the primary ones I'm talking about is the CrimeTracer and the SafePointe.
So with CrimeTracer and SafePointe, they're still giving us a little bit of negative net income, and the gross margins, though, are improving. So where we're heading for that is higher gross margins and higher adjusted EBITDA. So we'll go to the next slide. This is our longer-term goal. First, I'd like to highlight what we just mentioned yesterday. Our revenue growth from Q1 2023 to Q1 2024 was north of 23%. Our gross margin, by the way, last year, as a whole for the year, was only 57%, and in this first quarter already, we rounded up to 59%. We expected that for this year, you can see in the second one for our estimate, is gonna be about 60%. So gross margins are continuing to go up, okay? We do expect... I'm sorry, I'm bouncing a little bit around here.
Back on the revenue growth, we are saying that, okay, right now, the little north of 13% for this year, as we're ramping up and investing, is particularly in the SafePointe acquisition, but we believe that our long-term model can keep us around that 15% top-line revenue growth. We know that as that top-line revenue growth grows, our COGS basically does not increase at the same price. More like what you would see with a typical straight software company, our gross margins are gonna be around 70%. We believe we can get to these longer-term models somewhere around four years from now. And most importantly, I think that matters to a lot of you because it just doesn't just talk about the profitability of the company, but it also talks about cash generation.
Our adjusted EBITDA this year, middle of the range, we said 18%-20%, so let's call it 19%. We know within the next couple of years, four, you know, four years plus , we'll be at that 40% adjusted EBITDA. Very few companies at that range are producing that type and that amount of adjusted EBITDA, but that is because we'll hit those break-even numbers on the two technologies, and the other ones that we're continuing to go are already highly profitable, such as our ShotSpotter gunshot detection. So I think that's the last slide, and I think we gave ourselves at least 10 minutes for Q&A. Sir?
I have a few questions. I'll start with just the growth. It just feels like it's slowing, and when you make an acquisition of, like, the weapons detection in that market, you know, I'm just, I'm following Evolv. I've been following you guys for many years, this new acquisition to me seems like, you know, you can't go to a venue without, you know, or you can't go to a college campus and follow Evolv. It's like they're positioned everywhere. I was supposed to go to the conference in Vegas.
I don't know how that turned out for you guys, but I know that conference has had a very good turnout, you know, showing. But I'm just concerned that the sales growth is shrinking. Then when I look at, like, it seems like there's a lot of emphasis on foreign markets, you know, international and, you know, even three and four cities. Is there like a... you've hit all the major cities, and now you have to look at the smaller, second, and third, or fourth-tier cities and international markets?
Would you like me to-
Yeah, sure.
I'll go ahead and start. The question was, it seems like revenue is slowing down a little bit and maybe more focused on international and some other things, and why is that, especially doing some acquisitions? It's an excellent question. I think what we are trying to be is realistic in terms of where we're gonna get to. We believe that the SafePointe acquisition in itself, with a $20 billion TAM, is a very, very large market, and you know, Evolv is doing a great job. We're cheering them on because they're helping build the things and market, which is you've got customers there, they're either they do nothing or they do something like Evolv or like what we're doing.
But in all honesty, we only acquired it, you know, a couple of months ago, you know, it's a little more than six months ago. So for us, we're still investing a lot, and we don't want to commit to something higher than what we believe we can certainly deliver. Ultimately, I think it's gonna be higher than that as we see SafePointe, you know, grow, and we get into those, those TAM and some of those verticals. But for now, what we'd like to put out there publicly is, is where we think the long term can be, which is still 15%, uh, growth, as you continue to increase the profitability, we think that's pretty appealing.
Yes, and maybe if I can add on to that. I think, one of the issues or challenges is we're dealing with the law of large numbers. So I think in our core business, which is a substantial part of our revenue, the ShotSpotter business, that's about a 10% growing business. You can just look at the way we're adding miles. We have about 1,100 mi deployed to date. We're talking about going forward, adding, you know, anywhere from 100 mi to maybe 130 mi per year. So that's- that makes that business about 10%, and it represents the vast majority of our revenue today. Although some of these other solutions are growing much faster, but they're starting on a much smaller basis.
So when you blend those two together, that's how you get to the blended rate of 15%. You have a big portion growing at 10%, high single digits, maybe 10% or so, and then you have these other solutions growing much faster, but when you blend them together, it gets to, at this point in time, 15%. Now, as our SafePointe solution gets to be more significant portion of our revenue, and it's maintaining a growth rate that's higher than 20%, that's when you would expect the long-term model, 15%, maybe to accrete up a little bit. But for now, at least over the next three to four years, we see this being a 15% + growing business. I hope that answers your question.
The last comment I might say would be with related to international. International, during the pandemic, it basically went to zero. So we were now starting to see that increase internationally is, so far, primarily on the ShotSpotter, which is the gunshot detection solution. The interesting thing, a part about that is, where we charge about $70,000 per sq mi domestically, we charge almost $200,000 per sq mi internationally.
Mm-hmm.
So going live again in Cape Town, which we did about a year and a half ago, we just went live in Uruguay. We're gonna be going live in another country that is gonna be... you know, it's only for 10 km, so a couple of miles is like $600,000 a year. So it doesn't cost us a lot more, but that adds a lot more in gross margin and a lot more in adjusted EBITDA. So that's another reason that, you know, even a slightly smaller from a revenue growth, allows things that are very positive for the rest of the income statement.
So my follow-up to that was, $100 million is not a big business, especially for a public company. It won't attract the type of interest to really, like, make that sell penetrating, raising money, growing a sales team, and really dominating the market. What would it take to get this back to, like, a 20%+ growth?
Well, I think at this point, we've invested a lot in sales and marketing, and when I say a lot, we probably went from about 20 people to over 50 in the last three years. So we've already added a significant amount, but that's because we now have five solutions. And the ones that we just hired for the SafePointe, which is more tied to commercial entities, is completely different than selling to municipalities. Selling to hospitals is not the same as selling to a police department. So we had to add more people there. Added seven more of those just in the last six months. So the short answer is, this is where we think we're gonna get to. Our hope and expectation is that we can do a little better than this. Yes, sir?
Could you differentiate between adding a mile to an existing customer and adding a mile to a brand-new customer from a cost point of view? Who installs all the sensors, who pays for the sensors, versus an existing customer that may have them already and certainly has the system in place? Could you kind of give us the picture there?
You want to...
Yes, I'll be glad to. Question is, when we add new miles to an existing customer, who does it? What does that cost? The short answer is, we use the same team, and it costs the same amount. So if you're gonna add, go from 10 mi- 12 mi, and each mile, let's say, we have to set exact numbers, but let's say it costs us about $45,000 to add. Those two new miles would still be about $45,000 to add, and we would use our same installers, or we do have a couple of vendors that help as well.
And an existing customer would be exactly the same cost?
Exactly the same cost. Yeah.
Okay, so a brand-new customer doesn't incur any expense to getting their system in place and trained and all the rest of it?
Well, no, we do that. That's, I guess that's an excellent point because there are things for a new customer. We do train them.
Sure.
Okay, so we have a customer success team that goes in and helps them make sure that they understand how to use best practices, how to use the solution. That would be a little bit of cost, but it's sort of a fixed cost, and those same customer success still go back to the existing customers every year to help make sure they're still doing the right thing. So it's not a lot of additional cost for adding new miles.
Thank you.
Yes, sir.
So what would you say is the sort of TAM, the mileage TAM for ShotSpotter, like, versus 1,100+ currently, and what constrains your growth? Like, well, why, why couldn't you grow that faster than 10% a year in terms of mileage cover? Are you limited by salespeople, or is it just, you know... I mean, like, what's, what's the limitation to grow faster?
I'll maybe take a crack at answering that question. We think we're about 10% penetrated in the mileage opportunity for traditional ShotSpotter. I think we're now kind of hitting the long tail of the market, so you're gonna probably see us deploy a lot more systems in what we describe as tier four, tier five cities. There's still some pretty significant tier zero, tier one cities out there for us to capture that we haven't captured yet. Philadelphia would be a great example although we did capture Philadelphia. We have 3 sq mi in Philadelphia, but that has an opportunity to become a pretty decent size city. Seattle is another kind of tier one city that we're very interested in.
Los Angeles, a couple cities down in Texas. So there'll be a mix of kind of tier one, tier two cities, but we're gonna see much more contribution coming from the long tail on the ten, or excuse me, on the tier four, tier five cities. That's why you saw us put the numbers up that we did, for this last quarter, where we went live with 10 new customers. A lot of those were smaller customers. So, I would say we're pretty patient. This is a market that you can't really, I mean, you can't convince someone that doesn't have a really compelling need to do something. It's when the time is right, the time is right. We just make sure that we're around the hoop, so to speak.
That's why you see our, our CAC costs be like less than $1. We don't wanna overspend on that. Our idea is that once we get a customer, we hold the customer. So even if it takes a little bit longer, we're really interested in not having attrition leakage out the bottom. So that's been our approach, and it's worked so far. Yes, sir, in the back.
Nice presentation. Enjoyed it. Thank you. Are those numbers stripped out Chicago and Puerto Rico or inclusive on the board?
The long-term model? That would be without Chicago and Puerto Rico.
Just wanna be sure.
Yeah.
Number two, the SafePointe sounds like amazing product. What is the pushback? Is it the economics? Is it the cost? Is, you know, you know, casino and hospitality, you think, "Wow, that's a natural." Is there, is there other products that are less expensive, or, or there's built-in legacy like, "Well, we got a metal detector, and we don't have a budget for this?" What are the biggest pushbacks?
That, that's a great, that's a great question. I'll answer that. The pushback is do nothing. There's a strong interest in doing nothing, and that's one of the reasons that we're rooting Evolv on, is because-
Sell it.
Yeah, no, we don't like doing nothing, and Evolv doesn't like do nothing either. And that's why we're rooting Evolv's success on because our common enemy, if you will, is not to do anything. But we're... what we're increasingly finding, because of active shooter situations, mass shooting situations, and workplace violence, workplace violence is a really big issue, particularly in hospitals, that it, they're compelling these security directors to do something. What they've traditionally done is done metal detectors, but that offers a lot of friction. So we're basically offering a new way.
Right.
And I think, with Evolv, who has some amount of intelligence in what they do, the whole notion is how you can provide a protective layer of security without aftertaste or the minimum aftertaste, in terms of slowing people down.
I got that.
Yeah.
So what, how does that... So where's the pushback?
It's a new market. Yeah, it's just a new market. You just have to get in there, invest in the market, and educate the market with what the realm of the possibility is with this, so.
So, what percentages of those casinos or hospitals already have a metal detector and say, "Hey, that's, that's adequate. I have no incentive to invest otherwise." So, you know, when this wears down, you know, when this is not comfortable, I'll give you a call. Is that what you're hearing, or we just don't see a need, or the economics just don't work? I'm trying to understand what is the biggest objection from the customer when you make the pitch.
So with respect to casinos, not a lot of casinos have metal detectors 'cause the friction cost is too great. Yeah, so they're more on the do nothing category. Although it's interesting, we're now seeing in the state of Illinois, as an example, where they're gonna compel these casinos or gaming centers to do something because the risk, they factored in that the risk is too great not to do, not to do nothing. That's not, that's not good enough anymore. So we're in the very early stages of this market, and we're, you know, putting up some pretty impressive numbers. We're about $2.5 million in ARR from our SafePointe acquisition. We're looking at adding on another $5 million this year.
We talked yesterday on our earnings call about building the pipe up to $12 million. Already. We have $12 million of pipe.
Already.
Y eah, for SafePointe, and that's growing as well. We think that this market, this particular weapons detection market, has the opportunity to be a significant part of our business. We're going at it a little bit differently than Evolv, I would say. My sense of Evolv is there may be a little bit more transaction-oriented. We're kinda long-term greedy folks. We wanna make sure that when we deploy something, it sticks, and it adds value. It addresses the need.
We spend a lot of upfront time doing diagnostic work and really making sure we understand the customer's requirement and how they're thinking about security, because everything can be a bit bespoke there. I was pretty impressed listening in to their earnings call. They were talking about their sales cycles being, what? Like, three to four months. Yeah. We don't see three or four month sales cycles with SafePointe. I mean, our sales cycles are gonna be more like nine to two months, maybe even 13 months, 'cause we wanna do a lot more upfront diagnostic work, and we're bringing our customer success model to these deployments. That's worked so well in our public safety solution, which is why we see the stickiness that we do. I mean, a retention rate of like 99% is pretty impressive.
Yeah, we're out of time. Yeah.
Do you have the bundle products like...?
Yes. Short answer, yes. Yeah. Yeah, are we out of time?
We're out of time. Yeah.
Thank you so much. Great questions. Appreciate it. Thank you.