SoundThinking, Inc. Reports Record 2025 Revenues, Lowers Outlook for 2026

Key Financial Highlights

• Record Annual Revenue: SoundThinking, Inc. reported \$104.1 million in revenues for the full year 2025, marking a 2% growth compared to 2024 and the highest annual revenue in company history.
• Fourth Quarter Growth: Q4 2025 revenues increased 6% to \$24.8 million versus \$23.4 million in Q4 2024.
• Gross Profit: Q4 gross profit was \$12.6 million, up 8% year-over-year, with a gross margin of 51%. Full year gross profit was \$56.6 million, down 2% from 2024 (54% margin vs 57% last year).
• GAAP Net Loss: The company posted a Q4 net loss of \$2.8 million (or \$0.22 per share) and a full year net loss of \$9.4 million (\$0.74 per share), slightly higher than 2024.
• Adjusted EBITDA: Q4 Adjusted EBITDA was \$1.3 million (down from \$1.7 million in Q4 2024). Full year Adjusted EBITDA was \$12.6 million (12% margin), down from \$14.4 million (14% margin) in 2024.
• Cash Position: \$15.8 million in cash and cash equivalents at year-end, with \$36.0 million available on the credit facility.
• Deferred Revenue: \$43.9 million in deferred revenue at year-end.

Operational Highlights

• ShotSpotter solution went live in 10 new cities, 2 universities, and 11 expansions in 2025, with Q4 showing 1 new city and 4 expansions.
• Annual Recurring Revenue (ARR) at the start of 2026 was \$95.4 million. ARR retention rate dropped to 99% (from 105% in 2024), mainly due to the loss of the Chicago ShotSpotter contract (approx. \$9 million impact).
• Sales and marketing spend per \$1 of new annualized contract value improved to \$0.56 (from \$0.63 in 2024), indicating greater sales efficiency.

2026 Guidance and Strategic Outlook

• Lowered Revenue Guidance: Full year 2026 revenue guidance was lowered to \$109.0 million to \$111.0 million, representing about 6% year-over-year growth at the midpoint.
• Adjusted EBITDA Margin Guidance: Lowered to 16% to 18% for 2026.
• ARR Growth: ARR is expected to increase from \$95.4 million at the start of 2026 to approx. \$110.0 million at the start of 2027.
• Strategic Initiatives: The company is realigning its sales organization, refreshing go-to-market strategies, and investing in innovation and AI-driven capabilities to drive growth and improve margins.
• Efficiency Review: Management is reviewing operations to identify opportunities for cost reduction and improved margins.

Management Commentary

“2025 was a transitional year for SoundThinking,” said President and CEO Ralph Clark. “Despite encountering headwinds, we delivered record revenue and maintained profitability. We continued to expand our customer footprint and invested in innovation, AI-driven capabilities, and go-to-market execution. Although contract delays and key renewals impacted results, demand remains strong and converting that demand into bookings is a top priority. We are confident in our ability to drive growth, reduce costs, and deliver increasing value for our customers and shareholders.”

Price Sensitive Factors for Shareholders

• Chicago Contract Loss: The loss of the Chicago ShotSpotter contract in 2024 represents a significant revenue impact, affecting both ARR and retention rate.
• Lowered Guidance: The reduction in both revenue and Adjusted EBITDA margin guidance for 2026 may be viewed negatively by investors and could impact the share price.
• Strategic Changes: Realignment of sales, increased investment in AI and innovation, and efficiency reviews could lead to improved performance, but also carry execution risk.
• Strong Pipeline: Despite setbacks, management asserts a “healthy pipeline expansion” and “underlying demand remains strong,” which could support future growth if successfully converted to bookings.
• Balance Sheet: The company maintains a solid cash position and credit availability, supporting continued operations and investments.

Non-GAAP Metrics and Definitions

• Adjusted Net Income (Loss): Excludes acquisition-related expenses, restructuring, and loss from disposal of assets.
• Adjusted EBITDA: Excludes interest, taxes, depreciation, amortization, restructuring, stock-based compensation, and acquisition-related expenses.
• Annual Recurring Revenue (ARR): Based on expected revenue from contracts in effect at January 1, assuming renewals occur as expected.
• Revenue Retention Rate: Reflects retention and expansion among existing customers, excluding new customer revenues.
• Sales and Marketing Spend Efficiency: Measures cost to acquire new contract value.

Conference Call Details

SoundThinking will host a conference call on March 3, 2026 at 4:30 p.m. ET (1:30 p.m. PT) to discuss results and business outlook. Webcast access is available via the Investor Relations website, with telephone dial-in for US and international participants. A replay will also be available.

About SoundThinking, Inc.

SoundThinking, Inc. (Nasdaq: SSTI) is a leading public safety technology company delivering AI and data-driven solutions for law enforcement, civic leaders, and security professionals. Its SafetySmart platform includes products like ShotSpotter (gunshot detection), CrimeTracer (search engine), CaseBuilder (investigation management), ResourceRouter (patrol resource optimization), SafePointe (AI weapons detection), and PlateRanger (ALPR). The company is trusted by over 300 customers and has worked with approximately 2,100 agencies.

Disclaimer: This article is based on SoundThinking, Inc.’s official financial disclosures and management statements. Forward-looking statements are subject to risks and uncertainties as outlined in the company’s SEC filings. Investors should not rely solely on this article for investment decisions and are encouraged to review the original filings and consult with a financial advisor. The author assumes no responsibility for investment outcomes.

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