SoundThinking, the company formerly known as ShotSpotter, just released its Q1 2024 earnings transcript, and while the headline numbers show solid growth, a deeper dive reveals what could be a ticking time bomb of explosive expansion hidden within their financials. While analysts focus on the Chicago noise and international expansion, a silent shift in SoundThinking's go-to-market strategy could unlock an entirely new dimension of growth that few seem to be noticing.

The key lies in SoundThinking's SafePointe weapon detection system. This AI-powered technology, acquired in 2023, is quietly building a massive pipeline that could dwarf the growth of their core gunshot detection business. Consider this: SoundThinking booked revenue on 30 new SafePointe "lanes" in Q4 2023. Each lane, according to the Q4 2023 earnings call transcript, generates $17,000 to $20,000 in annual recurring revenue. That translates to a rough quarterly revenue of $510,000 to $600,000 from just those 30 lanes.

But here's where the potential explosion comes in: SoundThinking is reporting a SafePointe pipeline of over $12 million. Assuming a consistent average lane price of $18,500, that pipeline represents a potential of 648 new lanes. Compare that to the 30 lanes booked in Q4, and you see the scale of the potential growth hiding within this single product. Furthermore, SoundThinking's revenue guidance for 2024 anticipates $3 million to $5 million in new sales from SafePointe, suggesting they're expecting to convert a significant portion of this pipeline.

What's driving this potential surge? It seems SoundThinking is quietly shifting away from its traditional, highly consultative approach with SafePointe. Ralph Clark, SoundThinking's CEO, stated in the Q1 2024 earnings call transcript that they're "not trying to be transactional" and "not into transactional sales" with SafePointe. However, the sheer scale of the $12 million pipeline suggests a more aggressive approach is taking hold.

It's possible that SoundThinking, having learned valuable lessons from the Chicago saga, is seeking to diversify its revenue base more rapidly. The healthcare sector appears to be a key target for this expansion, as they explicitly highlight "impressive momentum" with "multiple healthcare systems" having either signed deals or being in advanced negotiations for SafePointe.

Let's consider a hypothetical scenario. If SoundThinking converts just half of its current SafePointe pipeline, that's 324 new lanes, generating approximately $5.99 million in annual recurring revenue. This is already within their stated guidance range for new SafePointe sales in 2024. But what if they exceed their own expectations? What if, driven by the need for discreet yet effective security in sectors like healthcare, they convert 75% of their pipeline? That jumps the annual recurring revenue to $8.99 million.

Such a scenario would represent a silent growth explosion, fueled not by the volatile political landscape of gunshot detection, but by the consistent and growing demand for security solutions in new markets.

Potential SafePointe Revenue Growth

The following table illustrates potential annual recurring revenue based on different pipeline conversion rates:

This hypothesis, hidden in plain sight within the Q1 transcript, raises some intriguing questions. Is SoundThinking about to unleash a wave of SafePointe deployments? Will the weapon detection business ultimately eclipse their core gunshot detection business? And most importantly, are investors missing the signal amidst the noise? Only time will tell, but the numbers paint a compelling picture of a potentially dramatic shift in the SoundThinking story.

"Fun Fact: SoundThinking's technology goes beyond just detecting gunshots. Their SafePointe system utilizes the subtle changes in an object's magnetic field as it moves to detect weapons, ensuring a discreet and frictionless experience for individuals passing through security checkpoints."