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June 7, 2017, 9:20 a.m. EDT

ShotSpotter IPO: Five things to know about the gunshot-detection company

Gunshot detection company sends alert and location to authority within 45 seconds

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By Caitlin Huston, MarketWatch


ShotSpotter
An audio expert works at ShotSpotter’s incident review center.

A gunshot-detection company with the goal of reducing gun violence in violence-racked cities is ready to hear what Wall Street thinks of it.

ShotSpotter Inc. /zigman2/quotes/203800377/composite SSTI -0.61%   priced its initial public offering at $11 a share Wednesday to raise $30.8 million. The stock is expected to start trading Wednesday on the Nasdaq Capital Market under the symbol “SSTI.”

The Newark, Calif., company was founded in 2001 and says 89 cities use its technology.

Roth Capital Partners was the sole book-running manager on the offering, with Northland Capital Markets and Imperial Capital as additional underwriters.

Here’s what you need to know before the company goes public:

How it works

The company has three products: ShotSpotter Flex, used in urban areas, and SST SecureCampus and ShotSpotter SiteSecure used at universities, offices and transportation centers. The majority of its revenue comes from ShotSpotter Flex.

ShotSpotter’s systems uses sensors and cloud-based software to pinpoint gunshots and notify authorities or customers. For outdoor gunfire, sensors capture the data and a recorded audio file and then send it to the company’s incident-review centers. Acoustic experts review the data and add extra information such as whether it was multiple shooters or a high-capacity weapon. On average, an alert, which contains a map and location information, is sent to emergency dispatch and other authorities within 45 seconds.

Indoors, the company says its products automatically send an alert to security within 10 seconds.

The customers

ShotSpotter reports 74 “public safety” customers—including 89 cities and localities in the U.S. like Miami-Dade County in Florida, San Diego, Calif., and Birmingham, Alabama—using its products as of March 2017. It had six customers using its security solutions to cover seven higher-education campuses and one international ShotSpotter Flex customer in Cape Town, South Africa.

The company largely contracts with police departments and other government agencies, and it cautions that the agencies have restricted budgets that can be affected by decreases in funding and grants and changes in elected officials. Additionally, government agencies may require preferential pricing and have high compliance requirements.

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The money

ShotSpotter recorded revenue of $15.5 million in 2016, up from $11.8 million in 2015. This was on top of net losses of $6.86 million in 2016, slightly wider than a net loss of $6.19 million in 2015.

/zigman2/quotes/203800377/composite
US : U.S.: Nasdaq
$ 45.70
-0.28 -0.61%
Volume: 11,297
July 30, 2021 4:00p
P/E Ratio
416.97
Dividend Yield
N/A
Market Cap
$533.58 million
Rev. per Employee
$291,299
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