SoundThinking Inc (SSTI) 2018 Q3 法說會逐字稿

Good afternoon, and welcome to ShotSpotter Third Quarter 2018 Earnings Conference Call. My name is Devon, and I will be your operator for today's call. Joining us are ShotSpotter CEO, Ralph Clark; and CFO, Alan Stewart.

Please note that certain information discussed on the call today will include forward-looking statements about future events and ShotSpotter's business strategy and future financial and operating performance. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict and may cause the actual results to differ materially from those stated or implied by those statements. Certain of these risks and assumptions are discussed in ShotSpotter's SEC filings, including its registration statement on Form S-1. These forward-looking statements reflect management's beliefs, estimates and predictions as of the date of this live broadcast, November 13, 2018. And ShotSpotter undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. Finally, I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's website at ir.shotspotter.com.

Now I would like to turn the call over to ShotSpotter CEO, Ralph Clark. Sir, please proceed.

Thanks, Devon. Good afternoon, and thank you for joining us to discuss our third quarter results. After reviewing this quarter and our forecast for full year 2018, we will share our initial outlook for 2019. Alan and I will then be happy to take your questions.

In short, we had another solid quarter performance and exceeded revenue expectations for the sixth consecutive time as a reporting public company. We're pleased with the solid progress we've made on both near-term tactical execution as well as long-term strategic goals, which only increases our optimism about our ability to scale our unique franchise and have even a greater impact on helping reduce gun violence globally.

Before I highlight some of those achievements, I want to briefly share my perspective on the public safety solutions marketplace and recent developments that form the basis for our constructive view of, and position in, this large and growing market.

As some of you may know, IACP, or the International Association of Chiefs of Police, puts on an annual conference where nearly 20,000 police executives and vendors gather to discuss relevant issues within policing and learn about solutions to successfully address many of those challenges. At this year's conference, several of the core themes discussed align directly with our mission. It is very clear that agencies are increasingly demanding technology solutions, which help increase officer safety, promote community engagement and provide for more precision-oriented policing, with the overall objective of both preventing and decreasing violent crime. In fact, Chicago, which is our largest deployment, was highlighted for the progress the city has made in reducing gun violence. And although there are still much work to be done, we believe having our value proposition validated across so many different panels and workshops at this key industry gathering is invaluable.

We're also encouraged that just a few weeks ago, New York City experienced its first weekend without any shootings in 30 years. Just think about that. Some of the toughest neighborhoods in New York City, which is our second largest deployment, went a weekend without a single shooting. Congratulations to NYPD and the citizens of New York City. They are a tangible example of the art of the possible with respect to driving public safety outcomes for all. And while we are the first to say that ShotSpotter is not the singular solution for gun violence abatement, we are pleased that ShotSpotter has been a valuable tool used by NYPD and other agencies in their efforts to drive tangible positive impact in their respective communities. We believe that ShotSpotter is doing work that really matters and it's the reason we lean in so firmly in the work that we do every day.

Let's look at how this translates into this quarter's results. We're able to grow revenue to a record $9.2 million, representing a 35% increase from $6.8 million a year ago. We also nearly achieved breakeven before onetime charges. Alan will provide the detail about the charges, but we're very encouraged by this achievement. We intend to reach GAAP profitability next quarter, a goal that we set for ourselves over 4 quarters ago.

We went live with 36 miles this quarter while also achieving 0 miles of attrition. Our go-live miles were the result of expanded coverage in Miami, New York City, Baltimore and Birmingham, as well as going live with 3 new cities, including West Palm Beach and Fort Myers, Florida and Jackson, Tennessee, our very first customer in Tennessee. We also deployed another campus customer, University of West Georgia, for a total of 9 campuses that are live today. In fact, within days of going live at University of West Georgia, they had 2 separate ShotSpotter alerted incidents that took place just off campus that led to the on-scene arrest of each shooter. Fortunately, there were no injuries, but it did demonstrate how critical this solution is with college communities where the safety and welfare of students, faculty and workers are a priority.

Lastly, we also went live with our very first freeway project. We're very excited about the freeway project and look forward to sharing the results of its use.

Our exceptional execution and continued strong performance allows us to increase our full year revenue outlook for 2018 for the fourth consecutive time to $34.4 million to $34.6 million, which, at the midpoint, is a 45% year-over-year increase from 2017. We're also providing initial revenue outlook for 2019 of $45 million to $47 million. Alan will provide the details during his commentary, but I could not be more pleased with the company's trajectory on fulfilling our long-term ambitions.

Let's turn to some of the key initiatives we executed during the quarter, which we believe positively impact our long-term outlook. First, we're very pleased that during the quarter, we signed Chicago to a 23-year -- or excuse me, $23 million, 3-year deal. With over 100 square miles covered in Chicago, this agreement is obviously a strong statement about how Chicago views our role in the city's aggressive plans to reduce gun violence. Another benefit is that this agreement, combined with other multiyear deals executed with other agencies, provides us excellent revenue visibility.

Second, we've talked in the past about our strategy to expand to adjacent complementary markets. Based on the trust and high customer satisfaction levels we've established within policing agencies, who use our gunshot detection service, we have the confidence that we can build or acquire new capabilities that will be of important value to customers within this vertical market. Our acquisition of HunchLab, now renamed ShotSpotter Missions, is an important first step in the execution of this strategy. Missions' web-based proactive patrol management system moves us into AI-driven data analysis and predictive policing.

Mission applies learning to multiple -- machine learning, excuse me, to multiple data sets creating a risk forecast of where and when crimes may occur. This helps police plan patrol missions and help deter crime and better utilize police resources. We're investing the build up of Missions platform to ingest shots-fired, gun-fired data to improve forecasting accuracy for gun crimes as well as tightly integrate it with our Respond app. Respond is already a trusted tool on tens of thousands of field officer smartphones in patrol car display terminals. We believe there's ample opportunity to demonstrate value of Missions and cross-sell it to our customer base as a part of our strategy to increase revenue per customer. We demonstrated Missions at IACP and received an extremely positive reception for the technology and its capabilities. While we don't expect any material revenue impact until late 2019 at the earliest, we see Missions as an important opportunity to build organizational competency in product acquisition and cross-selling opportunities.

Third, we believe our go-to-market reach has been enhanced as a result of the Verizon reseller arrangement we announced with Verizon earlier in the quarter. As our value proposition has become better known and accepted, we think this reseller arrangement enables us to leverage a larger, well-resourced national reseller like Verizon. We are humbled by Verizon's enthusiastic embracement of ShotSpotter as a solution and as a partner company, serving the needs of the law enforcement ecosystem. We've held sales trading events and are already working collaboratively on several key early opportunities. This agreement is separate from our smart city's partnership with Verizon, which is scheduled to launch in 2019. While our Verizon relationship is not necessarily material revenue driver until late 2019 or early 2020, it is yet another reason we are so optimistic about ShotSpotter's long-term growth prospects.

Lastly, based on how law enforcement approaches technology purchases, largely based on positive word-of-mouth recommendations from peers, we believe that continuing to invest in people, processes and product that results in high customer satisfaction is of a utmost importance for growing our business. Each year, we measure customer satisfaction and willingness to recommend our solution to others with a formal Net Promoter Score survey. We've seen significant gains in recommendation levels over the years -- over the last several years, and we've held 50% or higher in the last 2 years. The survey also enables customers to provide feedback on how to make our solution and the delivery of it better over time, which we take very seriously.

That completes my prepared remarks. I will now turn the call over to Alan, and I look forward to taking your questions later.

Thank you, Ralph, and good afternoon, everyone. We're pleased that our third quarter, again, exceeded our revenue expectations, allowing us to increase our outlook for the full year. We still expect to be GAAP profitable in Q4, and our goal is to maintain profitability going forward.

We went live in 36 new miles, added a new bank line of credit and completed our first post-IPO acquisition. So again, it was another productive quarter, supporting our long-term opportunity.

Let's look at the details of the quarter. Revenue for the third quarter grew 35% to $9.2 million, which reflected deployment expansion in current cities as well is going live in 3 new cities, 1 new campus and our first freeway deployment.

Gross profit for the quarter was $5 million or 55% of total revenue, up from 50% in third quarter of 2017. As a reminder, in the second quarter of 2018, we decided to exit the indoor gunshot detection business. And in accordance to that plan, during this quarter, we wrote off our remaining indoor sensor inventory, which had an impact on our margins. Without this charge, gross margin would have been approximately 58%. With all material charges related to exiting the indoor gunshot detection business now behind us, we expect gross margins will continue to increase going forward.

In the third quarter, our loss was $1.4 million, an improvement from the $1.6 million loss in the prior year period.

Adjusted EBITDA, which is calculated by taking our GAAP net income and adding back interest, taxes, depreciation, amortization and stock-based compensation, was $199,000, up significantly from the $156,000 loss in the prior year period. Operating expenses for the quarter were $6.6 million, a 58% increase over the prior year period. Our operating expenses are increasing as we pursue international sales, add to our marketing staff and expand our customer success efforts. In addition, third quarter operating expenses included approximately $1.4 million related to onetime events.

Sales and marketing expenses for the quarter were $2.5 million or 27% of revenue versus $1.8 million or 26% of revenue to prior year period. As we have discussed, this increase reflects our continued expansion of our domestic and international sales and marketing efforts along with increasing customer service levels.

R&D expenses for the quarter were $1.2 million or 13% of revenue compared to $1.1 million or 16% of revenue in the prior year period. We continue to invest in R&D to improve functionality of our ShotSpotter Missions product, formerly HunchLab, expand the applications for our existing technology, improve our analytics capabilities and conduct other initiatives.

G&A expenses for the quarter were $2.9 million or 32% of revenue, which is an increase from $1.3 million or 19% of revenue for the prior year period. The increase was primarily related to onetime legal and settlement costs related to litigation and expenses in connection with the HunchLab acquisition. As we have discussed, going into 2019, we expect operating expenses to increase as we continue to add headcount and scale the business for the future.

Deferred revenue at the quarter end was approximately $20.4 million, up from $17.4 million in the prior quarter, due largely to the long-term contract we signed with Chicago. The 3-year, $20 million contract covers the over 100 miles under coverage. Of note, with this new Chicago contract, over 40% of our revenues now comes from customers with multiyear contracts. Of our deferred revenues, $19.2 million was short term and $1.2 million was long term. In general, we expect short-term deferred revenues to be recognized within 4 quarters. And as always, we stress that you should not read too much into the quarterly variability in deferred revenues as timing during the quarter of when new miles go-live can have a significant impact on deferred revenue. We consider this metric to be more informative on a year-over-year basis versus quarterly.

We generated cash flow from operations for the quarter of approximately $3.4 million, and our cash balance increased to $16.4 million. Also during the quarter, we announced that we obtained a $10 million line of credit, which will provide flexibility in funding our growth plans. We have not drawn on this line of credit.

Due to our continued strong execution, we are, again, increasing our full year outlook. We now expect revenues for 2018 to be approximately $34.4 million to $34.6 million, an increase from the range of $33.5 million to $34 million that we provided last quarter.

We are also providing an initial look at our 2019 revenue guidance. Currently, we expect full year revenues of $45 million to $47 million. This outlook is based on our historically strong renewal rates, new contracts scheduled to go live next year and the strength of our deferred revenues. We expect the recent addition of ShotSpotter Missions, formerly HunchLab, to expand our service offerings. However, we don't expect to see this bring material revenue until late 2019 at the earliest.

Next year, we intend to continue spending to drive our growth, so we expect operating expenses to increase marginally with the greatest increase expected in sales and marketing. While the quarterly cadence of our revenues will still be somewhat affected by contract renewal dates, we expect the cadence to be more even across the quarters as we continue to improve our execution and timeliness of contract renewals. We're very pleased with the continued strong trajectory of the business and are excited about our progress in helping reduce gun violence around the country. We look forward to seeing many of you at our first Investor Day, which will take place at our headquarters tomorrow. If you would like additional information, please get in touch with our Investor Relations department.

Now back over to you, Ralph.

Thank you, Alan, and thank you to all of you that joined us on the call today. We're very excited about seeing several of you tomorrow. We look forward to introducing you to some of our senior colleagues, driving our results, who will provide insight to our TAM, product road map and business model, among other topics. Finally, attendees will have the opportunity to tour our Incident Operations Center, which provides a unique understanding of how we provide real-time gun-fire alerts and data to police departments across the country.

We will now take your questions.

(Operator Instructions) Our first question comes from the line of Tim Klasell with Northland Securities.

Yes, I have 2 quick questions. First, as far as next year, it sounds like you really are putting nothing for HunchLab into that guidance, so that guidance is just -- the raise is purely organic, right? And this is...

So this is Alan. No, we do have a moderate amount of revenues from the HunchLab product next year included in our current guidance.

Okay, okay. And then the second one. You mentioned all sorts of good momentum with the current customers and with some new ones, new signings, congratulations. But on the international side, what are you seeing there? Obviously, you're investing. Do you think we'll see in that guidance for next year? Is that assuming some success there? Or is that maybe a little further out?

Yes. I think, as we've said in other earnings calls that our expectation is that we wouldn't drive any material revenue from our international efforts until probably late 2019 of next year. And we're still holding to that. As you know, domestically, our sales cycles are 12 to 18 months. And we don't have any reason to believe that the sales cycles are going to be shorter internationally. In fact, they could possibly be a little bit longer. So we're just going to be very thoughtful about how quickly it is we're expecting to have any material increase to international revenues from our efforts, certainly, in Latin America and a renewed focus on seeing how we can expand what we're doing in South Africa. So the answer to that is probably more likely that would happen in late 2019.

Our next question comes from the line of Matt Pfau with William Blair.

Wanted to follow up on the partnerships with the Verizon reseller agreement, and maybe you can just talk about how this reseller agreement extends your sales reach. Are you targeting cities that you wouldn't have been able to previously? Or is it a function of them just broadening and having more feet on the street?

Yes. So this is Ralph, and, Alan, jump in later. But we certainly see it as an opportunity to expand a number of feet on the street and have more conversations that we wouldn't be able to have, given the very limited and focused size of our sales organization. So you can think of it more as being kind of a market generation capability. We know that we're still going to probably have to be involved in kind of getting these deals across the line. And again, they're confronting the same sales cycle that we're confronting in terms of a timing cadence. These systems are really 12- to 18-month sales cycles due to the complexity involved in kind of getting customers on board. But the nice thing about this partnership is that their reach is so much more pervasive and extensive than ours, so we're expecting them to churn up a lot of potential prospects that will have the opportunity to work with them collaboratively on getting across the line. But again, our -- from a revenue contribution point of view, our expectation is really little to de minimis, happening maybe in late 2019, much more likely that we begin to see traction there in 2020, again, just given the nature of the sales cycles.

Got it. And then in terms of the commentary around sales and marketing expense being the -- seen the biggest increase of the operating expense line items for 2019, maybe you can just talk about where those incremental sales and marketing dollars are being invested.

Sure. This is Alan. We really started an expansion of our marketing team midyear. So we're starting to see some of those costs come in to the sales and marketing numbers. We are still hiring in terms of marketing capabilities, lead generation, more things that are outreach to our potential customers and other stakeholders. Those are the types of things that are adding to our sales and marketing. Going into 2019, we'll probably be adding additional capabilities.

Got it. And...

Potentially as well as Verizon assisting as well.

Great. Last one from me. Just wanted to hit on the HunchLab acquisition, and maybe you can just talk a little bit more detail about how you view the opportunity for this product. Is it something that could be used by all of your current city and municipality customers, or are there specific ones that it's more applicable to? And then is it potentially a customer generation tool as well? Or is it more of an upsell to Flex customers?

Yes. So I think it's much more of the former that you stated. It's certainly a solution that's going to be very attractive to our existing ShotSpotter customer installed base, and we've begun a number of conversations with several of those folks already. But it is also, as you suggest, an opportunity to have dialogue in relevancy with customers that aren't ShotSpotter customers today that have a need for a more efficient deployment of patrol resources. And although they might not have a significant gun violence problem at this point in time, they could use the solution offered by HunchLab, now renamed ShotSpotter Missions. So it's, obviously, a pretty good way for us to develop new relationships with new folks outside of our current installed base. So we think it's pretty exciting in that regard.

Our next question comes from the line of Jeremy Hamblin with Dougherty & Company.

I wanted to start by just getting underneath the G&A reported in the quarter. You noted a couple of items: one, acquisition costs related to closing the HunchLab deal; and then also, you noted some legal costs, I think, from the lawsuit. Was wondering if you could just give me the component parts to those 2 things that's included in the...

Sure. This is Alan. The total costs for those amongst some other like minor onetime things were approximately $1.4 million. We are under a confidentially agreement in terms of the actual terms of the settlement. The majority of that was related to settling the outstanding litigation. A couple hundred thousand dollars of that was directly related to legal and banking fees associated with the HunchLab acquisition.

Okay, got it. And then I wanted to come back to the commentary around sales and marketing. It sounds like you're making incremental investments, in that not only currently, but looking forward into next year. Can you give us a sense for, as this business scales towards $50 million in annual revenues and beyond, how will that sales and marketing component of your financial model leverage? Is that something where as we look into next year, we can assume you're still going to get nice, solid leverage on that revenue growth that you are expecting?

Yes. This is Alan. And I would say that we are expecting leverage as we go forward. If I were to characterize a couple of the building years, '17 and '18 were building primarily in the sales force side of things, although we've continued to do that into the end of '18 and '19. '18 and '19 is primarily into the marketing side of things. By the time we get to the end of '19, though, we should be fairly stable in terms of a lot of the headcount related to those sales and marketing activities and only adding incremental at a much lower rate than our top line revenue growth. I'd expect, as we get closer to the $50 million to $70-plus million range, that our sales and marketing spend as a percentage of revenue would be down in the low to mid-20%.

Okay, great. And then just another question about the core technology and applicability of it or opportunities for it. As we think about large events, and you noted the success right away in West Georgia campus of being able to identify shots. As we think about things really large events coming up, like the Olympics in 2028, the World Cup coming here, how are you approaching opportunities for those large-gathering type of events? How is this technology able to be applied? And is there interest, as you talk to the organizing bodies, of using something like this to improve overall safety?

Yes. So this is Ralph, and that's a great question. I think the good news is that the core technology in terms of the center platform, the communications, backhaul networks, the back-end infrastructure required to be able to detect, locate on alert on gunfire is exactly the same. And -- but what we're talking about is a slightly different buying center and certainly a slightly different use case. And we've got great examples of kind of being able to make that pivot as a part of our security business. When you think about the 9 or so college campuses that don't have persistent ongoing gun violence the way a urban city might, but they are concerned about the more, I would call, occasional gunfire, are certainly protecting themselves against the more rare, but certainly impactful, mass shooting event. And we know from our deployments in those environments that we are detecting gunfire from time to time. Another great example, and this is what we got an inbound on, is someone had the problem of dealing with sniper fire off of a freeway and had the creative idea to approach us, and say, hey, is this a technology challenge that you guys can perform to, which we were happy to jump on board and be able to show and prove that we can. We've also applied the technology out in the Kruger National Park. This is more of a proof-of-concept basis. But we like challenging ourselves around what's possible in terms of -- are possible with applying our core technology. You saw, fundamentally, different security problems. And we've actually been successful in the Kruger even though we've only had a tiny, tiny deployment where we detected, and actually caught as a result of those detections, some rhino poaching. You probably have seen, it's not really a part of our business per se, but our founder, original founder, Dr. Bob Showen, had the notion of taking the core technology, adopting a little bit more from the use cases I described previously, but adopt new technology to be able to deploy it in the ocean to be able to potentially address the issue of fish blasting, which is a very big concern for many countries in Southeast Asia that -- where the core reap is being deployed. So there is a lot of different opportunities to go take this core technology, apply it to different security problems, and we're excited about pursuing those to the extent that it makes sense.

(Operator Instructions) Our next question comes from the line of Joseph Osha with JMP Securities.

This is actually Hilary on for Joe. I was just hoping to jump into the HunchLab expectations just a little bit more. I know you said that -- just on HunchLab, I know you said you're expecting some contribution here later in 2019. But if you could give any thoughts and commentary on how you expect that to ramp into 2020?

Yes. I don't think we'd be prepared to comment on that. This is a fairly new area for us. I mean, we're, again, in the process of kind of developing our marketing position. We're getting the sales organization trained up, prioritizing where we're going to invest in the platform to kind of bring it forward. What -- the thing that we've only decided at this point in time is that we know that it will be sold on a subscription-based business model.

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city. That's kind of the way we're looking at this.

Okay, great. And is it going to be...

And we're very excited about

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The predictive

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I'm sorry, your question -- I didn't hear your question.

I'm sorry. It's just a little bit of bad service on my end. I apologize. In terms of the sales effort, is this going to be kind of going in conjunction with the current business? Or is this going to be a separate offering, just kind of thoughts on how customers are going to be receptive to adding this on as a separate offering?

Yes. So it's going to definitely be a different SKU with, again, kind of a different price point and slightly different pricing model, although business model is going to be the same, recurring revenue business model. The initial reaction in the marketplace and customers that we talked to has been extremely, extremely positive. So we think this is something that makes a lot of sense. As you probably know, if you've been around the company a little bit, we've really foreshadowed, in many ways, our interest in trying to explore how to move into adjacent markets where there's good operating synergy. We've always said, anything that we were going to do on the acquisition side was going to be more customer-led or customer-pull driven versus us trying to go out and do some fancy financial reengineering thing. That's just not what or who we are. And this fit the bill perfectly. It's really something that customers, in fact, there were a couple of customers that we talked to, a couple of our larger customers, I would say, that were exciting and ecstatic that we acquired those assets because they know that the culture of this company is really about, kind of, quality and innovation and the fact now that we have some resources to smartly invest with them in terms of kind of moving that really amazing robust platform forward in a way to add more value around how agencies are using it to prevent and reduce gun crime, violent crime in particular, is very exciting.

Our next question comes from the line of Saliq Khan with Imperial Capital.

Just a couple of quick questions on my end. The first one was, could you talk about the ergonomics and the form factor. I find it to be pretty important and when it comes to sensors and detection capabilities. And I recall you guys being at the fourth generation, I believe, of those sensors. So can you kind of talk about your anticipation of having to upgrade those sensors? And what those costs could potentially look like?

So this is Alan. I would say, at this point, we have sensors deployed that are both 3G and LTE sensors as well. We do continue to do improvements on the sensors, more minor ones. But it's generally more in terms of the firmware, things that we can do. In terms of the hardware and the actual costs, we will, at some point, have to swap out the 3G sensors.

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near the end of '19. We're now working with our carriers, namely Verizon, AT&T, where the extension of that swap out can go all the way into 2022. And one thing that we do know is that when we started expanding some of our international deployments as well, they're still on 2G. So some of the sensors, as long as they're serviceable, when we pull them out, the 3G ones may be able to be used internationally as well. So although there will be some costs related to that swap out over time, we're still evaluating and working with some of the partners to mitigate that cost going forward.

And then my anticipation is that when it comes to the work you guys are doing in campus safety that there does not to be a rehash or some sort of an upgrade or different type of a form factor for the sensor then, correct? If you can -- especially since that's so important, why wouldn't you have it currently?

Correct. Yes. We use the same sensors, same technology for our campus and site deployments.

Got you. And on the same point, campus safety departments, these guys are used to buying cameras and locks, not necessarily gunshot detection services. So I look at it as a bit of a different sale. Can you kind of talk about what that market opportunity looks like for you? And do you have a dedicated sales person concentrating on this opportunity?

So we have an overlay sales resource of a couple of folks from pre-sales, actual sales. And they work collaboratively with our field sales organization that are mostly focused on cities. But we find that there's a lot of synergies with the work that our sales directors are maybe doing in a location that can then be leveraged or applied to a campus security or campus police setting. The really powerful use case for us is, we found that in the process of deploying these domes of protections or arrays across the campus, we're extending the coverage out a few blocks beyond the campus. And that happened, somewhat accidentally, actually to be perfectly honest, in the early stages, as most of the people were concerned or customers really were concerned about protecting students on campus against a potential active shooter, mass-shooting situation. What we found is that going just 3 to 4 blocks off-campus, many of these campuses are in transitional neighborhoods. We weren't getting mass shootings or active shootings, but we were getting the occasional gunshot events that are happening in these neighborhoods where there's kind of gun crime that takes place. And I mentioned the specific example in the brand-new deployment we had at University of West Georgia. I think it's probably well known. We've had a couple of shooting incidents here in the west, on the West Coast, where they've been able to capture trigger pullers there. I know in the case of some of our Southeast deployments, there's probably more than a little bit of frequent shootings that take place just off campus. So this is an extremely possible use case. And I think just from the anecdotal point of view, if you're just in and ever around a campus, at night especially, just drive around off campus, and I bet you'll oftentimes see these little posts with little blue lights on it, these are the security phones, basically, even in the age of cell phones when they're still deploying these things, a lot of it is driven by the Clery Act, which is really requiring universities to take responsibility for the safety of their students, faculty and workers even if they're just slightly off-campus. You have a lot of campus assets and housing that take place 2, 3, 4 blocks off-campus. That doesn't relieve the university of responsibility for the safety of their students just because they're technically not on the campus. And we know, from our experience in these 9-or-so deployments, that we do have shootings. And having that very quick, precise alert can make the difference. And sometimes, it's about capturing the trigger puller. But more often than not, it's really about being able to dispatch EMS to those locations because getting that EMS there 2 minutes sooner, 3 minutes sooner can save a life. And that's a life, if you're a campus chancellor or something, that could be extremely valuable, okay, if it's a student. So we think we're on the right track here, and we've got some great support from our existing customers. I -- we talked a little bit about our NPS. That NPS score is really more focused on the cities. If we carve out the mini NPS that we did just for our campus customers, it's actually quite a bit higher, which is phenomenal. I mean, it's almost too incredible to even talk about publicly. But I can say, customers, our customers really love the solution. So we're on the right track.

That's incredibly helpful. And then I'll sneak in just one last one. And regarding the international opportunity, you guys are pretty hot when it came to South Africa. Can you kind of highlight the work you guys are doing there? And how should I be thinking about internationals? I'm thinking about projections for late 2019.

Yes. So again, as we stated several times -- this is Ralph -- we're incredibly excited about the international opportunity. We have a little bit of pricing leverage there. We've had a great deployment in Cape Town specifically that is a strong power user. They actually have a need to expand. There's no question about that. We believe we're going to expand our footprint, at large, in South Africa. And we've invested in bringing on Jon Magin, who is our VP of Sales, focus on Latin America. He's been very, very busy, having a number of constructive conversations, not only with customers, but with go-to-market partners, integrators and the like. If you read anything in The Wall Street Journal or Economist, we think we have gun violence problems in this country. I mean, go to Brazil, go to Columbia, well, Columbia is a little bit better now these days, but Mexico, Brazil, they're having some number of challenges there. There's been a couple of elections down in that area. I think, certainly, the new President of Brazil is a little bit more law and order like. So we're pretty constructive on the long term of very interesting possibilities in international, not only South Africa where we're already deployed, but some number of countries in Latin America as well. But again, these sales cycles aren't going to be -- they're not going to be magically 6-month, 12-month sales cycles. They're 12- to 18-month sales cycles, if we're lucky, internationally. But when they come, they'll have a little bit of an outsized footprint from a revenue per square kilometer, revenue per square mile basis. So I think -- we think we're approaching this the right way. We're investing the right amount and have the right focus on this, and we just ask people to be patient. We're not going to promise you something that you know is not going to happen. Late '19 is the way we're thinking about it.

Our final question comes from the line of David Swank with Hood River Capital Management.

Regarding the HunchLab's acquisition, you mentioned that you included a moderate, I think, you said amount of revenue in 2019 guidance. Could you be any more precise on how much HunchLab is in 2019, so it's still possible to calculate an organic growth rate? For instance, is it a few million dollars? Or can you get us any closer?

So this is Alan. I think, at this point, the moderate amount is less than a few million dollars. I think that's all we'd be comfortable in saying.

At this time, this concludes our question-and-answer session. If your question was not taken, you may contact ShotSpotter's Investor Relations team at SSTI@liolios.com. I would now like to turn the call back over to Mr. Clark for his closing remarks.

Great. Thank you all very much for dialing in and participating in our third quarter earnings call, and looking forward to seeing many of you tomorrow in person so we can show off what we do and certainly happy to introduce the rest of our team that work so hard to make these amazing results happen. So thanks again.

Thank you for joining us on today's ShotSpotter Third Quarter 2018 Earnings Call. You may now disconnect, and have a wonderful day.