AI security solutions provider SoundThinking sinks 25% on lowered 2026 guidance
The company also reported a bottom-line loss and missed top-line expectations for the second quarter / Photo: Facebook/SHOTSPOTTER
Shares of SoundThinking, a micro-cap developer of AI-powered public safety solutions, plunged 25% on Friday. The company’s second-quarter results fell short of its own expectations, prompting the management to lower its full-year guidance. At least two Wall Street analysts subsequently downgraded the stock.
Details
SoundThinking dropped 25% on Friday to $6.20 per share, marking a three-month low. The company’s products include gunshot and weapons detection systems, as well as an investigation management system.
On Thursday, the company reported that its second-quarter revenue had fallen 8% year over year to $23.9 million. It attributed the decline primarily to nonrenewals and delays in renewing contracts with several customers. Its net loss widened by around 55% to $4.8 million, or $0.37 per share. Both figures fell short of Wall Street consensus estimates, MarketBeat notes.
The performance prompted the management to lower its full-year top-line guidance. It previously expected revenue of $109-111 million but now forecasts $99-100 million. It also halved its adjusted EBITDA margin forecast to 8-9% from 16-18%.
“Our second quarter results were below our expectations,” CEO Ralph Clark acknowledged in the company’s earnings release. Nevertheless, he added, “we remain encouraged by our long-term growth opportunities across public safety and commercial security.”
What analysts say
The day after SoundThinking released its quarterly results, on Friday, analysts at both Lake Street Capital and Citizens downgraded the stock. Lake Street cut its rating from “buy” to “hold,” while Citizens lowered its outlook from “market outperform” to “market perform.”
Cantor Fitzgerald maintained its “neutral” stance on SoundThinking but cut its target price by 20% to $8 per share, implying 29% upside from the Friday close. Cantor cited the scale of the guidance cut, saying it raises the bar for the reacceleration in SoundThinking’s growth needed to support a re-rating.
The stock has four “hold” ratings from Wall Street analysts versus two “buy” calls. The average target price is $9 per share, implying 45% upside from the Friday close.
