Urbanization And AI Will Redefine Global Public Safety

Key Takeaways

• Accelerating international adoption, pricing power in emerging markets, and legislative tailwinds could drive significant revenue and high-margin growth beyond current projections.
  
• Expanding SaaS model, cross-selling opportunities, and digital transformation leadership strengthen recurring revenues, lift margins, and increase long-term earnings visibility.
  
• Heavy reliance on municipal contracts, rising costs, and regulatory risks threaten revenue stability, while intensified competition may undermine margins and long-term profitability.

Catalysts

A public safety technology company, provides data-driven solutions and strategic advisory services for law enforcement, security teams, and civic leadership.

• Analyst consensus expects robust international expansion, but this stance understates the magnitude of potential upside-SoundThinking's ShotSpotter is now charging approximately three times US pricing in emerging markets like Brazil, while accelerating adoption across both Spanish
• and Portuguese-speaking countries could create a step-change in top-line revenues over the next several years.
  
• While analyst consensus highlights advantage from new public safety legislation in California, the true impact is likely far greater-SafePointe's multi-vertical applicability (healthcare, casinos, and high-traffic commercial settings) combined with the removal of the do nothing competitive threat means this segment could rapidly outpace current projections, materially boosting both recurring revenue and high-margin earnings as mandates spread.
  
• The rapid scaling of SoundThinking's AI-driven CrimeTracer and multimodal investigative intelligence platform positions the company to become the industry standard as agencies globally pursue digital transformation, unlocking significantly higher average contract values and driving durable margin expansion through technological leadership.
  
• Urbanization and rising security concerns worldwide are causing a structural shift where proactive public safety is an essential budget line for governments and institutions, dramatically growing SoundThinking's addressable market across new geographies, which will meaningfully impact recurring revenues and provide long-term earnings visibility.
  
• SoundThinking's deepening SaaS subscription model across an expanding product portfolio creates powerful cross-selling and up-selling leverage, with multiyear contracts and bundled deals improving revenue quality, reducing churn, and structurally lifting net margins over time.

SoundThinking Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on SoundThinking compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming SoundThinking's revenue will grow by 10.5% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -7.4% today to 4.5% in 3 years time.
• The bullish analysts expect earnings to reach $6.3 million (and earnings per share of $0.5) by about August 2028, up from $-7.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 72.8x on those 2028 earnings, up from -18.7x today. This future PE is greater than the current PE for the US Software industry at 37.7x.
• Analysts expect the number of shares outstanding to decline by 0.86% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.57%, as per the Simply Wall St company report.

SoundThinking Future Earnings Per Share Growth

Risks

• SoundThinking's heavy dependence on large municipal contracts like those with New York City and previously Chicago exposes it to political risks and shifts in public policy, as seen by the non-inclusion of Chicago's contribution in forward guidance and the uncertainty in international expansion timelines, creating long-term revenue and earnings volatility.
  
• The company's sustained investment in AI-driven offerings and product diversification efforts, while necessary to remain competitive against evolving alternatives, is already contributing to higher R&D and infrastructure costs relative to revenue, indicating potential sustained margin pressure if new products like PlateRanger or SafePointe do not achieve meaningful near-term market adoption.
  
• Changes in legislative environments and public sentiment around surveillance, policing technology, and privacy could result in regulatory headwinds or stricter procurement standards, directly limiting the adoption or renewal of SoundThinking's core ShotSpotter and AI-enabled platforms, with negative implications for long-term revenue growth and margin expansion.
  
• Increasing fiscal constraints and budget volatility among municipalities, which SoundThinking acknowledges as "lingering headwinds," could lead to higher churn, contract delays, and unmet growth expectations, making both multi-year revenue stability and the maintenance of high-margin recurring contracts more challenging.
  
• As industry competition intensifies, driven both by consolidation among larger public safety tech vendors and by new, less intrusive security technologies, SoundThinking risks margin erosion and lost market share if its offerings or business model are commoditized, directly impacting its ability to sustain operating leverage and long-term profitability.

Valuation

• The assumed bullish price target for SoundThinking is $29.86, which represents two standard deviations above the consensus price target of $22.17. This valuation is based on what can be assumed as the expectations of SoundThinking's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $30.0, and the most bearish reporting a price target of just $19.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $141.5 million, earnings will come to $6.3 million, and it would be trading on a PE ratio of 72.8x, assuming you use a discount rate of 8.6%.
  
• Given the current share price of $11.42, the bullish analyst price target of $29.86 is 61.8% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.