SoundThinking CVR Math: Valuing the $3 Earnout From the Bottom Up

Start with the exact CVR, then work backward from $8.44

The merger agreement starts the CVR at $0.50 when eligible 2027 revenue reaches $73.5M. The payout then rises in discrete steps until it reaches $3 at $87M. CrimeTracer, CaseBuilder, ResourceRouter and PlateRanger are excluded from the eligible-revenue definition.

A conservative public-contract layer reaches about $11.68M before modeled renewals

A top-down ShotSpotter revenue assumption is easy to write and hard to audit. I therefore rebuilt a narrower layer from municipal procurement records whose existing terms reach into 2027. Each row below allocates disclosed consideration only across the portion of calendar 2027 covered by the current term. No renewal after expiration is assumed.

The subtotal is $11.68M across 9 streams. New York City dominates the visible layer. Its approximately $21.85M three-year agreement runs through December 12, 2027, producing about $6.91M of simple 2027 service value under straight-line allocation.

Several real opportunities stay outside this subtotal on purpose. Fayetteville has public renewal evidence and SoundThinking says coverage extends through 2029, but the exact executed agreement was not pinned at the same level. Santa Fe exposes a $354K agreement without a clean end date on the reviewed page. Wilmington mixes products. Denver's reviewed term ends December 31, 2026. Harris County's roughly $4.96M award is CrimeTracer, which the CVR expressly excludes.

The separate Q2 renewal layer also matters. SoundThinking announced multi-year ShotSpotter renewals for Albuquerque, Worcester, Richland County, Macon-Bibb and Peoria, but the company grouped those values with other renewals in a way that prevents a clean customer-by-customer CVR allocation. I keep that evidence as support for 2027 continuity rather than forcing it into the $11.68M subtotal.

SafePointe is where the CVR becomes nonlinear

The June 2026 filing reported 365 SafePointe lanes under contract. On the Q2 call, management described more than 100 booked lanes in flight as representing more than $2M of ARR. I use $20K per productive lane-year as a normalization proxy, while keeping contracted lanes, live lanes and lane-years separate.

The bottleneck is deployment timing, not evidence of demand

SoundThinking's revised 2026 guidance moved revenue from $109M-$111M to $99M-$100M. Management tied roughly $2M of the reduction to slower SafePointe deployments and described larger enterprise projects that require more facilities work, networking, credentials, IT coordination and construction. Some delayed 2026 revenue could become a 2027 tailwind, but the same delay is direct evidence that bookings and productive lane-years are not interchangeable.

One clause deserves monitoring. The agreement gives a special 120-day continuation treatment to one confidential Schedule A contract. New York City is a plausible candidate because its large reviewed agreement ends December 12, 2027 and SoundThinking has previously dealt with delayed NYC renewals. That identification is an inference, not a disclosed fact, and this study assigns the clause no extra base-case revenue.

Methodology and limits

The full 48-row operating grid is available in the public CSV below. The separate contract-reconstruction CSV preserves all nine hard-layer rows, source URLs and allocation notes for independent review.

Sources

Transaction mechanics come primarily from SoundThinking's merger 8-K and merger agreement. Operating inputs use company filings and disclosures, while the hard ShotSpotter layer uses the municipal records retained with the reviewed study evidence.

Citation and reuse