SoundThinking (SSTI): Undervalued Public Safety Tech Innovator Poised for 2026 Growth

In the high-margin, mission-critical sector of public safety technology, SoundThinking (SSTI) stands out as a company with a unique blend of innovation, strategic vision, and undervalued potential. Despite a challenging Q2 2025 marked by a 4% year-over-year revenue decline due to the non-renewal of its Chicago contract, the company has demonstrated resilience through a robust $37 million pipeline for the remainder of 2025 and a clear roadmap for 2026 growth. With a reaffirmed full-year revenue guidance of $111–$113 million and a focus on AI-driven integrations, hybrid solutions, and critical infrastructure expansion, SoundThinking is positioning itself to capture untapped markets while trading at a discount to its intrinsic value.

Strategic Expansion: From Law Enforcement to Critical Infrastructure

SoundThinking's core strength lies in its ability to adapt its technologies to evolving market needs. The company's SafetySmart platform—a unified ecosystem of AI-powered tools—has already transformed law enforcement operations with products like ShotSpotter (gunshot detection), CrimeTracer (investigative search), and PlateRanger (vehicle recognition). However, the real growth catalyst lies in its foray into critical infrastructure and corporate security.

A prime example is the development of a hybrid sniper detection solution combining wide-area acoustic gunshot detection with perimeter-based technology. This innovation, set for commercial availability in early 2026, targets high-value sectors such as utility substations, financial institutions, and corporate campuses. By offering a “two for one” solution—protecting both open spaces and physical perimeters—SoundThinking is expanding its total addressable market (TAM) into a $10+ billion global security segment. Early discussions with a major New York City financial institution and deployments in Brazil and South America underscore the scalability of this approach.

Technological Differentiation: AI-Driven Integration and Interoperability

What sets SoundThinking apart is its commitment to open standards and AI-native design. The recent integration of PlateRanger with CrimeTracer and ShotSpotter creates a seamless workflow for law enforcement, enabling real-time linking of gunfire events with vehicle data and investigative intelligence. This interconnected ecosystem not only accelerates case resolution but also enhances cross-jurisdictional collaboration through the Rekor Public Safety Network (RPSN), a federated data-sharing platform that respects agency control while boosting operational efficiency.

Moreover, SoundThinking's AI-powered search capabilities in CrimeTracer and its generative AI tools are redefining investigative workflows. These advancements align with the company's broader strategy to become an AI-native enterprise, leveraging machine learning for threat detection, predictive analytics, and automation. Such differentiation is critical in a sector where interoperability and data silos often hinder progress.

Financial Resilience and 2026 Catalysts

Despite near-term headwinds, SoundThinking's financials tell a story of cautious optimism. The company ended Q2 2025 with $9 million in cash, a post-quarter improvement to $16 million, and $21 million in available credit. While gross margins dipped to 53% due to maintenance costs and the NYPD contract delay, adjusted EBITDA of $3.4 million reflects operational discipline. The reaffirmed 2025 guidance and a projected $110 million ARR by 2026 suggest a path to sustainable growth.

The most significant catalyst for 2026 lies in the Chicago RFP process, currently in the live demo phase. As the first to pioneer such a process over a decade ago, SoundThinking is well-positioned to reclaim a contract that could add $2.8 million annually. Even if the deal is smaller, the symbolic win would validate its technology and open doors to other U.S. cities. Additionally, the hybrid sniper detection solution and international expansion into Brazil and South America are poised to drive revenue diversification.

Undervaluation in a High-Margin Sector

SoundThinking's current valuation appears disconnected from its growth trajectory. With a market cap of approximately $1.2 billion (as of August 2025) and a price-to-sales ratio of 8.5x, the stock trades at a discount to peers in the public safety tech space. This undervaluation is further supported by its $43 million NYPD contract renewal and a strong balance sheet, which includes share repurchases at $14.84—a 30% discount to its 2024 peak.

Investment Thesis: A Compelling Entry Point

For investors seeking exposure to a high-margin, mission-critical sector, SoundThinking offers a compelling risk-reward profile. The company's technological differentiation, strategic expansion into critical infrastructure, and 2026 revenue acceleration from Chicago and hybrid solutions create a strong case for long-term growth. While short-term volatility is likely due to contract uncertainties, the reaffirmed guidance, improving cash flow, and a robust pipeline suggest that SSTI is undervalued and poised for a re-rating.

Key Risks: Delays in the Chicago RFP, slower-than-expected adoption of hybrid solutions, and margin pressures from R&D investments.

Conclusion: SoundThinking is a rare blend of innovation and operational resilience in a sector where demand for AI-driven security solutions is only set to grow. For patient investors, the current valuation offers an attractive entry point ahead of what could be a transformative 2026.