What once was restricted to the world of science fiction is now a reality.
This is not a movie, as robots are finally here to protect us—and thankfully, they appear a lot more like R2D2 than Skynet and the Terminator.
Autonomous Security Robots (ASR) are quickly becoming an essential part of our future1 as the population continues to grow past 8 billion people and the very real problem of law enforcement and security guards becomes a reality.
Bringing us towards this robot-secured reality is Knightscope, Inc. (NASDAQ:KSCP), a Silicon-Valley-based advanced security tech company that builds ASRs that deter, detect and report with groundbreaking technology that’s proven to help fight crime and has the potential to be the largest disruption of public safety in history.
In the USA alone, where the population is over 331 million, there are only 660,288 full-time law enforcement officers2 and just over a million more security guards3—that’s roughly 200 people to every one protector. But the officers and guards need to work 24/7, so the math is even worse (i.e., you can’t triple shift a human).
The need isn’t being ignored. Since its inception in 2013, Knightscope, Inc. (NASDAQ:KSCP) has raised over $120 million, amassed 35,000+ investors by the time it listed on the NASDAQ in January 2022 and taken four advanced technologies (autonomous self-driving, robotics, artificial intelligence and electric vehicles) to develop its own proprietary tech from scratch and roll out for over 1.8 million hours of field operation to date.
Knightscope (NASDAQ:KSCP) recently acquired CASE Emergency Systems4 and its impressive roster of key clients, like the NYPD and FDNY.
The company expects a revenue run rate between $12 million to $14 million following this acquisition, delivering on the accelerated growth by a significant margin versus the $3.4M from 2021.
Clearly, something needs to be done to protect the liberty and safety of the growing population, as the National Crime Victimization Survey confirmed that violent crime in urban areas is rising dramatically.5
To combat this and better equip domestic law enforcement and private businesses, Knightscope, Inc. (NASDAQ:KSCP) has developed timely solutions for the road ahead.
Investors Should Pay Close Attention to Knightscope, Inc. (NASDAQ:KSCP)
Huge Market in Dire Need of Crime Prevention: Huge Market in Dire Need of Crime Prevention: Between 2019 and 2020, both the FBI and CDC reported a roughly 30% increase in the US murder rate, while the FBI also reported a decline from 61% to 54% in the “clearance rate” which is the percentage of murders solved.5 The public is also noticing the trend, with a record-high 56% of Americans perceiving that local crime has increased.7 According to the NCVS, violent crime in urban areas rose 29% from 2020 to 2021, from 19.0 to 24.5 victimizations per 1,000 persons aged 12 or older.8
Data-Proven Effective: As evidenced by a unanimous 5-0 vote, the City Council of Huntington Park approved the renewal of an additional 2-year term, after seeing declines in its calls for service by 10%, crime reports by 46% and citations by 68%, while arrests went up by 27%. With over 1.8 million hours of operation in the field, not only is Knightscope (NASDAQ:KSCP) amassing big safety data (over 90 terabytes per year), but it’s also improving the AI capabilities and making the technology better every single day.
Machine-as-a-Service (MaaS) = Massive Recurring Revenue Opportunity: Clients that utilize a Knightscope’s ASR onsite get the safety of providing 24/7 patrol, for less than $9 per hour (and as low as $0.75 per hour). The MaaS model provides recurring revenue and plenty of satisfied (renewing) clients.
Autonomous Operation: This is the ONLY company operating fully autonomously 24/7/365 across an entire country without human intervention both outdoors and indoors. They’ve already amassed satisfied clients with plenty of renewals and have gained 1.8+ million hours of field experience so far, and growing…
Solid Support: Since inception, Knightscope (NASDAQ:KSCP) has raised in excess of $120 million to build all of the technology from scratch. As of its NASDAQ public listing (27 Jan 2022), Knightscope is backed by a strong following of over 35,000 investors. It subsequently secured a $100 million committed equity facility from B Riley.9
Growing Tech Portfolio: Comprehensive offering with nine patents and technologies designed for various environments, including stationary, indoor, outdoor and future multi-terrain and high-speed vehicles.
Relentless, Experienced Leadership Team: Most of the management team consists of the original founding management team who’ve been with the company for nearly a decade and hold a big insider position, having only strengthened the team by adding more experts along the way10 plus a stellar Board of Directors.11 Knightscope’s (NASDAQ:KSCP) team clearly believes in the product, and wants to see it through to becoming a big player.
Knightscope’s is not only stacked with industry rockstars but adds a much-needed ESG bonus in today’s investment market.
Dire Need for Crime Prevention Driving a HUGE Market Forward
According to a Gallup poll released in October 2022, a record-high 56% of Americans perceive that local crime has increased.13
On top of this, the current relationship between the public and police across the US is declining across all demographics.14
Not only is the public trust waning, but the danger for law enforcement officers is rising to new heights, as intentional killings of law enforcement officers recently reached a 20-year high,15 rising by nearly 60% in 2021.16
FBI Director Christopher Wray told CBS News’ 60 Minutes program that law enforcement officers were “being killed at a rate of almost one every five days.”17
Thefts and robberies in major cities increased by ~20% in the first half of 2022.18
Now, a wave of violence has also spilt across college campuses.19
The need for action became so necessary that the US House of Representatives passed a bi-partisan funding bill to help police cope with the growing issue in September.20
Something needs to change to keep the public and those tasked with protecting the public safer.
This is where innovations such as Autonomous Security Robots (ASRs) from developers as advanced as Knightscope, Inc. (NASDAQ:KSCP) are being seen as an effective solution.
Knightscope’s ASRs could potentially replace security guards,21 while greatly enhancing the tool sets of professionals tasked with public safety.
The Security Robots Market is estimated to currently be $31.7 billion in 2022, while being projected to reach $71.8 billion by 2027, growing at a whopping 17.8% CAGR along the way.22
Built to succeed in this rapidly growing market, Knightscope, Inc. (NASDAQ:KSCP) is aspiring to build toward a $30 billion company. However, it’s difficult to point to a similar story arc in this burgeoning industry.
On some levels, it looks like a defense contractor like Lockheed Martin or a Raytheon—but instead of building up technology and capabilities for soldiers, Knightscope focuses on the Department of Justice, Homeland Security, 19,000 law enforcement agencies, and 8,000 private security firms who can greatly benefit from an injection of data-proven technology.
With a unique hardware-software Machine-as-a-Service (MaaS) business model, Knightscope, Inc. (NASDAQ:KSCP) generates its recurring revenue from a growing number of satisfied clients both in the public and private sector.
In short, Knightscope is a company that doesn’t fit into a box. There are no obvious comparables to what they are doing.
Knightscope, Inc. (NASDAQ:KSCP) also has a solid long-term and short-term plan in place to solidify its spot in the market.
- Sales Team: Recruit and train sales professionals
- Verticals: Focus on commercial real estate, hospitals, hotels, residential, manufacturing, logistics, casinos, corporate campuses and transportation
- Marketing: Continue using Robot Roadshow as a highly unique selling tool to place ASRs in front of prospective clients
- Technology: Back-end technology improvements focused on scaling
- FedRamp: Continue working towards targets ATO (Authority to Operate with the US Federal government
- Technology: Continue to invest in new product development focused on additional capabilities and form factors
- Acquisitions: Selectively explore possible target with unique technologies and/or teams
- Strategic Partnerships: Explore additional opportunities with InsureTech and PropTech firms
- Knightscope To Provide PENN Entertainment With Technology Services Across Its Portfolio
- NYPD Launches Knightscope Security Robot Service In Manhattan Subway
- Knightscope Robot Roadshow Makes 100th Landing And California Market Renews Contract For 5th Year
- Ascendiant Capital Markets Maintains Buy Rating For Knightscope
- Knightscope Building On Results To Deliver New Solutions For Parking And Public Safety On AWS
Machine-as-a-Service (MaaS) = Ongoing Recurring Revenues
As shown above, Knightscope, Inc. (NASDAQ:KSCP) has already proven a capability to generate millions in revenue from its business model.
The nationwide average for a police officer falls mostly between $57k and $67k,29 and fully-fringed is estimated to be up to $149k. 30
Using those metrics, budgeting for 24/7 patrol requires 4-8 humans for 1-2-up patrol, thus in many cases costing municipalities +$1M per year.
Knightscope’s (NASDAQ:KSCP) service has annual subscriptions at an effective price of approximately $0.75 to $9 per hour with an all-inclusive service including Deployment (needs assessment, virtual demo, site assessment, site survey, shipping, logistics, setup, configuration and training); Technology (Autonomous Security Robot (ASR), Knightscope Security Operations Center (KSOC) user interface, charging systems, and data storage).
A single K5 ASR can generate ~$309,700 of revenue over a 5-year period and is either paid up front by the client or financed by a funding partner.31
Total cash outflows over the period is ~($133,000) yielding a margin of $176,700 or 57% as an example.
The concept stands out, as it presents luxury automotive per-unit economics, with a Machine-as-a-Service (MaaS) business model, which is almost like the customer is buying a new Tesla every year.
On the surface, that may sound pricey to the client, but it’s potentially one of the most cost-effective ways for a user to provide security, especially since they run 24/7 (it takes four humans to do that), and be deployable both in indoor and outdoor settings.
Stacked and Growing Roster of Clients
Since the launch of its ASRs, Knightscope (NASDAQ:KSCP) has been working tirelessly to present this new technology to potential clients across the US, and its efforts are paying off immensely.
On December 13, Knightscope announced the largest single contract in the company’s history as well as two new contracts from cities in New York and Georgia, consisting of 12 K5 Autonomous Security Robots (ASRs), two K1 Blue Light Towers and two K1 Call Boxes.
New York and Georgia are expanding their communication capabilities with Knightscope K1 Blue Light Emergency Towers and Emergency Call Boxes, which use cellular and satellite communications with solar power to provide additional safety in remote locations. These newer, more advanced wireless systems will save end users money on both infrastructure and hardware costs, while improving reliability on a modern communication network.
Just one week earlier, Knightscope (NASDAQ:KSCP) announced three new contracts totaling 16 new machines. The contracts call for 13 new K1 Blue Light Towers and three K1 Retrofit Kits. Two of the new clients are colleges in Georgia and Texas, indicating that education is a crucial growth area for the company.
In fact, it’s really just been deal after deal for this company. In November, Knightscope announced it has secured five new contracts and deployed dozens of machines for clients, including a leading US-based casinos and gaming facilities operator, a Fortune 1000 hospitality company, a Fortune 500 consumer foods manufacturer, and a privately held multi-family housing developer with 25 properties in Texas.32
Some of Knightscope’s new clients include a global manufacturer and distributor of medical and laboratory products, two hotels, a sports complex in New York, a multi-family housing complex in Pennsylvania33 and a 41-machine contract with a University in New Jersey.34
And Knightscope’s market expansion continued later in the month, this time in the rapidly growing healthcare sector. On November 30, the company announced the receipt of five contracts totaling 22 new machines in the healthcare market across multiple US states for its Autonomous Security Robot (ASR) services.35 Clients include a hospital group in Minnesota and a healthcare and rehabilitation center in New York. These wins serve as a reminder of the need and desire to create a secure environment for the country’s healthcare providers and patients.
These new clients join an already impressive roster of top-tier clients like PG&E, which just recently doubled its order due to positive ROI.36
But perhaps the most important deal Knightscope (NASDAQ:KSCP) signed in the last month is the acquisition of CASE Emergency Systems37 and its flagship Blue Light Tower system – a high-visibility, solar-powered, weatherproof, wireless emergency phone designed to function in virtually every possible setting, including remote locations.38
CASE also comes equipped with an impressive roster of key clients, including the New York Police Department (NYPD), New York City Fire Department (FDNY), San Bernardino County Transportation Commission (SBCTC), San Luis Obispo Council of Governments (SLOCOG), Orange County Transportation Authority (OCTA) and Ventura County Transportation Commission (VCTC).
And this is just the beginning. Knightscope’s Robot Roadshow has been so successful at generating new clients that it’s led to millions of dollars in backlog orders for ASRs across the country.39
In order to better understand the potential for Knightscope’s (NASDAQ:KSCP) ASR technology, one must look at the case studies of their use in the field.
A perfect example of this comes from the City of Huntington Park in Los Angeles County, California.
The launch of the program caused quite a bit of media interest, given the novelty of the technology and the general public not yet used to seeing robots rolling about their community on patrol.
The program was an undeniable success, gaining the support of both the city and its local law enforcement.
“The K5 robot is having a positive impact on crime and nuisance activity at Salt Lake Park, which is reducing the instances of police activity at the park,” – City Manager, Ricardo Reyes, and Chief of Police, Cosme Lozano, in a statement written to local lawmakers in 2020
The numbers spoke for themselves, as the city witnessed double-digit improvements in key law enforcement areas, including calls for service, arrests, crime reports, and citations.
Upon review of these improvements, Huntington Park’s City Council unanimously voted 5-0 to approve a renewal of the service with an additional 2-year term in place.40
This wasn’t the only case of improvement.41
The security robots have proven their weight in gold, by providing all types of incredibly useful evidence in several cases, including against Armed Robbery, Auto Theft, Burglaries, Domestic Violence, Fire, Fraud, Hit and Run, a Sexual Predator, Shooting, Stolen Bikes, a Thief, Trespassing, Vandalism, and Vehicle Break-Ins.
As well the clientele of Knightscope has also reported back operational improvements in the areas of ASR usage, including BOLO (Be On the Lookout), Feeling of Safety, Incident Reduction, and Perimeter Expansion.
Since its inception, Knightscope has raised more than $120 million to build all of the technology from scratch. As of the time of its NASDAQ public listing (27 Jan 2022) Knightscope is backed by a strong following of over 35,000 investors.
Among that investor base, 57% is owned by individual investors, while individual insiders account for 32% of the company’s stockholders.42
Knightscope’s Expert Leadership Team
The same team that founded, funded, grew, and listed Knightscope, Inc. (NASDAQ:KSCP) over the last decade is leading the company today, and they plan to continue growing the company organically over the next two to three decades, while achieving their goal of making America safer. Among the talented roster, includes:
RECAP: 7 Reasons
To Put Knightscope, Inc. (NASDAQ:KSCP) On Your Watchlist
Huge Crime Prevention Market
Recurring Revenue Through MaaS Business Model
Growing Tech Portfolio
Persistent, Experienced Leadership Team
The autonomous security space is still in its infancy with Knightscope (NASDAQ:KSCP) positioning itself as the first mover. The problem of crime is not going away any time soon and this story is one to pay attention to.
Do your own due diligence on this startup that has taken the idea from the movies and created a real-life R2D2 security robot. Knightscope, Inc. (NASDAQ:KSCP) nearly a decade since its founding, and over 1.8 million hours in operation in the field, has the business model and technology to make a big impact on society.