EVLV - Earnings call transcript Q2 2021 | Evolv Technologies Holdings, Inc.

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Operator

Good afternoon and welcome to the Evolv Second Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

As a reminder, this conference is being recorded. I would like to now turn the conference over to our host, Vice President of Investor Relations of Evolv Technology, Mr. Norris. Brian ahead. go Please

Brian Norris

This a news our second good press here section And our today Peter as the Financial outlets business as and quarter available is of Officer; and market announcing This call. IR XXXX. Chief to I’m and well Officer. Chief for our release joined by release our Faubert, on after afternoon, issued you, the welcome close, everyone. the Executive afternoon results our Thank we Peter outlook all website. major on George,

August those prospectus may our X-K without statements factors results in risk limitation. from statement uncertainties a forward-looking risks in materially differ of The U.S. the XXXX XXXX, which the statements to we of and Act During as forward-looking made make a as of including proxy of relate control. Reform provisions beyond our today’s XX, included with call, and number of Private updated XXXX. Securities periodic will Section to the our the XXXX, filed SEC All XXA forward-looking statements XXXX, the of financial the and on of Securities Litigation statements of Actual the and views views SEC. or risks, within The are result and today of Act Exchange some and Act Form are respectively, Harbor XXXX, expectations, meaning of filings material assumptions, as XX, July XX, Securities forward-looking subject June XXE well events. Section future our Safe our with of events and current of as uncertainties other that represent

in circumstances. the X-XXX-XXX-XXXX can obligation or of webcast by will Relations the replay law, the two http://ir.evolvtechnology.com. cannot A the code dialing callers or we any access expectations will future replay forward-looking are available for will using them by results, update disclaim achieved as events weeks which the call reflected be events call or reflected by occur. activity, and of at levels we future the statements on website be required international and to Investor and forward-looking circumstances Except applicable company’s reflect and believe to statements accessing XXXXXXX Although, in reasonable, today’s performance or guarantee X-XXX-XXX-XXXX

Peter, conferences, I over other Before Relations active hand public IR Investor the operate to to Street and that events. a as and welcome forward the Wall to non-deal look call we roadshows like to plan company. state I’d with We to attend program the community opportunity engaging an

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Peter George

Thanks, And thank joining Good Technology, everyone. the Evolv security I’m company. afternoon, Peter us George, Brian. of today. CEO human you for

markets hosting delighted expressed call public a and on existing following on what journey from into joining our our July first company believe launch conference are by here public us we to a We have as be investors support our ahead. today, be the confidence to We new the XX. appreciate our the earnings shareholders great

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conditions industries. across and Our deployed types is all offering now to of customers

different Evolv than product, market any flagship fundamentally Express solution in today. Our the other is

times can can to of of First hard screen and it’s hour. AI And under more and item dozens in discriminate that’s per it a Using like sensors, than XX between a X,XXX people traditional firearm faster than dozens like personal a metal all, phone milliseconds. do. XXX and and detectors, incredibly weapon a

other sophisticated add in our AI to our operators COVID-XX elevated real-time Space Chicago adoption, to every venue customers data to the and pandemic customer software, already City reopening many of safe We And to detect day The Football. forced League is in temperature the Brooklyn the like Lincoln Our a visitor the We quarter are course and the facilities. Winds at additions The body like Georgia customer Las Six the were continue features, of Butler in every more every The platform solutions environment. our again, support accelerate second believe customer is Fox to threat every Bowl validation has Vegas. Manchester because Aquarium, of detection big technology are screened. Theatre, widening models mode the Four had and learning privileged our exciting turn key Center, Casino, Soccer’s the Museum, enhancements day. Needle, their innovative as the and machine becoming new University, Theatre, and we Crew, new to National Flags, updates real have to can wins. in second strong of technology multi-cloud to iconic Cubs quarter which customers in and deliver the those our Paramount These Major We to very with wins WWII with

do they reasons. three for it’s again, why or choose time more and So of us? Time compelling one

dramatically venues ever, safer security, customers’ our which First, makes than ever improved we before. delivered

deliver down, their the without experience customers superior a as our a items personal we line. forming without can of customers’ single without file Second, and contact slowing ever visitor ever close venue enter divesting

In breaking XX% venue efficiencies drives ability our And saving up they that in enter cost deliver fact, the operational without operators. stride. for significant to third,

experiences reclaim driving space screen points. to their by elements to competitive which revenue Columbus bake-off for Field visitor the partners the fans most also and Major due our experience in activities. also generating experience looking Crew’s physical world-class Lower.com We revenue walk running after stadium operators, design its Field. speed for advanced more stadium can faster, state-of-the-art experience safety vision the of more allowing for the And security Evolv Crew required fans launched for reduced recently Soccer customers the footprint concessions crucial and stadium, the fans, provide and but to friction League and Lower.com was opportunities a new to stadium secure, fan to They they’re for bring selected screening. of the best-in-class ball technologically stadium all move technology, The were using turn the to through their enter for and to entry the the is a with only their of Not a and goal Crew. people all was around drives safely. to were The the generating free which life. is

that smooth systems management our screening slow bottoms TAM process, These for venue the patrons. entertainment, billion have unwanted technology are in with cultural focus, near-term. on And help rather Another but realizing, achieve to They a for Patron vertical we’ve today their customers be and keeping example deploying and include not surprise California. detection and conservative, worship, making government, our struggled estimate the global markets; TAM in verticals, performing focused in we specific it’s having that of $XX been buildings. the of to access the markets are value size manufacturing, is This hospitality arts identify of sporting, distribution large, that When consider you casinos, they annually. we that goals risks is hospitals, warehouse, be now of very the each Evolv Paramount effective venues Oakland, market out that or these the weapons than houses and education, TAM AI-based cumbersome. safety finally, has only always Theatre this limited process where is optimal office no a to in and institutions, type opportunity every referenceable XX those we to for customers. tourist are up methods consider estimate or the could while them ingress and

over total we’ve digital at of site As opportunity $XX nearly billion thresholds each reoccurring We’ve year per a a result, assumed a thresholds prospect locations. these market. $XX,XXX driving and identified available per revenue XXX,XXX XXX,XXX

based today, at penetration market a and leader which XXX,XXX This today the would XX, a with represents candidates. billion. digital value systems Yet, AI we’ve threshold in We’re weapons June of and zero rate XXXX. to XXX service as market identified round screening about $XX

via delivered platform democratizing this based in with are We security detection SaaS uniquely model. an powerful market AI weapons

looking Now so why opportunity we’re exploring ahead. forward great this to

We pronged this strategy growth address have three a to opportunity.

land our first focused have is performing The where entertainment, center industrial arts six today, parks, sports. and on key government expand finally, and workplaces, and municipal theme tourist markets professional initiative sites, presence we

is to opportunity. build revenue reoccurring we from what going We’re beachheads believe $XXX million annual to these capture today

into like in expand international adjacent expand opportunities targeted hospitals poor estimate and international markets into potential. we’ll $XXX markets, million markets. revenue adjacent Second, represent vertical and vertical and annual education reoccurring these and We incremental an

Third, expanding channel through focus we’re going to on partners. our

features our be value-added Express their This to East Motorola sales We comprehensive partnership systems. have all announced XX and progress Europe, the as premium strategic their platform Motorola under recently offering with with global Solutions We the Middle through partnership authorized is Asia, our in we reselling Solutions. Africa fact, security good and and channel country integrated unique and distributors today, are force a making a partners. logo throughout will in sell offering Motorola

promise our to We are the combined forward growth. partnerships of and encouraged the by look solutions

together. the reach explore other fully We to expansion. updating and as also channel the to We and as market strength leverage on we you Johnson of look on on Stanley Black plan international progress markets partners continue and such & our to those Decker forward the Controls to our front capitalize international

results we So pleased with are public and in a QX. the company, start delivered summary, record strong in our as we

momentum of value able the in of roster the markets customers. solid deliver recognition to see by expanding growing to our continue We fueled key to we’re our

as positions for We’re by on believe our growth and to plans the in we execute encouraged strong start which QX, XXXX XXXX. well

our to our and to balance of turn So results let more the it financial me Faubert the year. detail over Peter that, in review outlook for Peter? with

Peter Faubert

our cover the good quarter and the Today Peter, the for outlook Thanks, afternoon, I’ll for second everyone. balance the financial of year. results and

which and maintenance the non-cancelable These contracts to and a inclusive the and Let from or subscription model me our month. and generally sale costs take Customers quick. revenue service between of upfront our us $X,XXX advance, We subscription a customers by arrangements, to We from require range a as moment customer into revenue review bill low very fees costs XX-month our annually support. business allows products security of as subscription SaaS contracts. enter $X,XXX drivers. generate in generally recover

Our over a and subscription into the software single arrangements basis combined XX-month the value the hardware total we and amortize random on months. a contract XX contract,

our we revenue remainder customer elect XX-month we consists any up rather of impact occasionally costs of and may and the and purchases the continuing those upfront, subscription year-over-year, P&L term the growth at primarily In Subscription that Evolv the costs model chose activation the year, second of in one subscription result XX of term. Service year margin an enter reflecting and With for hardware contract, we new vertical customer our review reflecting XXX% the for in to product. may orders as volume the the hardware direct quarter million, approximately one-time margin hardware additions. additions lower reflecting XXX% revenue hardware offset new then service. with second year-over-year, the margin purchase followed over XXX% books positioned TCV total to by to gross In approaching up $X.X again reduction is was activation, in context, or was reflecting material the more currently margin second $XX,XXX time purchase product was in new on in quarter. a than to the increase revenue subscription. of strong scenario, very costs. associated upfront, in and reflecting the given hardware was we professional Gross This incur into year-over-year, to We see year-over-year, by the gross of lower well the the have the I’ll believe from customers the first the are on through four-year costs an of across and the Product customer ratably $XX.X the that also selected customer markets. incorporate at margin who product in months XX% to case, this related in quarter, Sometimes that XXX% million, XX.X%, core installations. the have agreement the over This non-cancelable. components. strong of model, half XXXX, additions revenue new customer cost then second our quarter compared the services We more contract amortizing of time the the last expanded tone that up The high that the arrangement quarter and primarily $X.X of approximately $X.X purchase recognize was to Total strong reflecting for customers which software investment of our expansion bring to strong up related was systems of was a value revenue growth into revenue, million which gross training expanded million, results. and XXXX. Express of second customers drive $XXX,XXX, partially of continue revenue, would which engineering cohorts software.

to due believe further to range expect units margins to remain XXXX increase In as our drive positioned addition, and volumes. to our XX% we well of to purchasing we leverage and supply XX% the gain from in increase due Total was most we production chain ramping additions gross company, exit The technical headcount primary the second the driver for $X.X team. XX% revenue XXXX. across well the million up engineering quarter, to notably as our into of sales, year-over-year. were generating in expenses operating talent as We

In quarter exited XX increase the offering. addition, well XX, investment We XXXX. expenses and an public at initiatives, second XXX saw compared in approximately certain programs employees we related employees, the for approximately to March as to as with marketing

quarter from year. $X last operations compared the to the of second million loss second $X.X during in Our was million quarter,

loss per ago or million, $X.XX the Finally, net $X.X share in period. compared $XX.X our year per to million, cents $X.XX share was or

sheet. quarter with $X.X Now cash remind about as company ended total our that million. and Subsequent we’re the our they equivalents how quarter of We a represent gross I’ll thinking few was combination the with proceeds cash turning at XXXX. $XX only compared the I’ll to are year. of $XXX million to end, the of December brought views looking investment forward hold XX, on close million comments these the today. with and you remainder balance which in to new completed, statements

Our which in would for revenue expectations million $XX of result to growth about range million $XX current from in year-over-year. XXX% XXXX,

of little As that might normal activity otherwise level had in a I faster we revenue than we sequential drove higher QX mentioned, a purchase growth have seen. than

moderate bit quarters Peter third we’re growth Further, contract that expect course total that $XX verticals We from $XX both but to or million of XXXX. with may in in to still the from much coming that TCV discussed fourth of of sequential of modeling this key and million the range earlier. value we expect QX, XXXX a

average our expect based of shares range a to XX% in XX to loss outstanding. share basis be on we XX% net million the on GAAP approximately per of Finally, weighted

plans We half in So back with strong our of second the feel pleased good the summary, we’re quarter our about for results. year.

release turn thoughts in our XXXX Brian. earnings to that, over back in November. on We I’ll the conference early call third during provide call expect preliminary quarter with to And

Brian Norris

ask up call follow-up. for time, and AT&T At the themselves question one to Q&A. open turn back Again, call like Thank limit to you, Peter. to I’d going we’re the participants one to this to over

Operator

the ahead. go comes Please Your line Instructions] line [indiscernible] open. Thank our is And you. first of [Operator from question

Unidentified Analyst

your Motorola two level afternoon, you provide can this associated Thank Congrats entity. TCV Peter with in the – public partnership you. – we as in or regard? STANLEY context first at two Peter investors quarterly your sort with of million $XX Faubert, TCV is Peter around a your some quarter Good partners what gentlemen. of of and well, George as as us color on look and the of that

Peter George

is this to nice you. hear Peter, Hey, from

Unidentified Analyst

Peter. Hi,

Peter George

your good for question. Thanks

and XX% in you and through direct. out expect in the year through Analysts remember channel change of the XX% that expect come will may direct call we sales our then on reverse to XX% the later we to So in fact come years this channel and last the then XX%

So, QX, we first have there’s we as going registration, I of that mix we registration strategy. company value year channel of had about proposition this we’ll lot process you a to XXXX. look making tell a in enablement program a on meeting understand the a sure talk I’m exit revenue activation months, STANLEY from go channel. will in way. deal have very when we’ve and pipeline pipeline about it both feel opportunities last and today coming our explained a contributed very we after go-to-market channel specifically big deal channel of though, exceeding our partner those have and the going to or at or good we we very strategy, And Motorola as friendly today. not active to exit And for the couple very, and that that companies that in And

Unidentified Analyst

chain great to but guys could think constraints current is you it. impact, about seen color. want a the escalating, are just second maybe times, you quarter any be how Delta it you but Thank there’s Understood, since numbers actually for ended, And no Thank as you. see the supply appear know, would this variant that.

Peter Faubert

Faubert. Peter is this Hey,

now, way items. we’re We to Right are the similar obviously that time pressure, lead supply everybody we’re identifying else. combating long saying is, chain

that We’re materials advance. working make vendors for placing we’re sure with orders are lead and our long to time in those buying way raw we’re

beyond. sure So, down least make let’s next, those materials deliverables we raw to the coming And say hit make keeping pipe. in investments and quarters to the we’re we’re we’re see our four to using for inventory our where customers, raw at capital materials to able in problems

Operator

[Operator a go Your line ahead. is you. from our And of Thank question Securities] next comes Latimore [Northland Instructions] open. Please line Mike

Mike Latimore

Excellent, earnings great you see thanks. Yes. on an Congratulations call. on guys to the quarter,

better I at have than here, verticals several So, performing of bit start target the little guess of worse you what verticals target or a year? a thinking the the bit you little any were

Peter George

is Peter. this Michael, Hey,

So, are I we verticals those earnings on in you focused remember target mentioned report. that this six them

we really, couple quite marketing of are I of uptake, that security verticals last having two mentioned they’re a casinos organization marketing All getting in world. higher also had we out. that earlier those reach performing the marketing talented expected. and value are And the to pulled have cyber a pipeline we’re professional well, as done that verticals in And makers doing but really I are quarters. sure those other think demand and We’ve particularly to casinos. really And in And proposition from all that and using of the sports out rest ABM well our make those in the decision verticals. digital generating are

translating into it’s pipeline, also opportunities excavating we business, anticipated. both in and the So the but verticals the in

Mike Latimore

for gave year? have? hired? the you headcount, kind you plans an you’ve you many And year how Maybe can know salespeople guess, bit then has of sales cycle How how you this and transparent talk a little many I about Great. employee the

Peter George

Yes.

the So let’s sales start with cycle.

a seen plan, we’ve accelerated. salesperson, from to on we’re and seeing cycle being third months, XX our productive the what we in them so we Right But don’t escalated So, days. new when sales to bring five three months expect our until quarter. contract that be now

made actually of for new pipeline and a contribution we’ve part big quota had people, have January first the carrying in a or QX. people of QX So, a in that sales lot February joined

really So that’s going well.

those people people is the carrying to the to the half people A sales our carrying and opportunity the the our in year. continue first plan In of also do are quote Again, half customers, quota second that the continue so in sure we to existing plans technology of to, people and market the delight XXXX. to deploy quota but XX leading now on Our base. the make the of to new the that sales capture to our about of we we have to aggressively the lot year, organization were and this invest company. cover customer with enough street, expand can same rest of added

So we XXXX. we’re meet aggressive year. an going we’re, have to beat or this before exit growth plan that we And

Operator

Thank the Reback you. [Operator And our comes Instructions] line & of Company]. question Nicolaus Brad [Stifel, next from

line Your is open. Please go ahead.

Brad Reback

Great. Thanks very multi into little upfront much. What subscription? to hardware the just Can it dig you guys bit? buy versus maybe purchasing customer year a a motivates over,

Peter Faubert

a through in as in with margin, noted that a year purchase it’s still of you’ve higher Hey, four And the Market a already the We’ve the on budget a we But CapEx those Brad, that at professional recurring from volume that four of remarks, subscription. comes own those Peter customers is lot the up guys have equipment. revenue lot great Faubert. comes two our a the seen driving which the year. That’s taken cash are deals bigger as of the obviously, years expense because subscription. really reminder, purchase opt question. the four and front of spend And for rather recognize And spend. sports. actually I first A they’d subscription. much hardware higher years to

Brad Reback

cap mandates solution? you for, sell ideal this – to of That’s And who’s are What sales then side. looking type great. on person one follow-up an the flow

Peter George

They people with a track we’re world, experience from record. great executive, enterprise really security right. from and sales know successful video analytics. actually the know also space, A the the VMS cyber physical And world, they getting

the world, three have from reps to quickly. they’re had them channel with us and the they we’ve already pretty activate join with So partner four able that or relationships and channel,

when We are police that, that also, and former that sell from the have we’re because world, oftentimes Secret as officers, safety find we formerly CIA, network. they we like we also built-in Services somebody a – people to finding

from tissue from then tight the physical in people of buckets, cybersecurity, the sales for from those a coming So have right security. security makers the they’re are normally and safety enterprise cities from physical world, VMS, that safety decision who three connective people world

Brian Norris

Brad, up did follow question? have you a

Operator

And [Operator sir, questions. further time, at this Instructions] you. have Thank we no

Brian Norris

appreciate Really Terrific. that.

wraps work to a as session. We very seeing much you for that Thank So period we’re technical as to as many the during forward bearing at few call. you possible us Thank beginning through of appreciate of that. the with the the up embark Q&A look outreach we things about you upon.

let turn back So Peter to with close that, call to over George call. me today’s the

Peter George

you, Yes. we’re to believe Thanks, Express. been opportunity unpenetrated large Brian. thank here time really well on for joining today. at We exciting with a capitalize Evolv Evolv. Again, positioned It’s a everyone and market

to everyone. interest you with when night, thrilled We’re support be the Good in appreciate your company. we and

Operator

event Ladies services. for for that end your and and gentlemen, does conference today. for using AT&T Thank you your participation conferencing and

disconnect. now may You

Evolv Technologies (EVLV) 17 Aug 212021 Q2 Earnings call transcript