EVLV - Earnings call transcript Q1 2024 | Evolv Technologies Holdings, Inc.

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Operator

Thank you for standing by, ladies and gentlemen, and welcome to the Evolv Technologies First Quarter Earnings Call. [Operator Instructions] As a reminder, today's conference is being recorded.I'd now like to turn the conference over to Senior Vice President of Finance and Investor Relations for Evolv Technologies, Brian Norris.

Brian Norris

Thank you, Ryan, and good afternoon, everyone, and welcome to the call. I'm joined here today by Peter George, our President and Chief Executive Officer; and Mark Donohue, our Chief Financial Officer.This afternoon, after the market closed, we issued a press release announcing our first quarter 2024 results and our business outlook for the remainder of the year. Press release has been furnished with the SEC and is also available on the IR section of our website.During today's call, we will make forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. our our not and our customers, limited growth outlook. financial to events, of future demand relate and to and but growth meet and including, to, results, our for statements our current gain offerings views expectations future operations, ability products These to for and new ability potential statements business regarding our some to of are forward-looking subject material risks, and control. statements are which assumptions, beyond our All uncertainties materially from including, and events forward-looking for XX, financial the Form risk ended or annual December on the months may differ the of XX-Q XXXX, for XX-K caption the uncertainties, Actual of SEC report because today. March and earlier year with factors the number our without those quarterly a Factors under XX, filed our XX, XXXX, results statements X report the in with Form XXXX, ended Risk on SEC set risks forth filed on February limitation, made will are although will statements we the circumstances our The forward-looking the performance XXXX, May guarantee future these that in statements or results, reflected today of as statements and that reflected forward-looking or expectations we believe be X, cannot reasonable, achieved events views our occur. in represent provide will be include as Except today events which insights may non-GAAP obligation them investors. disclaim circumstances.Our financial for any or to believe also law, update we commentary we additional required by applicable future to measures, reflect information from principles. accepted in generally as These accordance accounting not measures a substitute in should prepared for financial considered or be isolation with per share. operating income, margin, gross and These adjusted adjusted expenses, adjusted profit, measures earnings include adjusted gross operating adjusted EBITDA, diluted adjusted earnings adjusted measures can in differ companies. non-GAAP from comparable titled these GAAP these presented press issued that metrics similarly of our be most directly release between other measures the note today.Please by Reconciliations may found definition our and measures

number progress are of metrics is I'd investors or key we which deployment subscriptions, annual over a Peter? total believe discussing understanding as recurring business.With obligation, each performance helpful such RPO, we or the activity making ARR, the be that, remaining turn and of Peter. as will to call We to to revenue, like in

Peter George

going you, for customer in walk few the in provide acquisition Thank through will new front million, outlook.Revenue on Evolv through and our the results our the a financial today. seeing our reflecting continued partners on minutes base, and channel a growth $XX.X I'm everyone, thanks, and installed results, spend then expansion with the QX our Mark XX% brief joining activity, we're first to us customer trends Brian, update and business. was Express. year-over-year, in then traction strong our quarter regulatory from that of up walk subscriptions

support a revenue.We multiyear to a like support XX% growth about our central the excludes just and -- to awareness of XXX the Evolv ARR XX compared attributable in Department Detroit last of were and our largely markets. the we we shipped. first QX Evolv sent including in This began, none was in systems improved pushed XX customers from of and activated rentals our Express, XX% reoccurring quarter. the Again, Notably, QX raise the at of the our transition deployed late-stage margin quarter year-over-year gross number the unit year the of Rentals certain XXX in year to level the place year.We these to million Since on this now to compared for $XX in last and event of largest related to from of taking direct to sales, into welcomed France units new of shift presence reflects in about QX Our XX% the year. further is than which Technology. win of Police higher a was revenue lighter onetime ago. college rate revenue were from working units these sporting expanded we we weeks draft. about XX% the XX year, grew figure key geography to of to is in world's events, in across QX final Reoccurring end the serve high Adjusted which count.While last XX% were in quarter. overall new last transition the customers to annual of vertical major product Evolv we've and anticipating Express the XXXX. subscription QX of quarter QX away rate XX% sequentially included accelerate description deals were model second football year introduced in XX% to in the over XX% distribution subscriptions

our to to by in months QX X through the months QX about of XXXX. slanted to, and Some previous inquiries X of from they things, media worked make diligence their average among analysis way sales the more we buying discussed these in related cycle have opportunities select satisfy regulatory were as are as compared quarter lengthened due that on questions the the Customers XX% completed recently outlets of requirements revealed delayed to the coverage journey. of asking other XXXX calls.Our incremental customers

that are or our customers going decision. process to simply through We rush not that

in and outcomes closed several news We deals strong that have already start these of decisions. to have good off is to QX, second the a in of lot a The the here we're those of confidence quarter.

uncertainty what have our to their inquiry. invited the possible SEC, responsive working also been deal by still It does with not marketplace. cycle, there lengthened to FTC made the in which information stages.So it has, opportunities We're term to their impacting any, to not be win to is bit but little since what as rate. While in regulatory their challenging more work less in appear of in does sales uncertain. overhang its it provided a earliest continue the slippage the complete We has our on however, work is, It provide and we forecasts they we're to this the impact, mean believe has because work participate a and nature, documentation is all as its if with near clear business? to

For reaching that second XXXX. prudent we of think by reason, it's said, to the our bit adjusted a in remain That be to outlook. EBITDA quarter annual cautious committed more we positive

We expecting management are advanced our we're data-driven the commitment leverage across we're profitability expense implementing from with maintaining prudent and the company. the methodologies to

our we leader. several marketing the senior individuals will or the softer strong partner Detect, to a new We to this pleased Chief awareness our restructuring overall a professionals new than had great the share progress Commercial Chief to demand interest our profitability.I a making the to to senior are last in to Gun Evolv identified venue. So sales on scale with expected offering and detect new believe optimizing and new to seeing including that around generation customer we're previously X other motion is newer a contributed gaps in and designed of the we recall we sales We're report in Officer updates bought channel Visual in levels to guns stretch year. go-to-market board improve did and Officer, team that the our few across execution want business.We brandished which efforts, Marketing on effectiveness business. address final start months, Investors the up-leveling in process, in channel brand

we the Parag labs. the We and product extending our Staying this to digital markets. capabilities R&D our on solution very team on the will in customers' Evolv new ecosystem be some which innovation demand continue These and our will on are seeing vertical -- and mission. front, mix of new interesting addressing for in a markets, across products, needs Mike, our working vertical both provide physical, are multiple additional initiatives

be Over a sales geographies announcement most to saw go-to-market a particularly XX% with lifetime whom activity we strong the Motorola they units We We expanding make of These them partners expect to new existing activity customers that the QX. create major product XXXX. of I reach new since QX environments. tuned extend with before and customers, partners. end value expect these our Stay for the channel sold or us our that.Moving booked our where helping are partners the had to strong year. to subscription-based presence. and our safer of with into have or verticals came our through in certain products of

other in with partners regional had central We first Johnson scale plans will Technology to expect Group meaningful of expected, than Security. confidence a These contract. value to of like Nothing see units fact customers technology our to and relationships quarter of to strong for up our Alliance realize over of time.We the come set and more first and continue the dozens our Securitas renewing did XXXX. Stone Controls, over and as to XX% renewal be products our activity our Motorola, units speaks company the And that the in subscription in renew.

of and have QX These have can addition pleased of we compared validation our of are XX% We're existing from XX% and in technology in to very In that that to QX customers and customers contribution that made decision provide rates, was bookings thoroughly trust from to confidence. to strong XXXX. renewal existing tested our ARR customers customer believe report deployed expand. booked the

that, little education, where seeing to seasonality validation prior a strong ARR end welcomed in XX We we In turn driver indicate we new in bit the So in education quarters. we're market. of in the there.I deals QX, believe have has a want did our with trends which customers. starting education, any may X-figure markets, not been that to

more in make in purchasing We states deployments districts a operating technology Maryland School a more are finding our sources. for multiple embedded ESSER the larger security the and prioritize creative the to onetime school fund later also opposed change are their preparation a budgets Evolv ways officials standard as finding funding and to year. using ways solution they Kentucky, of to this way of brand.School We're expiration seeing districts motion are quarters. school funding our in capital obvious funding. solution can This boards their increasingly projects seeing like over as in fund absence district phased shift

So ARR winning deployed quarter. units or show booked they do up while we a in always as opportunities, are not single large

We're XXXX. to latter of the XX school XXX We have buildings. deals of XXX in for significant several the school country deployed potentially the in be the districts proud in in education over half largest pipeline

Dallas screenings XXXX nationwide. of hospital win school XX and surged We teams teams home We're QX with vertical excited a significant new about visitor achieved a last landscape. wins QX to fans of like in key care are substantial us, layered across we're update Daily dozen in in to leagues. deploying during teams tripled for system market Trail professional care is level, few the competitive now beginning detection all market weapons and XXX,XXX the proud is visitor gain care welcome year.Professional customers added. there XXXX hospital for to board.Finally, in to nearly Cowboys. health Hornets, facilities the to health XXX,XXX XXX,XXX Rays nearly of sports players include about customers. Portland like We're XXX I'd be operational the that health robust exciting brief at be on a high in last Recent have continues buildings a an QX to for at their the We exceptionally remained from are with sports in Bay of over the rate and daily AT&T and Our major on QX Stadium, security provide believe Charlotte screenings AI-based to an and XXX,XXX compared market traction QX Blazers, the which a to part these year.Our Tampa X development.

the screen deployment market. base leadership layered part units detection Evolv critical every a single and used is day. Express to in security Our extensive our is X.X customer of million solidify solution and of weapons a position widespread AI-based visitors

than use single XXX to more on firearms customers tag every Our day. Express average Evolv XXX-plus

more our select is due light, integration Evolv front which market a into has we to infrastructure players, capabilities, user to capabilities. improvements that customers experience, We not software and to Express the work, broader to we've the recently, for detection While securing cheaper, for place witnessing things upgrades.More through head-to-head a for end but limited continue strong and with more a future us, simplistic the to look calls.Before more products system, uninformatic security focus ongoing on sports to in lost continuous back been more and previously alerting of but I solution venues about opportunities. multiple a offers handing wins, a democratize room with X-quarter mission, to had and reengaging education world our with previous only at and seeing recent to over in existing shift play. deployments X Evolv. their forward of lost We've we're green opt enjoyable instances superior professional might Initially, replacing red opportunities This revisitation not its least we're our sharing light and competitive close making want Mark, progress safer to the on security, live, learn phenomenon. is see

through turn Mark? will our advancing model of outlook. to to forward and over to these me on all mission things who and We Mark, update innovate the financial our investors We continue XX. on deliver simultaneously will on Rule our and our goals.With operating to to long-term you let results look while that, take continuing

Mark Donohue

our $XX.X our XXXX, afternoon, was performance recurring as outlook.As and Thanks, total reflecting Peter growth at $X.X of good quarter was or XX, million to quarter XX% XXXX, QX recurring first ARR, in million, Peter, million 'XX.Remaining more in revenue year-over-year. walk growth the of and $XX.X obligation, XX% Annual XXXX million, revenue first review through the revenue, first $XXX our of and note, revenue XX% about of was Of mentioned, or Total during results sequentially. $XX was up reflecting XXX% of XX% in to recurring of up XX, 'XX March year-over-year. detail then going I'm quarter was March compared year-over-year. in everyone. XXXX, million, to RPO, year-over-year X% QX compared XX%

prior statements through first with growth of in there quarter running calls, as As expect implementation we've and to on RPO year. model.Adjusted in to first our the margin, was lower distributor compared the XXXX XX% less excludes we rate the investors product quarter other stock-based of onetime the told the of attenuate is revenue financial of subscription gross expenses, compensation in XX% last which margin

and were gross and model equipment $XX.X transition in $XX subscription restricted and XXXX. of we quarter margin other $XX.X loss compensation, inventory through in as in primarily profit margin quarter improved pure our stock-based distribution and million negative certain impairment of significant to Our reflects our newer for compared operating onetime continued year. inventory build This was which stock-based reflects prepared cash to cash, both higher million revenue of quarter $XX.X million our research sheet. comment $XXX both as EBITDA, recurring of actual million is due to also streams, particularly primarily our management.Turning dedicated development. expense in first That equipment. cash compared in expenses, excludes The other on the to Express balance at which the and The the transition model.Adjusted million revenue-generating onetime expenses, QX to the plant system. inventory the gross sheet first resources to the subscription property, of new last primarily increase loss, the well excludes We first and quarter million of sequentially negative our year. payroll This securities year-over-year reflects to in items, Adjusted found and the positions as stock-based tax end the compensation ended marketable with across last onetime million $XX.X next-generation prudent at start on expenses, we million which $XX.X and year.Adjusted to in increase gross strong headcount balance last other in reflects year. investments expansion business, is equivalents, the and was compensation, the to compared and $XX.X a excludes noncash compared charges

last also and the shared PP&E the XXXX to with to and of inventory. believe quarter lesser our in model have million the our call February, cash clear, ending comments want for be reflects that we of outlook. earnings investors FTC our undeployed in for SEC In changes point the demand close thoughts fact, in because we payments.I strategically over environment during usage reached now for was inventory changed. will our the To has be the a certain year. That a To capital the high we for extent, rest few support the we on and that depleting our assumed $XX we year, subscription of no about inquiries. significant assumption we of outlook cash pure When told timing the

the among Some opportunities previous coverage customers have related discussed requirements these the on have and to, incremental regulatory been other work select inquiries delayed as calls. outlets media diligence to due from satisfy slanted things, we

we're focus to our are In brand generation win deals up raising channel interim, and going sales awareness, rates While close. we program. to execution, improving year-over-year, demand to longer see partner the taking continue driving on our optimizing

these cycle X completed XXXX. quarter outlook.Our recently we're of our in While matters revealed resolve, cautious QX to lengthened months be in compared to more QX our XX% months near-term analysis in of to that the XXXX of X going sales average about

$XXX We we of about $XXX previous We year million about of of $XXX of compared our million compared XX% $XXX year-over-year. to to about reflects are XX% million modeling now growth to exit million. estimate full reflects of $XXX can about year-over-year. estimate now revenues of previous million. growth This with XXXX our believe between This ARR

And half to I'll adjusted can deliver our for we call of to EBITDA remain reaffirming EBITDA adjusted year positive on over year full that in are the the XX% get in full We track are back XX%. least in first belief estimate that, further, at of gross we reaffirming Brian. our turn improvements XXXX, adjusted of margin and to we about believe we XXXX.With

Brian Norris

we're the one participants question follow-up. open to ask to limit call one like I'd going time, and Q&A. this to up to At Again, Mark. themselves Thanks, for

Operator

Northland Mike the from will [Operator Instructions] with Our question Latimore first Capital. of line come

Unknown Analyst

on Aditya you many salespeople And how of ] the year? have number hired salespeople what have? of you you Latimore. Mike behalf [ is tell Could is this This me total

Brian Norris

to just the that This I sure Was how do the Norris. it is make we quota-carrying folks many is question. want Brian question, that I salespeople now? got And have?

Unknown Analyst

Yes.

Brian Norris

is about the since year. is we XX have unchanged executives, So to end that last answer question sales the of which quota-carrying relatively

Unknown Analyst

on Got we industrial coming you is? industrial good All warehouse a could see of bookings amount also, how color the from us warehouse? give right. Do category some And it. the

Peter George

go top we We is but is for in going We're of vertical verticals. big, Obviously, time a beginning market over verticals is X warehouse big it the orientation, the just Yes. company. care, to one industrial can the on how which be to health one. very think be industrial education warehouses

So it's still days, good make we'll year, year confident next this progress that early both there. but we're and

Brian Norris

Perfect. question, for ready we're Operator, please. the next

Operator

next the Knoblauch. the And Brett of line question from comes

Brett Knoblauch

new which we just X I could Maybe suggest units to that guidance. need over million the is last year what I expecting? from the to you that low of that my obviously bit if from maybe point confident the installs? guess Or to year. QX is be how is should you full down get a X,XXX that kind are to add math start But $XXX ARR, on guess maybe we quarters, good remaining extent,

Mark Donohue

mean, is for This a we feel Look, Donohue. QX Brett. point. is quarter seasonally We do. I think I do are low we at Yes, this a We us. low Mark for quarter. Thanks. like

months in in, I from frame. April out of saw the deals, X some which gone to actually think the months the we X.X have coming of extensions time

and a confidence tick up that we're some give to you're going right. starting said, us QX. So That into bunch see

X,XXX more with we the the cycle, been going -- -- we probably of buying the a to X,XXX some work to. with customers cycle used range as get on them just It's the going and the well, as X,XXX-unit this it in and and to of overhang through for they're or phone we've conversations good through.We've extensions we had year go sales now time the I that regulatory we're conversations than to XX,XX- think kind the a for taking do often that getting year, little looking when I think we're bit close. their through

that overall rates win our QX we're -- were in had we XX% invited for fact, the about to. deals In

this due right we're overhang going the, So It's just we're that dealing done. little slower of with. bit still media slanted getting and a to regulatory some say, I now would

Brett Knoblauch

it the week And time Awesome. I -- there there and last was within hospital then and there. it hospital sales segment, I seamless. the a guess new curious month, second which the one to was a last And unit very went seeing I specific board? I cycles. to just the was the went Or over market? on Is end you was that are across

Peter George

been about cycle it's in they say end Health would education because up longer X is across board. I sales impacts The the longer actually of anyway. have months. still -- Yes. care being

extraordinary deals won On relates XXX% to side, close had we an to rate. as were health the positive quarter that care We of we in win it in. the

we it first, in in, their first the system were normally, really, the said hospital vertical our for in when earlier, end care. of customers buildings XXX finding now. we're in things before. see important in really we test a they'll XX% violence up in, workplace of is And having a that days they system early right the happening a We thought As never as POC represents coming that It at us. they and health then do put

to hard get out. it's the back system So

a double on. down hospitals we're is place think we continue So going to to

Brian Norris

we're to Yes. sales see Brett, cycles the add also that I'd level. hospital that, at system only starting engage to

local So Is Today, level. follow-up questions difference opportunities much starting were a year there, the that's see emerge. at there from we Brett? when hospital a to months selling XX ago we're or bigger any

Brett Knoblauch

Maybe just one different a on topic.

particular? any system. talk City in And New and your you speech subways talking ago, I conference standing a a there to conference view gave he Mayor and -- about on areas subway York United a how Could month was about about safety next where the metro over across other month bit you Evolv maybe is a think was City Adams protecting York in the now press a product States? ago update it New

Peter George

Yes.

And that, are before to NYPD we always Having a partner asked believe believe They us. subways period. with our learning support to from to we look, phase full we're technology right in them the They're that a their and today and supporting the New Yorkers keep said knows environment technology. them. how that NYPD for still came going standpoint. we've now. have they challenging use and So to to us, We're we confidence security, wanted said investigation us safe,

Brian Norris

the analysis before we to question, included of transit just that that opportunity TAM the ever in shared Brett, And say I'll we've the get next is none public with the Street.

And our so we're going all there. again, that -- still through testing phases

that if to quarters queue. estimates All next the question, in accretive the in be come there's ready I the TAM on to think anybody More of Ryan, left for that we've our would provided. that ahead. we're

Operator

Our next with the will come Street. Martinuzzi from line Lake Eric of question

Eric Martinuzzi

Or pricing And you both could competitive before? back prices? are behaviors health for buyers that regard to care on the Yes. verticals, if seen the know and it coming you lower you Curious education asking seeing about you environment. to the and seeing comment with haven't are prospective

Mark Donohue

competitive seeing seen been we behaviors, more competition some more I pricing deals. the we've think of Well, before. in We've some and haven't seen

a we're benefit there's what to technology think clear I doing.

comparative pricing I premium perspective, technical we priced But very from product. on So perspective think the are a a the high. is

and school volume. gone been of have, though, a in systems pricing lot there's to where particularly We and amenable the

delta can some out the pricing value between of actually have to throughput In verticals, with the that gone able I we're competition that to of provide mitigating we So -- pricing the that we're and still are to ensure prospects actually our position. path kind our other customers providing. maintain to work we're the there's there. of down that because maintaining and still helpful technical differentiators, still The think, we

Eric Martinuzzi

that education captured for those 'XX? the those deals in prices And potential that safe the environment is in lower to outlook, the outlook new volume-based this say it's -- in

Mark Donohue

I mean did our pricing, and in we that we have XXX%. January.

is reflects that has entire our everything and model outlook our been pricing in So year. outlook our for the in

Eric Martinuzzi

be then XXXX. the first a we you when follow-up balance half of adjusted And EBITDA should the reach breakeven to path on on in looking for point? that What Okay. cash the

Mark Donohue

top being of look us probably in $XX $XX probably to $XX slightly in the $XX the neutrality. positive million actually cash think at to well, I reach neutrality, necessity that you'll We balance. that range a EBITDA to as see the revenue million million range and EBITDA cash line million

as would get we're So our really to be as I really we a to profitability path ensure have say business. this year to in to habits about judicious goal the stay that's we looking we also past. that there going by ago. on maintaining announced a spending still We're going that that

Brian Norris

Terrific.

think the question. that's I last

going few a I'm Peter for closing it to turn to over So remarks.

Peter George

delivered Brian. revenue lot, really Thanks a Look, reoccurring we strong this quarter.

X lot with margins from months right very stay X sales gross now overhang, lighter Our bit evidence a has dealing and went year our on and that certainly little of shown cycle very, started we EBITDA, There months to focused sales we're a of expanded up, been the execution. but that. than adjusted slower is expected. We regulatory in which up improving

second XX. We mission, a the are making And mentioned, our company. to remain is As to senior there our as world of the leadership And of positive place making XXXX. we committed in we learn mission EBITDA work, quarter play we model all our to feel long-term operating mentioned and earlier, just big this about in already. that for getting have some Mark together, a Rule added the finally, difference and live, people and that safer honored to really

everyone. So thank you,

Operator

I'd today's your you thank like Ladies conference. participation. for conclude and that gentlemen, to does

disconnect. now may You

Evolv Technologies (EVLV) 9 May 242024 Q1 Earnings call transcript