Evolv Technology Reports Strong First Quarter Financial Results

Company Reaffirms Outlook for 2022  

  • Q1 Revenue of $8.7 million, up 118% year-over-year
  • Q1 Ending ARR of $16.6 million, up 207% year-over-year
  • Q1 Ending Evolv Express® subscriptions of 910, up 227% year-over-year

Evolv Technology (NASDAQ: EVLV), a global leader in weapons detection security screening, today announced financial results for its first quarter ended March 31, 2022 and reaffirmed its business outlook for 2022.

“We’re pleased to report solid first quarter results which were highlighted by strong growth in revenues, new customers and Evolv Express subscribers,” said Peter George, President and Chief Executive Officer of Evolv Technology. “Our results continue to reflect our expanding leadership position in North America as more facility operators adopt our solutions to digitally transform their security operations. Looking ahead, we believe we remain well positioned to execute on our strategic growth plans.”

Results for the First Quarter of 2022

Total revenue for the first quarter of 2022 was $8.7 million, an increase of 118% compared to $4.0 million for the first quarter of 2021. Total Contract Value (“TCV”)1 of orders booked for the first quarter of 2022 was $19.2 million, an increase of 128% compared to $8.4 million in the first quarter of 2021. Annual Recurring Revenue (“ARR”)2 was $16.6 million at the end of first quarter of 2022, an increase of 207% compared to $5.4 million in the first quarter of 2021. Net loss for the first quarter of 2022 was ($14.6) million, or ($0.10) per basic and diluted share, compared to net loss of ($13.8) million, or ($1.32) per basic and diluted share, for the first quarter of 2021. Adjusted earnings (loss)3 for the first quarter of 2022 was ($19.1) million, or ($0.13) per basic and diluted share, compared to ($10.5) million, or ($1.01) per basic and diluted share, for the first quarter of 2021. Adjusted EBITDA3 for the first quarter of 2022 was ($18.2) million, compared to ($7.6) million for the first quarter of 2021. As of March 31, 2022, the Company had cash and cash equivalents of $270.9 million compared to $307.5 million as of December 31, 2021.

Company Reaffirms Outlook for 2022

The Company today commented on its business outlook for 2022. The Company's outlook is based on the current indications for its business, which may change at any time.

 

2022 Business Outlook

Estimate (In millions)

 Issued March 14, 2022

 Issued May 11, 2022

Total Revenue

$29-$31

No change

Annual Recurring Revenue2 (ARR) at 12/31

$27-$28

No change

Adjusted EBITDA3

($65-$67)

No change

Cash and Cash Equivalents

$220-$230

No change

Company to Host Live Conference Call and Webcast

The Company’s management team plans to host a live conference call and webcast at 4:30 p.m. Eastern Time today to discuss the financial results as well as management’s outlook for the business and other matters. The conference call may be accessed in the United States by dialing +1.877.692.8955 and using access code 774298. The conference call may be accessed outside of the United States by dialing +1.234.720.6979 and using the same access code. The conference call will be simultaneously webcast on the Company’s investor relations website, which can be accessed at http://ir.evolvtechnology.com. A replay of the conference call will be available for a period of 30 days by dialing +1.866.207.1041 or +1.402.970.0847 and using access code 5434851 or by accessing the webcast replay on the Company’s investor relations website at http://ir.evolvtechnology.com.

About Evolv Technology

Evolv Technology (NASDAQ: EVLV) is a global leader in weapons detection security screening. Our mission is Evolv Technology (NASDAQ: EVLV) is a leader in weapons detection for security screening, securing the world’s most iconic venues and companies. Its mission is enabling a better experience and better security for venues, creating a safer world to work, learn, and play by transforming physical security to make everywhere safer. It gives sports fans, theme park visitors, concertgoers, shoppers, employees, students, and others peace of mind so that they can gather without fear of violence. Its security screening has scanned more than 250 million people, second only to the Department of Homeland Security’s Transportation Security Administration (TSA) in the United States, and its technology combines powerful, advanced sensors with proven artificial intelligence (AI), security ecosystem integrations, and comprehensive venue analytics to reliably detect threats 10 times faster than traditional metal detectors. Evolv Technology, Evolv Express®, Evolv Insights™, and Evolv Cortex AI™ are registered trademarks or trademarks of Evolv Technologies, Inc. in the United States and other jurisdictions. For more information, visit https://evolvtechnology.com.

1 We define Total Contract Value, or TCV, of orders booked as the total value of the contract over the specified term. Our calculation of TCV is not adjusted for the impact of any known or projected future events (such as customer cancellations, upgrades or downgrades, or price increases or decreases). TCV should be viewed independently of, and not as a substitute for or forecast of, revenue and deferred revenue. Our calculation of TCV may differ from similarly titled metrics presented by other companies.

2 We define Annual Recurring Revenue, or ARR, as subscription revenue and the recurring service revenue related to purchase subscriptions for the final month of the quarter normalized to a one-year period. Our calculation of ARR is not adjusted for the impact of any known or projected future events (such as customer cancellations, upgrades or downgrades, or price increases or decreases) that may cause any such contract not to be renewed on its existing terms. In addition, the amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to new bookings, cancellations, upgrades, downgrades or other changes in pending renewals, as well as the effects of professional services revenue and acquisitions or divestitures. As a result, ARR should be viewed independently of, and not as a substitute for or forecast of, revenue and deferred revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies.

3 Non-GAAP Financial Measures In this press release, the Company’s adjusted gross profit, adjusted gross margin, adjusted EBITDA and adjusted earnings (loss) are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of results of operations. Adjusted gross profit and adjusted gross margin exclude one-time items which management believes provides a more meaningful representation of contribution margin. Adjusted EBITDA is defined as net income (loss) plus depreciation and amortization, share-based compensation, and certain other one-time expenses. Adjusted earnings (loss) is defined as net income (loss) plus stock-based compensation, change in fair value of derivative liability, change in fair value of contingent earn-out liability, change in fair value of contingently issuable common stock liability, change in fair value of public warrant liability, change in fair value of common stock warrant liability, restructuring expenses, loss on impairment of lease equipment, and certain other one-time expenses. Management presents non-GAAP financial measures because it considers them to be important supplemental measures of performance. Management uses non-GAAP financial measures for planning purposes, including analysis of the Company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. Management also believes non-GAAP financial measures provide additional insight for analysts and investors in evaluating the Company's financial and operational performance. However, non-GAAP financial measures have limitations as an analytical tool and are not intended to be an alternative to financial measures prepared in accordance with GAAP. We intend to provide non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of non-GAAP financial measures will provide consistency in our financial reporting. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in this press release.

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking” statements and information, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events including but not limited to statements regarding our ability to meet our business outlook for revenue and profitability. Forward-looking statements involve the Company’s current expectations and projections relating to its financial condition, competitive position, future financial results, plans, objectives, and business. All statements other than statements of historical facts contained in this press release are forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “should,” “could,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or the negative of these terms or other similar expressions. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect the Company’s current views with respect to future events and the Company’s performance and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation expectations regarding the Company’s strategies and future financial performance, including its future business plans or objectives, prospective performance and opportunities and competitors, revenues, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures; the Company’s history of losses and lack of profitability; the Company’s reliance on third party contract manufacturing; the rate of innovation required to maintain competitiveness in the markets in which the Company competes; the competitiveness of the market in which the Company competes; the ability for the Company to obtain, maintain, protect and enforce the Company’s intellectual property rights; the concentration of the Company’s revenues on a single solution; the Company’s ability to timely design, produce and launch its solutions, the Company’s ability to invest in growth initiatives and pursue acquisition opportunities; the limited liquidity and trading of the Company’s securities; geopolitical risk and changes in applicable laws or regulations; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; operational risk; risk that the COVID-19 pandemic, including variants, vaccine roll-out efforts, and local, state, and federal responses to addressing the pandemic may have an adverse effect on the Company’s business operations, as well as the Company’s financial condition and results of operations; litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on resources; and the risk factors set forth under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 28, 2022.

These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this press release. You should not put undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

EVOLV TECHNOLOGY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended

March 31,

 

 

2022

 

 

 

2021

 

Revenue:

 

 

 

Product revenue

$

5,194

 

 

$

2,502

 

Subscription revenue

 

3,020

 

 

 

1,300

 

Service revenue

 

501

 

 

 

197

 

Total revenue

 

8,715

 

 

 

3,999

 

 

 

 

 

Cost of revenue:

 

 

 

Cost of product revenue

 

5,576

 

 

 

2,229

 

Cost of subscription revenue

 

1,065

 

 

 

595

 

Cost of service revenue

 

448

 

 

 

127

 

Total cost of revenue

 

7,089

 

 

 

2,951

 

Gross profit

 

1,626

 

 

 

1,048

 

 

 

 

 

Operating expenses:

 

 

 

Research and development

 

4,286

 

 

 

3,612

 

Sales and marketing

 

12,053

 

 

 

3,684

 

General and administrative

 

11,093

 

 

 

2,899

 

Loss from impairment of property and equipment

 

96

 

 

 

-

 

Total operating expenses

 

27,528

 

 

 

10,195

 

Loss from operations

 

(25,902

)

 

 

(9,147

)

 

 

 

 

Interest expense

 

(142

)

 

 

(2,447

)

Interest income

 

209

 

 

 

-

 

Change in fair value of derivative liability

 

 

 

 

(1,425

)

Change in fair value of contingent earn-out liability

 

4,226

 

 

 

-

 

Change in fair value of contingently issuable common stock liability

 

1,472

 

 

 

-

 

Change in fair value of public warrant liability

 

5,586

 

 

 

-

 

Change in fair value of common stock warrant liability

 

 

 

 

(736

)

Total other income (expense)

$

11,351

 

 

$

(4,608

)

 

 

 

 

Net loss and comprehensive loss – basic and diluted

$

(14,551

)

 

$

(13,755

)

 

 

 

 

Net loss per share – basic and diluted

$

(0.10

)

 

$

(1.32

)

 

 

 

 

Weighted average common shares outstanding – basic and diluted

 

142,878,406

 

 

 

10,443,323

EVOLV TECHNOLOGY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

March 31,

2022

 

December 31,

2021 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

270,872

 

 

$

307,492

 

Restricted cash

 

400

 

 

 

400

 

Accounts receivable, net

 

8,589

 

 

 

6,477

 

Inventory

 

7,181

 

 

 

5,140

 

Current portion of contract assets

 

1,448

 

 

 

1,459

 

Current portion of commission asset

 

1,477

 

 

 

1,645

 

Prepaid expenses and other current assets

 

17,252

 

 

 

11,047

 

Total current assets

 

307,219

 

 

 

333,660

 

Restricted cash, noncurrent

 

275

 

 

 

275

 

Contract assets, noncurrent

 

3,321

 

 

 

3,418

 

Commission asset, noncurrent

 

4,239

 

 

 

3,719

 

Property and equipment, net

 

25,282

 

 

 

21,592

 

Operating lease right-of-use assets

 

2,287

 

 

 

-

 

Other assets

 

1,275

 

 

 

401

 

Total assets

$

343,898

 

 

$

363,065

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

4,645

 

 

$

6,363

 

Accrued expenses and other current liabilities

 

7,118

 

 

 

9,183

 

Current portion of deferred revenue

 

7,433

 

 

 

6,690

 

Current portion of deferred rent

 

 

 

 

135

 

Current portion of long-term debt

 

3,000

 

 

 

2,000

 

Current portion of operating lease liabilities

 

1,089

 

 

 

 

Total current liabilities

 

23,285

 

 

 

24,371

 

Deferred revenue, noncurrent

 

4,517

 

 

 

2,475

 

Deferred rent, noncurrent

 

 

 

 

333

 

Long-term debt, noncurrent

 

6,950

 

 

 

7,945

 

Operating lease liabilities, noncurrent

 

1,634

 

 

 

 

Contingent earn-out liability

 

18,128

 

 

 

20,809

 

Contingently issuable common stock liability

 

3,792

 

 

 

5,264

 

Public warrant liability

 

5,444

 

 

 

11,030

 

Total liabilities

 

63,750

 

 

 

72,227

 

 

 

 

 

Stockholders’ Equity:

 

 

 

Preferred stock

 

-

 

 

 

-

 

Common stock

 

14

 

 

 

14

 

Additional paid-in capital

 

399,424

 

 

 

395,563

 

Accumulated deficit

 

(119,290

)

 

 

(104,739

)

Total stockholders’ equity

 

280,148

 

 

 

290,838

 

Total liabilities and stockholders’ equity

$

343,898

 

 

$

363,065

 

 

 

 

 

EVOLV TECHNOLOGY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

 

Three Months Ended

March 31,

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

Net loss

$

(14,551

)

 

$

(13,755

)

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

948

 

 

 

452

 

Write off of inventory

 

324

 

 

 

 

Adjustment to property and equipment for sales type leases

 

(321

)

 

 

 

Loss from impairment of property and equipment

 

96

 

 

 

 

Stock-based compensation

 

5,190

 

 

 

1,082

 

Noncash interest expense

 

5

 

 

 

2,344

 

Noncash lease expense

 

197

 

 

 

 

Provision recorded for allowance for doubtful accounts

 

 

 

 

(63

)

Change in fair value of derivative liability

 

 

 

 

1,425

 

Change in fair value of common stock warrant liability

 

 

 

 

736

 

Change in fair value of earn-out liability

 

(4,226

)

 

 

 

Change in fair value of contingently issuable common stock

 

(1,472

)

 

 

 

Change in fair value of public warrant liability

 

(5,586

)

 

 

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable

 

(2,112

)

 

 

(874

)

Inventory

 

(6,985

)

 

 

(433

)

Commission assets

 

(351

)

 

 

(391

)

Contract assets

 

108

 

 

 

(119

)

Prepaid expenses and other current assets

 

(5,280

)

 

 

(4,104

)

Accounts payable

 

(1,867

)

 

 

1,194

 

Deferred revenue

 

2,778

 

 

 

(621

)

Deferred rent

 

(468

)

 

 

(11

)

Accrued expenses and other current liabilities

 

(2,065

)

 

 

1,100

 

Operating lease liabilities

 

(229

)

 

 

 

Net cash used in operating activities

 

(35,867

)

 

 

(12,038

)

 

 

 

 

Cash flows from investing activities:

 

 

 

Development of internal-use software

 

(646

)

 

 

-

 

Purchases of property and equipment

 

(323

)

 

 

(2,522

)

Net cash used in investing activities

 

(969

)

 

 

(2,522

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

216

 

 

 

455

 

Repayment of financing obligations

 

-

 

 

 

(359

)

Proceeds from long-term debt, net of issuance costs

 

-

 

 

 

31,882

 

Net cash provided by financing activities

 

216

 

 

 

31,978

 

 

 

 

 

Net increase (decrease) in Cash, cash equivalents and restricted cash

 

(36,620

)

 

 

17,418

 

 

 

 

 

Cash, cash equivalents and restricted cash, beginning of period

 

308,167

 

 

 

4,704

 

Cash, cash equivalents and restricted cash, end of period

$

271,547

 

 

$

22,122

 

 

 

 

 

EVOLV TECHNOLOGY

RECONCILIATION OF FORECASTED 2022 NET LOSS TO ADJUSTED EBITDA

(In thousands)

(Unaudited)

 

 

 

 

 

Twelve Months Ended

December 31, 2022

 

High

 

Low

 

 

 

 

Net income (loss)

$

(83,000

)

 

$

(85,000

)

Adjustments to reconcile net income (loss) to Adjusted EBITDA:

 

 

 

Depreciation and amortization

 

6,000

 

 

 

6,000

 

Stock-based compensation

 

11,000

 

 

 

11,000

 

Other expense

 

1,000

 

 

 

1,000

 

Adjusted EBITDA

$

(65,000

)

 

$

(67,000

)

 

 

 

 

EVOLV TECHNOLOGY

SUMMARY OF KEY OPERATING STATISTICS

(Unaudited)

 

($ in thousands)

December 31,

2020

March 31,

2021

June 30,

2021

September 30,

2021

December 31,

2021

March 31,

2022

New customers

6

13

21

23

27

44

Total contract value of orders booked

$5,956

$8,424

$10,476

$16,995

$17,916

$19,167

Annual recurring revenue

$4,034

$5,424

$7,423

$9,932

$12,907

$16,641

Remaining performance obligation

$13,381

$17,658

$24,930

$34,152

$40,160

$50,537

Contract value for units in backlog

n/a

n/a

n/a

n/a

$11,270

$13,213

Net additions

32

64

113

176

136

207

Ending deployed units

214

278

391

567

703

910

EVOLV TECHNOLOGY

RECONCILIATION OF GAAP TO ADJSUTED GROSS PROFIT AND GAAP OPERATING INCOME

TO ADJUSTED OPERATING INCOME

(In thousands)

(Unaudited)

 

 

Three Months Ended

March 31,

 

2022

 

2021

Revenue

$

      8,715

 

$

       3,999

Cost of revenue

 

         7,089

 

 

         2,951

Gross Profit

 

       1,626

 

 

       1,048

  Stock-based compensation

 

60

 

 

5

Adjusted Gross Profit

 $

       1,686

 

$

       1,053

 

 

 

 

Gross Margin %

 

18.7%

 

 

26.2%

Adjusted Gross Margin %

 

19.3%

 

 

26.3%

 

 

Three Months Ended

March 31,

 

2022

 

2021

Operating income (loss) GAAP

$

     (25,902)

 

$

     (9,147)

  Stock-based compensation

 

5,190

 

 

1,082

  Restructuring expenses

 

324

 

 

-

  Loss on impairment of lease equipment

 

96

 

 

-

  Other one-time expenses

 

1,107

 

 

-

Adjusted Operating Income (loss)

$

     (19,185)

 

$

     (8,065)

 

 

 

 

EVOLV TECHNOLOGY

RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA

(In thousands)

(Unaudited)

 

 

Three Months Ended

March 31,

 

 

2022

 

 

 

2021

 

 

 

 

 

Net income (loss)

$

(14,551

)

 

$

(13,755

)

Depreciation & Amortization

 

948

 

 

 

452

 

Stock-based compensation

 

5,190

 

 

 

1,082

 

Interest and other income (expense)

 

(67

)

 

 

2,447

 

Loss on disposal of property & equipment

 

-

 

 

 

-

 

Loss on extinguishment of debt

 

-

 

 

 

-

 

Change in fair value of derivative liability

 

-

 

 

 

1,425

 

Change in fair value of contingent earn-out liability

 

(4,226

)

 

 

-

 

Change in fair value of contingently issuable common stock liability

 

(1,472

)

 

 

-

 

Change in fair value of public warrant liability

 

(5,586

)

 

 

-

 

Change in fair value of common stock warrant liability

 

-

 

 

 

736

 

Restructuring expenses

 

324

 

 

 

-

 

Loss on impairment of lease equipment

 

96

 

 

 

-

 

Other one-time expenses

 

1,107

 

 

 

-

 

Adjusted EBITDA

$

(18,237

)

 

$

(7,613

)

 

 

 

 

EVOLV TECHNOLOGY

RECONCILIATION OF GAAP NET INCOME AND EARNINGS PER SHARE TO ADJUSTED EARNINGS

AND EARNINGS PER SHARE

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended

March 31,

 

 

2022

 

 

 

2021

 

Net income (loss)

$

(14,551

)

 

$

(13,755

)

Stock-based compensation

 

5,190

 

 

 

1,082

 

Change in fair value of derivative liability

 

-

 

 

 

1,425

 

Change in fair value of contingent earn-out liability

 

(4,226

)

 

 

-

 

Change in fair value of contingently issuable common stock liability

 

(1,472

)

 

 

-

 

Change in fair value of public warrant liability

 

(5,586

)

 

 

-

 

Change in fair value of common stock warrant liability

 

-

 

 

 

736

 

Restructuring expenses

 

324

 

 

 

-

 

Loss on impairment of lease equipment

 

96

 

 

 

-

 

Other one-time expenses

 

1,107

 

 

 

-

 

Adjusted earnings (loss)

$

(19,118

)

 

$

(10,512

)

 

 

 

 

Weighted average common shares outstanding – basic and diluted

 

142,878,406

 

 

 

10,443,323

 

 

 

 

 

Adjusted EPS

$

(0.13

)

 

$

(1.01

)

 

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