EVLV Evolv Technologies Holdings Inc

– Company Raises Outlook for 2023 –

• Q1 Revenue of $18.6 million, up 113% year-over-year

• Q1 Ending ARR1 of $42.0 million, up 153% year-over-year

• Q1 Ending RPO2 of $161.8 million, up 154% year-over-year

• Q1 Ending Evolv Express® subscriptions of 2,787, up 206% year-over-year

 

Evolv Technology (NASDAQ: EVLV), the leader in AI-based weapons detection security screening, today announced financial results for the quarter ended March 31, 2023 and raised its business outlook for 2023.

Results for the First Quarter of 2023

Total revenue for the first quarter of 2023 was $18.6 million, an increase of 113% compared to $8.7 million for the first quarter of 2022. Annual Recurring Revenue (“ARR”)1 was $42.0 million at the end of first quarter of 2023, an increase of 153% compared to $16.6 million at the end of the first quarter of 2022. Net loss for the first quarter of 2023 was $(28.6) million, or $(0.20) per basic and diluted share, compared to net loss of $(13.8) million, or $(0.10) per basic and diluted share, in the first quarter of 2022. Adjusted earnings (loss)3 for the first quarter of 2023 was $(16.9) million, or $(0.12) per diluted share, compared to adjusted earnings (loss)3 of $(18.5) million, or $(0.13) per diluted share, for the first quarter of 2022. Adjusted EBITDA3 for the first quarter of 2023 was $(15.4) million compared to $(17.3) million in the first quarter of 2022. Cash and cash equivalents as of March 31, 2023 was $182 million which reflected the Company's decision to pay off its $30 million debt facility during the first quarter of 2023. The Company had no debt as of March 31, 2023.

The following table summarizes the breakdown of recurring and non-recurring revenue4 during each quarter:

 

Three Months Ended March 31,

 

2023

 

2022

 

% Change

Recurring revenue

$

9,075

 

$

3,159

 

187

%

Non-recurring revenue

 

9,506

 

 

5,551

 

71

%

Total revenue

$

18,581

 

$

8,710

 

113

%

The following table summarizes operating cash flows during each quarter:

 

Three Months Ended March 31,

 

2023

 

2022

Net loss

$

(28,609

)

 

$

(13,801

)

Non-cash (income) expense

 

14,005

 

 

 

(5,126

)

Changes in operating assets and liabilities

 

11,170

 

 

 

(10,503

)

Net cash used in operating activities

$

(3,434

)

 

$

(29,430

)

Company Raises Outlook for 2023

The Company today commented on its business outlook for 2023. The Company's outlook is based on the current indications for its business, which may change at any time.

 

 

2023 Business Outlook

Estimate (In millions)

 

Issued March 1, 2023

 

Issued May 10, 2023

Total Revenue

 

$55-$60

 

$60-$65

Annual Recurring Revenue1 (ARR) at 12/31/23

 

$65-$70

 

$67-$71

Adjusted Gross Margin3

 

30%-35%

 

35%-40%

Adjusted EBITDA3

 

($55-$60)

 

($53-$58)

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 825879. 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 9795540 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 transforming human security to make a safer, faster, and better experience for the world’s most iconic venues and companies as well as schools, hospitals, and public spaces, using industry leading artificial intelligence (AI)-powered weapons detection and analytics. Its mission is to transform security to create a safer world to work, learn, and play. Evolv has digitally transformed the gateways in places where people gather by enabling seamless integration combined with powerful analytics and insights. Evolv’s advanced systems have scanned more than 600 million people, second only to the Department of Homeland Security’s Transportation Security Administration (TSA) in the United States. Evolv has been awarded the U.S. Department of Homeland Security (DHS) SAFETY Act Designation as a Qualified Anti-Terrorism Technology (QATT) as well as the Security Industry Association (SIA) New Products and Solutions (NPS) Award in the Law Enforcement/Public Safety/Guarding Systems category. Evolv Technology®, Evolv Express®, Evolv Insights®, and Evolv Cortex AI® are registered trademarks of Evolv Technologies, Inc. in the United States and other jurisdictions. For more information, visit https://evolvtechnology.com.

1 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.

2 We define Remaining Performance Obligation, or RPO, as estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied or partially satisfied as of the end of the quarter.

3 Non-GAAP Financial Measures In this press release, the Company’s adjusted operating expenses, adjusted gross profit (loss), adjusted gross margin, adjusted operating income (loss), adjusted EBITDA, adjusted earnings (loss), and adjusted earnings per share-diluted 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 including stock-based compensation expense which management believes provides a more meaningful representation of contribution margin. Adjusted operating expenses is defined as operating expenses less one-time items including stock-based compensation expense, restructuring expenses, and loss on impairment of lease equipment which management believes provides a more meaningful representation of on-going operating expense levels. 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 included in this press release. The Company is unable to provide a reconciliation of Adjusted Gross Margin to GAAP Gross Margin and non-GAAP Adjusted EBITDA to Net Income (Loss), each measure's most directly comparable GAAP financial measure, on a forward-looking basis without unreasonable effort, because items that impact these GAAP financial measures are not within the Company’s control and/or cannot be reasonably predicted. These items may include, but are not limited to, predicting forward-looking share-based compensation, changes in the fair value of derivative liabilities, changes in the fair value of contingent earn out liabilities, changes in the fair value of contingently issuable common stock liabilities and changes in fair value of public warrant liabilities. Such information may have a significant, and potentially unpredictable, impact on the Company’s future financial results.

4 Recurring revenue includes the recurring portion of revenue associated with pure subscription contracts and hardware purchase subscription contracts. Non-recurring revenue includes revenue that is one-time in nature, such as product revenue, shipping revenue, and revenue from installation, training, and professional services.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release other than statements of historical facts, including without limitation statements regarding our ability to meet our 2023 annual guidance for revenue, ARR, adjusted gross margin, adjusted EBITDA, as well as our estimates for cash and cash equivalents for fiscal year 2023. Words such as “believe” “may,” “will,” “expect,” “should,” “could,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “project,” “plan,” “target,” “is/are likely to” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: 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 and a global supply chain; the rate of innovation required to maintain competitiveness in the markets in which the Company competes; the loss of designation of the Evolv Express system as a Qualified Anti-Terrorism Technology under the Homeland Security SAFETY Act; the ability for the Company to obtain, maintain, protect and enforce the Company’s intellectual property rights and use of “open source” software; 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; risks related to existing and changing tax laws; 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; the impact of fluctuating general economic and market conditions; the need for additional capital to support business growth, which might not be available on acceptable terms, if at all; risks related to our indebtedness; and litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on resources, the Company’s ability to identify and implement digital advances in its technology. These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission ("SEC") on March 24, 2023 as may be updated from time to time in other filings we make with the SEC, could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release.

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended March 31,

 

2023

 

2022

Revenue:

 

 

 

Product revenue

$

8,754

 

 

$

5,194

 

Subscription revenue

 

6,466

 

 

 

3,004

 

Service revenue

 

3,361

 

 

 

512

 

Total revenue

 

18,581

 

 

 

8,710

 

Cost of revenue:

 

 

 

Cost of product revenue

 

10,578

 

 

 

5,206

 

Cost of subscription revenue

 

2,351

 

 

 

1,542

 

Cost of service revenue

 

887

 

 

 

1,065

 

Total cost of revenue

 

13,816

 

 

 

7,813

 

Gross profit

 

4,765

 

 

 

897

 

Operating expenses:

 

 

 

Research and development

 

5,389

 

 

 

4,175

 

Sales and marketing

 

12,804

 

 

 

9,672

 

General and administrative

 

8,926

 

 

 

10,817

 

Loss from impairment of property and equipment

 

137

 

 

 

96

 

Total operating expenses

 

27,256

 

 

 

24,760

 

Loss from operations

 

(22,491

)

 

 

(23,863

)

Other income (expense), net:

 

 

 

Interest expense

 

(654

)

 

 

(142

)

Interest income

 

953

 

 

 

68

 

Other expense, net

 

19

 

 

 

—

 

Loss on extinguishment of debt

 

(626

)

 

 

—

 

Change in fair value of contingent earn-out liability

 

(3,318

)

 

 

3,078

 

Change in fair value of contingently issuable common stock liability

 

(742

)

 

 

1,472

 

Change in fair value of public warrant liability

 

(1,750

)

 

 

5,586

 

Total other income (expense), net

(6,118

)

 

10,062

 

Net loss

$

(28,609

)

 

$

(13,801

)

 

 

 

 

Weighted average common shares outstanding – basic and diluted

 

146,433,378

 

 

 

142,878,406

 

Net loss per share - basic and diluted

$

(0.20

)

 

$

(0.10

)

 

 

 

 

Net loss

$

(28,609

)

 

$

(13,801

)

Other comprehensive income (loss)

 

 

 

Cumulative translation adjustment

 

(16

)

 

 

—

 

Total other comprehensive loss

 

(16

)

 

 

—

 

Total comprehensive loss

$

(28,625

)

 

$

(13,801

)

 

EVOLV TECHNOLOGY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

 

 

March 31, 2023

 

December 31, 2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

180,996

 

 

$

229,783

 

Restricted cash

 

1,000

 

 

 

—

 

Accounts receivable, net

 

23,156

 

 

 

31,920

 

Inventory

 

8,816

 

 

 

10,257

 

Current portion of contract assets

 

3,265

 

 

 

2,852

 

Current portion of commission asset

 

3,293

 

 

 

3,384

 

Prepaid expenses and other current assets

 

14,413

 

 

 

14,388

 

Total current assets

 

234,939

 

 

 

292,584

 

Restricted cash, noncurrent

 

275

 

 

 

275

 

Contract assets, noncurrent

 

715

 

 

 

1,386

 

Commission asset, noncurrent

 

6,390

 

 

 

5,655

 

Property and equipment, net

 

59,789

 

 

 

44,707

 

Operating lease right-of-use assets

 

1,459

 

 

 

1,673

 

Other assets

 

1,965

 

 

 

1,835

 

Total assets

$

305,532

 

 

$

348,115

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

19,192

 

 

$

18,194

 

Accrued expenses and other current liabilities

 

6,477

 

 

 

11,545

 

Current portion of deferred revenue

 

23,977

 

 

 

18,273

 

Current portion of long-term debt

 

—

 

 

 

10,000

 

Current portion of operating lease liabilities

 

1,122

 

 

 

1,114

 

Total current liabilities

 

50,768

 

 

 

59,126

 

Deferred revenue, noncurrent

 

20,748

 

 

 

17,695

 

Long-term debt, noncurrent

 

—

 

 

 

19,683

 

Operating lease liabilities, noncurrent

 

630

 

 

 

892

 

Contingent earn-out liability

 

17,536

 

 

 

14,218

 

Contingently issuable common stock liability

 

4,134

 

 

 

3,392

 

Public warrant liability

 

7,874

 

 

 

6,124

 

Total liabilities

 

101,690

 

 

 

121,130

 

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.0001 par value; 100,000,000 authorized at March 31, 2023 and December 31, 2022; no shares issued and outstanding at March 31, 2023 and December 31, 2022

 

—

 

 

 

—

 

Common stock, $0.0001 par value; 1,100,000,000 shares authorized at March 31, 2023 and December 31, 2022; 147,977,034 and 145,204,974 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

15

 

 

 

15

 

Additional paid-in capital

 

424,672

 

 

 

419,190

 

Accumulated other comprehensive loss

 

(26

)

 

 

(10

)

Accumulated deficit

 

(220,819

)

 

 

(192,210

)

Stockholders’ equity

 

203,842

 

 

 

226,985

 

Total liabilities and stockholders’ equity

$

305,532

 

 

$

348,115

 

 

EVOLV TECHNOLOGY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net loss

$

(28,609

)

 

$

(13,801

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

1,815

 

 

 

1,086

 

Write-off of inventory and change in inventory reserve

 

214

 

 

 

324

 

Adjustment to property and equipment for sales type leases

 

—

 

 

 

(625

)

Loss from impairment of property and equipment

 

137

 

 

 

96

 

Stock-based compensation

 

5,043

 

 

 

3,927

 

Non-cash interest expense

 

22

 

 

 

5

 

Non-cash lease expense

 

214

 

 

 

197

 

Change in allowance for expected credit losses

 

124

 

 

 

—

 

Loss on extinguishment of debt

 

626

 

 

 

—

 

Change in fair value of earn-out liability

 

3,318

 

 

 

(3,078

)

Change in fair value of contingently issuable common stock

 

742

 

 

 

(1,472

)

Change in fair value of public warrant liability

 

1,750

 

 

 

(5,586

)

Changes in operating assets and liabilities

 

 

 

Accounts receivable

 

8,640

 

 

 

(2,112

)

Inventory

 

1,418

 

 

 

(1,310

)

Commission assets

 

(644

)

 

 

(351

)

Contract assets

 

258

 

 

 

108

 

Other assets

 

(130

)

 

 

141

 

Prepaid expenses and other current assets

 

(25

)

 

 

(5,571

)

Accounts payable

 

(2,213

)

 

 

(855

)

Deferred revenue

 

8,757

 

 

 

2,577

 

Accrued expenses and other current liabilities

 

(4,637

)

 

 

(2,433

)

Operating lease liability

 

(254

)

 

 

(697

)

Net cash used in operating activities

 

(3,434

)

 

 

(29,430

)

Cash flows from investing activities:

 

 

 

Development of internal-use software

 

(733

)

 

 

(728

)

Purchases of property and equipment

 

(13,365

)

 

 

(6,689

)

Proceeds from sale of property and equipment

 

60

 

 

 

—

 

Net cash used in investing activities

 

(14,038

)

 

 

(7,417

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

33

 

 

 

227

 

Proceeds from long-term debt

 

1,876

 

 

 

—

 

Repayment of principal on long-term debt

 

(31,876

)

 

 

—

 

Payment of debt issuance costs and prepayment penalty

 

(332

)

 

 

—

 

Net cash provided by (used in) financing activities

 

(30,299

)

 

 

227

 

Effect of exchange rate changes on cash and cash equivalents

 

(16

)

 

 

—

 

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

 

(47,787

)

 

 

(36,620

)

Cash, cash equivalents and restricted cash

 

 

 

Cash, cash equivalents and restricted cash at beginning of period

 

230,058

 

 

 

308,167

 

Cash, cash equivalents and restricted cash at end of period

$

182,271

 

 

$

271,547

 

EVOLV TECHNOLOGY REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS (In thousands) (Unaudited)

In preparing the condensed consolidated financial statements as of and for the three and six months ended June 30, 2022, the Company identified various errors in its previously issued financial statements. The identified errors impacted the Company's previously issued quarterly financial statements for the three months ended March 31, 2022, and accordingly the Company has made adjustments to the prior period amounts presented herein. Additionally, the Company has made adjustments to correct for other previously identified immaterial errors. The Company evaluated the errors and determined that the related impacts were not material to any previously issued annual or interim financial statements. The impact of the revisions to the quarterly period ending March 31, 2022 is presented as follows (in thousands):

 

Three Months Ended March 31, 2022

 

As Previously Reported

 

Adjustment

 

As Revised

Revenue:

 

 

 

 

 

Product revenue

$

5,194

 

 

$

—

 

 

$

5,194

 

Subscription revenue

 

3,020

 

 

 

(16

)

 

 

3,004

 

Service revenue

 

501

 

 

 

11

 

 

 

512

 

Total revenue

 

8,715

 

 

 

(5

)

 

 

8,710

 

Cost of revenue:

 

 

 

 

 

Cost of product revenue

 

5,576

 

 

 

(370

)

 

 

5,206

 

Cost of subscription revenue

 

1,065

 

 

 

477

 

 

 

1,542

 

Cost of service revenue

 

448

 

 

 

617

 

 

 

1,065

 

Total cost of revenue

 

7,089

 

 

 

724

 

 

 

7,813

 

Gross profit

 

1,626

 

 

 

(729

)

 

 

897

 

Operating expenses:

 

 

 

 

 

Research and development

 

4,286

 

 

 

(111

)

 

 

4,175

 

Sales and marketing expense

 

12,053

 

 

 

(2,381

)

 

 

9,672

 

General and administrative

 

11,093

 

 

 

(276

)

 

 

10,817

 

Loss from impairment of property and equipment

 

96

 

 

 

—

 

 

 

96

 

Total operating expenses

 

27,528

 

 

 

(2,768

)

 

 

24,760

 

Loss from operations

 

(25,902

)

 

 

2,039

 

 

 

(23,863

)

Other income (expense), net:

 

 

 

 

 

Interest expense

 

(142

)

 

 

—

 

 

 

(142

)

Interest income

 

209

 

 

 

(141

)

 

 

68

 

Change in fair value of contingent earn-out liability

 

4,226

 

 

 

(1,148

)

 

 

3,078

 

Change in fair value of contingently issuable common stock liability

 

1,472

 

 

 

—

 

 

 

1,472

 

Change in fair value of public warrant liability

 

5,586

 

 

 

—

 

 

 

5,586

 

Total other income (expense), net

 

11,351

 

 

 

(1,289

)

 

 

10,062

 

Net loss

$

(14,551

)

 

$

750

 

 

$

(13,801

)

 

 

 

 

 

 

Weighted average common shares outstanding - basic and diluted

 

142,878,406

 

 

 

—

 

 

 

142,878,406

 

Net loss per share - basic and diluted

$

(0.10

)

 

$

—

 

 

$

(0.10

)

 

 

Three Months Ended March 31, 2022

 

As Previously Reported

Adjustment

As Revised

Cash flows from operating activities:

 

 

 

Net loss

$

(14,551

)

$

750

 

$

(13,801

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

948

 

 

138

 

 

1,086

 

Write-off of inventory

 

324

 

 

—

 

 

324

 

Adjustment to property and equipment for sales type leases

 

(321

)

 

(304

)

 

(625

)

Loss from impairment of property and equipment

 

96

 

 

—

 

 

96

 

Stock-based compensation

 

5,190

 

 

(1,263

)

 

3,927

 

Non-cash interest expense

 

5

 

 

—

 

 

5

 

Non-cash lease expense

 

197

 

 

—

 

 

197

 

Change in fair value of earn-out liability

 

(4,226

)

 

1,148

 

 

(3,078

)

Change in fair value of contingently issuable common stock

 

(1,472

)

 

—

 

 

(1,472

)

Change in fair value of public warrant liability

 

(5,586

)

 

—

 

 

(5,586

)

Changes in operating assets and liabilities

 

 

 

Accounts receivable

 

(2,112

)

 

—

 

 

(2,112

)

Inventory

 

(6,985

)

 

5,675

 

 

(1,310

)

Commission assets

 

(351

)

 

—

 

 

(351

)

Contract assets

 

108

 

 

—

 

 

108

 

Other assets

 

—

 

 

141

 

 

141

 

Prepaid expenses and other current assets

 

(5,280

)

 

(291

)

 

(5,571

)

Accounts payable

 

(1,867

)

 

1,012

 

 

(855

)

Deferred revenue

 

2,778

 

 

(201

)

 

2,577

 

Deferred rent

 

(468

)

 

468

 

 

—

 

Accrued expenses and other current liabilities

 

(2,065

)

 

(368

)

 

(2,433

)

Operating lease liability

 

(229

)

 

(468

)

 

(697

)

Net cash used in operating activities

 

(35,867

)

 

6,437

 

 

(29,430

)

Cash flows from investing activities:

 

 

 

Development of internal-use software

 

(646

)

 

(82

)

 

(728

)

Purchases of property and equipment

 

(323

)

 

(6,366

)

 

(6,689

)

Net cash used in investing activities

 

(969

)

 

(6,448

)

 

(7,417

)

Cash flows from financing activities:

 

 

 

Proceeds from exercise of stock options

 

216

 

 

11

 

 

227

 

Net cash provided by financing activities

 

216

 

 

11

 

 

227

 

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

 

(36,620

)

 

—

 

 

(36,620

)

Cash, cash equivalents and restricted cash

 

 

 

Cash, cash equivalents and restricted cash at beginning of period

 

308,167

 

 

—

 

 

308,167

 

Cash, cash equivalents and restricted cash at end of period

$

271,547

 

$

—

 

$

271,547

 

Supplemental disclosure of non-cash activities

 

 

 

Transfer of inventory to property and equipment

$

4,620

 

$

(4,620

)

$

—

 

Capital expenditures incurred but not yet paid

 

1,693

 

 

698

 

 

2,391

 

 

EVOLV TECHNOLOGY

SUMMARY OF KEY OPERATING STATISTICS

(Unaudited)

 

 

Three Months Ended or as of,

($ in thousands)

 

March 31, 2022

 

June 30, 2022

 

September 30, 2022

 

December 31, 2022

 

March 31, 2023

New customers

 

 

44

 

 

53

 

 

92

 

 

106

 

 

61

Annual recurring revenue

 

$

16,641

 

$

20,865

 

$

28,741

 

$

34,120

 

$

42,021

Recurring revenue

 

$

3,159

 

$

4,604

 

$

6,221

 

$

7,388

 

$

9,075

Remaining performance obligation

 

$

63,750

 

$

80,978

 

$

109,407

 

$

144,561

 

$

161,813

Net additions

 

 

207

 

 

237

 

 

545

 

 

575

 

 

520

Ending deployed units

 

 

910

 

 

1,147

 

 

1,692

 

 

2,267

 

 

2,787

 

EVOLV TECHNOLOGY

RECONCILIATION OF GAAP OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES

(In thousands)

(Unaudited)

 

 

Three Months Ended,

 

 

March 31, 2022

 

June 30, 2022

 

September 30, 2022

 

December 31, 2022

 

March 31, 2023

Operating expenses, GAAP

 

$

24,760

 

 

$

25,835

 

 

$

26,827

 

 

$

26,868

 

 

$

27,256

 

Stock-based compensation

 

 

(3,819

)

 

 

(4,781

)

 

 

(6,298

)

 

 

(6,771

)

 

 

(4,898

)

Restructuring expenses

 

 

(324

)

 

 

13

 

 

 

—

 

 

 

—

 

 

 

—

 

Loss on impairment of lease equipment

 

 

(96

)

 

 

(316

)

 

 

(626

)

 

 

(123

)

 

 

(137

)

Other one-time expenses

 

 

(1,107

)

 

 

(2,298

)

 

 

(69

)

 

 

(41

)

 

 

(53

)

Adjusted Operating Expenses

 

$

19,414

 

 

$

18,453

 

 

$

19,834

 

 

$

19,933

 

 

$

22,168

 

 

EVOLV TECHNOLOGY

RECONCILIATION OF GAAP GROSS PROFIT TO ADJUSTED GROSS PROFIT, GAAP GROSS MARGIN TO ADJUSTED GROSS MARGIN AND GAAP OPERATING INCOME (LOSS) TO ADJUSTED OPERATING INCOME (LOSS)

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

2023

 

2022

Revenue

$

18,581

 

 

$

8,710

 

Cost of revenue

 

13,816

 

 

 

7,813

 

Gross Profit, GAAP

 

4,765

 

 

 

897

 

Stock-based compensation

 

145

 

 

 

108

 

Amortization of capitalized stock-based compensation

 

10

 

 

 

3

 

Adjusted Gross Profit

$

4,920

 

 

$

1,008

 

 

 

 

 

Gross Margin %

 

25.6

%

 

 

10.3

%

Adjusted Gross Margin %

 

26.5

%

 

 

11.6

%

 

Three Months Ended March 31,

 

2023

 

2022

Operating income (loss), GAAP

$

(22,491

)

 

$

(23,863

)

Stock-based compensation

 

5,043

 

 

 

3,927

 

Amortization of capitalized stock-based compensation

 

10

 

 

 

3

 

Restructuring expenses

 

—

 

 

 

324

 

Loss on impairment of lease equipment

 

137

 

 

 

96

 

Other one-time expenses

 

53

 

 

 

1,107

 

Adjusted Operating Income (Loss)

$

(17,248

)

 

$

(18,406

)

 

EVOLV TECHNOLOGY

RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EBITDA

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

2023

 

2022

Net loss

$

(28,609

)

 

$

(13,801

)

Depreciation & amortization

 

1,815

 

 

 

1,086

 

Stock-based compensation

 

5,043

 

 

 

3,927

 

Interest expense (income)

 

(299

)

 

 

74

 

Loss on disposal of property & equipment

 

—

 

 

 

—

 

Loss on extinguishment of debt

 

626

 

 

 

—

 

Change in fair value of contingent earn-out liability

 

3,318

 

 

 

(3,078

)

Change in fair value of contingently issuable common stock liability

 

742

 

 

 

(1,472

)

Change in fair value of public warrant liability

 

1,750

 

 

 

(5,586

)

Restructuring expenses

 

—

 

 

 

324

 

Loss on impairment of lease equipment

 

137

 

 

 

96

 

Other one-time expenses

 

53

 

 

 

1,107

 

Adjusted EBITDA

$

(15,424

)

 

$

(17,323

)

 

EVOLV TECHNOLOGY

RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED EARNINGS (LOSS)

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended March 31,

 

2023

 

2022

Net loss

$

(28,609

)

 

$

(13,801

)

Stock-based compensation

 

5,043

 

 

 

3,927

 

Amortization of capitalized stock-based compensation

 

10

 

 

 

3

 

Loss on extinguishment of debt

 

626

 

 

 

—

 

Change in fair value of contingent earn-out liability

 

3,318

 

 

 

(3,078

)

Change in fair value of contingently issuable common stock liability

 

742

 

 

 

(1,472

)

Change in fair value of public warrant liability

 

1,750

 

 

 

(5,586

)

Restructuring expenses

 

—

 

 

 

324

 

Loss on impairment of lease equipment

 

137

 

 

 

96

 

Other one-time expenses

 

53

 

 

 

1,107

 

Adjusted Earnings (Loss)

$

(16,930

)

 

$

(18,480

)

 

 

 

 

Weighted average common shares outstanding – diluted

 

146,433,378

 

 

 

142,878,406

 

 

 

 

 

Adjusted Earnings (Loss) Per Share – diluted

$

(0.12

)

 

$

(0.13

)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230510005730/en/

Investor Relations: Brian Norris Senior Vice President of Finance and Investor Relations bnorris@evolvtechnology.com