Evolv Technologies Holdings, Inc. Q1 FY2024 earnings call

• Q1 2024 revenue was $21.7M, up 17% YOY; ARR was $83M, up 96% YOY. - Recurring revenue in Q1 2024 was $19.4M, up 114% YOY, with 89% recurring revenue. - Activated 377 new multiyear subscriptions of Evolv Express, excluding direct rentals. - Average sales cycle lengthened to 5 months in Q1 2024 from 3 months in Q1 2023. - Added senior sales and marketing professionals, including CCO, CMO, and senior channel leader. - Strong customer interest in Evolv Visual Gun Detect; R&D working on new products. - Over 70% of sales activity in Q1 came via channel partners. - Over 90% of Q1 2024 units renewed; 49% of booked ARR in Q1 from existing customers. - Deployed in 20 of the 100 largest school districts, 350 hospital buildings; strong in professional sports. - Leadership position in AI-based weapons detection market with extensive customer base.

Revenue in the first quarter was $21.7 million, up 17% year-over-year. Annual recurring revenue (ARR) grew 10% sequentially and 96% year-over-year to $83 million at the end of Q1 2024. Recurring revenue in Q1 was $19.4 million, up 114% year-over-year, with 89% of revenue being recurring. Remaining performance obligation (RPO) as of March 31, 2024, was $254 million, up 57% year-over-year and 6% sequentially. Adjusted gross margin expanded to 61% in Q1 2024 compared to 26% in Q1 2023.

• Revised full-year revenue to ~$100M (down from $115M), growth ~25% YOY. - Revised ARR to ~$100M (down from $108M-$112M), growth ~33% YOY. - Reaffirmed adjusted full-year gross margin of ~60%. - Reaffirmed goal to deliver at least 40% improvement in full-year adjusted EBITDA in 2024 and reach positive adjusted EBITDA in H1 2025.

• Regulatory overhang (FTC, SEC inquiries) lengthened sales cycle. - Slanted media coverage added to challenges in providing near-term forecasts due to possible deal slippage.

Q: How many salespeople do you have?

A: About 35 quota-carrying sales executives.

Q: Color on industrial warehouse category?

A: Just beginning vertical orientation, confident in progress.

Q: Full-year guidance and sales cycles?

A: Q1 is low point, sales cycles longer, but win rates up; modeling 1600-1900 units for year.

Q: Pricing environment and path to EBITDA breakeven?

A: Saw competitive pricing in some deals, but maintained in others; aiming for $65M-$75M cash balance and $32M-$35M revenue for EBITDA neutrality by H1 2025