EVLV Q2 2024: Warehouse vertical to be top-two revenue driver in 2025
- Industrial Warehouse Vertical Opportunity: The executives highlighted that although early in development, this vertical is expected to become materially important in 2025 and eventually rank as one of the top two revenue drivers, signaling a strong growth avenue.
- Exceptional Healthcare Close Rates: The team noted a 100% close rate in the healthcare vertical, demonstrating robust demand and validating the system’s effectiveness through strong customer confidence.
- Strategic Partnership with Motorola: Motorola’s momentum was emphasized due to its leadership in safety and expansive channel network (approx. 2,000 channel partners), positioning the company well to capitalize on increased distribution opportunities.
- Regulatory uncertainty: Ongoing investigations with the FTC, which typically take 12–18 months to resolve, could prolong sales cycles and add uncertainty to near-term revenue projections.
- Competitive pressures in price-sensitive markets: In the education sector, aggressive pricing from established security players may lead to margin compression and slower revenue growth.
- Cash flow and inventory management risks: Increased cash usage related to inventory buildup and transitioning assets, with cash levels expected to dip further before recovering, could strain liquidity if growth stalls.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2024 | $100 million | $100 million | no change |
ARR | FY 2024 | $100 million | $100 million | no change |
Adjusted Gross Margin | FY 2024 | 60% | 60% | no change |
Adjusted EBITDA | FY 2024 | ≥40% improvement | ≥40% improvement | no change |
Adjusted EBITDA | Q2 2025 | no prior guidance | Positive adjusted EBITDA | no prior guidance |
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Cash Flow/Distribution
Q: What about cash and subscription mix trends?
A: Management expects a slight cash usage in Q3 before returning to approximately $60 million by year-end, with the distribution model growing from 20% to over 40% in Q2 and aiming for roughly 50% by Q4. -
Regulatory Update
Q: How are regulatory issues affecting sales cycles?
A: They remain in active dialogue with the FTC, expecting a 12–18 month resolution period while keeping sales cycles steady by addressing regulatory concerns early with customers. -
Warehouse Catalyst
Q: What catalyst is needed for warehouse revenue growth?
A: It’s early days, but management expects material revenue growth in 2025 from the industrial warehouse vertical, positioning it among the top two verticals along with education. -
New Products
Q: What’s the update on new product add-ons?
A: They’ve introduced visual gun detection, which is already boosting pipeline activity, with one to two additional digital or physical products expected by year-end. -
Motorola Momentum
Q: Why is Motorola’s performance accelerating?
A: Their momentum stems from being a strong industry leader, with a vast network of approximately 2,000 channel partners and robust direct sales, aligning well with Evolv’s technological edge. -
Inbound Interest
Q: What impact is NYC news having on inbound leads?
A: The brand visibility from the NYC trials is generating increased inbound interest from other major cities like L.A., enhancing credibility and market momentum. -
NYC Subway
Q: What is the status of the NYC subway deployment?
A: The subway deployment remains in the trial phase, with authorities actively testing the system before making a final decision. -
Sales Headcount
Q: How large is the sales team now?
A: The go-to-market team totals about 150 employees, including a couple dozen quota-carrying salespeople augmented by a dedicated channel team. -
G&A Explanation
Q: Why did G&A expenses jump this quarter?
A: The apparent increase is mainly due to estimates for legal settlements and higher stock-based compensation reserves, though core adjusted levels stay relatively stable. -
CT Relationship
Q: How is the Columbia Technology partnership performing?
A: The relationship remains strong, with Columbia Technology continuing to support current volume needs and upcoming product launches effectively. -
Education Pricing
Q: Is pricing in education stabilizing now?
A: Competition remains tough in the price-sensitive education market, but there is a steady trend towards integrating security as part of operating expenses.
Research analysts covering Evolv Technologies Holdings.