Sign in

You're signed outSign in or to get full access.

ET

Evolv Technologies Holdings, Inc. (EVLV)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 41% year over year to $29.1M, with adjusted EBITDA turning positive at $0.4M; GAAP gross margin expanded to 57.5% and adjusted gross margin to 62.4% .
  • ARR ended at $99.4M (+39% YoY) and RPO at $266.7M; cash and equivalents were $51.9M with no debt .
  • Management completed the financial restatement and regained SEC/Nasdaq compliance; they emphasized disciplined execution and achieving profitability goals six months ahead of schedule .
  • Key catalysts: restatement completion and FTC resolution (limited impact: ~4% of installed base/ARR/RPO), plus the first quarter of positive adjusted EBITDA, all of which can reset investor confidence and narrative focus toward execution and recurring model durability .

What Went Well and What Went Wrong

  • What Went Well

    • Achieved positive adjusted EBITDA in Q4 2024 ($0.4M) and improved FY adjusted EBITDA to $(21.0)M from $(51.8)M, reflecting margin expansion and opex discipline .
    • Strong recurring model: Q4 recurring revenue grew 39% YoY to $23.7M; ARR ended at $99.4M (+39% YoY) driven by subscription mix shift .
    • Management tone: “With both the restatement and the FTC resolution now firmly behind us… well-positioned as we enter our next phase of growth,” signaling confidence and execution focus .

  • What Went Wrong

    • Q4 GAAP net loss remained elevated at $(15.7)M, pressured by one-time legal and regulatory costs ($7.3M) and impairment of intangible asset ($1.0M) .
    • Distribution/transition effects: non-recurring revenue volatility (Q4 +55% YoY but quarterly swings), and continued cash usage in operations (Q4 operating cash flow used: $3.2M) .
    • Restatement/investigation overhang: revenue recognition issues (net ~$3.1M restated; earlier internal estimate $4–$6M), Nasdaq delinquency notice in November (since resolved) and FTC-related K‑12 cancellations option (~4% potential impact) .

Financial Results

MetricQ4 2023Q3 2024Q4 2024Vs S&P Global Estimates (Q4 2024)
Revenue ($USD Millions)$20.58 $27.36 $29.10 N/A*
GAAP Gross Margin %46.5% 57.8% 57.5% N/A*
Adjusted Gross Margin %56.6% 64.1% 62.4% N/A*
Net Loss ($USD Millions)$(17.20) $(30.44) $(15.72) N/A*
Diluted EPS ($USD)$(0.11) $(0.19) $(0.10) N/A*
Adjusted EBITDA ($USD Millions)$(10.28) $(3.02) $0.37 N/A*

*Values retrieved from S&P Global were unavailable due to API limits; estimates would normally be sourced from S&P Global.

Segment revenue breakdown

Revenue Component ($USD Millions)Q4 2023Q3 2024Q4 2024
Product$1.85 $1.34 $1.68
Subscription$12.47 $17.91 $17.26
Service$4.86 $6.09 $6.56
License fee & other$1.41 $2.02 $3.60
Total Revenue$20.58 $27.36 $29.10

Recurring vs non-recurring revenue

Revenue Type ($USD Millions)Q4 2023Q3 2024Q4 2024
Recurring$17.07 $23.76 $23.68
Non-recurring$3.51 $3.60 $5.42
Total Revenue$20.58 $27.36 $29.10

KPIs and operating stats

KPIQ3 2024Q4 2024
ARR (end of period, $USD Millions)$93.68 $99.35
RPO (end of period, $USD Millions)N/A$266.70
New customers (units)52 60
Total net units shipped (units)468 458
Deployed units (approx.)N/A~6,100 (after removing ~100 non-revenue units)
Cash & equivalents (end of period, $USD Millions)$56.3 $51.9
Operating cash flow ($USD Millions)$3.68 used $3.20 used

Non-GAAP and one-time items (Q4 2024)

  • One-time legal and regulatory costs: $7.28M; intangible asset impairment: $0.98M; inventory charge: $0.12M; employee separation costs: $2.06M; stock-based compensation: $3.39M (components across COGS/OpEx detailed in reconciliations) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
Total RevenueFY 2024~$100M (May 9 & Aug 8, 2024) $103.87M Raised vs guide (outperformed)
ARR at 12/31/24FY 2024~$100M (reaffirmed) $99.35M Maintained (slightly below target)
Adjusted Gross MarginFY 2024~60% (reaffirmed) 61.7% Exceeded
Adjusted EBITDA (YoY improvement)FY 2024Improve by 40%+ (reaffirmed) $(21.0)M vs $(51.8)M FY23 Exceeded improvement objective
Adjusted EBITDA (quarter)Q4 2024Not guided$0.37M Positive surprise (first positive quarter)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Distribution subscription model40% of units booked via distribution (double Q1); key driver of margin expansion Continued shift to recurring, adjusted GM 56.9% for 9M Recurring revenue +39% YoY; adj GM 62.4% Strengthening recurring mix, higher margins
Channel partners (Motorola, JCI, etc.)~70% activity via partners; Motorola bookings +196% YoY Partner-driven scale continuing Partner model supports subscription growth and ARR Sustained partner leverage
Education vertical28 new education customers; funding shifts post-ESSER; strong renewal rates Robust deployments and ARR growth FTC resolution focuses on ~8% of K‑12 customers; ~4% potential impact on units/ARR/RPO Net positive demand; limited FTC impact
Regulatory/legalWorking with FTC; cycles lengthened but close rates high Internal investigation, delayed Q3 filing (Nasdaq notice) Restatement completed; regained compliance; FTC matter resolved without monetary relief Overhang reduced; governance strengthened
Product & AI innovationNew myEvolv portal, mobile app; Visual Gun Detection; 1–2 new offerings expected Continued platform investment AI-led screening and analytics highlighted; >2B people scanned since inception Expanding ecosystem/analytics
Cash/financingTarget ~$60M cash over next 4 quarters; evaluating nondilutive debt Cash $56.3M at Q3-end Cash $51.9M, no debt; operating cash used $3.2M in Q4 Cash usage moderating; ops efficiency focus

Management Commentary

  • “Completing this restatement… brings the Company back into full compliance with SEC reporting and Nasdaq listing requirements… having achieved our long-standing profitability goals six months ahead of schedule, we believe we are well-positioned as we enter our next phase of growth.” — CEO John Kedzierski .
  • “We worked collaboratively with the FTC… pleased that the FTC did not challenge the fundamental effectiveness of our technology and that the resolution does not include any monetary relief.” — Interim CEO Mike Ellenbogen .
  • Strategic posture: “Company Achieves Positive Adjusted EBITDA in Q4’24” and highlights of Q4 results (ARR $99.4M, RPO $266.7M) underscore confidence in subscription model and execution .

Q&A Highlights

  • Regulatory overhang and sales cycle: Management addressed FTC early in sales cycles, maintaining high close rates (100% in healthcare) despite elongated cycles .
  • NYC transit engagement: Systems under trial/testing; long-standing NYC footprint cited, with broader city inbound interest (e.g., Detroit precedent) .
  • Distribution mix and cash trajectory: Distribution model expected ~50% by Q4 2024; cash usage to bottom then revert to ~$60M levels as profitability attained .
  • Columbia Tech (manufacturing partner) and new products: CT remains a key partner; Visual Gun Detection live; 1–2 new offerings targeted by year-end to expand ARPU and stickiness .

Estimates Context

  • Attempts to retrieve S&P Global consensus for Q4 2024 (Revenue, EPS, EBITDA) were unsuccessful due to request limits. As a result, estimate comparisons are not included; normally, Wall Street consensus would be benchmarked against reported metrics (values would be sourced from S&P Global)*.
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Recurring model durability: Q4 recurring revenue +39% YoY, ARR $99.4M and adjusted gross margin 62.4% underpin a higher-quality revenue mix .
  • Inflection to profitability: First positive adjusted EBITDA quarter; FY adjusted EBITDA improved materially, supporting path toward sustained profitability .
  • Overhang resolution: Restatement completion/regained compliance and FTC resolution (no monetary relief, limited K‑12 impact ~4%) reduce headline risk .
  • Execution catalysts: Partner sales channel strength and continued AI/product innovation (Visual Gun Detection, analytics) can drive multi-vertical expansion .
  • Watch opex normalization: One-time legal/regulatory costs and impairment weighed on GAAP net income; adjusted measures strip these out and show underlying improvement .
  • Cash discipline: Cash ended at $51.9M with no debt; operating cash usage in Q4 suggests continued focus on collections and working capital as subscription mix increases .
  • K‑12 exposure: FTC remedy limited to ~8% of K‑12 customers with optional cancellations affecting ~4% of installed base/ARR/RPO, manageable vs overall ARR scale .

Notes

  • Prior two quarters reviewed: Q2 2024 results and call, and Q3 2024 results (included within April 28, 2025 8‑K/press release) – .
  • All non-GAAP metrics reconciled to GAAP in provided schedules (adjusted gross profit/margin, adjusted operating loss, adjusted EBITDA, adjusted loss per share) .