Evolv Technologies Holdings, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Evolve Technologies first quarter earnings results. At this time, all participants are in a listen-only mode. Later, there'll be a question and answer session. Instructions will be given at that time. Please limit yourself to one question and one follow-up. If you need assistance during the call, please press star then zero. As a reminder, this conference is being recorded. I'd like now to turn the conference over to our hosts, Brian Morris, Vice President of Investor Relations for Evolve Technologies. Please go ahead.

Thank you, Dan, and good afternoon, everyone, and welcome to the call. I'm joined here today by Peter George, our Chief Executive Officer, and Mario Reynolds, our Chief Financial Officer and Chief Risk Officer. This afternoon, after the market closed, we issued a press release announcing our first quarter results and our business outlook for 2022. The press release is available on all major news outlets as well as on the IR section of our website. During today's call, we will make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and 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. All forward-looking statements are subject to material risks, uncertainties, and assumptions, some of which are beyond our control. Actual events or financial results may differ materially from these forward-looking statements as a result of a number of risks and uncertainties, including, without limitation, The risk factors set forth under the caption risk factors of our annual report on Form 10-K for the year ended December 31st, 2021, as filed with the SEC on March 28th, 2022, and in other documents filed with or furnished to the SEC from time to time. The forward-looking statements made today represent our views as of May 11th, 2022. 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 those forward-looking statements will be achieved or will occur. Except as may be required by applicable law, we disclaim any obligation to update them to reflect future events or circumstances. Our commentary today will also include certain non-GAAP financial measures, including adjusted gross profit, adjusted gross margin, adjusted EBITDA, and adjusted earnings, which we believe provide additional insight for investors in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release issued today. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies. Before I turn things over to Peter, let me briefly highlight a few of our upcoming investor relations activities. On Wednesday, June 1st, we will be in New York for the Cowen Technology Conference, And on Tuesday, June 7th, we will be at the Steeple Investor Conference in Boston. If you are planning to attend either event and are interested in meeting with the management team, please let me know. With that, I'd like to turn the call over to Peter.

Peter? Thanks, Brian, and thank you, everyone, for joining us today. We're pleased to share the highlights from the first quarter as well as the trends we're seeing in our business. As the leader in AI-based weapons detection, we continue on our important mission of making everywhere and everyone safer every day. We're redefining how people think about security, and we are enabling our customers to create a safe and frictionless experience for all those gathering again. The secular trends that demand a new kind of security has become the urgent need for our society today. Evolve exists to meet that need and moment we find ourselves now in. We started the year with a strong first quarter results, which we believe position us well to deliver on our full year growth plans. The key takeaways are as follows. Revenue was $8.7 million in the first quarter, up 27% sequentially, and 118% year over year, primarily driven by strong demand in our key verticals, an increase in purchase subscription deals, and a continuing momentum with our channel partners. We added over 40 new customers in Q1, a new company record, including key wins at the Charlotte-Mecklenburg School District in North Carolina, the Aon Arena in the UK, the Dollywood Theme Park and Hard Rock International, and the New England Patriots of the NFL. Our total contract value of orders booked, or TCV, was $19.2 million in the first quarter, up 7% sequentially and 128% year-over-year. As we shared on our last earnings call, Q1 got off to a slower start due to the surge of COVID-19 cases from the Omicron variant and its lingering impact on both sales and installation activity. That said, We began to see signs of improving conditions in March, and we now believe the headwind caused by Omicron is behind us, though we're keeping a close eye on any further evolving sub-variants. We deployed 207 units, another company record, in the first quarter, which drove an increase in the number of subscriptions of Evolve Express from 703 at December 31, 2021, to 910 at the end of the first quarter. The strong activation activity reflected our ability to catch up and operationalize the unusually high installation backlog that we had as of December the 31st. To that end, it would not surprise us to see installation activity recede a bit here in Q2, but we believe we're tracking well to our goal of 1400 to 1500 subscriptions by the end of the year, which would further strengthen our market moat. While our primary focus continues to be on the U.S.-based facility operators, I'm pleased to report that 15% of our bookings activity in the first quarter came from our international markets, an area which we are starting to explore. We just surpassed 250 million visitors screened. We are now screening more than 500,000 people every single day, and every one of those scans enriches our product capabilities and analytics and underscores our technological lead in the market. We again saw increasing vertical market adoption of Evolve Express. We continue to see signs of accelerating demand in education, in healthcare, and professional sports as evidenced by a higher volume of opportunities and higher volume of seven-figure opportunities. Nearly 30% of our TCV came from the K-12 education market, our single largest market in terms of TAM and addressable facilities. We secured 10 educational-related customers, including the Charlotte-Mecklenburg School District in North Carolina, one of the largest school districts in the country, I think they're ranked number 18, with nearly 150,000 enrolled students. We closed that opportunity in Q1 and completed the deployment of 50 platforms within just a few weeks. And then a few days later, on our second day in use, our Evolve Express platform was able to identify a student who attempted to enter the district's Berry Academy of Technology with a fully loaded handgun. The student was stopped and arrested and thankfully, a potential tragedy was avoided. All the students and staff at the school were safe and the school was not evacuated or placed on a lockdown. Threats like this have unfortunately become commonplace in the United States. Our K-12 education activity, partner development, and funnel are accelerating as more school boards and school districts are acting to digitally transform their security operations and accelerate how they keep their students safe. We saw continued growth in the hotel and casino market, which represented about 17% of our TCV. We closed a large seven-figure deal in Mexico and this was one of the largest 20-unit deals in the company history. We closed this deal with Stanley Security Solutions. We also secured Hard Rock International and three regional casino operators. We're seeing more casinos returning to full pre-pandemic operations and are rolling out solutions that can enhance visitor security and visitor experience. Tourism and performing arts represented about 10% of PCB for the quarter, including a key win at the Aeon Arena in the UK, the same venue where, in 2017, a terrorist detonated an explosive device, killing 22 people attending an Ariana Grande concert. We're proud to be the new touchless security screening provider for that arena, which is one of the busiest venues in the world, and the largest indoor arena in all of Europe. The win is consistent with our go-to-market playbook, securing an iconic venue and a geography, then leveraging that as a beachhead for the future expansion in that market. The healthcare market, which includes hospitals and clinics, represented nearly 10% of our TCV, as we welcomed nearly two dozen customers who deploy us to provide patient and safe security. Finally, just in time for the summer vacation period, we're excited to welcome several new theme parks, including Dollywood, the biggest ticketed tourist attraction in Tennessee, and Kennywood, a century-old theme park in Pennsylvania. Combined, these two theme parks welcome more than 5 million visitors annually. I want to shift and share some key trends we're seeing in our business. First, we continue to see strong momentum with our channel partners, which is enabling us to extend our vertical and geographic reach. Over 60% of our Q1 TCV came through our channel partners, which is up significantly from the back half of 2021. That involvement is most pronounced in healthcare, education, and professional sports. We're seeing broad activity across three dozen authorized channel partners and several strategic global partners in Motorola Solutions, Johnson Controls, and Stanley. The number of qualified partner-involved opportunities has never, ever been higher. We're also seeing strong growth in the number of Evolve Express certified professionals among our partners, which is a result of the work we've done to activate and enable partners over the last several quarters. These are partner professionals who will be able to sell, install, and support Express in the field. Second, on the supply chain front, we continue to feel the impact of higher hardware costs connected to COVID-related challenges over the last 12 to 18 months. We're addressing these challenges by pre-buying hard to find parts, which helps us to ensure product availability while helping protect against the risk of rising inflation. We feel confident about both our inventory levels and our product availability. Third, on the competitive front, we're continuing to see more attention being paid to the space, which is not surprising given the size of the market opportunity and the compelling economics. We still see up to 90% of our opportunities going uncontested. When we do bump into others in the marketplace, it's generally a provider of legacy walk-through metal detectors, and we tend to do very well with those head-to-head competitions as that technology has been around for decades. We continue to stay relentlessly focused on improving the coverage, productivity, and predictability of our sales force. Finally, we're seeing increasing acknowledgement of our detection and performance capabilities by universal testing bodies. On March 31st, 2020, the end of the quarter, 2022, we announced that we were awarded the U.S. Department of Homeland Security Safety Act designation for Evolve Express platform. Safety Act designation provides significant federal liability limitations for those using or deploying Evolve Express to protect their visitors. The Safety Act is recognized as an important standard by which security technologies are judged and our designation status validates the Express platform as a high-throughput, touchless weapons detection screening system worthy of the very high DHS performance standard. DHS's application process involves significant review of the technology, its use in the field, results from field testing, and customer feedback and testimonials on its performance. Several of our customers submitted their performance evaluation and testing in support of our application. We were also recently recognized by the National Center for Spectator Sports Safety and Security, or NCS4, which tested the effectiveness of the Evolve Express platform. The results of that testing were very positive, as we earned a score of 2.84 on a scale of 0 to 3, the highest among the high-throughput touchless weapons detection screening systems. The DHS Safety Act designation and positive NCS4 testing results are important acknowledgments for the company, our customers, and our partners, and provide further validation of our technological and market lead. So that's an update on our progress in Q1 and the trends we're seeing in the business. We're off to a solid start here in 2022 and we believe we're well positioned to meet our full year top line growth plans. We remain well capitalized and we remain confident that we have the appropriate resources to get to cash break even without any additional capital raising efforts. None of this would be possible without the trust of our customers put in Evolve every day to keep their venues and people in them safe. In all my years in the security business, much of that in cybersecurity, I've never seen such a deep, trusted relationship develop between a company and its customers. That mutual devotion to keeping students, employees, visitors, and fans safe is something we cherish here at Evolve. With that, let me turn things over to Mario, who will take you through our financial results and our outlook for 2022. Mario?