Evolv Technologies Holdings, Inc.

to the Evolve Technologies fourth quarter earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you wish to queue up for questions today, please press 1 followed by 0 on your device. As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Brian Norris, Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you, Grace, and good afternoon, everyone. Welcome to the call. I'm joined here today by Peter George, our President and Chief Executive Officer, and Mark Donahue, our Chief Financial Officer. This afternoon, after the market closed, we issued a press release announcing our fourth quarter results and our business outlook for 2023. This press release, along with an accompanying slide presentation, is available on the IR section of our website. During today's call, we will be making forward-looking statements in the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the 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 future operations, growth and financial results, our potential for growth, and ability to gain new customers, demand for our products and offerings, and our ability to meet our business outlook. 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 because of a number of risks and uncertainties, including Without limitation, the risk factors set forth under the caption risk factors in our annual report on Form 10-K for the year-ended December 31st, 2021, filed with the SEC on March 28th, 2022, and is updated in other documents, including our quarterly reports on Form 10-Q, all filed or furnished with the SEC from time to time. The forward-looking statements made today represent our views as of March 1, 2023. Although we believe that the expectations reflected in these statements are reasonable, we cannot guarantee that future results, performance, or the events and circumstances reflected in our 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 non-GAAP financial measures, which we believe provide additional insights for investors. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between non-GAAP measures and the most directly comparable GAAP measures 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. Tonight, we will also be discussing key metrics such as inter-recurring revenue or ARR, remaining performance obligation or RPO, deployment activity, and total number of subscriptions, each of which we believe are helpful to investors in understanding the progress we're making as a business. Before I turn the call over to Peter, Let me briefly highlight here on slide three that we will again be hosting a variety of live and virtual investor events throughout the quarter. We will be hosting events with Callen, Stiefel, Canna Fitzgerald, and Northland Capital. And we're also excited to announce that we'll be hosting the first ever Evolve Technology Analyst Day at Fenway Park in Boston on May 25th. That event will take place immediately following the JPMorgan Technology Conference, which, of course, is considered an annual right of spring for many tech investors. More details to come, but for now, please mark your calendars for Thursday, May 25th. For more information about our IR plans, please contact me at bnorris at evolvetechnology.com. With that, I'd like to turn the call over to Peter. Peter?

Thanks, Brian, and thanks, everyone, for joining us today. We're pleased to be reporting strong fourth quarter results, which capped a historic year for the company. Our results were highlighted by record growth in new customers, revenues, ARR, and RPO. We have a lot of exciting news to share with you today, but before we do that, let me take a moment here on slide five to remind everyone of our mission, which is to democratize security. making venues, facilities, and people everywhere more secure. We're focused on making the world a safer place and more enjoyable place to live, to work, to learn, and to play. As we prepare to commemorate our 10th anniversary as a company later this year, I can tell you categorically that the mission our founders laid out in 2013 is timeless and, yes, intact. We are a mission-driven company made up of mission-driven people, as we are the human security company. Moving to slide six, revenue in the fourth quarter was $20.9 million, up 217% year-over-year and 26% sequentially. For the year, revenue was $55.2 million, up 136% year over year. Our growth continues to reflect strong customer acquisition activity and the continued expansion of our subscription base. We welcomed over 100 new customers in the fourth quarter and nearly 300 in the year. We activated 575 new multi-year subscriptions of Evolve Express in the fourth quarter alone and nearly 1,600 in all of 2022. Further, we grew ARR from $13 million at the end of 2021 to $34 million at the end of 2022, reflecting growth of over 160%. We anticipate ARR to again double in 2023, which, combined with expanding gross margins and prudent expense management, should enable us to reduce our adjusted EBITDA losses by as much as 20% in 2023, while reducing our cash usage by about $20 million. We expect to end the year with about $170 million in cash. Mark will share more thoughts on our outlook in a few moments. Moving to slide seven, we're seeing several interesting dimensions of our leadership emerging. One positive indicator is bookings activity, which increased 27% sequentially and 222% year over year. Other powerful measures include, we had 14 transactions of at least a million dollars of PCV in the fourth quarter, compared to three in the fourth quarter last year. We grew our install base of Evolve Express subscriptions from 703 at the end of 2021 to 2,267 at the end of 2022, reflecting growth of 222% year over year. We further expanded our reach and now have Evolve Express units deployed in 45 U.S. states as well as Puerto Rico. Finally, and perhaps the best sign that our value proposition is resonating in the C-suite of major enterprises, we're pleased to announce that Evolve Express is now installed at three of the Fortune 20 and eight of the Fortune 100 companies. We believe that our results continue to reflect several major trends. The first is the unfortunate and tragic trend in escalating gun violence in the United States, which is reflected here on slide eight. According to recently released reports from the Gun Violence Archives, there were 648 mass shootings in 2022. This is over twice as many mass shootings as occurred annually just a decade ago. This is the mission we were born to undertake, to democratize security and make venues and people safer and more secure. We're doing this one customer at a time, one venue at a time, and one entryway at a time. As you can see here on slide nine, We screened close to 115 million visitors in the fourth quarter. During 2022, we screened over 350 million visitors, which is equivalent to the full population of the United States. It's also more than twice the number of visitors we screened in 2021. We have now screened over a half a billion visitors and expect to surpass 1 billion visitors screened by the end of 2023 as the momentum of our customer base and deployments accelerates. In terms of making a fundamental difference in visitor security, our customers used Evolve Express to tag over 176,000 weapons in 2022, including 93,000 guns and 83,000 knives. In the fourth quarter alone, they tagged nearly 70,000 weapons, including 36,000 guns and 33,000 knives. That's an average of 400 guns every single day. Turning to slide 10, another significant development is our growing technical advantage in the market. Building on our already strong technical lead in the fourth quarter, we released several new major advancements. First, we've expanded our API library, extending integration from Evolve Express to various security endpoints, such as video management systems, video analytics, infinite management systems, and mass notification systems. Next, We released several new data extract APIs, which allows customers to ingest Evolve Insights security screening and ingress data into their existing data infrastructure. And finally, we launched our new Evolve Insights dashboard, which enables our customers to better understand security staff screening performance. Because our customers are on long-term subscription contracts with us, They can easily take advantage of these breakthrough capabilities as they are released over time to our powerful cloud-based environment. More venue operators are turning to us to power their digital thresholds. We are digitally transforming security with critical capabilities, not only in weapons detection, but in adjacent areas such as crowd assessment, mass notification, and people flow analytics. These capabilities enable us to continually raise the bar of innovation and bring better and better products to the market. And in time, we believe this will enable us to optimize average revenue per unit, or ARPU, and maximize renewal rates as and when customers reach the end of their initial subscription contracts. With better data and better products, we're able to deliver a superior value proposition to the market. we're able to classify threats based on a unique, large, and rapidly growing data set that makes it possible with our advanced algorithms to improve detection accuracy over time, which we believe makes our customers' venues safer than ever before. Turning to slide 11, We believe that our highly differentiated new customer acquisition efforts provide a first mover advantage due to the strong network effect dynamics of our market. We are proud to partner with over 500 customers across our key vertical markets to create safer zones for them and their visitors, employees, students, and yes, fans. As highlighted here on slide 12, Our strong new customer acquisition activity continued in Q4. We added 106 new customers in the quarter, up from our previous record of 92 in third quarter. Our measure is arguably a conservative view because for us, one customer could mean a dozen or more buildings in one new school district or a new healthcare system. For example, our single largest customer, a school district, now has over 160 Evolve Express units deployed across dozens of high schools and middle schools. We're excited to welcome dozens of iconic venues, including View Boston, which sits high atop the Prudential Building here in the Back Bay, the Norton Museum of Art, located in West Palm Beach, Florida, the Honolulu Museum of Art in Hawaii, the Ocean Casino Resort in Atlantic City, the Seabreeze Amusement Park in New York, the International African American Museum in Charleston, South Carolina, and the Ronald Perlman Performing Arts Center in New York City, which is set to open later this year. As highlighted here on slide 13, Our accelerating new customer activity, coupled with expanding deployments among our existing customers, is leading to significant growth in our install base of Evolve Express subscriptions. In the fourth quarter, we deployed a record 575 Evolve Express units that are powered by long-term, four-year subscription contracts. We now have over 2,200 Evolve Express units deployed. Moving to slide 14, we have seen and expect to continue to see momentum with our channel partners, which helps us extend our reach to certain geographies and vertical markets, primarily in healthcare and education. Over 65% of our sales activity came from or through a channel partner in 2022. We expect to continue to see strong activity with Johnson Controls, the newly formed Securitas technology, and Motorola Solutions, as well as dozens of other regional partners like Alliance Technology Group and Stone Security. These relationships will be central to our plans to scale over time. Turning to slide 15. We remain well positioned in the major vertical markets that have been among the earliest adopters of our technology, specifically education, healthcare, and professional sports. The education market remains exceptionally large, with nearly 130,000 schools across the nation, half of which are middle schools and high schools. Gun violence in schools remains a top issue for district leadership, school administrators, parents, teachers, and students. The tragic news is that 1,676 children under the age of 18 were killed by gun violence in 2022. That's five of our children every day. Unfortunately, that rate has increased here in 2023. The Center for Disease Control and Prevention reports that firearm-related injuries have now surpassed motor vehicle accidents and has become the leading cause of death among children and adolescents. Add to this the number of children that sustain non-fatal injuries and the escalating anxiety levels among young people and the pain and emotional damage that is being created is likely to be felt for generations to come. We're on a mission to improve the safety of young people, and for us, that starts with students and their schools. This continues to be our number one end market. We partner with our customers to create safer zones in over 400 school buildings, up from 200 at the end of the third quarter. Another measure of our progress in education is our penetration rate among the 100 largest school districts in the country, which now stands at eight. We're pleased to welcome the Duval County School District in Florida, the Columbus School District in Ohio, the Johnston County School District in North Carolina, and the Buffalo Public School District, which is the second largest school district in all of New York. Combined, these four customers are in the process of deploying 200 Evolve Express units. All told, the education vertical represented half of our business in the fourth quarter. Turning to slide 16, another major market for Evolve continues to be healthcare, which includes over 6,000 hospitals and where over 70% of workplace violence takes place. Hospital administrators are making investments to enhance patient and safety, and we stand well-positioned to fill this market need. We added dozens of new healthcare customers in the fourth quarter, including the University of Illinois Hospital, Grandview Health in Pennsylvania, Meritas Health, Western Maryland's largest healthcare provider, and Stony Brook University Hospital, Long Island's premier academic medical center. We're pleased to report that we added another 25 hospitals in the fourth quarter and now serve nearly 100 hospital buildings across the country. That's up from just seven hospital buildings a year ago. We're absolutely honored to be the trusted screening partner for these medical professionals and their patients. One more market to highlight here on slide 17 is professional sports, where we continue to transform the guest experience from millions of fans at stadiums and ballparks around the country. We enable fans to enjoy a faster, more convenient, and more secure screening experience. We added several new professional sports teams in the fourth quarter, including three major league baseball teams, the Minnesota Twins, the Philadelphia Phillies, and the Houston Astros. We also added another NHL team, the Tampa Bay Lightning, and our seventh major league soccer franchise, the Colorado Rapids. We now screen millions of fans of nearly three dozen professional sporting teams across the NFL, MLS, MLB, and NHL. We expect that these three markets, education, healthcare, and professional sports, along with warehouses and tourist attractions, will be central to our expansion plans in 2023. So to summarize here on slide 19, we're reporting strong fourth quarter results, highlighted by record revenues, ARR, and yes, RPO. We're seeing growing market awareness and strong new customer acquisition activity. We're continuing to see evidence of the leverage in our business model. We have an exciting growth plan for 2023, which is focused on, again, doubling our ARR. And we believe that we remain well capitalized and believe that the strength of our balance sheet will enable us to reach cash break even without any additional capital. With that, let me turn things over to Mark, who will take you through our financial results and our outlook. Mark? Thanks, Peter, and good afternoon, everyone.