Evolv technology reports record third quarter financial results
Waltham, mass.--(business wire)--evolv technology (nasdaq: evlv), the leader in ai-based weapons detection security screening, today announced financial results for its third quarter ended september 30, 20221 and raised its business outlook for 2022. “we’re pleased to be reporting record third quarter results which were highlighted by strong growth in revenues and continued market expansion,” said peter george, president and chief executive officer of evolv technology. “we experienced particularly robust market adoption with 92 new customers including five of the largest school districts in the united states, over a dozen new hospitals across the nation, as well as the home stadiums of five additional professional sports teams. our results and momentum position us well to deliver full year growth above our previous outlook for 2022.” results for the third quarter of 2022 total revenue for the third quarter of 2022 was $16.5 million, an increase of 96% compared to $8.4 million for the third quarter of 2021. total contract value (“tcv”)2 of orders booked for the third quarter of 2022 was $45.4 million, an increase of 167% compared to $17.0 million in the third quarter of 2021. annual recurring revenue (“arr”)3 was $28.7 million at the end of third quarter of 2022, an increase of 189% compared to $9.9 million at the end of the third quarter of 2021. net loss for the third quarter of 2022 was $(18.6) million, or $(0.13) per basic and diluted share, compared to net income attributable to common stockholders for basic and diluted shares of $20.8 million and $21.3 million, respectively, or $0.17 per basic share and $0.14 per diluted share, in the third quarter of 2021. adjusted earnings (loss)4 for the third quarter of 2022 was $(18.6) million, or $(0.13) per diluted share, compared to adjusted earnings (loss)4 of $(12.9) million, or $(0.08) per diluted share, for the third quarter of 2021. adjusted ebitda4 for the third quarter of 2022 was $(18.0) million compared to $(11.5) million in the third quarter of 2021. results for the first nine months of 2022 total revenue for the nine months ended september 30, 2022 was $34.3 million, an increase of 104% compared to $16.8 million for the nine months ended september 30, 2021. tcv2 of orders booked for the nine months ended september 30, 2022 was $86.6 million, an increase of 141% compared to $35.9 million for the nine months ended september 30, 2021. net loss for the nine months ended september 30, 2022 was $(58.1) million, or $(0.40) per basic and diluted share, compared to net loss of $(15.7) million, or $(0.33) per basic and diluted share, for the nine months ended september 30, 2021. adjusted earnings (loss)4 for the nine months ended september 30, 2022 was $(54.3) million, or $(0.38) per diluted share, compared to $(33.5) million, or $(0.70) per diluted share, for the nine months ended september 30, 2021. adjusted ebitda4 for the nine months ended september 30, 2022 was $(51.7) million, compared to $(24.9) million for the nine months ended september 30, 2021. company raises outlook for 2022 the company today commented on its business outlook for 2022. the company's outlook is based on the current indications for its business, which may change at any time. 2022 business outlook estimate (in millions) issued august 10, 2022 issued november 9, 2022 total revenue $29-$31 $46-$48 annual recurring revenue3 (arr) at 12/31 $27-$28 $31-$32 adjusted ebitda4 ($65-$67) no change cash and cash equivalents $220-$230 no change “we believe we are well positioned to deliver strong top line growth above our previously issued guidance in 2022,” said mark donohue, chief financial officer of evolv technology. “our preliminary estimates for 2023 call for exiting arr in the range of $65 million and $70 million – reflecting growth of more than 100% – and full year revenues in the range of $55 million to $60 million, reflecting our transition towards a subscription model. we also expect to significantly reduce our full year operating cash usage in 2023. we will provide formal detailed guidance for 2023 when we release results for the fourth quarter of 2022.” company to host live conference call and webcast the company’s management team plans to host a live conference call and webcast at 4:30 p.m. eastern time today to discuss the financial results as well as management’s outlook for the business and other matters. the conference call may be accessed in the united states by dialing +1.877.692.8955 and using access code 774298. the conference call may be accessed outside of the united states by dialing +1.234.720.6979 and using the same access code. the conference call will be simultaneously webcast on the company’s investor relations website, which can be accessed at http://ir.evolvtechnology.com. a replay of the conference call will be available for a period of 30 days by dialing +1.866.207.1041 or +1.402.970.0847 and using access code 4430069 or by accessing the webcast replay on the company’s investor relations website at http://ir.evolvtechnology.com. about evolv technology evolv technology (nasdaq: evlv) is transforming human security to make a safer, faster, and better experience for the world’s most iconic venues and companies as well as schools, hospitals, and public spaces, using industry leading artificial intelligence (ai)-powered weapons detection and analytics. its mission is to transform security to create a safer world to work, learn, and play. evolv has digitally transformed the gateways in places where people gather by enabling seamless integration combined with powerful analytics and insights. evolv’s advanced systems have scanned more than 425 million people, second only to the department of homeland security’s transportation security administration (tsa) in the united states. evolv has been awarded the u.s. department of homeland security (dhs) safety act designation as a qualified anti-terrorism technology (qatt) as well as the security industry association (sia) new products and solutions (nps) award in the law enforcement/public safety/guarding systems category. evolv technology®, evolv express®, evolv insights®, and evolv cortex ai® are registered trademarks or trademarks of evolv technologies, inc. in the united states and other jurisdictions. for more information, visit https://evolvtechnology.com. 1 amounts herein pertaining to september 30, 2022 represent a preliminary estimate as of the date of this earnings release. more information on our results of operations for the three and nine months ended september 30, 2022 will be provided upon filing our quarterly report on form 10-q with the securities and exchange commission. 2 we define total contract value, or tcv, of orders booked as the total value of the contract over the specified term. our calculation of tcv is not adjusted for the impact of any known or projected future events (such as customer cancellations, upgrades or downgrades, or price increases or decreases). tcv should be viewed independently of, and not as a substitute for or forecast of, revenue and deferred revenue. our calculation of tcv may differ from similarly titled metrics presented by other companies. the fourth quarter of the fiscal year ended december 31, 2022 is the final quarter that we will be reporting tcv. 3 we define annual recurring revenue, or arr, as subscription revenue and the recurring service revenue related to purchase subscriptions for the final month of the quarter normalized to a one-year period. our calculation of arr is not adjusted for the impact of any known or projected future events (such as customer cancellations, upgrades or downgrades, or price increases or decreases) that may cause any such contract not to be renewed on its existing terms. in addition, the amount of actual revenue that we recognize over any 12-month period is likely to differ from arr at the beginning of that period, sometimes significantly. this may occur due to new bookings, cancellations, upgrades, downgrades or other changes in pending renewals, as well as the effects of professional services revenue and acquisitions or divestitures. as a result, arr should be viewed independently of, and not as a substitute for or forecast of, revenue and deferred revenue. our calculation of arr may differ from similarly titled metrics presented by other companies. 4 non-gaap financial measures in this press release, the company’s adjusted operating expenses, adjusted gross profit, adjusted gross margin, adjusted operating income (loss), adjusted ebitda, adjusted earnings (loss), and adjusted earnings per share-diluted are not presented in accordance with generally accepted accounting principles (gaap) and are not intended to be used in lieu of gaap presentations of results of operations. adjusted gross profit and adjusted gross margin exclude one-time items which management believes provides a more meaningful representation of contribution margin. adjusted ebitda is defined as net income (loss) plus depreciation and amortization, share-based compensation, and certain other one-time expenses. adjusted earnings (loss) is defined as net income (loss) plus stock-based compensation, change in fair value of derivative liability, change in fair value of contingent earn-out liability, change in fair value of contingently issuable common stock liability, change in fair value of public warrant liability, change in fair value of common stock warrant liability, restructuring expenses, loss on impairment of lease equipment, and certain other one-time expenses. management presents non-gaap financial measures because it considers them to be important supplemental measures of performance. management uses non-gaap financial measures for planning purposes, including analysis of the company's performance against prior periods, the preparation of operating budgets and to determine appropriate levels of operating and capital investments. management also believes non-gaap financial measures provide additional insight for analysts and investors in evaluating the company's financial and operational performance. however, non-gaap financial measures have limitations as an analytical tool and are not intended to be an alternative to financial measures prepared in accordance with gaap. we intend to provide non-gaap financial measures as part of our future earnings discussions and, therefore, the inclusion of non-gaap financial measures will provide consistency in our financial reporting. investors are encouraged to review the reconciliation of these non-gaap measures to their most directly comparable gaap financial measures included in this press release. forward-looking statements this press release contains forward-looking statements and information within 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 u.s. private securities litigation reform act of 1995. all statements contained in this press release other than statements of historical facts should be considered forward-looking statements, including without limitation statements regarding: the transition of our business model, our ability to reduce future cash burn and meet our goals for revenue and profitability, including for fiscal years 2022 and 2023. forward-looking statements involve the company’s current expectations and projections relating to its financial condition, competitive position, future financial results, plans, objectives, and business. all statements other than statements of historical facts contained in this press release are forward-looking statements. in some cases, these forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “should,” “could,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or the negative of these terms or other similar expressions. these forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. in addition, these forward-looking statements reflect the company’s current views with respect to future events and the company’s performance and are not a guarantee of future performance. actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation expectations regarding the company’s strategies and future financial performance, including its future business plans or objectives, prospective performance and opportunities and competitors, revenues, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures; the company’s history of losses and lack of profitability; the company’s reliance on third party contract manufacturing; the rate of innovation required to maintain competitiveness in the markets in which the company competes; the competitiveness of the market in which the company competes; the ability for the company to obtain, maintain, protect and enforce the company’s intellectual property rights; the concentration of the company’s revenues on a single solution; the company’s ability to timely design, produce and launch its solutions, the company’s ability to invest in growth initiatives and pursue acquisition opportunities; the limited liquidity and trading of the company’s securities; geopolitical risk and changes in applicable laws or regulations; the possibility that the company may be adversely affected by other economic, business, and/or competitive factors; operational risk; risk that the covid-19 pandemic, including variants, vaccine roll-out efforts, and local, state, and federal responses to addressing the pandemic may have an adverse effect on the company’s business operations, as well as the company’s financial condition and results of operations; risks associated with inflation and its possible impact on the company; litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on resources; and the other important risk factors set forth under the caption “risk factors” in our annual report on form 10-k for the year ended december 31, 2021 filed with the securities and exchange commission ("sec") on march 28, 2022, as may be updated in other filings we make with the sec. these statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this press release. you should not put undue reliance on any forward-looking statements. 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 the forward-looking statements will be achieved or will occur. except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. evolv technology consolidated statements of operations and comprehensive loss (in thousands, except share and per share data) (unaudited) three months ended september 30, nine months ended september 30, 2022 2021 2022 2021 revenue: product revenue $ 9,839 $ 5,395 $ 19,179 $ 10,279 subscription revenue 5,198 2,312 12,208 5,060 service revenue 1,493 717 2,923 1,456 total revenue 16,530 8,424 34,310 16,795 cost of revenue: cost of product revenue 12,960 2,967 23,513 7,386 cost of subscription revenue 2,207 1,277 5,730 3,080 cost of service revenue 1,138 713 3,392 1,685 total cost of revenue 16,305 4,957 32,635 12,151 gross profit 225 3,467 1,675 4,644 operating expenses: research and development 5,616 3,612 13,947 8,399 sales and marketing 11,746 10,024 33,169 17,756 general and administrative 8,839 7,535 29,268 12,058 loss from impairment of property and equipment 626 1,656 1,038 1,656 total operating expenses 26,827 22,827 77,422 39,869 loss from operations (26,602 ) (19,360 ) (75,747 ) (35,225 ) other income (expense), net: interest expense (188 ) (295 ) (489 ) (5,952 ) interest income 1,052 — 1,611 — other expense, net (57 ) (669 ) (57 ) (669 ) loss on extinguishment of debt — (865 ) — (12,685 ) change in fair value of derivative liability — 475 — (1,745 ) change in fair value of contingent earn-out liability 7,245 32,609 9,754 32,609 change in fair value of contingently issuable common stock liability 1,081 5,718 2,529 5,718 change in fair value of public warrant liability (1,146 ) 3,152 4,297 3,152 change in fair value of common stock warrant liability — 42 — (879 ) total other income (expense), net $ 7,987 $ 40,167 $ 17,645 $ 19,549 net income (loss) attributable to common stockholders – basic $ (18,615 ) $ 20,807 $ (58,102 ) $ (15,676 ) net income (loss) attributable to common stockholders – diluted $ (18,615 ) $ 21,278 $ (58,102 ) $ (15,676 ) weighted average common shares outstanding basic 144,117,273 119,745,196 143,522,555 47,772,253 diluted 144,117,273 153,936,436 143,522,555 47,772,253 net income (loss) per share basic $ (0.13 ) $ 0.17 $ (0.40 ) $ (0.33 ) diluted $ (0.13 ) $ 0.14 $ (0.40 ) $ (0.33 ) net income (loss) $ (18,615 ) $ 20,807 $ (58,102 ) $ (15,676 ) other comprehensive income (loss) cumulative translation adjustment 45 — # 35 # — total other comprehensive income 45 — 35 — total comprehensive income (loss) $ (18,570 ) $ 20,807 $ (58,067 ) $ (15,676 ) evolv technology condensed consolidated balance sheets (in thousands, except share and per share data) (unaudited) september 30, 2022 december 31, 2021 assets current assets: cash and cash equivalents $ 218,499 $ 307,492 restricted cash 400 400 accounts receivable, net 21,199 6,477 inventory 6,732 2,890 current portion of contract assets 5,291 1,459 current portion of commission asset 2,413 1,645 prepaid expenses and other current assets 20,223 10,757 total current assets 274,757 331,120 restricted cash, noncurrent 275 275 contract assets, noncurrent 1,524 3,418 commission asset, noncurrent 4,607 3,719 property and equipment, net 40,532 23,783 operating lease right-of-use assets 1,882 — other assets 2,045 542 total assets $ 325,622 $ 362,857 liabilities and stockholders’ equity current liabilities: accounts payable $ 11,139 $ 6,045 accrued expenses and other current liabilities 8,884 9,551 current portion of deferred revenue 15,852 6,599 current portion of deferred rent — 135 current portion of long-term debt 4,000 2,000 current portion of operating lease liabilities 1,106 — total current liabilities 40,981 24,330 deferred revenue, noncurrent 9,234 2,475 deferred rent, noncurrent — 333 long-term debt, noncurrent 4,959 7,945 operating lease liabilities, noncurrent 1,147 — contingent earn-out liability 11,452 21,206 contingently issuable common stock liability 2,735 5,264 public warrant liability 6,733 11,030 total liabilities 77,241 72,583 stockholders’ equity: preferred stock, $0.0001 par value; 100,000,000 authorized at september 30, 2022 and december 31, 2021; no shares issued and outstanding at september 30, 2022 and december 31, 2021 — — common stock, $0.0001 par value; 1,100,000,000 shares authorized at september 30, 2022 and december 31, 2021; 144,434,717 and 142,745,021 shares issued and outstanding at september 30, 2022 and december 31, 2021, respectively 14 14 additional paid-in capital 412,238 396,064 accumulated other comprehensive income 35 — accumulated deficit (163,906 ) (105,804 ) stockholders’ equity 248,381 290,274 total liabilities and stockholders’ equity $ 325,622 $ 362,857 evolv technology consolidated statements of cash flows (in thousands) (unaudited) nine months ended september 30, 2022 2021 cash flows from operating activities: net loss $ (58,102 ) $ (15,676 ) adjustments to reconcile net loss to net cash used in operating activities: depreciation and amortization 3,782 1,948 write-off of inventory 559 400 adjustment to property and equipment for sales type leases (625 ) — loss from impairment of property and equipment 1,038 1,656 loss on disposal of property and equipment — 659 stock-based compensation 15,513 6,032 non-cash interest expense 14 5,561 non-cash lease expense 602 — provision recorded for allowance for doubtful accounts 100 (63 ) loss on extinguishment of debt — 12,685 change in fair value of derivative liability — 1,745 change in fair value of common stock warrant liability — 879 change in fair value of earn-out liability (9,754 ) (32,609 ) change in fair value of contingently issuable common stock (2,529 ) (5,718 ) change in fair value of public warrant liability (4,297 ) (3,152 ) changes in operating assets and liabilities accounts receivable (14,822 ) (5,866 ) inventory (4,401 ) (736 ) commission assets (1,656 ) (1,102 ) contract assets (1,938 ) (3,477 ) other assets (629 ) 23 prepaid expenses and other current assets (9,009 ) (11,535 ) accounts payable 2,177 240 deferred revenue 16,005 2,352 deferred rent — 397 warranty reserve — (42 ) accrued expenses and other current liabilities (750 ) 2,834 operating lease liability (699 ) — net cash used in operating activities (69,421 ) (42,565 ) cash flows from investing activities: development of internal-use software (1,936 ) — purchases of property and equipment (17,554 ) (10,994 ) proceeds from sale of property and equipment 312 — net cash used in investing activities (19,178 ) (10,994 ) cash flows from financing activities: proceeds from exercise of stock options 571 777 proceeds from issuance of common stock from the pipe investment — 300,000 proceeds from the closing of the merger — 84,945 payment of offering costs from the closing of the merger and pipe investment — (33,968 ) repayment of financing obligations — (359 ) proceeds from long-term debt, net of issuance costs — 31,882 repayment of principal on long-term debt (1,000 ) — net cash provided by (used in) financing activities (429 ) 383,277 effect of exchange rate changes on cash and cash equivalents 35 — net increase (decrease) in cash, cash equivalents and restricted cash (88,993 ) 329,718 cash, cash equivalents and restricted cash cash, cash equivalents and restricted cash at beginning of period 308,167 4,704 cash, cash equivalents and restricted cash at end of period $ 219,174 $ 334,422 evolv technology revision of prior period financial statements (in thousands) (unaudited) in preparing the condensed consolidated financial statements as of and for the three and six months ended june 30, 2022, the company identified various errors in its previously issued financial statements. the identified errors impacted the company's previously issued 2021 quarterly and annual financial statements and its quarterly financial statements for the three months ended march 31, 2022, and accordingly the company has made adjustments to the prior period amounts presented herein. a summary of the revisions to certain previously reported financial information impacting amounts presented in this earnings release is as follows (in thousands): three months ended september 30, 2021 nine months ended september 30, 2021 as previously reported adjustment as revised as previously reported adjustment as revised revenue: product revenue $ 5,345 $ 50 $ 5,395 $ 10,299 $ (20 ) $ 10,279 subscription revenue 2,305 7 2,312 5,118 (58 ) 5,060 service revenue 717 — 717 1,429 27 1,456 total revenue 8,367 57 8,424 16,846 (51 ) 16,795 cost of revenue: cost of product revenue 2,933 34 2,967 7,237 149 7,386 cost of subscription revenue 1,086 191 1,277 2,542 538 3,080 cost of service revenue 192 521 713 732 953 1,685 total cost of revenue 4,211 746 4,957 10,511 1,640 12,151 gross profit 4,156 (689 ) 3,467 6,335 (1,691 ) 4,644 operating expenses: research and development 3,641 (29 ) 3,612 8,330 69 8,399 sales and marketing expense 8,510 1,514 10,024 17,284 472 17,756 general and administrative 6,983 552 7,535 11,162 896 12,058 loss from impairment of property and equipment 1,656 — 1,656 1,656 — 1,656 total operating expenses 20,790 2,037 22,827 38,432 1,437 39,869 loss from operations (16,634 ) (2,726 ) (19,360 ) (32,097 ) (3,128 ) (35,225 ) other income (expense), net: interest expense, net (286 ) (9 ) (295 ) (5,988 ) 36 (5,952 ) other expense, net (669 ) — (669 ) (669 ) — (669 ) loss on extinguishment of debt (865 ) — (865 ) (12,685 ) — (12,685 ) change in fair value of derivative liability 475 — 475 (1,745 ) — (1,745 ) change in fair value of contingent earn-out liability 31,818 791 32,609 31,818 791 32,609 change in fair value of contingently issuable common stock liability 5,718 — 5,718 5,718 — 5,718 change in fair value of public warrant liability 3,152 — 3,152 3,152 — 3,152 change in fair value of common stock warrant liability 42 — 42 (879 ) — (879 ) total other income (expense), net 39,385 782 40,167 18,722 827 19,549 net income (loss) attributable to common stockholders - basic $ 22,751 $ (1,944 ) $ 20,807 $ (13,375 ) $ (2,301 ) $ (15,676 ) net income (loss) attributable to common stockholders - diluted $ 23,222 $ (1,944 ) $ 21,278 $ (13,375 ) $ (2,301 ) $ (15,676 ) december 31, 2021 as previously reported adjustment as revised assets current assets: cash and cash equivalents $ 307,492 $ — $ 307,492 restricted cash 400 — 400 accounts receivable, net 6,477 — 6,477 inventory 5,140 (2,250 ) 2,890 current portion of contract assets 1,459 — 1,459 current portion of commission asset 1,645 — 1,645 prepaid expenses and other current assets 11,047 (290 ) 10,757 total current assets 333,660 (2,540 ) 331,120 restricted cash, noncurrent 275 — 275 contract assets, noncurrent 3,418 — 3,418 commission asset, noncurrent 3,719 — 3,719 property and equipment, net 21,592 2,191 23,783 other assets 401 141 542 total assets $ 363,065 $ (208 ) $ 362,857 liabilities and stockholders’ equity current liabilities: accounts payable $ 6,363 $ (318 ) $ 6,045 accrued expenses and other current liabilities 9,183 368 9,551 current portion of deferred revenue 6,690 (91 ) 6,599 current portion of deferred rent 135 — 135 current portion of long-term debt 2,000 — 2,000 total current liabilities 24,371 (41 ) 24,330 deferred revenue, noncurrent 2,475 — 2,475 deferred rent, noncurrent 333 — 333 long-term debt, noncurrent 7,945 — 7,945 contingent earn-out liability 20,809 397 21,206 contingently issuable common stock liability 5,264 — 5,264 public warrant liability 11,030 — 11,030 total liabilities 72,227 356 72,583 stockholders’ equity: convertible preferred stock — — — common stock 14 — 14 additional paid-in capital 395,563 501 396,064 accumulated deficit (104,739 ) (1,065 ) (105,804 ) stockholders’ equity 290,838 (564 ) 290,274 total liabilities and stockholders’ equity $ 363,065 $ (208 ) $ 362,857 evolv technology reconciliation of forecasted 2022 net loss to adjusted ebitda (in thousands) (unaudited) twelve months ended december 31, 2022 high low net income (loss) $ (76,000 ) $ (78,000 ) adjustments to reconcile net income (loss) to adjusted ebitda: depreciation and amortization 5,000 5,000 stock-based compensation 19,000 19,000 other one-time expenses 5,000 5,000 other (income) expense (18,000 ) (18,000 ) adjusted ebitda $ (65,000 ) $ (67,000 ) evolv technology summary of key operating statistics (unaudited) three months ended or as of, ($ in thousands) march 31, 2021 june 30, 2021 september 30, 2021 december 31, 2021 march 31, 2022 june 30, 2022 september 30, 2022 new customers 13 21 23 27 44 53 92 total contract value of orders booked $ 8,424 $ 10,476 $ 16,995 $ 17,916 $ 19,167 $ 22,066 $ 45,353 annual recurring revenue $ 5,424 $ 7,423 $ 9,932 $ 12,907 $ 16,641 $ 20,865 $ 28,741 remaining performance obligation $ 17,658 $ 24,930 $ 34,152 $ 51,430 $ 63,750 $ 80,978 $ 109,407 net additions 64 113 176 136 207 237 545 ending deployed units 278 391 567 703 910 1,147 1,692 evolv technology reconciliation of gaap operating expenses to adjusted operating expenses (in thousands) (unaudited) three months ended, march 31, 2021 june 30, 2021 september 30, 2021 december 31, 2021 march 31, 2022 june 30, 2022 september 30, 2022 operating expenses, gaap $ 9,400 $ 7,642 $ 22,826 $ 19,429 $ 24,760 $ 25,835 $ 26,827 stock-based compensation(1) (300 ) (1,052 ) (4,589 ) (3,513 ) (3,819 ) (4,781 ) (6,298 ) restructuring expenses — — — — (324 ) 13 — loss on impairment of lease equipment — — (1,656 ) (213 ) (96 ) (316 ) (626 ) other one-time expenses — — (685 ) — (1,107 ) (2,298 ) (69 ) adjusted operating expenses $ 9,100 $ 6,590 $ 15,896 $ 15,703 $ 19,414 $ 18,453 $ 19,834 (1) reflects immaterial adjustments to previously reported stock-based compensation amounts. evolv technology reconciliation of gaap gross profit to adjusted gross profit and gaap operating income (loss) to adjusted operating income (loss) (in thousands) (unaudited) three months ended september 30, nine months ended september 30, 2022 2021 2022 2021 revenue $ 16,530 $ 8,424 $ 34,310 $ 16,795 cost of revenue 16,305 4,957 32,635 12,151 gross profit, gaap 225 3,467 1,675 4,644 stock-based compensation(2) 227 66 615 91 amortization of capitalized stock-based compensation 6 — 15 — adjusted gross profit $ 458 $ 3,533 $ 2,305 $ 4,735 gross margin % 1.4 % 41.2 % 4.9 % 27.7 % adjusted gross margin % 2.8 % 41.9 % 6.7 % 28.2 % (2) reflects immaterial adjustments to previously reported stock-based compensation amounts. three months ended september 30, nine months ended september 30, 2022 2021 2022 2021 operating income (loss), gaap $ (26,602 ) $ (19,360 ) $ (75,747 ) $ (35,225 ) stock-based compensation 6,525 4,655 15,513 6,032 amortization of capitalized stock-based compensation 6 — 15 — restructuring expenses — — 311 — loss on impairment of lease equipment 626 1,656 1,038 1,656 other one-time expenses 69 685 3,474 685 adjusted operating income (loss) $ (19,376 ) $ (12,364 ) $ (55,396 ) $ (26,852 ) evolv technology reconciliation of gaap net income (loss) to adjusted ebitda (in thousands) (unaudited) three months ended september 30, nine months ended september 30, 2022 2021 2022 2021 net income (loss) $ (18,615 ) $ 20,807 $ (58,102 ) $ (15,676 ) depreciation & amortization 1,432 846 3,782 1,948 stock-based compensation 6,525 4,655 15,513 6,032 interest expense (income) (864 ) 295 (1,122 ) 5,952 loss on disposal of property & equipment — 659 — 659 loss on extinguishment of debt — 865 — 12,685 change in fair value of derivative liability — (475 ) — 1,745 change in fair value of contingent earn-out liability (7,245 ) (32,609 ) (9,754 ) (32,609 ) change in fair value of contingently issuable common stock liability (1,081 ) (5,718 ) (2,529 ) (5,718 ) change in fair value of public warrant liability 1,146 (3,152 ) (4,297 ) (3,152 ) change in fair value of common stock warrant liability — (42 ) — 879 restructuring expenses — — 311 — loss on impairment of lease equipment 626 1,656 1,038 1,656 other one-time expenses 69 685 3,474 685 adjusted ebitda $ (18,007 ) $ (11,528 ) $ (51,686 ) $ (24,914 ) evolv technology reconciliation of gaap net income (loss) to adjusted earnings (loss) (in thousands, except share and per share data) (unaudited) three months ended september 30, nine months ended september 30, 2022 2021 2022 2021 net income (loss) attributable to common stockholders – diluted $ (18,615 ) $ 21,278 $ (58,102 ) $ (15,676 ) stock-based compensation 6,525 4,655 15,513 6,032 amortization of capitalized stock-based compensation 6 — 15 — loss on extinguishment of debt — 865 — 12,685 change in fair value of derivative liability — (475 ) — 1,745 change in fair value of contingent earn-out liability (7,245 ) (32,609 ) (9,754 ) (32,609 ) change in fair value of contingently issuable common stock liability (1,081 ) (5,718 ) (2,529 ) (5,718 ) change in fair value of public warrant liability 1,146 (3,152 ) (4,297 ) (3,152 ) change in fair value of common stock warrant liability — (42 ) — 879 restructuring expenses — — 311 — loss on impairment of lease equipment 626 1,656 1,038 1,656 other one-time expenses 69 685 3,474 685 adjusted earnings (loss) attributable to common stockholders - diluted $ (18,569 ) $ (12,857 ) $ (54,331 ) $ (33,473 ) weighted average common shares outstanding – diluted 144,117,273 153,936,436 143,522,555 47,772,253 adjusted earnings per share – diluted $ (0.13 ) $ (0.08 ) $ (0.38 ) $ (0.70 )
