[Abrupt Start] as a result of a number of risks and uncertainties including without limitation, the risk factors set forth under the caption risk factors, and our prospective filed with the SEC on September 3, 2021 and in our other documents filed with or furnish to the SEC.

The forward-looking statements made today represent our views as of November 10, 2021.

Although, we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements which will be achieved or will occur.

Except as required by applicable law, we disclaim any obligation to update them to reflect future events or circumstances. Before I turn the call over to Peter George, let me briefly bring to your attention a few upcoming investor events. Tomorrow, Thursday November 11 we will be at the Stifel Midwest Investor Virtual Conference.

On Tuesday November 30th, we will be at the Credit Suisse Technology Conference in Scottsdale, Arizona and on Wednesday, December 15th we will be at the Imperial Capital Conference in New York City. We will also be hosting and provide the up following live and virtual investor events throughout the quarter.

For more information or to schedule a meeting with the Management team at any of these conferences, please contact me at bnorris@evolvtechnology.com. With that, I'll like to turn the call over to Peter.

Peter?.

Thanks, Brian. Good afternoon, everyone and thank you for joining us today. We have a lot of exciting news to share regarding the third quarter and our business momentum, but before we start, I want to take a moment to formally introduce Mario Ramos who joined us last week as Chief Financial Officer and Chief Risk Officer.

Mario brings over two decades of executive experience, building and leading high growth companies and his financial and strategic leadership will be instrumental in supporting our next stage of growth. He's had a very successful career, which included a six-year run at CVS in a variety of executive leadership roles, including CFO of CVS Caremark.

Before that he was Head of CVS' M&A and corporate development group and led the acquisition and integration of the Aetna, which as you know is the signature transaction and the transformation that CVS has gone through.

He has also served as COO of CVS International and spent over 17 years on Wall Street, primarily at JP Morgan and Lehman brothers, we're thrilled to have you on board welcome Mario..

Thank you, Peter. It's great to be here and thank you for the warm welcome. I'm excited to join the team and I look forward to meeting and working with all the members of the investment community.

Let me just share a little bit of why I joined the company, which started first and foremost with its mission? I really believe strongly in Evolv's mission of creating a safer world for everyone to work, learn, and play.

And also as we continue on our growth trajectory, I believe we will need to continue scaling the business to maximize efficiency and maintain our market leading position. This means building a solid foundation and infrastructure across the company with a special focus in certain areas like supply chain among others.

I'm proud to say I've spent a large portion of my career scaling and leading digital transformations of companies based in the U.S. and abroad. I'm looking forward to putting that experience to work at Evolv, a leader in one of the fastest growing markets across all of technology..

the new analytics and Evolv Insights allows for the integration and interrogation of threat types and alarm rates, informed decisions around sensitivity settings and better understanding of present characteristics, improving security posture, staffing and training and venue resource planning. And number three, it's connected.

The new remote management capabilities allow administrators to access Evolv Express systems for remote configuration and monitoring, including important notifications and system changes regardless of where they are in the world.

I want to thank our entire R&D team for their incredible work, which continues to deliver ever increasing value to our customers through our AWS enabled cloud offering and continues to set the standard for innovation across the industry.

So in summary, we're pleased to be reporting strong third quarter results highlighted by record total contract value of orders booked and record revenues.

We continue to extend our leadership position with a record number of new customers and expansion of existing customers, strong new product introduction, and acceleration with our key channel partners. We remain on track for a strong finish in 2021 and believe that we are well positioned to deliver on our TCV and market expansion goals.

So with that, let me turn it over to Peter Faubert to review our financial results in more detail and on our outlook for the balance of the year.

Peter?.

Thanks, Peter, and good afternoon, everyone. Today I'll cover our financial results for the third quarter and our outlook for the balance of the year. I'll start with our third quarter results. The total contract value of orders booked or TCV was $16.9 million in the third quarter, up 365% year-over-year reflecting strong new customer additions.

Total revenue was $8.4 million, up 473% year-over-year reflecting strong new customer additions across our core vertical markets, as well as an expanded cohort of customers that chose to purchase hardware upfront.

Product revenue was approximately $5.3 million compared to $300,000 in the third quarter of last year, reflecting the decision of two large customers the Carolina Panthers of the National Football League and a Major New England Area Convention Center to purchase Evolv Express at the beginning of the subscription period.

These two transactions resulted in about $3 million of product revenue in the third quarter of 2021. Looking ahead, we expect a greater percentage of our revenue to shift to pure subscription revenue, which tends to provide much higher recurring revenue.

Subscription revenue was $2.3 million, up 190% year-over-year, primarily reflecting the strong new customer additions in growth in systems and service. Service revenue, which primarily consists of professional services and training, was approximately $700,000, up 125% year-over-year reflecting an increased volume of installations.

Subscription gross margin expanded to 53% in the third quarter from 43% in the second quarter, as we saw continued benefit from our scaling operations.

Product gross margin increased to 45% in the third quarter from 15% in the second quarter, primarily due to certain credits we received from our contract manufacturer for inventory that we had provided to them.

Excluding this benefit, our product gross margin would have been 25% in the third quarter, which again would have demonstrated solid improvement from the 15% in Q2. Total gross margin was 50% compared to 25% in the second quarter of 2021.

Excluding the product cost of goods sold benefit that I just described gross margin would have been 36% in the third quarter. Total operating expenses were $20.8 million in the third quarter, up 205% year-over-year.

The primary drivers of the increase were headcount additions across the company, most notably in revenue generating sales as well as technical talent for our engineering team, stock-based compensation expense, transaction costs associated with the offering as well as a modest impairment charge for the write down of certain assets.

We exited the third quarter with approximately 160 employees compared to approximately 50 employees at March 31, 2021. Our loss from operations was $16.6 million in the third quarter, compared to $6.2 million in the third quarter of last year.

Finally, we reported net income of $23.2 million or $0.15 per diluted share compared to a net loss of $6.3 million or 70% – $0.70 per diluted share in the year ago period. Now turning to the balance sheet. We ended the quarter with approximately $334 in cash and cash equivalents compared to $4.7 million at December 31, 2020.

This increase reflects the completion of our public offering in the third quarter of 2021 more specifically, our financing activities in the third quarter included $300 million in pipe proceeds and approximately $51.2 million in proceeds from the closing of our merger with NewHold.

We ended the quarter with net accounts receivable of $7.3 million compared to $1.4 million at December 31, 2020, reflecting strong new customer acquisition and billing activity. We ended the third quarter with property and equipment of $17.8 million compared to $9.3 million at December 31, 2020.

This growth reflects strong customer adoption of solutions via our pure subscription pricing model under which we retain title of Evolv Express. I'll close with a few comments on how we're thinking about the rest of the year. I will remind you that these forward looking statements represent our views only as of today.

Based on the strength of our third quarter results and our outlook for the balance of the year we are raising our previously issued guidance for both TCV and revenue. Our current expectations are for full year total contract value or TCV of between $53 million and $57 million compared to our previously issued outlook of $53 million to $55 million.

Relatives are practiced to only provide our business outlook on an annual basis with only one quarter to go in a year. Our outlook by extension calls for TCB of between $17 million and $21 million in the fourth quarter of 2021.

Our current expectations for full year revenue of between $20 million and $23 million compared to our previously issued outlook of $20 million to $21 million. Again, only with one quarter left to go into the year, our outlook by extension calls for revenue between $3 million and $6 million in the fourth quarter of 2021.

This reflects our expectation that more customers will be traditional subscription transactions versus the greater contribution of purchase subscription transactions that we saw in Q2 and Q3. The core drivers that support our overall growth opportunity are intact.

The key trends of escalating gun violence, venue reopening and the demand by visitors for a more frictionless and touchless guest experience are all powerful drivers for growth for us.

We expect to continue to invest across the business, mostly in revenue generating and revenue supporting head count as well as an engineering resources to continue to extend our leadership position. We believe all of these investments will put us in an excellent position to continue to capture the opportunity in 2023 and beyond.

We'll provide a detailed outlook during our fourth quarter earnings call in March of 2022. So in summary, we're pleased with our strong third quarter results. We're excited about our plans for the fourth quarter and the opportunity ahead in 2022. And with that, I'll turn the call back over to Brian..

Thank you, Peter. At this time we'd like to open the call up for Q&A. Again we ask participants to limit themselves to one question in one follow-up.

Operator?.

[Operator Instructions] And our first question will come from Mike Latimore with Northland Securities Markets. Please go ahead..

Yes. Congratulations on a great quarter there. Great momentum in the business..

Thank you..

I liked the emergency room example; that seems like that's a logical one we can kind of go everywhere..

Yes..

So you gave generally an employee headcount updates.

How is the sales hiring going? Is that on track and what kind of background the people are you seeing there?.

Yes. Thanks Mike. Good to good to have you on the call. So just your point about the emergency room, so we saw healthcare as one of the big emerging verticals in Q3 that we think is going to be one of the biggest verticals for the company going forward.

You may remember last quarter; we talked about casinos and theme parks as being a big parts of our growth. This quarter it was healthcare. So that's a natural place for us. We're excited about that, what that means. So to capture that demand, we're continuing to add new people across the company. We started the year, as you know was about 50 people.

We're going to exit this year with about 180. And we're adding people in every part of the organization in particular quota, carrying salespeople to capture the demand in the market. So we should exit this year with 25 to 30 "quota, carrying sales people in conjunction with that another 10 to 15 solution engineers, they team sell with our customers.

And then of course you heard the work that we're doing to activate the channel. We were thrilled to see the channel represent what third of our business in the quarter. And we expect that to continue and of course our channel partners like Motorola and Stanley, these are big sizeable companies with hundreds of salespeople.

And in some cases, Motorola has thousands of channel partners. This is going to be a process and a journey with them, but it's going to have a big impact on her future ability to get operational leverage and our go to market model.

So between the people we're hiring and then getting that scale through the channel, we'll be able to capture the growing demand in the market..

Yes. Perfect. And then you talked a little bit about more bookings in the subscription category in the fourth quarter relative to product.

Is that tied to vertical mix or channel versus direct or is it just kind of a bottoms up?.

Yes. Hi Mike its Peter Faubert. Again, we talk about a lot of the purchase subscription deals that we're closing being in professional sports. If we just look at the pipeline in Q4, a lot of the pipeline is coming from that $18 billion TAM, the Greenfield opportunities.

So we expect that there will be a little bit of a shift more towards the subscription deals in Q4..

Got it. Okay. Great. Thanks so much. Good luck..

Thanks Mike..

Thanks Mike..

Operator, we're ready for the next question, please..

And next we'll go to the line of Brad Reback with Stifel. Please go ahead..

Great. Thanks very much. Peter, as you think about this really large opportunity within professional sports, it seems like the customer experience gain is so substantial.

What's the gating factor for these facilities not to move even faster?.

Yes. So look, we – when we thought about our business we thought about the $18 billion [indiscernible], which are those people that thought about security, but didn't want to take the only technology available at the time, which is a metal detector, so they ended up doing nothing, and we began our business going after that market.

The truth is we found great success now in professional sports, which is the other regulated area other than prisons and aviation. So now that we've made really good progress with some of the teams and the fan experience in those stadiums is so different than the other fan experiences in the other teams.

Obviously the physical security people know each other from each of the teams. They're talking to each other. And we think there's going to be a lot momentum across the leagues, all the leagues and professional sports. That's going to drive a lot of business for us going forward. So we're really excited about that.

So excited that we're standing up a professional sports division. We just hired a world-class executive formerly with the nets knows the space really well and we're going to aggressively go after this market. And of course, you have to win at the league level, but you also have to go stadium to stadium.

So having people in every geography and every theater that can support and call on the stadiums is really important. We're excited about what that's going to mean and I think you'll see over the next quarters and years, this being a really big part of our business.

And as I mentioned in my comments, one of the biggest values of the professional sports is all the eyeballs that go into those games, whatever sport we're in, that translates into such a different experience for them that they go back and if they're a decision-maker in a performing arts venue or in a theme park, they want to have that same experience and we get that inbound call.

So it has a force multiplier effect in terms of people walking through the system and having this transformative experience. So we get a tremendous benefit, not just growing revenue in professional sports, but, you know, getting that exposure through the number of people that go to the stadium. So we're excited about it..

That's great. And then it wouldn't be a conference call nowadays, if someone didn't ask about hardware and supply chain. So maybe you can give us an update on where you guys standing your ability to procure the necessary hardware to meet orders for the rest of this year and into next? Thanks..

Yes. Thanks Brad. This is Peter Faubert. Again as we talked about last quarter we're still identifying long lead time items were aggressively placing purchase orders against those through our contract manufacturer. And we're trying to stock up on raw materials inventory.

And I think from a raw materials perspective, we're in great shape through at least the mid-point of 2022. That said the supply chain issues continue. And as we ramp into 2022 we're going to continue with that same approach.

But some of these supply chain issues as we're scaling may not allow us to aggressively stock up on these raw materials like we were able to do this year. So it remains to be seen we're in good shape for now, and we're still actively managing the process..

Great. Thanks a lot..

Thanks Brad. See you at the conference this quarter. Next question, please operator..

[Operator Instructions] Next question comes from the line of Sandy Badri with Credit Suisse. Please go ahead..

Hi. Thank you for the question. You open with some of the drivers of your business, and I think one of the most critical is as I said, much of the strength of your business is the post-COVID recovery dynamic versus the organic and kind off to say, of course [indiscernible] are going to see any ways in your business? That's question number one.

Question number two is, when about think about your five deals that were $1 million plus, how many of those actually include a channel partners? And I'm specifically trying to get at or trying to figure out is, is Motorola an enabler for you to push deals that are much larger than you really ever seen before.

Maybe clarification and color on that? And how about that, we can start with those two first then rolled into the others..

Sure. Well first of all, welcome and thanks for your question. Your first question broke-up a little bit, but let me see if I have it right, if not ask me again. So, a couple of big kind of secular tailwinds impacting the growth that we're having in the demand and the business.

Number one, everyone during the pandemic has gone through an accelerated digital transformation in every part of their business. Well, that's what we do for physical security, right. We take that dumb analog device called a metal detector and transform it into a digital platform.

And so that accelerated, I think people thinking about when it was time to return, they knew that their employees, their fans, their patrons wanted to return in a different way and digitally transforming their platform and their threshold allows them to do that in a touch less way.

So we've gotten the benefit of post-pandemic of people having the time to rethink how they want to do security in their venue.

And when they understand that we can not only increase their security posture, but make their lines go away and make sure that the experience is such that you walk right into the venue without breaking stride, and nobody has to touch your belongings.

Well, that's transformative for every venue, which is why we're having such great success as North America is opening up. And we see hundreds of thousands of thresholds of places that are going to want us going forward. So excited about that.

Most of the reopening and our business is happening in North America right now, and the international market still has a bit of a COVID hangover as that begins to open up next year, we expect to feel that same kind of momentum.

So the combination of digital transformation, the pandemic, people wanting to return in a new way without any friction in a touchless experience, and then get into the venue and be safe, safe from the anxiety and the proliferation of weapons in North America.

There were 400 million guns in North America, and when people get together, they want to get together and know they're safe from all kinds of threats, not just COVID-19, but also people that have a weapon on them, and that's what we do for them.

So we're excited about what ahead of us, everyone these secular tailwinds are impacting all the verticals we're focused on and we're seeing great traction and there's a – and there is a lots of room there. But the second question I think was about these number of million dollar deals and getting them through the channel.

So out of those $5 million deals that we did three of them were with the channel and two of them were direct. And yes, the answer is companies like Motorola, Stanley, black and Decker and JCI.

They have been selling too many of the professional sporting teams, schools, theme parks, for years, they've been selling lots of security equipment and lots of other equipment. They have contracts, they have relationships, and so it gives us really not only access, but a fast path to deploy our systems.

So we expect those partnerships to play an increasing role in helping us penetrate professional sports, amateur sports, but all the other venues that they have a great position in like schools, Motorola has a phenomenal position in the federal government, right.

And we want to work with them to make sure that we can reach all the markets in the federal government that we haven't staffed for yet. So yes, we're expecting these partnerships to give us reach both in vertical and across the globe that we're not going to do organically, and we're thrilled about that..

Got it. Thank you for the color..

Yes..

And then, so thank you for clarifying that and five, $1 million plus deals versus I think you – I believe you said none versus the prior year.

Is there an internal bar or expectation on number of $1 million plus deals that you guys want to hit on a quarterly basis going forward?.

We track all the metrics that you might imagine all the SaaS metrics because we're a SaaS company that's one of them, which is number of seven figure deals.

So we're excited about what our pipeline looks for that and all the leading indicators like ASP growing, sales cycle contracting, up-sell opportunities with our customers, all those metrics including seven figure deals we track. And we feel very good about what's ahead of us.

In terms of the pipelines what's really interesting is because the competitive landscape is not very aggressive right now. We like to have three times the pipeline in the forward quarters to feel comfortable about, you know, landing our numbers. So we have a really good marketing team and channel team helping us build that pipeline.

And at the end of the quarter, the deals that we don't get, we may lose a few but we don't lose the few to competition. We lose a few to no budget. But the deals that we don't get in the quarter typically move to the next quarter.

So we have this really great quarter of pipeline deals to go after every quarter and if it doesn't close this quarter, then it normally moves the next one. And it gives us a lot of confidence that we can continue to grow at the rate that we're growing..

Got it. And then my last question is a technology related question.

Does the Evolv API or information flow directly into say a Motorola command center type software suite? Or is it currently an independent, a pane of glass type of software or webpage interface?.

Yes. It's a great question. So we have an open API, which is one of the things I didn't mention in my remarks is because we're a digital platform and we have an open API we can connect into both the physical and the cyber infrastructure that we go into.

So think about connecting to Motorola's CMS system, their video analytics capability, their license plate readers, that whole lineage of premium products that they have, we can connect to. So specifically with our open API, we can send an alert to a Motorola SOC and have that connection happen immediately.

So yes, that's available for Motorola, but also through all the other partnerships that we're building as well. That open API allows us to integrate into the physical and the cyber infrastructure of all the different echo systems that customers deploy.

But we're excited about what it's going to mean for the partnership of Motorola, because they're creating some premium products on our platform that are going to be really unique and compelling and differentiate them in the market in a way that we're excited about. And I know they are too..

Got it. Great. Thank you..

Sandy, thanks for those questions. Look forward to participating in the conference – the Credit Suisse Conference I next month, or later this month I should say. Operator, I think we have time for one more question..

And the next question that comes to the line of Brian Ruttenbur with Imperial Capital. Please go ahead..

Yes, thank you very much. Okay, hopefully I'm coming through..

Yes. We can hear you Brian. Go ahead..

Yes. I'm getting weird feedback. So I apologize. So in terms of EPS, you have been giving guidance of $0.80 – loss of $0.80, a loss of $0.75 on the 84 million shares outstanding.

Is there an update to that?.

Yes. Just on the EPS in general, we booked all of our [indiscernible] back transaction accounting entries obviously when we closed the deal. As part of those entries, we reevaluated a lot of the derivative liability, earn-out liability and common stock, contingent common stock liability balances from the closing date.

So the big swing in EPS is really around booking those gains based on the reduction in the stock price. And so that was the big swing in the EPS from the loss to the gain..

Great.

Do you have an update on year for adjusted EPS or GAAP EPS?.

Yes. We don't really want to talk about it because obviously the stock volatility is outside of our control. So it's really tough to forecast that for the year. All I can say is the EPS….

Okay. So last question – go ahead..

Sorry, the EPS swing is not coming from operations, it's really coming from these technical accounting entries..

Okay. Understand. The last question is on Disney trial.

Can you give us an update on whatever happened with the Disney trials? Is there still ongoing trials and what is the overall status there at the theme parks?.

So, Brian, this is Brian Norris. I don't know that we've ever discussed that as a customer of the company. Obviously we're very focused on the theme park space in general.

And I think our technology plays very, very well there, and we're certainly excited to continue to expand our leadership position in the theme park, vertical in all parts of the country.

How about that?.

Okay. Thank you very much..

Hey, Brian, any other final questions there? Anything else we can help you with? Otherwise, we'll look forward to seeing you in December at new conference in New York..

Yes. Thank you very much. That's it..

Erica, do any other questions? So we get to all of them, I think we did?.

And we have no further questions in the queue at this time..

Terrific. Okay. Well on behalf of Peter and Mario and Peter and the whole management team and all employees of Evolv, we thank you for participating in this evening's call. We look forward to reaching as many of you as we can, and our outreach period again with three conferences during the period.

Feel free to reach out to me at bnorris@evolvtechnology for more information. Thank you so much..

And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using at ATT Teleconference. You may now disconnect..