Q1 2024 Evolv Technologies Holdings Inc Earnings Call
Operator: As a reminder, today's conference is being recorded. I'd now like to turn the conference over to Senior Vice President of Finance and Investor Relations for Evolv Technologies, Brian Norris.
As a reminder, today's conference is being recorded I would now like to turn the conference over to senior Vice President of Finance and Investor Relations for you both technologies, Brian Norris.
Brian Norris: Thank you, Ryan, and good afternoon, everyone, and welcome to the call. I'm joined here today by Peter George, our President and Chief Executive Officer, and Mark Donohue, our Chief Financial Officer.
Brian Norris: Thank you, Brian and good afternoon, everyone and welcome to the call I'm joined here today by Peter George Our President and Chief Executive Officer, and Mark Donohue, Our Chief Financial Officer.
Brian Norris: This afternoon after the market closed, we issued a press release announcing our first quarter 2024 results and our business outlook for the remainder of the year. The press release has been filed with the SEC and is also available on the IR section of our website. During today's call, we will make forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These statements 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.
Speaker Change: This afternoon. After the market closed we issued a press release announcing our first quarter 2024 results and our business outlook for the remainder of the year.
Brian Norris: Press release has been furnished with the SEC and is also available on the IR section of our website.
Brian Norris: 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 those 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 31, 2023, filed with the SEC on February 29, 2024, and our quarterly report on Form 10-Q for the three months ended March 31, 2024, filed with the SEC earlier today.
Brian Norris: During today's call, we will make forward looking statements within the meaning of the safe Harbor provision of the private Securities Litigation Reform Act of 1095.
Brian Norris: These statements 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.
Brian Norris: All forward looking statements are subject to material risks uncertainties and assumptions some of which are beyond our control.
Brian Norris: Actual events or financial results may differ materially from those 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 31, 2023 filed with the SEC on February 20.
Brian Norris: <unk> 2024, and our quarterly report on Form 10-Q for the three months ended March 31, 2024 filed with the SEC earlier today.
Brian Norris: The forward-looking statements made today represent our views as of May 9, 2024. 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.
Brian Norris: The forward looking statements made today represent our views as of May nine 2024, 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.
Brian Norris: Except as may be required by applicable law, we disclaim any obligation to update them to reflect future events or circumstances.
Brian Norris: Our commentary today will also include non-GAAP financial measures which we believe provide additional insights for investors. However, these measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with generally accepted accounting principles. These measures include adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted operating income, adjusted EBITDA, adjusted earnings, and adjusted earnings per diluted share. Reconciliations between these 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.
Brian Norris: Our commentary today will also include non-GAAP financial measures, which we believe provide additional insights for investors.
Brian Norris: These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with generally accepted accounting principles.
Brian Norris: These measures include adjusted gross profit adjusted gross margin adjusted operating expenses adjusted operating income adjusted EBITDA adjusted earnings and adjusted earnings per diluted share.
Brian Norris: Filiation between these non-GAAP measures and the most directly comparable GAAP measures can be found in our press release issued today. Please.
Brian Norris: Please note that our definition of these measures may differ from similarly, titled metrics presented by other companies.
Brian Norris: We will be discussing key metrics such as annual recurring revenue, or ARR, remaining performance obligation, or RPO, deployment activity, and total number of subscriptions, each of which we believe is helpful to investors in understanding the progress we are making as a business. With that, I'd like to turn the call over to Peter.
Brian Norris: We will be discussing key metrics, such as annual recurring revenue or a RR remaining performance obligation or RP O deployment activity and total number of subscriptions each of which we believe is helpful to investors in understanding the progress, we're making as a business with.
Brian Norris: With that I'd like to turn the call over to Peter Peter.
Peter Gustav George: Thank you, Brian, and thanks, everyone, for joining us today. I'm going to spend a few minutes on our Q1 results, provide a brief update on the regulatory front, and then walk through the trends that we're seeing in the business. Mark will then walk through our financial results and our outlook. Revenue in the first quarter was $21.7 million, up 17% year-over-year, reflecting new customer acquisition activity, strong expansion from our installed customer base, continued traction with our channel partners, and growth in subscriptions of Evolv Express.
Brian Norris: Yes.
Peter: Thank you, Brian and thanks to everyone for joining us today.
Peter Gustav George: Let's spend a few minutes on our Q1 results provide a brief update on the regulatory front and then walk through the trends that we're seeing in the business Mark will then walk through our financial results and our outlook.
Peter Gustav George: Revenue in the first quarter was $21 7 million up 17% year over year, reflecting new customer acquisition activity strong expansion from our installed customer base continued traction with our channel partners and growth in subscriptions of evolve Express.
Peter Gustav George: Our growth rate reflects the transition away from one-time product sales, which were central to our revenue just a year ago. Recurring revenue was 89% in Q1 compared to about 50% in Q1 of last year. We welcomed over 50 new customers in Q1 and now serve about 750 customers across 10 key vertical markets. ARR grew 10% sequentially and 96% year-over-year to $83 million at the end of the first quarter of 2024. Adjusted gross margin expanded to 61% in Q1 compared to 26% in Q1 of last year.
Peter Gustav George: Our growth rate reflects the transition away from one time product sales, which was central to our revenue just a year ago.
Peter Gustav George: Reoccurring revenue was 89% in Q1 compared to about 50% in Q1 of last year.
Peter Gustav George: We welcomed over 50, new customers in Q1, and now serve about 750 customers across 10 key vertical markets.
Peter Gustav George: <unk> grew 10% sequentially and 96% year over year to $83 million at the end of the first quarter of 2024.
Peter Gustav George: Adjusted gross margin expanded to 61% in Q1 compared to 26% in Q1 of last year.
Peter Gustav George: This is largely attributable to the shift to the distribution subscription model we introduced last year and the related transition to a higher level of recurring revenue. We activated 377 new multi-year subscriptions for Evolv Express, which is lighter than we were anticipating for the quarter. Notably, this figure excludes units from the high number of direct rentals we ship.
Peter Gustav George: This is largely attributable to the shift to the description distributions subscription model, we introduced last year and the related transition to a higher level of reoccurring revenue.
Peter Gustav George: We activated 377, new multiyear subscriptions have evolved express which is lighter than we were anticipating for the quarter.
Peter Gustav George: Notably this figure excludes units from the high number of direct rentals, we shipped since.
Peter Gustav George: Since the year began, we've sent about 75 Evolv Express systems to support major events, including the world's largest sporting event taking place in France, and to the Detroit Police Department in support of the annual college football draft. Rentals like these accelerate our presence in the region and further raise awareness of Evolv technology. Again, none of these units were included in our deployed unit count.
Peter Gustav George: Since the year began we sent about 75 of Bob Express systems to support major events, including the world's largest sporting event, taking place in France.
Peter Gustav George: And to the Detroit Police Department in support of the annual College football draft rents.
Peter Gustav George: Rentals like these accelerate our presence in the geography and further raise awareness of all the technology.
Peter Gustav George: Again, none of these units were included in our deployed unit count.
Peter Gustav George: Yeah.
Peter Gustav George: While our overall win rate improved to 79% from 71% in Q1 of last year, certain late-stage deals we were working on in the final weeks of the quarter were pushed into the second quarter. Some of these opportunities were delayed as customers worked to satisfy the incremental due diligence requirements related to, among other things, the regulatory increase and slanted coverage from the select media outlets we have discussed on previous calls. Our recently completed analysis of the quarter revealed that our average sales cycle lengthened by about 40% in Q1 of 2024 to five months compared to three months in Q1 of 2023.
Peter Gustav George: While our overall win rate improved to 79% from 71% in Q1 of last year certain late stage deals. We were working on in the final weeks of the quarter were pushed into the second quarter.
Peter Gustav George: Some of these opportunities were delayed as customers work to satisfy the incremental due diligence requirements related to among other things the regulatory inquiries and slanted coverage from the select media outlets, we have discussed on previous calls.
Peter Gustav George: Our recently completed analysis of the quarter revealed that our average sales cycle lengthened by about 40% in Q1 of 2024 to five months compared to three months in Q1 of 2023.
Peter Gustav George: Customers are asking more questions as they make their way through the buying journey. We are simply not going to rush our customers through that process or that decision. We have a lot of confidence in the outcomes of those decisions.
Peter Gustav George: Customers are asking more questions as they make their way through the buying journey.
Peter Gustav George: We are simply not going to rush, our customers through that process or that decision.
Peter Gustav George: We have a lot of confidence in the outcomes of those decisions.
Peter Gustav George: The good news is that several of these deals have already closed here in Q2, and we're off to a strong start to the second quarter. We continue to work with the FTC as they complete their work and have provided documentation and information responsive to their inquiry. We're also working with the FCC, but their work is still in its earliest stages. So what does all this mean for our business? While we believe the regulatory overhang has lengthened the sales cycle, it does not appear to be impacting our win rate.
Peter Gustav George: The good news is that several of these deals have already closed here in Q2, and we're off to a strong start to the second quarter.
Peter Gustav George: We continue to work with the FTC as they complete their work and have provided documentation and information responsive to their inquiry.
Peter Gustav George: We're also working with the FCC, but their work is still in its earliest stages.
Peter Gustav George: So what does all this mean to our business.
Peter Gustav George: While we believe the regulatory overhang has lengthened the sales cycle. It does not appear to be impacting our win rate.
Peter Gustav George: It is a little less clear as to what impact, if any, there has been on opportunities in which we're not invited to participate because of uncertainty in the marketplace. It has, however, made it a bit more challenging to provide forecasts in the near term since possible deal slippage is, by its nature, uncertain. For that reason, we think it's prudent to be a bit more cautious in our annual outlook. That's all.
Peter Gustav George: It is a little less clear as to what impact if any there has been an opportunities in which were not invited to participate because of uncertainty in the marketplace.
Peter Gustav George: It has however, maybe there's a bit more challenging to provide forecast in the near term since possible deal slippage is by its nature uncertain for that reason, we think it's prudent to be a bit more cautious in our annual outlook.
Peter Gustav George: That said, we remain committed to reaching positive adjusted EBITDA by the second quarter of 2025.
Peter Gustav George: We remain committed to reaching positive adjusted EBITDA by the second quarter of 2025. We are maintaining our commitment to profitability with prudent expense management and the leverage we're expecting from the advanced data-driven methodologies we're implementing across the company. So, we're on the final stretch to profitability.
Peter Gustav George: We are maintaining our commitment to profitability with prudent expense management and the leverage we're expecting from the advanced data driven methodologies, we're implementing across the company. So we're on the final stretch to profitability.
Peter Gustav George: I want to share a few other updates across the business. Investors will recall that we brought on board several senior sales and marketing professionals in the last six months, including a new chief commercial officer, a new chief marketing officer, and a new senior channel leader. We did this to address gaps we had previously identified in our sales execution process, which we believe contributed to the softer-than-expected start to the year. We're pleased to report that the new team is making great progress in restructuring demand generation efforts, upleveling brand awareness, and optimizing channel partner effectiveness to improve our overall go-to-market motion and scale in our business. We are seeing strong levels of customer interest in Evolv Visual Gun Detect, our newer offering designed to detect individuals with brandished guns in or around a venue.
Speaker Change: I wanted to share a few other updates across the business.
Peter Gustav George: Investors will recall that we brought on onboard several senior sales and marketing professionals in the last six months, including a new Chief commercial officer, a new Chief marketing officer, and a new senior channel leader.
Peter Gustav George: We did this to address gaps we had previously identified in our sales execution process, which we believe contributed to the softer than expected start to the year.
Peter Gustav George: We're pleased to report that the new team is making great progress in restructuring demand generation efforts.
Peter Gustav George: Up leveling brand awareness and optimizing channel partner effectiveness to improve our overall go to market motion and scale in our business.
Peter Gustav George: We are seeing strong levels of customer interest and evolve visual gotten detect our newer offering designed to detect individuals' with branded gardens in or around the venue.
Peter Gustav George: We are seeing demand for this solution across multiple vertical markets.
Peter Gustav George: We are seeing demand for this solution across multiple vertical markets. Meanwhile, staying on the new product front, Mike, Parag, and the R&D team are working on some very interesting initiatives in our innovation lab. These new products, which will be a mix of both digital and physical, will provide additional capabilities in our vertical markets, addressing our customers' needs and extending the Evolv ecosystem to continue on our mission. We expect these subscription-based products to be sold to new and existing customers, expanding the lifetime value of our customers and helping them create safer environments. I expect us to make a major new product announcement before the end of the year. Stay tuned for that.
Peter Gustav George: Staying on the new product front, Mike Parag and the R&D team are working on some very interesting initiatives in our innovation labs.
Peter Gustav George: These new products, which we will be a mix of both digital and physical will provide additional capabilities in our vertical markets addressing our customers' needs and extending the evolve ecosystem to continue on our mission.
Peter Gustav George: We expect these subscription based products to be sold to new and existing customers expanding their lifetime value of our customers and helping them create safer environments.
Peter Gustav George: I expect us to make a major new product announcements before the end of the year stay tuned for that.
Peter Gustav George: Yeah.
Peter Gustav George: Moving to our go-to-market partners, over 70% of our sales activity came with or through our channel partners in Q1. These are partners that extend our reach into certain verticals or geographies where they have a particularly strong presence. We saw strong activity with Motorola, with whom we had the most booked units since Q4 of 2022. We expect to continue to see strong activity with Motorola, Johnson Controls, Securitas Technology, and dozens of other regional partners like Alliance Technology Group and Stone Security.
Peter Gustav George: Moving to our go to market partners over 70% of our sales activity came with her through our channel partners in Q1.
Peter Gustav George: These are partners that extend our reach into certain verticals or geographies, where they have a particularly strong presence.
Peter Gustav George: We saw strong activity with Motorola with whom we had the most booked units since Q4 of 'twenty 'twenty. Two we expect to continue to see strong activity with Motorola Johnson controls securitize technology and does it dozens of other regional partners like Alliance Technology Group and stone.
Peter Gustav George: <unk> security.
Peter Gustav George: These relationships will be central to our plans to scale over time. We had our first meaningful set of units come up for renewal in the first quarter of 2024, and as expected, over 90% of the units did, in fact, renew. Nothing speaks more to the confidence and the value that our customers realize in our company and our products than renewing a subscription contract.
Peter Gustav George: These relationships will be central to our plans to scale over time.
Peter Gustav George: We had our first meaningful set of units come up for renewal in the first quarter of 2024 and as expected over 90% of the units did in fact renew.
Peter Gustav George: Nothing speaks more to the confidence and the value that our customers realize in our company and our products than renewing a subscription contract.
Peter Gustav George: In addition to renewal rates, we believe that bookings contribution from existing customers can provide very strong validation of customer trust and confidence.
Peter Gustav George: We believe that Booking's contribution from existing customers can provide very strong validation of customer trust and confidence. We're pleased to report that 49% of our booked ARR in Q1 was from existing customers, compared to 43% in Q1 of 2023. These are customers that have thoroughly tested and deployed our technology and have made the decision to expand. So, strong validation there.
Peter Gustav George: We're pleased to report that 49% of our booked <unk> in Q1 was from existing customers compared to 43% in Q1 of 2023.
Peter Gustav George: These are customers that have thoroughly tested and deployed our technology and have made the decision to expand so strong validation there.
Peter Gustav George: I want to turn to the trends we're seeing in markets, starting with education, where we welcome 15 new customers. In Q1, we did not have any seven-figure ARR deals in education, which has been a driver in prior quarters. We believe that this may indicate a little bit of seasonality in the education market. We are seeing a shift as more school districts change the way they fund security technology in preparation for the expiration of ESSER funding later this year.
Speaker Change: I wanted to turn to the trends, we're seeing in our end markets, starting with education, where we welcomed 15 new customers.
Peter Gustav George: In Q1, we did not have any seven figure <unk> deals in education, which has been a driver in prior quarters. We believe that that may indicate a little bit of seasonality in the education market.
Peter Gustav George: We are seeing a shift as more school districts changed the way They fund security technology in preparation for the exploration of Essar funding later this year.
Peter Gustav George: School boards are finding ways to fund our solution using their operating budgets and capital projects funding. This can make Evolv more embedded in a district standard purchasing motion as opposed to a one-time grant. School officials are finding creative ways to prioritize our solution in the absence of obvious funding sources.
Peter Gustav George: School boards are finding ways to fund our solution using their operating budgets and capital projects funding.
Peter Gustav George: This can make evolve more embedded in a district standard purchasing motion as opposed to a one time Grant school.
Peter Gustav George: School officials are finding creative ways to prioritize our solution and the absence of obvious funding sources.
Peter Gustav George: We're also seeing larger school districts in states like Maryland and Kentucky increasingly phase their deployments over multiple quarters. So while we are winning large opportunities, they do not always show up as booked ARR or deployed units in a single quarter. We have several potentially significant education deals in the pipeline for the latter half of 2024. We are proud to be deployed in 20 of the 100 largest school districts in the country in over 800 school buildings. Our daily school visitor screenings surged to nearly 700,000 during Q1 of 2024 compared to 250,000 in Q1 last year.
Peter Gustav George: We're also seeing larger school districts in states, like Maryland, and Kentucky increasingly phased deployments over multiple quarters. So while we are winning large opportunities. They do not always show up as booked <unk> are deployed units in a single quarter.
Peter Gustav George: We have several potentially significant education deals in the pipeline for the latter half of 2024.
Peter Gustav George: We're proud to be deployed in 20 of the 100 largest school districts in the country and over 800 school buildings.
Peter Gustav George: Our daily school visitor screenings have surged to nearly 700000 during Q1 of 2024 compared to 250000 in Q1 last year.
Peter Gustav George: Our healthcare market remains robust, with over a dozen new customers added; we are now operational in about 350 hospital buildings nationwide. We achieved an exceptionally high win rate in healthcare in Q1 and are beginning to gain traction at the hospital system level, which is an exciting development. Daily visitor screenings in healthcare facilities tripled to nearly 600,000 in Q1 of 2024 from 200,000 in Q1 last year. Professional sports continues to be a key vertical market for us, and we're proud to be part of the layered security for about 40 teams across all five major professional sports leagues. Recent wins include teams like the Charlotte Hornets, the Portland Trailblazers, the Tampa Bay Rays, and AT&T Stadium, home of the Dallas Cowboys.
Peter Gustav George: Our health care market remains robust with over a dozen new customers added.
Peter Gustav George: We're now operational in about 350 hospital buildings nationwide.
Peter Gustav George: We achieved an exceptionally high win rate in healthcare in Q1 and are beginning to gain traction at the hospital system level, which is an exciting development.
Peter Gustav George: Daily visitor screenings and health care facilities tripled to nearly 600000 in Q1 of 2024 from 200000 in Q1 last year.
Peter Gustav George: Yeah.
Peter Gustav George: Professional sports continues to be a key vertical market for us and we're proud to be part of the layered security for about 40 teams across all five major professional sports leagues.
Peter Gustav George: Recent wins include teams like the Charlotte Hornets.
Peter Gustav George: The Portland Trail Blazers, the Tampa Bay rays.
Peter Gustav George: And AT&T Stadium home of the Dallas Cowboys, we're excited to welcome these teams and their fans onboard.
Peter Gustav George: We're excited to welcome these teams and their fans on board. Finally, I'd like to provide a brief update on the competitive landscape. We believe there is a significant market for AI-based weapons detection with a few substantial players that are deploying it customers. Our extensive customer base, and widespread deployment of units solidify our leadership position in the AI-based weapons detection market. Evolv Express is a critical part of a layered security solution and is used to screen two and a half million visitors every single day. Our 750-plus customers use Evolv Express to tag, on average, more than 500 firearms every single day.
Peter Gustav George: Finally, I'd like to provide a brief update on the competitive landscape.
Peter Gustav George: We believe there is a significant market for AI based weapons detection with a few substantial players that are deploying at customers.
Peter Gustav George: Our extensive customer base and widespread deployment of units solidify our leadership position in the AI based weapons detection market.
Peter Gustav George: <unk> Express as a critical part of our layered security solution and is used to screen $2 5 million visitors every single day.
Peter Gustav George: Our 750, plus customers use evolve expressed the tag on average more than 500 firearms every single day.
Peter Gustav George: While the market has room for multiple players, we continue to see customers select our products for their detection capabilities, strong focus on end-user experience, integration into broader security infrastructure, and ongoing continuous improvements through software upgrades. More recently, we've been securing more head-to-head wins, and we're seeing revisitation of previously lost opportunities. We've had at least five recent instances of previous lost opportunities in education and professional sports not only reengaging with us but replacing their existing deployments with Evolv.
Peter Gustav George: While the market has room for multiple players we continue to see customers select our products for the detection capabilities.
Peter Gustav George: <unk> focus on end user experience.
Peter Gustav George: Integration into broader security infrastructure.
Peter Gustav George: And ongoing continuous improvement through software upgrades.
Peter Gustav George: More recently, we've been securing more head to head wins, and we're seeing revisit patient of previously lost opportunities.
Peter Gustav George: We've had at least five recent instances of previous lost opportunities in education, and professional sports not only re engaging with us, but replacing their existing deployments with the ball.
Peter Gustav George: Initially, venues might opt for a cheaper, more limited solution that offers a simplistic and uninformative red light, green light alerting system. But we're witnessing a shift back to Evolv Express due to its superior capabilities. This is not a one-quarter phenomenon.
Peter Gustav George: Initially venues might opt for a cheaper more limited solution that offers a simplistic in <unk>.
Peter Gustav George: Informatic Red light Green.
Peter Gustav George: Greenlight alerting system, but we're witnessing a shift back to evolve express due to its superior capabilities. This is not a one quarter phenomenon.
Peter Gustav George: We look forward to sharing more about our progress on the competitive front in future calls. Before handing things over to Mark, I want to close with our mission, which is to democratize security and make the world a safer and more enjoyable place to live, work, learn, and play. We will continue to innovate and deliver on our mission while simultaneously advancing on our long-term operating model and the Rule of Forty. We look forward to continuing to update investors on all these goals. With that said, let me turn things over to Mark, who will take you through our financial results and our outlook. Mark.
Peter Gustav George: We look forward to sharing more about our progress on the competitive front in future calls.
Peter Gustav George: Before handing things over to Mark.
Mark: I want to close with our mission.
Mark: Which is to democratize security.
Mark: Making the world a safer and more enjoyable place to live work learn into play.
Mark: We will continue to innovate and to deliver on our mission while simultaneously advancing on our long term operating model and the rule of 40.
Mark: We look forward to continuing to update investors on all of these goals.
Peter Gustav George: With that let me turn things over to Mark who will take you through our financial results and our outlook.
Peter Gustav George: Mark.
Mark Donohue: Thanks, Peter, and good afternoon, everyone. I'm going to review our first quarter results in more detail and then walk through our outline. As Peter mentioned, total revenue was $21.7 million, up 17% year over year. Annual Recurring Revenue, or ARR, at March 31, 2024 was $83 million, reflecting growth of 96% year over year. Total recurring revenue during the first quarter of 2024 was $19.4 million, compared to $9.1 million in the first quarter of 2023, reflecting growth of 114% year-over-year.
Mark: Thanks, Peter and good afternoon, everyone I'm going to review, our first quarter results in more detail and then walk through our outlook.
Mark Donohue: As Peter mentioned total revenue was $21 7 million up 17% year over year.
Mark Donohue: Annual recurring revenue or <unk> at March 31, 2024 was $83 million, reflecting growth of 96% year over year.
Mark Donohue: Total recurring revenue during the first quarter of 2024 was $19 4 million compared to $9 1 million in the first quarter of 2023, reflecting growth of 114% year over year.
Mark Donohue: Of note, 89% of our revenue in Q1'24 was recurring compared to about 50% in Q1'23. Remaining Performance Obligation, or RPO, as of March 31, 2024 was $254 million, up 57% year-over-year and 6% sequentially. As we've told investors on prior calls, we expect the rate of growth in RPO to attenuate as there is less lower-margin product revenue running through our financial statements with the implementation of the distributor subscription model. Adjusted gross margin, which excludes stock-based compensation and other wind-time expenses, was 61% in the first quarter of 2024, compared to 26% in the first quarter of last year.
Mark Donohue: Of note, 89% of our revenue in Q1, 24 was recurring compared to about 50% in Q1 'twenty three.
Mark Donohue: Remaining performance obligation or RPE O as of March 31, 2024 was 254 million up 57% year over year and 6% sequentially.
Mark Donohue: As we've told investors on prior calls we expect the rate of growth in our Po to attenuate as there is less lower margin product revenue running through our financial statements with the implementation of the distributor subscription model.
Mark Donohue: Adjusted gross margin, which excludes stock based compensation and other one time expenses was 61% in the first quarter of 2024.
Mark Donohue: Compared to 26% in the first quarter of last year.
Mark Donohue: Our improved gross profit and gross margin primarily reflect our continued transition to recurring revenue streams, both through our pure subscription model and our newer distribution subscription model. Adjusted operating expenses, which exclude stock-based compensation, loss on impairment of equipment, and certain other one-time expenses, were $27.3 million compared to $22.2 million in the first quarter of last year. The increase year-over-year primarily reflects headcount investments across the business, particularly in revenue-generating positions and in research and development.
Mark Donohue: Our improved gross profit and gross margin primarily reflects our continued transition to recurring revenue streams, both through our peer subscription model and our newer distribution subscription model.
Mark Donohue: Adjusted operating expenses, which exclude stock based compensation loss on impairment of equipment and certain other onetime expenses.
Mark Donohue: Were $27 3 million compared to $22 2 million in the first quarter of last year.
Mark Donohue: The increase year over year, primarily reflects head count investments across the business, particularly and revenue generating positions and in research and development.
Mark Donohue: The increase sequentially is also due to a higher payroll tax, comment at the start of the new year. Adjusted loss, which excludes stock-based compensation, non-cash charges, and other one-time items, was $13.1 million, compared to $16.9 million in the first quarter of last year.
Mark Donohue: The increase sequentially is also due to a higher payroll tax.
Mark Donohue: Comment at the start of the new year.
Mark Donohue: Net loss, which excludes stock based compensation noncash charges and other onetime items was $13 1 million compared to $16 9 million in the first quarter of last year.
Mark Donohue: Adjusted EBITDA, which excludes stock-based compensation and other one-time expenses, was negative $10.7 million compared to negative $15.4 million in the first quarter of last year. This reflects strong gross margin expansion and prudent expense management. Turning to the balance sheet, we ended the quarter with $81 million in cash, cash equivalents, restricted cash, and marketable security, compared to $119 million at the end of Q4 2023. This primarily reflects the significant resources we dedicated to build inventory as we prepared for the transition to our next generation express system. That inventory is found on our balance sheet in both actual inventory, as well as in property, plant, and equipment.
Mark Donohue: Adjusted EBITDA, which excludes stock based compensation and other one time expenses.
Mark Donohue: Was negative $10 7 million compared to negative $15 4 million in the first quarter of last year.
Mark Donohue: This reflects strong gross margin expansion and prudent expense management.
Mark Donohue: In fact, over $39 million of our ending PP&E was for undeployed inventory. To be clear, we believe we have reached the high point for inventory for the year, and we will now be strategically depleting that for the rest of the year. To a lesser extent, the cash usage in the quarter also reflected capital to support our pure subscription model and the timing of certain cash payments.
Mark Donohue: Turning to the balance sheet, we ended the quarter with $81 million in cash cash equivalents restricted cash and marketable securities compared to 101 hundred $19 million at the end of Q4 2023.
Mark Donohue: This primarily reflects the significant resources, we dedicated to build inventory as we prepared for the transition to our next generation Express system.
Mark Donohue: That inventory is founded on our balance sheet and both actual inventory as well as in property plant and equipment.
Mark Donohue: In fact over $39 million of our ending PP&E was for underplay the inventory.
Mark Donohue: To be clear, we believe we have reached the high point for inventory for the year and.
Mark Donohue: And we will now be strategically depleting that for the rest of the year.
Mark Donohue: To a lesser extent the cash usage in the quarter also reflects capital to support our pure subscription model and the timing of certain cash payments.
Mark Donohue: I want to close with a few comments on our outlook. When we shared thoughts about our 2024 outlook during our last earnings call in February, we told investors that we assumed no significant changes in the demand environment because of the FTC and SEC inquiries. That assumption has changed.
Speaker Change: I want to close with a few comments on our outlook.
Mark Donohue: When we shared thoughts about our 2024 outlook during our last earnings call in February we told investors that we assumed no significant changes in the demand environment because of the FTC and FCC inquiries.
Mark Donohue: That assumption has changed.
Mark Donohue: Some opportunities have been delayed as customers work to satisfy the incremental due diligence requirements related to, among other things, these regulatory inquiries and the slanted coverage from select media outlets we have discussed on previous calls. While our win rates are up year over year, we see deals taking longer to close. In the interim, we're going to continue to focus on improving sales execution, raising brand awareness, driving demand generation, and optimizing our Channel Partner Program. While these matters are resolved, we're going to be more cautious in our near-term outlook.
Mark Donohue: Some opportunities have been delayed as customers work to satisfy the incremental due diligence requirements related to among other things these regulatory inquiries and the slanted coverage from select media outlets, we have discussed on previous calls.
Mark Donohue: While our win rates are up year over year, we see deals taking longer to close.
Mark Donohue: In the interim we're going to continue to focus on improving sales execution raising brand awareness.
Mark Donohue: Driving demand generation and optimizing our channel partner program.
Mark Donohue: While these matters resolved, we're going to be more cautious in our near term outlook.
Mark Donohue: Our recently completed analysis of the quarter revealed that our average sales cycle lengthened by about 40% in Q1 of 2024 to five months compared to three months in Q1 of 2023. We are now modeling full-year revenues of about $100 million compared to our previous estimate of $115 million. This reflects growth of about 25% year-over-year. We now believe we can exit 2024 with an ARR of about $100 million, compared to our previous estimate of between $108 to $112 million.
Mark Donohue: Our recently completed an analysis of the quarter, we revealed that our average sales cycle lengthened about 40% in Q1 of 2024 to five months compared to three months in Q1 of 2023.
Mark Donohue: We are now modeling full year revenues of about $100 million compared to our previous estimate of $115 million.
Mark Donohue: This reflects growth of about 25% year over year.
Mark Donohue: We now believe we can exit 2024 with <unk> of about $100 million compared to our previous estimate of between $108 million to $112 million.
Mark Donohue: This reflects growth of about 33% year over year. We are reaffirming our estimate for adjusted full-year gross margin of about 60%. And further, we are reaffirming our belief that we can deliver improvements and full-year adjusted EBITDA of at least 40% in 2024, and we believe we remain on track to get to positive adjusted EBITDA in the first half of 2025. With that, I'll turn the call back over to Brian.
Mark Donohue: This reflects growth of about 33% year over year.
Mark Donohue: We are reaffirming our estimate for adjusted full year gross margin of about 60%.
Brian Norris: And further we are reaffirming our belief that we can deliver improvements in full year adjusted EBITDA of at least 40% in 2024.
Brian Norris: And we believe we remain on track to get to positive adjusted EBITDA in the first half of 2025.
Mark Donohue: With that I'll turn the call back over to Brian.
Brian Norris: Thanks, Mark. At this time, we'd like to open the call up for Q&A. Again, we're going to ask participants to limit themselves to one question and one follow-up.
Mark Donohue: Mark at this time, we'd like to open the call up for Q&A again, we're going to ask participants to limit themselves to one question and one follow up.
Operator: And as a reminder, if you would like to ask a question, please press 1, then 0 at this time. 1, 0. Our first question will come from the line of Mike Latimore with Northland Capital. Please go ahead; your line is open.
Brian Norris: And as a reminder, if you would like to ask a question. Please press one then zero at this time.
Operator: One zero.
Operator: Yeah.
Operator: Our first question will come from the line of Mike Latimore with Northland Capital. Please go ahead. Your line is open.
Aditya: Hi, this is Aditya on behalf of Mike Latimore. Could you tell me how many salespeople you have hired this year and what is the total number of salespeople you have?
Bill: Hi, This is other bill on behalf of Mike Lattimore.
Aditya: Could you tell me how many gains this.
Aditya: This year on what is the total number of.
Speaker Change: You bet.
Brian Norris: This is Brian Norris. I just want to make sure that I understood the question. Was it quote-of-carrying salespeople now, and was that the question, how many folks do we have? The answer to that question is we have about 35 quarter-carrying sales executives, which is relatively unchanged since the end of last year.
Aditya: This is Brian Norris I, just want to make sure that I got the question was it was a quota carrying salespeople now and is that the question how many how many folks we have.
Brian Norris: Yes. The answer to that question is we have about 35 quota carrying sales executives, which is relatively unchanged since the end of last year.
Brian Norris: Yeah.
Aditya: All right, got it. And also, could you give some color on how the industrial warehouse category is performing? Do we see a good amount of bookings coming from the industrial warehouse?
Brian Norris: And also could you give some color on how the industrial lot host.
Aditya: So we see a good amount of bookings coming from the industrial warehouse.
Peter Gustav George: Yeah, we're just beginning the Industrial Warehouse Vertical Orientation, which is how we go to market for verticals. We think it can be one of the top two verticals over time for the company. Obviously, education is very big, health care, but industrial warehouses is going to be a big one. So it's still early days, but we're confident that both this year and next year we'll make good progress there.
Speaker Change: Yeah, we're just beginning the industrial warehouses vertical orientation, which is how we go to market on verticals. We think it can be in one of the top two verticals over over time for the company, obviously education very big healthcare, but industrial warehouses is going to be a big one.
Peter Gustav George: So it's still early days, but we're confident that both this year and next year, we will make good progress there.
Aditya: All right, I got it. Thank you.
Speaker Change: Got it thank you.
Operator: Perfect, thank you. Operator, are you ready for the next question, please?
Speaker Change: Perfect. Thank you operator ready for the next question. Please.
Operator: And that next question comes from the line of Brett Knoblauch. Please go ahead; your line is open.
Operator: And then next question comes from the line of Brett Knoblauch. Please go ahead. Your line is open.
Brett Anthony Knoblauch: Hi guys, thanks for taking my questions. Maybe if we could just start on the four-year guidance, I guess my math kind of suggests that, to get to 100 million ARs, you need to add maybe 1,100 new units over the remaining three quarters, which obviously is down a good bit from last year. But I guess, to that extent: How confident are you that maybe Q1 is the low point for installs, or is that what we should be expecting?
Brett Anthony Knoblauch: Hey, guys. Thanks for taking my question.
Brett Anthony Knoblauch: If we could just start on the on our full year guidance.
Brett Anthony Knoblauch: I guess my math kind of suggests that they.
Brett Anthony Knoblauch: To get to a 100 million a are you need to add and maybe elaborate 100, new units over the remaining three quarters, which.
Brett Anthony Knoblauch: It is down a bit from last year.
Brett Anthony Knoblauch: But I guess to that extent how.
Brett Anthony Knoblauch: How confident are you that maybe Q1 is the low point low point from installs or is that what we should be expecting.
Mark Donohue: Yeah, Brett, thanks. This is Mark Donohue.
Brett Anthony Knoblauch: Yeah, Brett. Thanks, This is mark Donohue.
Mark Donohue: Look we we we feel like we are at a low point, we do we do for this quarter I mean, I think Q1 is seasonally a low quarter for us I think we saw some of the extensions of the deals which have gone out from three and a half months to five months actually coming in in the April timeframe. So we're starting to see.
Mark Donohue: That tick up a bunch and give us some some confidence going into Q2 that said you're right.
Mark Donohue: Look, we feel like we are at a low point. We are. We do for this quarter. I mean, I think Q1 is seasonally a low quarter for us. I think we saw some of the extensions of the deals, which have gone out from three and a half months to five months, actually coming in in the April timeframe. So we're starting to see that pick up a bunch and give us some confidence going into Q2.
Mark Donohue: Think that I think for the year, we're looking probably in the 16 to 1900 unit range or 6100 6400 for the year as we kind of work through this.
Mark Donohue: At this sales cycle extensions in some of the regulatory overhang that we've been that we've been going through we've had good conversations with customers when we get on the phone with them and we do often now as they're going through their buying cycle.
Mark Donohue: The conversations go well and we're getting to a close it's just taking a little bit more time than it used to.
Mark Donohue: In fact, we had.
Mark Donohue: Our win rates overall were about 79% in Q1 for the deals that were invited to so we're still we're still getting this done it's just going a little bit slower right now due to some of the I would say slanted media and regulatory overhang that we're dealing with.
Mark Donohue: That said, you're right. I think for the year, we're looking probably in the $1600 to $1900 unit range or $6100 to $6400 for the year as we kind of work through these sales cycle extensions and some of the regulatory overhang that we've been going through. It's just going a little bit slower right now due to some of the, I would say, slanted media and regulatory overhang that we're dealing with.
Brett Anthony Knoblauch: And then I guess within the hospital segment, you know, I went to a hospital last week, which was the second time I went there in the last month, and there was a new unit there. And it was very seamless.
Mark Donohue: Awesome, and then I guess with.
Mark Donohue: The hospital segment.
Brett Anthony Knoblauch: Went to a hospital last week and.
Brett Anthony Knoblauch: Which is the second time I went there over the last month and there isn't a new.
Brett Anthony Knoblauch: Unit there than.
Brett Anthony Knoblauch: And it was very seamless and I was just curious on the sales cycles.
Brett Anthony Knoblauch: Specific to one end market or are you seeing it across the board.
Mark Donohue: I was just curious about the sales cycles. Is that specific to one end market? Or are you seeing it across the board?
Brett Anthony Knoblauch: Yeah, I would say it's across the board the longer impacts have been actually in education because of they end up being longer anyway.
Mark Donohue: Yeah, I would say it's across the board. The longer impacts have actually been in education because they end up being longer anyway.
Mark Donohue: Healthcare's sales cycle is still about five months. On the positive side, we had an extraordinary quarter in healthcare as it relates to win rates. We won close to 100% of the deals that we were in. As we said earlier, we're in 350 hospital buildings right now. We see that as a really, really important vertical for us. It represents 70% of the violence at the workplace that's happening in healthcare. And when we put a system in, normally, our customers test it first; they'll do a POC, and then in their first few days of having the system in, they end up finding things that they never thought were coming in before. So it's hard to get the system back out. We think hospitals are a place we're gonna continue to double down on.
Mark Donohue: Healthcare sales cycles still about five months on the positive side, we had an extraordinary quarter.
Mark Donohue: In health care as relates to win rate, we won close to 100% of the deals that we were in as we said earlier. We're in 350 hospital buildings right now we see that as a really really important vertical for us. It represents 70% of the of the violence at the workplace is happening.
Mark Donohue: In health care.
Mark Donohue: And when we put a system in normally our customers test. It first they'll do a POC and then in their first early days of having the system and they end up finding things that they never thought were coming in before so it's hard to get the system back out. So we think hospitals as a <unk>.
Speaker Change: We're going to continue to double down on yes, I'd only add to that Brett that we're also starting to see sales cycles engaged at the hospital system level. So that's a difference from a year or 18 months ago. When we were selling at the local hospital levels today, we're starting to see much bigger opportunities emerge.
Mark Donohue: I'd only add to that, Brett, that we're also starting to see sales cycles engage at the hospital system level. So that's a difference from a year or 18 months ago when we were selling at the local hospital level. Today we're starting to see much bigger opportunities emerge. Are there any follow-up questions there, Brett?
Brett: Are there any follow up questions.
Brett Anthony Knoblauch: Maybe just one on a different topic. You know, I think it was about a month ago, maybe a bit over a month ago now, where Mayor Adams gave a press conference, a speech talking about subway safety, and he was standing next to the Evolv system. Could you talk about how you view your product protecting subways in New York City and other metro areas across the United States, and is there any update on New York City in particular?
Brett: Maybe just one on a different topic.
Brett Anthony Knoblauch: It was about a month ago, maybe a bit over a month ago, now where mayor Adams Gabe.
Brett Anthony Knoblauch: Thompson.
Brett Anthony Knoblauch: The conference talking.
Brett Anthony Knoblauch: Talking about.
Brett Anthony Knoblauch: So by safety and he was saying next duty valve system could you talk about.
Brett Anthony Knoblauch: How you view your product.
Brett Anthony Knoblauch: Protecting the subway in New York city's in other metro areas across the.
Brett Anthony Knoblauch: The United States.
Brett Anthony Knoblauch: Any update on New York City in particular.
Peter Gustav George: So look, we've always said, we believed before, and we believe today that subways are a challenging environment for security, period. Having said that, the NYPD came to us, they wanted to partner with us, they asked us to use our technology, we're supporting them, and we have full confidence that the NYPD knows how to keep New Yorkers safe, and we're going to support them from a technology standpoint. They're still in the investigation and learning phase right now.
Speaker Change: So look we've always said, we believe before we believe today that subways or a challenging environment.
Peter Gustav George: For security period.
Peter Gustav George: Having said that the.
Peter Gustav George: And why PD came to us they wanted to partner with us They asked us to use our technology, we're supporting them.
Peter Gustav George: And we have full confidence that the NYPD knows how to keep new Yorker safe and we're going to support them from a technology standpoint, there's still in there and their investigation and learning phase right now.
Brett Anthony Knoblauch: Thank you. I'll hop back in queue.
Speaker Change: Okay. Thank you I'll hop back in queue.
Brett Anthony Knoblauch: Yeah.
Brian Norris: And Brett, before we get to the next question, I'll just say that none of the public transit opportunities are included in the TAM analysis that we've ever shared with the street, and so all that, again, we're still going through our testing phases there. But all of that would be accretive to the TAM estimates that we've provided. More to come on that in the quarters ahead. Ryan, I think we're ready for our next question if there's anybody left in the queue.
Brett Anthony Knoblauch: And before we get to the next question I'll, just say that none of the public transit opportunity is included in the Tam analysis that we've ever shared with the street and so all of that's again, we're still going through our testing phases. There all of that would be accretive to the Tam estimates that we've provided.
Brian Norris: More to come on that in the quarters ahead.
Ryan: Brian I think we're ready for our next question if there's anybody left in the queue.
Operator: Our next question will come from the line of Eric Martinuzzi with Lake Street. Please go ahead; your line is open.
Speaker Change: Our next question will come from the line of Eric Martin Newsy with Lake Street. Please go ahead. Your line is open.
Eric Martinuzzi: Yeah, curious to know about the pricing environment and if you could comment on it with regard to both the education and the healthcare verticals. Are you seeing prospective buyers coming back and asking for lower prices? Or are you seeing competitive behaviors that you haven't seen before?
Eric Martinuzzi: Yes curious to know about the pricing environment.
Eric Martinuzzi: Comment on it with regard to <unk>.
Eric Martinuzzi: The education and the healthcare verticals are you.
Eric Martinuzzi: Or are you seeing prospective buyers coming back and asking for lower prices or are you seeing competitive behavior that you hadn't seen before.
Eric Martinuzzi: Well.
Mark Donohue: We've been seeing some competitive behaviors that I think we haven't seen before. We've seen more and more pricing competition in some of the deals. I think there's a clear technology benefit to what we're doing, so I think the comparative on the technical perspective is very high, but from a pricing perspective, we are a premium-priced product. We have, though, gone and been amenable to pricing, and particularly in school systems where there's a lot of volume, so we have actually gone down that path to work with our customers and prospects to actually kind of ensure that we In other verticals, we're still able to maintain pricing because of the value we're providing. The throughput that we can provide and the technical differentiators, I think, are still helpful in maintaining our pricing position.
Eric Martinuzzi: We've been seeing some competitive behaviors I think we haven't seen before we've seen more and more pricing competition and some of the deals I think there is a clear technology.
Mark Donohue: Benefit to what we're doing so I think the comparative on on the technical perspective is very high but from a pricing perspective, we are a premium price product, we have though gone.
Mark Donohue: Been amenable to pricing.
Mark Donohue: And particularly in the school systems, where Theres a lot of volume. So that we have actually gone down that path to work with our to work with our customers and prospects to actually kind of ensure that that where we're mitigating the delta between some of the some of the competition out there.
Mark Donohue: And in other verticals, there's still we're still able to maintain pricing because of the value we're providing.
Mark Donohue: The throughput that we can provide and the.
Mark Donohue: The technical Differentiators I think still are helpful and maintaining our pricing position.
Mark Donohue: Yeah.
Eric Martinuzzi: And it's safe to say that those in the education environment and those volume-based deals that the potential lower prices are captured in this outlook, the new outlook for 2040.
Mark Donohue: And it's safe to say that those in the education environment in those volume based deals that the potential lower prices is captured in this outlook.
Eric Martinuzzi: Outlook for 'twenty.
Mark Donohue: 100%. I mean, we have our pricing, and we did that in January, so everything that is in our outlook and has been in our outlook reflects our pricing model for the entire year.
Speaker Change: 100% I mean, when we have our pricing and we did that in January so everything that is in our outlook and has been in our outlook reflects our pricing model for the entire year.
Eric Martinuzzi: Okay, and then a follow-up on the path to breakeven in the first half of 2025. What should we be looking for on the cash balance when you reach that point?
Speaker Change: Okay, and then a follow up on the <unk>.
Eric Martinuzzi: <unk> two <unk>.
Eric Martinuzzi: Breakeven adjusted EBITDA breakeven in the first half of 2025, what should we be looking for on the cash balance when you reach that point.
Mark Donohue: I think that you'll see us in the range of $65 to $75 million as a cash balance. We look at the top line revenue necessity probably being in the $32 to $35 million range to actually reach that EBITDA neutrality, well, probably slightly EBITDA positive in cash neutrality. So, that's still our goal as a business. We're going to get there by really maintaining judicious spending habits as we have in the past. I would also say that we're going to... really be looking to ensure that we stay on this path to profitability that we announced about a year ago.
Speaker Change: I think that Youll see us in the range of $65 million to $75 million as a cash balance we look at the top line.
Mark Donohue: Revenue necessity, probably being in that $32 million to $35 million range to actually reach that EBIT neutrality.
Mark Donohue: Well, probably slightly EBIT positive in cash neutrality. So that's still our goal as a business.
Mark Donohue: We're going to we're going to get there by really maintaining.
Mark Donohue: Judicious judicious spending habits as we have in the past.
Mark Donohue: I would say also that we're going to.
Mark Donohue: Really be looking to ensure that we stay on this path to profitability.
Mark Donohue: We announced about a year ago.
Eric Martinuzzi: Got it. Thanks for taking my questions.
Speaker Change: Got it thanks for taking my questions.
Eric Martinuzzi: Yes.
Brian Norris: Terrific. I think that's the last question, so I'm going to turn it over to Peter for a few closing remarks. Thanks a lot, Brian. Look, we delivered.
Eric Martinuzzi: Terrific I think that's the last question, so I'm going to turn it over to Peter for a few closing remarks, thanks, a lot Brian.
Peter Gustav George: Look, we delivered really strong recurring revenue this quarter. Our gross margins went up, and adjusted EBITDA, but the year started a little bit lighter and slower than we expected. There certainly has been a lot of evidence of regulatory overhang, which has shown up in that expanded sales cycle from three months to five months, and we're dealing with that.
Peter: We delivered really strong reoccurring revenue this quarter, our gross margins went up adjusted EBITDA, but the year started a little bit lighter in slower than we expected.
Peter Gustav George: There certainly has been a lot of evidence of regulatory overhang, which is showing up in that expanded sales cycle from three months to five months, we're dealing with that.
Peter Gustav George: We are very, very focused right now on improving our sales execution. As we mentioned earlier, we added some senior leadership there that is making a big difference already. We remain really committed to our long-term operating model and our rule of 40, and, as Mark just mentioned, getting to EBITDA positive in the second quarter of 2025. And finally, this is all about our mission, making the world a safer place for people to live, work, learn, and play together. And we feel honored to have that mission in the company. So thank you, everyone. Okay, ladies and gentlemen, that does conclude today's conference. I would like to thank you for your participation. You may now go.
Peter Gustav George: We stay very very focused right now on improving our sales execution as we mentioned earlier, we added some senior leadership, there that are making a big difference already.
Peter Gustav George: We remain really committed to our long term operating model and our rule of 40 and as Mark just mentioned getting to EBIT positive.
Speaker Change: In the second quarter of 2025.
Peter Gustav George: And finally this is all about our mission of making the world a safer place for people to live work learn and play together and we feel honored to have that mission in the company. So thank you everyone.
Peter Gustav George: Okay.
Operator: We're sorry, your conference is ending now. Please hang up.
Operator: Okay, ladies and gentlemen, that does conclude today's conference. I'd like to thank you for your participation. You may now disconnect.
Speaker Change: Okay, ladies and gentlemen that does conclude today's conference I'd like to thank you for your participation you may now disconnect.
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Operator: Yeah.
Operator: [music].
Operator: We're sorry your conferences.
Operator: Now please hang up.