Q1 2025 Evolv Technologies Holdings Inc Earnings Call

Operator: Good afternoon and welcome to the Evolv Technology First Quarter Earnings Result Conference Call. All participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded.

Good afternoon, and welcome to the evolve technology first quarter earnings Conference call.

All participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

Brian Norris: As a reminder, this conference call is being recorded I would now like to introduce your host for today's call, Brian Norris Senior Vice President of Finance and Investor Relations for evolve technology. Please go ahead Sir.

Brian Norris: I would now like to introduce your host for today's call, Brian Norris, Senior Vice President of Finance and Investor Relations for Evolv Technology. Please go ahead, sir. Thank you, and good afternoon, everyone, and welcome to The Call. I'm joined here today by John Kaczorski, our President and Chief Executive Officer, and Chris Cutzer, our Chief Financial Officer.

Speaker Change: Thank you and good afternoon, everyone and welcome to the call I'm joined here today by John <unk>, Our President and Chief Executive Officer, and Chris Koch, Our Chief Financial Officer.

Brian Norris: This afternoon, after the market closed, we issued a press release announcing our first quarter 2025 results and our business outlook for the year. This press release has been furnished with the SEC, and it's also available on the IR section of our website. There, investors can also access the Form 12B-25 that we filed on May 15, 2025, which was a required SEC filing explaining why we needed more time to finalize our Q1-25 financials due to the efforts spent completing our 2024 filing. As required, that filing also included preliminary estimates for Q1-25 results, and those estimates are in line with the results we issued this evening.

Speaker Change: This afternoon after the market close we issued a press release announcing our first quarter 2025 results and our business outlook for the year.

Speaker Change: This press release has been furnished with the SEC and is also available on the IR section of our website.

Speaker Change: Investors can also access the form <unk> 25 that we filed on May 15, 2025, which was the required SEC filings, explaining why we need more time to finalize our Q1 dollars 25 financials due to the efforts spent completing our 2024 filings.

Speaker Change: As required debt filing also included preliminary estimates for Q1 dollars 25 results and those estimates are in line with the results we issued this evening.

Brian Norris: During today's call, we will make forward-looking statements within the meaning of the safe harbor provisions 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. All forward-looking statements are subject to material risks, uncertainties, and assumptions, some of which are beyond our control. actual events or financial results may differ materially from these forward-looking statements which 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, 2024 filed with the SEC on April 28, 2025 and our quarterly report on Form 10-Q for the three months ended March 31, 2025 filed with the SEC earlier today.

Speaker Change: During today's call, we will make forward looking statements within the meaning of the safe Harbor provisions 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 gaming.

Speaker Change: Customers demand for our products and offerings and our ability to meet our business outlook.

Speaker Change: All forward looking statements are subject to material risks uncertainties and assumptions some of which are beyond our control.

Speaker Change: Actual events or financial results may differ materially from these forward looking statements because of a number of risks and uncertainties, including without limitation the risk factors set forth under the caption risk factors in our annual report on Form 10-K for the year ended December 31, 2024 filed with the SEC on April 28 2025.

Speaker Change: In our quarterly report on Form 10-Q for the three months ended March 31, 2025 filed with the SEC earlier today.

Brian Norris: The forward-looking statements made today represent our views as of May 20, 2025. 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.

Speaker Change: The forward looking statements made today represent our views as of May 22025, Although we believe that the expectations reflected in these statements are reasonable we cannot guarantee future results performance or the events and circumstances reflected in our forward looking statements will be achieved or will occur.

Speaker Change: <unk> 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. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with These measures include adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted operating income, adjusted EBITDA, adjusted EBITDA margin, 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.

Speaker Change: Our commentary today will also include non-GAAP financial measures, which we believe provide additional insights for investors.

Speaker Change: Measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP.

Speaker Change: These measures include adjusted gross profit adjusted gross margin adjusted operating expenses adjusted operating income adjusted EBITDA adjusted EBITDA margin adjusted earnings and adjusted earnings per diluted share Rex.

Speaker Change: Reconciliations between these non-GAAP measures and the most directly comparable GAAP measures can be found in our press release issued today.

Speaker Change: 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 anti-recurring revenue, or ARR, remaining performance obligation, or RPO, and total number of subscriptions, each of which we believe is helpful to investors in understanding the progress we are making as a business.

Speaker Change: We will be discussing key metrics such as in our recurring revenue or <unk>.

Speaker Change: Remaining performance obligation or RVO and total number of subscriptions each of which we believe is helpful to investors in understanding the progress, we're making as a business.

Brian Norris: Before I turn things over to John, I want to briefly share some details of our upcoming investor outreach plans. We plan to return to the conference circuit here in Q2 with three events during the quarter. The Craig Hallam Conference in Minneapolis and the Cowan Technology Conference, both being held later this month, and the Northland Capital Conference in June. We look forward to seeing investors at those events.

Speaker Change: Before I turn things over to John I want to briefly share some details of our upcoming Investor outreach plans, we plan to return to the conference circuit here in Q2 with three events during the quarter.

Speaker Change: Craig Hallum Conference in Minneapolis, and the Cowen Technology Conference both being held later this month and the Northland Capital Conference in June.

Speaker Change: We look forward to seeing investors apples events.

Brian Norris: With that, I'd like to turn the call over to John. Thank you, Brian. And thanks, everyone, for joining us today.

Speaker Change: With that I'll like to turn the call over to John John.

Speaker Change: Thank you, Brian and thanks, everyone for joining us today before.

John Kaczorski: Before we get into our prepared remarks, since this marks our first call together as CEO and CFO, Chris and I are going to take a moment to introduce As I speak with you today on my first earnings call, I do so with a deep sense of responsibility and optimism. In the brief time I've been with the company, I've been impressed by the commitment of our customers, partners, employees, and shareholders. Their passion for what we do drives us every day, and it's more important than ever as we enter a new phase of I joined Evolv in December, bringing over 20 years of experience at Motorola Solutions, where I helped build a market-leading video security business.

Speaker Change: Before we get into our prepared remarks since this marks our first call together as CEO and CFO, Chris and I are going to take a moment to introduce ourselves.

Speaker Change: As I speak with you today on my first earnings call.

Speaker Change: So with a deep sense of responsibility and optimism in.

Speaker Change: In the brief time I've been with the company I've been impressed by the commitment of our customers partners employees and shareholders their passion for what we do drives us every day.

Speaker Change: And it's more important than ever as we enter a new phase of growth at.

Speaker Change: I joined evolve in December bringing over 20 years of experience at Motorola solutions.

Speaker Change: Help build a market leading video security business. In addition to leadership roles in engineering sales and services.

John Kaczorski: in addition to leadership roles in engineering, sales, and service. That experience taught me valuable lessons about growing technology businesses and staying close to customer needs. I also served on Evolv's board from January 2022 to November 2023, which gave me a deeper understanding of the company's mission and the potential for our technology. I joined Evolv because I believe deeply in the mission, making the world a safer place.

Speaker Change: That experience company valuable lessons.

Speaker Change: Growing technology businesses, and staying close to customer needs.

Speaker Change: Also served on <unk> Board from January 2022 to November 2023, which gave me a deeper understanding of the company's mission and the potential for our technology.

Speaker Change: I joined evolved because I believe deeply in the mission, making the world a safer place.

John Kaczorski: Gun violence, which continues to rage across the country, has dominated headlines on almost a daily basis over the past eight weeks. from a student union in Tallahassee to a food hall in downtown Oklahoma City, from a funeral service in Hartford, Connecticut, to a spring car show in New Mexico, to a school in Madison, Wisconsin. The headlines have been a sobering reminder of the ongoing toll of gun violence across America. Evolv has developed a technology that enables schools, hospitals, distribution warehouses, tourist attractions, and other facilities to implement weapon screening in places where it simply wasn't practicable.

Speaker Change: Gun violence, which continues to rage across the country has dominated the headlines on almost a daily basis. Some of the past eight weeks from a student union in Tallahassee to a food hall in downtown Oklahoma City from a funeral service in Hartford, Connecticut to our spring car show in New Mexico to a school in Madison, Wisconsin.

Speaker Change: The headlines have been a sobering reminder of the ongoing toll of gun violence across America.

Speaker Change: <unk> has developed a technology that enables schools hospitals distribution warehouses tourist attractions and other facilities to implement <unk> screening in places where it simply wasn't practical before there are hundreds of thousands of entrances across the country that could benefit from AI base weapons detection.

John Kaczorski: There are hundreds of thousands of entrances across the country that could benefit from AI-based weapons detection. And today, we're only in around 6,600 of them. We're still very much in the early innings of adoption and the potential market opportunity is enormous.

Speaker Change: And today, we're only in around 6600 of them.

Speaker Change: We're still very much in the early innings of adoption and the potential market opportunity is enormous.

John Kaczorski: This is my first time speaking with many of you, so I want to take a moment to share how I think about the drivers of our business. At its core, our business rests on the total number of subscriptions. The first step in modeling a business like ours is the starting annual recurring revenue base, which was approximately $100 million as of December 31, 2020. That reflected a subscription base of approximately 6,100 units at that time. As we walked into 2025, that recurring revenue base formed a solid foundation to about 78% of the revenue plan we're outlining for 2025.

Speaker Change: This is my first time speaking with many of you. So I wanted to take a moment to share how I think about the drivers of our business model.

Speaker Change: At its core.

Speaker Change: Our business rests on the total number of subscriptions.

Speaker Change: The first step in modeling our business like ours is the starting annual recurring revenue base, which was approximately $100 million as of December 31 2024.

Speaker Change: That reflected a subscription base of approximately 6100 units at that time.

Speaker Change: As we walked into 2025 that recurring revenue base form a solid foundation to about 78% of the revenue plan, we're outlining for 2025.

John Kaczorski: We expect the additional revenue to come from new customer acquisition and expanded deployments with existing customers, which will drive our volume of subscriptions incrementally higher. To that end, we expect new subscriber growth in 2025 to be at least in line with what we delivered in 2024 and potentially greater.

Speaker Change: We expect the additional revenue to come from new customer acquisition and expanded deployments with existing customers, which will drive our volume of prescriptions incrementally higher.

Speaker Change: To that end, we expect new subscriber growth in 2025 to be at least in line with what we delivered in 2024 and potentially greater.

John Kaczorski: So what does that mean for investors? Simply put, this should be a consistent and predictable business with a well-defined range of outcomes. That's the hallmark of a strong subscription model. We believe this gives us a clear path to building a highly valuable business, one capable of delivering strong growth, expanding adjusted EBITDA margins and increasing free cash.

Speaker Change: So what does that mean for investors simply put this should be a consistent and predictable business with a well defined range of outcomes. That's the hallmark of our strong subscription model. We believe this gives us a clear path to building a highly valuable business, one capable of delivering strong growth expanding adjusted EBITDA margins.

Speaker Change: And increasing free cash flow.

John Kaczorski: In a few minutes, Chris will walk through some thoughts on our long-term operating model and explain why we believe there may be more leverage in the business than we've previously communicated. I'm focused on advancing our strategy and taking the company to the next stage of its maturity. Above all, I want to assure you that our commitment to integrity, transparency, and accountability will guide every decision we make. We remain dedicated to maintaining open and honest communication with all our stakeholders as we work to achieve our long-term goal.

Speaker Change: In a few minutes, Chris will walk through some thoughts on our long term operating model and explain why we believe that may be more leverage in the business and we've previously communicated.

Speaker Change: I'm focused on advancing our strategy and taking the company to the next stage of its maturity.

Above all I want to assure you that our commitment to integrity transparency and accountability will guide every decision we make we remain.

Speaker Change: Dedicated to maintaining open and honest communication with all our stakeholders as we work to achieve our long term goals.

Chris Cutzer: Let me pause there for a moment and ask Chris to share a little bit about himself. Great, thanks, John. And hello, everybody. It's a real pleasure to be here today. I'm excited to join Evolv at such a pivotal time, not just for the company, but for the future of security technology. What drew me here is Evolv's mission and the opportunity to use my recent experience to drive value. Before coming to Evolv about a month ago, I served as CFO, COO, and board member of Kin & Carta, a publicly traded digital transformation consultancy, where we brought 12 firms into one global platform.

Speaker Change: Let me pause there for a moment and ask Chris to share a little bit about himself.

Chris: Great. Thanks, John and Hello, everybody, it's a real pleasure to be here today.

I am excited to join evolve at such a pivotal time not just for the company, but for the future of security technology.

Chris: What drew me here has evolved mission and the opportunity to use my recent experience drive value.

Chris: Before coming to evolve about a month ago I served as CFO COO and board member Mckinnon car to a publicly traded digital transformation consultant fee, where we brought together 12 firms into one global platform and we did this over a multiyear period focused on scaling and the power of platform by implementing enterprise.

Chris Cutzer: And we did this over a multi-year period, focused on scaling and the power of platforms by implementing enterprise-grade systems and processes. and I see that same opportunity here at Evolv to scale the business. Earlier in my career, I spent nearly 25 years at Motorola Solutions in a range of senior finance roles. I'm energized by the opportunity to help Evolv grow with focus, discipline, and a deep commitment to our mission.

Chris: <unk> systems and processes.

Chris: And I see that same opportunity here at evolve to scale the business.

Chris: Earlier in my career I spent nearly 25 years of Motorola solutions and a range of senior finance roles and I'm energized by the opportunity to help evolve and grow with focus discipline and a deep commitment to our mission.

John Kaczorski: With that, I'll turn things back over to John for more discussion on the Thanks, Chris. Over the past six to 12 months, we have navigated a period of significant challenge and transformation. Since our last investor call in August, we have appointed a new chief executive officer, chief financial officer, chief accounting officer, general counsel, chief revenue officer, and vice president of supply chain. We have successfully resolved the FTC inquiry that began in 2023. Following a previously disclosed internal investigation, we also completed a restatement that, on a net basis, shifted $3.1 million in revenue from certain periods prior to July 1, 2024 to fiscal periods that extend to 2029.

Chris: With that I'll turn things back over to John for more discussion on the business.

John: Thanks, Chris over the past six to 12 months, we have navigated a period of significant challenge and transformation.

Speaker Change: Since our last Investor call in August we have appointed a new Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer General Counsel, Chief revenue Officer, and Vice President of supply chain.

Speaker Change: We have successfully resolved the FTC inquiry that began in 2023.

Speaker Change: Following our previously disclosed internal investigation, we also completed a restatement on a net basis shifted $3 $1 million in revenue from certain periods. Prior to July one 2024 to fiscal periods that extend to 2029.

John Kaczorski: We fully recognize the seriousness of these matters. Under new leadership, we are taking comprehensive steps to address the root causes and build a stronger, more resilient organization. This includes fostering a stronger company culture, reinforcing our ethical standards and accountability, enhancing financial oversight and cross-functional coordination. refreshing policies and training programs, and appointing experienced professionals to key roles. These efforts and investments are ongoing.

Speaker Change: We fully recognize the seriousness of these matters under new leadership, we are taking comprehensive steps to address the root causes and build a stronger more resilient organization.

This includes fostering a stronger company culture, reinforcing our ethical standards and accountability enhancing financial oversight and cross functional coordination rift.

Speaker Change: We're refreshing policies and training programs and appointing experienced professionals to key roles.

Speaker Change: These efforts and investments are ongoing.

John Kaczorski: We understand that rebuilding trust takes time, but we are confident that these changes will position us for long-term success.

Speaker Change: We understand that rebuilding trust takes time, but we are confident that these changes will position us for long term success.

John Kaczorski: to our shareholders. Thank you for your patience and your partnership.

Speaker Change: To our shareholders. Thank.

Speaker Change: Thank you for your patience and your partnership to.

John Kaczorski: to our customers. Thank you for continuing to trust us to help make your venues safer, a responsibility we hold sacred. To our employees, your relentless commitment to our mission, our customers, and our shareholders has been extraordinary.

Speaker Change: To our customers.

Speaker Change: Thank you for continuing to trust us to help make your venues safer a responsibility we have.

Speaker Change: Hold sacred to.

Speaker Change: So our employees you are relentless commitment to our mission our customers and our shareholders has been extraordinary and.

John Kaczorski: and to the families and loved ones who support our team, thank you. We are on a journey. We intend to emerge from this period stronger and more resilient. We truly appreciate your patience and unwavering partnership throughout these difficult times. And we're now focused on leveraging this momentum as we enter the next stage of growth and innovation.

Speaker Change: And to the families and loved ones, who support our team.

Speaker Change: <unk>.

Speaker Change: We are on a journey.

Speaker Change: We intend to emerge from this period stronger and more resilient, we truly appreciate your patients and unwavering partnerships throughout these difficult times and we're now focused on leveraging this momentum as we enter the next stage of growth and innovation.

John Kaczorski: I'm going to spend a few minutes on our Q1 results and the trends that we are seeing in the business. Chris will then walk through our financial results and our outlook. Overall, I am pleased with the solid start to the year. Revenue in the first quarter was $32 million, up 10% sequentially, and 44% year-over-year. Our results in Q1 reflected new customer acquisition activity, strong expansion from our installed customer base, overall growth in subscriptions of Evolv Express, and the early adoption of our newest product offering. Evolv Tech Hldg We'd recommend that investors not read too much into the year-over-year growth, as Q1 2024 was a relatively soft quarter, with only 10% growth over Q1 2023.

Speaker Change: I am going to spend a few minutes on our Q1 results and the trends that we're seeing in the business. Chris will then walk through our financial results and our outlook.

Speaker Change: Overall, I am pleased with the solid start to the year.

Chris: Revenue in the first quarter was $32 million up 10% sequentially and 44% year over year.

Chris: Our results in Q1 reflected new customer acquisition activity strong expansion from our installed customer base overall growth in subscriptions of evolve express and the early adoption of our newest product offerings.

Chris: Evolve expedite.

Chris: We recommend that investors not read too much into the year over year growth as.

As Q1, 2024 was a relatively soft quarter with only 10% growth over Q1 2023.

John Kaczorski: As a result, we believe the year-over-year comparison is less meaningful in assessing current momentum. We welcomed over 50 new customers in Q1 2025, and now serve about 950 customers across our key end markets. ARR grew 34% year over year to $106 million at the end of Q1. Finally, building on our achievement of reaching positive adjusted EBITDA in Q4'24, we're pleased to report adjusted EBITDA for Q1'25 increased to $1.7 million. Adjusted EBITDA margin, a term that investors will hear more frequently from the company, was 5% in Q1 2020. Despite challenging conditions, our sales teams remained focused and resilient.

Chris: As a result, we believe the year over year comparison is less meaningful in assessing current momentum.

Chris: We welcomed over 50, new customers in Q1, 25, and now serve about 950 customers across our key end markets.

Chris: <unk> grew 34% year over year to $106 million at the end of Q1 'twenty five.

Chris: Finally building on our achievement of reaching positive adjusted EBITDA in Q4 'twenty four we're pleased to report adjusted EBITDA for Q1, 'twenty five increased to $1 7 million.

Chris: Adjusted EBITDA margin of term that investors will hear more frequently from the company was 5% in Q1 25.

Chris: Despite challenging conditions, our sales teams remained focused and resilient.

John Kaczorski: continuing to serve our customers with professionalism and integrity. who are deeply grateful for their perseverance during a demanding period.

Chris: Continuing to serve our customers with professionalism and integrity.

Chris: We are deeply grateful for their perseverance.

Chris: A demanding period.

John Kaczorski: Their efforts have been reinforced by the leadership of Robert Marshall, our newly appointed Chief Revenue Officer, who joined earlier this year. Under Robert's guidance, we're starting to see early but encouraging signs of progress and renewed momentum across the business. Sales cycles, which we define as the average time from opportunity creation to a buying decision, improved in Q1. These cycles had been lengthening throughout much of 2024, but began to recover following the successful resolution of the FTC matter, which we announced in late May. One measure of sales productivity is sales and marketing spend as a percentage of revenue.

Chris: Their efforts have been reinforced by the leadership of Robert Marshall, our newly appointed Chief revenue Officer, who joined earlier this year.

Chris: Under Robert's guidance, we're starting to see early but encouraging signs of progress and renewed momentum across the business.

Chris: Sales cycles, which we define as the average time from opportunity creation to a buying decision improved in Q1. These cycles had been lengthening throughout much of 2024, but began to recover following the successful resolution of the FTC matter, which we announced in late Q4.

Chris: One measure of sales productivity as sales and marketing spend as a percentage of revenue.

John Kaczorski: Sales and marketing spend as a percentage of revenue is improving, a metric that I monitor personally. That is a sign that our team is executing more effectively and efficiently. Following the resolution of the FCC matter, we retained 92% of the eligible education customers that could have canceled the remaining term. Further, we retained 90% of the deployed units across those customers. reflecting the strong value our solutions deliver and the trust that our customers continue to demonstrate in In fact, several of the education customers eligible for early cancellation expanded their deployments with us, driving 92% net revenue retention and 94% net unit retention across the eligible group.

Chris: Sales and marketing spend as a percentage of revenue is improving a metric that I monitor personally.

Chris: That is a sign that our team is executing more effectively and efficiently.

Chris: Following the resolution of the FTC matter, we retained 92% of the eligible education customers that could have canceled the remaining terms.

Further we retained 90% of the deployed units across those customers, reflecting the strong value our solutions deliver and the trust that our customers continue to demonstrate and us.

Chris: In fact, several of the education customers eligible for early cancellation.

Chris: They expanded their deployments with us driving 92% net revenue retention and 94% net unit retention across the eligible group.

John Kaczorski: These results highlight the high customer satisfaction and strong renewal rates driven by Evolv's proven performance. This is a powerful endorsement of the value we're delivering. With 400 of our 6,600 units naturally coming up for renewal this year, we remain optimistic about maintaining strong retention.

Chris: These results highlight the high customer satisfaction and strong renewal rates driven by evolves proven performance. This is a powerful endorsement of the value we're delivering.

Chris: With 400 of our 6600 units naturally coming up for renewal. This year, we remain optimistic about maintaining strong retention.

John Kaczorski: I want to take a moment to introduce a new program we are rolling out here in Q2. our certified pre-owned program. This program, which you may hear us refer to as CPO, allows us to recapture value from Evolv Express units that are returning to us following a non-renewal or from a customer upgrading from our first generation express to our second generation. A good example of this is the upgrade we just completed with the San Francisco Giants, who chose to move to our next-gen Express and commit to a new four-year subscription. With a modest refurbishment investment, we can repurpose those partially depreciated units that are attuned to us for a new set of subscription customers.

Speaker Change: Wanted to take a moment to introduce a new program. We are rolling out here in Q2.

Chris: Our certified pre owned program.

Chris: This program, which you may hear us refer to as CPO allows us to recapture value from evolve express units that are returning to us following a non renewal or from a customer upgrading from our first generation Express two our second generation expressed <unk>.

A good example of this is the upgrade we just completed with the San Francisco Giants, who chose to move to our next Gen Express and commit to a new four year subscription with a modest refurbishment investment we can repurpose those partially depreciated units that are returned to us for a new set of subscription customers. This is.

John Kaczorski: This enables us to reach more price sensitive buyers and expand to market segments that were previously out of reach. We expect this program to contribute positively to revenue, cash flow, ARR, and RPO.

Chris: Tables us to reach more price sensitive buyers and expand into market segments that were previously out of reach.

Chris: We expect this program to contribute positively to revenue cash flow.

Chris: And RPI.

John Kaczorski: Expedite, our autonomous bag screening solution, is off to a good start. In just a few months since its launch, we've added 12 new customers. That is early traction, which we believe is encouraging. We believe Expedite has the potential to drive meaningful customer expansion, higher attach rates, and stronger subscription stickiness.

Chris: Expedite our autonomous bag screening solution is off to a good start.

Chris: And just a few months since its launch we have added 12, new customers that is early traction, which we believe is encouraging.

Chris: We believe expedite has the potential to drive meaningful customer expansion higher attach rates and stronger subscription stickiness.

John Kaczorski: Lastly, I want to highlight a key signal of customer trust. Expansion About 50% of the units and ARR we booked in Q1 came from existing customers. These are organizations that have already deployed our technology. tested it in the real world and decided to invest further. A strong validation of the value we provide.

Chris: Lastly, I want to highlight a key signal of customer trusts expansion.

Chris: About 50% of the units and <unk>, we booked in Q1 came from existing customers. These are organizations that have already deployed our technology.

Chris: <unk> tested it in the real World and decided to invest further are strong validation.

Chris: Validation of the value we provide.

John Kaczorski: Beyond the numbers, Evolv is making a significant impact in the communities we serve. On average, we are now screening over 3 million people every day and have screened over 2 billion people since we started deploying Evolv Express. More importantly, our technology is being used by our customers to tag, on average, approximately 500 firearms every single day. What does that look like in real life? As you may have seen in the media, just last month at Rock Island High School in Illinois, Evolv Express flagged a student during morning screening. A search revealed a loaded handgun and the student was arrested, avoiding a potentially dangerous situation.

Chris: Beyond the numbers evolve is making a significant impact in the communities we serve.

Chris: On average we are now screening over 3 million people every day and have screened over 2 billion people. Since we started of all deploying evolve express.

Chris: More importantly, our technology is being used by our customers to tag on average approximately 500 firearms every single day.

Speaker Change: What does that look like in real life.

Speaker Change: As you may have seen in the media just last month at Rock Island High School in Illinois.

Speaker Change: <unk> Express flagged a student during morning screening.

Speaker Change: Our search revealed a loaded handgun and a student was arrested avoiding a potentially dangerous situations.

John Kaczorski: Earlier this year, Antioch High School in Nashville, Tennessee, experienced the heartbreaking tragedy of a school shooting that deeply impacted the entire In response, the district took swift action to enhance campus safety by deploying Evolv. Over just the last two weeks, our technology has been used to successfully identify loaded firearms on students on three different occasions. Thanks to Metro Nashville's rapid deployment of our technology and the exemplary actions by school staff on site, potential violence was avoided. These are just a few examples that highlight how our technology is making a real difference in keeping Today, Evolv Express is deployed in 20 of the 100 largest U.S.

Speaker Change: Earlier this year Antioch High school in Nashville, Tennessee experienced the heartbreaking tragedy of a school shooting the deeply impacted the entire community.

Speaker Change: In response, the district took swift action to enhance campus safety by deploying evolve.

Speaker Change: Over just the last two weeks our technology has been used successfully identified loaded firearms on students on three different occasions.

Speaker Change: Thanks to Metro Nashville, rapid deployment of our technology and the exemplary actions by school staff on site potential violence was the verdict.

Speaker Change: These are just a few examples that highlight how our technology is making a real difference in keeping schools safer.

Speaker Change: Today evolve express is deployed in <unk>, the 100 largest U S school districts and over 3500 school buildings screening more than 850000 students and visitors daily.

John Kaczorski: school districts and over 1,300 school buildings, screening more than 850,000 students and visitors daily. This reflects the trust placed in us by school administrators, parents, and communities who view our system as a critical tool for proactive change.

Speaker Change: This reflects the trust placed in us by school administrators parents and communities, who view our system is a critical tool for proactive safety.

John Kaczorski: In healthcare, Evolv is making significant strides in transforming hospital safety. we believe our concealed weapons detection technology is enhancing security in hospitals without compromising the patient experience. In Q1 2025, we added nearly a dozen new health care customers, and we now have an installed base of products in 500 hospital buildings across the United States. Daily visitor screenings have nearly doubled year-over-year, reaching nearly 900,000. At a hospital in Canada, our solution intercepted 23 knives in one week. This illustrates the power of our technology in creating safer environments for healthcare workers and patients alike, reinforcing our commitment to building trust and delivering safety.

Speaker Change: In healthcare evolve is making significant strides in transforming hospital safety.

Speaker Change: We believe our concealed weapon detection technology is enhancing security in hospitals without compromising the patient experience.

In Q1, 2025, we added nearly a dozen new health care customers and we now have an installed base of products and 500 hospital buildings across the United States.

Speaker Change: Daily visitor screenings have nearly doubled year over year, reaching nearly 900000.

Speaker Change: At a hospital in Canada, our solution intercepted 'twenty three knives in one week.

This illustrates the power of our technology, and creating safer environments for health care workers and patients alike.

Speaker Change: Reinforcing our commitment to building trust and delivering safety.

John Kaczorski: We're also monitoring changes in state laws that could impact security requirements and create demand for our solutions. One notable example is California's new law mandating that hospitals implement automated weapons detection screening and staff security training at key entrances by March 2027. This regulation reflects growing concern over health care worker and patient safety and signals an increased focus toward prioritizing safety in health care settings. As hospitals work to improve safety and security, we believe there may be meaningful, long-term opportunity for us.

Speaker Change: We are also monitoring changes in state laws that could impact security requirements and create demand for our solutions. One. Notable example is California's new law mandating that hospitals implement automated weapons detection screening and staff security training at key entrances by March 2027.

Speaker Change: This regulation reflects growing concern over health care worker and patient safety and.

Speaker Change: And signals, an increased focus towards prioritizing safety and health care settings as.

Speaker Change: As hospitals work to improve safety and security, we believe there may be meaningful long term opportunity for us.

John Kaczorski: Momentum also continued in the sports and entertainment sector in Q4 2024 and Q1 2025. We supported several high-profile events including both NBA tip-off games, the MLS Cup Final, and the Mike Tyson versus Logan Paul fight. We also provided fan screening at 12 college football bowl games, including three during the highly attended playoffs. Our new Evolv Expedite solution was deployed at the Houston Astros Stadium, marking another milestone in professional sport. We added new venues, such as the Rogers Center in Edmonton and Sports Illustrated Stadium in New Jersey. a partnership with COSM in both their LA and Dallas locations, and three new ASM Global Venues.

Speaker Change: Momentum also continued in the sports and entertainment sector in Q4, 2024, and Q1 2025, we supported several high profile events, including both NBA tip off games, the MLS Cup final and Mike Tyson for a slogan Paul.

Speaker Change: We also provide advanced screening at 12 College football Bowl games, including three during the highly attended playoffs are new evolve expedite solution was deployed at the Houston Astros Stadium, marking another milestone in professional sports.

Speaker Change: We added new venues such as the Roger centered Edmonton and Sports illustrated stadium in New Jersey.

Speaker Change: Partnership with Cosan, and both their la and Dallas locations and three new ASM global venues.

John Kaczorski: These events and renewals demonstrate the growing adoption of Evolv technology in major leagues and iconic venues, showcasing our ability to deliver safety and operational excellence at scale.

Speaker Change: These events and renewals demonstrate the growing adoption of evolve technology and major leagues and iconic venues showcasing our ability to deliver safety.

Speaker Change: And operational excellence at scale.

John Kaczorski: This is just a glimpse of how Evolv is changing the landscape of safety, one vertical market at a time. As we look at the broader market opportunity, it's clear that this is bigger than just a product or a company. It's a movement, a transformation in how we think about safety and public safety. We are not just helping to improve weapons detection, we're creating an entirely new category. Prior to Evolv, many of our customers lacked a weapons detection system, not because they didn't care about safety, but because they felt traditional solutions were too slow, too labor intensive, and too disruptive to daily operations.

Speaker Change: This is just a glimpse of how evolve is changing the landscape of safety one vertical market at a time.

Speaker Change: As we look at the broader market opportunity. It is clear that this is bigger than just a product of our company. It's a movement of transformation, how we think about safety and public spaces, we're not just helping to improve weapons detection, we're creating an entirely new category.

Speaker Change: Prior to evolve many of our customers lax and weapons detection system not because they didn't care about safety because they felt traditional solutions were too slow too labor intensive and too disruptive to daily operations.

John Kaczorski: Evolv is changing that with our AI-powered technology that detects a wide variety of concealed weapons while ignoring many everyday benign items such as self-defense. There are hundreds of thousands of entrances that can be protected by AI-based weapons detection. And while we're currently one of the leaders in this market, we're in only about 6,600 entrances today. Over time, we believe that could grow to 10,000, then 20,000, and so on. While that type of installed base of subscriptions would drive us to new heights in terms of both revenue and cash generation, The market penetration would still be far less than temporary.

Speaker Change: Evolve is changing that with our AI powered technology that detects a wide variety of concealed weapons, while ignoring many everyday benign items such as cell phones.

Speaker Change: There are hundreds of thousands of entrants that can be protected by AI based detection and while were currently one of the leaders in this market where in only about 6600 entrants is today.

Speaker Change: Overtime, we believe that could grow to 10000 than 'twenty.

Speaker Change: So on.

Speaker Change: That type of installed base of subscriptions would drive us to new heights in terms of both revenue and cash generation the.

Speaker Change: The market penetration would still be far less than 10%.

John Kaczorski: Let me give you some perspective. Today, Evolv is in only about 1% of U.S. school Adoption in hospitals and healthcare is still in the low single digit. Even in sports and entertainment, where we've made the most progress, we've only scratched the surface. Make no mistake, we are still in the early innings of a new market which we think will drive significant value creation for sure.

Speaker Change: Let me give you some perspective today, if all of us and only about 1% of U S School buildings.

Speaker Change: Adoption in hospitals and health care is still in the low single digits.

Speaker Change: Even in sports and entertainment, where we've made the most progress we've only scratched the surface make no mistake. We are still in the early innings of a new market, which we think will drive significant value creation for shareholders.

John Kaczorski: Think about electric vehicles, which are widely present today. Ten years ago, EVs were for early adopters. That's where we are with AI-powered weapons detection, especially outside of sports and entertainment. We're still in the first smoother phase.

Speaker Change: Think about electric vehicles, which are widely present today 10.

10 years ago Evs for early adopters.

Speaker Change: That's where we are with AI powered weapon detection, especially outside of sports and entertainment. We're still in the first mover face we're not just selling a product we are enabling a new security paradigm. One that's designed to be smarter faster and more scalable. So as we look ahead the opportunity is large.

John Kaczorski: We're not just selling a product. We're enabling a new security paradigm, one that's designed to be smarter, faster, and more scalable.

John Kaczorski: So if you look ahead, the opportunity is large. So what does that look like in 2025? We expect to grow revenues by 20 to 25% in 2020. while delivering positive full-year adjusted EBITDA. We also expect to be cash flow positive by the end of the year. We have strong visibility to the key drivers of our business and remain confident in our ability to deliver on our 2025 revenue target. and to build sustainable growth well beyond this year.

Speaker Change: So what does that look like in 2025.

Speaker Change: We expect to grow revenues by 20% to 25% in 2025, while delivering positive full year. Adjusted EBITDA. We also expect to be cash flow positive by the end of the year, we have strong visibility into the key drivers of our business and remain confident in our ability to deliver on our 2025 revenue targets and.

Speaker Change: To build sustainable growth well beyond this year.

Chris Cutzer: I'm going to leave it there and turn it over to Chris, who will take you through our financial results and details behind our offer. Thanks, John. I'm going to review our results in more detail and then walk through our outlook.

Speaker Change: I'm going to leave it there and turn it over to Chris who will take you through our financial results and details behind our outlook.

Chris: Thanks, John I'm going to review our results in more detail and then walk through our outlook.

Chris Cutzer: Since we did not host a conference call following the release of our full year results a few weeks ago, I want to cover our final 2024 financial results very briefly. Total revenue in 2024 was $103.9 million, representing a 31% increase compared to $79.6 million in 2023, as restated. That strong growth reflected continued progress across our core markets and expanded adoption of our solution. It also reflects the full annualized impact of the record bookings levels we achieved in 2023. Adjusted EBITDA also improved meaningfully to a loss of $21 million compared to a loss of $51.8 million in 2023.

Chris: Since we did not host a conference call. Following the release of our full year results a few weeks ago I want to cover our final 2024 financial results very briefly.

Chris: Total revenue in 2024 was $103 9 million representing.

Chris: Representing a 31% increase compared to $79 6 million in 2023 as restated.

Chris: That strong growth reflected continued progress across our core markets and expanded adoption of our solutions. It also reflects the full annualized impact of the record bookings levels, we achieved in 2023.

Chris: Adjusted EBITDA also improved meaningfully to a loss of $21 million compared to a loss of $51 8 million in 2023.

Chris Cutzer: Turning to our 2025 first quarter results. As John mentioned, revenue was $32 million, up 10% sequentially and 44% year-over-year. Those results include approximately $1 million of one time favorable impacts, with approximately $800,000 from a Q4-24 product order in the industrial warehouse market that disproportionately benefited Q1, and just under $100,000 related to the restate . I also want to echo John's comments about the softness in the prior year comparison and the strong adoption of our full subscription model just to keep things in the proper context. Annual Recurring Revenue, or ARR, at March 31, 2025 was $106 million, reflecting growth of 34% year-over-year.

Chris: Turning to our 2025 first quarter results as.

Jon: As Jon mentioned revenue was $32 million up 10% sequentially and 44% year over year.

Jon: Those results include approximately $1 million of one time favorable impacts with approximately 800000 from a Q4 'twenty four product order and the industrial warehouse market. The disproportionately benefited Q1, and just under $100000 related to the restatement.

Speaker Change: I also want to Echo John's comments about the softness in the prior year comparison and the strong adoption of our full subscription model just to keep things in the proper context.

Speaker Change: Annual recurring revenue or <unk> at March 31, 2025 was $106 million, reflecting growth of 34% year over year.

Chris Cutzer: 80% of our revenue in Q1 25 was recurring revenue compared to 85% in the first quarter of last year, reflecting a higher contribution from one time product sales, such as the product order I just mentioned, and higher one time IP license . Remaining Performance Obligation, or RPO, as of March 31, 2025, was $261.2 million. This reflects the value of the 48-month subscription that we have with our customers. adjusted gross margin, which excludes stock-based compensation and certain other one-time expenses, with 61% in the first quarter of 2025, consistent with the first quarter of last year and benefiting from the one-time favorable items previously mentioned.

Speaker Change: 80% of our revenue in Q1 dollars 25 was recurring revenue compared to 85% in the first quarter of last year, reflecting a higher contribution from one time product sales such as the product order I, just mentioned and higher one time IP license fees.

Speaker Change: Remaining performance obligation or <unk> as of March 31, 2025 was 261 $2 million. This.

Speaker Change: Next the value of the 48 month subscriptions that we have with our customers.

Speaker Change: Adjusted gross margin, which excludes stock based compensation and certain other one time expenses was 61% in the first quarter of 2025, consistent with the first quarter of last year and benefiting from the onetime favorable items previously mentioned.

Chris Cutzer: Adjusted operating expenses, which exclude stock-based compensation, loss on impairment of equipment, and certain other one-time expenses, were $23.2 million, compared to $27.3 million in the first quarter of last year. This 15% year-over-year decline in adjusted operating expenses primarily reflects the actions we've taken over the last year to reduce spend. we are beginning to see the impact of improving operating leverage in our business model. Adjusted loss, which excludes stock-based compensation, non-cash charges, and other one-time items, was $3.4 million, compared to $12.7 million in the first quarter of last year. Adjusted EBITDA, which excludes stock-based compensation and the other one-time items, was $1.7 million compared to a loss of $10.4 million in the first quarter of last year.

Speaker Change: Adjusted operating expenses, which excludes stock based compensation loss on impairment of equipment and certain other one time expenses were $23 2 million compared.

Speaker Change: Compared to $27 3 million in the first quarter of last year.

Speaker Change: This 15% year over year decline in adjusted operating expenses, primarily reflects the actions we've taken over the last year to reduce spend.

We're beginning to see the impact of improving operating leverage in our business model.

Speaker Change: Adjusted loss, which excludes stock based compensation noncash charges and other one time items was $3 4 million compared.

Speaker Change: Compared to $12 7 million in the first quarter of last year.

Speaker Change: Adjusted EBITDA, which excludes stock based compensation and the other one time items was $1 7 million compared to a loss of $10 4 million in the first quarter of last year.

Chris Cutzer: This $1.7 million, or 5.3% margin, included approximately $500,000, or 150 basis point benefit, from the one-time product order previously mentioned. Due to new information recently received from our insurers, we recorded an estimated insurance recovery of $3.9 million for the first quarter of 2025. This is related to certain defense costs previously incurred and paid for in connection with the securities litigation and related regulatory matters, including the restatement in connection with the same. This is reflected as a reduction in our GAAP G&A expenses for the quarter and is also included in prepaid and other current assets on our balance sheet as of March 31st, 2025.

Speaker Change: This $1 7 million or five 3% margin included approximately $500000 or 150 basis point benefit from the onetime product order previously mentioned.

Speaker Change: Due to new information recently received from our insurers we recorded an estimated insurance recovery of $3 9 million for the first quarter of 2025.

Speaker Change: This is related to certain defense costs previously incurred and paid for in connection with the securities litigation and related regulatory matters, including the restatement in connection with the same.

Speaker Change: This is reflected as a reduction in our GAAP G&A expenses for the quarter and is also included in prepaid and other current assets on our balance sheet as of March 31 2025.

Chris Cutzer: The estimate includes both of, one, the amounts confirmed for reimbursement by our insurance providers and two, a reasonable estimate of the minimum additional claims we expect will be covered. We expect this receivable to be recovered as a cash payment to the company partially in Q2 and the balance expected later in the year. While the estimated recovery is part of our Q1 GAAP results, we excluded it from our non-GAAP financial metrics to give investors a clearer view of our ongoing operating performance. There are more claims that are being evaluated for possible recovery, and we will continue to keep investors up to date.

Speaker Change: The estimate includes both of one the amounts confirmed for reimbursement by our insurance providers and to a reasonable estimate of the minimum additional claims we expect will be covered.

Speaker Change: We expect this receivable to be recovered as a cash payment to the company partially in Q2 and the balance expected later in the year.

Speaker Change: While the estimated recovery as part of our Q1 GAAP results, we excluded it from our non-GAAP financial metrics to give investors a clearer view of our ongoing operating performance.

Speaker Change: There are more claims that are being evaluated for possible recovery and we will continue to keep investors up to date.

Chris Cutzer: Turning to the balance sheet, we ended the quarter with $35 million in cash, cash equivalents, and marketable securities, compared with $52 million at the end of Q4 2024. This reduction primarily reflects several drivers. First, we had approximately $6 million of one-time cash disbursements associated with third party advisors related to the ad hoc investigation and ensuing restatement. We had approximately $3.5 million in short-term incentive payments associated with our 2024 performance. This distribution typically occurs in March each year. We also had approximately $1.5 million in disbursements for restructuring costs related to the workforce rationalization that was completed in Q1.

Turning to the balance sheet, we ended the quarter with $35 million in cash cash equivalents in marketable securities compared with $52 million at the end of Q4 2024.

This reduction primarily reflects several drivers.

Speaker Change: First we had approximately $6 million of one time cash disbursements associated with third party advisors related to the AD hoc investigation and ensuing restatements.

Speaker Change: We had approximately $3 5 million in short term incentive payments associated with our 2024 performance. This distribution typically occurs in March each year.

Speaker Change: We also had approximately $1 $5 million and disbursements for restructuring costs related to the workforce rationalization that was completed in Q1.

Chris Cutzer: And sequential decline in cash also reflected the traditional linearity of customer collections, which tends to be very strong in the fourth quarter.

Speaker Change: And the sequential decline in cash also reflected the traditional linearity of customer collections, which tends to be very strong in the fourth quarter.

Chris Cutzer: Turning to our outlook for 2025. We expect total revenues to grow by 20-25% this year to between $125 million and $130 million. Of note, we do not expect any material revenue contribution from the restatement in 2025.

Speaker Change: Turning to our outlook for 2025.

Speaker Change: We expect total revenues to grow by 20% to 25% this year to between $125 million and $130 million of note. We do not expect any material revenue contribution from the restatement in 2025.

Chris Cutzer: I want to take a moment to share some details on the assumptions behind our revenue outlook. The financial hallmark of any strong subscription business is, of course, ARR. This is a measure of the revenue we expect to generate from existing customers in the next 12 months. We had an ARR balance of approximately $100 million on December 31st, 2024. So we effectively brought in about 78% of our full year revenue plan into the year on day one. We expect a substantial amount of our growth plan to come from the expansion of our existing subscription base during the year, which helps reduce overall volatility and provides a more defined set of possible outcomes from 2025 or any year.

Speaker Change: I want to take a moment to share some details on the assumptions behind our revenue outlook.

The financial Hallmark of any strong subscription business is of course.

Speaker Change: This is a measure of the revenue we expect to generate from existing customers. In the next 12 months, we had an <unk> balance of approximately $100 million on December 31, 2024. So we effectively brought in about 78% of our full year revenue plan into the year on day one.

Speaker Change: We expect a substantial amount of our growth plan to come from the expansion of our existing subscription base during the year, which helps reduce overall volatility and provides a more defined set of possible outcomes from 2025 or any year.

Chris Cutzer: And we expect the incremental growth to come from new customer acquisition and expanding deployment. To that end, we're encouraged by the strength of our pipeline, the positive buying signals that we're seeing from both customers and prospects, and the signals we're seeing in overall improved sales execution.

Speaker Change: And we expect the incremental growth to come from new customer acquisition and expanding deployments.

Speaker Change: To that end, we're encouraged by the strength of our pipeline the positive buying signals that we're seeing from both customers and prospects and the signals we're seeing in overall improved sales execution.

Chris Cutzer: One final consideration informing our 2025 revenue outlook. Based on the trends we are seeing during the first half of 2025, we expect a shift towards more pure subscription orders versus purchase deals. Peer subscription generates less upfront revenue but maximizes ARR and strengthens future year revenue visibility. Conversely, purchase subscription transactions can bring higher one-time upfront revenue with less ARR. For these reasons, Model Mix can be a key driver to short-term revenue growth, ARR growth, and gross margin. And based on the model mix in our outlook, we expect slight headwinds of two to three hundred basis points of gross margin for the full year 2025.

Speaker Change: One final consideration in forming our 2025 revenue outlook.

Speaker Change: Just on the trends we are seeing during the first half of 2025, we expect a shift towards more pure subscription orders versus purchase deals.

Speaker Change: Pure subscription generates less upfront revenue, but maximizes IRR and strengthened future year revenue visibility.

Speaker Change: Conversely purchased subscription transactions can bring higher one time upfront revenue with less.

Speaker Change: For these reasons model mix can be a key driver to short term revenue growth <unk> growth and gross margins and.

Speaker Change: And based on the model mix in our outlook, we expect slight headwinds of two to 300 basis points of gross margin for the full year 2025.

Chris Cutzer: However, over the long term, shifting the models that maximize ARR and thus long-term revenue growth and profitability is optimal for the company and its shareholders.

Speaker Change: However over the long term shifting the models that maximize <unk> and thus long term revenue growth and profitability is optimal for the company and its shareholders.

Chris Cutzer: I want to turn to our outlook for profitability in 2025. In short, we believe our strong revenue growth plans, coupled with a continued careful focus on operational efficiency, will drive improved profitability in 2025. And we expect to make approximately $2 million of near-term, temporary investments in 2025 to help improve our back-office platform and scale our business operation. We intend to improve our systems and processes for enhanced controls with expected efficiency once implemented. As a result of our growth and operational drivers, we expect to deliver positive, fully year-adjusted EBITDA in 2025, with margins in the low to mid-single digits, inclusive of this $2 million near-term investment.

Speaker Change: I want to turn to our outlook for profitability in 2025.

Speaker Change: In short we believe our strong revenue growth plans, coupled with our continued careful focus on operational efficiency will drive improved profitability in 2025.

Speaker Change: And we expect to make approximately $2 million of near term temporary investments in 2025 to help improve our back office platform and scale our business operations we.

Speaker Change: We intend to improve our systems and processes for enhanced controls with expected efficiency once implemented.

Speaker Change: As a result of our growth and operational drivers, we expected to deliver positive full year adjusted EBITDA in 2025 with margins in the low to mid single digits inclusive of this $2 million near term investment.

Chris Cutzer: Turning to cash, we feel confident about our liquidity position for several reasons. First, we have a solid plan focused on driving top-line growth of 20-25% in 2025. Second, we've successfully restructured the company, reduced spend, and achieved positive adjusted EBITDA ahead of schedule. Third, we have confirmation by our insurer that certain defense costs related to the securities litigation and other related matters will be reimbursed starting now. And finally, we remain on track to deliver positive free cash flow in Q4, as planned, subject to any future swings in tariffs.

Speaker Change: Turning to cash we feel confident about our liquidity position for several reasons.

Speaker Change: First we have a solid plan focused on driving top line growth of 20% to 25% in 2025.

Speaker Change: Second we successfully restructured the company reduced spend.

Speaker Change: And achieved positive adjusted EBITDA ahead of schedule.

Speaker Change: Third we have confirmation by our insurer that certain defense costs related to the securities litigation and other related matters will be reimbursed starting now.

Speaker Change: And finally, we remain on track to deliver positive free cash flow in Q4 as planned subject to any future swings in tariffs.

Chris Cutzer: I also want to be clear that we have no current plans to raise capital through any type of dilutive forms of equity-based finance.

Speaker Change: I also want to be clear that we have no current plans to raise capital through any type of dilutive forms of equity based financing.

Chris Cutzer: And finally, I want to close with a few comments on our long-term operating model. That long-term operating model was last shared with investors in 2023. At that time, the target was achieving long-term adjusted EBITDA margins of 10 to 15 percent. And since then, a lot has changed in the business. We're currently taking a fresh look at the model and intend to update it. In short, we believe there's potential for greater long-term leverage in this business.

Speaker Change: And finally I want to close with a few comments on our long term operating model that.

Speaker Change: That long term operating model was last shared with investors in 2023.

At that time, the target was achieving long term adjusted EBITDA margins of 10% to 15%.

Speaker Change: And since then a lot has changed in the business.

Speaker Change: We're currently taking a fresh look at the model and intend to update it.

Speaker Change: In short we believe there is potential for greater long term leverage in this business.

Brian Norris: While there's more work to do, we look forward to sharing detailed updates at our next Analyst Day. With that, I'll turn the call back over to Brian.

Speaker Change: While there's more work to do we look forward to sharing detailed updates at our next analyst day.

Brian Norris: And with that I'll turn the call back over to Brian.

Brian Norris: Thank you, Chris. At this time, we'd like to open the call up for Q&A. We will now begin Q&A. For today's session, we will be utilizing the raise hand feature. If you'd like to ask a question, simply click on the raise hand button at the bottom of your screen. Once you've been called on, please unmute yourself and begin to ask your question. Please limit to one question and one follow up before jumping back in the queue. Thank you.

Speaker Change: Thank you Chris at this time, we'd like to open the call up for Q&A.

Speaker Change: We will now begin Q&A for today's session, we will be utilizing the race and feature if you'd like to ask a question click on the right hand button at the bottom of your screen once you've been called on police Unmeet yourself and begin to ask your question. Please limit to one question and one follow up before jumping back in the queue.

Speaker Change: Thank you we will now pause a moment to assemble the queue.

Operator: We will now pause a moment to assemble the queue.

Jeremy Hamblin: The first question will come from Jeremy Habla with with Craig Hallam, please unmute your line and ask your question. Thanks and congratulations on all the hard work getting here and the great results. I wanted to start by just asking about the success you're having with expansions. I think you said you know 50% of the new subscriptions were expansions and get an understanding of whether or not more of that is coming from the education vertical or healthcare or you know enterprise or Thank you for the question. We're thrilled about the commitment our customers are showing to our technology and see that as a great sign of the value we provide that they chose to double down on the investment that they've made in Evolv.

Speaker Change: The first question will come from Jeremy Hamblin with Craig Hallum. Please on mute your line and ask your question.

Jeremy Hamblin: Thanks, and congratulations on all the hard work getting here and the great results.

Jeremy Hamblin: I wanted to start by just asking about the success, you're having with expansions I think you said.

Jeremy Hamblin: 50% of the new subscriptions were expansions and get an understanding of whether or not.

Jeremy Hamblin: More of that is coming from the education vertical or health care or.

Jeremy Hamblin: Enterprise or stadiums.

Jeremy Hamblin: Thank you for the question, we're thrilled about the commitment of our customers are showing to our technology and see that as a great signs of the value we provide.

Jeremy Hamblin: Those two double down on the investment that they've made.

John Kaczorski: In terms of your question on where that's coming from, that is our express install base, since Expedite is new to the market.

Jeremy Hamblin: It evolved in terms of your question on where that's coming from that is our express installed base since expedite is new to the market and in terms of specific verticals. That's something we could follow up at a later time.

John Kaczorski: And in terms of specific verticals, that's something we could follow up on. Got it.

Jeremy Hamblin: Got it.

John Kaczorski: And then I wanted to get an understanding there's, you know, there's some new, there's a new law in California, that's, that's captured some attention here about hospital entrances being required by March of 27 to have weapons detection systems at all entranceways, and wanted to get a sense for, you know, inbound interest related to that. And then any additional comments that you might have, I think there's, you know, several other states that are looking at similar types of legislation requirements. We have a healthcare vertical team and they're aware of that legislation and actively engaging with customers in California.

Jeremy Hamblin: And then I wanted to get an understanding there is there is some new there's a new law in.

Jeremy Hamblin: In California.

Jeremy Hamblin: The captured some attention here about.

Jeremy Hamblin: Hospital entrances being required by March of 2007 to have weapons detection systems at all entrance ways.

Jeremy Hamblin: Wanted to get a sense for.

Jeremy Hamblin: Inbound interest related to that.

Jeremy Hamblin: And then any additional comments that you might have I think there is several other states that are looking at similar types of legislation requirements.

Jeremy Hamblin: We havent healthcare vertical team and they are aware of that legislation and actively engaging with customers in California.

John Kaczorski: I believe that that legislation is a broader indicator of enhanced focus on safety and security in the healthcare setting, and we're seeing positive signs in that vertical overall. significant opportunity. Great.

Jeremy Hamblin: I believe that that legislation is a broader indicator.

Jeremy Hamblin: <unk> focus on safety and security in the healthcare setting and we are seeing positive signs in that vertical overall, let's see.

Jeremy Hamblin: Significant opportunity for at all.

Jeremy Hamblin: Great and then as you continue to rollout the Gen two <unk>.

John Kaczorski: And then as you continue to roll out the Gen 2 Express product, I wanted to get an understanding of how you expect the gross margin profile to play out as that rolls out here over the next year or two. As Chris commented in his prepared, you know, remarks, Overall, we see gross margins being consistent outside of the comment that Chris mentioned in terms of some headwinds based on mix, as we do have a different gross margin profile across purchase versus full subscription. We're very encouraged about the signs of more customers preferring full subscription as that maximizes our ARR.

Jeremy Hamblin: Breath product I wanted to get an understanding of how you expect.

Jeremy Hamblin: The gross margin profile.

Jeremy Hamblin: To play out as that.

Jeremy Hamblin: Rolls out here over the next year or two.

Jeremy Hamblin: As Chris commented in his prepared remarks.

Jeremy Hamblin: Overall, we see gross margins being consistent outside of the comment that Chris mentioned in terms of some headwinds based on the mix as we do have a different gross margin profile across purchase versus full subscription, but we're very encouraged about the signs of more customers preferring full.

Jeremy Hamblin: <unk> is that maximizes our <unk> and.

Jeremy Hamblin: Yep.

Jeremy Hamblin: Okay.

John Kaczorski: Got it.

Got it last one for me.

Jeremy Hamblin: Last one for me. Go ahead. Go ahead, Jeremy. Last one. Yeah, I was just going to ask about your CapEx expectations for the year.

Jeremy Hamblin: Go ahead go ahead, Jeremy last one.

Speaker Change: Yes, I was just going to ask about your capex expectations for the year.

Brian Norris: Yeah, so Jeremy, it's Brian. So I think, you know, if you look at maybe 20 to $25 billion for CapEx to support the full subscription business, that's probably a good way to think about it. Again, based on what John just described, we're seeing a little bit more rotation to full subscription. And in that case, it could be just a little bit higher, but 20 to 25 is probably the right Remember, we have a different bomb cost for gen two, right?

Speaker Change: Yeah, So Jeremy it's Brian So I think if you look at maybe 20% to 25 billion for Capex to support the full subscription business is probably a good way to think about it again based on what John just described we're seeing a little bit more rotation to full subscription and in that case it could be just a little bit higher but 20 to 25 is probably the right way to think about the business.

Speaker Change: We have a different bond costs for Gen. Two right. So so we can do that a little bit more.

Beth Simpson: So, so we can do that a little Thanks for taking the questions, Beth Simpson.

Speaker Change: Yes.

Speaker Change: Okay got.

Speaker Change: Got it thanks for taking the questions.

Speaker Change: Right.

Michael Glattemore: Our next question comes from Michael Glattemore with Northland Capital Markets. Please unmute your line and ask your question. All right, great. Yep.

Speaker Change: Our next question comes from Mike Latimore with Northland Capital markets. Your line and ask your question.

Mike Latimore: Alright, great and congrats on getting these reports.

Michael Glattemore: And to wrap up on getting these reports done, I plan to have a live call again here.

I just want to have a lifestyle again here.

John Kaczorski: I guess John, maybe Since it's your first call, maybe a little bit more on strategy here, any refinements to strategy, whether it's, you know, through distribution versus direct OEM, you know, is there a view that you might might want to make an acquisition, just maybe a couple updates on kind of any enhancements to strategy here? We see the highest opportunity for shareholder value creation in continuing to drive a strong predictable subscription model. As Chris mentioned, we had the privilege of walking in the. with 78% of our Outlook already contracted, and we're focused on securing as many more entryways as we can to grow into that subscription base, which will drive predictable long-term revenue.

John: I guess John maybe.

Speaker Change: Since this is your first call I made a little bit more on strategy here any any refinements to strategy whether it's.

Speaker Change: Through distribution versus direct.

Speaker Change: Is there a view that you might might want to make an acquisition just maybe a couple of updates on any.

Speaker Change: Any enhancements to the strategy here.

We see the highest opportunity for shareholder value shareholder value creation, and continuing to drive that drive the strong predictable subscription model that we have as.

Speaker Change: As Chris mentioned, we had the privilege of walking into 2025 with 78% of our outlook already contracted and we are focused on securing as many more entry ways as we can to grow into that subscription base, which will drive predictable long term revenue growth.

John Kaczorski: Got it.

Speaker Change: Got it and then.

John Kaczorski: And then does your guidance assume kind of consistent bookings every quarter or are you expecting, you know, second half to be greater than first half? As we look into that guidance and informed it beyond walking in with 78% already committed and the incremental coming from new bookings, we expect to deploy at least as many new subscriptions in 2025 as we did in 2020.

Speaker Change: Does your guidance assume kind of consistent bookings every quarter are you expecting.

Speaker Change: Have to be greater than first half.

Speaker Change: As we look into that guidance and what informed it beyond walking in with 78% already committed and the incremental coming from new bookings, we expect to deploy as many news at least as many new subscriptions in 2025 as we did in 2024.

Speaker Change: Okay. And then is there is there one vertical that you're particularly excited about that youre seeing a lot of momentum.

John Kaczorski: And then is there is there one vertical that you're particularly excited about that you're seeing a lot of momentum? We're excited about the momentum that we see across, you know, our verticals, you know, Q1s, sports and entertainment, where many of our shareholders can experience our product when they attend their favorite sporting event, education, where we take our responsibility very seriously in helping schools secure their facilities, and to the earlier comment about health care, where there's an increasing focus in patient and health care workers.

Speaker Change: Okay.

We're excited about the momentum that we see across our verticals Q1's sports and entertainment.

Speaker Change: Many of our shareholders can experience our product when they attend to their favorite sporting event Ajay.

Speaker Change: Education, where we take our responsibility very seriously and helping schools secure debt facilities and to the earlier comment about healthcare, where there is an increasing focus in patient and health care worker safety.

Chris Cutzer: And Michael, this is Chris. One point I'd add that, you know, I'm excited about, and I mentioned briefly, about half of our bookings and units in Q1 came from existing customers. So that's across the verticals, but, you know, that's a pretty strong statement of, you know, repeat, not just repeat business, but continued investment, further investment by our institution.

Chris: And Michael This is Chris one point I'd add that I am.

Speaker Change: I'm excited about and I mentioned briefly.

Speaker Change: About half of our bookings and units in Q1 came from existing customers.

Speaker Change: That's across the verticals, but that's a pretty strong statement of.

Speaker Change: Repeat that just repeat business. The continued investment further investment by our installed base.

Chris Cutzer: I guess just last one on the tariff topic, is that having an impact on, you know, pricing for the system or, you know, access to components? First, I want to make sure that you know that we have factored in our forecast for tariff exposure in our 2025 outlook that we just shared with you tonight. And I believe that we're well positioned to manage the potential trade-related For some additional color on why we feel that way, first, it's important to note that our products are assembled right here in the U.S., which significantly limits the direct impact of tariffs on our operations.

Speaker Change: Got it got it I guess just last one on the tariff topic is that.

Speaker Change: Having an impact on pricing for the system or <unk>.

Speaker Change: Access to components.

Speaker Change: First I want to make sure that you know that we have factored in our forecast for tariff exposure in our 2025 outlook just shared with you Tonight and I believe that we're well positioned to manage the potential trade related headwinds.

Speaker Change: For some additional color on why we feel that way first it's important to note that our products are assembled right here in the U S, which significantly limits the direct impact of tariffs on our operations for some additional detail approximately 40% of our materials.

Chris Cutzer: For some additional detail, approximately 40% of our materials comes from North America, US, Mexico and Canada. And the Mexico and Canada content is in compliance with the USNCA, thus tariff exemptions. One other bit of detail that I'll provide as we look into tariff impacts into the future, our flagship product Evolv Express, which is the disproportionate majority of the revenue in our outlook, represents less than five percent. China represents less than five percent of the bill of So we're obviously watching the changing tariff environment very closely, but it is in the outlook. Perfect, perfect. Thanks very much.

Speaker Change: Comes from North America.

Speaker Change: Mexico, and Canada, and in Mexico, and Canada content is in compliance with the U S. MCA, thus tariff exempt.

Speaker Change: One other bit of digital that will provide as we look into tariff impacts into the future our flagship product evolve express which is the disproportionate majority of the revenue in our outlook.

Speaker Change: Represents less than 5%, China represents less than 5% of the bill of materials in that product. So we're obviously watching the changing tariff environment very closely but it is in the outlook that you saw.

Speaker Change: Perfect perfect. Thank you very much faster.

Chris Cutzer: Best of luck. Thank you.

Speaker Change: Thank you.

Operator: Just a reminder, if you'd like to ask a question, simply click on the raise hand button at the bottom of your screen.

Speaker Change: Just a reminder, if you'd like to ask a question simply click on the right hand button at the bottom of your screen.

Eric Martinuzzi: Our next question will come from Eric Martinuzzi with Lake Street Capital Markets.

Speaker Change: Our next question will come from Eric Marc Newsy with Lake Street Capital markets. Please UN mute your line and ask your question.

John Kaczorski: Please unmute your line and ask your question. I was curious about the expectation for the number of units, you know, historically, you guys have kind of given a range that you expect to support the revenue target. So there's 20 to 25% revenue growth. You just finished a year where you shipped 1748 Evolv Express units. What's the range that we're looking at for 2025?

Speaker Change: Was curious about the expectation for the number of units you know historically you guys have kind of given a range that you expect to support the revenue targets. So this 20% to 25% revenue growth.

Speaker Change: You just finished the year, where you shipped 1748 evolve express units whats the range that we're looking at for 2025.

John Kaczorski: As I stated earlier, we expect to deploy at least many units in 2025 as we do in 2024, which would put us in approximately 8,000 units deployed at the end of the year.

Speaker Change: As I stated earlier, we expect to deploy at least as many units in 25 as we do in 2024, which would put us.

Speaker Change: <unk> 8000, approximately 8000 units deployed at the end of the year going forward Youre going to hear us deemphasize the number of units shipped per quarter and that's for a very intentional reason as we're entering into the next phase of our revolution.

John Kaczorski: Going forward, you're going to hear us de-emphasize the number of units shipped per quarter, and that's for a very intentional reason.

John Kaczorski: As we're entering into the next phase of our revolution, upgrades from Gen 1 to Gen 2, which would not be a new unit shift, but would be an extension of RPO, renewals of systems, including early renewals sometimes as people upgrade to Gen 2, short-term subscription opportunities that we're excited about are all becoming drivers of ARR revenue and RPO and not in a new unit shift. So you're not going to hear us talk about that as much, but we believe we'll be finishing 2025 with approximately Okay, and then the revenue progression for 2025.

Speaker Change: <unk> from Gen. One to Gen, two which would not be a new unit shift, but it would be an extension of <unk> <unk>.

Speaker Change: <unk> systems, including early renewals, sometimes that people upgrade to Gen. Two short term subscription opportunities that we're excited about are all becoming drivers of our revenue in <unk> and not reflected in our new unit shift so youre not going to hear us talk about that as much.

Speaker Change: I believe we will be finishing 2025 with approximately 2000 beds.

Speaker Change: Okay, and then the revenue progression for 2025, you guys have historically.

Brett Knoblauch: You guys have historically, you know, there's just been sequential growth quarter by quarter. Given the one-time benefits that you talked about in Q1, do we have a step down? Should we expect a step down in Q2 or is there is sequential growth a plan?

Speaker Change: Theres just been sequential growth quarter by quarter, given the one time benefits that you talked about in Q1 do we have a step down and should we expect a step down in Q2 or is there some.

Speaker Change: <unk> growth plan.

Brett Knoblauch: This is Brett. Thanks for the question, Eric. A couple things. We did say, hey, don't read too much into Q1 because of the soft compare. Hopefully that's clear. It did have some one-time impacts. We haven't guided specifically on Q2, so I'm not going to get overly specific there. But remember, Q3, Q4, and now Q1 all had, in general, some benefits of this more one-time revenue, where revenues reflected more upfront because of the purchase subscription transactions the customers were opting for. You heard John say a few minutes ago, however, we're seeing increased adoption of pure subscription.

Speaker Change: This is Chris Thanks for the question Eric a couple of things, we did say don't read too much into Q1 because of the soft compare hopefully that's clear it did have some some one time impacts we haven't guided specifically on Q2, so I'm not going to get overly specific there.

Speaker Change: But remember Q3 Q4, and now Q1, all had in general some benefits of this more onetime revenue where revenue is.

Speaker Change: Reflected more upfront because of the purchase subscription transactions that customers were asking for you heard John say a few minutes ago. However, we are seeing increased adoption of pure subscription and what that means is more revenue over the four year lease versus more upfront and that's a good thing for the <unk>.

Brett Knoblauch: And what that means is more revenue over the four-year lease versus more upfront. And that's a good thing for the business that we think is likely to continue as we get more ARR, and it's very, very good in general.

Speaker Change: <unk> that we think is likely to continue as we get more.

Speaker Change: And it's very very good in general.

Brett Knoblauch: I will just give you a quick reminder, right? Full subscription defers revenue recognition compared to purchase subscription, and that is informed in our 2025 outlook. Remember, too, that comps through the rest of this year, through the rest of 2025, are impacted by the higher revenue recognition in the second half of last year, the second half of 2024, that also had some of that one-time higher revenue impact. So when you keep that all together, it nets out to exactly what you heard from us, 20 to 25 percent that we expect for this year. It's informed, again, by all the way back at the beginning, you heard John talk about a strong, predictable subscription business that has a substantial amount of revenue booked on day one that gives us a little bit more visibility and less volatility in either Gotcha.

Speaker Change: I'll just give you a quick reminder, right full subscription deferred revenue recognition compared to purchase subscription and that is informed in our 2025 outlook.

Speaker Change: Remember too the comps through the rest of this year through the rest of 2025 are impacted by the higher revenue recognition in the second half of last year. The second half of 2024 that also had some without one time higher revenue impact.

Speaker Change: So when you keep that altogether.

Speaker Change: Zelle to exactly what you heard from 20% to 25% that.

Speaker Change: We expect for this year, it's informed again by all the way back.

Speaker Change: John talked about a strong predictable subscription business that has a substantial amount of revenue booked on day, one it gives us a little bit more visibility and less volatility in either direction.

Speaker Change: Gotcha.

Brett Knoblauch: And then you talked about kind of a $2 million in near term investments. How does that layer on? Is this sort of spread like peanut butter across the, you know, the remaining three quarters? Or is there should we anticipate larger amounts in different quarters? For now, it is just beginning. Some of that spend has begun now, but yeah, it will be a bit more in the second half.

Speaker Change: And then you talked about.

Speaker Change: Kind of two.

Speaker Change: $2 million in near term investments, how does that layer on as sort of the spread like peanut butter across.

Speaker Change: The remaining three quarters or is there should we anticipate larger amounts in different quarters.

Speaker Change: For now it is just beginning some of that spend has begun now, but yes, it will be a bit more in the second half.

Brett Knoblauch: But we'll update you again in Q2 with the state of that investment.

Speaker Change: But we'll update you again in Q2 with the state of that investment.

Brett Knoblauch: Yeah, thanks for taking my questions.

Speaker Change: Got it thanks for taking my questions.

Speaker Change: No.

Brett Knoblauch: Our next question will come from Brett Knoblauch with Cantor Fitzgerald. Please unmute your line and ask your question. Hi guys, thanks for taking my question.

Our next question will come from Brett Knoblauch with Cantor Fitzgerald, Amit Your line and ask your question.

Brett Knoblauch: Hi, guys. Thanks for taking my question.

John Kaczorski: I'd like to hear your voice again. just on the purchase versus description model. Is there a mix that we can assume that you guys are going to target? Are we ever going to have another quarter where we're going to get a higher purchase order, or is now the business direction and focus just on the equipment side is never going to... have that quarter where there's a big one-time cost or one-time benefit.

Speaker Change: Bob.

Speaker Change: Just on the.

Speaker Change: Subscription model.

Speaker Change: Is there a mix.

Speaker Change: Right.

Speaker Change: Right.

Speaker Change: Thank you.

Speaker Change: Are we ever going to have it's been another quarter, where we're going to forget a higher purchase order or down, but the business direction and focus jump on it.

Speaker Change: Great.

Speaker Change: And that whatever whether it's a big one time cost or one time benefits.

John Kaczorski: We definitely like the shift that we see to more pure subscription because of all the reasons that we've already articulated, and we also think it's the best ownership experience for our customers as well. The shift that we're observing here in the first half Coming from customer preference, which we see as an encouraging. We're going to continue both options in terms of customers being able to purchase. To learn more, go to brainstorminglife.com Got it.

Speaker Change: We definitely like the shift that we see to more pure subscription because of all the reasons that we've already articulated and we also think it's the best ownership experience for our customers as well the shifts that we are observing here in the first half.

Speaker Change: Coming from customer preference, which we see as an encouraging sign but we're going to continue both options in terms of customers being able to purchase.

Speaker Change: The hardware and then subscribe to the software because all of our models have a subscription attached to 48 months subscription or enter into pure subscription. So we're communicating what we are seeing a trend that we see for the rest of the year.

Speaker Change: Got it and then maybe just a follow up on expedite.

John Kaczorski: Let me just follow up on Expedite. The 12 new customers that you guys have added, were those like met new customers who weren't using Evolv at all before or were those kind of existing customers with adding Expedite on top? There was a mix of customers with quite a few that had Expresses already, which we think is great for the comments we've made about existing customer expansion, growing their fleets, or cross-selling new units, but we also saw brand new customers with Expedite that we're excited about. We're optimistic about how that product is launched into market with seeing new customers so early into the launch process.

Speaker Change: 12, new customers that you guys have added.

Speaker Change: Where they would like net new customers, who aren't using Bob.

Speaker Change: One of our existing.

Speaker Change: Existing customers, adding expedite.

Speaker Change: Yes.

Speaker Change: There was a mix of customers.

Speaker Change: Quite a few that had expressed as already which we think is great for the comments, we've made about existing customer expansion and growing their fleets or cross selling new units, but we also saw.

Speaker Change: Brand new customers with expedite that we're excited about we're optimistic about how that product is launched into the market would see new customers early so early into the launch process.

Brett Knoblauch: Thank you. Appreciate it, guys.

Speaker Change: Perfect I appreciate it guys.

Speaker Change: Okay.

John Kaczorski: This concludes our question and answer session. I'd like to turn it back to the company. Thank you for joining us today. We are very pleased to be back in compliance with the SEC and our SEC filing requirements and re-engaging with investors like we did just now. We have had a period of significant I am very proud of how our team has negotiated through. We greatly appreciate the support of our customers. shareholders, and our I am pleased with the start we've seen to the year and the positive indicators that we see about the We believe that there may be more leverage in the model, and in this model specifically on adjusted EBITDA.

Speaker Change: This concludes our question and answer session I would like to turn it back to the company.

Speaker Change: Thank you for joining US today, we are very pleased to be back in compliance with the SEC and our SEC filing requirements and re engaging with investors like we did just now we have had a period of significant change I am very proud of how our team has negotiated.

Speaker Change: Through those challenges we greatly appreciate the <unk>.

Speaker Change: Part of our customers.

Speaker Change: Our shareholders.

Speaker Change: And our employees thank.

Speaker Change: Thank you.

Speaker Change: I am pleased with the start we've seen through the year and deposit indicators that we see about the business.

Speaker Change: We believe that there may be more leverage in the model.

Speaker Change: This model specifically on adjusted EBITDA.

John Kaczorski: And we really look forward to seeing our investors as we enter into our offers period. Thank you. Thank you for joining.

Speaker Change: And we really look forward to seeing our investors as we enter into our outreach period. Thank you.

Speaker Change: Thank you for joining this concludes today's call you may now disconnect.

Operator: This concludes today's call. You may now disconnect.