Evolv Technologies Holdings, Inc. [EVLV] Filings

10-Q 1 nhic-20240630.htm 10-Q nhic-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to

Commission file number: 001-39417

___________________________________

Evolv Technologies Holdings, Inc.

(Exact Name of Registrant as Specified in Its Charter)

___________________________________


Delaware			84-4473840
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

500 Totten Pond Road, 4th Floor

Waltham, Massachusetts 02451

(Address of Principal Executive Offices)

(781) 374-8100

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading symbol

Name of Exchange on which registered

Class A common stock, par value $0.0001 per share

EVLV

The Nasdaq Stock Market

Warrants to purchase one share of Class A common stock

EVLVW

The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 7, 2024, there were 157,550,036 shares of Class A common stock, par value $0.0001 per share, outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
Part I	Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (Unaudited)	F-1

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)	F-2

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)	F-4

	Condensed Consolidated Statements of Cash Flows (Unaudited)	F-5

	Notes to Consolidated Financial Statements (Unaudited)	F-7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4.	Controls and Procedures	18

Part II	Other Information	20

Item 1.	Legal Proceedings	20

Item 1A.	Risk Factors	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	25

Signatures

Table of Contents

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical facts, including, without limitation, statements regarding our results of operations and financial position, business strategy, plans and prospects, our relationship with significant manufacturers and suppliers, our ability to obtain new customers and retain existing customers, existing and prospective products, research and development costs, the potential benefits of our transition to a pure subscription model, timing and likelihood of success, macroeconomic and market trends, the impact of government regulations that we are subject to, our expectations regarding outcomes and impact of any legal proceedings, government investigation, or enforcement action (such as the current investigations by the FTC and the SEC), and plans and objectives of management for future operations and results, are forward-looking statements. The words “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions are intended to identify forward-looking statements though not all forward-looking statements use these words or expressions.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, without limitation risks relating to our history of losses and ability to reach profitability; our reliance on reseller partners to generate a growing portion of our revenue; expectations regarding the Company’s strategies and future financial performance, including its future business plans or objectives, prospective performance and opportunities and competitors, revenues, products and services, pricing, operating expenses, market trends, liquidity, cash flows and uses of cash, capital expenditures; the Company’s reliance on third party contract manufacturing and distribution, and a global supply chain; the Company recognizes a substantial portion of its revenue ratably over the term of its agreements, and, as a result, downturns or upturns in sales may not be immediately reflected in its operating results; the rate of innovation required to maintain competitiveness in the markets in which the Company competes; the competitiveness of the market in which the Company competes; the failure of our products to detect threats could result in injury or loss of life, which could harm our brand, reputation, and results of operations; the loss of designation of our Evolv Express® system as a Qualified Anti-Terrorism Technology under the Homeland Security SAFETY Act; risks related to our business model, which is predicated, in part, on building a customer base that will generate a recurring stream of revenues through the sale of our subscription contracts; the ability for the Company to obtain, maintain, protect and enforce the Company’s intellectual property rights and use of “open source” software; the concentration of the Company’s revenues on a single solution; the Company’s ability to timely design, produce and launch its solutions, the Company’s ability to invest in growth initiatives and pursue acquisition opportunities; the limited liquidity and trading of the Company’s securities; risks related to existing and changing tax laws; geopolitical risk and changes in applicable laws or regulations; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; operational risk; risks related to material weaknesses in our internal control over financial reporting and our remediation plans; risks related to increasing attention to and evolving expectations for, environmental, social, and governance initiatives; the impact of fluctuating general economic and market conditions and reductions in spending; the need for additional capital to support business growth, which might not be available on acceptable terms, if at all; and litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on resources; and other important factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as any such factors may be updated from time to time in its other filings with the Securities and Exchange Commission (the “SEC”). The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, it may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect.

Table of Contents

We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

GENERAL

We may announce material business and financial information to our investors using our investor relations website at https://ir.evolvtechnology.com/. We therefore encourage investors and others interested in Evolv to review the information that we make available on our website, in addition to following our filings with the SEC, webcasts, press releases and conference calls. Information contained on our website is not part of this Quarterly Report on Form 10-Q.

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)


	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	35,698	$	67,162
Restricted cash	—		275
Marketable securities	20,757		51,289
Accounts receivable, net of allowance for expected credit losses of $785 and $582 as of June 30, 2024 and December 31, 2023, respectively *	36,428		22,611
Inventory	18,604		9,507
Current portion of contract assets	1,690		3,707
Current portion of commission asset	4,810		4,339
Prepaid expenses and other current assets	19,912		16,954
Total current assets	137,899		175,844
Restricted cash, noncurrent	275		—
Contract assets, noncurrent	144		451
Commission asset, noncurrent	7,128		7,107
Property and equipment, net	120,045		112,921
Operating lease right-of-use assets	2,161		1,195
Other assets	865		1,202
Total assets	$	268,517	$	298,720

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	5,574	$	17,400
Accrued expenses and other current liabilities	15,913		15,578
Current portion of deferred revenue	56,168		47,677

Current portion of operating lease liabilities	1,754		1,391
Total current liabilities	79,409		82,046
Deferred revenue, noncurrent	23,655		23,813

Operating lease liabilities, noncurrent	566		—
Contingent earn-out liability	5,706		29,119
Contingently issuable common stock liability	2,256		6,530
Public warrant liability	3,852		10,889
Total liabilities	115,444		152,397
Commitments and contingencies (Note 14)

Stockholders’ equity:
Preferred stock, $0.0001 par value; 100,000,000 authorized at June 30, 2024 and December 31, 2023; no shares issued and outstanding at June 30, 2024 and December 31, 2023	—		—
Common stock, $0.0001 par value; 1,100,000,000 shares authorized at June 30, 2024 and December 31, 2023; 157,474,122 and 151,310,080 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	16		15
Additional paid-in capital	459,745		444,825
Accumulated other comprehensive loss	(42)		(53)
Accumulated deficit	(306,646)		(298,464)
Stockholders’ equity	153,073		146,323
Total liabilities and stockholders’ equity	$	268,517	$	298,720

*Includes related party accounts receivable, net of $2.9 million and $1.7 million as of June 30, 2024 and December 31, 2023, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-1

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share and per share amounts)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue:
Product revenue	$	2,044	$	7,243	$	2,647	$	15,997
Subscription revenue	15,903		7,964		30,406		14,430
Service revenue	5,553		3,905		10,937		6,691
License fee and other revenue	2,040		713		3,218		1,288
Total revenue *	25,540		19,825		47,208		38,406
Cost of revenue:
Cost of product revenue	3,149		7,722		5,926		18,300
Cost of subscription revenue	6,436		3,406		12,215		5,757
Cost of service revenue	1,311		1,014		2,522		1,597
Cost of license fee and other revenue	172		270		301		574
Total cost of revenue	11,068		12,412		20,964		26,228
Gross profit	14,472		7,413		26,244		12,178
Operating expenses:
Research and development	5,722		6,395		11,927		11,784
Sales and marketing	16,892		13,613		32,897		26,417
General and administrative	14,185		10,874		26,025		19,800
Loss from impairment of property and equipment	—		157		—		294
Total operating expenses	36,799		31,039		70,849		58,295
Loss from operations	(22,327)		(23,626)		(44,605)		(46,117)
Other income (expense), net:
Interest expense	—		—		—		(654)
Interest income	681		1,853		1,766		2,806
Other income (expense), net	(39)		(22)		(67)		(3)
Loss on extinguishment of debt	—		—		—		(626)
Change in fair value of contingent earn-out liability	16,514		(28,113)		23,413		(31,431)
Change in fair value of contingently issuable common stock liability	3,747		(5,095)		4,274		(5,837)
Change in fair value of public warrant liability	4,886		(11,751)		7,037		(13,501)
Total other income (expense), net	25,789		(43,128)		36,423		(49,246)


Net income (loss)	$	3,462	$	(66,754)	$	(8,182)	$	(95,363)


Net income (loss) attributable to common stockholders – basic and diluted (Note 12)	$	3,421	$	(66,754)	$	(8,182)	$	(95,363)

Weighted average common shares outstanding
Basic	156,473,080		148,882,160		154,774,899		147,664,534
Diluted	171,563,943		148,882,160		154,774,899		147,664,534
Net income (loss) per share
Basic	$	0.02	$	(0.45)	$	(0.05)	$	(0.65)
Diluted	$	0.02	$	(0.45)	$	(0.05)	$	(0.65)




Net income (loss)	$	3,462	$	(66,754)	$	(8,182)	$	(95,363)
Other comprehensive income (loss)
Cumulative translation adjustment	8		(17)		11		(33)
Total other comprehensive income (loss)	8		(17)		11		(33)
Total comprehensive income (loss)	$	3,470	$	(66,771)	$	(8,171)	$	(95,396)

F-2

Table of Contents

*Includes related party revenue of $2.0 million and $3.4 million for the three months ended June 30, 2024 and 2023, respectively, and $3.9 million and $7.0 million for the six months ended June 30, 2024 and 2023, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-3

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(In thousands, except share amounts)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balances at December 31, 2023	151,310,080	$	15	$	444,825	$	(53)	$	(298,464)	$	146,323
Issuance of common stock upon net exercise of stock options	519,089	1		301		—		—		302
Issuance of common stock upon vesting of restricted stock units	3,527,778	—		—		—		—		—

Stock-based compensation cost	—	—		6,605		—		—		6,605
Cumulative translation adjustment	—	—		—		3		—		3
Net loss	—	—		—		—		(11,644)		(11,644)
Balances at March 31, 2024	155,356,947	$	16	$	451,731	$	(50)	$	(310,108)	$	141,589
Issuance of common stock upon net exercise of stock options	823,047	—		335		—		—		335
Issuance of common stock upon vesting of restricted stock units	1,294,128	—		—		—		—		—

Stock-based compensation cost	—	—		7,679		—		—		7,679
Cumulative translation adjustment	—	—		—		8		—		8
Net income	—	—		—		—		3,462		3,462
Balances at Balances at June 30, 2024	157,474,122	$	16	$	459,745	$	(42)	$	(306,646)	$	153,073








Balances at December 31, 2022	145,204,974	$	15	$	419,190	$	(10)	$	(192,210)	$	226,985
Issuance of common stock upon net exercise of stock options	100,587	—		33		—		—		33
Issuance of common stock upon vesting of restricted stock units	1,841,257	—		—		—		—		—
Issuance of common stock upon exercise of warrants	830,216	—		348		—		—		348
Stock-based compensation cost	—	—		5,101		—		—		5,101
Cumulative translation adjustment	—	—		—		(16)		—		(16)
Net loss	—	—		—		—		(28,609)		(28,609)
Balances at March 31, 2023	147,977,034	$	15	$	424,672	$	(26)	$	(220,819)	$	203,842
Issuance of common stock upon net exercise of stock options	775,193	—		310		—		—		310
Issuance of common stock upon vesting of restricted stock units	1,038,415	—		—		—		—		—
Issuance of common stock upon exercise of warrants	100	—		1		—		—		1
Stock-based compensation cost	—	—		6,776		—		—		6,776
Cumulative translation adjustment	—	—		—		(17)		—		(17)
Net loss	—	—		—		—		(66,754)		(66,754)
Balances at June 30, 2023	149,790,742	$	15	$	431,759	$	(43)	$	(287,573)	$	144,158

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-4

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(8,182)	$	(95,363)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	7,442		4,087
Write-off of inventory and change in inventory reserve	1,725		337

Loss from impairment of property and equipment	—		294

Stock-based compensation	13,834		11,732
Non-cash interest expense	—		22
Amortization (accretion) of premium (discount) on marketable securities, net of change in accrued interest	181		(242)
Non-cash lease expense	728		432
Change in allowance for expected credit losses	203		173
Loss on extinguishment of debt	—		626
Change in fair value of earn-out liability	(23,413)		31,431
Change in fair value of contingently issuable common stock	(4,274)		5,837
Change in fair value of public warrant liability	(7,037)		13,501
Changes in operating assets and liabilities
Accounts receivable	(14,020)		(646)
Inventory	(10,354)		5,080
Commission assets	(492)		(1,258)
Contract assets	2,324		(1,184)
Other assets	337		(43)
Prepaid expenses and other current assets	(2,958)		580
Accounts payable	(1,653)		(7,409)
Deferred revenue	8,333		24,113
Accrued expenses and other current liabilities	79		(342)
Operating lease liability	(765)		(513)
Net cash used in operating activities	(37,962)		(8,755)
Cash flows from investing activities:
Development of internal-use software	(3,408)		(1,599)
Purchases of property and equipment	(21,092)		(33,173)
Proceeds from sale of property and equipment	—		60
Purchases of marketable securities	(14,567)		(29,405)
Proceeds from maturities of marketable securities	44,918		—
Net cash provided by (used in) investing activities	5,851		(64,117)
Cash flows from financing activities:
Proceeds from exercise of stock options	636		344

Proceeds from long-term debt	—		1,876
Repayment of principal on long-term debt	—		(31,876)
Payment of debt issuance costs and prepayment penalty	—		(332)
Net cash provided by (used in) financing activities	636		(29,988)
Effect of exchange rate changes on cash and cash equivalents	11		(33)
Net decrease in cash, cash equivalents and restricted cash	(31,464)		(102,893)
Cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period	67,437		230,058
Cash, cash equivalents and restricted cash at end of period	$	35,973	$	127,165

Supplemental disclosure of cash flow information
Cash paid for interest	$	—	$	710
Supplemental disclosure of non-cash activities
Transfer of property and equipment to inventory	$	468	$	191

F-5

Table of Contents


	Six Months Ended June 30,
	2024		2023
Capital expenditures incurred but not yet paid	3,407		13,572
Capitalization of stock compensation	450		218
Finback exercise price	—		348
Operating lease liabilities arising from obtaining right-of-use assets	1,694		—
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	35,698	$	125,890
Restricted cash	—		1,000
Restricted cash, noncurrent	275		275
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	35,973	$	127,165

The accompanying notes are an integral part of these condensed consolidated financial statements.

F-6

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of the Business and Basis of Presentation

Evolv Technologies Holdings, Inc. (the “Company”), a Delaware corporation, is a leading security technology company pioneering AI-based screening designed to help create safer experiences, with key market categories that include education, healthcare, sports, and live entertainment.

The Company's solutions combine proprietary software and hardware, delivered as a long-term Software-as-a-Service subscription model. Its flagship product, Evolv Express®, uses advanced sensors, artificial intelligence powered software, and cloud services to reliably detect firearms, improvised explosives, and certain types of knives while ignoring many harmless items such as cell phones and keys. These solutions and services are designed to capture valuable visitor data customers can leverage to inform their security operations, while providing end-users with an approachable and non-intrusive security experience. The Company is headquartered in Waltham, Massachusetts.

As used in this Quarterly Report on Form 10-Q, unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Evolv” refer to the consolidated operations of Evolv Technologies Holdings, Inc. and its wholly-owned subsidiaries, which include Evolv Technologies, Inc., Evolv Technologies UK Ltd. and Give Evolv LLC. References to “NHIC” refer to our legal predecessor, a special-purpose acquisition company, prior to the consummation of our business combination on July 16, 2021 (the “Merger”), and references to “Legacy Evolv” refer to Evolv Technologies, Inc. dba Evolv Technology, Inc. prior to the consummation of the Merger. The Merger was contemplated by the Agreement and Plan of Merger, dated March 5, 2021, with NHIC Sub Inc., NHIC, and Legacy Evolv, as amended by that certain First Amendment to Agreement and Plan of Merger dated June 5, 2021 (as amended, the “Merger Agreement”).

Basis of presentation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023 have been prepared on the same basis as the audited annual consolidated financial statements as of December 31, 2023 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2024 and the results of its operations for the three and six months ended June 30, 2024 and 2023 and cash flows for the six months ended June 30, 2024 and 2023. The results for the three and six months ended June 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

Reclassifications

During the year ended December 31, 2023, the Company began classifying revenue from professional services, which includes installation, training, and event support, as well as other one-time revenue, within license fee and other revenue on the consolidated statements of operations and comprehensive loss, whereas the revenue for these services has previously been included in service revenue. Correspondingly, the Company began classifying costs associated with professional services within cost of license fee and other revenue, whereas these costs were previously included in cost of service revenue. These reclassifications were made to align the presentation of professional services with the Company's internal reporting and analysis. The reclassifications did not impact total revenue or total cost of revenue for any period. Prior year amounts included in this Quarterly Report on Form 10-Q have been reclassified to conform to the current presentation.

F-7

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the three and six months ended June 30, 2023, the reclassifications resulted in an increase in license fee and other revenue of $0.7 million and $1.3 million, respectively, and a corresponding decrease in service revenue, as well as an increase in cost of license fee and other revenue of $0.3 million and $0.6 million, respectively, and a corresponding decrease in cost of service revenue.

2. Summary of Significant Accounting Policies

Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2023, and the notes thereto, which are included in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2024.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The updated accounting guidance requires enhanced reportable segment disclosures, primarily related to significant segment expenses which are regularly provided to the chief operating decision maker. The guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Retrospective application is required and early adoption is permitted. The Company is currently evaluating the impact of this standard on the disclosures within the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Early adoption is permitted. A public entity should apply the amendments in ASU 2023-09 prospectively to all annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of this standard on the disclosures within the consolidated financial statements.

3. Marketable Securities

Marketable securities as of June 30, 2024 and December 31, 2023 consisted of the following:


	June 30, 2024
	Amortized Cost		Unrealized Gain/(Loss)		Fair Value
U.S. Treasury bills	$	20,757	$	—	$	20,757
Total marketable securities	$	20,757	$	—	$	20,757


	December 31, 2023
	Amortized Cost		Unrealized Gain/(Loss)		Fair Value
U.S. Treasury bills	$	51,289	$	—	$	51,289
Total marketable securities	$	51,289	$	—	$	51,289

Marketable securities at June 30, 2024 and December 31, 2023 are comprised solely of zero coupon U.S. treasury bills with maturities of greater than three months but less than one year that are classified as available-for-sale debt securities. Unrealized gains or losses were not material for each of the three and six months ended June 30, 2024 and 2023. The accretion of discounts on marketable securities is included in interest income on the condensed consolidated statements of operations and comprehensive income.

F-8

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. Fair Value Measurements

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values (in thousands):


	Fair Value Measurements at June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	28,025	$	—	$	—	$	28,025
Treasury bills	—		20,757		—		20,757
	$	28,025	$	20,757	$	—	$	48,782
Liabilities:
Contingent earn-out liability	$	—	$	—	$	5,706	$	5,706
Contingently issuable common stock liability	—		—		2,256		2,256
Public Warrant liability	3,852		—		—		3,852
	$	3,852	$	—	$	7,962	$	11,814


	Fair Value Measurements at December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	57,829	$	—	$	—	$	57,829
Treasury bills	—		51,289		—		51,289
	$	57,829	$	51,289	$	—	$	109,118
Liabilities:
Contingent earn-out liability	$	—	$	—	$	29,119	$	29,119
Contingently issuable common stock liability	—		—		6,530		6,530
Public Warrant liability	10,889		—		—		10,889
	$	10,889	$	—	$	35,649	$	46,538

Money market funds are included in cash and cash equivalents on the condensed consolidated balance sheets. As of June 30, 2024 and December 31, 2023, all outstanding treasury bills, which totaled $20.8 million and $51.3 million, respectively, had original maturities greater than 3 months and are reflected as marketable securities. The fair value of the treasury bills, which are classified as Level 2 securities, is calculated by a third-party pricing service and is based on estimates obtained from various sources.

The Company may also value its non-financial assets and liabilities, including items such as inventories and property and equipment, at fair value on a non-recurring basis if it is determined that impairment has occurred. Such fair value measurements use significant unobservable inputs and are classified as Level 3.

The carrying amounts of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, accrued liabilities, and other accrued expenses approximate fair value because of their short maturity.

During each of the six months ended June 30, 2024 and 2023, there were no transfers between Level 1, Level 2 and Level 3.

F-9

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Valuation of Contingent Earn-out

Pursuant to the Merger Agreement, the Legacy Evolv stockholders, immediately prior to the Merger, were entitled to receive additional shares of the Company’s common stock upon the Company achieving certain milestones as described in Note 2 of our consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s contingent earn-out shares were recorded at fair value as contingent earn-out liability upon the closing of the Merger and are remeasured each reporting period. As of June 30, 2024, no milestones have been achieved.

The fair value of the contingent earn-out is calculated using a Monte Carlo analysis in order to simulate the future path of the Company’s stock price over the earn-out period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value. The significant assumptions used in the Monte Carlo model as of June 30, 2024 were as follows: 87.5% expected stock price volatility, a risk-free rate of return of 4.8%, a 25% likelihood of change in control and a remaining term of 1.7 years.

The following table provides a rollforward of the contingent earn-out liability (in thousands):


Balance at December 31, 2023	$	29,119
Change in fair value	(23,413)
Balance at June 30, 2024	$	5,706

The decrease in fair value of the contingent earn-out liability is primarily due to lowered probability to achieve the stock price milestones based on the Company's current stock price and a shorter remaining term.

Valuation of Contingently Issuable Common Stock

Prior to the Merger, certain NHIC stockholders owned 4,312,500 shares of NHIC Class B common stock which were converted into shares of the Company's stock in connection with the Merger (the “Founder Shares”). Of these shares, 1,897,500 shares vested at the closing of the Merger, 517,500 shares were transferred back to NHIC and then contributed to Give Evolv LLC, and the remaining 1,897,500 outstanding shares will vest upon the Company achieving certain milestones as described in Note 2 of our consolidated financial statements of our Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s contingently issuable common shares were recorded at fair value on the closing of the Merger and are remeasured each reporting period. As of June 30, 2024, no milestones have been achieved.

The fair value of the contingently issued common shares is determined using a Monte Carlo analysis in order to simulate the future path of the Company’s stock price over the vesting period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value. The significant assumptions used in the Monte Carlo model as of June 30, 2024 were as follows: 85% expected stock price volatility, a risk-free rate of return of 4.7%, a 25% likelihood of change in control and a remaining term of 2.0 years.

The following table provides a rollforward of the contingently issuable common shares (in thousands):


Balance at December 31, 2023	$	6,530
Change in fair value	(4,274)
Balance at June 30, 2024	$	2,256

Valuation of Public Warrant Liability

In connection with the closing of the Merger, the Company assumed warrants to purchase 14,325,000 shares of common stock (the “Public Warrants”) at an exercise price of $11.50. The Public Warrants are immediately exercisable and expire in July 2026. The Public Warrants are classified as a liability and are subsequently remeasured to fair value at each reporting date based on the closing price as reported by Nasdaq on the last date of the reporting period. As of June 30, 2024, 14,324,893 Public Warrants are outstanding.

F-10

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides a rollforward of the public warrant liability (in thousands):


Balance at December 31, 2023	$	10,889
Change in fair value	(7,037)
Balance at June 30, 2024	$	3,852

5. Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification 606 – Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In order to achieve this core principle, the Company applies the following five steps when recording revenue: (1) identify the contract, or contracts, with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when, or as, performance obligations are satisfied.

The Company derives revenue from (1) subscription arrangements generally accounted for as operating leases, including SaaS and maintenance, (2) the sale of products, (3) SaaS and maintenance related to products sold to customers either by Evolv or by Columbia Tech pursuant to the Distribution and License Agreement (as defined below), (4) license fees related to the Distribution and License Agreement (as defined below), and (5) professional services, including installation, training, and event support. Maintenance consists of preventative maintenance, technical support, bug fixes, and when-and-if available threat updates. Our arrangements are generally noncancelable and nonrefundable after ownership passes to the customer. Revenue is recognized net of sales tax.

Distribution and License Agreement

In March 2023, the Company entered into a distributor licensing agreement (the “Distribution and License Agreement”) with Columbia Electrical Contractors, Inc. (“Columbia Tech”). Columbia Tech, a wholly-owned subsidiary of Coghlin Companies, which serves as the Company's primary contract manufacturer. Under this arrangement, the Company has granted a license of its intellectual property to Columbia Tech, which contracts directly with certain of the Company's resellers to fulfill sales demand where the end-user customer prefers to purchase the hardware equipment as opposed to lease the equipment. Columbia Tech pays the Company a hardware license fee for each system it manufactures and sells under the agreement. In these instances, the Company still contracts directly with the reseller to provide a multi-year SaaS and maintenance subscription to the end-users.

The Company has assessed whether it operates as the principal or as an agent in relation to the sale of product made by Columbia Tech to the Company's resellers pursuant to the Distribution and License Agreement. The Company considered various factors, including but not limited to, inventory risk, discretion in establishing pricing, and which entity is primarily responsible for fulfillment. Based on an evaluation of the facts and circumstances, the Company concluded that Columbia Tech is the principal in the arrangement. The Company therefore does not recognize revenue in relation to sales of product pursuant to the Distribution and License Agreement, but does recognize revenue in relation to license fees received from Columbia Tech and the SaaS and maintenance subscription contracts.

Remaining Performance Obligations

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) as of June 30, 2024:

F-11

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


	Less than 1 year		1 - 2 years		More than 2 years		Total
Product revenue	$	1,670	$	—	$	—	$	1,670
Subscription revenue	67,956		59,326		63,842		191,124
Service revenue	24,238		23,019		21,076		68,333
License fee and other revenue	1,789		10		21		1,820
Total revenue	$	95,653	$	82,355	$	84,939	$	262,947

The amount of minimum future leases is based on expected income recognition. As of June 30, 2024, future minimum payments on noncancelable leases are as follows (in thousands):


Year Ending December 31:
2024 (six months remaining)	$	34,992
2025	63,964
2026	52,682
2027	32,219
2028	7,133
Thereafter	134
	$	191,124

Contract Balances from Contracts with Customers

Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is conditional and not only subject to the passage of time. As of June 30, 2024 and December 31, 2023, the Company had $1.7 million and $3.7 million in current portion of contract assets and $0.1 million and $0.5 million in contract assets, noncurrent on the condensed consolidated balance sheets, respectively.

Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. The Company has a contract liability related to service revenue, which consists of amounts that have been invoiced but that have not been recognized as revenue. Amounts expected to be recognized as revenue within 12 months of the balance sheet date are classified as current deferred revenue and amounts expected to be recognized as revenue beyond 12 months of the balance sheet date are classified as deferred revenue, noncurrent. The Company recognized revenue of $14.1 million and $31.4 million during the three and six months ended June 30, 2024, respectively, that was included in the December 31, 2023 deferred revenue balance. The Company recognized revenue of $5.3 million and $12.1 million during the three and six months ended June 30, 2023, respectively, that was included in the December 31, 2022 deferred revenue balance.

F-12

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides a rollforward of deferred revenue (in thousands):


Balance at December 31, 2023	$	71,490
Revenue recognized in relation to the beginning of the year contract liability balance	(31,445)
Revenue deferred	39,778
Balance at June 30, 2024	$	79,823

The following table presents the Company’s components of lease revenue (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Interest income on lease receivables	$	41	$	51	$	83	$	104
Lease income - operating leases	15,903		7,964		30,406		14,430
Total lease revenue	$	15,944	$	8,015	$	30,489	$	14,534

Interest income on lease receivables is classified under interest income in the condensed consolidated statements of operations and comprehensive loss. Lease income from operating leases is related to the leased equipment under subscription arrangements and is classified as subscription revenue in the condensed consolidated statements of operations and comprehensive loss. Revenue related to leases entered into with related parties were $0.3 million and less than $0.1 million during the three months ended June 30, 2024 and June 30, 2023, respectively. Revenue related to leases entered into with related parties were $0.6 million and $0.2 million during the six months ended June 30, 2024 and June 30, 2023, respectively.

Disaggregated Revenue

The following table presents the Company’s revenue by revenue stream (in thousands). Certain prior period amounts have been reclassified to conform to current period presentation:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Product revenue	$	2,044	$	7,243	$	2,647	$	15,997
Subscription revenue	15,903		7,964		30,406		14,430
Service revenue	5,553		3,905		10,937		6,691
License fees	1,717		—		2,441		—
Professional services and other revenue	323		713		777		1,288
Total revenue	$	25,540	$	19,825	$	47,208	$	38,406

Commissions

The Company incurs and pays commissions on sales of its products and services. The Company applies the practical expedient for contracts less than one year in duration to expense the commission costs in the period in which they were incurred. Commissions on product sales and services are expensed in the period in which the related revenue is recognized. Commissions on subscription arrangements and maintenance are expensed ratably over the life of the contract. The Company had a deferred asset related to commissions of $11.9 million and $11.4 million as of June 30, 2024 and December 31, 2023, respectively. During the three months ended June 30, 2024 and 2023, the Company recognized commission expense of $1.6 million and $1.5 million, respectively. During the six months ended June 30, 2024 and 2023, the Company recognized commission expense of $3.0 million and $3.1 million, respectively.

F-13

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. Accounts Receivable

Allowance for Expected Credit Losses

Changes in the allowance for expected credit losses were as follows (in thousands):


	Allowance for Doubtful Accounts
Balance at December 31, 2023	$	(582)
Provisions	(206)
Write-offs, net of recoveries	3
Balance at June 30, 2024	$	(785)

7. Inventory

Inventory consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Raw materials	$	2,974	$	1,869
Finished goods	15,630		7,638
Total	$	18,604	$	9,507

8. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Computers and telecom equipment	$	1,574	$	1,331
Lab equipment	4,494		1,171
Furniture and fixtures	111		111
Leasehold improvements	592		566
Leased equipment	97,746		80,206
Capitalized software	12,396		8,629
Sales demo equipment	3,180		2,758
Equipment held for lease1	22,739		32,910
Construction in progress	1,415		2,493
	144,247		130,175
Less: Accumulated depreciation and amortization	(24,202)		(17,254)
	$	120,045	$	112,921

1 Represents equipment that has not yet been deployed to a customer and, accordingly, is not being depreciated.

As of June 30, 2024 and December 31, 2023, the net book value of capitalized software was $10.1 million and $7.0 million, respectively. These amounts include $1.2 million and $0.7 million of capitalized stock compensation costs, respectively. Depreciation and amortization expense related to property and equipment was $4.0 million and $2.3 million for the three months ended June 30, 2024 and 2023, respectively, which included amortization expense of capitalized software of $0.3 million and $0.2 million, respectively. Depreciation and amortization expense related to property and

F-14

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

equipment was $7.4 million and $4.1 million for the six months ended June 30, 2024 and 2023, respectively, which included amortization expense of capitalized software of $0.6 million and $0.4 million for the six months ended June 30, 2024 and 2023, respectively.

Leased equipment and the related accumulated depreciation were as follows:


	June 30, 2024		December 31, 2023
Leased equipment	$	97,746	$	80,206
Accumulated depreciation	(18,896)		(13,283)
Leased equipment, net	$	78,850	$	66,923

Depreciation expense related to leased units was $3.2 million and $1.8 million during the three months ended June 30, 2024 and 2023, respectively, and $6.1 million and $3.2 million during the six months ended June 30, 2024 and 2023, respectively. Depreciable lives are generally 7 years, consistent with the Company’s planned and historical usage of the equipment subject to operating leases.

The Company did not record any loss from impairment of property and equipment during the three and six months ended June 30, 2024 and recorded $0.2 million and $0.3 million of loss from impairment of property and equipment during the three and six months ended June 30, 2023, respectively. This primarily related to the removal of Evolv Edge units and Evolv Express prototypes from service, resulting in an impairment of the remaining economic value of such units.

9. Long-term Debt

In December 2022, the Company entered into a loan and security agreement (the “2022 SVB Credit Agreement”) with Silicon Valley Bank (“SVB”) in order to finance purchases of hardware to be leased to customers. On March 10, 2023, SVB was closed by California state regulators and the FDIC was appointed as receiver. Subsequently, on March 31, 2023, the Company fully repaid all borrowings and accrued interest under the 2022 SVB Credit Agreement and terminated the 2022 SVB Credit Agreement. In accordance with the terms of the 2022 SVB Credit Agreement, the Company was required to pay a prepayment premium equal to 1.0% of the principal balance on the date of repayment. During the six months ended June 30, 2023, the Company incurred a loss on debt extinguishment of $0.6 million, consisting of the prepayment penalty of $0.3 million and the write-off of $0.3 million of unamortized debt issuance costs. The Company had no long-term debt as of June 30, 2024 and December 31, 2023.

10. Stock-Based Compensation

Stock Options

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted during the six months ended June 30, 2024 and 2023:


	Six Months Ended June 30,
	2024	2023
Risk-free interest rate	4.1%	4.2%
Expected term (in years)	6.1	6.1
Expected volatility	90.0%	87.5%
Expected dividend yield	0.0%	0.0%

F-15

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes the Company’s stock option activity since December 31, 2023 (in thousands, except for share and per share data):


	Number of Shares	Weighted Average Exercise Price

Outstanding as of December 31, 2023	20,324,528	$	1.04
Granted	2,725,625	3.63
Exercised	(1,342,136)	0.48
Forfeited	(13,085)	0.42
Expired	(13,141)	0.42
Outstanding as of June 30, 2024	21,681,791	$	1.40

Restricted Stock Units

The following table summarizes the Company's restricted stock units activity since December 31, 2023:


	Number of Shares	Grant Date Fair Value

Nonvested as of December 31, 2023	13,046,679	$	3.49
Granted	8,422,954	3.57
Vested	(4,441,906)	3.44
Forfeited	(910,339)	3.74
Nonvested as of June 30, 2024	16,117,388	$	3.54

Performance Stock Units

The following table summarizes the Company's performance stock units activity since December 31, 2023:


	Number of Shares	Grant Date Fair Value

Nonvested as of December 31, 2023	380,000	$	2.64
Granted	—	—
Vested	(380,000)	2.64
Forfeited	—	—
Nonvested as of June 30, 2024	—	$	—

Finback Common Stock Warrants

In January 2021, the Company granted equity classified warrants (the “Finback Common Stock Warrants”) to purchase 2,552,913 shares of the Company's Class A common stock at an exercise price of $0.42 per share to Finback Evolv OBH, LLC (“Finback”), a consulting group affiliated with one of the Company's stockholders. The Finback Common Stock Warrants vest upon meeting certain sales criteria as defined in a business development agreement (the “Finback BDA”), which had a term of 3 years. The Finback BDA expired on January 1, 2023 but included a 1-year “tail period” expiring on January 1, 2024. During the tail period, the Finback Common Stock Warrants continued to vest related to any sale consummated by the Company for which it was determined Finback provided services prior to January 1, 2023

F-16

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

in furtherance of the sale. The Finback Common Stock Warrants expire in January 2031. The Finback Common Stock Warrants are accounted for under ASC 718 Compensation – Stock Compensation as the warrants vest upon certain performance conditions being met.

As of June 30, 2024, 117,423 Finback Common Stock Warrants were exercisable at a total aggregate intrinsic value of $0.3 million, and there were no Finback Common Stock Warrants that were unvested, given the expiration of the 1-year tail period on January 1, 2024. The Company recognized compensation expense for the Finback Common Stock Warrants when the warrants vested based on meeting the specified sales criteria. During the three and six months ended June 30, 2024, there was no stock-based compensation expense within sales and marketing expense related to the Finback Common Stock Warrants. During the three and six months ended June 30, 2023, the Company recorded $0.8 million and $1.4 million of stock-based compensation expense, respectively, within sales and marketing expense related to the Finback Common Stock Warrants.

Stock-Based Compensation

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of revenue	$	173	$	184	$	311	$	329
Research and development	1,219		1,238		2,101		2,075
Sales and marketing	2,724		2,508		5,683		4,506
General and administrative	3,308		2,759		5,739		4,822
Total stock-based compensation expense	$	7,424	$	6,689	$	13,834	$	11,732

11. Income Taxes

There is no provision for income taxes for the three and six months ended June 30, 2024 and 2023 because the Company has historically incurred net operating losses and maintains a full valuation allowance against its deferred tax assets.

The Company’s tax provision and the resulting effective tax rate for interim periods is determined based upon its estimated annual effective tax rate (“AETR”), adjusted for the effect of discrete items arising in that quarter. The impact of such inclusions could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings or losses versus annual projections. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual tax rate changes, a cumulative adjustment is made in that quarter.

12. Net Income (Loss) per Share

In periods in which the Company reported net income, net income attributable to common stockholders is computed using the two-class method as the Founder Shares are classified as participating securities containing rights to receive dividends. In accordance with the two-class method, a portion of net income is allocated to participating securities and excluded from the calculation of income allocated to common stock.

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted average shares outstanding during the period. Diluted net income (loss) per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of potential common shares, determined using the treasury stock

F-17

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

method. Basic and diluted net income (loss) per share attributable to common stockholders are calculated as follows (in thousands, except share and per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023








Net income (loss)	$	3,462	$	(66,754)	$	(8,182)	$	(95,363)
Reallocation of net income attributable to participating securities	(41)		—		—		—
Net income (loss) attributable to common stockholders – basic and diluted	$	3,421	$	(66,754)	$	(8,182)	$	(95,363)

Denominator:
Weighted average common shares outstanding – basic	156,473,080		148,882,160		154,774,899		147,664,534
Weighted average effect of potentially dilutive securities:

Stock options	13,047,919		—		—		—
Restricted stock units	1,940,411		—		—		—

Finback Common Stock Warrants	102,533		—		—		—
Total potentially dilutive securities	15,090,863		—		—		—
Weighted average common shares outstanding – diluted	171,563,943		148,882,160		154,774,899		147,664,534
Net income (loss) per share attributable to common stockholders - basic	$	0.02	$	(0.45)	$	(0.05)	$	(0.65)
Net income (loss) per share attributable to common stockholders - diluted	$	0.02	$	(0.45)	$	(0.05)	$	(0.65)

The following potentially dilutive outstanding securities were excluded from the computation of diluted net income (loss) per share attributable to common stockholders because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Options issued and outstanding	7,237,746	22,340,997	21,681,791	22,340,997
Public Warrants to purchase common stock	14,324,893	14,324,893	14,324,893	14,324,893
Warrants to purchase common stock (Finback)	—	1,590,984	117,423	1,590,984
Unvested restricted stock units	8,843,186	12,451,740	16,117,388	12,451,740
Unvested performance stock units	—	407,000	—	407,000
Earn-out shares*	15,000,000	15,000,000	15,000,000	15,000,000
Contingently issuable common stock*	1,897,500	1,897,500	1,897,500	1,897,500
	47,303,325	68,013,114	69,138,995	68,013,114

*Issuance of Earn-out shares and Contingently issuable common stock is contingent upon the satisfaction of certain conditions, which were not satisfied by the end of the period

F-18

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

13. Related Party Transactions

Original Equipment Manufacturer Partnership Agreement with Motorola

In December 2020, the Company entered into an original equipment manufacturer partnership agreement with Motorola Solutions, Inc. (“Motorola”), an investor in the Company. The partnership agreement has since been amended and restated. Motorola sells Motorola-branded premium products based on the Evolv Express platform through their worldwide network of over 2,000 resellers and integration partners, and has integrated the Evolv Express platform with Motorola products. During the three months ended June 30, 2024 and 2023, revenue from Motorola's distributor services was $2.0 million and $2.9 million, respectively. During the six months ended June 30, 2024 and 2023, revenue from Motorola's distributor services was $3.9 million and $6.2 million, respectively. As of June 30, 2024 and December 31, 2023, accounts receivable related to Motorola’s distributor services was $2.9 million and $1.2 million, respectively.

Reseller Agreement with Stanley Black & Decker

In June 2020, the Company entered into a reseller agreement with Stanley Black & Decker, an investor in the Company. Stanley Black & Decker's electronic security business was acquired by Securitas AB (“Securitas”) in 2023. Securitas, directly or through its affiliates, resells the Company's products. Effective in the first quarter of 2024, while the reseller agreement is still in effect, Securitas is no longer considered a related party. During the three and six months ended June 30, 2023, revenue from Securitas' reseller services was $0.5 million and $0.9 million, respectively. As of December 31, 2023, accounts receivable related to Securitas' reseller services was $0.6 million.

14. Commitments and Contingencies

Indemnification Agreements

In the ordinary course of business, the Company provides indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its Board of Directors and certain of its executive officers and employees that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their role, status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred or accrued for any material costs as a result of such indemnifications in its condensed consolidated financial statements as of June 30, 2024 or December 31, 2023.

Legal Proceedings

We are from time to time subject to various claims, lawsuits, and other legal and administrative proceedings arising in the ordinary course of business.

At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses the costs related to such legal proceedings as incurred.

The Company has identified certain claims as a result of which a loss may be incurred. This assessment is based on our current understanding of relevant facts and circumstances. As such, our view of these matters is subject to inherent uncertainties and may change in the future. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates. Except for the regulatory matters discussed below, based upon information presently known to management, the Company has not accrued a loss for any other legal matters, as a loss is not probable and reasonably estimable. The pending proceedings involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources. The results of legal proceedings are inherently uncertain, and material adverse outcomes are reasonably possible.

F-19

Table of Contents

EVOLV TECHNOLOGIES HOLDINGS, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In March 2024, an Evolv shareholder filed in the U.S. District Court for the District of Massachusetts a putative class action lawsuit, captioned Raby v. Evolv Technologies Holdings, Inc., et al. case number 1:24-cv-10761, alleging that Evolv and certain of its current and former executives and other individuals violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 based on alleged misstatements concerning the Company’s products. This litigation is in the preliminary stages, and the outcome of any complex legal proceeding is inherently unpredictable and subject to significant uncertainties. The Company intends to vigorously defend itself in this matter.

Regulatory and Governmental Matters

In the ordinary course of business, the Company is subject to regulatory and governmental examinations, information gathering requests, inquiries, and investigations. The U.S. Federal Trade Commission (“FTC”) has requested information about certain aspects of the Company's marketing practices. The Company is cooperating with the investigation and has provided documentation and information responsive to the FTC inquiry. Further, in February 2024, we received a subpoena from the SEC, Division of Enforcement, requesting that we produce certain documents and information. We are cooperating and intend to continue to cooperate with the SEC's investigation.

In view of the inherent unpredictability of such regulatory and governmental matters, the Company cannot determine with certainty the timing or ultimate resolution of legal and regulatory matters or the eventual loss, fines or penalties, if any, that may result from such matters. The Company establishes reserves for such matters when those matters present loss contingencies that are both probable and can be reasonably estimated. The actual costs of resolving such matters, however, may be substantially higher than the amounts reserved for those matters, and an adverse outcome in certain of these matters could have a material adverse effect on the condensed consolidated financial statements in particular quarterly or annual periods. The Company accrues amounts for certain matters for which losses are considered to be probable of occurring based on its reasonable estimate of the most likely outcome. It is reasonably possible actual losses could be significantly different from the Company's current estimates. In addition, there are some matters for which it is reasonably possible that a loss will occur, however the Company cannot estimate a range of the potential losses for these matters.

Any resolution or litigation with the FTC, the SEC or other parties, could ultimately result in monetary and injunctive relief that may impose costs on the Company and/or require it to make changes to its business practices. These costs and requirements may be material both individually and in the aggregate. As of June 30, 2024, we have accrued $1.1 million for such matters. These amounts were recorded in other accrued liabilities in the condensed consolidated balance sheets and the associated expenses were recorded in general and administrative expenses in the condensed consolidated statements of operations. There can be no assurance as to the timing or the terms of the ultimate outcome of these investigations. Actual loss can be significantly greater or less than our estimated accrual. Legal fees incurred in connection with ongoing legal matters are considered period costs and are expensed as incurred.

We can offer no assurances as to the outcome of these investigations or their potential effect, if any, on us or our results of operations. There can be no assurance whether there will be further information requests or potential enforcement action or litigation, which is necessarily uncertain.

F-20

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” section of our 2023 Form 10-K and in other parts of this Quarterly Report on Form 10-Q.

As used in this Quarterly Report on Form 10-Q, unless otherwise indicated or the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Evolv” refer to the consolidated operations of Evolv Technologies Holdings, Inc. and its subsidiaries. References to “NHIC” refer to the company prior to the consummation of our business combination (the "Merger") and references to “Legacy Evolv” refer to Evolv Technologies, Inc. dba Evolv Technology, Inc. prior to the consummation of the Merger.

Business Overview

We are a leading security technology company pioneering AI-based screening designed to help create safer experiences, with key market categories that include education, healthcare, sports, and live entertainment.

Our solutions combine proprietary software and hardware, delivered as a long-term Software-as-a-Service subscription model. Our flagship product, Evolv Express®, uses advanced sensors, artificial intelligence powered software, and cloud services to reliably detect firearms, improvised explosives, and certain types of knives while ignoring many harmless items such as cell phones and keys. Our solutions and services are designed to capture valuable visitor data customers can leverage to inform their security operations, while providing end-users with an approachable and non-intrusive security experience.

Our products have screened over 1.5 billion visitors worldwide since our inception. We believe that we have screened more people through advanced systems than any organization other than the United States Transportation Security Administration (“TSA”). Our customers include many iconic venues across a wide variety of industries, including major sports stadiums and arenas, notable performing arts and entertainment venues, major tourist destinations and cultural attractions, hospitals, large industrial workplaces, schools, and prominent houses of worship. We offer our products for lease or purchase and primarily under a multi-year security-as-a-service subscription pricing model that delivers ongoing value to customers, generates predictable revenue, and creates expansion and upsell opportunities.

Since our inception, we have incurred significant operating losses. Our ability to generate revenue and achieve cost improvements sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $25.5 million and $19.8 million for the three months ended June 30, 2024 and 2023, respectively. We generated operating losses for the three months ended June 30, 2024 and 2023 of $22.3 million and $23.6 million, respectively. We expect to continue to incur operating losses as we focus on growing and establishing recurring commercial sales of our products, including growing our sales and marketing teams, scaling our manufacturing operations, and continuing research and development efforts to develop new products and further enhance our existing products.

Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve profitability, we expect to finance our operations through cash generated from operations, and if necessary, debt financings. However, we may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations. See “Liquidity and Capital Resources.” Additionally, as discussed in Note 14 (Commitments and Contingencies) to our condensed consolidated financial statements for the three months ended June 30, 2024, certain legal proceedings, including government investigations, have been initiated involving us. Given the uncertainty of such matters, no assurance can be given regarding the final outcome of such matters. During the three months ended June 30, 2024, we accrued $1.1 million related to such matters. However, the ultimate amount or range of potential loss, which might result to the Company may differ materially from our current estimates.

Table of Contents

Key Factors Affecting Our Operating Results

We believe that our performance and future success depend on many factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the “Risk Factors” section of our 2023 Form 10-K.

General Economic and Market Conditions

We expect that our results of operations, including our revenue and cost of revenue, may fluctuate or continue to fluctuate based on, among other things, the impact of rising inflation and interest rates on business spending; supply chain issues and the impacts on our manufacturing capabilities; public health emergencies; geopolitical conflicts and war, including the conflicts in Europe and the Middle East; and recessionary trends. See the risk factor titled “Downturns in general economic and market conditions and reductions in spending may reduce demand for our products and services and may impact third parties on which we rely, which could harm our revenue, results of operations, and cash flows, and could make it difficult to predict revenue for a particular period” in Item 1A of our 2023 Form 10-K. While these factors continue to evolve, we plan to remain flexible and to optimize our business as appropriate and allocate resources, as necessary.

Adoption of our Security Screening Products

We believe the world will continue to focus on the safety and security of people in the places where they gather. Many of these locations, such as professional sports venues, educational institutions, and healthcare facilities, are moving toward a more frictionless security screening experience. We are well-positioned to take advantage of this opportunity due to our proprietary technologies and distribution capabilities. Our products are designed to empower venues and facilities to realize the full benefits of touchless security screening, including a rapid visitor throughput and minimal security staff to screened visitor physical contact. We expect that our results of operations, including revenue, will fluctuate for the foreseeable future as venues and facilities continue to shift away from conventional security screening processes towards touchless security screening or consider security screening processes for the first time. The degree to which potential and current customers recognize these benefits and invest in our products will affect our financial results.

Sales Mix, Pricing, Product Cost and Margins

We sell our solutions under two primary sales models. We offer a “pure subscription” model, where the customer leases hardware from us and we provide a multi-year security-as-a-service subscription. For end-user customers that prefer to purchase our hardware outright, we offer our “distributor licensing” model based on the Distribution and License Agreement we entered into with Columbia Electrical Contractors, Inc. (“Columbia Tech”) in March of 2023. Columbia Tech, a wholly-owned subsidiary of Coghlin Companies, currently serves as our primary contract manufacturer. Under this arrangement, we have granted a license of our intellectual property to Columbia Tech, which contracts directly with certain of our resellers to fulfill sales demand where the end-user customer prefers to purchase the hardware equipment. Columbia Tech pays us a hardware license fee for each system it manufactures and sells under this agreement. In these instances, we still contract directly with the reseller to provide a multi-year security-as-a-service subscription to the end-users.

We also have historically sold our systems under a purchase subscription model, where customers purchase the hardware from us, and we provide a multi-year security-as-a-service subscription. However, we do not plan to offer this sales model in future periods to our existing or new customers, except in limited circumstances.

Going forward, we expect our products to be adopted in a variety of vertical industry markets and geographic regions, primarily within the United States. Pricing may vary by region or vertical market due to market-specific dynamics. As a result, our financial performance depends, in part, on the mix of sales, bookings, and business in different markets during a given period. In addition, we are subject to price competition, and our ability to compete in key markets will depend on the success of our investments in new technologies and cost improvements as well as our ability to efficiently and reliably introduce cost-effective touchless security screening products to our customers.

Continued Investment and Innovation

We are a leading security technology company pioneering AI-based screening designed to help create safer experiences. Our investment into our research and development program drives growth by improving our existing products, developing potential new products for the market and expanding what is possible for physical security.

Table of Contents

Components of Results of Operations

Revenue

We derive revenue from (1) subscription arrangements generally accounted for as operating leases, including SaaS and maintenance, (2) the sale of products, (3) SaaS and maintenance related to products sold to customers either by Evolv or by Columbia Tech pursuant to the Distribution and License Agreement, (4) license fees related to the Distribution and License Agreement, and (5) professional services, including installation, training, and event support. Maintenance consists of preventative maintenance, technical support, bug fixes, and when-and-if available threat updates. Our arrangements are generally noncancelable and nonrefundable after shipment to the customer. Revenue is recognized net of sales tax.

Product Revenue

We derive a portion of our revenue from the sale of our Evolv Express equipment and related add-on accessories to customers. Revenue is recognized when control of the product has transferred to the customer, which follows the terms of each contract. We expect product revenue to continue declining as a percentage of our overall revenue as we continue focusing our go-to-market strategy on our pure subscription and distributor licensing sales models.

Subscription Revenue

Subscription revenue consists of revenue derived from leasing Evolv Express units to our customers. Lease terms are typically four years and customers generally pay either a quarterly or annual fixed payment for the lease, SaaS, and maintenance elements over the contractual lease term. Equipment leases are generally classified as operating leases and recognized ratably over the duration of the lease. There are no contingent lease payments as a part of these arrangements.

Lease arrangements generally include both lease and non-lease components. The non-lease components relate to (1) distinct services, including professional services, SaaS, and maintenance, and (2) any add-on accessories. Professional services are included in license fees and other revenue as described below, and add-on accessories are included in product revenue as described above. Because the equipment lease, SaaS, and maintenance components of a subscription arrangement are recognized as revenue over the same time period and in the same pattern, the equipment lease and SaaS/maintenance performance obligations are classified as a single category of subscription revenue in our consolidated statements of operations and comprehensive income (loss).

Service Revenue

Service revenue consists of subscription-based SaaS and maintenance revenue related to Evolv Express units sold to customers. Customers generally pay either a quarterly or annual fixed payment for SaaS and maintenance. SaaS and maintenance revenue is recognized ratably over the period of the arrangement, which is typically four years.

License Fee and Other Revenue

License fee and other revenue includes license fee revenue from the Distribution and License Agreement, revenue from professional services, and other one-time revenue. License fee revenue is recognized upon the shipment of product from Columbia Tech to the reseller. Revenue for professional services is recognized upon transfer of control of these services, which are normally rendered over a short duration. Revenue for professional services and other one-time revenue, which had previously been included in service revenue, has been reclassified for prior periods to License fee and other revenue on the consolidated statements of operations and comprehensive income (loss). We expect license fee and other revenue to continue to increase as we continue to focus our go-to-market strategy on our distributor licensing sales model.

Cost of Revenue

We recognize cost of revenue in the same manner that the related revenue is recognized.

Cost of Product Revenue

Cost of product revenue consists primarily of costs paid to our third-party manufacturer and other suppliers, labor costs (including stock-based compensation), and shipping costs.

Table of Contents

Cost of Subscription Revenue

Cost of subscription revenue consists primarily of depreciation expense related to leased units, an allocated portion of internal-use software amortization expense, shipping costs, and maintenance costs related to leased units. Maintenance costs consist primarily of labor (including stock-based compensation), spare parts, shipping costs, field service repair costs, equipment, and supplies.

Cost of Service Revenue

Cost of services revenue consists of maintenance costs related to units purchased by customers and an allocated portion of internal-use software amortization expense. Maintenance costs consist primarily of labor (including stock-based compensation), spare parts, field service repair costs, equipment, and supplies.

Cost of License Fee and Other Revenue

Cost of license fees and other revenue consists primarily of internal and third-party costs related to professional services, such as installation, training, and event support.

Gross Profit and Gross Margin

Our gross profit is calculated based on the difference between our revenues and cost of revenues. Gross margin is the percentage obtained by dividing gross profit by our revenue. Our gross profit and gross margin are, or may be, influenced by a number of factors, including:

•Mix of sales between our pure subscription, purchase subscription, and distributor licensing sales models;

•Market conditions that may impact our pricing;

•Product mix changes between established products and new products;

•Our cost structure for manufacturing operations, including contract manufacturers, relative to volume, and our product support obligations;

•Our ability to maintain our costs on the components that go into the manufacture of our products; and

•Write-offs of inventory.

We expect our gross margins to fluctuate over time, depending on the factors described above.

Research and Development

Our research and development expenses represent costs incurred to support activities that advance the development of innovative security screening technologies, new product platforms, as well as activities that enhance the capabilities of our existing product platforms. Our research and development expenses consist primarily of salaries and bonuses, employee benefits, stock-based compensation, prototypes, design expenses, and consulting and contractor costs. We expect research and development costs will increase for the year ending December 31, 2024 compared to the year ended December 31, 2023 primarily due to incremental investments in headcount and programs we are making to support our new product development efforts.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing, customer success, business development, and strategy functions, as well as costs related to trade shows and events, and stock-based compensation. We expect our sales and marketing costs will increase for the year ending December 31, 2024 compared to the year ended December 31, 2023 primarily due to an overall increase in personnel related expense.

Table of Contents

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses associated with our executive, finance, investor relations, legal, information technology, and human resources functions, as well as professional fees for legal, audit, accounting and other consulting services, stock-based compensation, and insurance. We expect our general and administrative expenses will remain relatively consistent for the year ending December 31, 2024 compared to the year ended December 31, 2023 as we look to leverage previous investments made in people and processes. Our general and administrative expenses may be impacted by regulatory compliance costs related to the ongoing FTC and SEC matters.

Loss From Impairment of Property and Equipment

Loss from impairment of property and equipment relates to (i) leased Evolv Edge units and Evolv Express prototype units that are removed from service and retired as we transition our domestic customers to our most current Evolv Express units and (ii) damaged or destroyed leased units.

Interest Expense

Interest expense includes cash interest paid on long-term debt and amortization of deferred financing fees and costs.

Interest Income

Interest income relates to interest earned on money market funds and treasury bills, and interest earned on our lease receivables for our Evolv Express units recognized as sales-type leases.

Loss on Extinguishment of Debt

Change in Fair Value of Contingent Earn-out Liability

In connection with the Merger and pursuant to the Merger Agreement, certain of Legacy Evolv’s initial shareholders are entitled to receive additional shares of our common stock upon us achieving certain milestones. The earn-out arrangement with the Legacy Evolv shareholders is accounted for as a liability and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the consolidated statements of operations and comprehensive income (loss).

Change in Fair Value of Contingently Issuable Common Stock Liability

Prior to the Merger, certain NHIC stockholders owned 4,312,500 shares of NHIC Class B common stock, referred to as Founder Shares. Upon the closing of the Merger, NHIC Class A and Class B common stock became the Company's common stock. 1,897,500 Founder Shares vested at the closing of the Merger, 1,897,500 Founder Shares are contingently issuable and shall vest upon the Company achieving certain milestones, and 517,500 Founder Shares were contributed to Give Evolv LLC. The 1,897,500 outstanding contingently issuable common shares are accounted for as a liability and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the consolidated statements of operations and comprehensive income (loss).

Change in Fair Value of Public Warrant Liability

In connection with the closing of the Merger, the Company assumed warrants to purchase 14,325,000 shares of common stock (the “Public Warrants”) at an exercise price of $11.50. The Public Warrants are currently exercisable and expire in July 2026. We assessed the features of these warrants and determined that they qualify for classification as a liability. Accordingly, we recorded the warrants at fair value upon the closing of the Merger as a component of other

Table of Contents

income (expense), net in the consolidated statements of operations and comprehensive income (loss) with the offset to additional paid-in capital.

Income Taxes

Our income tax provision consists of an estimate for federal, state, and foreign income taxes based on enacted rates in the jurisdictions in which we operate, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in tax law. We have historically incurred net operating losses and maintain a full valuation allowance against our deferred tax assets.

Reclassification

During the year ended December 31, 2023, the Company began classifying revenue from professional services, which includes installation, training, and event support, as well as one-time revenue within license fee and other revenue on the consolidated statements of operations and comprehensive income (loss), whereas the revenue for these services has previously been included in service revenue. Correspondingly, the Company began classifying costs associated with professional services within cost of license fee and other revenue, whereas these costs were previously included in cost of service revenue. These reclassifications were made to align the presentation of professional services with the Company's internal reporting and analysis.

Table of Contents

Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended June 30, 2024 and 2023 (in thousands):


	Three Months Ended June 30,
	2024		2023		$ Change		% Change
Revenue:
Product revenue	$	2,044	$	7,243	$	(5,199)	(72)	%
Subscription revenue	15,903		7,964		7,939		100
Service revenue	5,553		3,905		1,648		42
License fee and other revenue	2,040		713		1,327		186
Total revenue	25,540		19,825		5,715		29
Cost of revenue:
Cost of product revenue	3,149		7,722		(4,573)		(59)
Cost of subscription revenue	6,436		3,406		3,030		89
Cost of service revenue	1,311		1,014		297		29
Cost of license fee and other revenue	172		270		(98)		(36)
Total cost of revenue	11,068		12,412		(1,344)		(11)
Gross profit	14,472		7,413		7,059

Evolv Technologies Holdings, Inc. [EVLV] Filings
Evolv Technologies Holdings, Inc. [EVLVW] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-09]
10-K	[2024-02-29]
10-Q	[2023-11-09]
10-Q	[2023-08-10]
10-Q	[2023-05-10]
10-K	[2023-03-24]
10-Q	[2022-11-09]
10-Q	[2022-08-18]
10-Q	[2022-05-13]
10-K	[2022-03-28]
10-Q	[2021-11-15]
10-Q	[2021-08-16]
S-1	[2021-08-12]
10-Q	[2021-05-24]
10-K	[2021-03-25]
10-Q	[2020-11-16]
S-1	[2020-07-10]

Evolv Technologies Holdings, Inc. [EVLV] Filings

Evolv Technologies Holdings, Inc. [EVLVW] Filings