– Evolv Does Not Admit Wrongdoing; Resolution
Does Not Include Monetary Relief –
– FTC Does Not Challenge Core Product Efficacy;
Order Involves Approximately 4% of Installed Base –
– Company Reaffirms Commitment to Innovation,
Integrity, and Customer Trust –
Evolv Technology (NASDAQ: EVLV), a leading security technology
company pioneering AI-based solutions designed to create safer
experiences, today announced that it has resolved the United States
Federal Trade Commission’s (FTC) inquiry into certain aspects of
the Company’s prior marketing claims. While Evolv disagrees with
the FTC’s allegations, and has not admitted any wrongdoing, it has
chosen to resolve the matter to focus on its core mission of
protecting lives through innovation and maintaining the trust of
its valued customers.
“We worked collaboratively with the FTC to resolve this matter
and are pleased that the FTC did not challenge the fundamental
effectiveness of our technology and that the resolution does not
include any monetary relief. We appreciated the opportunity to
demonstrate for the FTC our Evolv Express® system and our
customers’ diligence in researching, testing and ultimately
deploying our solution in myriad environments,” said Mike
Ellenbogen, Interim President and CEO of Evolv Technology. “Our top
priority is the safety of people and the communities we serve. To
be clear, this inquiry was about past marketing language and not
our system’s ability to add value to security operations.”
The Evolv Express has demonstrated that it works in real-life
situations and has helped to detect and prevent dangerous weapons
from entering schools and places where they are prohibited,
supporting our customers in providing a safer environment for
learning. Recent examples of situations in which the Evolv Express
has enabled school users to detect illicit firearms are available
here and here. “This resolution allows us to focus on a small
segment of our school customers to ensure they remain satisfied
with Express and allows us to move forward without distraction,
continuing our important work to help protect our communities,”
continued Ellenbogen.
What Parents Should Know
In resolving the inquiry, the FTC did not challenge the core
efficacy of Evolv’s products, including the use of artificial
intelligence in its technology. Instead, the focus of the inquiry
was related to how the technology was described for a period of
time in historical marketing materials.
As part of the resolution, Evolv has agreed to offer a limited
number of its K-12 education customers the option to cancel the
remainder of their current contracts during a 60-day cancellation
period. Evolv has consistently encouraged customers to
independently test technologies and speak with other users of the
technology about their experiences to ensure it will meet their
specific needs. The Company has confidence that most customers are
satisfied with their deployment of Evolv Express as they recognize
the value that the systems bring to enhancing safety and security.
A notice will be sent to this limited group of customers about
their contract cancellation option.
“We understand the concerns parents have about the safety of
their children at school, and we want to reassure them that our
technology works and continues to help protect students every day,”
said Courtney Cunnane, Chief Marketing Officer for Evolv
Technology. “We take our responsibility seriously and remain
committed to providing transparent, accurate information about our
products so that parents, educators, and administrators can make
informed decisions.”
Investing in Trust and Integrity
In line with this commitment, Evolv will continue to refine the
way it markets its technology, highlighting capabilities and
limitations. These efforts build on the proactive steps the Company
had already been taking to develop a new Brand Integrity Program
centered on transparency and education. Evolv has also appointed a
new Director of Advertising Law and Policy to support all
go-to-market activities.
Commitment to Customer Community
Evolv’s customer relationships are driven by trust, demonstrated
through the performance of the Company’s technology at scale.
Approximately 45% of the Company’s sales in any given quarter come
from existing customers that are expanding their deployments of
Evolv Express. Beyond enhanced governance and compliance, the
Company has made significant new investments to educate the
communities it serves about how technology may be one part of a
layered approach to reducing the potential for gun violence.
“We remain deeply committed to our core safety mission and
supporting our valued community of customers,” said Ellenbogen.
“The trust and partnership of our customers remain our top priority
as we work to democratize security for a safer world. We look
forward to working collaboratively with our customers to ensure
they identify the right technology solution for their security
needs.”
Financial Implications of FTC Resolution
There are no financial penalties or other monetary relief
associated with today’s announcement. As part of the resolution
announced today:
- Approximately 237 Evolv Express units of certain customers1
could be impacted by the right to cancel, or approximately 4% of
the Company’s total installed base of 5,323 Evolv Express units as
of June 30, 2024.
- Approximately $3.9 million of the Company’s Annual Recurring
Revenue2 could be impacted by the right to cancel, or approximately
4% of the Company’s Annual Recurring Revenue as of June 30,
2024.
- Approximately $10.5 million of the Company’s Remaining
Performance Obligation3 could be impacted by the right to cancel,
or approximately 4% of the Company’s Remaining Performance
Obligation as of June 30, 2024.
As noted above, the cancellation option will be provided only to
a limited group of K-12 customers that comprise approximately 8% of
the Company’s total customers.
About Evolv Technology
Evolv Technology (NASDAQ: EVLV) is designed to transform human
security to make a safer, faster, and better experience for the
world’s most iconic venues and companies as well as schools,
hospitals, and public spaces, using industry leading artificial
intelligence (AI)-powered screening and analytics. Its mission is
to transform security to create a safer world to live, work, learn,
and play. Evolv has digitally transformed the gateways in many
places where people gather by enabling seamless integration
combined with powerful analytics and insights. Evolv’s advanced
systems have scanned more than two billion people since 2019. Evolv
has been awarded the U.S. Department of Homeland Security (DHS)
SAFETY Act Designation as a Qualified Anti-Terrorism Technology
(QATT) as well as the Security Industry Association (SIA) New
Products and Solutions (NPS) Award in the Law Enforcement/Public
Safety/Guarding Systems category, as well as Sport Business
Journal’s (SBJ) awards for “Best In Fan Experience Technology” and
“Best In Sports Technology”. Evolv®, Evolv Express®, Evolv
Insights®, Evolv Visual Gun Detection™, Evolv eXpedite™, and Evolv
Eva™ are registered trademarks or trademarks of Evolv Technologies,
Inc. in the United States and other jurisdictions. For more
information, visit evolv.com.
1 “Customer(s)” means school(s) or school district(s) in the
K-12 range that purchased or otherwise contracted for the use of
Evolv Express between the period April 1, 2022, to June 30, 2023.
Excluded from this definition is any school or school district
that: (1) participated in a pilot program of at least 30 days prior
to such purchase or contract; (2) purchased 15 or more Evolv
Express units; or (3) purchased or contracted for, and deployed,
additional Evolv Express units more than 45 days after initially
deploying Evolv Express at a school.
2 We define Annual Recurring Revenue, or ARR, as subscription
revenue and the recurring service revenue related to purchase
subscriptions for the final month of the quarter normalized to a
one-year period. Our calculation of ARR is not adjusted for the
impact of any known or projected future events (such as customer
cancellations, upgrades or downgrades, or price increases or
decreases) that may cause any such contract not to be renewed on
its existing terms. In addition, the amount of actual revenue that
we recognize over any 12-month period is likely to differ from ARR
at the beginning of that period, sometimes significantly. This may
occur due to new bookings, cancellations, upgrades, downgrades or
other changes in pending renewals, as well as the effects of
professional services revenue and acquisitions or divestitures. As
a result, ARR should be viewed independently of, and not as a
substitute for or forecast of, revenue and deferred revenue. Our
calculation of ARR may differ from similarly titled metrics
presented by other companies.
3 We define Remaining Performance Obligation, or RPO, as
estimated revenues expected to be recognized in the future related
to performance obligations that are unsatisfied or partially
satisfied as of the end of the quarter.
Forward-looking Statements
Certain statements in this press release may constitute
“forward-looking” statements and information, within the meaning of
Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934, and the safe harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995 that
relate to our current expectations and views of future events. In
some cases, these forward-looking statements can be identified by
words or phrases such as “may,” “will,” “expect,” “anticipate,”
“aim,” “estimate,” “intend,” “plan,” “believe,” “potential,”
“continue,” “is/are likely to” or other similar expressions. These
forward-looking statements are subject to risks, uncertainties and
assumptions, some of which are beyond our control. In addition,
these forward-looking statements reflect our current views with
respect to future events or our Company’s performance and are not a
guarantee of future performance. Actual outcomes may differ
materially from the information contained in the forward-looking
statements as a result of a number of factors, including, without
limitation, the risk factors set forth in our Annual Report on Form
10-K for the year ended on December 31, 2023, that was filed with
the SEC on February 29, 2024, as may be updated in other filings we
make with the SEC, including our Quarterly Report on Form 10-Q for
the quarter ended on March 31, 2024 that was filed with the SEC on
May 9, 2024. These statements reflect management’s current
expectations regarding future events and operating performance and
speak only as of the date of this press release. You should not put
undue reliance on any forward-looking statements. Although we
believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee that future results,
levels of activity, performance and events and circumstances
reflected in the forward-looking statements will be achieved or
will occur. Except as required by law, we undertake no obligation
to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise,
after the date on which the statements are made or to reflect the
occurrence of unanticipated events.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241126170116/en/
Media Contact: Alexandra Smith Ozerkis
aozerkis@evolvtechnology.com
Investor Contact: Brian Norris
bnorris@evolvtechnology.com
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