Why Evolv Technologies Stock Tumbled by 13% Today

What happened

Security tech stock Evolv Technologies Holdings (EVLV -13.33%) was hardly looking like a secure investment on Thursday. The company’s share price fell by more than 13% after management published a set of preliminary quarterly results. This, on a day when the S&P 500 index slumped by a relatively modest 0.6%.

So what

Evolv, which specializes in next-generation metal detectors for precision security screening, provided several estimates for its third quarter. The company anticipates it will book total revenue of $19.3 million to $19.8 million, with annual recurring revenue (ARR) landing at $65.5 million to $66 million as of the end of the period. 

Those ranges are well above the third-quarter 2022 figures. For that frame, Evolv posted revenue of $16.5 million, while its quarter-end ARR was $28.7 million. It was well in the red on the bottom line, however, with an $18.6 million ($0.13 per share) net loss.

In its preliminary results for the third quarter of 2023, Evolv did not proffer a bottom-line forecast.

Now what

Evolv also raised its guidance for the entirety of 2023. It believes total revenue will come in at $75 million to $77 million; previously it was estimating $70 million to $75 million. End-period ARR is now anticipated to be $73 million to $75 million, against the prior guidance of $70 million to $72 million. It did not provide any forecast for net profit or loss.

What investors were likely concerned with is growth — even at the top end of the bolstered revenue guidance, Evolv’s top-line improvement would be 36% for the year. That’d represent quite a comedown from the more than doubling of revenue in 2022 compared to the previous year. 2021 revenue, meanwhile, was nearly five times that of 2020.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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