Please ensure Javascript is enabled for purposes of website accessibility

Why Evolv Technology Stock Jumped 17.9% on Thursday

By Travis Hoium – Nov 11, 2021 at 5:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Quarterly results are looking strong for this security company.

What happened 

Shares of security company Evolv Technologies Holdings (EVLV 2.25%) jumped as much as 26.1% in trading on Thursday after reporting third-quarter 2021 financial results. Shares closed the day up 17.9%. 

So what

Total revenue in the quarter was up 473% from a year ago to $8.4 million, and the total contract value of orders booked in the quarter was $16.9 million. Net income was $23.2 million in the quarter, or $0.15 per share, but that included $41.7 million of gains on the fair value of items.

Metal detectors at an airport.

Image source: Getty Images.

Management also slightly increased guidance for bookings and revenue for the full year. The total contract value of bookings is now expected to be $53 million to $57 million, a $2 million higher top end than August's guidance. Revenue guidance was also $2 million on the high end at $20 million to $23 million. 

Now what

There is strong momentum for Evolv's products in this market. With safety a key concern for places with large gatherings, the market should grow. We are also seeing the company make a quick comeback after a slowdown during the pandemic. 

What investors will want to see over the next few quarters is a move toward profitability. Gross profit is high at around 50% of revenue, but operating losses were double Evolv's revenue in Q3, which isn't sustainable long term. We need to see more growth and better operating margins for this to be a big winner for investors. 

Travis Hoium 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.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.