Security tech company Evolv investigates sales misconduct, warning recent financials are unreliable

abcnews.go.com:

Evolv is warning its shareholders to no longer rely on recent financial statements, as the security technology company investigates employee misconduct related to “certain sales.”

NEW YORK — NEW YORK (AP) — Evolv is warning its shareholders to no longer rely on recent financial statements, as the security technology company investigates employee misconduct related to “certain sales."

In a Friday announcement, Evolv disclosed that a group of independent board directors is currently conducting an internal investigation into the company's sales practices. While this investigation is ongoing, the committee has found that at least some sales were “subject to extra-contractual terms and conditions” and were not shared with accounting personnel.

The committee has also determined that certain employees were engaged with this misconduct, but no further specifics were shared Friday. Evolv notes the investigation is trying to determine if this misconduct impacted revenue reports and other financial metrics, and if so, when senior personnel became aware.

As a result, the company is telling shareholders that financial statements between the second quarter or 2022 and that of 2024 are no longer reliable. Evolv's next earnings report will also be delayed.

The investigating committee estimates that the sales transactions at issue resulted in premature or incorrect revenue recognition of about $4 million to $6 million through the end of June, Evolv said, although that could change pending the conclusion of the investigation.

The company added that it's reported these issues to the U.S. Securities Exchange Commission.

The Waltham, Massachusetts-based company previously reported in August that second-quarter revenue was $25.5 million, an