What happened 

Shares of security company Evolv Technologies Holdings (NASDAQ:EVLV) 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.

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. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Source: https://www.fool.com/investing/2021/11/11/why-evolv-technology-stock-jumped-179-on-thursday/