Ladies and gentlemen, thank you for standing by. Welcome to the Evolv Technologies Q2 Earnings results. At this point, all the participant lines are in a listen-only mode. However, there will be an opportunity for your questions. Instructions will be given at that time. If you should require any assistance during the call, please press star zero and operator will assist you offline. As a reminder, today's call is being recorded. With that, I'll turn the call over to Brian Norris, Vice President of Finance and Investor Relations. Please go ahead. Thank you, John, and good afternoon, everyone, and welcome to today's call. I'm joined here today by Peter George, our President and Chief Executive Officer, and Mark Donohue, our Chief Financial Officer. This afternoon, after the market closed, we issued a press release announcing our Q2 results and our business outlook for 2022. This press release is available on major news outlets as well as the IR section of our website. During today's call, we will make forward-looking statements 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 Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events, including, rather, but not limited to, statements regarding our ability to meet our business outlook. All forward-looking statements are subject to material risks, uncertainties and assumptions, some of which are beyond our control. Actual events or financial results may differ materially from these forward-looking statements because of a number of risks and uncertainties, including, without limitation, the risk factors set forth under the caption Risk Factors in our annual report on Form 10-K for the year ended December 31st, 2021, filed with the SEC on March 28th, 2022, and in other documents filed with or furnished to the SEC from time to time. Our forward-looking statements represent our views as of August 10th, 2022. Although we believe the expectations reflected in these statements are reasonable, we cannot guarantee them. Except as may be required by applicable law, we disclaim any obligation to update them to reflect future events or circumstances. Our commentary today will also include non-GAAP financial measures, including adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted EBITDA, adjusted operating income or loss, and adjusted earnings and earnings per share, which we believe provide additional insight for investors in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with generally accepted accounting principles. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our press release issued today. Please note that our definition of these measures may differ from similarly titled metrics presented by other companies. Please be advised that as of January 1st, 2023, we no longer plan to disclose total contract value of orders booked, a measure we stopped guiding on several quarters ago because we no longer believe it's consistently indicative of the company's prospects. We encourage investors to continue to focus on key metrics such as annual recurring revenue, remaining performance obligation, deployment activity, and total number of subscriptions, which we believe are more indicative of the company's prospects. With that, I'll turn the call over to Peter. Peter? Thanks, Brian, and thank you everyone for joining us today. We're pleased to be reporting strong Q2 results, which are indicative of the growing momentum and visibility we're seeing throughout the business. We're encouraged by our year-to-date performance and, based on the strong demand drivers in our business, are optimistic in our outlook for a strong H2 of 2022. We have a lot of exciting news to share with you, but before we start, I wanna take a moment to formally introduce Mark Donohue, who joined us on June the 1st as our Chief Financial Officer. I know Mark is a familiar face to many of you as he has held leadership roles at several publicly traded technology companies. Mark brings over two decades of executive leadership experience with a strong background in subscription-based businesses. He joins us from Vestmark, a leading provider of SaaS-based portfolio management and trading tools, where he served as CFO for the last four years. Before that, Mark served in several senior roles on the finance team of Rapid7, a leading provider of cybersecurity analytics and automation. He also spent seven years at Cisco in various executive roles for the Mobility Business Group, and he held senior finance roles at Starent Networks, a leading provider of infrastructure solutions for mobile operators. Mark has helped build and shape several category-leading technology companies across SaaS, cybersecurity, and networking, and I know his experience and leadership will be particularly important to our continued growth. We're fortunate to have him on board. Welcome, Mark. Thank you, Peter. I'm excited to join the team, and I look forward to working with all the members of the investment community, many of whom, as you mentioned, I've worked with before. I joined Evolv first and foremost because of the deep connection I have with its vision and mission. Unfortunately, we live in an era of escalating violence, and that reality impacts not only my family, friends, and colleagues, but people in all walks of life. Evolv's next generation AI technology delivers a practical and affordable approach to helping solve the challenge of making everyone safer and more at ease in their daily lives. I also joined Evolv because I see its subscription-based security as a service business model, as disruptive as the technology itself. I believe the company is extraordinarily well-positioned in one of the fastest-growing areas across all of technology. The combination of Evolv's products, market position, breadth of customer base, business model, domain expertise, and strength of team position it well for the opportunity ahead. I look forward to leveraging my experience to help advance the company's business strategies. Thanks, Mark. It's great to have you on board. Now let's turn to our record financial results, which continue to reflect the strong momentum building across the company. Key highlights include, first, we extended our leadership position with dozens of new customers who are creating weapons-free zones. We delivered important product innovations to the market, and we continued to gain meaningful traction with our key channel partners. We also surpassed 1,000 Evolv Express Systems deployed and $100 million in cumulative bookings. These two milestones would not be possible without the trust of our customers and partners who rely on Evolv to digitally transform their physical security and the hard work and dedication of our employees, our Evolvers, who come to work every day inspired to make the world safer for everyone. Consider one of our healthcare customers, which is a major hospital system in the southeastern region of the U.S. Since going live just five months ago with Evolv Express, we've successfully detected and stopped over 120 weapons from entering that facility. This included an emergency room visitor who was attempting to gain entry with a concealed subcompact semiautomatic AR-15 rifle and another seven weapons in his duffel bag. At Evolv, preventing a potential mass shooting like the one thwarted at that hospital that day is exactly what we were born to do. In many ways, we're just getting started. We see a world where physical security is finally democratized, where it's easy to deploy, easy to operate, affordable and present everywhere you go. We're a global leader with over 1,000 units deployed, but our vision is much bolder than that. We've identified more than 700,000 points of ingress in our core vertical markets that are a candidate for locations for our technology. Our goal over the next five years is to have over 20,000 Evolv Express Systems deployed globally, screening tens of millions of people every single day. This will accelerate our path to eventually reaching our aspirational milestone of $1 billion of annual recurring revenue. I believe we're well-positioned to execute on this long-term vision and build the most durable and enduring company in the history of physical security. How are we doing in the execution of that vision? Let me share with you a few key takeaways from the quarter. First, revenue was $9.1 million, up 94% year-over-year, primarily reflecting three drivers, very strong demand in our key vertical markets, including education and healthcare, an increase in purchased subscription deals, and continuing momentum and expansion with our channel partners. We also delivered strong growth in annual recurring revenue and remaining performance obligations. We added a record 53 new customers compared to 44 in the Q1 and 21 in the Q2 of last year as our new customer momentum continues to accelerate. We secured 97 new customers in the H1 of this year, compared to 84 in all of last year. Since many of our customers are securing multiple buildings or schools, our measure of customers is more conservative than the number of actual buildings we're securing. As a result, we're seeing positive trends regarding average transaction size or ASP. We've reported four transactions of at least $1 million of TCV compared to zero in the Q2 of last year. Moving on to our rich and unique data set. We just surpassed 350 million visitors screened, second only to the TSA in North America. We're now screening more than 750,000 people every day, and as many as 1.25 million people a day on weekends. Just since the beginning of this year of 2022, we have stopped 57,000 weapons from entering our customers' venue, including 30,000 guns and 27,000 knives. This is unprecedented in the AI-based weapons detection screening category. What's more, every scan enriches our product capabilities and analytics, increases the accuracy and efficacy of our product over time, and underscores our technological lead in the market. I'd like to spend a few minutes highlighting the customer and market traction we're seeing, starting with the accelerating demand in education, healthcare, and professional sports. Nearly 40% of our TCV came from the education vertical. Key new customers included the Noble Network of Charter Schools, which operates 18 nonprofit charter public schools across Chicago with over 12,000 students, and Guilford County Schools in North Carolina, one of the 50 largest school districts in the United States, serving more than 70,000 students. They are now in the process of deploying just over 40 Evolv Express Systems. A perfect example of how a single customer addition can be much more than a single Evolv Express deployment. Our education market activity and order rate is accelerating as more school boards and school districts digitally transform their security operations, preparing for the upcoming school year and taking advantage of available funding pools. We're seeing a couple of really interesting trends in the education market. We're seeing more purchasing decisions being made, not at the school or the town level, but rather at the district-wide level. We're also seeing increased adoption of single lane configurations of Evolv Express, which fit more readily in the smaller entrances of schools, some of which are decades old. To add some context here, more than 70% of the units we sold in Q2 were single lane configurations with the heaviest demand by far coming in schools. The healthcare market represented about 15% of our TCV as an increasing number of hospitals and clinics are looking to enhance patient safety for their staff. That's not surprising when you consider that a recent U.S. Bureau of Labor Statistics report that healthcare workers accounted for 73% of all non-fatal workplace violence. New healthcare customers include Cincinnati-based Mercy Health, which we secured with our partner, Stanley Security, New Jersey-based Capital Health, and one of the largest nonprofit academic healthcare systems in the Deep South region of the U.S. The arenas and stadiums market represent about 15% of our TCV. New customers include the O2 Arena in the U.K. and yet another Major League Baseball franchise. We've also recently extended our leadership position across the National Football League, where we already support the Tennessee Titans, the Atlanta Falcons, and the New England Patriots, just to name a few. Here in the Q3, we won a competitive opportunity at FirstEnergy Stadium, home of the Cleveland Browns, where we've also been named the official fan screening provider. Finally, we experienced strong traction with the entertainment, warehouse, government industries, which combined to represent just over 20% of our TCV. Key wins here included the Blumenthal Performing Arts Center, the Taft Museum of Art, and the City of Detroit. The win at the City of Detroit is a fascinating example of a rapidly developing use case for our technology, and it's also expanding our TAM in an unexpected way. There's a growing demand among government agencies as well as local law enforcement to secure not just buildings where people work, learn, and play, but also in large gathering spaces where people live their everyday lives. The City of Detroit selected Evolv to support the creation of weapon-free zones for pedestrians across the city because, number one, we could offer a superior visitor experience, we could free up local law enforcement to provide security away from the points of ingress, and because we could be integrated into the city's security operations center. We also deployed over the summer, just in time for the Ford fireworks display, which has been on hiatus for two years due to COVID pandemic. This celebration was held downtown with over 100,000 people in attendance in the main viewing areas. In past years, the event has been plagued with gun violence, and many residents expressed fear for attending. The result at this summer's event, zero gun violence. We continue to see growing momentum internationally. For the Q2 in a row, we secured over $1 million of TCV outside of North America. Recent wins internationally include the AO Arena and the O2 Arena in the UK and Distrito T-Mobile, our first win in Puerto Rico. The AO Arena, which is managed by ASM Global, welcomes over 1 million visitors each year and is one of the busiest venues in the world. We were deployed to enhance venue safety and security, as well as improve the customer experience by making lines go away to offer a seamless and swift arrival into the venue. Given the positive experience at the AO Arena, ASM Global has announced plans to further roll out Evolv Express at other venues across Europe. Distrito T-Mobile is a major entertainment complex in Puerto Rico, which opened in August of 2021. It's located in the Miramar section of San Juan and drew more than 1.7 million visitors in the first six months of operation. Our technology is allowing visitors to walk into their iconic complex safely and seamlessly without any delays at all at the entrance. One of the most important elements of our long-term growth objectives is the leverage we're getting from strategic channel partners like Motorola Solutions, Johnson Controls, and Stanley Security, as well as our other growing number of regional partners who combine to extend our vertical and geographic reach efficiently and effectively. The number of qualified partner-involved opportunities has never been higher. I'm pleased to report that our partners contributed to over 50% to our order activity in the Q2, and nearly half of that came through Motorola Solutions with whom we have a strategic OEM partnership. We now have nearly 500 qualified opportunities in our pipeline with Motorola. We continue to make great progress on cross-training, enablement, activation, and certification of the Motorola teams. In summary, we are reporting strong Q2 results, highlighted by record revenues, ARR, and RPO. We continue to see strong market momentum in education fueled by newly available federal and state funding. We continue to extend our leadership position with a record number of new customers, strong product introductions, and acceleration with our key channel partners. We remain well capitalized and believe that the strength of our balance sheet will enable us to reach cash flow breakeven without any additional capital. Finally, based on the strength of our H1 results and the momentum in the business, we remain highly confident in our ability to deliver on our full year growth plans. With that, let me turn things over to Mark, who will take you through the financial results and our outlook for the back half of 2022. Mark. Thanks, Peter, and good afternoon, everyone. I'm going to review our results in more detail and then share some thoughts on how we're thinking about the rest of the year. As Peter mentioned, revenue was $9.1 million, up 4% sequentially and 94% year-over-year. This growth was highlighted by a 33% sequential increase in subscription revenue, reflecting the growing emphasis we're making on our pure subscription model. We ended the Q2 with 1,147 contracted subscriptions, up 26% sequentially and 193% year-over-year. TCV was $22.1 million, up 15% sequentially and 111% year-over-year. ARR at the end of the Q2 was $20.9 million, reflecting growth of 25% sequentially and 181% year-over-year. Remaining performance obligation, or RPO, was a record $66.2 million at the end of the Q2, up 31% sequentially and 166% year-over-year. RPO reflects the difference between contract value and revenue that has already been recognized for units that have been deployed as of the end of the quarter. We estimate that the gross margin of our current RPO, excluding overhead, is approximately 65%, the benefit of which will accrete to our income statement over time. That does not include the renewal opportunity, which would strengthen that gross margin over time as well. In addition to RPO, we had another $14.7 million of contracted revenue associated with units that had not yet been installed as of June 30, 2022. In total, we had about $81 million of RPO plus contracted revenue in backlog at the end of the Q2 representing growth of approximately 27% sequentially. Gross margin was 6% compared to 16% in the Q2 of last year. As a reminder, our gross margins don't currently reflect the overall business value as we're using two very different accounting treatments between our pure subscription sales and our hardware purchase subscription sales. In case of pure subscription sales, we're yielding gross margins that align better to the long-term deal economics. Alternatively, with our hardware purchase subscription sales, we recognize the equipment revenue and equipment costs at the beginning of the subscription period in advance of the long-term software subscription benefit. This results in lower gross margins for hardware subscription sales earlier in the life cycle than is typical over the contract period. The combination of these very different accounting treatments has traditionally driven our reported gross margins lower than the value of the customer contracts are truly reflecting over time. Going forward, we expect to lead increasingly with our pure subscription offering, which aligns more closely to the SaaS nature of our business model. The Q2 gross margins also reflected a higher mix of single lane systems we sold as we accelerated our presence in the education market and the higher contribution we saw from our channel partners. Total non-GAAP operating expenses were $18.2 million, compared to $19.4 million in the Q1 of 2022, and $6.6 million in the Q2 of last year. This sequential decline in OpEx reflects reductions in ongoing professional services and our continued company-wide focus on cost control. We exited the quarter with 213 employees, compared to 196 at March 31, 2022, reflecting a net add of 17 employees. Net loss was $25.7 million, compared to $23 million in the Q2 of last year. Adjusted net loss, which excludes stock-based compensation and other one-time items, was $17.3 million, compared to $9.1 million in the Q2 of last year. Adjusted EBITDA, which excludes stock-based compensation and other one-time items as well, was $16.4 million, compared to $5.2 million in the Q2 of last year. Turning to the balance sheet, we ended the quarter with $243 million in cash and cash equivalents, down about $28 million from the Q1 of 2022. This reflects adjusted net loss of $17 million, as well as several other uses of cash in the period, which were timing related, and we expect will benefit us over the next several quarters. The first was an investment we made in finished goods inventory as we continue to prioritize product availability. Our inventory balances increased 55% sequentially to $6 million at June 30, 2022, compared to $3.9 million at March 31, 2022. Another driver was the increase in prepaid deposit balances, primarily related to our contract manufacturing partner, again, as we prioritize product availability and lock in hard to source components. Prepaid deposits increased by 32% sequentially to $17.7 million at June 30, 2022, from $13.5 million at March 31, 2022. Finally, we saw an uptick in accounts receivable due to the increase in sales as well as our pause in billing activity earlier in Q2 as we migrated to NetSuite for our new ERP system. Our AR balance increased by 42% sequentially to $12.2 million on June 30, 2022, from $8.6 million on March 30, 2022. In total, these three drivers combined to consume approximately $10 million in cash in the Q2 of 2022. We consider all of this to be timing related and not what we would consider run rate use of cash going forward. As we shared last quarter, we continue to expect our quarterly cash losses to decrease in the H2 of the year as we grow deployments and limit expenses. We are encouraged by our progress during the H1 of the year. We believe we are well-positioned to meet our full year growth plans and as such are reaffirming our previous guidance, which calls for full year revenue of between $29 million-$31 million, with year exiting ARR to more than double to $27 million-$28 million. We expect to end the year with approximately $220 million-$230 million in cash, which reflects increased inventory buildup and deposits for materials to support our growth plans in 2023. It also assumes we're successful in implementing third-party financing to support our rapidly growing pure subscription pricing model. We also expect to pay down our outstanding long-term debt of approximately $10 million before the end of 2022. In summary, we're pleased with our strong results of the Q2. We're excited about our plans for the back half of the year and the opportunity ahead in 2023. With that, I'll turn the call back over to Brian. Thank you, Mark. At this time, we'd like to open the call up for Q&A. Again, we ask participants to limit themselves to one question and one follow-up. I'm gonna turn the call back over to John. Thank you. Ladies and gentlemen, if you wish to ask a question, please press one then zero on your telephone keypad. You may withdraw your question at any time by repeating the one zero command. If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, you may press one then zero at this time. One moment please for our first question. First, go to line of Shaul Eyal with Cowen. Please go ahead. Thank you. Good afternoon, guys. Apologies for joining a little late. Just want to find out in your financial statement. I think you've mentioned just, you know, a number of prior errors in prior financial statements for kind of 2021. Just can you address that and pretty much what changes have been implemented when you think about your reporting systems? I have a follow-up. Thank you. Great. Thanks, Shaul. This is Mark Donohue. Yes. We are, you know, we're really strengthening our team, the processes and systems that we're using right now. We talked about moving to our new ERP system, NetSuite, this quarter. We've been, you know, finding some minor elements, some minor reclasses, some minor fixes, and we worked with PwC to really see how to best handle those going forward. You know, the areas are not really core to the business that we're really driving. You know, just to give you a sense, we had a reclass from field and tech resources that were in sales and marketing, some small numbers that we really felt belonged in COGS long term. Just some inventory and fixed asset reclasses that we did as we kind of drive our SaaS model. Other than that, it's not a serious amount of things and the numbers are relatively small. Understood. Thank you so much for the color on that point. My second question is, I know the international opportunity longer term represents, you know, a meaningful one. Any issues with foreign exchange this quarter? I would imagine the answer is probably no, but just wanna see how you guys feel about it. No. There's no issue with foreign exchange at this point. We're actually doing all of our billing in USD, so that would not be an issue. We've been keeping. We're relatively clean in terms of our AR balances on the international side. Just to let you know too that just less than 5% is coming out of EMEA right now for us. Sure. I'll cede the floor. I'll come back later on. Thank you. Okay. Thanks, y'all. Next, we'll go to the line of Mike Latimore with Northland Capital Markets. Please go ahead. Great. Thank you. Hi, everybody. Yeah, congrats on the quarter and the, you know, sounds like great momentum in the business. Just wanted to get some more detail on the bookings and pipeline. Do you have a percent of the bookings and pipeline that are kind of pure subscription versus purchased subscription, I guess, you call it? Sure. Let me take that, and then I'll ask Mark to weigh in. How you doing, Mike? You know, we Good. Yeah, good. We had a great quarter in healthcare and education. What we learned during Q2 is that a lot of the education customers wanted to do a purchase subscription. They ended up buying the hardware and getting the subscription with it. It ended up being about 50% of our sales, which we didn't expect that, and we had planned for something a lot smaller. We think in the back half of the year, we're gonna direct our customers more towards full subscription and not purchase subscription. Because we had such a strong Q2 in purchase subscription, it drove the revenue number up. We don't think that that's gonna be the future back half of the year, what we'll wanna do in 2023. The mix was about 50/50. We expect that to change and lean heavily towards subscription. I'd like it to be more like 80/20 or 90/10 in 2023, and we're gonna work our way there in the back half of 2022. Mm-hmm. Okay, great. I know the supply chains have made it harder to reduce the system cost, hardware costs overall, but maybe can you give a little bit of an update on, you know, the plan to get the hardware system costs down? You know, what's the strategy there? What's the potential timing and potential magnitude of the change? Yeah. I mean, Peter and I will probably tag team on this one, but let me get started here first. You know, going into next year, we're already working hard on some cost down measures for our Express System. You know, so we are instituting those, and we expect by sometime middle of next year to start seeing some of the benefits from those cost down efforts. You know, if we're looking at the supply chain more generally, it has been a tough environment. We're doing some buys of our products as early as 12 months in advance just so we can kind of secure those parts, the last time buys that are happening, so we're being very vigilant on that front. You know, just in this kinda heightened market where the supply chain is under pressure, there have been what we call purchase price variances, which is basically. It's basically just that some of our products costing a little bit more than they typically would, and we're trying to keep that in check as well. Those are some of the things that we're doing. I don't think it's. It isn't anything to be concerned about, and we actually have quite a bit of a team working through it and helping us keep it in check. I would only add to that, Mike, that, you know, we made meeting the demand the top priority for the company this year. Okay. Because of that, with the global supply chain challenges and our strong balance sheet, we forward ordered long lead time items to make sure that we had the products in place to go meet the demand. As you know, our plan is to have exit this year with about 1,500 systems deployed. We're gonna beat that number. The investment we made in parts late last year and early this year guarantee that. We're really happy we did it, and I think it's gonna pay big dividends for us going forward. Our team's done a really super job of redesigning systems, dealing with the global chip problem, and making sure that we can meet the demand. We're delivering systems in less than 30 days to our customers today, and we feel great about that. Great. I guess just one last one. Just, piqued my interest, the Detroit story. I guess, I mean, that sounds like a highly valuable and useful use case. I'm guessing that could be a good reference account. But are you seeing other kind of interest in weapons-free zones around the country? We are. I mean, as we know, you know, violence is increasing everywhere at venues, but also in cities and with all the anxiety. The City of Detroit came to us last year and said, "We would like to create pedestrian free zones downtown in areas where people just can walk." Of course, we talked about what we did with them at the fireworks. It's exciting, and there are lots of other cities that have come to us that are having the same problem that we think we can help them. We're excited about it. We didn't think that was gonna be a great use case for us, but it's becoming one. I think it expands our TAM because it's not something we had planned for before. We hope you'll see our systems as you walk into areas that, it's not a building, but it's places where people gather, festivals and things like that. They'll be walking through our system, so you know when you're inside, you're safe. Mm-hmm. Yep. Yeah. Okay. Thank you. Thank you. Just as a brief reminder, if you would like to ask a question, please press one then zero. We'll go to Brian Ruttenbur with Imperial Capital. Please go ahead. Great. Thank you very much. Good quarter. Couple quick questions. Your guidance of $29 million-$31 million implies that the H2 of the year is gonna be weaker than the H1. I think you produced roughly $18 million in revenue in the H1. Am I misreading something or misunderstanding? We have a lot of momentum in our business, and we feel really good about where we are. Having said that, what I said earlier, Brian, is that we didn't expect 50% of our business to be purchase subscription. We expected, you know, 20% of our business to be purchase subscription, which drove the revenue rec higher than we expected. We're gonna be directing our salespeople and our channel to lead with subscription only in the back half of the year, and maybe only offer that next year. We'll see. I think that's gonna change, you know, what the revenue model looks like. We wanna take a conservative and cautious and prudent approach to guidance, and we'll let Q3 help determine what the mix is gonna look like. We feel really good about the momentum in our business, but given that shift towards purchase subscription, it artificially inflated our revenue, and we don't think that's gonna be the trend going forward. Add to that, you know, inflationary concerns and concerns about the recession and a war and global supply chain. We think being prudent and conservative right now is the right approach, but against the backdrop of that is really strong demand and momentum in our business. Great. Thanks for the color on that. Can you talk a little bit about your single units going into the schools? Can you give us a ballpark on how those are being funded and how much those cost on a per school basis? Just want to see where the money is coming from. School systems are historically cheap, and you're getting a lot of traction there, so I just wanna understand how you're getting that traction. Yeah. You know, there are a couple of things going on there. Number one, what we saw was an enormous amount of our business coming through the channel. Our channel partners, we mentioned some of them, have been selling to schools for decades. They're really well positioned to lead with our product and not only sell our product by itself, but integrate it into other things that they're selling. Access control, video analytics, things that they do, and then stitch that together to provide a really nice solution. You know, our channels has done a really great job of getting us in front of the opportunity in schools. We're seeing new funding in schools around the Safety Act, but also there's been ESSER funding that was issued a couple of years ago that was COVID-related. There's $150 billion of ESSER funding that's unused that was issued by the federal government that schools can tap into. We're starting to see, you know, people use those unspent ESSER funding to fund security, and that's, you know, that's driving schools now to be able to step forward and deploy these systems. That's the interest. The other thing around the schools is that we had planned for selling lots of dual lane systems, and what we're finding is schools are putting a dual lane in the main door, but in other doors where they're bringing in the bus stop or the car drop-off, they're using single lane systems. That's what's shifting the mix from dual lane to single lane. The cost of that is about 40% less than our dual lane system. We have to sell a lot more single lanes to make both the revenue and the TCV numbers that we have planned for. Great. Thank you. Next we have a line of Brad Reback with Stifel. Please go ahead. Oh, great. Thanks very much. Can you guys remind us what the economics look like on the channel sales? Sure. We have an MSRP that we issue to the market. Our standard channel partners get 20% discount. We have a even bigger discount with our OEM partner. We know exactly when it goes through the channel what the margin's gonna look like, because we recognize the buy price from the channel to us, and we also retire quota with our salespeople on the buy price as well. That's what the discount is. It's standard. Everyone gets the same one, and it helps us be more predictable about what our margins are gonna be and what revenue we're gonna get. On the revenue front, does the rev rec happen when the customer installs or when you deliver it to the partner? It depends on the situation. For the subscription, pure subscription sales, it happens on the installs. When we if we're selling it to the partner or frankly, any hardware purchase, especially with the channel, it's actually recognized upon the receipt by the channel. That's great. I know you said two, but could I sneak one third one in which was around the Yeah, please. Yeah. Yeah. The third party financing commentary. Will that meaningfully change the economics going forward? What we're really doing as we go and try to drive the SaaS business, we're obviously gonna have an increase in our fixed assets as we over the period to which the lifetime value of the product. We're gonna be trying to finance that because obviously we're not a bank, it's not core to our business long term, and we wanna keep our operating capital, you know, in play. I would expect by the end of the year, we're probably gonna have close to, you know, at this point, we've got about $35 million in fixed assets. We probably have something in the area of $45 million in fixed assets. This is the time when we wanna start thinking about making sure that we're working through that and funding it correctly. That's great. Thanks very much. Mm-hmm. Thanks, Brad. With that, I'll turn it back to the company with no further questions in queue. Terrific, John. Thanks very much. We appreciate that last question. What I'm gonna do is turn the call back over to Peter for just a few closing remarks. Sure. Thanks, Brian. Thank you, everyone, for joining our call today. We feel really good about the results that we just announced to the market. Record revenue, record ARR, record RPO. We're excited about that. Obviously, we're operating at a, you know, a higher level, particularly around education and healthcare. We've seen a dramatic increase in the pipeline and opportunities in those two verticals. They're big verticals to go get, and we're gonna go get them. We've extended our leadership in terms of record new customers. We're innovating, which is critical for our products. Of course, we're enabling our channel and getting amazing operational leverage, both here in North America, but also getting that same kind of leverage in the international markets. As I mentioned, we feel great that we're fully capitalized as a company and have a lot of confidence in the full year outlook of the numbers. We thank everyone for joining the call, and we look forward to the next call that we have, which I think is gonna be in November to report our Q3 results. Thanks, everybody. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.