Security tech company Evolv fires its chief executive
FILE - The Evolv Express weapons detection system lights up red during a demonstration, May 25, 2022, in New York. (AP Photo/Mary Altaffer, File)
NEW YORK (AP) — Amid the backdrop of a sales misconduct investigation and other looming legal troubles, security technology company Evolv is now firing its CEO.
Evolv’s board of directors terminated chief executive Peter George on Wednesday, effective immediately, according to a Thursday announcement from the company. Michael Ellenbogen, Evolv’s current chief innovation officer, will step into the role as interim CEO and president.
Specifics behind George’s firing were not immediately clear — but Evolv noted the dismissal was without cause and followed months of “careful planning and deliberation” by the board.
The move arrives just days after Evolv disclosed an ongoing investigation into the company’s sales practices, warning shareholders to no longer rely on recent financial statements. The board acknowledged this investigation Thursday, but maintained that it had been “evaluating leadership and performance for several months — long before we became aware of any potential issues relating to the Company’s sales practices and financial reporting.”
Evolv shared initial findings this investigation last week. An internal committee found that certain employees engaged in sales “subject to extra-contractual terms and conditions,” the company noted, some of which were not shared with accounting personnel. Evolv says it’s trying to determine if this misconduct impacted revenue reports and other financial metrics, and if so, when senior personnel became aware.
How high up that could be has yet to be confirmed, but Evolv said it would take any remedial actions as necessary. As of Friday’s disclosure, the investigating committee estimated that sales transactions at issue resulted in premature or incorrect revenue recognition of about $4 million to $6 million through the end of June.
This is far from the first time Evolv has found itself in hot water. The company has faced other legal issues over the years, including separate federal probes into its marketing practices led by the Federal Trade Commission and the Securities Exchange Commission.
And earlier this year, investors filed a class-action lawsuit, accusing company executives of overstating the devices’ capabilities and claiming that “Evolv does not reliably detect knives or guns.”
Evolv, which provides security screening technology powered by artificial intelligence, also made headlines after a pilot testing program used its portable weapons scanners inside some New York City subway stations this summer.
That program faced ample criticism from some civil liberties groups, as well as questions of efficacy. Recently released police data showed that the scanners did not detect any passengers with firearms — and had more than 100 false alerts over the one-month test.
Following the news of George’s firing, shares for Evolv were down nearly 10% Thursday afternoon.
According to the company, Evolv’s board formed a succession planning committee to evaluate leadership performance and plan for a CEO transition back in May. The company noted that it’s been actively recruiting candidates for CEO, and intends to announce an official successor “expeditiously.”
In a statement Thursday, the board added that a leadership change was necessary “to improve the company’s culture as we prepare for the next phase of growth.”
Ellenbogen, the current interim CEO, is one of Evolv’s co-founders and previously served as chief executive for seven years.
In August, Waltham, Massachusetts-based Evolv reported second-quarter revenue was $25.5 million, up 29% from $19.8 million for the same period last year. Its next earnings report is delayed due to the ongoing sales misconduct investigation.