Evolv Technologies Holdings, Inc.

What they do

Evolv provides AI-powered security screening through its Evolv Express (people screening) and Evolv eXpedite (bag screening) products, delivered via a Security-as-a-Service model. The company operates with two sales models: pure subscription (hardware lease plus software) and purchase subscription (hardware purchase plus software). Subscriptions include Evolv Insights analytics and full onsite support and repair services.

Revenue drivers

• Pure subscription model — Customers lease hardware and pay a multi-year security-as-a-service subscription; revenue is recognized over the contract term.
• Purchase subscription model — Customers purchase hardware outright and pay for a multi-year software subscription; this model recognizes hardware revenue upfront, increasing early-year revenue but pressuring gross margin.
• Distributor licensing model — Under a 2023 agreement with Columbia Tech, Evolv licenses IP and receives a hardware license fee for each system sold by Columbia Tech to resellers; applicable when end customers prefer to purchase hardware.

Recent performance

For Q2 2026, revenue was $43.8 million, up 34% year-over-year, with a net loss of $9.3 million and Adjusted EBITDA of $4.4 million. First half 2026 revenue was $90.1 million, up 40% year-over-year, with a net loss of $14.3 million and Adjusted EBITDA of $8.4 million. ARR at June 30, 2026 was $132.7 million, up 20% year-over-year, and remaining performance obligation was $312.6 million. Cash, equivalents, marketable securities, and restricted cash were $63.4 million at quarter end.

Strategy

Evolv is focused on expanding its installed base and accelerating adoption of Evolv eXpedite, as highlighted by the addition of 70 new customers in Q2 2026. The company plans to increase the mix of purchase subscription deployments to approximately 60% of new unit deployments in 2026, which boosts early revenue but creates a modest near-term headwind to gross margins. Management emphasizes continuous software upgrades and data-driven model improvements as key differentiators.

Risks

• Adoption uncertainty — Revenue and results may fluctuate as venues shift from conventional screening to touchless AI-based screening, and the pace of adoption is uncertain.
• Customer concentration — No specific concentration disclosed, but reliance on a limited number of large customers could impact revenue stability if contracts are not renewed or are delayed.
• Sales practice investigation — The company has an ongoing investigation by an ad hoc committee of independent directors into sales practices, which could lead to legal, regulatory, or reputational risks.
• Model mix margin pressure — The shift toward purchase subscription models increases revenue but reduces gross margin percentage due to upfront hardware cost recognition.

Outlook

For 2026, management expects total revenue of $180 to $185 million, up approximately 23% to 27% year-over-year. Ending ARR is expected to be $148 to $150 million, and Adjusted EBITDA is expected between $15 to $16 million with high single-digit margins. The outlook reflects an increased mix of purchase subscription deployments.