Evolv Technologies Holdings, Inc.

Evolv Technologies Holdings, Inc. (Evolv) is a security technology company that specializes in Artificial Intelligence (AI)-powered screening solutions to create safer environments while maintaining efficient visitor flow ¹. The company serves various end markets, including education, healthcare, sports, live entertainment, tourist attractions, houses of worship, and industrial workplaces ². Evolv's mission is to make the world safer and more enjoyable, focusing on addressing gun violence, mass shootings, and terrorist attacks ³. The company's solutions are delivered through a Security-as-a-Service model, integrating proprietary sensor platforms, AI-powered software, cloud connectivity, and ongoing services ⁴.

Evolv operates primarily through two sales models: a pure subscription model, where customers lease hardware and receive a multi-year security-as-a-service subscription, and a purchase subscription model, where customers buy hardware outright, coupled with a multi-year security-as-a-service subscription ⁵. The company previously offered a "distributor licensing" model, which expired on December 31, 2025, under an agreement with Columbia Tech, where Evolv granted a license of its intellectual property for hardware manufacturing and sales, while still providing the multi-year security-as-a-service subscription to end-users ⁶. This integrated approach, combining hardware and software with ongoing services, is central to Evolv's business model, aiming for continuous improvement through software upgrades and predictable, recurring subscription revenue ⁷.

Evolv's core offerings include Evolv Express and Evolv eXpedite. Evolv Express, commercially available since October 2019, is designed to quickly detect firearms, improvised explosive devices, and large tactical knives in high-volume, unstructured people flows ⁸. Evolv eXpedite, launched in September 2024, is an autonomous AI-based weapons detection system for bags in high-clutter environments, designed with AI computer vision and not requiring a trained X-Ray operator ⁹. Both solutions can be deployed independently or together to provide a layered security approach, aiming for heightened sensitivity with efficient throughput and a positive visitor experience ¹⁰. The subscription also includes Evolv Insights, a cloud-based analytics solution providing operational visibility into system performance, throughput volumes, alarm statistics, detection settings, and system performance metrics ¹¹.

For the fiscal year ended December 31, 2025, Evolv reported total revenue of $145.905 million ¹², an increase from $103.865 million in the prior year ¹³. Product revenue was $21.637 million ¹⁴, subscription revenue was $83.839 million ¹⁵, service revenue was $29.375 million ¹⁶, and license fee and other revenue was $11.054 million ¹⁷. The total cost of revenue for 2025 was $70.603 million ¹⁸, leading to a gross profit of $75.302 million ¹⁹. The net loss for the year was $33.138 million ²⁰, an improvement from a net loss of $54.017 million in 2024 ²¹. Diluted EPS for 2025 was $(0.20) ²², compared to $(0.34) in 2024 ²³. Cash and cash equivalents stood at $49.150 million ²⁴ as of December 31, 2025, with marketable securities of $19.885 million ²⁵. Total long-term debt was $28.596 million ²⁶.

Comparing 2025 to 2024, total revenue increased by $42.040 million, or 40% ²⁷. Product revenue saw a significant increase of $15.173 million, or 235% ²⁸, primarily due to increased utilization of the purchase subscription model ²⁹. Subscription revenue grew by $18.793 million, or 29% ³⁰, driven by customer base expansion and more active systems under the pure subscription model ³¹. Service revenue increased by $5.908 million, or 25% ³², due to growth in active revenue-generating purchase subscription units ³³. License fee and other revenue increased by $2.166 million, or 24% ³⁴, primarily from higher license fees and professional services ³⁵. Gross profit margin for product revenue improved from (66)% in 2024 to (12)% in 2025 ³⁶, while subscription revenue gross margin remained consistent at 56% in 2025 compared to 57% in 2024 ³⁷. Service revenue gross margin decreased from 78% in 2024 to 71% in 2025 ³⁸.

Significant operational developments in 2025 included the launch of Evolv eXpedite in September 2024 ³⁹. Evolv also entered into a non-exclusive contract manufacturing agreement with Plexus Corp. on November 5, 2025, as part of a broader supply chain strategy to enhance scalability and diversification ⁴⁰. The distribution licensing agreement with Columbia Tech expired on December 31, 2025, with future hardware purchase quotes to be fulfilled through the purchase subscription model ⁴¹. The company implemented a Board-approved reduction in force affecting 41 employees on January 21, 2025, as part of an initiative to increase profitability and cash flow ⁴².

Evolv expects its research and development costs to increase for the year ending December 31, 2026, compared to 2025, as the company continues to invest in product innovation ⁴³. Sales and marketing costs are also expected to increase modestly for the year ending December 31, 2026, due to expanded go-to-market efforts through both direct and channel investments ⁴⁴. Conversely, general and administrative expenses are expected to decrease for the year ending December 31, 2026, as expenses incurred in 2025 related to a previously disclosed investigation and restatement of prior period financial statements are believed to be substantially non-recurring ⁴⁵.

The company's growth strategy includes developing initial customer successes in specific target metropolitan areas, leveraging these successes for referrals and expansion ⁴⁶. Evolv plans to expand and activate its reseller strategy by adding geographic and vertical market coverage and sales capacity, cultivating collaboration between direct sales and resellers ⁴⁷. The company will concentrate sales and marketing efforts in specific target accounts within identified vertical industries, using brand awareness strategies, content marketing, lead generation, and sales development activities ⁴⁸. Evolv also intends to promote awareness by gathering and leveraging its customer community, seeking referrals, selling additional capacity, and introducing new add-on products and services to existing customers ⁴⁹. Finally, Evolv aims to extend its value proposition with additional products by introducing new applications and services that solve adjacent security challenges, through internal development, third-party partnerships, or acquisitions ⁵⁰.

Evolv's supply chain strategy includes a non-exclusive contract manufacturing agreement with Plexus Corp., entered into on November 5, 2025, aimed at enhancing scalability, geographic diversification, creating long-term cost-saving opportunities, and operational resiliency ⁵¹. The company believes it maintains ample inventory and committed production capacity with its existing contract manufacturer during the onboarding of Plexus, ensuring uninterrupted service and consistent delivery ⁵². Evolv regularly evaluates its supply chain structure to mitigate risks such as supplier concentration, global chipset and semiconductor supply constraints, long lead times, cost volatility, and supplier allocation practices ⁵³. The company is also making significant investments in its technology platforms, including a commitment to implement new systems related to quoting, commissions, and order processing in 2026, and plans to implement a new instance of its financial Enterprise Resource Planning Tool (ERP) during 2027 to further automate processes and reduce manual errors ⁵⁴.

Evolv expects its cash, cash equivalents, and marketable securities of $69.0 million as of December 31, 2025, together with cash expected to be generated from future operations and borrowing availability under its Senior Secured Credit Facilities, will be sufficient to fund operating expenses and capital expenditure requirements for at least twelve months from the date of the Annual Report on Form 10-K ⁵⁵. The company entered into a $75.0 million MidCap Credit Agreement on July 29, 2025, providing for an initial $30.0 million term loan facility, a $30.0 million delayed draw facility, and a $15.0 million revolving line of credit, each with a maturity date of July 1, 2030 ⁵⁶. As of December 31, 2025, $30.0 million under the initial term loan was drawn and outstanding, while the $30.0 million delayed draw facility and $15.0 million revolving credit facility remained undrawn and available ⁵⁷. The company is required to comply with certain covenants, including a minimum annual recurring revenue (ARR) covenant starting at $106.0 million on December 31, 2025, and increasing quarterly thereafter, minimum liquidity of 50% of outstanding borrowings, and a minimum EBITDA covenant taking effect on June 30, 2027 ⁵⁸.

Evolv faces several material risks, including material weaknesses in internal control over financial reporting that contributed to a prior restatement of financial statements ⁵⁹. The company has a history of losses, with a net loss of $33.1 million in 2025, and may not achieve or maintain profitability in the future ⁶⁰. Operating results may fluctuate due to factors like the timing of large volume customer sales, changes in sales and fulfillment models, and macroeconomic conditions such as inflation, high interest rates, and geopolitical conflicts ⁶¹. The company relies on reseller partners, and failure to maintain these relationships or if partners underperform could limit market reach ⁶². Supply chain disruptions, including increases in component costs, long lead times, and reliance on limited or sole source suppliers, could adversely affect the business ⁶³. Defects or poor quality in products could lead to increased costs, customer dissatisfaction, and reputational harm ⁶⁴. The company recognizes a substantial portion of revenue ratably over typical four-year agreements, meaning sales downturns may not be immediately reflected in operating results, and there is a risk of losing recurring revenue if customers do not renew subscriptions or renew on less favorable terms ⁶⁵. The loss of the Homeland Security SAFETY Act Designation for Evolv Express could result in adverse reputational and financial consequences ⁶⁶. The AI-based weapons detection market is new and evolving, and may not grow as expected, or may develop more slowly or differently than anticipated ⁶⁷. The use of AI and machine learning in product development and operation presents risks such as errors, bias, intellectual property infringement, and evolving legal frameworks for AI governance ⁶⁸. Expansion into international markets exposes Evolv to additional operational, regulatory, and compliance risks, including differing product certification regimes, import/export controls, cybersecurity requirements, and data protection laws ⁶⁹. The company's growth potential outside the U.S. may be limited by variations in security threats, customer perceptions, and regulatory environments ⁷⁰. Failure to anticipate market needs and enhance existing products or develop new ones in a timely manner could adversely affect revenue ⁷¹. Reliance on third-party technology and components, including open-source software, could lead to intellectual property disputes, disclosure obligations, or security risks ⁷². Disruptions to information technology systems, including internal enterprise software solutions, could materially and adversely affect business operations ⁷³. The collection and storage of personal data expose the company to privacy, cybersecurity, and regulatory risks ⁷⁴. Failure to effectively expand, train, and retain qualified sales, marketing, and research and development personnel could hinder growth ⁷⁵. The inability to protect intellectual property rights could substantially harm the business ⁷⁶. Assertions by third parties of intellectual property infringement could result in significant costs ⁷⁷. The company is subject to government investigations, regulatory enforcement proceedings, and litigation, including class action lawsuits and SEC investigations, which could result in significant penalties and harm to the business ⁷⁸. There are risks related to the utilization of net operating loss carryforwards and research and development tax credit carryforwards due to potential ownership changes ⁷⁹. Evolv may require additional capital to support business growth, which might not be available on acceptable terms ⁸⁰. Existing and future debt obligations, including covenants in the Senior Secured Credit Facilities, may limit operating flexibility and affect financial condition ⁸¹. The market price of common stock and warrants has been and may continue to be highly volatile ⁸². Certain warrants, earn-out shares, and contingently issuable founder shares are accounted for as liabilities, and changes in their fair value could materially affect financial results ⁸³.

Management's message to shareholders emphasizes Evolv's position as a leading security technology company pioneering AI-powered screening solutions to create safer environments while maintaining efficient visitor flow and a positive visitor experience ⁸⁴. The company's goal is to help facility operators address escalating gun violence, mass shootings, and terrorist attacks ⁸⁵. Management highlights the Security-as-a-Service model, integrating proprietary sensor platforms, AI-powered software, cloud connectivity, and ongoing services, as reflecting the full scope of their offering and aligning long-term interests with customers ⁸⁶. For the year ended December 31, 2025, Adjusted EBITDA was $11.1 million, an improvement of $32.1 million year-over-year from negative Adjusted EBITDA of $(21.0) million in 2024, driven by revenue growth, increased operating leverage, and disciplined operating expense management ⁸⁷. Management expects research and development costs to increase in 2026 due to continued investment in product innovation ⁸⁸, and sales and marketing costs to increase modestly due to expanded go-to-market efforts ⁸⁹. General and administrative expenses are projected to decrease in 2026 as non-recurring expenses from prior period financial statement restatement normalize ⁹⁰. The company's strategic priorities include continued investment in product innovation, expanding go-to-market efforts through direct and channel investments, and optimizing business operations and resource allocation to achieve profitability and cash flow ⁹¹.