Evolv Technologies Earnings Call Signals Confident Growth

Evolv Technologies Holdings, Inc. ((EVLV)) has held its Q4 earnings call. Read on for the main highlights of the call.

Evolv Technologies’ latest earnings call struck an optimistic tone, as management balanced impressive growth and improving profitability against temporary margin pressure. Executives emphasized recurring revenue expansion, stronger cash generation, and a raised 2026 outlook, arguing that structural momentum and scale benefits outweigh short-term headwinds in gross margins.

Revenue Growth Accelerates Across Q4 and Full Year

Evolv reported Q4 revenue of $38.5M, up 32% year over year, underscoring solid demand across its security screening portfolio. Full-year 2025 revenue reached $145.9M, representing 40% growth and signaling that the business is scaling meaningfully despite some quarterly timing noise in product and subscription mix.

Recurring Revenue Engine Drives Long-Term Visibility

Annual recurring revenue climbed to $120.5M as of December 31, 2025, a 21% increase from the prior year that reinforces the stickiness of the platform. Management expects ARR to reach roughly $145M–$150M by the end of 2026, implying 20%–25% growth and setting the stage for ARR expansion to outpace top-line revenue.

RPO Expansion and Record Backlog Underpin Growth

Remaining performance obligations rose to $293.4M at the end of Q4, up 13% from $259.1M a year earlier, highlighting solid multi-year contract coverage. The company also enters 2026 with a record units backlog, giving investors added confidence that current demand can support the raised revenue outlook.

Profitability Turns the Corner With Positive EBITDA

Evolv has now posted five consecutive quarters of positive adjusted EBITDA, marking a clear turn in its financial profile. For 2025, adjusted EBITDA was $11.1M, a 7.6% margin and a roughly $32M improvement versus the $21M loss booked in 2024, as operating discipline and scale start to flow through.

Cash Generation and Balance Sheet Strengthen

The company’s cash, cash equivalents and marketable securities increased by $12.8M sequentially in Q4 to $69M, giving it more flexibility to invest in growth. Full-year 2025 operating cash generation was about $18.7M, helped by tighter collections and working capital management, and management flagged continued progress despite some timing-related drags ahead.

Deployment Scale Highlights Network Effect

Evolv now has roughly 8,000 systems deployed, screening more than 4M people per day across its installed base, showing significant real-world usage. Since launch, the platform has screened over 4B people, a scale that not only showcases demand but also supports data-driven product improvement and customer retention.

Customer Additions Expand Market Footprint

The company added more than 60 new customers in Q4 and now serves over 1,200 customers globally, broadening its recurring revenue base. During 2025, it brought on 65 new education customers and 65 new sports and live entertainment customers, underscoring traction in two highly visible, security-sensitive verticals.

Product Momentum and Cross-Selling With eXpedite

Evolv’s eXpedite autonomous bag screening solution is gaining early traction, with 65 customers, or about 5% of the customer base, now using it. In Q4, 16 customers were new to the company through eXpedite and 11 bought it alongside the core Express product, supporting a growing multi-product attach strategy.

Raised 2026 Outlook Signals Confidence in Demand

Management raised full-year 2026 revenue guidance to $172M–$178M from $160M–$165M, implying roughly 18%–22% growth over 2025. The company also expects to surpass 10,000 deployed units by year-end 2026, reflecting its conviction that the current sales pipeline and backlog can sustain continued expansion.

Partnerships and Manufacturing Ramp Support Scale

Evolv highlighted its designation as a preferred provider by the American Hospital Association, which should open doors across the healthcare market. The company is also preparing a contract manufacturing ramp with Plexus in the second half of 2026, aimed at supporting higher volume while maintaining quality and cost discipline.

Gross Margin Contraction Weighs on Q4 Results

Adjusted gross margin slipped to 50% in Q4 2025 from 62% a year earlier, a roughly 12-point decline that investors will watch closely. Management tied the drop mainly to the strategic move toward direct fulfillment of purchase subscriptions, which pulls more revenue onto Evolv’s books but compresses near-term margin percentages.

Service Margin Pressure and One-Time Accruals

Service gross margins fell about 900 basis points sequentially, reflecting increased costs to support the installed base. A roughly $1M accrual for targeted parts upgrades and proactive field service work further weighed on Q4 service margins, though executives framed these as temporary and aimed at strengthening customer experience.

Revenue Mix and Timing Create Quarterly Noise

Subscription revenue was modestly lower in Q4 due to the timing of a short-term subscription tied to a major international sporting event, muting what management views as an otherwise strong recurring trend. Product revenue also dipped slightly from Q3 following a large one-time deal in that earlier quarter, underscoring the inherent lumpiness in hardware-driven sales.

Fulfillment Shift Brings Near-Term Margin Headwinds

By bringing purchase subscription fulfillment in-house, Evolv now captures a larger share of revenue and gross profit dollars over the life of contracts. However, this change compresses gross margin percentages in the early quarters of those deals, creating near-term headwinds that management expects to ease as volumes ramp and the installed base matures.

2026 Memory Cost Headwind in Margin Outlook

Management flagged around a $1M headwind from higher memory chip costs in its 2026 modeling, a modest but notable drag on profitability. While small relative to total revenue, this cost pressure will slightly temper adjusted EBITDA margin expansion as the company invests to meet product performance requirements.

Q1 Cash Flow Impact From Incentive Timing

Evolv expects Q1 2026 cash flow to be temporarily affected by roughly $7M of cash costs tied to prior-year incentive payments, creating a short-term drag. Despite this, leadership reiterated expectations for full-year cash flow improvement and a return to positive cash generation in the second half of 2026.

Gross Margin Miss Versus Market Expectations

Overall adjusted gross margin in Q4 came in below Street expectations, as the combined impact of the fulfillment transition, one-time service accruals and revenue mix shifts proved larger than anticipated. Management maintained that these pressures are largely timing and mix related rather than structural, and that margins should recover as the model stabilizes.

Guidance and Outlook Emphasize Scaled, Profitable Growth

Evolv now guides 2026 revenue to $172M–$178M, ARR to $145M–$150M with growth of about 20%–25%, and expects ARR growth to begin outpacing revenue. The company targets high single-digit adjusted EBITDA margins, positive cash flow in the second half of 2026, an accelerating RPO base, and a roughly 50/50 mix between purchase subscriptions and pure subscriptions as Plexus manufacturing ramps.

Evolv’s earnings call painted a picture of a company moving firmly into a scaled, recurring-revenue-driven phase, even as it works through margin growing pains. For investors, the combination of strong top-line trends, rising ARR, improved profitability and higher 2026 guidance suggests the growth story remains intact, with execution on margin recovery now the key metric to watch.