Evolv Technologies Q2 2026 Earnings Call Transcript

Quartr
Provided by Quartr
August 11, 2026

Key Takeaways

  • Positive Sentiment: Evolv reported Q2 revenue of $43.8 million, up 34% year over year, while adjusted EBITDA margin expanded to 10.1% from 6.5% and first-half adjusted EBITDA doubled year over year.
  • Positive Sentiment: Customer momentum remained strong, with 70 new customers added—the best quarter in two years—while roughly 60% of unit bookings came from existing customers, net revenue retention stayed above 100%, and RPO increased 4.5% sequentially to $312.6 million.
  • Positive Sentiment: Adoption of the broader platform is expanding, with more than 100 Evolv eXpedite customers, growing Gen2 upgrades, and new wins across education, healthcare, sports, entertainment, and Fortune 500 workplaces. The company also began shipping through new manufacturing partner Plexus, which it expects to improve capacity, resiliency, and costs over time.
  • Positive Sentiment: Evolv raised its 2026 outlook, forecasting revenue of $180 million-$185 million, ARR of $148 million-$150 million, more than 10,000 deployed units, and adjusted EBITDA of $15 million-$16 million.
  • Negative Sentiment: Management expects future year-over-year revenue comparisons to be less favorable as the temporary benefit from its 2025 fulfillment-model change rolls off. The 2026 gross-margin outlook also faces pressure from a higher mix of purchase subscriptions, Gen1 upgrade-related costs, and higher component and supply-chain expenses, while a potential $2 million-$4 million inventory investment remains possible.
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Earnings Conference Call
Evolv Technologies Q2 2026
00:00 / 00:00

Transcript Sections

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Operator

Good afternoon, and welcome to the Evolv Technology second quarter earnings results conference call. All participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Brian Norris, Senior Vice President of Finance and Investor Relations for Evolv Technology. Please go ahead, sir.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

Thank you, and good afternoon, everyone. Welcome to today's call. I am joined today by John Kedzierski, our President and Chief Executive Officer, and Chris Kutsor, our Chief Financial Officer. Earlier today, we issued a press release detailing our second quarter results and our updated 2026 outlook. This release is available on the investor relations section of our website and has been filed with the Securities and Exchange Commission. During today's call, we will make forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These statements reflect our current expectations regarding our business, strategy, growth opportunities, customer activity, strategic partnerships, product demand, and financial outlook. All forward-looking statements are subject to material risks, uncertainties, and assumptions, some of which are beyond our control.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

Actual events or financial results may differ materially due to a number of factors, including those described under the caption Risk Factors in our annual report on Form 10-K for the year ended December 31st, 2025, filed with the SEC on March 10th, 2026, and our quarterly report on Form 10-Q for the quarter ended June 30, 2026, which we filed with the SEC earlier today. The forward-looking statements made today represent our views as of August 11, 2026. Although we believe that the expectations reflected in these statements are reasonable, we cannot guarantee that future results, performance, or the events and circumstances reflected herein will be achieved or will occur. 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 include non-GAAP financial measures that we believe provide additional insights for investors.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Non-GAAP measures discussed today include adjusted gross profit and margin, adjusted operating expenses and operating income, adjusted EBITDA and adjusted EBITDA margin, and adjusted earnings and adjusted earnings per diluted share. Reconciliations to the most directly comparable GAAP measures are included in today's press release, and our definitions may differ from similarly titled measures used by other companies. In addition, we will discuss annual recurring revenue, or ARR, remaining performance obligation, or RPO, and net revenue retention, or NRR, which we believe provide useful insights into the business. We define ARR as the sum of subscription revenue and the recurring service revenue related to purchase subscriptions for the final month of the quarter, all multiplied by 12.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

RPO represents estimated revenues expected to be recognized in the future, which are related to performance obligations that are either unsatisfied or partially satisfied as of the end of the reporting period. We define NRR as recurring revenue in the last month of the quarter divided by recurring revenue from the year ago month for the same customer base, inclusive of churn and expansions. Before I turn things over to John, I'd like to briefly highlight some of the investor outreach plans for the second half of 2026. We plan to be at four institutional investor conferences, including the Lake Street Investor Conference in September, the Craig-Hallum Alpha Select Conference in November, the UBS Global Technology Conference in December, and the Northland Capital Conference later in December. As always, we welcome the opportunity to engage with both existing and prospective shareholders.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

If you would like additional information, please feel free to contact me at bnorris@evolvtechnology.com. With that, I'd like to turn the call over to John.

John Kedzierski
President and CEO at Evolv Technology

Good afternoon, and thank you for joining us. Before we discuss our second quarter results, I'd like to briefly revisit a few themes from our Investor Day in June. At Investor Day, we shared our perspective on the long-term growth potential we see in front of the company. We discussed our belief in the large and under-penetrated markets we serve, our differentiated technology, and the opportunity we see to expand adoption across a broad range of end markets. We estimate there are more than 700,000 serviceable doorways across the markets that we serve today. With about 9,200 units deployed, our current penetration remains well below 5%, highlighting the substantial runway for future growth. Against that backdrop, we outlined a path to growing revenue to more than $500 million by 2031, representing a compound annual growth rate of approximately 25% over the next five years.

John Kedzierski
President and CEO at Evolv Technology

While we expect growth to vary from year to year based on factors such as deployment timing, product mix, and customer buying behavior, we remain confident in the long-term opportunity ahead. We also discussed a path to achieving adjusted EBITDA margins of at least 25%. Taken together, we believe this represents a path to becoming a rule of 50 business, a combination of top-line growth and bottom-line profitability that we believe reflects the strength of our business model and the scale of the opportunity ahead. Importantly, we believe the foundation for that framework is already in place today through our growing base of contracted recurring revenue and more than $300 million of remaining performance obligation, or RPO, which carries attractive long-term gross margins. At its core, Evolv is a hardware-enabled subscription business that generates high margin, long-term recurring revenue. We are built around physical security, not digital workflows.

John Kedzierski
President and CEO at Evolv Technology

We are a leader in what we believe is one of the largest and least penetrated segments of the public safety market, AI-powered weapons detection. Our platform combines proprietary hardware, software, AI models, data, and services into a single integrated solution delivered through multi-year subscription agreements, typically four years in duration. These long-term contracts create a growing base of contracted future revenue and visibility that differs meaningfully from many software businesses. While advances in AI and agentic technologies may reshape portions of the software industry, they do not replace the proprietary hardware, real-world data, operational expertise, and long-term customer relationships that underpin our business. We use AI to help protect people and places, not screens and code. We view the second quarter of 2026 as another step toward achieving these Rule of 50 objectives. New customer acquisition remained healthy. Renewal trends continued to strengthen.

John Kedzierski
President and CEO at Evolv Technology

Customers increasingly adopted additional platform capabilities such as Evolv eXpedite. While significant opportunity remains ahead of us, we are encouraged by our progress and remain confident in our long-term outlook. With that in context, let me briefly summarize our second quarter results. Revenue in the second quarter was up 34% year-over-year, reflecting strong new customer wins and continued expansion within our existing customers. We ended the quarter with annual recurring revenue up 20% year-over-year, reflecting the compounding impact of the growth in our deployed unit base. Adjusted EBITDA margin expanded to 10.1% in Q2, compared to 6.5% in the second quarter of last year. Of note, total adjusted EBITDA in the first half of 2026 doubled compared to the first half of 2025. We added 70 new customers during the quarter, marking our strongest quarter in two years for new customer additions.

John Kedzierski
President and CEO at Evolv Technology

What makes this result particularly encouraging is that approximately 60% of unit bookings during the quarter came from existing customers. Together, these results highlight both our ability to deepen relationships with existing customers and continuing to add new logos at a healthy pace. We are pleased to report that we now have customers in all 50 U.S. states and across North America, including Canada and Mexico. This milestone reflects both the versatility of our platform and the growing global demand for solutions that enhance safety without creating friction for visitors. As we outlined at Investor Day, we expect an increasing portion of our growth over the next five years to come from markets outside the United States, with early progress expected later in the year. Today, our solutions screen nearly 5 million people each day, reflecting the growing scale and global reach of the Evolv platform.

John Kedzierski
President and CEO at Evolv Technology

Our net revenue retention remained comfortably above 100% in the second quarter, reflecting continued success renewing and expanding existing customer relationships. Finally, remaining performance obligation was up 4.5% sequentially to $312.6 million, reflecting strong end market demand, continued multi-product adoption, and strong renewal upgrades to our Gen2 Evolv Express platform. Our RPO provides visibility into future revenues and reinforces one of the key strengths of our model, a large and expanding base of contracted revenue expected to be recognized over the coming years. Our RPO now exceeds 1.7x our full year revenue outlook, underscoring the visibility and durability embedded in our model. In the second quarter of 2026, we saw strong demand across our core education market. We added 23 new education customers across 13 states.

John Kedzierski
President and CEO at Evolv Technology

These wins spanned K12 schools, higher education institutions, and state education agencies, demonstrating the broad applicability of our solutions across a diverse range of educational environments. Today, we are proud to support approximately 1,800 schools across the country, including 24 of the top 100 largest school districts in the U.S. We continue to see strong adoption of our Gen2 Express platform, with customers signing new four-year contracts to upgrade from Gen1 deployments. We also continue to see a supportive policy and funding environment for school safety investments. Alongside federal grant programs, we are monitoring school safety funding and legislative initiatives across nearly a dozen states, creating potential opportunities to expand access to modern security solutions. Importantly, these efforts are being driven by demand from policymakers, educators, and local communities, underscoring the long-term importance of school safety nationwide.

John Kedzierski
President and CEO at Evolv Technology

In healthcare, we added eight new customers ranging from community hospitals to regional health systems, including Alberta Health Services, Canada's largest integrated healthcare system, further strengthening our position in the Canadian market while demonstrating the scalability of our platform across a diverse range of healthcare environments. As workplace violence remains a significant challenge across the healthcare sector, providers are increasingly prioritizing technologies that enhance security while preserving the open access and efficient visitor flow that are fundamental to care delivery. Today, we support approximately 800 hospitals, reflecting the growing recognition that healthcare organizations can improve safety without compromising the patient, visitor, and staff experience. In sports and live entertainment, we added more new customers across professional hockey, basketball, and football, including the Pro Football Hall of Fame in Canton, Ohio.

John Kedzierski
President and CEO at Evolv Technology

These organizations are investing in security solutions that enhance both safety and the fan experience by enabling faster and more efficient venue entry without compromising threat detection. We also supported the 2026 FIFA World Cup through a short-term subscription deployment spanning Q2 and Q3, with installations at match venues, fan festivals, and transportation hubs, including New York Penn Station. During the nearly 40-day tournament, Evolv screened more than 3.5 million fans, demonstrating the scalability of our platform and further strengthening global awareness of the Evolv brand. We are also pleased to announce the recent selection of Evolv by Northwestern University's new Ryan Field, one of the most anticipated venue openings in college sports. Following a rigorous evaluation process, Ryan Sports Development selected Evolv to help deliver the fan arrival experience at what is believed to be the most expensive college football stadium ever built, representing an investment of approximately $870 million.

John Kedzierski
President and CEO at Evolv Technology

We believe this win reflects a broader trend across college athletics, where leading institutions are increasingly investing in the same fan experience, operational capabilities, and security infrastructure traditionally associated with professional sports venues. We are proud to support a growing roster of leading universities, including the University of North Carolina, BYU, Boston College, the University of Nebraska, the University of Texas, and now Northwestern's new Ryan Field. As schools continue to modernize their facilities and elevate the game day experience, we believe security is becoming an increasingly important component of the overall fan journey, and that Evolv is well-positioned to support that evolution. We also continue to see momentum in the workplace across corporate headquarters, distribution centers, and critical infrastructure.

John Kedzierski
President and CEO at Evolv Technology

During the quarter, we added two additional Fortune 500 companies, including a leading grocery retailer with one of the largest distribution networks in the U.S. and one of the country's largest off-price retail chains. These wins further expand our footprint within large enterprise environments where organizations are seeking to enhance security while maintaining efficient operations and positive employee and visitor experiences. Today, we are proud to serve as the trusted weapon screening partner for over 30 Fortune 500 companies. The momentum we're seeing across these markets reinforces our belief that customers increasingly view Evolv as a security platform rather than a point solution. Evolv eXpedite, our autonomous AI-powered bag screening solution, continues to gain traction in environments where customers want to screen bags without slowing entry. Increasingly, customers are looking to conduct bag screening as part of a single integrated security workflow, and Evolv eXpedite is purpose-built for that model.

John Kedzierski
President and CEO at Evolv Technology

We now have over 100 Evolv eXpedite customers, representing approximately 8% of our total customer base, up from 2% a year ago. In the second quarter, approximately 70% of new customers who purchased Evolv eXpedite also bought Evolv Express. We've now also cross-sold Evolv eXpedite into more than 40 existing Evolv Express customers. Customers have now screened more than 20 million bags with Evolv eXpedite and now averaging approximately 90,000 bags each day. We believe Evolv eXpedite represents a compelling expansion opportunity, allowing us to effectively stack ARPUs while creating additional leverage on our customer acquisition investments. Importantly, as our install base continues to expand, we are accumulating a growing body of security and screening data that can be used to help improve product performance, strengthen our AI models, and create opportunities for additional software-driven capabilities.

John Kedzierski
President and CEO at Evolv Technology

We believe this data advantage enhances outcomes for customers, supports future software innovation, and reinforces our long-term competitive position. During the first half of the year, we delivered significant enhancements to the Evolv eXpedite platform through software innovation. These enhancements help customers optimize security operations, improve the visitor experience, and make more informed decisions about staffing and screening workflows. As customers increasingly see the value of managing both walk-through and bag screening through a single cloud-connected platform, we believe there remains a meaningful opportunity for account expansion, deeper platform adoption, and stronger subscription retention over time. Turning to operations, I'm pleased to report that we have onboarded Plexus, our new global contract manufacturing partner, and have now begun shipping product through their facilities.

John Kedzierski
President and CEO at Evolv Technology

This represents an important milestone in our manufacturing strategy and positions us to scale production capacity, extend our global reach, enhance operational resiliency, and over time, reduce bill of material costs through greater procurement leverage and manufacturing efficiencies. With respect to the broader supply chain environment, we continue to actively manage through the well-documented semiconductor supply constraints and remain confident in our ability to execute against our full-year deployment plans. Before I turn things over to Chris Kutsor, I want to share some context around our outlook. We continue to see strong momentum across the business. Our pipeline remains healthy, execution is tracking well, and for those reasons, we are raising our outlook for 2026. We expect to end 2026 with comfortably over 10,000 units deployed, which would reflect net deployed unit growth of about 30% year-over-year.

John Kedzierski
President and CEO at Evolv Technology

We are raising full year revenue guidance to 23%-27% year over year compared to our previous forecast of 20%-23%. While we continue to invest in innovation and operations, we continue to expect to deliver expanded adjusted EBITDA margins in 2026 compared to 2025. As we look to the balance of 2026, we expect continued growth in deployed units, ARR, revenue, adjusted EBITDA, and RPO. Importantly, the combination of strong new customer additions, growing multi-product adoption, and continued operating leverage gives us confidence in both our updated 2026 outlook and the long-term framework we outlined at Investor Day. With that, I'll turn it over to Chris to walk through our second quarter financial results and updated outlook in greater detail.

Chris Kutsor
CFO at Evolv Technology

Thanks, John, and good afternoon, everyone. I'm going to cover our second quarter results in more detail and then share our updated outlook for 2026. Revenue in Q2 was $43.8 million, an increase of 34% year over year. This primarily reflected strong underlying demand for our solutions and the now fully completed transition to the direct fulfillment model, which created a temporary year over year tailwind to product revenue as a larger portion of revenue was recognized upfront relative to prior periods. While the step-up in dollars is permanent, the year over year comps will normalize beginning here in Q3 as we've now anniversaried both the fulfillment and the pricing changes which we implemented on July 1st, 2025. As a result, we expect future year over year comparisons to provide a cleaner view as to the underlying operating performance of the business.

Chris Kutsor
CFO at Evolv Technology

To be clear, we expect revenue growth to more closely align with deployed unit growth, subject to normal fluctuations driven by deployment timing, pricing, product mix, and the timing of short-term rental agreements. ARR, or annual recurring revenue, at June 30th, 2026, was $132.7 million, reflecting growth of 20% year over year. Growth in ARR was driven by strong new customer acquisition, expanding deployments within the installed base, and continued strength in renewal activity, which drove net revenue retention comfortably above 100%. Adjusted gross margin was 51% in Q2, consistent with Q1. Moving down the P&L, adjusted operating expenses, which excludes stock-based compensation, loss on impairment of equipment, and certain other one-time expenses, were $25 million, compared to $21.6 million in the second quarter of last year, reflecting growth of 16% year-over-year.

Chris Kutsor
CFO at Evolv Technology

The increase reflects continued investment in product innovation and go-to-market capacity, higher commission expense associated with our revenue growth, and targeted investments in IT systems and personnel to support scale and efficiency in the business. Q2 adjusted EBITDA, which excludes stock-based compensation and other one-time items, was $4.4 million, compared to $2.1 million in the second quarter of last year. This resulted in adjusted EBITDA margin of 10.1%, compared to 6.5% in the second quarter of last year. Importantly, adjusted EBITDA margins expanded 160 basis points sequentially and 360 basis points year over year, despite continued investment in product development, commercial resources, and operational infrastructure, demonstrating the operating leverage inherent in our model. Remaining performance obligation, or RPO, was $312.6 million at the end of the second quarter, reflecting growth of 4.5% sequentially.

Chris Kutsor
CFO at Evolv Technology

We continue to see strong demand for Gen2 Express, with customers increasingly choosing to upgrade their existing deployments. This, combined with solid end market demand, contributed to continued RPO growth during the quarter. We continue to expect RPO growth to accelerate over time, supported by increasing end market demand, favorable renewal activity, expansion within the install base, and the higher level of contracted revenue associated with our current fulfillment model. We continue to believe the gross margin profile of our remaining performance obligation is an important indicator of future earnings potential. As we discussed at our Investor Day, the contracted revenue reflected in our RPO carries an estimated gross margin profile of approximately 66%, well above our current reported gross margin.

Chris Kutsor
CFO at Evolv Technology

This difference reflects the economics of the purchase subscription model, where the majority of the hardware costs are recognized immediately and upfront, while a significant portion of the associated software and services revenue remains contracted and will be recognized over future periods. As a result, we believe our RPO represents a substantial pool of future contracted revenue with attractive margin characteristics that supports our confidence in the long-term profitability and earnings leverage of the business. Turning to the balance sheet, cash equivalents, marketable securities, and restricted cash increased about $2 million sequentially to $63 million. The positive cash flow in Q2 is a quarter ahead of our expectations, driven by improved profitability and strong cash collections in the quarter. We expect to remain cash flow positive through the balance of the year.

Chris Kutsor
CFO at Evolv Technology

However, we may selectively choose to invest an additional $2 million-$4 million into inventory safety stock to enhance supply chain readiness and support anticipated customer demand. We would expect that any such investment would be largely opportunistic and timing-related in nature. Turning to 2026, as John highlighted, the fundamentals of our business remain strong, with robust customer demand and the foundational changes we made to our business are taking hold. We are raising our full year 2026 outlook for revenue to $180 million-$185 million, compared to our prior guidance of $175 million-$180 million. This represents year-over-year growth of approximately 23%-27%. Our upwardly revised revenue outlook reflects both continued strength in customer demand, pricing, and ARPU trends, as well as a higher mix of purchase subscriptions, which increases the year one revenue recognition.

Chris Kutsor
CFO at Evolv Technology

We are raising our estimate for year-end annual recurring revenue to be approximately $148 million-$150 million, representing 23%-25% year-over-year growth. Our updated forecast reflects stronger than anticipated renewal performance, which is driving higher net revenue retention, helping to offset the impact to ARR that is driven by the higher mix of purchase subscriptions relative to pure subscriptions in the second half of the year. At the midpoint of our outlook, we expect second half revenue to be modestly higher than H1 and up year-over-year, with ARR growth outpacing revenue growth in the second half. Remember, these prior period growth comparisons reflect the changes to our pricing and fulfillment model that were implemented in mid-2025, as discussed on prior earnings calls. These changes have now lapped a year, so future variances will be more comparable.

Chris Kutsor
CFO at Evolv Technology

This updated outlook and H2 strong demand underpins the 23%-27% annual growth that we expect for 2026, and the same fundamentals underlying our long-term growth expectations of approximately 25% revenue growth, which we outlined in June at our Investor Day. We continue to expect strong unit growth, with second half deployment exceeding first half deployments and growing approximately 30% year-over-year. We expect gross margins in the second half to remain consistent with first half levels throughout the remainder of 2026. Our 2026 outlook reflects the impact of three factors on gross margin. First, we are seeing a higher mix of purchase subscriptions, which is a little more of a point to the gross margin headwind I just mentioned. We are now forecasting 60% of new full-year deployed units to be via purchase subscription versus 55% that we assumed in our last guidance issued in May.

Chris Kutsor
CFO at Evolv Technology

As a reminder, with purchase subscription transaction, we recognize all of the hardware costs immediately while deferring software and services revenue into future RPO. Second, we are seeing stronger demand than anticipated for Gen2 upgrades, which drive new four-year contracts and higher RPO. While these upgrades enhance long-term value, they also create a temporary margin headwind as returned Gen1 units incur freight, refurbishment, and depreciation costs during the period between upgrade and redeployment. These higher Gen2 upgrades and associated Gen1 costs are just under one point of gross margin headwind. We expect these costs to convert to significant revenue and cash as these Gen1s are redeployed in the future. Finally, we are seeing modestly higher component and supply chain costs than we originally anticipated, as seen across the tech industry, which is approximately a half a point of gross margin headwind.

Chris Kutsor
CFO at Evolv Technology

I would also remind investors that Evolv eXpedite is still progressing along its cost reduction curve and has not yet fully benefited from the bill of material optimization and supply chain efficiencies that we expect to achieve as adoption continues to grow. While these factors are combining to create near-term pressure on gross margin, we are also expecting some tailwinds to gross margin to emerge. We continue to realize manufacturing efficiencies and scale benefits through our new contract manufacturing partner, and we have recently implemented pricing increases across our product lines of Express and eXpedite. As those higher price points are reflected in new deployments and renewals, we expect them to support gross margin expansion over time as those higher prices become increasingly reflected in our revenue.

Chris Kutsor
CFO at Evolv Technology

Overall, our 2026 outlook reflects a business that is capturing more of the economic value that it creates, generating stronger renewal outcomes, increasing visibility through ARR and RPO, and delivering a more durable and predictable financial profile over time. We are continuing to invest thoughtfully in the capabilities needed to support the long-term vision that we outlined at our Investor Day. This includes targeted investments in selling and marketing to expand our market presence, R&D to accelerate innovation and reduce false alarms, and the systems and processes needed to operate at greater scale. Importantly, even as we increase investment in these areas, we expect full-year adjusted EBITDA to be in the range of $15 million-$16 million, with margins in the high single digits for 2026, up from 7.6% in 2025. In summary, we believe Q2 marked another quarter of strong growth, customer and revenue retention, profitability, and operating leverage.

Chris Kutsor
CFO at Evolv Technology

The drivers underlying the long-term framework that we outlined at Investor Day continue to perform in line with our expectations. While we're not providing guidance beyond 2026, we remain confident in the opportunity ahead and in our ability to deliver against the long-term financial framework and rule of 50 objectives that we shared in June. With that, I'll turn things back over to Brian for Q&A.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

Thank you, Chris. Operator, at this time, we'd like to open the call up for Q&A, and we're going to ask participants to limit themselves to one question and one follow-up.

Operator

We will now begin Q&A. For today's session, we'll be utilizing the raise hand feature. If you'd like to ask a question, simply click on the raise hand button at the bottom of your screen. Once you've been called on, please unmute yourself and begin to ask your question. Please limit to one question and one follow-up before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Our first question will come from Jeremy Hamblin with Craig-Hallum. Please unmute your line and ask your question.

Jeremy Hamblin
Jeremy Hamblin
Analyst at Craig-Hallum

Thanks, and congratulations on the strong results and momentum in the business. I thought I would just start with some of the commentary around ARR growth, and then the commentary around the unit growth that you're seeing where you discussed comfortably over 10,000 units deployed at the end of the year. Can you just discuss those two things, kind of the ARR growth rate that you're seeing and whether or not ARR growth as a percentage you expect as you now lap the change in fulfillment and the pricing change from 2025, if that should also pick up in growth. Just kind of the comparison between the unit growth and the ARR growth.

Chris Kutsor
CFO at Evolv Technology

Hi, Jeremy. Thanks, thanks for the question. This is Chris. A couple of things to unpack there. We do expect ARR growth to continue to accelerate from here, as we have talked about, compared to the past with some of the changes we have made to the business, pricing included from the prior year. When you talk about the unit growth percentage, and we talked about that at approximately 30% for the quarter and the year, compared to ARR growth of approximately 23%-25% for the year or 20% for the quarter. Those are diverging, I think is part of your question. One of the things to consider is the fact that those are different is as we would have expected. The reason we expect it is we have a broader portfolio today than we did in the year ago period in which we are comparing the growth rates.

Chris Kutsor
CFO at Evolv Technology

We have now added our Gen1 units that are increasingly coming back from customers that are upgrading to Gen2. As customers upgrade to Gen2, they sign a new four-year contract that is very good for the business, good for RPO and everything else that goes with it. But they give us back Gen1s, and that has been happening at an ever greater pace than we were expecting. That is the good news. The flip side to that is, as those Gen1s come back, we store them, we bring them back, and we will redeploy those to customers at a lower ARPU. We have been doing that in the first half, and we will continue to do that in the second half and beyond. Those Gen1 units, of course, have a lower ARPU than the comparison Gen2s in the prior period.

Chris Kutsor
CFO at Evolv Technology

Let me also talk about Evolv eXpedite. Evolv eXpedite was launched at a lower price point. We have seen it have significant demand, as we have talked about every quarter since it has been out. That has a slightly lower price than does Evolv Express. So when you compare Evolv eXpedite ARPU to Evolv Express ARPU, those are also different. However, as we mentioned in our prepared remarks, we have also implemented a price increase across the board and with a little bit more of that to Evolv eXpedite, such that Evolv eXpedite and Evolv Express going forward will be more closely aligned than they are today. So I just wanted to recap all of that. The difference between ARR and unit growth is as we would have expected because we are selling Gen1 units at a lower ARPU and Evolv eXpedite has been lower, that will be converging with Evolv Express. So I am glad you asked it.

Chris Kutsor
CFO at Evolv Technology

That was something we talked about in prepared remarks because we thought that could be a question. Hopefully I answered it. John, I do not know if you got anything to add. Otherwise, Jeremy, we can take it back to your, if you have a follow-up.

Jeremy Hamblin
Jeremy Hamblin
Analyst at Craig-Hallum

Well, unless John is adding something, just wanted to ask about kind of the legislative environment. You have HB 1023 in Georgia. You have legislation in California in the healthcare side, and I believe the legislation in Georgia has been tabled until their state senate returns in January. Just wanted to get a sense of whether or not there are other things we should be paying attention to on the legislative side here in 2026. How is this potentially making progress in some other states like Let's say Florida and Texas, where you may have a little bit less penetration today than you do in some other geographies in the Southeast, let's say, like the Carolinas or Georgia.

John Kedzierski
President and CEO at Evolv Technology

Jeremy, we think that what happened in California organically and what's in progress in Georgia, because as you know, that bill has not been voted on yet in the Georgia Senate to the latest information that I have, is an encouraging sign that a technology like ours can become standardized and even regulated in the places that it makes a big impact. There are plenty of examples that we can see from our lives where a new safety and security technology becomes, not only commonplace, but expected over time. I look at what's happening in California and Georgia as a proof point of that. Just like airbags are expected inside vehicles, and sprinkler systems in certain buildings, and I could keep going on, or the presence of body cams on police officers. We weren't involved in either of those situations in California and Georgia.

John Kedzierski
President and CEO at Evolv Technology

But as we mentioned in Investor Day, we think we're in a position now to make our voice heard on what the potential positive impact of our technology is, and you're going to see us be more assertive in those areas.

Jeremy Hamblin
Jeremy Hamblin
Analyst at Craig-Hallum

Great. Just the question on the progress in Florida and Texas.

John Kedzierski
President and CEO at Evolv Technology

I don't have any specifics to update on Florida and Texas.

Jeremy Hamblin
Jeremy Hamblin
Analyst at Craig-Hallum

Got it. I'll hop out of the queue. Congrats, and thanks for taking the questions.

John Kedzierski
President and CEO at Evolv Technology

Thank you, Jeremy.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

Thanks, Jeremy.

Operator

Our next question will come from Eric Martinuzzi with Lake Street Capital. Please unmute your line and ask your question.

Eric Martinuzzi
Eric Martinuzzi
Analyst at Lake Street Capital

Yeah, my congrats as well on the quarter and the guide. Looks like the business is in pretty good shape here. I wanted to talk about the Plexus relationship here. As far as your thoughts about there may be a potential inventory buy. How are we doing components wise? If you could give a layer deeper on both availability as well as cost.

John Kedzierski
President and CEO at Evolv Technology

We're on track with the schedule that we've communicated regarding the moving to Plexus. When we announced the deal late last year, we had said that we would be transitioning throughout the first half of 2026, and in the second half of 2026, the majority of our units would be shipping from Plexus facilities. I'm pleased that we are on that schedule, and that is what's happening today with the majority of our orders being fulfilled from units that are built at Plexus. As we commented in the prepared remarks, we're not immune to the challenges that are well-publicized around supply chains, particularly around electronics. But I'm proud of the efforts made in collaboration with Plexus and the line of sight that we have to hit the revenue guidance that we provided.

John Kedzierski
President and CEO at Evolv Technology

We continue to work through it every day and making sure that we're in our best position to fulfill the demand that we're capturing.

Eric Martinuzzi
Eric Martinuzzi
Analyst at Lake Street Capital

Just a follow-up there. Chris, you commented that it seemed like a pretty specific dollar amount. Is this something that is already in the works as far as the inventory investment, kind of an advance commit in order to lock up supply at a certain price, that $2 million-$4 million range?

Chris Kutsor
CFO at Evolv Technology

No, there is nothing imminent. That comes with scanning the market and participating over the last six months and learning what an opportunity might look like. So it is a possibility, not a probability at this point.

Eric Martinuzzi
Eric Martinuzzi
Analyst at Lake Street Capital

Got it. Thanks for taking my questions.

Chris Kutsor
CFO at Evolv Technology

Yep.

Operator

Our next question will come from Michael Latimore with Northland Capital Markets. Please unmute your line and ask your question.

Michael Latimore
Michael Latimore
Analyst at Northland Capital Markets

Yep, thank you. Great results there. I guess just two on the financials. How many Gen1 customers do you expect to upgrade this year? Then on the price change, what is the magnitude to the change you're seeing? Is it across the board, all products, all verticals?

John Kedzierski
President and CEO at Evolv Technology

Sorry. Eric, can you repeat the last part of your question? I missed the last part.

Michael Latimore
Michael Latimore
Analyst at Northland Capital Markets

Yeah. On the price change, what is the rough magnitude of the price change, and is that across the board, like all products, all verticals?

John Kedzierski
President and CEO at Evolv Technology

Yep.

Chris Kutsor
CFO at Evolv Technology

Yeah, so-

John Kedzierski
President and CEO at Evolv Technology

Sorry

Chris Kutsor
CFO at Evolv Technology

Go ahead. Go ahead, John.

John Kedzierski
President and CEO at Evolv Technology

I will take this one. Regarding your question on the Gen1 to Gen2 upgrade activity, what we have provided publicly in prior calls is that to date, and that was as of Q2, our call, about 60% of our existing customers that we were renewing had upgraded to Gen2. They like the form factor of that product, the performance of that product inside that environment. So that is as much information as we provided, that renewals transacted to date was approximately 60%, went to Gen2. In terms of the price increase, it was across the board. We have implemented a more diligent process to have regular price reviews to make sure we are pricing appropriately for value, as well as what we are seeing around the horizon in terms of costs.

John Kedzierski
President and CEO at Evolv Technology

I would call out eXpedite separately, because again, the price increase was across the board on Express and eXpedite and associated piece parts. On eXpedite, when we introduced that product about a year and a half ago and made it generally available, I would say that we introduced it at an introductory type price. It was a new solution developed specifically to address the unique circumstances around verticals such as schools and workplaces and some healthcare environments where people are entering with bags that contain large amounts of what we call clutter. It is various electronics like laptops, AirPods, tablets, and chargers that can contribute to a higher false positive rate.

John Kedzierski
President and CEO at Evolv Technology

A year and a half later, we are really pleased with the traction that we have seen in the eXpedite product, not only in terms of customer adoption, as we shared in our prepared remarks, but also in the impact on customers' entry. We have shared some statistics on the clearance rate that customers are seeing, clearance rate meaning the amount of people that walk through without ever being stopped for either their bag or for something on their person. We think it is the right time to adjust the price of eXpedite to be more in line than it already was with Express to reflect the value that that product provides.

Operator

Once again, if you would like to ask a question, simply click on the raise hand button at the bottom of your screen, or if you would like to re-enter the queue. Our next question will come from Shaul Eyal with TD Cowen. Please unmute your line and ask your question.

Shaul Eyal
Shaul Eyal
Analyst at TD Cowen

Good afternoon. Congrats on results and guidance. John, with the World Cup having concluded last month, Evolv Express was widely deployed across, I think, six stadiums. Penn State, I think you've mentioned, and some additional fan zones. Now that the tournament is over, can you share whether you have seen increased interest from similar event organizers? Maybe also, how far in advance of kickoff back in June did the selection process begin?

John Kedzierski
President and CEO at Evolv Technology

We're very proud to be able to support an international event of that scale and show the capabilities that the organization has, not only in our core weapon screening technologies, but also the services and support that back what we do. We see more opportunities and see continued demand for short-term events of that nature. Our Gen1 fleet is well-purposed for many of those events, and we've been using it for events of that scale, and we'll continue to do that. Obviously, not every event is the size of a World Cup that occurs every four years. But there are many events that occur on a regular basis where somebody needs units for a temporary period.

John Kedzierski
President and CEO at Evolv Technology

We both have a network of partners that specialize in short events, as well as now our own fleet that we can make available either to them or for us to provide customers. Hopefully, that answered the first part of your question, but there was a second part that I want to make sure I get to as well. Could you repeat that?

Shaul Eyal
Shaul Eyal
Analyst at TD Cowen

Yeah, sure. Just kind of thinking out loud, any views you can share with us, how far ahead of the tournament, the kickoff, did the negotiations start with the various stadiums you guys have been providing the Evolv Express with?

John Kedzierski
President and CEO at Evolv Technology

I will not provide specifics around any particular customer negotiation, but I would say that we did support the FIFA Club World Cup in the prior year.

Shaul Eyal
Shaul Eyal
Analyst at TD Cowen

Understood. Got it. Any views you can offer us regarding the competitive landscape. It would appear you are gaining share, but curious to hear your views about this topic. Thank you.

John Kedzierski
President and CEO at Evolv Technology

To be concise, I would say overall, we have not seen a change in the competitive environment. We are continuing to focus on providing the best solution that we can, which we believe is both a combination of the technology and constantly innovating to increase throughput, lower friction by lowering false positive rates, the services that we provide with the product, and the software experience that provides our customers what we believe are unique capabilities to make our devices a part of the overall security workflow that we have. So have not seen a change in the competitive environment. We like the position that we have, and we are focused on maintaining what we think is the leadership position in terms of the overall solution that we provide.

Shaul Eyal
Shaul Eyal
Analyst at TD Cowen

Thank you so much. Good luck.

John Kedzierski
President and CEO at Evolv Technology

Thank you.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

Operator, are there any other questions in the queue?

Operator

Yes. We have one question from Andrew McIntosh from HUI. Please unmute your line and ask your question.

Andrew McIntosh
Analyst at HUI

Can you hear me okay?

Chris Kutsor
CFO at Evolv Technology

Yes.

Operator

One more time, Andrew, could you please unmute your line and ask your question?

Andrew McIntosh
Analyst at HUI

Can you hear me now?

Chris Kutsor
CFO at Evolv Technology

Yes, we can hear you.

Andrew McIntosh
Analyst at HUI

Okay. I'm sorry. With the Northwestern deal, have you talked to any other Big Ten schools or any other large universities about, and I know you can't name names or anything like that, but about getting your products into their venues as well? I happen to be at the University of Florida and seen your products in other venues, not in the football stadium, but around campus and so forth, and I'm just wondering what kind of opportunities you have in that area.

John Kedzierski
President and CEO at Evolv Technology

We're really excited about the opportunity in NCAA. Outside of Northwestern's Ryan Field, which feel privileged to be part of that revolutionary new deployment, we cited several other NCAA wins in recent months. You asked about the Big Ten specifically. We had a press release a few months ago about the University of Washington and being their fan screening partner for the Huskies. I believe as NCAA looks to continue to differentiate their experience, they'll look to what's happening in professional sports. I think the new Ryan Field is a great example of that, and we feel good about our ability to offer a differentiated experience for these locations as they want to make fan entry, which is the first thing that a fan does experience when they're coming into a stadium, be as good as it can be.

John Kedzierski
President and CEO at Evolv Technology

We like the position that we have, but we think the opportunity's still largely ahead of us there.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

Perfect. Thank you for that call. I think we have time for one more question here.

Operator

Yes. We have Michael Latimore with Northland Capital. Please unmute your line and ask your question.

Michael Latimore
Michael Latimore
Analyst at Northland Capital Markets

Yeah, thanks. Just wanted to circle back to the Fortune 500 wins. Are you getting placed in both the corporate headquarters and the retail locations of those two wins?

John Kedzierski
President and CEO at Evolv Technology

I will just speak about Fortune 500 in general and what we see, because we did not share specifics on the wins mentioned. We see both. There was an increased focus on corporate headquarters, specifically after the murder of the UnitedHealthcare CEO a couple years ago, and we definitely saw an uptick of interest and engagement with security teams that continues to this day following that. But also, these locations and these businesses are interested in protecting their other facilities. I would say the most notably what we see is distribution centers at warehouses, busy locations that they have, and concerns around workplace violence there.

Michael Latimore
Michael Latimore
Analyst at Northland Capital Markets

Yeah, makes sense. On the slight increase or shift towards purchase subscription, any factors there? Is it just kind of vertical strength or more, I do not know, Evolv eXpedite or something?

John Kedzierski
President and CEO at Evolv Technology

I think it is just the customer mix as it happens to be landing. Different customers have different reasons for wanting to treat it as CapEx versus OpEx. But we still think long-term, 50% to each is probably the right thing for long-term planning, but we certainly see that heading to 60% purchase subscription in this year.

Michael Latimore
Michael Latimore
Analyst at Northland Capital Markets

All right, got it. Thank you.

Brian Norris
Senior VP of Finance and Investor Relations at Evolv Technology

Thank you, Michael.

Operator

That was your last question. I would now like to turn the call over to John for closing remarks.

John Kedzierski
President and CEO at Evolv Technology

Thank you again for joining us today and for your continued interest in Evolv. We are encouraged by the momentum we're seeing across the business and believe our second quarter results reflect continued progress against the long-term framework we outlined at Investor Day. We remain focused on expanding our leadership position in AI-powered weapons detection, one of the largest and least penetrated segments of the public safety market. Just as importantly, we believe our differentiation goes well beyond software, combining proprietary hardware, AI machine learning, data, services, and long-term customer relationships into a platform designed to deliver valuable security outcomes. Supported by growing recurring revenue, a substantial base of contracted future revenue, and strong customer demand across our end markets, we remain confident in the opportunity ahead. Thank you for your support, and we look forward to updating you on our progress next quarter.

Operator

Thank you for joining. This concludes today's call. You may now disconnect.

Analysts
    • Brian Norris
      Senior VP of Finance and Investor Relations at Evolv Technology
    • John Kedzierski
      President and CEO at Evolv Technology
    • Chris Kutsor
      CFO at Evolv Technology
    • Jeremy Hamblin
      Analyst at Craig-Hallum
    • Eric Martinuzzi
      Analyst at Lake Street Capital
    • Michael Latimore
      Analyst at Northland Capital Markets
    • Shaul Eyal
      Analyst at TD Cowen
    • Andrew McIntosh
      Analyst at HUI
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