Evolv: Generating Shareholder Returns Through A Safer World

Evolv Technologies is redefining physical security with AI-driven, non-invasive screening that allows people to pass through at a natural walking pace. The global concealed weapons detection market is forecast to nearly double from $2.5 billion in 2025 to $4.8 billion by 2033 (8% CAGR), while the broader security screening market is expected to grow from $9.92 billion to $13.80 billion by 2030 (6.8% CAGR).

Evolv has already screened more than 3 billion visitors since 2019 and now serves over 1,000 customers worldwidem, from schools and hospitals to sports venues and industrial sites, proving the tech works at real-world scale. This is a pure-play way to ride a $30+ billion market as AI-powered security replaces old-school metal detectors.

Evolv’s Security-as-a-Service model creates predictable revenue streams and keeps customers engaged long term. Annual Recurring Revenue reached $117.2 million in Q3 2025, up 25% year-on-year, with recurring revenue of $30.1 million making up roughly 70% of total sales. That gives investors clear line of sight on future cash flows rather than one-off hardware wins.

The mix shift to more direct sales and higher pricing is starting to show up in the P&L. Evolv delivered $5.1 million of adjusted EBITDA in Q3 (12% margin) and has raised 2025 revenue guidance to $142–145 million, with positive full-year adjusted EBITDA and Q4 cash flow. This looks less like a speculative story and more like an emerging, profitable SaaS-style subscription business.

Adoption is accelerating across education, healthcare, sports, live entertainment and industrial workplaces. Evolv added 62 new customers in Q3 and 179 year-to-date, taking the installed base to more than 1,000 global customers who use the systems every day to screen millions of visitors. Notable deployments include FIFA Club World Cup 2025, 20 of the largest U.S. school districts, and over 500 hospitals.

The use case is simple: faster, more dignified security where traditional metal detectors cause queues and missed threats. Every successful roll-out, from large school districts and hospital groups to major venues, it becomes a visible proof of concept and a reference site. The growing penetration in these everyday settings is what can turn Evolv from a niche name into a mainstream security standard.

• Guidance reset that signals something bigger is happening: Evolv didn’t just tweak its outlook, it moved it meaningfully higher. Full-year growth now sits at 37–40%, a jump that suggests demand is hitting an inflection point, not drifting sideways. Companies don’t raise that aggressively unless the pipeline is already landing.

• Profitability finally breaks the surface: Q4 is set to be cash-flow positive, and 2025 is shaping up as the first full year of positive adjusted EBITDA. This is the psychological moment when a “story stock” becomes an “operating company.” Funding risk fades. Confidence resets.

• 2026 ARR growth effectively pre-announced: Management has already telegraphed next year: they expect to sell more units in 2026 than in 2025 (~1,950). Translate that into subscription math and that gets 24%+ ARR growth baked in. The subscription flywheel is no longer theoretical, it’s compounding.

• A new manufacturing partner that quietly fixes the cost base: The shift to Plexus is structural, not cosmetic. Lower build costs. Smoother scale. Fewer supply-chain headaches. Hardware margins expand, subscription margins expand, and total unit economics improve with each cohort.

• A massive installed-base opportunity hiding in plain sight: Evolv already serves 1,000+ customers, but that’s a rounding error vs. the total addressable landscape, tens of thousands of schools, hospitals, stadiums, arenas, factories and workplaces still using 20-year-old tech. Security is shifting from inconvenience to expectation, and the market is still early.

• The business model morphs into pure recurring revenue: The legacy distribution model is being sunset. The future is multi-year subscriptions, fleet expansions, and data-driven renewals. Recurring revenue grew 27% YoY, and as more customers shift to subscriptions, Evolv begins to look less like “hardware security” and more like a sticky, high-visibility software platform anchored by physical nodes.

As Evolv shifts from third-party distribution to direct sales, profit margins are feeling the pressure, Q2 2025 adjusted gross margin dropped to 55% due to a $1.8 million inventory reserve. While management sees this as a path to higher gross profit in the long run, it means earnings may look weaker until the transition is fully executed, making clear investor communication especially important during this period.

Well-funded security giants and leading tech companies are closely watching the AI-powered security space. If established players like Motorola or new tech entrants launch competing products or buy up innovative startups, Evolv could face stiff competition and pricing pressure, so staying ahead with ongoing R&D and deepening customer relationships is critical.

Operating in a heavily regulated industry means Evolv is constantly under the microscope, recently resolving investigations by the DOJ and FTC but still facing ongoing scrutiny. Evolving privacy laws and stricter security standards could force expensive product updates or slow new deployments. Success in maintaining certifications and adapting to global compliance requirements will be crucial for protecting both growth opportunities and reputation.