Evolv Technologies Holdings, Inc. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead, sir. 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.

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 31, 2025, filed with the SEC on March 10, 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.

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.

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.

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

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.

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.

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.

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.

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.

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 1.7 times 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.

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.