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ET

Evolv Technologies Holdings, Inc. (EVLV)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat: Revenue $32.01M (+44% YoY) vs consensus ~$27.99M; Adjusted EPS improved to $(0.02) vs $(0.09) consensus; GAAP diluted EPS $(0.01). Adjusted EBITDA was positive at $1.74M (5.4% margin), marking continued operating progress . Estimates from S&P Global: Revenue $27.99M*, EPS $(0.09)*.
  • End-of-quarter ARR reached $105.99M (+34% YoY), recurring revenue was $25.75M (+36% YoY), and RPO stood at ~$261.2M, underscoring subscription durability and visibility .
  • FY 2025 guidance initiated: revenue $125–$130M (+20–25%), positive full-year adjusted EBITDA with low-to-mid single-digit margins, and positive free cash flow in Q4 2025; management also flagged ~$2M near-term investments to strengthen controls and efficiency .
  • Management highlighted momentum post FTC resolution—92% of eligible education customers retained, with 94% net unit retention and several expansions—plus growing adoption of the new eXpedite product; these dynamics, along with a shift toward pure subscription, are key narrative tailwinds .

What Went Well and What Went Wrong

  • What Went Well

    • “I am pleased with our solid first quarter results and the foundation we’re building for continued growth and operational excellence” — CEO John Kedzierski; positive adjusted EBITDA and improved adjusted operating expenses demonstrate leverage .
    • Post-FTC retention strong: 92% of eligible education customers stayed; 94% net unit retention; some expanded deployments, reinforcing product value and trust .
    • Early traction for eXpedite bag screening (12 new customers) and healthy installed-base expansion (roughly 50% of units/ARR booked in Q1 from existing customers), supporting cross-sell and stickier subscriptions .

  • What Went Wrong

    • Mix headwinds: Management flagged expected gross margin pressure from model mix (more pure subscription, fewer purchase deals) and timing; Q1 adjusted gross margin held ~61%, but full-year outlook expects 200–300 bps headwinds vs prior expectations .
    • Cash declined sequentially ($35M at 3/31/25 vs ~$52M at 12/31/24), primarily due to one-time disbursements tied to restatement/ad hoc investigation, incentives, and restructuring—though insurance recoveries partly offset .
    • Non-GAAP adjusted loss remained $(3.36)M; while improving YoY, investors may watch path to scaling margins and free cash flow beyond Q4 seasonality .

Financial Results

MetricQ1 2024Q1 2025YoY Change
Revenue ($USD)$22.18M $32.01M +44%
Gross Profit ($USD)$12.16M $19.15M +58%
Gross Margin % (GAAP)54.8% 59.8% +500 bps
Adjusted Gross Margin %60.9% 60.8% -10 bps
Net Loss ($USD)$(11.27)M $(1.69)M +$9.58M
Net Profit Margin %(50.8)% (5.3)% +4,550 bps
Adjusted EBITDA ($USD)$(10.37)M $1.74M +$12.11M
Adjusted EBITDA Margin %(46.7)% 5.4% +5,210 bps
Diluted EPS (GAAP)$(0.07) $(0.01) +$0.06
Adjusted Diluted EPS$(0.08) $(0.02) +$0.06
Estimates vs Actual (Q1 2025)ConsensusActualSurprise
Revenue ($USD)$27.99M*$32.01M +$4.01M*
Primary EPS$(0.09)*$(0.02) +$0.07*

Values retrieved from S&P Global*

Revenue Breakdown ($USD)Q1 2024Q1 2025
Recurring Revenue$18.96M $25.75M
Non-Recurring Revenue$3.22M $6.25M
Total Revenue$22.18M $32.01M
Segment Revenue ($USD)Q1 2024Q1 2025
Product$1.49M $2.32M
Subscription$14.24M $19.24M
Service$5.25M $6.73M
License Fee & Other$1.22M $3.72M
Total$22.18M $32.01M
KPIsQ3 2024Q4 2024Q1 2025
New Customers (units)52 60 54
ARR ($USD)$93.68M $99.35M $105.99M
Recurring Revenue ($USD)$23.76M $23.68M $25.75M
Total Net Units Shipped468 458 465
RPO ($USD)——$261.2M
Liquidity & Cash FlowQ1 2024Q1 2025
Cash & Cash Equivalents ($USD)$44.87M $25.09M
Marketable Securities ($USD)—$9.93M
Total Cash & Marketable Securities ($USD)—~$35.02M
Net Cash Used in Operating Activities ($USD)$(16.15)M $(2.54)M

Notes: Q1 benefited from ~$0.8M one-time product order and < ~$0.1M restatement-related revenue; Adjusted EBITDA excluded ~$3.9M insurance recovery recognized in GAAP G&A .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025N/A$125–$130M (+20–25% YoY) Initiated
Adjusted EBITDA MarginFY 2025N/ALow to mid-single digits Initiated
Adjusted EBITDAFY 2025N/APositive full year Initiated
Free Cash FlowQ4 2025N/APositive FCF expected Initiated
Near-term InvestmentsFY 2025N/A~$2M to enhance systems/controls Initiated
Gross Margin CommentaryFY 2025N/AExpect 200–300 bps headwinds from model mix New commentary
CapEx (support subscriptions)FY 2025N/A~$20–$25M New commentary

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Subscription model durabilityQ4 2024: achieved positive adjusted EBITDA, strong ARR base entering 2025 ARR $106M; ~78% of FY plan carried by starting ARR; ~50% Q1 units/ARR from expansions Strengthening
FTC resolution & customer retentionLate Q4: FTC matter resolved; cancellation window for subset of K-12 ; Cohort retention: 92% customers, 94% units Management emphasizes regained momentum and improved sales cycles post-resolution Improving
eXpedite (AI bag screening)Launch late Q4 2024 12 new customers; cross-sell into existing base; potential to enhance attach and stickiness Early traction rising
Tariffs/supply chainGeneral caution in 2024 Limited BOM exposure (<5% China), 40% NA content (USMCA exempt), US assembly; tariff impacts embedded in 2025 outlook Managed
Operating leverageQ4 2024: initial adjusted EBITDA positive Adjusted operating expenses down to $23.18M; adjusted EBITDA margin 5.4% Improving
Legal/insurance dynamics2024 restatement; legal costs ~$3.9M insurance recovery recognized in GAAP; excluded from non-GAAP Tailwinds to GAAP G&A

Management Commentary

  • CEO on execution: “I am pleased with our solid first quarter results and the foundation we’re building for continued growth and operational excellence. This performance represents a meaningful step in rebuilding a consistent track record of execution.”
  • CEO on retention: “Following the resolution of the FTC matter, we retained 92% of the eligible education customers... and 90% of the deployed units... Several... expanded their deployments... driving 92% net revenue retention and 94% net unit retention...”
  • CFO on visibility: “We effectively brought in about 78% of our full year revenue plan into the year on day 1… We expect the incremental growth to come from new customer acquisition and expanding deployments.”
  • CFO on margin mix: “We expect slight headwinds of 200–300 basis points of gross margin for the full year 2025… shifting to models that maximize ARR is optimal for the company and its shareholders.”
  • CEO on product adoption: “EXpedite… is off to a good start… we’ve added 12 new customers… we believe eXpedite has the potential to drive meaningful customer expansion, higher attach rates and stronger subscription stickiness.”

Q&A Highlights

  • Mix and margin: Management reiterated a shift toward pure subscription (better ARR/RPO) at the expense of near-term gross margin; purchase-subscription remains available based on customer needs .
  • CapEx outlook: ~$20–$25M to support full subscription model, potentially “a little bit higher” with more rotation to pure subscription; Gen2 BOM cost aids capital efficiency .
  • Tariff exposure: US assembly; ~40% NA BOM (USMCA exempt); <5% China BOM for Evolv Express; impacts incorporated in FY outlook .
  • Sequential revenue cadence: Q1 included one-time benefits; mix shift to pure subscription defers revenue recognition vs purchase subscription; full-year growth guided at +20–25% .
  • Unit deployments/renewals: Expect at least as many units in 2025 as 2024 (~8,000 deployed by YE); de-emphasizing “units shipped” as renewals/upgrades reset subscription terms .

Estimates Context

  • Q1 2025 beat on revenue and EPS versus S&P Global consensus: Revenue $32.01M vs $27.99M*; EPS $(0.02) vs $(0.09); estimate counts were limited (# of estimates: Revenue 3; EPS 2), emphasizing lower coverage depth . Values retrieved from S&P Global.
MetricQ1 2025 ConsensusQ1 2025 ActualVariance
Revenue ($USD)$27.99M*$32.01M +$4.01M*
Primary EPS$(0.09)*$(0.02) +$0.07*

Values retrieved from S&P Global*

Implications: Narrow analyst coverage and mix-related revenue timing could lead to estimate revisions, particularly for full-year revenue and adjusted EBITDA trajectory given subscription mix and eXpedite scaling .

Key Takeaways for Investors

  • The Q1 print was a clear beat, with positive adjusted EBITDA and strong ARR growth; subscription durability plus installed-base expansion are key drivers of equity value .
  • FY guidance is conservative on revenue timing due to mix (more pure subscription) but favorable for long-term ARR and RPO; expect continued margin expansion as operating expenses normalize .
  • Post-FTC retention metrics de-risk near-term education renewals and support the thesis of sticky deployments; watch ongoing upgrade cycle to Gen2 and potential Certified Pre-Owned leverage .
  • eXpedite adoption is an emerging catalyst for attach and cross-sell—monitor scaling effects on gross margin as production efficiencies improve .
  • Liquidity declined on one-time items but insurance recoveries and improved collections are tailwinds; management targets positive FCF in Q4 2025—a key inflection for sentiment .
  • Tariff risk appears constrained (US assembly; minimal China BOM); macro/regulatory tailwinds (e.g., California hospital legislation) may bolster healthcare vertical demand .
  • Near-term trading: Expect focus on subscription mix, ARR/RPO momentum, and visibility to Q4 FCF; medium-term thesis centers on platform adoption (Express + eXpedite), margin leverage, and disciplined operating execution .