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ET

Evolv Technologies Holdings, Inc. (EVLV)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $42.9M, up 57% year over year, and adjusted EBITDA was $5.1M (12% margin); ARR ended at $117.2M (+25% YoY), while GAAP net loss narrowed to $(1.8)M or $(0.01) per share .
  • Results materially beat Wall Street: revenue beat by ~$9.2M vs consensus ($33.68M*) and Primary EPS beat by $0.05 (actual −$0.02 vs −$0.07*) [GetEstimates].
  • 2025 guidance raised: revenue to $142–$145M (37–40% growth) from $132–$135M; adjusted EBITDA margin raised to high single digits; Q4 cash flow positive reiterated .
  • Management signaled an inflection: ARR growth to outpace revenue in 2026; preliminary FY26 revenue $160–$165M and ARR growth ≥20%, supported by direct purchase fulfillment and pricing shifts that move $5–$10M from one-time to ARR/RPO .

What Went Well and What Went Wrong

What Went Well

  • Strong top-line beat with revenue +57% YoY to $42.9M and fourth consecutive positive adjusted EBITDA (12% margin), highlighting operating leverage .
  • Strategic progress: direct purchase fulfillment capturing 100% ARPU, software repricing to emphasize ARR, and new contract manufacturing partnership with Plexus to scale and lower COGS over time .
  • Product momentum: Expedite added 12 customers in Q3 and has screened 1M+ bags since launch; early deployments show ~2% alert rates in education, improving throughput and experience .
    “We reported our fourth consecutive quarter of positive adjusted EBITDA, with adjusted EBITDA margins of 12% in Q3.”
    “We now capture 100% of the average revenue per unit, or ARPU.”

What Went Wrong

  • Gross margin compression: GAAP gross margin fell to 49.7% (from 57.8% LY) and adjusted gross margin to 50.6% (from 64.1%), driven by fulfillment mix shift, subscale Expedite costs, and ~$3M one-time inventory/service adjustments .
  • Heavy reliance on non-recurring items this quarter: $7.5M from product on largest education deal ($3M), IP license/other ($3M), and short-term rentals ($1.5M), making normalized revenue ~$35–$36M (+~30% YoY) .
  • Net profit margin still negative at (4.2)%; while improved versus prior quarters, the model remains in transition with margins pressured near-term by fulfillment changes and new product scaling .

Financial Results

Revenue, EPS, and Estimates Comparison

Values with an asterisk (*) are S&P Global consensus; Values retrieved from S&P Global.

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$32.007 $32.544 $42.850
Revenue Consensus Mean ($USD Millions)*$27.986*$30.945*$33.683*
EPS - GAAP ($)$(0.01) $(0.25) $(0.01)
Primary EPS Consensus Mean ($)*$(0.09)*$(0.0775)*$(0.07)*
Adjusted EPS ($)$(0.02) $(0.04) $(0.02)

Margins and Profitability

MetricQ1 2025Q2 2025Q3 2025
Gross Margin % (GAAP)59.8% 49.8% 49.7%
Adjusted Gross Margin %60.8% 54.9% 50.6%
Adjusted EBITDA ($USD Millions)$1.743 $2.045 $5.131
Adjusted EBITDA Margin %5.4% 6.3% 12.0%
Net Profit Margin % (GAAP)(5.3)% (124.6)% (4.2)%

Segment Revenue Breakdown

MetricQ1 2025Q2 2025Q3 2025
Product Revenue ($USD Millions)$2.322 $2.528 $9.242
Subscription Revenue ($USD Millions)$19.237 $20.200 $22.685
Service Revenue ($USD Millions)$6.730 $6.686 $7.808
License & Other Revenue ($USD Millions)$3.718 $3.130 $3.115

KPIs

KPIQ1 2025Q2 2025Q3 2025
ARR ($USD Millions, period-end)$106.0 $110.5 $117.2
Recurring Revenue ($USD Thousands)$25,753 $26,678 $30,120
Non-Recurring Revenue ($USD Thousands)$6,254 $5,866 $12,730
New Customers (Units)54 63 62
RPO ($USD Millions)—~$275 ~$299
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$35.0 $36.9 $56.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)FY 2025$132–$135 (issued Aug 14, 2025) $142–$145 (issued Nov 13, 2025) Raised
Total Revenue Growth RateFY 202527%–30% 37%–40% Raised
Adjusted EBITDA MarginFY 2025Mid-single digits High single digits Raised
Cash FlowQ4 2025Positive in Q4 Positive in Q4 Maintained
Total Revenue ($M)FY 2026 (prelim)n/a$160–$165 New
ARR Growth (%)FY 2026 (prelim)n/a≥20% New
Revenue Mix ShiftFY 2026n/a$5–$10M shifted from one-time to ARR/RPO New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Fulfillment & Pricing ModelBegan shift to direct; mid-single digit adj. EBITDA margin guidance; ARR growth ~27% YoY Direct purchase fulfillment capturing 100% ARPU; pricing effective July 1; normalization to ARR over time Structural pivot to recurring; near-term margin headwind, long-term leverage
Manufacturing & Supply ChainNo named contract manufacturer; operating discipline New strategic partnership with Plexus to add capacity and lower COGS over time Scaling manufacturing; expected cost benefits in 2026
Product & Software ReleasesCustomer growth; Express deployments Released Express 9.0, Expedite 1.2, MyEvolv/Insights 6.0; integrated tablet UI; sensitivity tuning Continuous cloud-delivered enhancements; UX and data integration
Expedite Adoption & PerformanceLaunch in Q4 2024; early customers 12 new customers in Q3; ~2% alert rate in education; 1M+ bags screened Strong attachment to Express; improving throughput and detection balance
Vertical & Customer Wins1,000+ customers; sports/education/healthcare Buffalo Sabres (Gen2), UNC, Bank of America Stadium renewal, healthcare wins (WellSpan, UC Davis, Seattle Children’s) Diversified demand; renewals and expansions
ARR vs Revenue TrajectoryFY25 revenue growth 27–30%; ARR +27–34% YoY ARR to outpace revenue in 2026; push $5–$10M into ARR/RPO Narrative shift toward recurring durability

Management Commentary

  • “We now capture 100% of the average revenue per unit, or ARPU. This shift increases recurring revenue over the four-year subscription term and delivers back to Evolv a higher level of cash per unit.”
  • “We reported our fourth consecutive quarter of positive adjusted EBITDA, with adjusted EBITDA margins of 12% in Q3.”
  • “We recently released the latest versions of our software: Evolv Express 9.0, Evolv Expedite 1.2, and MyEvolv Portal and Evolv Insights 6.0…a new integrated tablet interface…”
  • “We now expect to grow revenue by about 37%–40% in 2025…$142–$145 million…”
  • “We estimate that…emphasizing ARR…will defer about $5–$10 million of revenue in 2026…to convert into long-term recurring revenue streams.”

Q&A Highlights

  • Revenue recognition mechanics: Legacy distribution model front-loads revenue for purchase subscriptions; normalization expected across 48-month terms under ASC 606; ~$5M from the largest order recognized in first two quarters .
  • Contract manufacturing partnership: Plexus expected to reduce manufacturing costs and scale production across full portfolio by 1H 2026 .
  • Expedite attachment: Of 12 new Expedite customers in Q3, 11 also acquired Express, indicating strong bundling momentum across education, sports, entertainment, and healthcare .
  • Bookings mix: >50% from existing customers in the quarter (excluding skew from large order started briefly in Q2), underscoring expansion within installed base .
  • Channel reaction: Move from distribution to direct fulfillment simplified partner buying process and lets Evolv capture 100% RPO without disrupting channel sales motion .

Estimates Context

  • Q3 2025: Revenue beat by $9.17M ($42.85M actual vs $33.68M*), and Primary EPS beat by $0.05 (−$0.02 actual vs −$0.07*). The beat was driven by strong purchase mix, the largest education contract ($3M product), IP license ($3M), and short-term rentals ($1.5M), partially offset by gross margin headwinds from fulfillment mix and subscale Expedite costs .
  • Q2 2025: Revenue beat by ~$1.60M ($32.54M actual vs $30.95M*), Primary EPS beat by ~$0.06 (−$0.02 actual vs −$0.0775*), supported by customer expansion and improved operating leverage .
  • Q1 2025: Revenue beat by ~$4.02M ($32.01M actual vs $27.99M*), Primary EPS beat by ~$0.07 (−$0.02 actual vs −$0.09*), with ARR +34% YoY and first positive adjusted EBITDA of the year .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Bold revenue and EPS beats in Q3, coupled with raised FY25 guidance and improving adjusted EBITDA, are likely to be stock-positive catalysts; however, note the elevated non-recurring revenue contribution this quarter .
  • Near-term margin pressure is a deliberate trade-off to scale direct fulfillment and new product (Expedite); expect gross margin recovery as Expedite manufacturing scales and Plexus onboarding progresses in 2026 .
  • Recurring durability strengthening: ARR +25% YoY to $117.2M and RPO ~$299M; management expects ARR growth to outpace revenue in 2026, with $5–$10M shifted into ARR/RPO .
  • Expansion vector remains robust in education, healthcare, and sports; bundling Express+Expedite improves throughput and customer experience, supporting attach and upsell opportunities .
  • Liquidity improved to $56.2M cash and marketable securities, supported by a new credit facility, tighter inventory, and stronger collections; Q4 2025 cash flow positive reiterated .
  • Watch for sustainability of growth into FY26: unit additions to exceed FY25, stable ARPU, faster ARR growth, and modest EBITDA margin expansion as the model matures .
  • Trading lens: Focus on trajectory of recurring metrics (ARR/RPO), margin normalization, Expedite scaling, and continued guidance credibility; valuation likely to hinge on recurring mix and EBITDA path rather than one-off revenue items .