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Evolv Technology (EVLV) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Aug 11, 2026

Source: earnings call transcript

Executive summary

Evolv Technology Q2 FY26 — Strong Revenue Growth and Expanded Profitability

Evolv Technology delivered strong Q2 FY26 results, driven by robust new customer acquisition and expanded platform adoption, leading to significant revenue growth and improved profitability. The company raised its full-year outlook, confident in its long-term Rule of 50 objectives, despite facing near-term gross margin pressures from product mix shifts and elevated supply chain costs. Management highlighted the strength of its hardware-enabled subscription model and growing RPO.

Highlights

5

  • Revenue increased 34% year-over-year to $43.8 million in Q2 FY26.

  • Annual Recurring Revenue (ARR) grew 20% year-over-year to $132.7 million as of June 30, 2026.

  • Adjusted EBITDA margin expanded to 10.1% in Q2 FY26, up from 6.5% in Q2 FY25.

  • Added 70 new customers in Q2 FY26, marking the strongest quarter in 2 years for new customer additions.

  • Remaining Performance Obligation (RPO) increased 4.5% sequentially to $312.6 million.

Concerns

3

  • A higher mix of purchase subscriptions (60% of new full-year deployed units vs. 55% prior assumption) creates a gross margin headwind.

  • Gen2 upgrades create a temporary gross margin headwind of just under 1 point due to refurbishment and depreciation costs for returned Gen1 units.

  • Modestly higher component and supply chain costs are contributing approximately 0.5 point of gross margin headwind.

Guidance & targets

CategoryTargetConfidence
Full-year 2026 Revenue
$180 million to $185 million
high materiality
High
Full-year 2026 Revenue Growth
23% to 27% year-over-year
high materiality
High
Full-year 2026 Deployed Units
comfortably over 10,000 units
medium materiality
High
Full-year 2026 Annual Recurring Revenue (ARR)
approximately $148 million to $150 million
high materiality
High
Full-year 2026 Adjusted EBITDA
$15 million to $16 million
high materiality
High
Full-year 2026 Adjusted EBITDA Margin
high single digits
high materiality
High
Long-term Revenue (by 2031)
more than $500 million
high materiality
High
Long-term Adjusted EBITDA Margin
at least 25%
high materiality
High

Orderbook & backlog

Remaining Performance Obligation (RPO) $312.6 million end of Q2 FY26

up 4.5% sequentially

Exceeds 1.7x full year revenue outlook, providing visibility into future revenues and reinforcing the durability of the model.

Product announcements

ProductTypeDetails
eXpedite platformupdate

Deals & partnerships

Alberta Health Services New customer acquisition in healthcare sector

Canada's largest integrated health care system, added as a new customer, ranging from community hospitals to regional health systems.

Pro Football Hall of Fame New customer acquisition in sports and live entertainment

Added as a new customer, investing in security solutions to enhance safety and fan experience.

2026 FIFA World Cup Short-term subscription deployment for a major international event Q2 and Q3 FY26

Supported the tournament with installations at match venues, fan festivals, and transportation hubs, including New York Penn Station.

Northwestern University (New Ryan Field) New customer acquisition for a major college sports venue

Selected by Ryan Sports Development to deliver the fan arrival experience at the new Ryan Field, a ~$870 million college football stadium.

Fortune 500 companies Two additional new customer acquisitions in the workplace segment

Includes a leading grocery retailer with one of the largest distribution networks and one of the country's largest off-price retail chains. Evolv now serves over 30 Fortune 500 companies.

Capital programs

Plexus Global Contract Manufacturing Partnership completed
Start: late 2025

Benefit:Scale production capacity, extend global reach, enhance operational resiliency, reduce bill of material costs through greater procurement leverage and manufacturing efficiencies.

Evolv has onboarded Plexus and has now begun shipping product through their facilities, representing an important milestone in the manufacturing strategy.

Risks & headwinds

Higher mix of purchase subscriptions FY26

60% of new full year deployed units via purchase subscription versus 55% assumed in prior guidance

Mitigation:Management expects this to be offset by stronger renewal performance and higher net revenue retention, contributing to overall ARR growth.

Temporary gross margin headwind from Gen2 upgrades FY26

just under 1 point of gross margin headwind

Mitigation:These costs are expected to convert to significant revenue and cash as refurbished Gen1 units are redeployed in the future.

Higher component and supply chain costs FY26

approximately 0.5 point of gross margin headwind

Mitigation:Management is realizing manufacturing efficiencies through Plexus and has implemented pricing increases across product lines, which are expected to support gross margin expansion over time.

Semiconductor supply constraints ongoing

well-documented semiconductor supply constraints

Mitigation:Company is actively managing through these constraints and remains confident in its ability to execute against full year deployment plans.

What to watch in Q3 FY26

Plexus Manufacturing Ramp-up and Cost Efficiencies

next quarter
Current Shipping product from Plexus facilities, transition on schedule
Target Continued scaling of production, realization of reduced bill of material costs and manufacturing efficiencies

Why it matters

Successful ramp-up and cost reduction from the Plexus partnership are key to improving gross margins and scaling production capacity.

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.

Find out whether EVLV delivers this. Inve re-checks your case every morning.

Q&A highlights

Why is unit growth (30%) outpacing ARR growth (20-25%), and will ARR growth accelerate as prior changes are lapped?

Chris Kutsor explained that the divergence is expected due to a broader product portfolio. Gen1 units, returned from customers upgrading to Gen2, are redeployed at a lower ARPU. Additionally, eXpedite was launched at a lower price point than Express, though recent price increases will align them more closely. He confirmed ARR growth is expected to accelerate.

“The difference between ARR and unit growth is as we would have expected because we are selling Gen1 units at a lower ARPU and eXpedite has been lower, and that will be converging with Express.”

asked by Jeremy Hamblin · answered by George Kutsor

2 min read 6 chapters

Detailed narrative

Market Penetration and Long-Term Growth Opportunity

Evolv Technology estimates there are over 700,000 serviceable doorways across its current markets, with only about 9,200 units deployed, indicating a penetration rate well below 5%. This significant untapped market underpins the company's long-term revenue target of over $500 million by 2031, representing a 25% compound annual growth rate, and a path to achieving adjusted EBITDA margins of at least 25%.

Hardware-Enabled Subscription Business Model

Evolv operates a hardware-enabled subscription model, built around physical security and AI-powered weapons detection. The platform integrates proprietary hardware, software, AI models, data, and services, delivered through multiyear subscription agreements, typically 4 years in duration. This model generates high-margin, long-term recurring revenue and provides significant visibility into future earnings, with over $300 million in remaining performance obligation (RPO).

Strong Customer Acquisition and Expansion

The company reported its strongest quarter for new customer additions in two years, adding 70 new customers in Q2 FY26. Notably, approximately 60% of unit bookings during the quarter came from existing customers, demonstrating successful expansion within the installed base. Evolv now serves customers in all 50 U.S. states, Canada, and Mexico, with solutions screening nearly 5 million people daily.

eXpedite Product Adoption and Innovation

Evolv's autonomous AI-powered bag screening solution, eXpedite, continues to gain traction, now serving over 100 customers, representing approximately 8% of the total customer base, up from 2% a year ago. Approximately 70% of new customers purchasing eXpedite also bought Evolv Express, and eXpedite has been cross-sold to over 40 existing Evolv Express customers. The platform has screened more than 20 million bags, averaging 90,000 bags daily, and has seen significant software enhancements to optimize security operations.

Manufacturing Strategy and Supply Chain Management

Evolv has successfully onboarded Plexus, its new global contract manufacturing partner, and has begun shipping products from their facilities. This transition is expected to scale production capacity, extend global reach, enhance operational resiliency, and reduce bill of material costs over time. The company continues to actively manage semiconductor supply constraints, confident in its ability to meet full-year deployment plans.

End-Market Performance and Policy Support

Evolv saw strong demand across its core education market, adding 23 new customers and supporting 1,800 schools. In healthcare, 8 new customers were added, including Alberta Health Services. Momentum continued in sports and live entertainment, with new customers like the Pro Football Hall of Fame and Northwestern University's New Ryan Field, and support for the 2026 FIFA World Cup. The workplace segment also expanded with two new Fortune 500 clients, bringing the total to over 30.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.