Evolv Technologies Holdings, Inc.

Good afternoon and welcome to the Evolve Technology first quarter earnings results conference call. All participants are in a listen only mode. Later we'll conduct a question and answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today's call, Brian Norris, Senior Vice President of Finance and Investor Relations for Evolve Technology. Please go ahead, sir.

Thank you and good afternoon. Welcome to today's call. I'm joined today by John Kaczorski, our President and Chief Executive Officer, and Chris Cutzer, our Chief Financial Officer. Today, after the market closed, we issued a press release detailing our first quarter results and our 2026 outlook. The release is filed with the SEC and is available in the investor relations section of our website. 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 and views of future events, including but not limited to our business strategy and model, our expectations for future growth and market opportunities, our ability to acquire, renew, and expand customer relationships, our strategic partnership with Plexus, future demand for our products, and our ability to achieve our business 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 multiple factors, including those described under the caption risk factors in our annual report on Form 10-K for the year ended December 31st, 2025, filed with the SEC on March 10, 2026, and our quarterly report on Form 10-Q filed with the SEC earlier today. The forward-looking statements made today represent our views as of May 12, 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 also 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 earnings per diluted share. Reconciliations to the most directly comparable gap measures are included in today's press release, and our definitions may differ from similarly titled measures used by other companies. We will also discuss other operating metrics, including annual recurring revenue, or ARR, and remaining performance obligation, or RPO, which we believe are helpful in understanding the progress we are making as a business. Before I turn things over to John, I'd like to remind investors about Investor Day 2026, which will be held on June 9th, 2026. The event will be webcast live on the investor relations section of our website. We look forward to providing a deeper update on our strategy, product innovation, and long-term financial framework at that time. With that, I'd like to turn the call over to John.

Thank you, Brian. And thanks to everyone for joining us today. As we reflect on our first quarter results, the message is straightforward. We continue to execute on what we said we would do. The progress we're making starts with the trust and partnership of our customers, and it's being delivered through the steady, disciplined work of our team. We continue to strengthen the consistency and reliability of our operations while scaling a hardware-enabled subscription business that is producing increasingly predictable and durable outcomes. We're doing this in a global security environment that is more complex than it even was a few years ago. Threat levels across schools, healthcare facilities, workplaces, and public venues remain elevated. That's being reinforced by instability and violence playing out globally, from ongoing unrest in the Middle East to high-profile attacks at public sites abroad, like the recent shooting at an archaeological site near Mexico City and the attempted attack at the White House Correspondents' Dinner. Against that backdrop, customers are increasingly focused on solutions that are not just effective, but scalable, consistent, and operationally reliable. Last quarter, we touched on the broader market conversation around generative AI and how quickly it is changing the software landscape. We won't revisit that discussion today, but the takeaway remains relevant. Differentiation comes from owning the full solution. Evolve was never built as a pure software company. Our platform combines proprietary hardware and sensors, the software that runs on that hardware, and our highly differentiated AI models. Because our systems are deployed at scale, with our customers' permission, we can evaluate new models using real-world data. that feedback loop combined with operational learning in the field helps improve performance over time and supports long-term customer relationships we deliver this capability as weapons detection as a service which includes the hardware software use of ai models and the on-site services required to keep systems operating as designed we remain on track to be comfortably over 10 000 units deployed by the end of this year reflecting sustained customer demand and our ability to scale responsibly. As our installed base grows, the platform becomes more valuable, supporting better detection performance, deeper customer integration, and stronger reoccurring revenue visibility through multi-year subscription contracts. As we look ahead, we believe we are still in the early innings of building scale in our business. While the company previously shared a long-term target of 10% to 15% adjusted EBITDA margins at its 2023 investor day, we are increasingly confident there is a potential for much greater leverage over time. That leverage is driven by a growing installed base, growing adoption of Expedite, improved customer acquisition efficiency, and operating scale across both our platform and services. We'll share much more detail on these dynamics at our investor day on June 9th. With that context, let me briefly summarize our first quarter results. Revenue in the first quarter was $46.3 million, up 45% year over year. Our growth reflected new customer wins, strong unit deployments, continued expansion within existing customers, and a step up in product revenue resulting from our decision to directly fulfill purchase subscriptions, which provides a year-over-year one-time benefit. We ended the quarter with annual recurring revenue of $127.3 million, reflecting 20% year-over-year growth as our subscription base continues to scale. Adjusted EBITDA margin expanded to 8.5% in Q1 compared to 6.4% in the first quarter of last year. We welcomed nearly 50 new customers during the quarter and now serve approximately 1,300 customers globally. Finally, remaining performance obligation was up 18% year-over-year to $299 million, reflecting continued end market demand and strong upgrades to our Gen2 Express platform. Beyond the financial results, we continue to see our platform deliver practical, real-world value to the communities that rely on Evolve every day. Weapon screening isn't just about what's detected. It's about helping organizations establish environments where safety is taken seriously and people can go about their daily lives with confidence. By serving as a critical layer within broader safety strategies, our technology supports environments where students can learn, patients can receive care, employees can work, and communities can gather, helping make the world a better place to live, learn, work, and play. Over the past several months, We've seen multiple instances in education where Evolve systems flagged firearms and knives during student arrival screening, allowing school staff and law enforcement to intervene early and prevent weapons from entering school buildings. In these situations, teams are able to respond quickly and allow the school day to continue without escalation, underscoring the value of preventative, operationally reliable screening. These events are occurring alongside broader policy discussions, including in Georgia, where House Bill 1023 recently passed the House and is now under consideration in the Senate. The bill would require weapons screening at primary student entry points across public schools statewide. But we are not assuming any specific legislative outcome. We are monitoring this development as one example of how policy discussions and day-to-day security challenges continue to reinforce long-term demand for proactive, layered weapons screening. In the first quarter of 2026, we continue to see steady demand across our core and markets, beginning with education, where safety priorities, operational scale, and daily throughput make reliability essential. During the quarter, we added over a dozen new education customers, including K-12 districts and municipalities across Arkansas, California, Michigan, Mississippi, New Mexico, New York, North Carolina, Pennsylvania, Tennessee, and Texas. These wins spanned a wide range of district sizes and operating environments, reflecting the applicability of our solutions across diverse geographies and education systems. In healthcare, we continue to build momentum with new customers across a range of hospital and health settings. Notable additions included BronxCare Health System and the West Virginia University Health System. Additional wins with regional systems and community hospitals further expanded our footprint in healthcare, reflecting a focus on safety solutions that preserve patient access and experience. In professional sports and live entertainment, We added several high-profile venues during the quarter, including Subaru Park, which is a state-of-the-art stadium for professional soccer. We also added one of professional football's most established franchises, as well as a major multi-use arena in the Western U.S., which is home to both professional basketball and hockey. These environments require security approaches that perform consistently at scale without disrupting the fan experience. As the playoffs begin this spring, Evolve was proud to serve as the weapons screening partner for 50% of all playoff teams across professional basketball and hockey. This reflects sustained trust from leagues and franchises operating large scale, high visibility events. We are also seeing growing momentum in the enterprise workspace. Across corporate campuses, headquarters, manufacturing facilities, and distribution centers. Security leaders in these environments are increasingly focused on protecting employees and visitors while maintaining efficient operations. During the quarter, we added several large-scale enterprise customers, including one of the world's most valuable and recognizable technology companies, as well as another Fortune 500 corporation. Today, we are proud to serve as the trusted weapons screening partner for more than 30 Fortune 500 companies, highlighting our expanding role in supporting safer workplaces. The momentum we're seeing across these markets reinforces the trust customers place in Evolve as a long-term partner and validates our strategy to expand the platform beyond walkthrough screening. Expedite, our autonomous AI-based bag screening solution, continues to gain traction in environments where customers want to screen bags without slowing entry or increasing staffing requirements. Increasingly, customers are looking to conduct bag screening as part of a single integrated security workflow, and Expedite is purpose-built for that model. When deployed alongside Evolve Express, we believe this combination offers customers with substantial bag and backpack usage, and specifically bags that have items like laptops in them, one of the most effective screening solutions available. enabling high throughput while delivering remarkably low alarm rates. In fact, in a specific school deployment of Express and Expedite, one customer reported an Expedite average alert rate of less than 2% on over 300,000 scanned bags over a six-month period of time. We believe the market is increasingly recognizing this type of performance. We now have over 75 Expedite customers, representing approximately 6% of our total customer base, up from roughly 1% a year ago. In the first quarter, 19% of new customers purchased Expedite, almost always alongside Express, which stacks ARPUs while optimizing customer acquisition costs. As customers increasingly see the value in operating both walkthrough and bag screening through a single cloud connected platform, we see meaningful opportunity for account expansion and deeper subscription stickiness over time. Following a period of 18 months of meaningful progress in resetting the business and building momentum, my focus has increasingly shifted toward positioning the company for long term success. Recently, I've been able to spend more of my time focused on leadership and organization development as we prepare for our next stage of growth. We strengthen the organization with new, experienced talent across AI and algorithms, product management, services, and IT to support the long-range needs of a growing customer base while continuing to drive more innovation and executing with discipline. In parallel, we are increasing investments in the foundational capabilities required to operate at greater scale, upgrading core back office systems, strengthening our process and controls, and tightening key operating processes across the company. These investments are deliberate and are reflected in our outlook that expects to deliver expanded adjusted EBITDA margins in 2026, ensuring that increased organizational rigor and financial discipline progress hand in hand. Turning to operations, we remain on track with our strategic partnership with Plexus, our new global contract manufacturing partner. Onboarding is progressing as planned, and we expect to complete that work by the end of the quarter. The Plexus partnership positions us to expand production capacity, extend our global reach, and further strengthen operational resilience as we continue to scale. With respect to supply chain, while semiconductor supply constraints have been well documented across the industry, we've been able to largely mitigate these challenges and expect to maintain our delivery plans for the near term, and we continue to expect to execute against our full-year unit deployment targets. Importantly, when we provided our guidance earlier this year, we proactively considered the impact of premium pricing for components, and those assumptions were embedded into our outlook. As a result, while we remain vigilant, we believe we appropriately plan for these dynamics and our positions to manage them through the year. Before I turn things over to Chris, I want to share some context around our outlook. We continue to see strong momentum across the business. Our pipeline remains healthy. Execution is tracking well, and for those reasons, we are raising our outlook for 2026. We continue to expect to end 2026 with comfortably over 10,000 units deployed. We are raising full-year revenue guidance and now expect $175 to $180 million, up from $172 to $178 million, representing growth of 20% to 23% year over year. While we continue to invest in innovation and operations, we expect to deliver expanded adjusted U.M. margins in 2026. As we move forward, our focus remains squarely on execution and scale, delivering consistently today while building the foundation for durable long-term growth. With that, I'll turn it over to Chris to walk through our first quarter financial results and outlook in more detail.