Evolv Technologies Holdings, Inc.

Good afternoon and welcome to the Evolve Technology fourth quarter earnings results conference call. All participants are in a listen only mode. Later, we will 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, operator, and good afternoon, everybody. Welcome to today's call. I'm joined by John Kaczorski, our President and Chief Executive Officer, and Chris Kutzer, our Chief Financial Officer. Earlier today, after the market closed, we issued a press release detailing our fourth quarter results and our 2026 outlook. The release is filed with the SEC and 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 Security Litigation Reform Act of 1995. These statements relate to our current expectations and views of future events, but not limited to statements regarding our expectations for future growth, our ability to gain new customers and renew and expand existing customers, future demand for our products, and our ability to meet 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 from these forward-looking statements because of a number of risks and uncertainties, including without limitation, the risk factors set forth under the caption risk factors in our annual report on Form 10-K for the year ended December 31, 2025, filed with the SEC earlier today. The forward-looking statements made today represent our views as of March 10, 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 therein will be achieved or will occur. Except this may be required by applicable law, we disclaim any obligation to update them to reflect future events or circumstances. Please note that our commentary today will also include non-GAAP financial measures, which we believe provide additional insights for investors. These measures should not be considered in isolation from or as a substitute for financial information paired in accordance with GAAP. These measures include adjusted gross profit, adjusted gross margin, adjusted operating expenses, adjusted operating income, adjusted EBITDA, and adjusted EBITDA margin, along with adjusted earnings and adjusted earnings per diluted share. Reconciliations between these non-GAAP measures and the most directly comparable GAAP measures can be found in the press release that we issued earlier today. Please note that our definition of these measures may be different than similarly titled metrics presented by other companies. We will be discussing other metrics such as interrecurring revenue, or ARR, and remaining performance obligation, or RPO, both of which we believe are helpful to investors in understanding the progress we are making as a business. Before I turn things over to John, I'd like to highlight an upcoming event for our investors. We will be hosting our 2026 Investor Day on June 9th, 2026. The event will be webcast live on the investor relations section of our website, and we will share additional details as we get closer to the date. 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 I reflect on the progress we made in 2025, I'm reminded that everything we achieved began with the trust and partnership of our customers and was made possible by the steady, determined efforts of our entire team. Over the past year, we strengthened the consistency and stability of our operations while continuing to build a scalable, high growth, hardware enabled subscription business with increasingly predictable and durable results. We're doing this in a global security environment that is materially more complex than it was even a few years ago. Threat levels across public venues, schools, workplaces and critical infrastructure have continued to escalate. increasing the importance of security solutions that are not only effective, but scalable, consistent, and operationally reliable. That backdrop reinforces our belief that customer demand for modern technology-enabled security solutions will continue to expand. I want to take a moment to address all the discussion of generative AI and what I believe that means for the future of software and software as a service, or SaaS. It's incredible what the latest large language models can do. It's hard to utilize those models, especially in the area of software creation, and not ask yourself if pure SaaS is vulnerable to disruption. We are not pure SaaS. We are unique. We use a tight combination of hardware, sensors, proprietary data sets, and software that enables our AI models to make rapid decisions at customer locations. We control our full solution stack. We design our own hardware from the ground up, from the geometry of the coils we use to generate our electromagnetic fields to how we capture and process the data those fields create. We develop the software that runs on that proprietary hardware. We are able to use the unique data our systems create to train proprietary AI models that make rapid decisions to differentiate many types of weapons from many everyday benign items. Our thousands of deployed systems are cloud-connected, so we have access, with our customers' permission, to the data created by those systems. We use that data to evaluate our new models against real, not simulated scans so that we can best understand what their real-world impact is likely to be. Our solution stack is truly end-to-end. We believe that companies that control their end-to-end solution stack of hardware, software, and data will have a moat that can be defended. Our stack is ours. We have spent more than a decade building it. We control it. We sell our solution to customers as weapons detection as a service. By signing up for that service, customers gain access to the hardware, the software that runs it, the AI models that make threat determinations, and our on-site services to keep our systems operating as designed. At the end of 2025, all of that translated into 8,000 systems deployed, screening over 4 million people per day. And since the launch of Evolve Express, our technology has been used to screen more than 4 billion people worldwide. Yes, that's billion with a B. The more customers that sign up, the more real-world data we can use to evaluate our AI models in different verticals and environments. That data is not useful to anyone but Evolve and its customers. Because without our unique hardware and software, you simply could not use it. Over time, this combination of deployed systems, operational learning, and long-term customer relationships supports recurring revenue through multi-year subscription contracts, drives ARR growth, and builds RPO, a remaining performance obligation. Our fourth quarter results reflect continued execution of this approach. We ended 2025 with annual recurring revenue, or ARR, of $120.5 million, reflecting growth of 21% year over year. As we will discuss in more detail momentarily, we expect this rate of growth to accelerate in 2026 as growth in our recurring revenue base begins to outpace growth in total revenue. Revenue in Q4 was $38.5 million, up 32% year over year. For the full year, revenue was $145.9 million, representing growth of 40% year-over-year. Growth in the fourth quarter and the full year reflected strong new customer acquisitions, continued expansion within existing customers, and a step-up of approximately $15 million in the second half of product revenue, resulting from our decision to directly fulfill purchase subscriptions. We reported our fifth consecutive quarter of positive adjusted EBITDA with adjusted EBITDA margin of 4.7% in Q4 and 7.6% for the full year. We reported positive adjusted EBITDA of 11.1 million in 2025 compared to a loss of 21 million in 2024, a $32 million improvement in adjusted EBITDA on an absolute dollar basis. Total cash, cash equivalents, and marketable securities increased by $12.8 million sequentially in Q4 25 to $69 million, reflecting strong cash collection effort and discipline around working capital management. We believe this highlights the cash generating potential of the business over the long term. We welcomed over 60 new customers in Q4 and now serve over 1,200 customers globally. we continue to see a strong trend of existing customers upgrading to our Gen2 Express platform. These upgrades, together with solid ad market demand, drove a 13% year-over-year increase in RPO to $293.4 million at the end of Q4. Beyond the financial results, we continue to deliver real, measurable value to the growing number of communities that rely on us. That starts with our customers detecting and tagging an average of 500 firearms daily. At its core, weapon screening isn't just about what's detected. It's about creating a culture of safety where students, staff, and families know that violence prevention is taken seriously. By serving as a visible, everyday layer in a comprehensive school safety plan, our technology can help deter threats before they escalate and reinforce expectations for a safe learning environment, even on days when no weapon is found. Just last month, at a Georgia school customer, a student arrived on campus carrying a knife Our system flagged the threat, and when school police investigated further, they discovered a loaded handgun and drugs in the student's car. Parents there described the incident as a clear message to the community that the system works. And in a high school in Oregon, our solutions identified a student attempting to bring a loaded handgun through the school entrance. Staff were able to intervene immediately, secure the weapon, and keep the school operating without ever needing to initiate a lockdown. These are two more examples from opposite sides of the country that demonstrate how proactive weapon screening not only stops dangerous items from entering schools, but also strengthens overall campus safety every single day. In the fourth quarter, we added 12 new school districts across the U.S., as well as three universities in New York, Massachusetts, and Texas. For the year, we added 65 new education customers, and we're proud to have screened approximately 300 million students and visitors. In the healthcare sector, we are advancing a critical industry transformation by enabling hospitals to strengthen safety through a rigorous, layered security model designed to address one of their most pressing risk areas. Hospitals remain among the most dangerous workplaces in the United States, accounting for nearly 70% of all reported workplace violence incidents. Our solutions provide threat detection at key access points while maintaining efficient patient-centric entry experiences, Recent customer additions include William P. Clements Junior University Hospital in Texas, the University of Oklahoma Medical Center, and Mosaic Life Care at St. Joseph in Missouri. As adoption in healthcare continues to expand, our technology now supports the screening of over 1 million patients, healthcare workers, and visitors each day across medical facilities nationwide. Staying in healthcare, we are pleased to announce a new partnership with the American Hospital Association. under which Evolve has been designated a preferred provider for hospitals and health systems nationwide. This designation marks an important milestone in our healthcare strategy and validates the critical role our technology plays in protecting patients, clinicians, and visitors. Through this collaboration, we will engage directly with AHA's nearly 5,000 member hospitals and 43,000 individual members across events, thought leadership platforms, and key industry forums, reinforcing our shared commitment to safer, more secure, and more welcoming healthcare environments. Shifting to sports and live entertainment, we continue to expand our presence with over a dozen new customers in the fourth quarter. including seven professional football teams, reflecting continued demand for modern, efficient screening solutions across practice and training facilities. Teams are increasingly turning to evolve as they look for ways to manage high volume entry points with speed, reliability, and a better experience for players, staff, media, and fans. Each new deployment reinforces our position as a trusted partner in complex, high throughput settings where security and efficiency must coexist. Our market leadership extends well beyond the five major professional leagues where we have already established a leadership position. We added 65 new sports and live entertainment customers in 2025. We also saw continued strength in renewals and Gen 2 upgrades in this market as well. TD Garden, home to the Boston Celtics and the Boston Bruins, upgraded to Gen 2 Express for walkthrough screening and added four expedite systems for autonomous x-ray screening of bags. Crypto.com Arena upgraded to Gen 2 and added an additional expedite. Other notable renewals and upgrades include the Houston Astros, Houston Texans, St. Louis City Soccer Club, and the Philadelphia Eagles. Across this segment, the combination of new customers, expanding partnerships, and high-value Gen 2 upgrades highlights the strength of our market position. Today, we proudly screen nearly 1.5 million sports and live entertainment visitors every day. Another key market where we are seeing growing momentum is in the workplace. Across commercial office buildings, distribution centers, warehouses, and manufacturing facilities, security leaders are increasingly focused on protecting employees and visitors in environments where high volume foot traffic can create real operational risk. Companies are under growing pressure to strengthen corporate security programs without disrupting productivity. Our ability to provide fast and effective screening is resonating with enterprises that are modernizing outdated systems. In the fourth quarter, we added multiple new Fortune 500 companies, including one of the 10 largest banks in the world, a top 25 U.S. retailer, a Fortune 100 healthcare innovator, a major insurance and financial services company, and a multinational medical technology company. These wins underscore the growing demand we're seeing from large-scale enterprises that view workplace safety as a strategic imperative, and they highlight our growing role in securing the modern workplace. We are proud to be the trusted security provider for over 30 of the Fortune 500. The momentum we're seeing across these key markets reinforces the trust customers are placing in Evolve as their long-term security partners. Building on that foundation, we've continued to invest in broadening our product portfolio, and nowhere is that more evident than the early success of Expedite, our autonomous AI-based bag screening solution. Expedite is resonating across environments where patrons bring bags and our customers want to screen 100% of those bags without slowing down entry, whether in education, healthcare, industrial workplaces, or sports entertainment. After just its first full year in market, we now have 65 Expedite customers, or about 5% of our base of 1,200 customers. Adoption is coming from both existing and new customers. In the fourth quarter, 16 brand-new Evolve customers purchased Expedite, and 11 of them also purchased Express, creating meaningful customer acquisition cost tailwinds as we land multi-product relationships from day one. Early deployments show a strong promise in balancing threat detection with significantly lower false alarm rates. This helps security teams focus on real threats while maintaining a smooth flow for students, staff, and visitors. We continue to believe Expedite will drive stronger attach rates, customer expansion, and deeper subscription stickiness by enabling organizations to run all screening operations through a single cloud connected platform. Before I hand 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 and execution is tracking well. For those reasons, we are raising our initial outlook for 2026. We expect to end 2026 with comfortably over 10,000 units deployed. We are modeling full year revenue of $172 million to $178 million, above the $160 to $165 million range we shared last November, with ARR growth in the range of 20% to 25%. While we continue investing in innovation and our product portfolio, we also expect to deliver modestly expanded adjusted EBITDA margins to the high single digits. 2025 is about strengthening our foundation, clarifying priorities, sharpening execution, and positioning the company for the future. As we look ahead, 2026 is about building the engine for durable, long-term growth. We believe weapons screening could become as common in certain types of buildings as sprinkler systems and intrusion alarms are today, not as a luxury, but as standard infrastructure. Getting there will require relentless innovation in weapons detection accuracy, form factor, and cost, And we believe we are well-positioned to lead the industry on all three. Through continued investment in AI, expansion within our install base, new product adoption, and disciplined market expansion, we are building the long-term architecture of a scaled global security platform. With that, I'll turn it over to Chris to walk through our financial results and the details behind our outlook.