Evolv Technologies Holdings, Inc.
For the period ended Mar 31, 2026. Filed May 12, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 12, 2026
EVLV$4.56+0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-13.
0001805385-25-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-12.
0001805385-26-000028
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 169 previous paragraphs and 177 current paragraphs.
61 unchanged; 67 reworded; 45 added; 35 removed; 6 previous and 4 current paragraphs rearranged.
Tables are not compared: 18 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (45)
Current report
Our solutions are delivered through a Security-as-a-Service model that integrates our proprietary sensor platform and AI-powered software, cloud connectivity, and ongoing services. We deliver our solutions through two sales models: a pure subscription model and a purchase subscription model, each of which requires both hardware and an active, connected software subscription. We believe this integrated approach reflects the full scope of our offering and aligns our long-term interests with those of our customers.
Current report
Our hardware platforms are uniquely designed and purpose engineered for real world, high throughput security environments and are the foundational component of our solutions. Evolv Express® and Evolv eXpedite™ operate exclusively with Evolv’s proprietary software and cloud services. When deployed together, the two products are designed to support improved operational efficiency through better threat identification and alarm performance. We believe our ability to deliver continuous improvement through software upgrades differentiates our platform from many legacy hardware only offerings.
Current report
Our platform was designed from inception around AI operating in physical environments. Our AI powered software and services are central to the performance and long-term value of our platform. Through continuous operation across a large and growing installed base, our systems generate substantial volumes of anonymized screening data related to the movement of people and bags through physical spaces. We train our models on a proprietary data set and can improve the system performance through new and updated algorithms, which customers receive from us through software updates.
Current report
We focus on weapons detection and offer two core solutions that can be deployed independently or together and are supported by data and visual dashboards that provide actionable analytics and automated reports designed to help security teams make evidence-based decisions to strengthen security. Evolv Express is designed to screen high volumes of people for concealed threats, while Evolv eXpedite is designed to screen high volumes of bags automatically, without requiring a trained X-Ray operator. When deployed together, these solutions provide a layered security approach that allows customers to operate at heightened sensitivity levels while seeking to maintain efficient throughput and a positive visitor experience.
Current report
In addition to screening capabilities, our subscription includes Evolv Insights®, our cloud-based analytics solution that provides customers with operational visibility into system performance across their venues or facilities. Available data includes throughput volumes, alarm statistics, detection settings, and system performance metrics, which customers can use to inform security operations, staffing decisions, and checkpoint configuration.
Current report
Our offering is bundled together by the services included in our subscription. We recognize that the primary mission of our customers is typically not security. Our customers’ mission might be educating children, restoring patients to good health, or entertaining fans in their seats. Our subscription includes full onsite support and repair services for the full term, so that our customers can focus on what they do best while we make sure their equipment is operating as designed. We are security as a service, from the hardware to the software to the data to the support.
Current report
Our platform incorporates both hardware and software components that are deployed across a large number of operating venues. Each deployed unit functions not only as a detection device but also as a data collection mechanism, generating ongoing real‑world operational data, including both threat and non‑threat events. Some of this data is used to support the continued development and refinement of our algorithms. We believe the integration of our hardware and software creates operational interdependencies that are integral to our platform. As a result, the hardware and software components of our system are designed to operate together and are not intended to function as standalone offerings, which distinguishes our approach from cloud‑only software solutions.
Current report
We believe our hardware-enabled, long term subscription model differentiates our business from purely software-as-a-service offerings. We believe our platform is well positioned to benefit from ongoing advances in artificial intelligence, driving durable customer value and supporting predictable, recurring subscription revenue.
Current report
Our customers include many iconic venues across a wide variety of industries, including major sports stadiums and arenas, notable performing arts and entertainment venues, major tourist destinations and cultural attractions, hospitals, large industrial workplaces, schools, and prominent houses of worship.
Current report
Key indicators of our performance of market acceptance and customer adoption include Annual Recurring Revenue (“ARR”), a measure of annualized recurring subscription and related service revenue, and Remaining Performance Obligation (“RPO”), a measure of expected future revenue from active customer contracts. We believe these indicators reflect the scale, durability, and growth of our Security‑as‑a‑Service model.
Current report
Certain Key Metrics and Non-GAAP Financial Measures
Current report
ARR. We believe annual recurring revenue (“ARR”) is a useful metric for investors because it provides visibility into the scale and sustainability of our recurring revenue base. ARR reflects the annualized value of active subscription arrangements at a point in time and helps investors evaluate trends in customer and unit acquisition, retention, and expansion. As our business continues to shift toward pure subscription and purchase subscription sales models (and away from our legacy distribution subscription model), we believe ARR more accurately captures the recurring nature of our revenue compared to period based revenue measures alone. Management also uses ARR to assess operating performance, inform strategic decisions, and plan for future growth, because it is impacted by multiple dimensions of our business, including new customer and unit acquisition, customer pricing, renewal history, and renewal pricing.
Current report
We define ARR as the sum of subscription revenue and the recurring service revenue related to purchase subscriptions for the final month of the quarter all multiplied by twelve. The amount of revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly due to differences in our recurring and non-recurring revenue streams. To the extent that we are negotiating a renewal or upgrade with a customer after the expiration of the subscription and we are continuing to provide service to that customer, we may continue to include that associated revenue in ARR. If a customer notifies us that it is not renewing its subscription, we will continue to include associated revenue in ARR through the natural expiration of the subscription term. ARR should be viewed independently of, and not as a substitute for or forecast of, revenue or deferred revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies.
Current report
As of March 31, 2026, ARR was $127.3 million, compared to $106.0 million as of March 31, 2025, representing year over year growth of 20%. This increase was driven by the addition of nearly 250 customers during 2025, expanded deployments by existing customers and increased demand for our pure subscription and purchase subscription sales models which generate a higher proportion of recurring revenue compared to our legacy distribution subscription sales model (see "Sales Models”).
Current report
RPO. We believe Remaining Performance Obligation ("RPO"), a measure of expected future revenue from active customers, to be a key indicator of our performance. As disclosed in Note 5 to our financial statements, RPO at March 31, 2026 was $299.0 million, an increase of approximately 2% from December 31, 2025, driven by continued market demand.
Current report
Adjusted EBITDA. We believe Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) is a useful metric for investors because it provides insight into the underlying operating performance of our business by excluding items that are not indicative of our core operating results or that may vary significantly from period to period. Adjusted EBITDA facilitates period-to-period comparisons of our operating performance and enhances investors’ ability to evaluate trends in profitability and operating leverage. In addition, Adjusted EBITDA helps investors better understand the impact of our cost structure and operating efficiency as we scale our business, independent of non‑cash expenses, financing decisions, tax structure, and certain non‑recurring or non‑operational items. While Adjusted EBITDA should be considered in conjunction with our GAAP financial results, we believe it provides supplemental information that enhances investors’ understanding of the performance of our business.
Current report
Management uses Adjusted EBITDA internally to assess operating performance, monitor cost discipline, and evaluate the efficiency of our business as we scale. Adjusted EBITDA is a key metric used by management to measure the profitability of our core operations and to assess the impact of operating decisions across the organization. Management reviews Adjusted EBITDA trends to inform strategic decisions related to expense management, investment prioritization, and resource allocation. Because Adjusted EBITDA excludes certain non‑cash and non‑recurring items, it allows management to better evaluate underlying operating performance and comparability across reporting periods. By monitoring Adjusted EBITDA over time, management is able to assess progress toward profitability objectives and make informed decisions regarding long-term operational and financial planning.
Current report
The following table presents a reconciliation of net income, the most directly comparable GAAP financial measure, to Adjusted EBITDA for each of the periods indicated:
Current report
For the three months ended March 31, 2026, Adjusted EBITDA was $3.9 million, compared to $2.1 million for the three months ended March 31, 2025, representing an improvement of $1.9 million year-over‑year. This improvement was primarily driven by revenue growth, increased operating leverage, and continued discipline in managing operating expenses, partially offset by higher investments to support growth initiatives and customer deployments.
Current report
Product Revenue
Current report
Subscription Revenue
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Service Revenue
Current report
Restructuring Costs
Current report
Interest Expense
Current report
Interest expense includes interest on ourlong-term debt, amortization of debt issuance costs, and unused commitment fees.
Current report
Interest Income
Current report
Change in Fair Value of Contingent Earn-out Liability
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Change in Fair Value of Public Warrant Liability
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Product Revenue
Current report
The increases in product revenue and cost of product revenue for the three months ended March 31, 2026 compared to the prior year period areprimarily due to an increased utilization of our purchase subscription model, in which the customers purchase Evolv Express and Evolv eXpedite systems directly from us. During the three months ended March 31, 2026, we recognized product revenue related to a large customer order which contributed approximately $1.9 million to product revenue, which included certain non-recurring engineering deliverables at higher margins than our typical product sales. The increase in product gross profit margin for the three months ended March 31, 2026 compared to prior year period was also driven by our ability to leverage our fixed costs over a higher revenue base, partially offset by an increase in outbound shipping costs of $0.4 million due to higher shipping volume and increase in manufacturing expense of $0.3 million.
Current report
Subscription Revenue
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Service Revenue
Current report
The increases in service revenue, cost of service revenue, and gross profit are primarily due to the growth in the number of active revenue-generating purchase subscription systems in the field duringthe three months ended March 31, 2026, compared to the prior year period. The gross profit margin was consistent with the prior period.
Current report
The increase in personnel related expenses is primarily due to an increase in payroll costs and stock-based compensation of $0.5 million, which resulted primarily from new hires in our research and development functions to support continued product innovation. Other expense increased primarily due to an increase in software subscription costs of $0.2 million.
Current report
Restructuring Costs
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Interest Expense
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Interest Income
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Change in Fair Value of Contingent Earn-out Liability
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Change in Fair Value of Public Warrant Liability
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Removed paragraphs (35)
Previous report
Our solutions combine proprietary software and hardware, delivered as a long-term Security-as-a-Service (“SaaS”) subscription model, and are designed to enhance security and improve the visitor experience. Evolv provides a cloud-connected, AI-driven approach to security that goes beyond just hardware, supporting the end-to-end screening experience. Our focus is weapons detection, and we offer two core solutions: Evolv Express® and Evolv eXpedite™, designed to efficiently screen high volumes of people and bags for concealed threats.
Previous report
Our flagship product, Evolv Express, uses advanced sensors, AI-powered software, and cloud services to not only consistently detect firearms, improvised explosives, and certain types of knives and distinguish them from many harmless items such as cell phones and keys, but also visualize the location of the potential threat helping to enable security personnel to conduct targeted, minimally intrusive secondary screenings. Evolv eXpedite, our high-speed autonomous X-ray bag scanning solution, works with Evolv Express to provide a layered approach to security for concealed weapons detection in high clutter environments. Using eXpedite with Express aims to allow the checkpoint to operate at heightened sensitivity while potentially reducing the burden on security staff and optimizing the visitor experience.
Previous report
Our innovative technology is designed to enhance security and provide an efficient, positive visitor and customer security experience. In addition to screening capabilities, our solution includes Evolv Insights®, a powerful software analytics dashboard that allows customers to comprehensively review, analyze, and gather insights from the Evolv Express screening systems at their various venues or facility locations. Available data includes visitor arrival patterns, throughput volumes, system detection performance, alarm statistics, weapons detected and detection settings. Our customers can leverage this data to inform their security operations, while providing end-users with an approachable security experience. Our products, which are offered to our customers primarily under a multi-year subscription model, provide predictable revenue streams for us in addition to value for our customers.
Previous report
The restructuring charges, which had previously been included in cost of service revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses, has been reclassified for prior periods to restructuring costs on the condensed consolidated statements of operations and comprehensive loss. See “Reclassifications” below and Note 1 for additional information.
Previous report
Interest expense includes cash interest paid on long-term debt and amortization of deferred financing fees and costs.
Previous report
Reclassifications
Previous report
During the three months ended March 31, 2025, the Company began classifying restructuring charges, which includes termination charges arising from severance obligations, incremental non-cash expense, and other customary employee benefit payments in connection with a reduction in force, within restructuring costs on the condensed consolidated statements of operations and comprehensive loss, whereas the restructuring costs for these services has previously been included in cost of service revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses. These reclassifications were made to align the presentation of restructuring charges with the Company's internal reporting and analysis. See Note 1, Nature of the Business and Basis of Presentation for additional information.
Previous report
The increases in product revenue and cost of product revenue for the three months ended September 30, 2025 compared to the prior year period are primarily due to an increased utilization of our purchase subscription model, in which customers purchase Evolv Express and Evolv eXpedite systems directly from us instead of through our distributor licensing model. The increase in product gross profit margin was due to an expense related to our inventory reserve of $1.5 million recognized in the three months ended September 30, 2024, which related primarily to the transition of our manufacturing operations to the next generation of Evolv Express systems and the determination that certain components within our legacy systems will not be used in the next generation systems, partially offset by the initial deployments of our Evolv eXpedite systems, which as a new product offering reflect a higher initial cost to produce that we expect to gradually decline in the future.
Previous report
The increases in service revenue, cost of service revenue, and service gross profit are primarily due to increased maintenance revenue associated with growth in number of active revenue-generating purchase subscription units, as well as active revenue-generating units purchased by customers directly from Columbia Tech under our distributor licensing model, for the three months ended September 30, 2025 compared to the prior year period. The decrease in gross profit margin is primarily due to a $0.5 million estimated field services cost related to the replacement of certain Express system parts and a $0.2 million increase in amortization of capitalized software costs during the three months ended September 30, 2025 due to the release of Evolv eXpedite and our second generation of Evolv Express systems.
Previous report
The increase in personnel related expenses is primarily due to a decrease in payroll costs capitalized related to internal-use software and software embedded in products to be sold or leased of $0.2 million. The decrease in materials and prototypes expense is primarily due to a decrease of $0.3 million in design and engineering costs reflecting the timing of certain product releases in the prior year.
Previous report
Change in the fair value of the contingently issuable common stock liability resulted in a $2.2 million gain for the three months ended September 30, 2025, resulting from quarterly mark-to-market adjustments and common shares issuance, and a $2.1 million loss for the three months ended September 30, 2024, resulting from quarterly mark-to-market adjustments.
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Comparison of the Nine Months Ended September 30, 2025 and 2024
Previous report
The increases in product revenue and cost of product revenue for the nine months ended September 30, 2025 compared to the prior year period are primarily due to an increased utilization of our purchase subscription model, in which the customers purchase Evolv Express and Evolv eXpedite systems directly from us. The increase in product gross profit margin for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 is primarily due to expense recognized during the nine months ended September 30, 2024 of a $1.1 million related to non-cancellable inventory purchase commitments, a $0.6 million decrease in charges for inventory reserves during the nine months ended September 30, 2025 as compared to the same period in the prior year, and a $0.7 million decrease in manufacturing expense during the nine months ended September 30, 2025, primarily related to the deployments of second generation of Evolv Express systems, which provide improved gross margins as compared to the first generation products, all partially offset by the initial deployments of Evolv eXpedite systems, which, as a new product offering, reflect a higher initial cost to produce that we expect to gradually decline in the future.
Previous report
The increases in subscription revenue, cost of subscription revenue, and subscription gross profit are primarily due to continued growth in our customer base as of September 30, 2025 compared to the prior year, with a higher number of active Evolv Express systems deployed under our pure subscription model and an increase in short term rental subscription revenue during the nine months ended September 30, 2025. Gross profit margin decreased primarily due to a $3.1 million loss on disposals of certain first generation Evolv Express systems and a $0.6 million estimated field services costs related to the replacement of certain Express system parts during the nine months ended September 30, 2025.
Previous report
The increases in service revenue, cost of service revenue, and gross profit are primarily due to increased maintenance revenue associated with growth in number of active revenue-generating purchase subscription units, as well as active revenue-generating units purchased by customers, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease in gross profit margin is primarily due to an accrual of $0.5 million estimated field services costs related to the replacement of certain Express system parts and increased amortization of capitalized software costs during the nine months ended September 30, 2025 by $0.7 million due to the release of Evolv eXpedite and our second generation of Evolv Express systems.
Previous report
License fee and other revenue
Previous report
The increase in license fee and other revenue and gross profit was primarily driven by $7.8 million of license fees earned during the nine months ended September 30, 2025 compared to $4.0 million earned during the nine months ended September 30, 2024 under the distributor licensing model, as well as a $0.4 million increase in installation and training service fees. In addition to the increase in the unit sales through our distributor licensing model, per-unit license fees also increased for our second generation of Evolv Express systems.
Previous report
Research and Development Expenses
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The decrease in personnel related expenses is primarily due to the January 2025 reduction in force, which resulted in a decrease in payroll costs of $0.9 million, partially offset by a $0.1 million increase in stock-based compensation and a decrease in payroll costs capitalized related to internal-use software and software embedded in products to be sold or leased of $0.1 million. The decrease in materials and prototypes expense is primarily due to a decrease of $1.0 million in design and engineering costs and $0.4 million inventory reserve on unused components recognized in the prior year, both of which relate primarily to the development of the next generation of our Evolv Express system and new product offerings. The decrease in professional fees primarily relates to a decrease in consulting costs incurred for product development and engineering of $0.5 million.
Previous report
Sales and Marketing Expenses
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The decrease in personnel related expenses is due to a decrease in payroll costs and stock-based compensation of $7.2 million, which resulted primarily from the reductions in force in May 2024 and January 2025. Stock-based compensation expense included in sales and marketing expenses was $4.2 million for the nine months ended September 30, 2025 compared to $8.2 million for the nine months ended September 30, 2024. The decrease in advertising and direct marketing expense is primarily due to a decrease in expenses related to trade shows and events of $0.6 million and a decrease in sponsorship fees of $0.5 million. The decrease in travel and entertainment expense is due to a decrease in travel costs for in-person sales meetings of $2.1 million as a result of our reductions in force. Professional fees decreased due to a decrease in marketing consulting costs of $1.0 million. Other expense decreased primarily due to reduction in shipping costs related to demonstration units of $0.4 million and supplies costs of $0.3 million.
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General and Administrative Expenses
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The decrease in personnel related expenses is due to a decrease in stock-based compensation of $2.5 million, which resulted primarily from the termination of certain executives and the reduction in force in January 2025, partially offset by a $1.4 million increase in payroll costs, which resulted primarily from an increase in accrued bonuses. Stock-based compensation expense included in general and administrative expenses was $6.8 million for the nine months ended September 30, 2025 compared to $9.2 million for the nine months ended September 30, 2024. Professional fees increased primarily due to an increase in outsourced accounting consultancy of $1.5 million and an increase in legal fees of $0.3 million, partially offset by a decrease in audit and tax fees of $0.4 million. Non-recurring professional fees and other expenses increased primarily due to a $10.3 million increase in consulting and legal fees related to the Investigation and related matters and audit fees incurred in connection with the restatement of prior period financial statements, $1.0 million of estimated net losses related to class action lawsuits, and an increase in rent of $0.9 million for additional leased space, partially offset by insurance recoveries of $6.8 million and a decrease in IT and software subscription costs of $0.3 million.
Previous report
Interest expense of $0.7 million for the nine months ended September 30, 2025 related to cash interest paid on long-term debt and amortization of deferred financing fees and costs. No interest expense was recognized for the nine months ended September 30, 2024, as there was no debt outstanding during the period.
Previous report
Change in the fair value of the contingently issuable common stock liability resulted in a $0.1 million loss for the nine months ended September 30, 2025, resulting from quarterly mark-to-market adjustments and common shares issuance, and $2.2 million gain for the nine months ended September 30, 2024, resulting from quarterly mark-to-market adjustments.
Previous report
Change in the fair value of the public warrant liability resulted in a $6.2 million loss and a $5.5 million gain for the nine months ended September 30, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments.
Previous report
Additionally, there continues to be significant uncertainty regarding recent changes and potential future developments related to increased trade restrictions, tariffs or taxes on imports or exports relating to countries where we source or sell materials or products. The exact magnitude of any potential impact remains uncertain, as there may be further changes to tariffs and policies and, consequently, potential increased tension between the U.S. and targeted countries, and our financial condition and results of operations could be adversely affected.
Previous report
•$16.9 million increase in accrued expenses and other current liabilities primarily due to a legal settlement offer accrual and bonus accrual, partially offset by decrease in accrued vendor payables;
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•$0.7 million increase in commission assets due to a higher volume of sales.
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•$8.3 million increase in inventory primarily due to increased purchases to satisfy future expected demand for the first generation of Evolv Express systems and for the ongoing transition to the next generation of Evolv Express systems;
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•$4.1 million increase in prepaid expenses and other current assets primarily due to prepaid deposits related to orders placed for Evolv Express systems; partially offset by
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•$1.7 million increase in accrued expenses due to the timing of certain payments; and
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•$1.0 million decrease in contract assets related to the timing of revenue recognition.
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During the nine months ended September 30, 2025, cash provided by financing activities was $34.7 million. The increase was primarily driven by $30.0 million in proceeds from debt issuance under the drawn Initial Term Loan, partially offset by total debt issuance costs of $3.7 million. Additional sources of financing cash flows included proceeds from the exercise of stock.
Previous report
For the fiscal year 2025, the Company implemented a channel partner rebate program (the “Rebate Program”) for eligible resellers. Under the Rebate Program, eligible resellers that attain at least 25% of their current fiscal year total contract value (“TCV”) target (“Annual Target”) in a given quarter are eligible for a rebate based upon a percentage of their TCV for that quarter. In addition, resellers that meet their Annual Target are eligible for a one-time rebate based upon a percentage of their total fiscal year TCV, applied as a credit in the subsequent fiscal year. All rebates are issued as credits against future purchases, and no cash rebates are paid. Unused rebate credits are forfeited in the event of a reseller agreement termination.
Reworded paragraphs (67)
Previous wording
Evolv is a leading security technology company pioneering Artificial Intelligence (“AI”)-powered screening designed to help create safer experiences, with key market categories that include education, healthcare, sports, live entertainment, and industrial workplaces. Our mission is to make the world a safer and more enjoyable place to live, work, learn, and play. Our goal is to help facility operators address the chronic epidemic of escalating gun violence, mass shootings and terrorist attacks while maintaining a positive visitor experience.
Current wording
Evolv, a Delaware corporation formed in 2021, is a leading security technology company pioneering Artificial Intelligence (“AI”)-powered screening solutions designed to help create safer environments while maintaining efficient visitor flow and a positive visitor experience. We serve customers across a range of end markets, including education, healthcare, sports, live entertainment, tourist attractions, houses of worship, and industrial workplaces. Our mission is to make the world a safer and more enjoyable place to live, work, learn, and play. Our goal is to help facility operators address escalating gun violence, mass shootings and terrorist attacks while maintaining a positive visitor experience.
Previous wording
On November 5, 2025, we entered into a non-exclusive contract manufacturing agreement with Plexus Corp. (“Plexus”). This shift is part of a broader supply chain strategy aimed at enhancing scalability, geographic diversification, creating long-term cost-saving opportunities, and operational resiliency. As Plexus is brought onboard, we believe we maintain ample inventory and committed production capacity to meet our growth targets with our existing contract manufacturer, ensuring uninterrupted service and consistent delivery to customers.
Current wording
On November 5, 2025, we entered into a non-exclusive contract manufacturing agreement with Plexus Corp. (“Plexus”). This shift is part of a broader supply chain strategy aimed at enhancing scalability, geographic diversification, creating long-term cost-saving opportunities, and operational resiliency. As Plexus is brought onboard, we believe we maintain sufficient inventory and committed production capacity to meet our growth targets with our existing contract manufacturer, ensuring uninterrupted service and consistent delivery to customers.
Previous wording
We regularly evaluate our supply chain structure to mitigate risks, including dependencies, lead times, and cost fluctuations. While no material disruptions are anticipated during the onboarding of Plexus, we continue to monitor potential risks associated with onboarding, logistics, and supplier performance. These factors may influence cost of revenue, inventory levels, and working capital in future periods.
Current wording
We regularly evaluate our supply chain structure to mitigate risks, including supplier concentration and dependencies, global chipset and semiconductor supply constraints, including memory and compute components used in AI‑enabled products, long and variable lead times, cost volatility, and supplier allocation practices. While we are actively managing the effects of these global market conditions on the supply of certain components, there can be no assurance that supplier capacity constraints, inventory availability, or supply‑chain disruptions will not impact our ability to meet customer demand in future periods. We continue to monitor risks associated with supplier onboarding, logistics, and supplier performance. These factors may influence cost of revenue, inventory levels, working capital, and our ability to meet customer demand in future periods.
Previous wording
We expect that our results of operations, including our revenue and cost of revenue, may fluctuate or continue to fluctuate based on, among other things, the impact of rising inflation and interest rates on business spending; supply chain issues and the impacts on our manufacturing capabilities; public health emergencies; geopolitical conflicts and war, including the conflicts in Europe and the Middle East; and recessionary trends. See the risk factor titled “Our operating results may fluctuate for a variety of reasons, including our failure to close large volume opportunity customer sales” in the“Risk Factors” section in this Quarterly Report on Form 10-Q. While these factors continue to evolve, we plan to remain flexible and optimize our business as appropriate and allocate resources, as necessary.
Current wording
We expect that our results of operations, including our revenue and cost of revenue, may fluctuate or continue to fluctuate based on, among other things, the impact of rising inflation and interest rates on business spending; supply chain constraints, operational challenges, and the impacts on our manufacturing capabilities; public health emergencies; geopolitical conflicts and war, including the conflicts in Europe and the Middle East; and recessionary trends. See the risk factor titled“Our operating results may fluctuate for a variety of reasons, including our failure to close large volume opportunity customer sales” in Item 1A. Risk Factors of this Quarterly Report on Form 10-Q. While these factors continue to evolve, we plan to remain flexible and optimize our business as appropriate and allocate resources, as necessary.
Previous wording
We believe the world will continue to focus on the safety and security of people in the places where they gather. Many of these locations, such as professional sports venues, educational institutions, and healthcare facilities, are moving toward a more frictionless security screening experience. We are well-positioned to take advantage of this opportunity due to our proprietary technologies and distribution capabilities. Our products are designed to empower venues and facilities to realize the full benefits of touchless security screening, including a rapid visitor throughput and minimal security staff to screened visitor physical contact. We expect that our results of operations, including revenue, will fluctuate for the foreseeable future as venues and facilities continue to shift away from conventional security screening processes towards touchless security screening or consider security screening processes for the first time. The degree to which potential and current customers recognize these benefits and invest in our products will affect our financial results.
Current wording
We believe the world will continue to focus on the safety and security of people in the places where they gather. Many of these locations, such as professional sports venues, educational institutions, and healthcare facilities, are moving toward a more frictionless security screening experience. We are well-positioned to take advantage of this opportunity due to our proprietary technologies and distribution capabilities. Our products are designed to empower venues and facilities to realize the full benefits of advanced security screening, including rapid visitor throughput and minimal security staff to screened visitor physical contact. We expect that our results of operations, including revenue, will fluctuate for the foreseeable future as venues and facilities continue to shift away from conventional security screening processes towards touchless security screening or consider security screening processes for the first time. The degree to which potential and current customers recognize these benefits and invest in our products will affect our financial results.
Previous wording
We sell our solutions under two primary sales models. We offer a “pure subscription” model, where the customer leases hardware from us and we provide a multi-year security-as-a-service subscription. For end-user customers that prefer to purchase our hardware outright, we offer customers the option of purchasing our hardware outright directly from us through our “purchase subscription” model. In addition to our two primary sales models, we have historically offered our “distributor licensing” model based on the Distribution and License Agreement we entered into with Columbia Tech in March of 2023. Under this arrangement, we have granted a license of our intellectual property to Columbia Tech, which contracts directly with certain of our resellers to fulfill sales demand where the end-user customer prefers to purchase the hardware equipment. Columbia Tech pays us a hardware license fee for each system it manufactures and sells under this agreement. In these instances, we still contract directly with the reseller to provide a multi-year security-as-a-service subscription to the end-users. During the three months ended September 30, 2025, we discontinued quoting on this basis, and while any outstanding quotes will be honored, all new quotes for end-user customers wishing to purchase the hardware equipment will be fulfilled through our purchase subscription model going forward. Thus, license revenue from this agreement is expected to reduce to zero over time, replaced by increased product revenue, which will in turn provide an increase in gross profit and a decrease in gross margin percentage. We regularly assess our sales and fulfillment models to ensure they align with customer preferences, operational scalability, and our long-term business objectives. We expect our revenue, gross profit, gross margin, and overall profitability in any given fiscal period to be influenced by customer demand for our various sales and fulfillment models, as well as any future strategic management decisions affecting our sales and fulfillment models that may result from such assessments.
Current wording
We sell our solutions under two primary sales models. We offer a “pure subscription” model, where the customer leases hardware from us and we provide a multi-year security-as-a-service subscription. For end-user customers that prefer to purchase our hardware outright, we offer customers the option of purchasing our hardware outright directly from us through our “purchase subscription” model that also includes a multi-year security and software-as-a-service subscription. In addition to our two primary sales models, we have historically offered our “distributor licensing” model based on the Distribution and License Agreement we entered into with Columbia Tech in March of 2023. Under this arrangement, we have granted a license of our intellectual property to Columbia Tech, which contracts directly with certain of our resellers to fulfill sales demand where the end-user customer prefers to purchase the hardware equipment. Columbia Tech pays us a hardware license fee for each system it manufactures and sells under this agreement. In these instances, we still contract directly with the reseller to provide a multi-year security-as-a-service subscription to the end-users. During the three months ended September 30, 2025, we discontinued quoting on this basis, and the agreement with Columbia Tech expired on December 31, 2025. All new quotes for end-user customers wishing to purchase the hardware equipment will be fulfilled through our purchase subscription model going forward. Thus, license revenue from this agreement is expected to reduce to zero over time, replaced by increased product revenue, which will in turn provide an increase in gross profit over the duration of the contract. We regularly assess our sales and fulfillment models to ensure they align with customer preferences, operational scalability, and our long-term business objectives. We expect our revenue, gross profit, gross margin, and overall profitability in any given fiscal period to be influenced by customer demand for our various sales and fulfillment models, as well as any future strategic management decisions affecting our sales and fulfillment models that may result from such assessments.
Previous wording
Going forward, we expect our products to be adopted in a variety of vertical industry markets and geographic regions. While adoption of our products has primarily been within the United States to date, we expect increased adoption of our products in foreign markets in the near future as we explore expansion into international markets. Pricing may vary by region or vertical market due to market-specific dynamics. As a result, our financial performance depends, in part, on the mix of sales, bookings, and business in different markets during a given period. In addition, we are subject to price competition, and our ability to compete in key markets will depend on the success of our investments in new technologies and cost improvements as well as our ability to efficiently and reliably introduce AI-powered security screening solutions to our customers.
Current wording
Going forward, we expect our products to be adopted in a variety of vertical industry markets and geographic regions. While adoption of our products has primarily been within the United States to date, we expect increased adoption of our products in foreign markets in the near future as we explore expansion into international markets. Pricing may vary by region or vertical market due to market-specific dynamics. As a result, our financial performance depends, in part, on the mix of sales and business in different markets during a given period. In addition, we are subject to price competition, and our ability to compete in key markets will depend on the success of our investments in new technologies and cost improvements as well as our ability to efficiently and reliably introduce AI-powered security screening solutions to our customers.
Previous wording
Since our inception, we have incurred significant operating losses. Our ability to generate revenue and achieve cost improvements sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $107.4 million and $74.8 million for the nine months ended September 30, 2025 and 2024, respectively. We generated a net loss of $44.0 million and $38.3 million for the nine months ended September 30, 2025 and 2024, respectively. We expect to continue to incur operating losses as we focus on growing and establishing recurring commercial sales of our products, including growing our sales and marketing teams, scaling our manufacturing operations, and continuing research and development efforts to develop new products and further enhance our existing products.
Current wording
Since our inception, we have incurred significant operating losses. Our ability to generate revenue and achieve cost improvements sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $46.3 million and $32.0 million for the three months ended March 31, 2026 and 2025, respectively. We generated a net loss of $5.0 million and $1.7 million for the three months ended March 31, 2026 and 2025, respectively. We expect to continue to incur operating losses as we focus on growing and establishing recurring commercial sales of our products, including growing our sales and marketing teams, scaling the use of third-party contract manufacturers, and continuing research and development efforts to develop new products and further enhance our existing products.
Previous wording
Change in Fair Value of Contingently Issuable/Returnable Common Stock Liability/Asset
Current wording
Adjusted EBITDA is defined as net income (loss) plus depreciation and amortization, stock based compensation, interest expense (income), provision for income taxes, change in fair value of contingent earn out liability, change in fair value of contingently issuable common stock liability, change in fair value of public warrant liability, loss on impairment of leased equipment, loss on impairment of intangible asset, loss on disposal of leased equipment, non-recurring employee restructuring and other separation costs, non-recurring inventory charges, and other non-recurring legal and regulatory costs, which management believes provides a more meaningful representation of operating results.
Previous wording
Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve profitability, we expect to finance our operations through cash generated from operations and our Senior Secured Credit Facilities. See “Liquidity and Capital Resources” as well as “Risks Related to Our Financial Condition and Liquidity” for more information. Additionally, as discussed in Note 14, Commitments and Contingencies, to our condensed consolidated financial statements for the three and nine months ended September 30, 2025, we are involved in certain legal proceedings, including a government investigation. Given the uncertainty of such matters, no assurance can be given regarding the final outcome of such matters. However, the ultimate amount or range of potential loss, which might result to the Company, may differ materially from our current estimates.
Current wording
Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Until such time, if ever, as we can generate substantial revenue sufficient to achieve profitability, we expect to finance our operations through cash generated from operations and our Senior Secured Credit Facilities. See “Liquidity and Capital Resources” as well as “Risks Related to Our Financial Condition and Liquidity” for more information. Additionally, as discussed in Note 13, Commitments and Contingencies, to our condensed consolidated financial statements for the three months ended March 31, 2026, we are involved in certain legal proceedings, including a government investigation. Given the uncertainty of such matters, no assurance can be given regarding the final outcome of such matters. However, the ultimate amount or range of potential loss, which might result to the Company, may differ materially from our current estimates.
Previous wording
We derive revenue from (1) subscription arrangements generally accounted for as operating leases, including SaaS and maintenance, (2) the sale of products, (3) SaaS and maintenance related to products sold to customers either by Evolv or by Columbia Tech pursuant to the Distribution and License Agreement, (4) license fees related to the Distribution and License Agreement, and (5) professional services, including installation, training, and event support. Maintenance consists of preventative maintenance, technical support, bug fixes, and when-and-if available threat updates. Our arrangements are generally noncancelable and nonrefundable after shipment to the customer. Revenue is recognized net of sales tax. We have been experiencing a growing mix of customers adopting our pure subscription model, which reduces upfront revenue recognition in favor of building a more predictable recurring revenue base.
Current wording
We derive revenue from (1) subscription arrangements generally accounted for as operating leases, including SaaS and maintenance, (2) the sale of products, (3) SaaS and maintenance related to products sold to customers either by Evolv or by Columbia Tech pursuant to the Distribution and License Agreement, (4) license fees related to the Distribution and License Agreement, and (5) professional services, including installation, training, and event support. Maintenance consists of preventative maintenance, technical support, bug fixes, and when-and-if available threat updates. Our arrangements are generally noncancelable and nonrefundable after shipment to the customer. Revenue is recognized net of sales tax. To the extent that we see an increase in demand for our pure subscription model, we would expect to see a reduction in upfront revenue recognition in favor of more recurring revenue.
Previous wording
We derive a portion of our revenue from the sale of our Evolv Express and eXpedite equipment and related add-on accessories to customers. Revenue is recognized when control of the product has transferred to the customer, which follows the terms of each contract. We anticipate future growth in product revenue as more customers purchase systems through our purchase subscription model.
Current wording
We derive a portion of our revenue from the sale of our Evolv Express and eXpedite equipment and related add-on accessories to customers. Revenue is recognized when control of the product has transferred to the customer, which follows the terms of each contract. We anticipate future growth in product revenue as more customers purchase systems through our purchase subscription model instead of through the now cancelled Distribution and License agreement with Columbia Tech.
Previous wording
Subscription revenue consists of revenue derived from leasing Evolv Express and eXpedite systems to our customers. Lease terms are typically four years and customers generally pay either a quarterly or annual fixed payment for the lease, SaaS, and maintenance elements over the contractual lease term. Equipment leases are generally classified as operating leases and recognized ratably over the duration of the lease. There are no contingent lease payments as a part of these arrangements.
Current wording
Subscription revenue consists of revenue derived from leasing Evolv Express and eXpedite systems to our customers. Lease terms are typically four years and customers generally pay either a quarterly or annual fixed payment for the lease, SaaS, and maintenance elements over the contractual lease term. Equipment leases are generally classified as operating leases and recognized ratably over the duration of the lease. There are no contingent lease payments as part of these arrangements.
Previous wording
License fee and other revenue includes license fee revenue from the Distribution and License Agreement, revenue from professional services, and other one-time revenue. License fee revenue is recognized upon the shipment of product from Columbia Tech to the reseller. Revenue for professional services is recognized upon transfer of control of these services, which are normally rendered over a short duration. Revenue for professional services and other one-time revenue, which had previously been included in service revenue, has been reclassified for prior periods to License fee and other revenue on the condensed consolidated statements of operations and comprehensive loss. During the three months ended September 30, 2025, we discontinued quoting under the Distribution and License Agreement, and while any outstanding quotes will be honored, all new quotes for end-user customers wishing to purchase the hardware equipment will be fulfilled through our purchase subscription model going forward. Thus, license revenue from this agreement is expected to reduce to zero over time, replaced by increased product revenue.
Current wording
License fee and other revenue includes license fee revenue from the Distribution and License Agreement, revenue from professional services, and other one-time revenue. License fee revenue is recognized upon the shipment of product from Columbia Tech to the reseller. Revenue for professional services is recognized upon transfer of control of these services, which are normally rendered over a short duration. Revenue for professional services and other one-time revenue, which had previously been included in service revenue, has been reclassified for prior periods to License fee and other revenue on the consolidated statements of operations and comprehensive loss. During the three months ended September 30, 2025, we discontinued quoting under this basis, and the agreement with Columbia Tech expired on December 31, 2025. All new quotes for end-user customers wishing to purchase the hardware equipment will be fulfilled through our purchase subscription model going forward. Thus, license revenue from this agreement is expected to be reduced to zero over time, replaced by increased product revenue, which will in turn provide an increase in gross profit over the duration of the contract.
Previous wording
Cost of subscription revenue consists primarily of depreciation expense related to leased units, an allocated portion of internal-use software amortization expense, shipping costs, and maintenance costs related to leased units. Maintenance costs consist primarily of labor (including stock-based compensation), spare parts, shipping costs, field service repair costs, equipment, and supplies.
Current wording
Cost of subscription revenue consists primarily of depreciation expense related to leased units, an allocated portion of internal-use software amortization expense, shipping costs, and maintenance costs related to leased units. Maintenance costs consist primarily of labor (including stock-based compensation), spare parts, shipping costs, field service repair costs, equipment, and supplies. Service-related costs reflected in cost of subscription revenue include, in part, the Company’s decision to in-source certain technical and field services support functions that were previously outsourced to a third-party service provider.
Previous wording
Cost of services revenue consists of maintenance costs related to units purchased by customers and an allocated portion of internal-use software amortization expense. Maintenance costs consist primarily of labor (including stock-based compensation), spare parts, field service repair costs, equipment, and supplies.
Current wording
Cost of service revenue consists of maintenance costs related to units purchased by customers and an allocated portion of internal-use software amortization expense. Maintenance costs consist primarily of labor (including stock-based compensation), spare parts, shipping costs, field service repair costs, equipment, and supplies. Service-related costs reflected in cost of service revenue include, in part, the Company’s decision to in-source certain technical and field services support functions that were previously outsourced to a third-party service provider.
Previous wording
Cost of license fees and other revenue consists primarily of internal and third-party costs related to professional services, such as installation, training, and event support. License fee revenue earned under our Distribution and License Agreement with Columbia Tech has no associated cost of revenue.
Current wording
Cost of license fee and other revenue consists primarily of internal and third-party costs related to professional services, such as installation, training, and event support. License fee revenue earned under our Distribution and License Agreement with Columbia Tech has no associated cost of revenue.
Previous wording
Gross Profit and Gross Margin
Current wording
Gross Profit and Gross Profit Margin
Previous wording
Our gross profit is calculated based on the difference between our revenues and cost of revenues. Gross margin is the percentage obtained by dividing gross profit by our revenue.
Current wording
Our gross profit is calculated based on the difference between our revenues and cost of revenues. Gross profit margin is the percentage obtained by dividing gross profit by our revenue.
Previous wording
•Mix of sales between our pure subscription, purchase subscription, and distributor licensing models;
Current wording
•Mix of sales between our pure subscription and purchase subscription models;
Previous wording
We regularly assess our sales and fulfillment models to ensure they align with customer preferences, operational scalability, and our long-term business objectives. We expect our gross profit and gross margin in any given fiscal period to be influenced by customer demand for our various sales and fulfillment models, as well as any future strategic management decisions affecting our sales and fulfillment models that may result from such assessments.
Current wording
We regularly assess our sales and fulfillment models to ensure they align with customer preferences, operational scalability, and our long-term business objectives. We expect our gross profit and gross profit margin in any given fiscal period to be influenced by customer demand for our various sales and fulfillment models, as well as any future strategic management decisions affecting our sales and fulfillment models that may result from such assessments.
Previous wording
Our research and development expenses represent costs incurred to support activities that advance the development of innovative security screening technologies, new product platforms, as well as activities that enhance the capabilities of our existing product platforms. Our research and development expenses consist primarily of salaries and bonuses, employee benefits, stock-based compensation, prototypes, design expenses, and consulting and contractor costs. We expect our research and development costs to decrease for the year ending December 31, 2025 compared to the year ended December 31, 2024 as a result of certain cost cutting measures we have taken, including the reduction in force implemented in January 2025, as well as decrease in consulting costs related to the second generation of our Evolv Express systems that were launched in prior year.
Current wording
Our research and development expenses represent costs incurred to support activities that advance the development of innovative security screening technologies, new product platforms, as well as activities that enhance the capabilities of our existing product platforms. Our research and development expenses consist primarily of salaries and bonuses, employee benefits, stock-based compensation, prototypes, design expenses, and consulting and contractor costs. We expect our research and development costs to increase for the year ending December 31, 2026 compared to the year ended December 31, 2025 as we continue to invest in product innovation.
Previous wording
Sales and marketing expenses consist primarily of personnel related expenses associated with our sales and marketing, customer success, business development, and strategy functions, as well as costs related to trade shows and events, and stock-based compensation. We expect our sales and marketing costs will decrease for the year ending December 31, 2025 compared to the year ended December 31, 2024 as a result of certain cost cutting measures we have taken, including the reduction in force implemented in January 2025.
Current wording
Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing, customer success, business development, and strategy functions, as well as costs related to trade shows and events, and stock-based compensation. We expect our sales and marketing costs will increase modestly for the year ending December 31, 2026 compared to the year ended December 31, 2025 as we expand our go to market efforts through both direct and channel investments.
Previous wording
General and administrative expenses consist primarily of personnel related expenses associated with our executive, finance, investor relations, legal, information technology, and human resources functions, as well as professional fees for legal, audit, accounting and other consulting services, stock-based compensation, and insurance, net of any probable and reasonably estimable insurance recoveries or received insurance recoveries. During the year ended 2024, we experienced a significant increase in general and administrative expenses, primarily for legal fees and consulting expenses, as a result of the Investigation and related actions. This increased level of expenses continued through the second quarter of 2025 and has reduced in the third quarter of 2025. We expect our general and administrative expenses to remain at this lower level in the fourth quarter of 2025.
Current wording
General and administrative expenses consist primarily of personnel related expenses associated with our executive, finance, investor relations, legal, information technology, and human resources functions, as well as professional fees for legal, audit, accounting and other consulting services, stock-based compensation, and insurance, net of any probable and reasonably estimable insurance recoveries or received insurance recoveries. During the first and second quarter of the year ended 2025, we experienced a significant increase in general and administrative expenses, primarily for legal fees and consulting expenses in connection with a previously disclosed investigation and restatement of prior period financial statements. Such costs began to decline in the second half of 2025 as certain of our legal and consulting expenses normalized. We expect our general and administrative expenses to decrease for the year ending December 31, 2026, as expenses incurred in 2025 related to a previously disclosed investigation and restatement of prior period financial statements are believed to be substantially non-recurring.
Previous wording
Interest income relates to interest earned on money market fundsand treasury bills, and interest earned on our lease receivables for our Evolv Express systems recognized as sales-type leases.
Current wording
Interest income relates primarily to interest earned on our money market fundsand treasury bills.
Previous wording
In connection with the Merger and pursuant to the Merger Agreement, certain of Legacy Evolv’s initial shareholders are entitled to receive additional shares of our common stock upon us achieving certain milestones. The earn-out arrangement with the Legacy Evolv shareholders is accounted for as a liability and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.
Current wording
In connection with the Merger and pursuant to the Merger Agreement, certain of Legacy Evolv’s initial shareholders were entitled to receive additional shares of our common stock upon us achieving certain milestones. The earn-out arrangement with the Legacy Evolv shareholders was accounted for as a liability and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the consolidated statements of operations and comprehensive (loss) income. The earn-out period expired on March 8, 2026 without achievement of the required milestones.
Previous wording
Prior to the Merger, certain NHIC stockholders owned 4,312,500 shares of NHIC Class B common stock, referred to as Founder Shares. Upon the closing of the Merger, NHIC Class A and Class B common stock became the Company's common stock. 1,897,500 Founder Shares vested at the closing of the Merger, 1,897,500 Founder Shares are contingently issuable and shall vest upon the Company achieving certain milestones, and 517,500 Founder Shares were contributed to Give Evolv LLC. The 1,897,500 outstanding contingently issuable common shares are accounted for as a liability and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.
Current wording
Prior to the Merger, certain NHIC stockholders owned 4,312,500 shares of NHIC Class B common stock, referred to as Founder Shares. Upon the closing of the Merger, NHIC Class A and Class B common stock became the Company's common stock. 1,897,500 Founder Shares vested at the closing of the Merger, 1,897,500 Founder Shares are contingently issuable and shall vest upon the Company achieving certain milestones, subject to expiration in July 2026, and 517,500 Founder Shares were contributed to Give Evolv LLC. The 1,897,500 outstanding contingently issuable common shares are accounted for either as a liability, if still held at the Company's transfer agent, or as an asset as described below, and subsequently remeasured at each reporting date with changes in fair value recorded as a component of other income, net in the condensed consolidated statements of operations and comprehensive loss.
Previous wording
In connection with the closing of the Merger, the Company assumed warrants to purchase 14,325,000 shares of common stock (the “Public Warrants”) at an exercise price of $11.50. The Public Warrants are currently exercisable and expire in July 2026. We assessed the features of these warrants and determined that they qualify for classification as a liability. Accordingly, we recorded the warrants at fair value upon the closing of the Mergeras a component of other income (expense), net in thecondensed consolidated statements of operations and comprehensive loss with the offset to additional paid-in capital.
Current wording
In connection with the closing of the Merger, the Company assumed warrants to purchase 14,325,000 shares of common stock (the “Public Warrants”) at an exercise price of $11.50. The Public Warrants are currently exercisable and expire in July 2026. We assessed the features of these warrants and determined that they qualify for classification as a liability. Accordingly, we recorded the warrants at fair value upon the closing of the Mergeras a component of other income (expense), net in thecondensed consolidated statements of operations and comprehensive loss with the offset to additional paid-in capital. The liability is subsequently remeasured at each reporting with changes in fair value.
Previous wording
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA introduces various corporate and international tax law changes with staggered effective dates through 2027. Key provisions include immediate R&D expensing, permanent bonus depreciation, modifications to interest expense limitations, and changes to certain international tax rules. The enacted legislation did not have a material impact on our financial position, results of operations, or effective tax rate for the nine months ended September 30, 2025, primarily due to our full valuation allowance position on U.S. deferred tax assets, immaterial current tax liabilities, and insignificant foreign earnings from Evolv UK. We will continue to monitor and evaluate all applicable provisions of the OBBBA and any potential future impact on our consolidated financial statements.
Current wording
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States. The OBBBA introduces various corporate and international tax law changes with staggered effective dates through 2027. Key provisions include immediate R&D expensing, permanent bonus depreciation, modifications to interest expense limitations, and changes to certain international tax rules. The enacted legislation did not have a material impact on our financial position, results of operations, or effective tax rate for the three months ended March 31, 2026, primarily due to our full valuation allowance position on U.S. deferred tax assets, immaterial current tax liabilities, and insignificant foreign earnings from Evolv UK. We will continue to monitor and evaluate all applicable provisions of the OBBBA and any potential future impact on our consolidated financial statements.
Previous wording
We believe there are several key trends that are continuing to drive increased adoption of our solutions and growth in our sales, including (i) escalating gun violence, which has created stronger demand for security screening solutions for customers and prospects in our key vertical markets, (ii) customer acquisition activities which led to the addition of 62 new customers during the three months ended September 30, 2025, and (iii) the expansion of our existing customers' initial Evolv Express deployments to other venues and locations as well as expanding their fleet with our Evolv eXpedite offering.
Current wording
We believe there are several key trends that are continuing to drive increased adoption of our solutions and growth in our sales, including (i) escalating gun violence, which has created stronger demand for security screening solutions for customers and prospects in our key vertical markets, (ii) customer acquisition activities which led to the addition of 48 newend-users during the three months ended March 31, 2026, and(iii) the expansion of our existing customers' initial Evolv Express deployments to other venues and locations, and (iv) growing momentum with our channel partners which helps us extend our reach in certain geographies or vertical markets.
Previous wording
The increases in subscription revenue, cost of subscription revenue, and subscription gross profit are primarily due to continued growth in our customer base as of September 30, 2025 compared to the prior year, with a higher number of active Evolv Express systems deployed under our pure subscription model and an increase in short term rental subscription revenue during the three months ended September 30, 2025. The decrease in subscription gross profit margin was due to a $1.9 million loss on disposal of leased equipment and a $0.6 million estimated field services cost related to the replacement of certain Express system parts.
Current wording
The increases in subscription revenue, cost of subscription revenue, and subscription gross profit are primarily due to continued growth in our customer base as of March 31, 2026 compared to the prior year, with a higher number of active Evolv Expressand Evolv eXpedite systems deployed under our pure subscription model during the three months ended March 31, 2026. The increase in subscription gross profit margin is also driven by a $1.2 million decrease in field services cost related to our subscription systems during the three months ended March 31, 2026.
Previous wording
The increases in license fee and other revenue and gross profit are primarily driven by $2.3 million of license fee revenue earned during the three months ended September 30, 2025 compared to $1.6 million earned during the prior year period under the distributor licensing model, as well as a $0.2 million increase in installation and training service fees. Although the unit sales through our distributor licensing model declined, the license fee and other revenue increased due to an increase in per-unit license fees for our second generation of Evolv Express systems.
Current wording
The decreases in license fee and other revenue and gross profit are primarily driven by $0.2 million of license fee revenue earned during the three months ended March 31, 2026 compared to $3.2 million earned during the prior year period under the Distribution and License Agreement due to the expiration and non-renewal of the agreement effective December 31, 2025. The decrease in gross profit margin is primarily due to the reduction in license fee revenue, which has no associated cost of revenue.
Previous wording
The decrease in personnel related expenses is due to a decrease in payroll costs and stock-based compensation of $1.1 million, which resulted primarily from the reduction in force in January 2025. Stock-based compensation expense included in sales and marketing expenses was $1.5 million for the three months ended September 30, 2025 compared to $2.5 million for the three months ended September 30, 2024. The decrease in advertising and direct marketing expense is primarily due to a decrease in expenses related to trade shows and events of $0.5 million and decrease in sponsorship fees of $0.2 million. The decrease in travel and entertainment expense is due to a decrease in travel costs for in-person sales meetings as a result of our reductions in force. Professional fees decreased primarily due to a decrease in marketing consulting costs.
Current wording
The increase in personnel related expenses is due to an increase in payroll costs and stock-based compensation of $1.0 million, which resulted primarily from new hires in our sales and marketing functions to support increased sales volume. Stock-based compensation expense included in sales and marketing expenses was $1.6 million for the three months ended March 31, 2026 compared to $1.0 million for the three months ended March 31, 2025. The increase in travel and entertainment expense is due to an increase in travel costs for in-person sales meetings.
Previous wording
Personnel related expenses increased due to a $1.5 million increase in payroll costs, primarily from an increase in accrued bonuses, offset by a decrease in stock-based compensation of $1.1 million, which resulted primarily from the termination of certain executives as well as the reduction in force in January 2025. Stock-based compensation expense included in general and administrative expenses was $2.4 million for the three months ended September 30, 2025 compared to $3.5 million for the three months ended September 30, 2024. Professional fees increased primarily due to an increase in legal fees of $0.4 million and an increase in audit and tax fees of $0.2 million. Non-recurring professional fees and other expenses decreased primarily due to a $1.2 million decrease in consulting and legal fees and audit fees incurred in connection with the previous restatement of prior period financial statements, additional insurance recoveries of $1.2 million, and a decrease in IT and software subscription costs of $0.3 million, partially offset by an increase in rent of $0.2 million for additional leased space.
Current wording
Personnel related expenses increased due to an increase in payroll costs and stock-based compensation of $1.7 million, resulting from expanding our general and administrative team during the past twelve months while reducing the use of outsourced contractors and consultants. Stock-based compensation expense included in general and administrative expenses was $2.4 million for the three months ended March 31, 2026 compared to $2.0 million for the three months ended March 31, 2025. Non-recurring professional fees and other expenses decreased primarily due to a $6.3 million decrease in consulting and legal fees and audit fees incurred in connection with a previously disclosed investigation and restatement of prior period financial statements and $0.3 million decrease in estimated net losses related to class action lawsuits, partially offset by a decrease in insurance recoveries of $2.9 million.
Previous wording
Restructuring costs of $2.7 million for the nine months ended September 30, 2025 resulted from the reduction in force in January 2025. Stock-based compensation expense included in restructuring costs was $0.5 million for the nine months ended September 30, 2025. Smaller restructuring costs of $0.9 million for the nine months ended September 30, 2024 resulted from the reduction in force in May 2024.
Current wording
Restructuring costs of$2.7 millionfor three months ended March 31, 2025 resulted from the reduction in force in January 2025. Stock-based compensation expense included in restructuring costs was $0.5 million for the three months ended March 31, 2025. No restructuring cost was recognized for the three months ended March 31, 2026.
Previous wording
Interest expense of $0.7 million for the three months ended September 30, 2025 related to cash interest paid on long-term debt and amortization of deferred financing fees and costs. No interest expense was recognized for the three months ended September 30, 2024, as there was no debt outstanding during the period.
Current wording
Interest expense of $1.0 million for the three months ended March 31, 2026 relatedto interest on long-term debt, amortization of debt issuance costs, and unused commitment fees. No interest expense was recognized for the three months ended March 31, 2025, as there was no debt outstanding during the period.
Previous wording
Interest income of $0.4 million for the three months ended September 30, 2025 and $0.6 million for the three months ended September 30, 2024 related primarily to interest earned on money market funds and the accretion of discounts on treasury bills. The interest earned decreased primarily due to lower average balances in interest-bearing accounts during the three months ended September 30, 2025 compared to during the three months ended September 30, 2024.
Current wording
Interest income of $0.5 million for the three months ended March 31, 2026 and $0.4 million for the three months ended March 31, 2025 related primarily to interest earned on money market funds and the accretion of discounts on treasury bills. The interest earned increased primarily due to higher average balances in interest-bearing accounts during the three months ended March 31, 2026 compared to during the three months ended March 31, 2025.
Previous wording
Change in the fair value of the contingent earn-out liability resulted in a $7.5 million gain and $8.3 million loss for the three months ended September 30, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments.
Current wording
Change in the fair value of the contingent earn-out liability resulted in a $0.4 million gain for the three months ended March 31, 2026, resulting from the expiration of the earn-out period. Change in the fair value of the contingent earn-out liability resulted in a $9.0 million gain for the three months ended March 31, 2025, respectively, resulting from quarterly mark-to-market adjustments.
Previous wording
Change in the fair value of the contingent earn-out liability resulted in gains of $2.3 million and $15.1 million for the nine months ended September 30, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments.
Current wording
Change in the fair value of the contingently issuable/returnable common stock liability/asset resulted in gains of $1.5 million and $1.7 million for the three months ended March 31, 2026 and 2025, respectively, resulting from quarterly mark-to-market adjustments.
Previous wording
Change in the fair value of the public warrant liability resulted in losses of $2.6 million and $1.6 million for the three months ended September 30, 2025 and 2024, respectively, resulting from quarterly mark-to-market adjustments.
Current wording
Change in the fair value of the public warrant liability resulted in gains of $2.0 million and $1.7 million for the three months ended March 31, 2026 and 2025, respectively, resulting from quarterly mark-to-market adjustments.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Our income tax provision consists of an estimate for federal, state, and foreign income taxes based on enacted rates in the jurisdictions in which we operate, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities and changes in tax law. We have historically incurred net operating losses and maintain a full valuation allowance against our deferred tax assets.
Current report — wording carried from elsewhere
•$7.2 million decrease in inventory primarily due to an increase in products expected to be leased to customers and an increased focus on efficient inventory management;
Current report — wording carried from elsewhere
•$3.9 million increase in prepaid expenses and other current assets primarily due to estimated insurance recoveries; and
Current report — wording carried from elsewhere
During the three months ended March 31, 2025, cash provided by financing activities was less than $0.1 million, consisting of proceeds from the exercise of stock options.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
No restructuring cost was recognized for the three months ended September 30, 2025 and 2024.
Previous report — wording carried elsewhere
The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024 (in thousands):
Previous report — wording carried elsewhere
Revenue, Cost of Revenue and Gross Profit
Previous report — wording carried elsewhere
We believe there are several key trends that are continuing to drive increased adoption of our solutions and growth in our sales, including (i) escalating gun violence, which has created stronger demand for security screening solutions for customers and prospects in our key vertical markets, (ii) customer acquisition activities which led to the addition of 179 new customers during the nine months ended September 30, 2025, and (iii) the expansion of our existing customers’ initial Evolv Express deployments to other venues and locations as well as expanding their fleet with our Evolv eXpedite offering.
Previous report — wording carried elsewhere
Interest income of $1.0 million and $2.4 million for the nine months ended September 30, 2025 and 2024, respectively, related primarily to interest earned on money market funds and the accretion of discounts on treasury bills. The interest earned decreased primarily due to lower average balances in interest-bearing accounts during the nine months ended September 30, 2025 compared to during the nine months ended September 30, 2024.
Previous report — wording carried elsewhere
We expect our cash, cash equivalents, and marketable securities of $56.2 million as of September 30, 2025, together with cash we expect to generate from future operations and our borrowing availability under our Senior Secured