Evolv Technologies Holdings, Inc. Q1 FY2025 earnings call

• Q1 2025 results reflected new customer acquisition, strong expansion from existing customers, growth in Evolv Express subscriptions, and early adoption of Evolv eXpedite.
• Retained 92% of eligible education customers and 90% of deployed units across those customers, with 92% net revenue retention and 94% net unit retention among eligible groups.
• Rolled out a certified pre-owned program (CPO) in Q2 to recapture value from returning or upgraded Evolv Express units.
• eXpedite added 12 new customers in its early launch phase.
• Strong performance in verticals: education (20 of 100 largest US school districts use Evolv Express), healthcare (nearly a dozen new customers, 500 hospital buildings, daily visitor screenings nearly doubled), and sports/entertainment (supported high-profile events, added new venues).

In the first quarter of 2025, revenue was $32 million, up 10% sequentially and 44% year-over-year. Annual recurring revenue (ARR) grew 34% year-over-year to $106 million at the end of Q1 2025. Adjusted EBITDA for Q1 2025 increased to $1.7 million with an adjusted EBITDA margin of 5%. In 2024, total revenue was $103.9 million, representing a 31% increase compared to 2023, with adjusted EBITDA improving to a loss of $21 million from a loss of $51.8 million in 2023.

• Expect total revenues to grow 20% to 25% in 2025, reaching between $125 million and $130 million.
• Aim for positive full year adjusted EBITDA with low to mid-single-digit margins, including ~$2 million in near-term investments to improve back-office platforms.
• Anticipate being cash flow positive by the end of 2025.
• Shift towards more pure subscription orders to maximize ARR and long-term revenue visibility, with slight headwinds to gross margin in 2025 due to model mix but long-term benefits for profitability.

• Tariff impacts on components, though products are assembled in the US with significant North American content (40% of raw materials from US, Mexico, Canada).
• Regulatory risks related to past FTC inquiry and restatement, though steps are being taken to address root causes and build a stronger organization.
• Dependence on customer retention and market penetration, as growth relies on maintaining strong renewal rates and expanding into new verticals.

Q: About expansions across verticals A: 50% of new subscriptions came from existing customers, with details on specific verticals to follow up on later Q: California healthcare law impact A: Healthcare team is engaging with customers in California, seeing positive signs of increased focus on safety in healthcare settings Q: CapEx expectations A: Expect $20 million to $25 million in CapEx to support the full subscription business Q: Strategy refinements A: Focus on the predictable subscription model, with strong momentum across education, healthcare, sports/entertainment verticals Q: Units and revenue progression for 2025 A: Expect ~8,000 units deployed by end of 2025; sequential revenue growth not specifically guided for Q2, with comps impacted by prior year's one-time revenue impacts Q: Purchase vs subscription mix A: Shift towards more pure subscription, but both purchase and subscription options are available for customers Q: eXpedite new customers A: Mix of new customers and existing customers adding eXpedite, with early traction observed