Q4 2025 Evolv Technologies Holdings Inc Earnings Call

March 10, 2026

Speaker #1: I'm joined by John Kedzierski, our President and Chief Executive Officer, and Chris Kutzor, our Chief Financial Officer. Earlier today, after the market closed, we issued a press release detailing our fourth-quarter results and our 2026 outlook.

Brian Norris: I'm joined by John Kedzierski, our President and Chief Executive Officer, and Chris Kutsor, our Chief Financial Officer. Earlier today, after the market closed, we issued a press release detailing our Q4 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 Securities 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.

Speaker #1: 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 Securities Litigation Reform Act of 1995.

Brian Norris: 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.

Speaker #1: These statements relate to our current expectations and views of future events, but are 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.

Speaker #1: 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.

Brian Norris: 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 as 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.

Speaker #1: 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.

Speaker #1: Except as 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.

Speaker #1: These measures should not be considered in isolation from, or as a substitute for, financial information prepared 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.

Brian Norris: These measures should not be considered in isolation from or as a substitute for financial information prepared 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 annual recurring 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.

Speaker #1: 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.

Speaker #1: We will be discussing other metrics such as annual recurring 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.

Speaker #1: 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 9, 2026.

Brian Norris: We will be hosting our 2026 Investor Day on 9 June 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.

Speaker #1: 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.

Speaker #1: 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.

Speaker #2: 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 achieve began with the trust and partnership of our customers.

John Kedzierski: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

John Kedzierski: 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 datasets, 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: We developed a 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.

John Kedzierski: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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 onsite services to keep our systems operating as designed.

John Kedzierski: 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. Since the launch of Evolv 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 Evolv and its customers, because without our unique hardware and software, you simply could not use it.

Speaker #2: 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 Evolv Express, our technology has been used to screen more than 4 billion people worldwide.

Speaker #2: 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.

Speaker #2: That data is not useful to anyone but Evolv and its customers. Because without our unique hardware and software, you simply could not use it.

Speaker #2: Over time, this combination of deployed systems, operational learning, and long-term customer relationships supports recurring revenue through multi-year subscription contracts. This drives ARR growth and builds RPO, or remaining performance obligation.

John Kedzierski: Over time, this combination of deployed systems, operational learning, and long-term customer relationships supports recurring revenue through multiyear subscription contracts, drives ARR growth, and builds RPO or remaining performance obligation. Our Q4 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

John Kedzierski: Growth in Q4 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 equivalents, and marketable securities increased by $12.8 million sequentially in Q4 2025 to $69 million, reflecting strong cash collection effort and discipline around working capital management.

Speaker #2: We reported our fifth consecutive quarter of positive adjusted EBITDA with adjusted EBITDA margin of 4.7% in Q4 and year. We reported positive adjusted EBITDA of 11.1 million in 2025 compared to a loss of 21 million in 2024, a 32 million dollar improvement in adjusted EBITDA on an absolute dollar basis.

Speaker #2: Total cash, cash equivalents, and marketable securities increased by 12.8 million dollars sequentially in Q4 '25 to $69 million. Reflecting strong cash collection effort and discipline around working capital management.

Speaker #2: 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.

John Kedzierski: 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 continued to see a strong trend of existing customers upgrading to our Gen Two Express platform. These upgrades, together with solid end 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.

Speaker #2: We continue to see a strong trend of existing customers upgrading to our Gen2 Express platform. These upgrades, together with solid end-market demand, drove a 13% year-over-year increase in RPO to $293.4 million at the end of Q4.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

John Kedzierski: 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. 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

John Kedzierski: 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 Q4, we added 12 new school districts across the US, as well as 3 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.

Speaker #2: In the fourth quarter, we added 12 new school districts across the US, as well as three universities in New York, Massachusetts, and Texas. For the year, we added 65 new—proud to have screened approximately 300 million students and visitors.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Recent customer additions include William P. Clements Jr. University Hospital in Texas; the University of Oklahoma Medical Center; and Mosaic Life Care at St. Joseph in Missouri.

John Kedzierski: Recent customer additions include William P. Clements Jr. 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 Evolv 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.

Speaker #2: 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.

Speaker #2: Staying in healthcare, we are pleased to announce a new partnership with the American Hospital Association, under which Evolv has been designated a preferred provider for hospitals and health systems nationwide.

Speaker #2: 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.

Speaker #2: 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.

John Kedzierski: Shifting to sports and live entertainment, we continue to expand our presence with over a dozen new customers in Q4, including seven professional football teams, reflecting continued demand for modern, efficient screening solutions across practice and training facilities. Teams are increasingly turning to Evolv 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 Gen2 upgrades in this market as well.

Speaker #2: Including seven professional football teams, reflecting continued demand for modern, efficient screening solutions across practice and training facilities. Teams are increasingly turning to Evolv as they look for ways to manage high-volume entry points with speed, reliability, and a better experience for players, staff, media, and fans.

Speaker #2: 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.

Speaker #2: We added 65 new sports and live entertainment customers in 2025. We also saw continued strength in renewals and Gen2 upgrades in this market as well.

Speaker #2: TD Garden, home to the Boston Celtics and the Boston Bruins, upgraded to Gen2 Express for walk-through screening and added four Expedite systems for autonomous X-ray screening of bags.

John Kedzierski: TD Garden, home to the Boston Celtics and the Boston Bruins, upgraded to Gen 2 Express for walk-through 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 SC, and the Philadelphia Eagles. Across this segment, the combination of new customers, expanding partnerships, and high-value Gen 2 upgrades highlight 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.

Speaker #2: Crypto.com Arena upgraded to Gen2 and added an additional Expede. Other notable renewals and upgrades include the Houston Astros, Houston Texans, St. Louis City Soccer Club, and the Philadelphia Eagles.

Speaker #2: Across this segment, the combination of new customers, expanding partnerships, and high-value Gen2 upgrades highlights the strength of our market position. Today, we proudly screen nearly 1.5 million sports and live entertainment visitors every day.

Speaker #2: 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.

Speaker #2: 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.

John Kedzierski: 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 Q4, we added multiple new Fortune 500 companies, including one of the 10 largest banks in the world, a top 25 US 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 Evolv as their long-term security partner.

Speaker #2: In the fourth quarter, we added multiple new Fortune 500 companies, including one of the 10 largest banks in the world, a top 25 US retailer, a Fortune 100 healthcare innovator, a major insurance and financial services company, and a multinational metal technology company.

Speaker #2: 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.

Speaker #2: 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 Evolv as their long-term security partner.

Speaker #2: 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.

John Kedzierski: 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 Q4, 16 brand new Evolv customers purchased eXpedite, and 11 of them also purchased Express, creating meaningful customer acquisition cost tailwinds as we land multiproduct relationships from day one. Early deployments show a strong promise in balancing threat detection with significantly lower false alarm rates.

Speaker #2: 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 and 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.

Speaker #2: Adoption is coming from both existing and new customers. In the fourth quarter, 16 brand new Evolv customers purchased Expedite, and 11 of them also purchased Express.

Speaker #2: Creating meaningful customer acquisition cost tailwinds as we land multi-product relationships from day one. Early deployments show strong promise in balancing threat detection, with significantly lower false alarm rates.

Speaker #2: 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.

John Kedzierski: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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%.

John Kedzierski: 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 weapon 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: 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.

John Kedzierski: Getting there will require relentless innovation in weapon 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 installed 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.

Speaker #2: Through continued investment in AI, expansion within our installed base, new product adoption, and disciplined market expansion, we are building the long-term architecture of a scaled global security platform.

Speaker #2: With that, I'll turn it over to Chris to walk through our financial results and the details behind our outlook. Thanks, John. Good afternoon, everybody.

Chris Kutsor: Thanks, John, and good afternoon, everybody. I'm gonna review our Q4 and full year results in more detail and then walk through our thoughts for 2026. Q4 revenue was $38.5 million, an increase of 32% year-over-year. All of our Q4 revenue streams performed in line with our expectations. Product revenue declined slightly from Q3, reflecting some of the one-time benefit in Q3 and trail off into Q4 from what was the largest deal in the company's history and had a heavier product mix. Subscription revenue was modestly lower due to the timing of a short-term subscription contract in connection with a major international sporting event in the summer of 2025, which provided a lift in both Q2 and Q3. License fee and other revenue declined as we completed the transition away from our legacy distributor licensing model.

Speaker #2: I'm going to review our fourth quarter and full-year results in more detail and then walk through our thoughts for 2026. Q4 revenue was $38.5 million, an increase of 32% year over year.

Speaker #2: All of our Q4 revenue streams performed in line with our expectations. Product revenue declined slightly from Q3, reflecting some of the one-time benefit in Q3 and trail off into Q4 from what was the largest deal in the company's history and had a heavier product mix.

Speaker #2: Subscription revenue was modestly lower due to the timing of a short-term subscription contract in connection with a major international sporting event in the summer of 2025, which provided a lift in both Q2 and Q3.

Speaker #2: License fee and other revenue declined as we completed the transition away from our legacy distributor, licensing model. Overall, our top-line results demonstrate solid underlying growth and continued consistency in the business.

Chris Kutsor: Overall, our top-line results demonstrate solid underlying growth and continued consistency in the business. Adjusted gross margin was 50% in Q4 compared to 62% in the same period last year. There are a couple of drivers worth digging into. First, as we discussed on our last call, the shift to direct fulfillment of our purchase-subscription orders creates near-term gross margin headwind. This dynamic is exactly what we planned for. While it brings lower gross margin in the initial quarter of a new transaction, the direct model delivers higher gross profit dollars over the life of the contract, along with higher revenue, ARR, RPO, and cash flow compared to the legacy distribution model. Another driver to gross margins in the period was an accrual for approximately $1 million for a targeted parts upgrade and proactive field service work.

Speaker #2: Adjusted gross margin was 50% in Q4, compared to 62% in the same period last year. There are a couple of drivers worth digging into.

Speaker #2: First, as we discussed on our last call, the shift to direct fulfillment of our purchased subscription orders creates a near-term gross margin headwind. This dynamic is exactly what we planned for.

Speaker #2: While it brings lower gross margin in the initial quarter of a new transaction, the direct model delivers higher gross profit dollars over the life of the contract, along with higher revenue, ARR, RPO, and cash flow compared to the legacy distribution model.

Speaker #2: Another driver to gross margins in the period was an accrual for approximately $1 million for a targeted parts upgrade and proactive field service work.

Speaker #2: Moving down the P&L, Q4 adjusted operating expenses, which exclude stock-based compensation, loss on impairment of equipment, and certain other one-time expenses, were $23.8 million compared to $23.1 million in the fourth quarter of last year, reflecting growth of 3% year over year.

Chris Kutsor: Moving down the P&L, Q4 adjusted operating expenses, which excludes stock-based compensation, loss on impairment of equipment, and certain other one-time expenses, were $23.8 million compared to $23.1 million in Q4 of last year, reflecting growth of 3% year-over-year. This contrasts with our 32% year-over-year growth in revenue in Q4, highlighting the leverage in our business model. Q4 adjusted EBITDA, which excludes stock-based compensation and other one-time items, was a positive $1.8 million in Q4 2025 compared to $400,000 in Q4 of last year. This resulted in adjusted EBITDA margin of 4.7% in Q4 2025. Visibility improved again in Q4, driven by another strong booked to deployed unit ratio.

Speaker #2: This contrasts with our 32% year-over-year growth in revenue in Q4, highlighting the leverage in our business model. Q4 adjusted EBITDA, which excludes stock-based compensation and other one-time items, was a positive $1.8 million in Q4 '25 compared to $400,000 in the fourth quarter of last year.

Speaker #2: This resulted in an adjusted EBITDA margin of 4.7% in the fourth quarter of '25. Visibility improved again in Q4, driven by another strong booked-to-deployed unit ratio.

Speaker #2: As a result, we began 2026 with a record level of units in backlog. Looking at a summary of our full-year results, as John mentioned, ARR at December 31st was $120.5 million.

Chris Kutsor: As a result, we began 2026 with a record level of units in backlog. Looking at a summary of our full year results, as John mentioned, ARR at December 31 was $120.5 million, reflecting growth of 21% year-over-year. This was fueled by new customer growth and expanding deployments across our customer base. Total revenue was $145.9 million, reflecting growth of approximately $42 million, up 40% year-over-year, primarily driven by strength in demand. The growth was further compounded by approximately $15 million of year-over-year growth in revenue from our shift to directly fulfilling the hardware portion of our purchase-subscription orders, which we told you about in Q3.

Speaker #2: Reflecting growth of 21% year over year. This was fueled by new customer growth and expanding deployments across our customer base. Total revenue was $145.9 million, reflecting growth of approximately $42 million, up 40% year on year, primarily driven by strength in demand.

Speaker #2: The growth was further compounded by approximately $15 million of year-over-year growth in revenue from our shift to directly fulfilling the hardware portion of our purchased subscription orders, which we told you about in Q3.

Speaker #2: This change captured more revenue and more gross profit dollars, albeit at a lower gross margin percentage in the second half of 2025. Adjusted EBITDA for the full year 2025 was $11.1 million, or 7.6%.

Chris Kutsor: This change captured more revenue and more gross profit dollars, albeit at a lower gross margin percentage in the second half of 2025. Adjusted EBITDA for the full year 2025 was $11.1 million or 7.6%. This is up $32.1 million from the prior year loss of $21 million on higher revenue and improved margins. Remaining performance obligation or RPO was $293.4 million at the end of Q4, compared to $259.1 million at the end of Q4 last year. We continued to see a strong trend of customers upgrading to our Gen2 Express platform. These upgrades, which include a new four-year subscription term, together with solid end market demand, drove this 13% year-over-year increase.

Speaker #2: This is up $32.1 million from the prior year loss of $21 million, on higher revenue and improved margins. Remaining performance obligation, or RPO, was $293.4 million at the end of the fourth quarter, compared to $259.1 million at the end of Q4 last year.

Speaker #2: We continued to see a strong trend of customers upgrading to our Gen2 Express platform. These upgrades, including new four-year subscription terms, together with solid end-market demand, drove this 13% year-over-year increase.

Speaker #2: Moving forward, we expect RPO growth to begin to accelerate, supported by increasing end-market demand and by bringing back more revenue in-house through our direct purchase fulfillment motion, which we've discussed with investors over the last six months.

Chris Kutsor: Moving forward, we expect RPO growth to begin to accelerate, supported by increasing end market demand and by bringing back more revenue in-house through our direct purchase fulfillment motion, which we've discussed with investors over the last six months. Turning to the balance sheet. Cash, cash equivalents, and marketable securities increased to $12.8 million sequentially to $69 million. This primarily reflected enhanced cash conversion in the quarter, driven by stronger collection activity and continued discipline around working capital management. Turning to 2026. As John highlighted, the fundamentals of our business remain strong with robust customer demand, and when combined with the foundational changes we made to our business model, we expect ARR growth to begin outpacing revenue growth. Let me expand on the context behind our outlook for 2026.

Speaker #2: Turning to the balance sheet, cash equivalents and marketable securities increased $12.8 million sequentially to $69 million. This primarily reflected enhanced cash conversion in the quarter, driven by stronger collection activity and continued discipline around working capital management.

Speaker #2: Turning to 2026, as John highlighted, the fundamentals of our business remain strong, with robust customer demand. And when combined with the foundational changes we made to our business model, we expect ARR growth to begin outpacing revenue growth.

Speaker #2: Let me expand on the context behind our outlook for 2026. We are currently modeling full-year 2026 revenue of approximately $172 to $178 million, compared to our prior guidance of $160 to $165 million.

Chris Kutsor: We are currently modeling full year 2026 revenue of approximately $172 to 178 million compared to our prior guidance of $160 to 165 million, representing year-over-year growth of approximately 18% to 22%. We are currently modeling about a 50/50 mix between purchase subscription and pure subscription in 2026. Changes in mix will affect revenue, ARR, RPO, and our margins. We expect to exit 2026 with annual recurring revenue of approximately $145 to 150 million, representing growth of about 20% to 25% year-over-year. I want to remind investors that we ended 2025 with about $120 million in ending our ARR.

Speaker #2: Representing year-over-year growth of approximately 18% to 22%. We are currently modeling about a 50/50 mix between purchased subscription and pure subscription in 2026. Changes in mix will affect revenue, ARR, RPO, and our margins.

Speaker #2: We expect to exit 2026 with annual recurring revenue of approximately $145 to $150 million, representing growth of about 20 to 25% year over year.

Speaker #2: I want to remind investors that we ended 2025 with about $120 million in ending ARR, so that creates a solid baseline for 2026, which means we're coming into the year with about 70% of our revenue guidance in hand on day one.

Chris Kutsor: That creates a solid baseline for 2026, which means we're coming into the year with about 70% of our revenue guidance in hand on day one. As we think about revenue growth across 2025 and into 2026, it's helpful to frame how that profile is being shaped by the fulfillment model change we implemented in mid-2025, which we've discussed the past several quarters. In light of that, this is how we see the year unfolding. In Q1, we expect revenue growth rate to be in the high 30s due to the installation of the record backlog we entered the year with and the step-up in one-time product revenue on direct purchase transactions compared to the prior year. As we move into Q2, we expect modest sequential revenue decline as prior year product backlog is consumed in Q1.

Speaker #2: As we think about revenue growth across '25 and into '26, it's helpful to frame how that profile is being shaped by the fulfillment model change we implemented in mid-2025, which we've discussed the past several quarters.

Speaker #2: In light of that, this is how we see the year unfolding. In Q1, we expect revenue growth rate to be in the high 30s, due to the installation of the record backlog we entered the year with, and the step-up in one-time product revenue on direct purchase transactions compared to the prior year.

Speaker #2: As we move into Q2, we expect a modest sequential revenue decline as prior-year product backlog is consumed in Q1. As we enter the second half of the year, we will mark the one-year anniversary of our purchase fulfillment change, and despite the expiration of the step-up effect on product revenue, we still expect second-half revenue to be modestly higher than the first half.

Chris Kutsor: As we enter the second half of the year, we will mark the one-year anniversary of our purchase fulfillment change, and despite the expiration of the step-up effect on product revenue, we still expect second half revenue to be modestly higher than the first half. Overall, our 2026 outlook reflects a business that is capturing more of the economic value that it creates while continuing to build a larger base of recurring revenue, increasing visibility through ARR and RPO, and delivering a more durable and predictable revenue profile over time.

Speaker #2: Overall, our '26 outlook reflects a business that is capturing more of the economic value that it creates while continuing to build a larger base of recurring revenue, increasing visibility through ARR and RPO, and delivering a more durable and predictable revenue profile over time.

Speaker #2: We remain committed to investing in growth in a responsible way that grows revenues faster than total expenses in 2026 and are modeling full-year adjusted EBITDA margins to expand from 7.6% in 2025 and to grow into the high single digits for the full year 2026, which includes approximately a $1 million headwind on memory chip costs.

Chris Kutsor: We remain committed to investing in growth in a responsible way that grows revenues faster than total expenses in 2026 and are modeling full year adjusted EBITDA margins to expand from 7.6% in 2025 and to grow into the high single digits for the full year 2026, which includes approximately a $1 million headwind on memory chip costs. Finally, a word on our long-term operating model. As we've shared with investors on prior earnings calls, that model, which previously showed a long-term adjusted EBITDA margins in the range of 10% to 15%, is now outdated. We now believe continued growth and operational improvements will drive greater long-term leverage in the business. We look forward to sharing more information on that topic at our Investor Day, 9 June. More to come.

Speaker #2: Finally, a word on our long-term operating model. As we've shared with investors on prior earnings calls, that model, which previously showed long-term adjusted EBITDA margins in the range of 10% to 15%, is now outdated.

Speaker #2: We now believe continued growth and operational improvements will drive greater long-term leverage in the business. We look forward to sharing more information on that topic at our investor day, June 9.

Speaker #2: More to come. Before we open the call for Q&A, let me turn the call back over to John for a few closing remarks.

Chris Kutsor: Before we open the call for Q&A, let me turn the call back over to John for a few closing remarks. Customers, dedication of our employees, the support of our partners, and the confidence of our shareholders. As we look ahead, we see significant opportunity to further scale the platform and unlock additional leverage, and we look forward to sharing more at our 2026 Investor Day. We are proud to be building technology that truly matters, helping keep people safe where they work, learn, live, and play. With that, we're happy to open the call for questions.

Chris Kutsor: Before we open the call for Q&A, let me turn the call back over to John for a few closing remarks.

John Kedzierski: Customers, dedication of our employees, the support of our partners, and the confidence of our shareholders. As we look ahead, we see significant opportunity to further scale the platform and unlock additional leverage, and we look forward to sharing more at our 2026 Investor Day. We are proud to be building technology that truly matters, helping keep people safe where they work, learn, live, and play. With that, we're happy to open the call for questions.

Speaker #1: Customers, the dedication of our employees, the support of our partners, and the confidence of our shareholders. As we look ahead, we see significant opportunity to further scale the platform and unlock additional leverage, and we look forward to sharing more at our 2026 Investor Day.

Speaker #1: We are proud to be building technology that truly matters, helping keep people safe where they work, learn, live, and play. With that, we're happy to open the call for questions.

Speaker #3: Terrific. Operator, we'd like to open the call now for Q&A.

Brian Norris: Perfect. Operator, we'd like to open the call now for Q&A.

Speaker #4: We will now begin Q&A. For today's session, we'll be utilizing the Raise Hand feature. If you'd like to ask a question, simply click on the Raise Hand button at the bottom of your screen.

Operator: We will now begin Q&A. For today's session, we'll be utilizing the Raise Hand feature. If you'd like to ask a question, simply click on the Raise Hand button at the bottom of your screen. Once you've been called on, please unmute yourself and begin to ask your question. Please limit to one question and one follow-up before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Your first question comes from Jeremy Hamblin with Craig-Hallum Capital Group. You may now unmute your line and ask your question.

Operator: We will now begin Q&A. For today's session, we'll be utilizing the Raise Hand feature. If you'd like to ask a question, simply click on the Raise Hand button at the bottom of your screen. Once you've been called on, please unmute yourself and begin to ask your question. Please limit to one question and one follow-up before jumping back in the queue. Thank you. We will now pause a moment to assemble the queue. Your first question comes from Jeremy Hamblin with Craig-Hallum. You may now unmute your line and ask your question.

Speaker #4: Once you've been called on, please unmute yourself and begin to ask your question. Please limit to one question and one follow-up before jumping back into the queue.

Speaker #4: Thank you. We will now pause a moment to assemble the queue. Your first question comes from Jeremy Hamblin with Craig-Hallum. You may now unmute your line and ask your question.

Speaker #1: Thank you, and congratulations to the team on a great year and quarter. I wanted to just start by understanding—you raised the revenue guidance pretty significantly.

Jeremy Hamblin: Thank you, and congratulations to the team on a great year and a quarter. I wanted to just start by, you know, understanding you raised the revenue guidance pretty significantly, and wanna understand the context for you had a bit more modest sequential ARR growth in Q4. Now, you are raising your ARR growth from 20% to 22.5% at the midpoint. But just wanna understand there's been a lot of change in your pricing model, and the fulfillment obviously for purchase deals. Can you help us just to understand, you know, how that's likely to play out in terms of maybe ARR per unit, you know, how that's played out, you know, in 2025 and now into 2026?

Speaker #1: And want to understand the context for you had a bit more modest sequential ARR growth in Q4. Now, you are raising your ARR growth from 20% to 22.5% at the midpoint.

Speaker #1: But just want to understand, there's been a lot of change in your pricing model and the fulfillment, obviously, for purchase deals. Can you help us just to understand how that's likely to play out in terms of maybe ARR per unit?

Speaker #1: How has that played out in '25 and now into '26? Are you likely to get ARR acceleration in the back half of the year as you're getting higher value per unit installed?

Jeremy Hamblin: Are you likely to get ARR acceleration in the back half of the year as you're getting higher, you know, value per unit installed? Color that you can share, you know, again, in context of the very strong raise of revenue guidance.

Speaker #1: But color that you can share again in context of the very strong raise of revenue guidance.

Chris Kutsor: Yes, Jeremy. That's correct. We do anticipate ARR to accelerate throughout the year. The changes that we made last year in bringing purchase subscription back in-house. At the same time, we also changed pricing, where we lowered the upfront price of hardware, the one-time price, and we raised the price of our software and services. That will take time to go out through the year. I'll remind you that mix also drives the rate of ARR growth as subscription compared to purchase subscription, where subscription is higher ARR.

Speaker #3: Yes, Jeremy. That's correct. We do anticipate ARR to accelerate throughout the year. The changes that we made last year in bringing purchase subscription back in-house at the same time, we also changed pricing, where we lowered the upfront price of hardware, the one-time price, and we raised the price of our software and services that will take time to go out through the year.

Speaker #3: I'll remind you that mix also drives the rate of ARR growth, as subscription compared to purchase subscription, where subscription is higher ARR.

Speaker #1: Got it. That's helpful. And then just want to understand, and it's a little bit related, I'm thinking from the last question, but in terms of your gross margin curve, you saw your subscription gross margin sequentially improve like 700 basis points.

Jeremy Hamblin: Got it. That's helpful. Just wanna understand, and it's a little bit related. I'm thinking from the last question. In terms of your gross margin curve, you know, you saw your subscription gross margin sequentially improve like 700 basis points. Your service gross margins, however, declined about 900 basis points, and overall gross margins were a little bit lower than street expectations. Again, is that captured by the change in pricing model? How should we be thinking about overall adjusted gross margins to trend over the course of 2026?

Speaker #1: Your service gross margins, however, declined about 900 basis points. And overall gross margins were a little bit lower than street expectations. Again, is that captured by the change in pricing model?

Speaker #1: And how should we be thinking about overall adjusted gross margins to trend over the course of 2026?

Speaker #3: Thanks, Jeremy. I'll take this one to start. We do expect gross margins to be in line or slightly better in '26 versus '25, first of all.

Chris Kutsor: Thanks, Jeremy. I'll take this one to start. We do expect gross margins to be in line or slightly better in 2026 versus 2025, first of all. Related to the first part of your question, there is more gross profit dollars now being pushed into RPO in future periods compared to where it has been in the past because of everything we just talked about. I won't revisit that, but that is a conscious and direct effect of the actions we took that we're pleased with because of course, more dollars come with it, more gross profit dollars, more revenue, et cetera. Otherwise we have of course the other thing we highlighted, about $1 million accrual for some targeted service costs that we incurred in the period as well. It was a one-timer.

Speaker #3: Related to the first part of your question, there is more gross profit dollars now being pushed into RPO and future periods compared to where it has been in the past because of everything we just talked about.

Speaker #3: So I won't revisit that, but that is a conscious and direct effect of the actions we took that we're pleased with because, of course, more dollars come with it—more gross profit dollars, more revenue, etc.

Speaker #3: Otherwise, we have, of course, the other thing we highlighted: about a $1 million accrual for some targeted service costs that we incurred in the period as well.

Speaker #3: That was a one-timer.

Speaker #1: Got it. Last one from me, and then I'll hop out of the queue. But you also have your Plexus relationship that's going to turn on here in 2026.

Jeremy Hamblin: Got it. Last one for me, and then I'll hop out of the queue. You also have your Plexus relationship that's gonna turn on here in 2026. You know, when do you expect production from Plexus to begin, and what quarter do you think that it will start to flow into the financials given inventory terms in your current position?

Speaker #1: When do you expect production from Plexus to begin? And what quarter do you think that it will start to flow into the financials, given inventory turns in your current position?

Speaker #3: So when we announced the Plexus deal in Q3 and Q4, we stated that the schedule was to get to full ramp with Plexus in the second half of 2026.

Chris Kutsor: When we announced the Plexus deal in Q3 and Q4, we stated that the schedule was to get to full ramp with Plexus in the second half of 2026. I'm pleased, Jeremy, that we're on that schedule. We still expect that, you know, same timing. We do expect that transition, as we've said before, to be a slight tailwind to gross margin over time, and I think there's some working capital improvements that can be had there as well.

Speaker #3: I'm pleased, Jeremy, that we're on that schedule. We still expect that same timing. We do expect that transition, as we've said, to be said before.

Speaker #3: To be a slight tailwind to gross margin over time. And I think there's some working capital improvements that can be had there as well.

Speaker #1: Thanks so much for taking my questions. Best wishes.

Jeremy Hamblin: Thanks so much for taking my questions. Best wishes.

Speaker #4: Your next question comes from Eric Martinuzzi with Lake Street Capital Markets. Please unmute your line and ask your question.

Chris Kutsor: Thanks, Jeremy.

Operator: Your next question comes from Eric Martinuzzi with Lake Street Capital Markets. Please unmute your line and ask your question.

Speaker #1: Yeah, the cash flow is very good in Q4. For the year, obviously, the $18.7 million in 2025. Just curious to try and see if there's any linkage here that we can draw, because there are so many moving parts in the revenue.

Eric Martinuzzi: Yeah. The cash flow was very good in Q4. For the year, obviously the $18.7 million in 2025. Just curious to try and see if there's any linkage here that we can draw, because there's so many moving parts in the revenue, between the Adjusted EBITDA forecast for 2026, which, you know, I'm coming up with a midpoint of $14 million in 2026 for Adjusted EBITDA. Is there any way to connect that to your expectations for cash from ops in 2026?

Speaker #1: Between the adjusted EBITDA forecast for 2026, which I’m coming up with a midpoint of $14 million in 2026 for adjusted EBITDA, is there any way to connect that to your expectations for cash from ops in '26?

Chris Kutsor: Yes. Thanks, Eric. There's a couple things there. We did have a very strong Q4 cash generation quarter, which we're proud of. That was both working capital efficiency, but a very strong focus in delivery of cash collections. We talked about 25 being a foundational year, implementing new process and improvements, and cash flow and cash collections was one of those areas. We did take some steps there that were more 2025 and won't be repeated going into 2026. The quarter was a very strong cash collection, some of which isn't repeatable going forward. In terms of cash flow for 2026, we haven't shaped 2026 or forecasted it at this point. I would say, however, a couple things. Very proud of Q4.

Speaker #3: Yes, thanks, Eric. There are a couple of things there. We did have a very strong Q4 cash generation quarter, which we're proud of. That was both working capital efficiency, but also a very strong focus on the delivery of cash collections.

Speaker #3: '25 has been a foundational year, implementing new processes and improvements. Cash flow and cash collections were some of those areas. We did take some steps there that were more for 2025 and won't be repeated going into 2026.

Speaker #3: So, the quarter was a very strong cash collection, some of which isn't repeatable going forward. In terms of cash flow for '26, we haven't shaped '26 or forecasted it at this point.

Speaker #3: I would say, however, a couple of things. Very proud of Q4. We do expect to be cash flow positive in the second half of '26.

Chris Kutsor: We do expect to be cash flow positive in the second half of 2026. The first half is going to be shaped as well by our Q1 incremental cash costs of our incentive payments from the prior year. When you take all of that, John and I are very focused on improving cash flow going forward, both in 2026 and beyond. With all of that baked in, I think you can expect improved trajectory with more specifics to come.

Speaker #3: The first half is going to be shaped as well by our Q1 incremental cash cost of our incentive payments from the prior year. And when you take all of that, John and I are very focused on improving cash flow going forward, both in 2026 and beyond.

Speaker #3: So, with all of that baked in, I think you can expect improved trajectory, with more specifics to come.

Eric Martinuzzi: Is the expectation that cash flow will be greater in 2026 than 2025?

Speaker #1: Is the expectation that cash flow will be greater in '26 than '25?

John Kedzierski: Absent the, again, the incremental $7 million that I'm expecting in Q1 for prior year incentives, that's incremental compared to the prior year payments. I am expecting cash flow improvement. I think it's gonna be close. I'll get back to you later in the year on whether I'm gonna call that, you know, slightly down or cash flow neutral.

Speaker #3: Absent again, the incremental $7 million that I'm expecting in Q1 for prior year incentives—that's incremental compared to the prior year payments. I am expecting cash flow improvement.

Chris Kutsor: Absent the, again, the incremental $7 million that I'm expecting in Q1 for prior year incentives, that's incremental compared to the prior year payments. I am expecting cash flow improvement. I think it's gonna be close. I'll get back to you later in the year on whether I'm gonna call that, you know, slightly down or cash flow neutral.

Speaker #3: I think it's going to be close. I'll get back to you later in the year on whether I'm going to call that slightly down or cash flow neutral.

Speaker #1: Got it. Thanks for taking my questions.

Eric Martinuzzi: Got it. Thanks for taking my questions.

Speaker #4: As a reminder, if you'd like to ask a question, simply click on the raise hand button at the bottom of your screen. Your next question comes from Shaul Eyal with TD Cowen.

Operator: As a reminder.

Operator: As a reminder, If you'd like to ask a question, simply click on the Raise Hand button at the bottom of your screen. Your next question comes from Shaul Eyal with TD Cowen. Please unmute your line and ask your question.

[Company Representative] (Evolv Technologies Holdings, Inc.): Welcome.

Chris Kutsor: If you'd like to ask a question, simply click on the Raise Hand button at the bottom of your screen. Your next question comes from Shaul Eyal with TD Cowen. Please unmute your line and ask your question.

Speaker #4: Please unmute your line and ask your question.

Speaker #1: Thank you. Thank you, guys. Congrats on a strong completion of 2025. Can you guys talk to us about the mix between new logos and existing customers this quarter?

Shaul Eyal: Thank you. Thank you, guys. Congrats on strong completion of 2025. Can you guys talk to us about the mix between new logos and existing customers this quarter? I know you touched on that briefly, but maybe any additional color will be greatly appreciated.

Speaker #1: I know you touched on that briefly, but maybe any additional color will be greatly appreciated.

Speaker #3: Yeah, we added about 60 new customers in the quarter, and that took our total count to over 1,200 customers, which we're extremely proud of and reflects the strength we're seeing in customer adoption of our solution.

John Kedzierski: Yeah. We added about 60 new customers in the quarter, and that took our total count to over 1,200 customers, which we're extremely proud of and reflects the strength we're seeing in customer adoption of our solution. You know, historically, we're always seeing a close to a 50/50 split of our new orders coming from new customers and existing customers expanding, which we think is a great testament to the strength of our solution. We highlighted that we now have over 30 Fortune 500 customers, and we're really encouraged by the uptake of eXpedite. Not only the new logos that we're bringing on with eXpedite, but also the attachment that we're seeing between eXpedite and Express.

Speaker #3: Historically, we're always seeing close to a 50/50 split of our new orders coming from new customers and existing customers expanding, which we think is a great testament to the strength of our solution.

Speaker #3: We highlighted that we now have over 30 Fortune 500 customers, and we're really encouraged by the uptake of Expedite—not only the new logos that we're bringing on with Expedite, but also the attachment that we're seeing between Expedite and Express.

Speaker #1: Got it, got it. And Chris and John, what are the hiring plans for fiscal '26 as the business is clearly scaling and accelerating? But also, EBITDA is gradually, nicely expanding.

Shaul Eyal: Got it. Chris and John, what are the hiring plans for fiscal 2026 as the business is clearly scaling and accelerating, but also, you know, EBITDA is gradually nicely expanding. So just thinking out loud here, what are your hiring plans in terms of headcount? Thank you.

Speaker #1: So, just thinking out loud here, what are your hiring plans in terms of headcount? Thank you.

John Kedzierski: We're encouraged by what we're seeing inside the market and the security environment overall, and we are investing to capture that growth, and that's reflected in us raising guidance here as we look into 2026. We are gonna make investments in R&D, sales, and marketing. We still have some work to do in G&A on the operational side of the business, as Chris communicated in the middle of last, you know, year. We're committed to doing that in a responsible way. What does that mean to us? We're gonna grow top line faster than we grow expenses, and you see that in us expanding our EBITDA margins in 2026.

Speaker #3: We're encouraged by what we're seeing inside the market and the security environment overall, and we are investing to capture that growth. That's reflected in us raising guidance here as we look into 2026.

Speaker #3: So, we are going to make investments in R&D and Sales and Marketing. We still have some work to do in G&A on the operational side of the business.

Speaker #3: As Chris communicated in the middle of last year, we're committed to doing that in a responsible way. And what does that mean to us?

Speaker #3: We're going to grow top line. Faster than we grow expenses. And you see that in us expanding our EBITDA margins. In '26. So one piece of color I would add here especially if you dig into the K at all and you look at actual headcount, our headcount is approximately flat to where we left where we started the year despite the reduction in force.

Chris Kutsor: One piece of color I would add here, especially if you dig into the 10-K at all and you look at actual headcount. Our headcount is approximately flat to where we left, where we started the year, despite the reduction in force that was put in place in Q1. A significant amount of the people that were added back were brought in-house for what used to be done by expensive consultants and contractors. We insourced a significant amount of services of our customers, and that's something we wanna control and touch our customers directly with anyway. That's a net trade from paying contractors to adding people in-house. We did the same thing, on a few G&A places as well, where we added headcount instead of paying external consulting firms to do the work for us.

Speaker #3: It was put in place in Q1. But a significant amount of the people that were added back were brought in-house for what used to be done by expensive consultants and contractors.

Speaker #3: So we insourced a significant amount of services of our customers. And that's something we want to control and touch our customers directly with anyway.

Speaker #3: So that's a net trade from paying contractors to adding people in-house. We did the same thing on a few G&A places as well where we added headcount instead of paying external consulting firms to do the work for us.

Chris Kutsor: While some headcount might shift, it doesn't commensurate with additional spend. Underpinning what John said, but I wanted to triangulate that in case you're looking at some headcount numbers in the 10-K.

Speaker #3: So, while some headcount might shift, it doesn't commensurate with additional spend. Underpinning what John said, what I wanted to triangulate is that, in case you're looking at some headcount numbers in the K.

Speaker #5: Perfect. I think we have time for one more question. Go ahead, finish your question. Go ahead, Shaul.

[Company Representative] (Evolv Technologies Holdings, Inc.): Perfect, guys. I think we have time for one more.

Brian Norris: Perfect, guys. I think we have time for one more.

Shaul Eyal: Appreciate it.

[Company Representative] (Evolv Technologies Holdings, Inc.): Go ahead. Finish your question.

Brian Norris: Go ahead. Finish your question.

Shaul Eyal: Sure.

Speaker #4: Your next question?

Chris Kutsor: Your next question

Operator: Your next question

Shaul Eyal: You know, I will say thank you so much for that. This is extremely helpful. Appreciate it. Thank you.

Speaker #1: I was saying thank you so much for that. This is extremely helpful. Appreciate it. Thank you.

Speaker #5: You're welcome.

John Kedzierski: Welcome.

Speaker #4: Your next question comes from Alex Lattimore with Northland. Please unmute your line and ask your

Operator: Your next question comes from Alex Latimore with Northland. Please unmute your line and ask your question.

Speaker #6: Hi, guys. Alex Lattimore here on for Mike Lattimore. A great call here. I just had two questions. First one is, what percent of bookings are you seeing from current customers versus new customers throughout the year?

Alex Latimore: Hi, guys. Alex Latimore here on for Mike Latimore. Great call here. Just had two questions. First one is, what percent of bookings are you seeing from current customers versus new customers throughout the year? What do you expect in 2026?

Speaker #6: And what do you expect in '26?

Speaker #3: It's been approximately 50/50 between customers expanding versus new customer acquisition, and we anticipate that to continue.

John Kedzierski: It's been approximately 50/50 of customers expanding versus new, net new customer acquisition, and we anticipate that to continue.

Speaker #6: Awesome. And then one other unrelated question here. Do you see the AHA certification that you have now accelerating the hospital deals this year?

Alex Latimore: Awesome. One other unrelated question here. Do you see the AHA certification that you have now accelerating the hospital deals this year?

Speaker #3: We're very excited about that partnership. And absolutely, as we look forward, we continue to think that healthcare is going to be a growth vertical.

John Kedzierski: We're very excited about that partnership. Absolutely, as we look forward, we continue to think that healthcare is gonna be a growth vertical. This is an additional tailwind on top of what you saw in the state of California, where they've mandated advanced, you know, weapon screening across that state to be implemented by 2027. We also recently saw what's happening in Georgia, where Georgia has a bill going through the legislation. It has not yet passed. That would mandate weapon screening inside all schools. We fervently believe that all schools should have weapon screening. We look at these two case examples where regulations are coming down mandating technology as ours as a tailwind as we look into 2027 and the future of our business and beyond.

Speaker #3: I'll provide this as an additional tailwind on top of what you saw in the state of California, where they’ve mandated advanced weapon screening across that state to be implemented by 2027.

Speaker #3: We also recently saw what's happening in Georgia. Georgia has a bill going through the legislature—it has not yet passed—that would mandate weapon screening inside all schools.

Speaker #3: We fervently believe that all schools should have weapon screening. We look at these two case examples where regulations are coming down mandating technology as ours.

Speaker #3: As a tailwind, as we look into 2027 and the future of our business and beyond.

Speaker #6: Understood. That's all from me. Thanks, guys.

Alex Latimore: Understood. That's all for me. Thanks, guys.

Speaker #5: Perfect, Alex. Thank you. John, you want to close it up?

John Kedzierski: Perfect, Alex. Thank you. John, you wanna close it out? Thank you. We're really excited about where we left 2025. As we look forward in 2026, you see the excitement and the strength that we see in our business and our pipeline, the improved execution that we built in Q4 in raising our overall guide, the changes that we put into the business, allowing us to capture all the revenue on purchase subscriptions and adjust pricing for long-term value are coming into the market as we had forecast. As we look into the second half of the year, building additional scale with our new contract manufacturing partner, Plexus, makes us very optimistic. Overall, we're building a very strong business.

Chris Kutsor: Perfect, Alex. Thank you. John, you wanna close it out?

John Kedzierski: Thank you. We're really excited about where we left 2025. As we look forward in 2026, you see the excitement and the strength that we see in our business and our pipeline, the improved execution that we built in Q4 in raising our overall guide, the changes that we put into the business, allowing us to capture all the revenue on purchase subscriptions and adjust pricing for long-term value are coming into the market as we had forecast. As we look into the second half of the year, building additional scale with our new contract manufacturing partner, Plexus, makes us very optimistic. Overall, we're building a very strong business.

Speaker #3: Thank you. We're really excited about where we left 2025. And as we look forward into 2026, you see the excitement and the strength that we see in our business and our pipeline, the improved execution that we built in Q4, in raising our overall guide, the changes that we put into the business.

Speaker #3: Following us to capture all the revenue on purchase subscriptions, and adjust pricing for long-term value, are coming into the market as we had forecast.

Speaker #3: As we look into the second half of the year, building additional scale with our new contract manufacturing partner, Plexus, makes us very optimistic. Overall, we're building a very strong business.

Speaker #3: This is a hardware-enabled SaaS business that combines our proprietary hardware, that generates proprietary data that we can use to continue to strengthen our models, and we monetize that in long-term recurring revenue, as you see in our RPO, or remaining performance obligation.

John Kedzierski: This is a hardware-enabled SaaS business that combines our proprietary hardware that generates proprietary data that we can use to continue to strengthen our models, and we monetize that in long-term recurring revenue as you see in our RPO or remaining performance obligation. We look forward to sharing more details about the long-term outlook of our business at our upcoming Investor Day. Thank you very much for your participation.

Speaker #3: We look forward to sharing more details about the long-term outlook of our business at our upcoming Investor Day. Thank you very much for your participation.

Operator: Thank you for joining. This concludes today's call. You may now disconnect.

Q4 2025 Evolv Technologies Holdings Inc Earnings Call

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