Loading...
01/11 13:58
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance with a 57% increase in revenue and positive adjusted EBITDA. Despite a decline in gross margin due to strategic shifts, the company has secured a significant contract and shows robust ARR growth. The Q&A session reveals positive sentiment towards strategic changes and future growth in various verticals. The partnership with Plexus and the education market expansion further support a positive outlook. However, some uncertainties remain regarding the pipeline of large contracts. Overall, the company is well-positioned for growth, suggesting a positive stock price movement.
Revenue $42.9 million, up 57% year-over-year, driven by strong new customer acquisition, expanded deployments within existing customers, and higher one-time product revenue associated with certain customer wins, including the largest customer contract in the company's history.
Annual Recurring Revenue (ARR) $117.2 million, reflecting growth of 25% year-over-year. The growth trailed revenue growth due to the transition from legacy distribution fulfillment to direct purchase fulfillment, which emphasizes ARR over short-term product revenue.
Adjusted EBITDA Positive $5.1 million in Q3 2025, compared to a loss of $3 million in the same quarter last year. This resulted in an adjusted EBITDA margin of 12%, driven by strong revenue growth and expense management.
Adjusted Gross Margin 51% in Q3 2025, compared to 64% in the same period last year. The decline was due to the shift from distribution fulfillment to direct purchase fulfillment, subscale manufacturing costs for the new eXpedite product, and $3 million of one-time costs related to inventory and service adjustments.
Remaining Performance Obligation (RPO) Approximately $299 million at the end of Q3 2025, up from $275 million at the end of Q2 2025 and $269 million at the end of Q3 2024, reflecting an 8% sequential increase.
Cash, Cash Equivalents, and Marketable Securities $56 million at the end of Q3 2025, up from $37 million at the end of Q2 2025, primarily due to proceeds from a new credit facility, tighter inventory management, and stronger collection activity.
eXpedite AI-powered bag screening solution: Gained strong traction since its Q4 2024 launch, adding 12 new customers in Q3, primarily in schools. Demonstrated an alert rate of approximately 2%, balancing detection and false alarm rates.
Software Updates: Released Evolv Express 9.0, Evolv eXpedite 1.2, MyEvolv Portal, and Evolv Insights 6.0. Introduced enhancements like integrated tablet interface and expanded alert tagging.
Education Sector: Added over a dozen new school districts in Q3, including districts in New Jersey, Michigan, California, and others. Enhanced safety in schools with Gen2 Express platform and eXpedite deployments.
Healthcare Sector: Expanded presence with wins like WellSpan Health, UC Davis Health, and Seattle Children's Hospital. Screening hundreds of thousands of visitors daily.
Sports and Entertainment: Expanded deployments in professional hockey, collegiate athletics, and professional football. Notable wins include Buffalo Sabres, University of North Carolina, and Bank of America Stadium.
Strategic Partnership with Plexus: Expanded production capacity, global reach, and operational resiliency through collaboration with Plexus, a global leader in design and manufacturing.
Transition to Direct Distribution Model: Shifted from legacy distribution to direct distribution, capturing 100% of ARPU and increasing recurring revenue over subscription terms.
Focus on ARR Growth: Prioritized ARR growth over short-term product revenue, expecting ARR to grow faster than total revenue in 2026.
Cost Efficiency Measures: Reduced spend and improved profitability, achieving positive adjusted EBITDA for the fourth consecutive quarter.
Legacy Distribution Fulfillment Model: The transition away from the legacy distribution fulfillment model has created short-term revenue recognition challenges and gross margin headwinds. This model also resulted in lower ARR and total contract revenue compared to direct purchase fulfillment.
Revenue Growth vs. Unit Growth Disparity: The gap between revenue growth and unit growth is driven by the trailing impact of the legacy distribution model and a higher proportion of purchase versus subscription sales. This creates a mismatch in revenue recognition and growth metrics.
Manufacturing Costs for eXpedite: The eXpedite product is operating at subscale manufacturing costs, which negatively impacts gross margins. Cost improvements are expected in 2026, but current costs remain a challenge.
Onetime Revenue Recognition: A significant portion of revenue in Q3 was driven by onetime items such as IP licenses, short-term subscriptions, and legacy distribution contracts. These are not expected to recur, creating potential volatility in future revenue.
Shift to ARR and Pricing Model Changes: The shift to emphasize ARR over short-term product revenue will defer $5 million to $10 million of revenue in 2026, impacting short-term financial performance but aiming to create long-term recurring revenue streams.
Gross Margin Pressure: Gross margins have been negatively impacted by the shift to direct purchase fulfillment, large education contracts, and onetime costs related to inventory and service adjustments.
Economic and Competitive Pressures: While not explicitly detailed, the need to maintain stable ARPU and manage pricing changes suggests underlying economic and competitive pressures that could impact financial performance.
Operational Resiliency and Supply Chain: The company has partnered with Plexus to expand production capacity and global reach, but this indicates potential challenges in operational resiliency and supply chain management.
Revenue Growth for 2025: The company has raised its 2025 revenue growth outlook to 37%-40%, with total revenue expected to be between $142 million and $145 million. This includes certain onetime benefits from legacy fulfillment and pricing models. Excluding these, normalized revenue growth is estimated at about 30% year-over-year.
Adjusted EBITDA for 2025: The company expects to deliver positive full-year adjusted EBITDA with margins in the high single digits, an improvement from prior guidance of mid-single digits.
Cash Flow for Q4 2025: The company remains committed to generating positive cash flow in the fourth quarter of 2025.
Revenue and ARR Growth for 2026: The company is modeling full-year 2026 revenue of $160 million to $165 million, with ARR expected to grow by at least 20%, outpacing total revenue growth. This marks an inflection point where ARR growth will exceed revenue growth.
Unit Growth for 2026: The company plans to add more units in 2026 than in 2025, with ARPU trends remaining stable. A higher percentage of new units in 2026 will be full subscription, which will lower short-term revenue growth but drive faster ARR growth.
Long-term Revenue Shifts: Changes in distribution fulfillment and pricing models will defer $5 million to $10 million of revenue in 2026 into long-term recurring revenue streams, benefiting future years.
Adjusted EBITDA Margins for 2026: The company is currently modeling modest expansion of adjusted EBITDA margins in 2026, with revenues expected to grow faster than total expenses.
The selected topic was not discussed during the call.
The earnings call highlights strong financial performance with a 57% increase in revenue and positive adjusted EBITDA. Despite a decline in gross margin due to strategic shifts, the company has secured a significant contract and shows robust ARR growth. The Q&A session reveals positive sentiment towards strategic changes and future growth in various verticals. The partnership with Plexus and the education market expansion further support a positive outlook. However, some uncertainties remain regarding the pipeline of large contracts. Overall, the company is well-positioned for growth, suggesting a positive stock price movement.
The earnings call highlighted strong financial performance with revenue and ARR growth, a positive adjusted EBITDA, and improved cash flow. The Q&A revealed a balanced strategy with a shift towards subscriptions, strong market interest, and efficient inventory management. Although there were some uncertainties in management responses, the overall sentiment is positive, supported by strategic growth in diverse markets and a new certified pre-owned program. The stock price is likely to react positively over the next two weeks, driven by these factors.
The earnings call reveals strong financial performance with significant revenue growth (44% YoY) and positive EBITDA, indicating improved operational efficiency. Despite cash flow concerns due to one-time costs, the company's focus on subscription growth and strategic expansion in promising verticals like healthcare and sports is promising. The Q&A session highlighted optimism about new legislation driving demand and a robust subscription model. While no shareholder returns were announced, the overall outlook and strategic focus suggest a positive sentiment, likely resulting in a 2% to 8% stock price increase.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
