Innovative, High-Impact Technology
Evolv’s touchless detection technology outperforms traditional metal detectors, offering faster throughput, better accuracy, and reduced operational costs.
Evolv: Generating Shareholder Returns Through A Safer World
Transforming everyday security into lasting value with AI-powered, touchless screening that creates safer spaces and drives robust shareholder returns.
NASDAQ:EVLV
$6.02+3.97%
Updated: May 02, 2025
Technology
smallusa
Bull & Bear Case
An overview of the main reasons to invest and the key risks involved.
Bull Case
Strong Recurring Revenue
The business generates high-margin, long-term SaaS subscriptions, with blue-chip clients and 64% growth in ARR to $89 million.
Large, Growing Market
Evolv is positioned to disrupt the $2B regulated security market and the $18B unregulated market, with strong growth prospects.
Bear Case
Regulatory Risks
Regulatory hurdles or delays in security approvals could hinder Evolv’s ability to scale quickly and impact its market adoption, affecting investor confidence.
Execution Challenges
While the market for security products is large, the company faces challenges in scaling efficiently, particularly in less-regulated markets like schools and warehouses, which may slow growth.
Financial Sustainability
Ongoing capital requirements for expansion and potential market volatility could strain cash flow, leading to concerns about financial sustainability in the longer term.
Executive Summary
Generating Returns Through A Safer World
Evolv is a fast-growing security technology business disrupting a $2B TAM with a revolutionary product. The company has pioneered the biggest change in event security with their touchless scanners. These allow guests to enter seamlessly without emptying their bags whilst using sensors and cameras to scan distinctly for weapons.
EVLV are one of the few SPACs to come to market and beat unit projections, handily growing revenues north of 50% since coming to market in 2021. The company are solving a real customer problem by dramatically increasing throughput while enhancing public safety with superior threat detection. The company is growing rapidly from a small revenue base to a huge TAM with profitability imminent setting the scene for stock returns.
Investment Thesis
Overview of buy and sell case of the business.
Why Invest?
Key pieces of information about the business that you need to know about.
Great Companies Solve Problems
Evolv sells touchless weapons detection scanners that enhance public security at sports games, concerts, schools, and more. Their technology competes with legacy metal detectors which are less accurate and produce drastically lower throughput, ~300 visitors per hour vs 3,600 with the Evolv Express. This reduces operating costs for customers by 70% and decreases wait times for guests whilst more accurately detecting threats. This product is a win for both the customer and society.
High-Quality Recurring Revenue from Blue Chip Customers
The business generates high-margin recurring revenue in the form of SaaS subscriptions that typically run on a 4-year non-cancellable term. Over the last 12 months annual-recurring-revenue (ARR) was $89 million, up 64% as of 2Q24. Their clients are some of the largest companies in the US which is a huge vote of confidence in the technology. Over 40% of teams in the NFL are using Evolv scanners, Disney and Six Flags theme parks, Wynn Resorts casinos and more.
Long Runway for Growth
The regulated security market has a $2B TAM comprised of airports, sports stadiums, and concert venues. This remains dominated by an inferior product, metal detectors, and is ripe for disruption. The greater opportunity is the $18B unregulated market in schools, warehouses, hospitals, places of worship, and hospitality venues. This market is currently underserved but is experiencing increasing demand as public safety becomes an ever more pertinent concern. Evolv has compounded revenue at a 56% CAGR since coming public in 2021 and has guided towards a 30-40% CAGR over the coming 5 years.
Catalysts
The key events that could drive investment opportunities and shift markets.
Profitability In Sight
EBITDA is forecasted to inflect into positive territory in 2Q25, this has the potential to be a significant event for the stock and a proof point for investors. This will be driven by operating leverage and a change in the business model.
Evolv has signed an agreement that offloads the sale of the equipment to their contract manufacturer in exchange for a high-margin license fee. This relieves Evolv of the capital-intensive hardware sale and with a greater mix of higher margin SaaS revenue. Importantly, this massively reduces the capital intensity of growth and should allow the firm to capitalise on demand.
Continued Outperformance
Evolv is one of the few SPACs to outperform their stated growth targets. We have a product that works and a growing public need driven by the proliferation of mass shootings across the US. Wall Street analysts have sales growing at ~28% per annum which should bring that all-important profitability and drive returns.
Discovery Value
Success breeds success. As of September 2024, EVLV has a $652 million market cap. When the company surpasses the $1B threshold, it will open itself to vast new pools of capital. As the stock appreciates, it will attract greater attention from new investors and secure better coverage from major Wall Street banks creating discovery value and a potential re-rating.
Key Risks
Key pieces of information about the business risks that you need to know about.
Regulatory Risks
Evolv faces potential risks related to its ongoing restatement efforts and regulatory inquiries, which could delay financial reporting and erode investor confidence. Compliance with both SEC and FTC regulations, as well as maintaining Nasdaq listing requirements, is crucial to avoid further disruption.
Operational Execution
Evolv's ability to scale its operations and manage a diverse customer base in multiple sectors presents operational risks. Missteps in scaling its AI solutions or failing to meet customer expectations in new markets like industrial workplaces and live events could undermine its growth trajectory.
Market Volatility and Financial Pressure
As a technology-focused company in an evolving industry, Evolv is susceptible to market volatility. Fluctuations in customer demand, economic downturns, or shifts in market priorities could affect revenue growth. The company's ability to generate positive free cash flow and maintain liquidity will be critical to its long-term sustainability.
Follow the Experts
Quickly navigate key insights from industry experts and leverage their knowledge and market intelligence.
Expert Insights
podcasts
"You will see them at all the stadiums, Six Flags etc, and they just continue to grow"
Expert Insights
Expert Insights
x
"In the first year of Evolv scanners, no guns were brought to Prince William County Schools, with a 93% clearance rate. In year two, they will be used at all varsity boys basketball and football games"
Expert Insights
x
"We need to protect our youth and our schools from these threats from ever happening again. All school districts need to add @EvolvTechnology Express weapon detection sensors in every building"
Investor Materials
Access the most recent investor updates published by the company.
Company Materials
Evolv Technology Unveils High-Speed Weapons Detection System
ArticleInvestor Presentation
PDFAnnual Report
PDFEvolv technology
Why Traditional Image Quality Specifications Can Be Outdated for Modern AI-Driven Security X-Ray Systems
ArticleBy recognizing the need for updated standards—focused on the capabilities of AI rather than legacy metrics—we can help ensure that security X-ray systems are assessed in a way that reflects their true value.
Evolv Technology Appoints John Kedzierski as Chief Executive Officer, President, and Director
PDFEvolv Announces Resolution of FTC Inquiry
PDFExternal Insights
A curated collection of third-party content relevant to the company and sector to help inform your investment decision.
Security Technology
Washington Post Article
ArticleResearch
Team
Meet the experienced professionals leading our organization
Anil Chitkara
Peter George
Mark Donohue
Mike Ellenbogen
What the Pro's Are Asking
Here are the questions that professional investors are asking before making an investment decision.
What are the key risks?
This is a new company with a new technology that is currently more expensive than existing solutions. The risk is that Evov fails to gain meaningful traction and can’t achieve the sufficient scale needed to compete effectively on cost.
The key caveat to this is that we are at under $100m in revenue and even a relatively small portion of the total pie could offer meaningful upside to investors.
The key caveat to this is that we are at under $100m in revenue and even a relatively small portion of the total pie could offer meaningful upside to investors.
Can the company service its demand?
Evolv has signed an agreement with their contract manufacturer, Columbia Technology, to offload the sale of hardware in exchange for a license fee. This means, for half of their business, EVLV no longer have to fund the capital-intensive manufacture of the product and will now only generate higher margin license fees and SaaS revenues which require significantly less upfront capital. This in effect removes a key government on growth allowing the company to service the demand available.
What about the FTC/ SEC investigation?
Evolv Technology has resolved a Federal Trade Commission (FTC) inquiry into its past marketing claims without admitting wrongdoing or incurring monetary penalties. The FTC did not challenge the effectiveness of Evolv's AI-based security products; the inquiry focused solely on historical marketing descriptions. As part of the resolution, Evolv offered a limited group of K-12 education customers the option to cancel their contracts within a 60-day period. On 23rd January the company announced that no customers had exercised their contract cancellation rights provided by the resolution. The vast majority of the cancellation rights available to this group of customers are scheduled to expire by March 14, 2025.
How do we know the technology works?
No technology is infallible but the long list of blue chip customers and resellers is a testament to the efficacy of the tech. Investors can have some confidence that these firms have all conducted their own due diligence. In the first four weeks of back-to-school in the US, Evolv had at least four instances of catching weapons at schools and preventing shootings (that we know of, as most go unreported to the public).
Is there any competition in this new technology?
An Italian company called CEIA dominates the legacy metal detection industry and has come to market with a new product, Opengate, to compete with Evolv. This is significantly cheaper, ~$40k over 4 years vs $90k for Evolv but lacks threat location detection, interactive AI, and machine learning. CEIA will likely continue to dominate the market as they already have relationships with the existing customer base and their price point is better suited for the mass market, especially in education which is highly cost-sensitive. Simple economies of scale should dictate that they will continue to benefit from a cost advantage.
Importantly, this is a huge market and with a revenue base below $100 million, it will not take a lot of move the needle for Evolv. Even if they garner only modest market share in the broader $20B TAM the potential returns could still be huge.
Importantly, this is a huge market and with a revenue base below $100 million, it will not take a lot of move the needle for Evolv. Even if they garner only modest market share in the broader $20B TAM the potential returns could still be huge.