Innovative, High-Impact Technology
Evolv’s touchless detection technology outperforms traditional metal detectors, offering faster throughput, better accuracy, and reduced operational costs.
An overview of the main reasons to invest and the key risks involved.
Evolv’s touchless detection technology outperforms traditional metal detectors, offering faster throughput, better accuracy, and reduced operational costs.
The business generates high-margin, long-term SaaS subscriptions, with blue-chip clients and 64% growth in ARR to $89 million.
Evolv is positioned to disrupt the $2B regulated security market and the $18B unregulated market, with strong growth prospects.
Regulatory hurdles or delays in security approvals could hinder Evolv’s ability to scale quickly and impact its market adoption, affecting investor confidence.
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.
Ongoing capital requirements for expansion and potential market volatility could strain cash flow, leading to concerns about financial sustainability in the longer term.
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.
Overview of buy and sell case of the business.
Key pieces of information about the business that you need to know about.
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.
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.
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.
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 pieces of information about the business risks that you need to know about.
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.
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.
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.
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By 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.
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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.
NASDAQ:EVLV
$6.023.97%
$987.00m
-22.22
3m
Pricing delayed 15 mins. Jul 7, 2025 2:00 AM
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