Breaking Down Evolv Technologies Holdings, Inc. (EVLV) Financial Health: Key Insights for Investors

You're looking at Evolv Technologies Holdings, Inc. (EVLV) and trying to figure out if its growth story is defintely translating into a durable business, and the Q3 2025 numbers, released on November 13, 2025, give us a clear, if still early, answer: the pivot to scale is working, but it's not cheap yet. The headline is that the company is finally turning the corner on operating efficiency, posting a positive Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $5.1 million for the quarter, a huge swing from the prior year. This efficiency is fueled by a massive jump in sales, with Q3 revenue hitting $42.9 million, a 57% year-over-year increase, and management is confident enough to raise the full-year 2025 revenue outlook to a range of $142 million to $145 million. Honestly, the most important number for a software-as-a-service (SaaS) business like this is the Annual Recurring Revenue (ARR)-the predictable, subscription-based revenue-which grew 25% to $117.2 million, proving customers are sticking around. Here's the quick math: you have a company with a strong 'Moderate Buy' consensus rating and an average price target of around $9.70, but what this estimate hides is the need to maintain that 37% to 40% growth rate to justify a valuation that still prices in future profitability.

Revenue Analysis

You need to know where Evolv Technologies Holdings, Inc. (EVLV) is making its money, and the simple answer is: subscriptions. The company is successfully transitioning to a high-margin, recurring revenue model, which is a massive de-risker for investors, but you still need to watch the one-off product sales that can skew quarterly results.

For the full 2025 fiscal year, Evolv Technologies Holdings, Inc. has raised its total revenue guidance to a range of between $142 million to $145 million, up from an earlier forecast. This is a strong signal, reflecting a projected year-over-year growth rate of 37% to 40% compared to the 2024 total revenue of $103.9 million.

The Dominance of Recurring Revenue Streams

The core of Evolv Technologies Holdings, Inc.'s financial health is its shift to a software-as-a-service (SaaS) model, where customers pay an Annual Recurring Revenue (ARR) for the use of the Evolv Express system and its AI-powered software. This is the predictable cash flow you want to see. By the end of the third quarter of 2025, ARR reached $117.2 million, marking a solid 25% increase from the prior year. In the second quarter of 2025, subscription and service revenue accounted for approximately 82% of the total revenue, which tells you everything you need to know about the business model's stability.

Here's the quick math on their revenue breakdown, using the granular Q1 2025 data as a representative snapshot of the mix:

• Subscription Revenue: $19.2 million (up 35% YoY)
• Service Revenue: $6.7 million (up 28% YoY)
• Product Revenue: $2.3 million (up 56% YoY)
• License/Other Revenue: $3.7 million (up 205% YoY)

Mapping Near-Term Revenue Volatility

While the long-term trend is toward recurring revenue, you have to be a realist about near-term quarterly noise. The third quarter of 2025, for instance, saw total revenue jump to $42.9 million, a 57% year-over-year spike. What this estimate hides is that approximately $7.5 million of that came from a few notable, non-recurring items. Specifically, about $3.0 million was product revenue from the largest customer order in the company's history, and another $3.0 million came from IP license fees tied to a distribution fulfillment model that the company is actually phasing out.

The company is strategically pivoting away from its old distribution model toward a direct purchase subscription model. This transition is healthy for long-term margins, but it means you should expect some lumpiness in product and license revenue as those legacy deals conclude. To defintely understand the long-term customer value, you should be Exploring Evolv Technologies Holdings, Inc. (EVLV) Investor Profile: Who's Buying and Why?

The table below summarizes the impressive top-line growth, but remember to look at the ARR trend for the true health of the business.

Profitability Metrics

When you look at Evolv Technologies Holdings, Inc. (EVLV) through a profitability lens, you see a classic high-growth technology company still in the investment phase. The key takeaway is this: while the company is still losing money on a net basis, its gross margin is strong and its recent quarterly net loss has shrunk dramatically, which is a major signal of improving operational leverage (the ability to grow revenue faster than costs).

For the trailing twelve months (TTM) ending Q3 2025, the company's core profitability ratios show the current state of play:

• Gross Profit Margin (TTM): 53.66%.
• Operating Profit (EBIT) Margin (TTM): -42.15%.
• Net Profit Margin (TTM): -43.77%.

The 53.66% gross profit margin is defintely solid for a hardware-enabled software business, but the negative operating and net margins tell you where the money is going: heavy investment in growth and sales infrastructure.

Trends in Profitability and Operational Efficiency

The real story for Evolv Technologies Holdings, Inc. isn't the TTM loss; it's the near-term trend. The company is actively moving toward profitability, which is best seen in the Q3 2025 results. Revenue for Q3 2025 was $42.9 million, and the net loss for the quarter was only $(1.8) million, translating to a much-improved Net Profit Margin of (4%).

This quarterly net loss of $(1.8) million is a huge improvement from the Net Loss of $(40.5) million in Q2 2025, and signals that the company is reaching a critical inflection point. Another key metric is the Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which came in positive at $5.1 million with an Adjusted EBITDA Margin of 12% for Q3 2025. This is a strong indicator that the core business is generating cash before non-cash charges and interest, a crucial step for a growth stock.

Here's the quick math on the operational shift: Management has raised the full-year 2025 revenue outlook to between $142 million and $145 million, reflecting a 37% to 40% year-over-year increase. The focus on operational efficiency is clear, including a shift from a distribution model to a direct sales model, which, while creating near-term gross margin pressure (forecasted adjusted gross margin of 54-56% for the rest of 2025), is designed to capture 100% of the average revenue per unit over the long run.

Industry Comparison: Where EVLV Stands

To gauge Evolv Technologies Holdings, Inc.'s financial health, you have to compare its margins to the sector median. The company operates in the security technology space, which often falls under the broader US Electronic or Software sectors.

The table below shows how Evolv Technologies Holdings, Inc.'s TTM profitability stacks up against the sector median for the period ending Q3 2025.

The Gross Profit Margin of 53.66% being higher than the sector median of 49.79% is a massive green flag. It confirms the underlying business model-selling AI-powered screening solutions-is fundamentally sound. What this estimate hides, however, is the aggressive spending below the gross profit line, which is why the Operating and Net Margins are deeply negative. This investment is what drives the premium valuation, as the Price-to-Sales ratio of 7.6x is notably higher than the US Electronic industry average of 2.3x. If you want more detail on the full picture, check out the full article at Breaking Down Evolv Technologies Holdings, Inc. (EVLV) Financial Health: Key Insights for Investors.

Next step: You need to model out the path to a positive EBIT margin by stress-testing their SG&A and R&D spending against their raised 2025 revenue guidance.

Debt vs. Equity Structure

Evolv Technologies Holdings, Inc. (EVLV) maintains a moderate and strategic leverage profile, shifting from a debt-free balance sheet earlier in the year to utilizing debt to fuel its high-growth, subscription-based model. This move is a calculated one, keeping the company's debt-to-equity ratio low at around 0.41 as of late 2025, which is a comfortable level for a technology firm focused on scaling its Annual Recurring Revenue (ARR).

You can see the company's financing strategy is centered on non-dilutive capital to avoid watering down shareholder value. Honstly, for a growth-focused company, this is a smart play. The key is monitoring how efficiently they deploy this new capital against their goal of achieving positive free cash flow.

Here's the quick math on their current financing mix:

• Total Debt (Q3 2025): Approximately $42.4 million.
• Debt-to-Equity Ratio: Around 0.41.
• Cash Position (Q2 2025): Total cash, cash equivalents, and marketable securities were $37 million.

To be fair, the company started the year with virtually no outstanding debt as of March 31, 2025. The current debt level is almost entirely long-term, stemming from a significant financing move mid-year.

Recent Debt Issuance and Leverage Profile

The primary driver of the new debt structure was the $75 million credit facility secured with MidCap Financial in July 2025. This facility is structured as non-dilutive debt, meaning Evolv Technologies Holdings, Inc. raised capital without issuing new shares, which is a win for existing shareholders. The facility is split into a $60 million tranched term loan and a $15 million undrawn revolving credit facility.

The initial draw on the term loan was $30 million, with an additional $30 million available for future use over the next two years. This is essentially a war chest for growth. The five-year maturity and the interest rate-equal to SOFR plus a margin of 5.25%-are reasonable terms for a company in this stage.

What this estimate hides is the change in the company's risk profile. While the 0.41 debt-to-equity ratio is low compared to the broader US industry average, it's slightly higher than the typical profile for a pure-play technology company, where ratios are often much lower. However, it's in line with related sectors like Communication Equipment, which averages around 0.47. The company's focus on a long-term subscription model (Security-as-a-Service) justifies this debt, as it provides stable, recurring revenue to service the obligation.

The company is clearly balancing its financing by using debt to support the capital-intensive nature of its subscription model-leasing hardware to customers-while relying on its equity base to maintain a healthy balance sheet. This approach provides the liquidity needed to scale without the immediate cost of equity dilution. It's a calculated risk, but one that is necessary for aggressive growth.

For a deeper dive into who is backing this strategy, check out Exploring Evolv Technologies Holdings, Inc. (EVLV) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if Evolv Technologies Holdings, Inc. (EVLV) has the cash on hand to cover its near-term bills. The quick answer is that while the company's immediate liquidity ratios are tight, their recent cash flow performance shows a critical, positive inflection point, and management is guiding for a strong finish to the year. This is a classic growth-stock dynamic: tight ratios but improving cash generation.

As of the third quarter of 2025 (Q3 2025), Evolv Technologies Holdings, Inc.'s liquidity position, measured by its current and quick ratios, sits just below the standard comfort zone. The current ratio, which compares all current assets to current liabilities, was only 0.93. This means the company had 93 cents of current assets for every dollar of current liabilities. The quick ratio (or acid-test ratio), which excludes inventory-a less liquid asset-was even tighter at 0.85.

To be fair, a ratio below 1.0 isn't a death knell, but it flags potential short-term funding pressure. It means the company would struggle to cover all its short-term debts if they came due immediately. Still, the company is sitting on a solid cash cushion of $56.2 million in cash, cash equivalents, and marketable securities as of September 30, 2025.

Working Capital and Cash Flow Turnaround

The real story is in the working capital trends and the cash flow statement. For a company in a high-growth phase, a negative working capital trend is common as they invest heavily in sales and operations. The key is how fast they are turning that around. Here's the quick math on their recent performance:

• Operating Cash Flow (CFO): For the nine months ended September 30, 2025, Evolv Technologies Holdings, Inc. reported net cash provided by operating activities of approximately $3.1 million [cite: 10 in first search].
• Prior Trend: This is a massive shift from the full-year 2024 operating cash flow, which was a use of cash of -$30.85 million [cite: 6 in first search].

The swing to positive operating cash flow is defintely the most important near-term liquidity strength. It shows the core business is starting to fund itself. This is the first time in a while that the business has delivered a sequential increase in cash, which is a huge milestone for a company focused on Mission Statement, Vision, & Core Values of Evolv Technologies Holdings, Inc. (EVLV).

Investing and Financing Cash Flow Overview

The other cash flow sections tell a story of growth and stability. Cash Flow from Investing Activities (CFI) is typically negative for a growth company as they buy property, plant, and equipment (PP&E). For 2024, CFI was a modest outflow of -$1.40 million [cite: 8 in first search]. This suggests capital expenditures are relatively controlled, which is good for cash preservation.

Cash Flow from Financing Activities (CFF) has been positive in the past, reflecting capital raises to fund growth, but the company's debt-to-equity ratio is low at 0.15 [cite: 2 in first search]. The company is not heavily reliant on debt, which is a significant solvency strength. Plus, management is confident enough to project they will be cash flow positive in the fourth quarter of 2025, building on their Q3 momentum [cite: 10 in first search, 13 in first search].

What this estimate hides is that the Q3 revenue included approximately $7.5 million from certain one-time items, like a large customer order, which boosted the operating cash flow. You need to watch Q4 to see if the underlying subscription and service revenue can sustain this positive cash flow without those one-off boosts.

The clear action here is to monitor the Q4 2025 earnings release closely. Look for confirmation that the company hit its guidance of positive cash flow for the quarter, and check the 2026 outlook to ensure the Annual Recurring Revenue (ARR) growth continues to drive sustainable operating cash flow improvements.

Valuation Analysis

You're looking at Evolv Technologies Holdings, Inc. (EVLV) because of its high-growth security technology story, but the valuation metrics are telling a complex tale. Honestly, for a company scaling up in the AI-powered security space, traditional metrics often fall short. The short takeaway is this: the stock is priced like a high-growth name, which means it looks expensive on current book value but is trading well below the average analyst price target.

The market has defintely rewarded the growth story over the last year. The stock price has seen a remarkable surge, climbing over 132.56% in the last 12 months, with a year-to-date return of over 51.90% as of mid-November 2025. This momentum reflects growing confidence in their technology roadmap. Still, the volatility is real; the 52-week trading range runs from a low of $2.64 to a high of $8.91, with the latest close around $5.92. It's been a wild ride.

Decoding the Valuation Multiples

When you look at the core ratios for Evolv Technologies Holdings, Inc., you see the classic profile of a pre-profitability growth company. You can't use the Price-to-Earnings (P/E) ratio in the traditional way because the company is still reporting a trailing twelve-month (TTM) net loss, resulting in a negative P/E of approximately -10.91 as of November 2025. The same applies to the Enterprise Value-to-EBITDA (EV/EBITDA) ratio, which sits at a negative -15.22.

Here's the quick math on what matters most right now:

• Price-to-Sales (P/S): At roughly 7.6x, this is the ratio to watch. It's significantly higher than the industry average, suggesting investors are pricing in substantial future revenue growth and margin expansion.
• Price-to-Book (P/B): The P/B ratio is high at approximately 13.31x, indicating that the market values the company far beyond its net tangible assets (Book Value). This is typical for a software-driven, asset-light business model where intellectual property and future recurring revenue are the true value drivers.

What this estimate hides is the shift toward profitability. Management expects to deliver positive full-year Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for 2025, with margins in the high single digits, which is a critical operational milestone. For more on the institutional view, you should check out Exploring Evolv Technologies Holdings, Inc. (EVLV) Investor Profile: Who's Buying and Why?

Analyst Consensus and Forward View

The analyst community is largely bullish, seeing a clear path for the stock to appreciate from its current level. The consensus rating among the seven analysts covering the stock is a Moderate Buy. No, Evolv Technologies Holdings, Inc. does not currently pay a dividend, which is standard for a company reinvesting all capital back into growth.

The key data points from the street are clear:

The average price target of $9.13 implies a significant upside, suggesting the market hasn't fully priced in the raised 2025 revenue guidance of $142 million to $145 million and the projected positive Adjusted EBITDA. The stock is undervalued if you believe the company can execute on its transition to high-margin recurring revenue.

Risk Factors

You've seen the headlines: Evolv Technologies Holdings, Inc. (EVLV) is growing fast, raising its 2025 revenue guidance to between $142 million and $145 million. That's a strong signal, but as a seasoned investor, you know that high growth often brings high-stakes risks. The biggest near-term challenge isn't demand-it's execution and financial plumbing.

The core risks for Evolv Technologies Holdings, Inc. fall into three buckets: operational shifts, financial reporting integrity, and the external competitive landscape. Honestly, the internal risks are the ones that demand your immediate attention because they are the most controllable, yet they've caused the most recent turbulence.

Operational and Financial Transition Risks

The company is moving from a legacy distribution model to a direct fulfillment and subscription-focused structure. This is a smart strategic pivot for long-term recurring revenue (ARR), but it creates short-term financial pain. For instance, the Q3 2025 adjusted gross margin dropped to 51%, a significant headwind from the 64% reported in the same period last year.

Here's the quick math on the revenue side: the shift is expected to defer approximately $5 million to $10 million of one-time product revenue from 2025 into future Annual Recurring Revenue (ARR) streams for 2026. While this builds a more predictable, high-quality revenue base-ARR was already up 25% year-over-year to $117.2 million as of September 30, 2025-it means less top-line growth in the short term.

• Gross Margin Pressure: Direct fulfillment increases upfront costs, squeezing margins.
• Revenue Deferral: Trading short-term product revenue for more valuable, long-term subscription revenue.
• Supply Chain: Dependence on a primary third-party contract manufacturer poses a risk, but the new strategic partnership with Plexus is a solid mitigation plan to expand capacity and improve resiliency.

Internal Control and Regulatory Headwinds

The most serious internal risk is the continued fallout from the past restatements of financial statements, which stemmed from materially inaccurate revenue recognition in prior periods. This led to the delay in filing the Q1 2025 Form 10-Q and the identification of material weaknesses in internal control over financial reporting.

What this estimate hides is the sheer cost and distraction of management's time, plus the exposure to regulatory actions and potential class-action lawsuits. To be fair, management is actively addressing this by working with a global advisory firm, AlixPartners LLP, and committing to invest in better financial reporting processes. They defintely need to nail this down for investor confidence.

External Market and Competitive Risks

The AI-based security screening market is new and evolving, which means Evolv Technologies Holdings, Inc. faces intense competition from new entrants and existing players. This is a high-stakes, high-visibility sector. The market's growth may not meet expectations, and the company is also exposed to macroeconomic factors that could affect customer budgets, especially in key verticals like education and healthcare.

Furthermore, as an AI-driven company, Evolv Technologies Holdings, Inc. is subject to evolving regulatory challenges and potential liability related to its technology. The valuation also carries a premium, trading at a Price-to-Sales ratio of 7.6x, which is notably higher than the US Electronic industry average of 2.3x. This premium suggests investors are pricing in exceptional growth, adding a layer of valuation risk if growth targets are missed.

To get a full picture of the company's trajectory, you should read our comprehensive breakdown: Breaking Down Evolv Technologies Holdings, Inc. (EVLV) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking at Evolv Technologies Holdings, Inc. (EVLV) and seeing a company still posting a net loss, but you need to know if the growth story is real. Honestly, the numbers from the Q3 2025 report defintely show a significant shift toward a sustainable, high-growth model. The key takeaway is that the transition to a subscription-first, direct-sales approach is working, and it's driving much stronger financial projections for the full year.

Evolv Technologies Holdings, Inc. has raised its full-year 2025 revenue outlook to between $142 million and $145 million, a substantial jump from earlier guidance. That's a projected year-over-year growth rate of 37% to 40%, which is a massive acceleration for a security technology company. The strength is really in the recurring revenue, which hit an Annual Recurring Revenue (ARR) of $117.2 million by the end of Q3 2025, up 25% from the previous year. That predictable cash flow is what matters most for long-term valuation.

Key Growth Drivers and Strategic Shifts

The company is pulling three major levers to drive this growth. First, the core business model is a multi-year security-as-a-service subscription, which gives Evolv Technologies Holdings, Inc. a financial stronghold and predictable revenue. Second, they are actively shifting to a direct fulfillment strategy. This means they are cutting out distributors on more deals, which the company expects will lead to higher revenue, better cash flow, and a higher ARR on a per-unit basis. Third, the market is expanding fast.

The demand for their AI-based security screening systems-like Evolv Express® and Evolv eXpedite™-is booming across multiple sectors, which translates to clear customer expansion. They now serve over 1,000 customers globally and are aiming for at least 8,000 active subscriptions by the end of 2025. That's a huge addressable market, from schools to stadiums.

• Product Innovation: Evolv eXpedite™ (AI bag screening) surpassed one million bags screened, proving real-world adoption.
• Market Expansion: New deployments with the Buffalo Sabres and an extension with the New England Patriots/Revolution show traction in professional sports venues.
• Financial Flexibility: A new $75 million non-dilutive credit facility secured in 2025 provides capital for continued growth and expansion.

Competitive Edge and Profitability Path

Evolv Technologies Holdings, Inc.'s competitive advantage is its innovative AI technology. Their systems can screen visitors walking through at a normal pace, differentiating between threats and harmless items like cell phones, which dramatically improves the visitor experience by reducing wait times. It's a huge differentiator against traditional metal detectors, especially in high-volume venues.

What this means for profitability is a clear path forward. The company achieved a positive Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $5.1 million in Q3 2025, with a 12% margin, and they are forecasting positive full-year Adjusted EBITDA with margins in the high single digits. More importantly, management is confident they will be cash flow positive in Q4 2025. That's the critical milestone to watch-turning high growth into self-sustaining operations.

Here's the quick math on the current outlook:

What this estimate hides is the potential impact of litigation concerns and the reliance on third-party technology, which are still risks to monitor. Still, the momentum is undeniable. To dive deeper into the current financial position, check out the full analysis: Breaking Down Evolv Technologies Holdings, Inc. (EVLV) Financial Health: Key Insights for Investors.

Next step: Financial Analyst: Model the Q4 2025 cash flow based on the $142M-$145M revenue range and high single-digit Adjusted EBITDA margin by next Tuesday.