Summary of Evolve Technology Q2 2026 Earnings Call

1Key Financial Results and Metrics

Revenue: $43.8 million, up 34% year-over-year, driven by strong demand and the completion of the transition to a direct fulfillment model.

Annual Recurring Revenue (ARR): $132.7 million, reflecting a 20% year-over-year growth.

Adjusted EBITDA: $4.4 million, with an adjusted EBITDA margin of 10.1%, up from 6.5% a year ago.

Remaining Performance Obligation (RPO): $312.6 million, up 4.5% sequentially, indicating strong future revenue visibility.

Customer Growth: Added 70 new customers in Q2, with a total of over 10,000 units expected to be deployed by year-end.

2Strategic Updates and Business Highlights

Evolve continues to focus on AI-powered weapons detection, positioning itself in a large, underpenetrated public safety market.

The company is expanding its footprint in various sectors, including education, healthcare, and sports, with notable wins in K-12 schools and partnerships with major healthcare systems.

The introduction of the Expedite platform is gaining traction, with over 100 customers now utilizing it, representing an 8% share of the total customer base.

Evolve has onboarded Plexus as its global contract manufacturing partner, which is expected to enhance production capacity and operational efficiency.

3Forward Guidance and Outlook

2026 Revenue Guidance: Raised to $180 million to $185 million, reflecting 23% to 27% year-over-year growth.

ARR Growth: Expected to reach approximately $148 million to $150 million by year-end, representing 23% to 25% growth.

Continued growth in deployed units, ARR, revenue, and adjusted EBITDA is anticipated for the second half of 2026, with a focus on maintaining strong customer demand and operational execution.

4Bad News, Challenges, or Points of Concern

The company faces challenges related to semiconductor supply constraints, which may impact production and deployment timelines.

There is a noted headwind in gross margins due to a higher mix of purchase subscriptions, which recognize hardware costs upfront while deferring software revenue.

Increased costs related to Gen1 upgrades and supply chain pressures are also expected to impact margins in the near term.

5Notable Q&A Insights

ARR vs. Unit Growth: The divergence between ARR growth (23%-25%) and unit growth (30%) is attributed to the return of Gen1 units and the lower ARPU associated with them, as well as the pricing strategy for Expedite.

Legislative Environment: The company is optimistic about potential regulatory changes that could standardize their technology in various states, enhancing market opportunities.

Competitive Landscape: Evolve maintains a strong position in the market, focusing on innovation and customer experience to differentiate itself from competitors.

Plexus Relationship: The transition to Plexus is on track, but supply chain challenges remain a concern, particularly regarding electronic components. Overall, Evolve Technology demonstrated strong growth in Q2 2026, with a positive outlook for the remainder of the year, despite facing some operational challenges and market headwinds.