Evolv Technologies Just Sent a Strong Signal on AI Security Demand

Evolv Technologies Inc. (NASDAQ: EVLV) is a leader in AI weapons/gun/concealed weapon detection. The company delivered its fourth-quarter earnings report after the market closed on March 10. The results were solid, starting with a double beat on the top and bottom lines.

Revenue for the quarter came in at $38.50 million, topping the forecast of $36.44 million by 5.65%. The bigger story, however, was the company’s bottom line. Adjusted earnings per share came in at 6 cents, well ahead of expectations for a loss of 8 cents per share.

Investors seem to be taking a wait-and-see approach. EVLV stock was up modestly in the session following the report, recovering from a loss of more than 2% at the open. It's not unusual for a stock that trades near $5 per share to see significant volatility in either direction. That’s been the case for EVLV stock, which is up more than 60% in the past 12 months but was down over 25% in 2026 heading into earnings.

At a time when many technology stocks, particularly those related to AI, are getting battered, it’s important to understand what Evolv does and why AI isn’t just an add-on service; it’s an integral part of the business case.

How Evolv Uses AI to Modernize Security Screening

The keyword to understanding Evolv’s approach is frictionless. Evolv builds AI-powered weapons-detection systems that let people walk through security checkpoints without stopping to empty their pockets or bags. This replaces the old metal-detector experience with fast, frictionless entry at places like schools, stadiums, hospitals, and theme parks.

Its systems combine advanced sensors with AI to analyze the signatures of guns, knives, and other weapons as people move through, then highlight potential threats, showing security personnel exactly where to check instead of triggering a generic alarm.

Evolv differentiates itself by focusing on speed, letting crowds flow at much higher throughput than traditional checkpoints while using AI pattern recognition to distinguish likely weapons from everyday items, which is designed to cut false alarms and add context, including some non-metal threats and richer situational awareness.

Strong Revenue Growth and Recurring Revenue Momentum

The proof is in the company’s growth. Quarterly revenue was up 32% year-over-year (YOY). This growth was driven by new customers and the expansion of deployments across its existing customer base.

That growth is also reflected in the company’s annual recurring revenue (ARR), which came in at $120.5 million in the quarter, an increase of 21% YOY.

Evolv also raised its 2026 full-year guidance. The company is forecasting total revenue in the range of $172 million to $178 million, which would be YOY growth of around 20% at the mid-point. Of that revenue, Evolv forecasts $145 million to $150 million in ARR, representing YOY growth of around 22.5% at the midpoint.

One driver of that growth is the company’s two-pronged business model. Customers can choose a pure subscription model or a purchase-subscription model. The pure subscription model keeps customers from buying the hardware outright; instead, they pay an all-in recurring fee that bundles the equipment, software, updates, service, and maintenance into one contract.

In the purchase-subscription model, customers still pay recurring software and service fees, but the commercial structure can separate or front-load more of the hardware cost, making the subscription portion relatively lower and more software-like.

In 2026, Evolv expects approximately 50% of its new unit deployments to be under the pure subscription model, with the remaining 50% deployed through its purchase-subscription model.

EVLV Stock Is a Speculative Play That Could Still Work Out

Investors should have absolute clarity about what they own with EVLV stock. Revenue is growing, but can be lumpy. Evolv delivered profitable earnings this quarter and expects to have its first full year of positive adjusted EBITDA, with margins in the high single digits. But the company will have to prove it can be consistently profitable for the stock to gain traction.

Adding to the headwinds is the competitive landscape. It’s fair to question the company’s moat. There are several companies competing in the AI-enabled weapons-detection and security-screening sector.

However, the need for the company’s products and services is, sadly, increasing. Evolv generated $145.90 million in revenue for all of 2025. The total addressable market for the company is forecast to be between $2 billion and $3 billion by 2030, depending on how the AI weapons/gun/concealed weapon detection area is defined by scope and methodology.

That leaves enough room for multiple names, and much of Evolv’s revenue comes from ARR, which is contracted over long periods.

Put it all together, and this is a speculative stock that is valued correctly at this time. Investors should be aware of the risks, but risk-tolerant investors may have a long-term opportunity.