Key Highlights

  • Evolv shares are trading down 6.90% at $4.20 versus a prior close of $4.51.
  • Third quarter Revenue was a record $47.3 million, up 10%.
  • Annual Recurring Revenue reached $140.5 million, up 20%.
  • Product gross Margin fell to 8.7% from 13.9% on the new pricing model.
  • 2026 revenue guidance was tightened to $182 million to $185 million.

Evolv Technologies (NASDAQ:EVLV) is trading down 6.90% at $4.20, a Penny Stock sliding toward its 52-week low as investors digest third quarter results and analyst target cuts. Revenue was a record $47.3 million, up 10% against a tough comparison with the largest contract in company history. Peer OSI Systems (NASDAQ:OSIS) is trading down 0.10%.

Solid Top Line, Thinner Margins

Adjusted EBITDA was $4.7 million, a 10% margin versus 12% a year ago, reflecting spending on research, sales and marketing, and Sarbanes-Oxley remediation. Free Cash Flow was $3.2 million and Operating Cash Flow was $18 million. Cash was $66.9 million. The GAAP loss widened to $0.09 per share.

Gross margin was 49.7% on a GAAP basis and 50.8% adjusted, while product gross margin fell to 8.7% from 13.9% because of the new pricing model.

Recurring Revenue Builds

Annual recurring revenue reached $140.5 million, up 20%. Remaining performance obligations were $325.8 million, up 12% from a year ago, with $132 million expected to be recognized in the next 12 months at an embedded gross margin of about 66%. Net revenue retention was 108%. Expedite is at about 9% of customers, up from 3% a year ago. Healthcare was 23% of units booked, and about 60% of bookings came from existing customers.

Guidance Details

Full-year revenue guidance was tightened to $182 million to $185 million from $180 million to $185 million. Year-end annual recurring revenue guidance of $148 million to $150 million was reaffirmed, with full-year adjusted EBITDA margin expected in the high single digits versus 7.6% in 2025.

The shift toward recurring pricing is a roughly 3% headwind to 2026 revenue growth and will shave three to four points from 2027 reported growth.

Analyst Reaction and Legal Risk

Craig-Hallum cut its target to $10 and Northland to $9, both keeping bullish ratings, with Northland citing multiple compression across the industry. A newly flagged risk around a founder-share dispute and possible litigation costs adds to the cautious tone. Both analysts covering the stock are bullish, with a $10 average target well above the current price.

Margin Recovery and the Dispute Decide the Next Move

The stock is trading well below analyst targets, so evidence that recurring revenue offsets the margin hit matters most. Investors will watch product gross margin after the pricing shift, whether year-end annual recurring revenue lands in the $148 million to $150 million range and whether litigation costs from the founder-share dispute grow.

Initial 2027 guidance and the pace of Expedite adoption are the next markers.