Evolv Technologies announced the installation of its Evolv Express concealed‑weapon detection system at Pechanga Arena San Diego, a 14,000‑seat multi‑purpose venue that hosts more than 125 events a year and is home to the San Diego Gulls and San Diego Seals. The deployment adds a high‑profile customer to Evolv’s growing portfolio of sports and entertainment venues and demonstrates the company’s ability to secure contracts at large, high‑traffic facilities.
The new installation is part of Evolv’s broader strategy to shift from a legacy distribution model to direct fulfillment, a move that has already boosted its annual recurring revenue (ARR) to $117.2 million in Q3 2025, up 25% year‑over‑year. The company’s Q3 2025 revenue of $42.9 million reflected a 57% year‑over‑year increase, driven largely by recurring subscription contracts and the expansion of its AI‑powered screening solutions into new venues. However, the shift to direct fulfillment has temporarily pressured gross margins, which fell to 51% from 64% in the prior year, largely due to higher manufacturing costs and a one‑time inventory adjustment.
Evolv’s profitability remains under pressure, with a net loss of $1.8 million in Q3 2025 and an operating margin of –38.7%. Despite these challenges, the company reported a positive adjusted EBITDA margin of 12% for the quarter, its fourth consecutive quarter of positive adjusted EBITDA. Management attributes the margin compression to the transition to a direct‑sales model and the need to invest in manufacturing capacity, while the positive EBITDA reflects disciplined cost management and the growing mix of high‑margin subscription contracts.
CEO John Kedzierski emphasized that the company is “rebuilding a consistent track record of execution” and that the shift to a recurring‑revenue model will be the primary growth engine in 2026. He noted that the company expects to be cash‑flow positive in Q4 2025 and to achieve high‑single‑digit adjusted EBITDA margins for the full year, signaling confidence in the long‑term viability of its AI‑driven security platform.
Investors have reacted to the announcement with a focus on revenue quality and margin compression. While the company’s revenue beat expectations, analysts highlighted that 30% of the growth came from non‑recurring sources, and the significant drop in gross margin has raised concerns about the sustainability of the current growth trajectory. The market reaction reflects a cautious stance toward the company’s ability to convert its high‑growth momentum into sustainable profitability.
Evolv’s new deployment positions it favorably against competitors such as Metrasens, Rapiscan, and Astrophysics. By securing a contract at a high‑profile venue, Evolv strengthens its market share in the sports and entertainment sector and reinforces its reputation as a leader in AI‑based weapons detection. The company’s continued focus on expanding its recurring‑revenue base and investing in manufacturing capacity is expected to support its long‑term growth prospects, even as it navigates margin compression and the transition to a direct‑sales model.
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