Segment Information
The Company determined that it has one operating and reporting segment after considering the Company’s organizational structure and the information regularly reviewed and evaluated by the Company’s CODM in deciding how to allocate resources and assess performance. The Company has determined that its CODM is its President and Chief Executive Officer. The CODM evaluates the performance of our segment based upon consolidated net income and considers budget-to-actual or forecast-to-actual variances to assess performance and make decisions about allocating resources. The CODM evaluates segment assets based on total assets on the consolidated balance sheets. Asset information is not presented here because its presentation here would be duplicative of the consolidated balance sheets. On the basis of these factors, the Company determined that it operates and manages its business as one operating and reporting segment, that develops, manufactures, markets and sells security screening products and specific services, and accordingly has one reportable segment for financial reporting purposes.
Information by reportable segment is as follows (in thousands):
| | | | | | | | | | | | | |
| Twelve Months Ended
December 31, |
| 2025 | | 2024 | | |
| Segment revenue | $ | 145,905 | | | $ | 103,865 | | | |
| Less: | | | | | |
| Employee expense | 67,735 | | | 66,847 | | | |
| Travel and expense | 4,318 | | | 6,043 | | | |
| Capitalized R&D expense | (5,217) | | | (6,027) | | | |
Stock-based compensation expense1 | 20,571 | | | 24,756 | | | |
Other non-recurring expenses2 | 8,119 | | | 17,212 | | | |
| Consulting and contract staffing | 11,841 | | | 12,732 | | | |
| Software subscriptions | 6,365 | | | 6,814 | | | |
| Depreciation and amortization | 24,340 | | | 17,375 | | | |
| Restructuring costs | 2,662 | | | 860 | | | |
| Loss on disposal of property and equipment | 3,787 | | | — | | | |
| Other cost of revenue | 32,974 | | | 18,320 | | | |
| Other operating expenses | 16,873 | | | 21,240 | | | |
Other segment items3 | (15,325) | | | (28,290) | | | |
| | | | | |
| | | | | |
| Segment net (loss) income | $ | (33,138) | | | $ | (54,017) | | | |
1 Excludes incremental expense related to modified awards included in the Restructuring costs line. See Note 22, Restructuring Charges for additional information.
2 For the year ended December 31, 2025, includes consulting and legal fees and additional audit fees incurred in connection with a previously disclosed investigation and restatement of prior period financial statements, net of estimated insurance recoveries, as well as estimated net losses related to ongoing legal matters. For the year ended December 31, 2024, includes each of the costs described above, as well as costs associated with adverse non-cancellable inventory purchase commitments, inventory reserve associated with the transition of our manufacturing operations to the next generation of Evolv Express systems and the determination that certain components within our legacy systems will not be used in the next generation systems, and severance expense.
3 Refer to Total other income (expense), net and provision for income taxes in the consolidated statements of operations and comprehensive loss.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.