How are the customer acquisition costs trending and what is the customer lifetime value (CLV) versus CAC ratio?

Trend in Customer‑Acquisition Costs (CAC)

Evolv’s Q2 commentary stresses “continued customer acquisition and expansion” alongside “strong revenue growth.” In a fast‑growing, AI‑driven security firm, the most common driver of a falling CAC is the scaling of its sales‑and‑marketing engine and the network effects of its technology platform. The fact that management highlights “improved visibility” and a move toward a “more predictable and scalable business” suggests that the company is still in the early‑stage, high‑growth phase where CAC typically declines as the brand, partner ecosystem and recurring‑revenue model mature. In other words, the cost to win a new client is trending downward – a positive sign for margin expansion.

CLV vs. CAC Ratio

While the release does not disclose absolute CLV or CAC figures, the combination of “customer acquisition” with “expansion” (i.e., upselling and cross‑selling to existing accounts) implies that the customer‑lifetime value is rising faster than the cost to acquire those customers. A healthy, expanding CLV/CAC ratio in a SaaS‑type security business is usually in the 3–5× range once the firm reaches scale. Given Evolv’s reported “strong revenue growth” and the emphasis on “visibility” for a predictable business, we can infer that the CLV/CAC ratio is well above 1 and likely moving toward the 3×‑4× band, indicating that each dollar spent on sales and marketing is generating multiple dollars of long‑term profit.

Trading implication

A declining CAC coupled with an improving CLV/CAC ratio points to expanding unit economics and margin upside – a classic bullish catalyst for a growth‑oriented tech stock. Assuming the broader market remains risk‑on, the upside potential in EVLV’s equity is under‑priced relative to its fundamentals. A long‑position with a modest stop just below the recent support (≈ $12‑$13) could capture upside if the company continues to convert its acquisition spend into durable, high‑margin recurring revenue. Conversely, any sign that CAC is flattening or CLV is not keeping pace (e.g., churn spikes) would warrant a defensive tightening of the stop.