Axon Enterprise, Inc.
AXON · Nasdaq
Next quarter
Reports Nov 3, 2026.
Consensus is $0.48 EPS for Sep 2026 across 7 estimates, ranging $0.01 to $1.01.
AXON Jun 2026
- 90.00%
- -14.28%
- $0.30
- $0.57
- —
- $904.39M
Reported results
- $904.39M
- 60.42%
- $46.78M
- 5.17%
- $29.43M
- $0.36
Highlights
- Revenue: Q2 revenue rose 35% year over year to $904.4 million, up 12% from $807.3 million in Q1 FY2026 and marking Axon’s 10th consecutive quarter of growth above 30%.
- EPS: The provided consensus dataset shows reported EPS of $0.57 versus $0.30 expected, a 90% surprise; GAAP diluted EPS in the release and filing was $0.36, versus $0.44 a year ago and $2.05 in Q1.
- Recurring demand: Annual recurring revenue increased 39% year over year to $1.6 billion, net revenue retention reached 126%, and future contracted bookings rose 41% to $15.1 billion.
- Software and AI: Software & Services revenue grew 36% to $397.8 million, with AI Era revenue up nearly 700%; software-only gross margin remained above 80%, although reported segment adjusted gross margin fell to 75.1% from 78.9%.
- Platform expansion: Connected Devices revenue increased 35% to $506.6 million, led by Platform Solutions growth of 123% to $149.8 million; Dedrone revenue surpassed $100 million.
- Profitability: Operating income reached $46.8 million versus a $1.0 million loss a year ago, while Adjusted EBITDA rose more than 40% to $242.0 million, or a 26.8% margin.
- Outlook: Axon raised its 2026 revenue-growth outlook to 32%-34% from 30%-32%, while maintaining its Adjusted EBITDA margin outlook at approximately 25.5%.
- Cash and investment: Operating cash flow improved to $20.1 million from negative $91.7 million a year ago, but free cash flow was still negative $1.0 million and net debt was approximately $1.1 billion at quarter-end.
Analysis
Axon’s Q2 FY2026 was primarily a growth and demand print: revenue of $904.4 million increased 35% year over year and 12% sequentially, while the provided expectations dataset shows EPS of $0.57 versus $0.30 consensus, a 90% beat. The company reported $0.36 of GAAP diluted EPS in its release and filing, compared with $0.44 a year ago and $2.05 in Q1, the latter benefiting from unusually large investment gains and tax effects. Non-GAAP net income was $155.5 million, or $1.88 per share, versus $179.0 million and $2.18 a year ago.
The defining operational feature was broad-based ecosystem expansion. Software & Services grew 36% to $397.8 million, supported by premium software, AI Era and Axon 911 adoption, while Connected Devices grew 35% to $506.6 million, with Platform Solutions up 123% to $149.8 million. ARR reached $1.6 billion, net revenue retention was 126%, and future contracted bookings rose 41% to $15.1 billion. Profitability improved, with operating income of $46.8 million and Adjusted EBITDA of $242.0 million, although software margins declined amid professional-services mix and new-product scaling. Axon raised full-year revenue-growth guidance to 32%-34% and kept its 25.5% Adjusted EBITDA margin target.
Growth and demand
Axon sustained an unusually high growth rate while expanding the contracted revenue base. Management cited large city and state corrections wins, a first full-scope Axon 911 agreement, and roughly tripling bookings in international and enterprise markets. Because those newer markets generally have shorter contracts, Axon began reporting five-year normalized bookings; on that basis, new bookings still grew more than 30% year over year.
- Recurring revenue: ARR rose 39% year over year to $1.639 billion from $1.183 billion, while net revenue retention increased to 126% from 124% a year ago and 125% in Q1.
- Contracted backlog: Future contracted bookings increased 41% to $15.1 billion from $10.7 billion a year ago and $14.3 billion in Q1. Axon expects to fulfill 20%-25% over the next 12 months.
- Customer expansion: More than 80% of customers deploy at least one integrated hardware-and-software solution, and more than 40% subscribe to at least one premium solution beyond core TASER, body-camera and evidence products.
Software and AI
Software & Services remained the higher-growth, higher-margin segment, with revenue rising 36.2% year over year to $397.8 million and 12.2% sequentially. Growth reflected more users and greater adoption of premium offerings, including the AI Era Plan, Axon Fusus and Axon 911. The tradeoff was near-term margin pressure as professional services and newer products scaled.
- AI Era: Management said AI Era revenue grew nearly 700% year over year, making it a major contributor to premium software adoption.
- Margin mix: Segment gross margin declined to 71.3% from 75.6% a year ago, and adjusted gross margin fell to 75.1% from 78.9%; software-only gross margin continued to exceed 80%.
- Investment: Company-wide R&D increased 28.4% to $208.7 million, with higher headcount, engineering expense and technology-license costs tied partly to AI initiatives.
Connected Devices
Connected Devices revenue increased 34.6% to $506.6 million, with growth broadening beyond TASER. TASER revenue rose 20.9% to $261.3 million on higher TASER 10 handle and cartridge volume, while Platform Solutions became the standout contributor through counter-drone demand and Dedrone.
- Platform Solutions: Revenue grew 122.6% to $149.8 million from $67.3 million a year ago; the category includes in-car and fixed cameras, drones, counter-drone equipment and training hardware.
- Dedrone: Revenue surpassed $100 million, and Dedrone supported all 11 U.S. World Cup stadiums plus more than 50 additional sites.
- Devices margin: Segment gross margin increased to 51.9% from 48.6%, and adjusted gross margin rose to 53.4% from 51.1%, helped by $47 million of tariff refunds but partly offset by Dedrone mix.
Profitability and cash
Operating leverage improved despite continued investment in headcount, AI and other growth initiatives. Operating expenses rose 23.4% year over year to $499.7 million, slower than revenue growth, taking operating margin to 5.1% from negative 0.2%. The quarter also benefited from global tariff refunds, which supported gross margin and Adjusted EBITDA.
- Adjusted earnings: Adjusted EBITDA increased more than 40% to $242.0 million, producing a 26.8% margin versus 25.7% a year ago and 25.0% in Q1.
- GAAP earnings: Net income was $29.4 million, or a 3.3% margin, versus $36.1 million and 5.4% a year ago. The year-ago quarter included a $75.0 million tax benefit, making the comparison less indicative of operating performance.
- Cash conversion: Operating cash flow was $20.1 million versus negative $91.7 million a year ago, while free cash flow improved to negative $1.0 million from negative $92.0 million.
- Capital structure: Cash, cash equivalents and short-term investments totaled $685.3 million against $1.75 billion of senior-note principal, resulting in net debt of approximately $1.1 billion.
Carbyne integration
The February acquisition of Carbyne expanded Axon’s emergency communications offering and was incorporated into Software & Services. The transaction was a material use of capital but was not large enough to make the reported quarterly operating results materially different on a pro forma basis.
- Acquisition cost: Axon paid approximately $551.7 million in cash, net of cash acquired and equity consideration attributable to pre-combination service, to acquire the remaining 89.3% of Carbyne.
- Accounting impact: The purchase-price allocation currently includes $523.3 million of goodwill and $108.2 million of identifiable intangible assets; the measurement period is expected to conclude by Q1 2027.
- Quarterly costs: Axon recorded $3.0 million of Carbyne-related transaction and integration costs in Q2 and $9.0 million in the first half.
Raised 2026 outlook
Axon raised its full-year revenue outlook as bookings, premium software adoption and the expanding pipeline supported continued growth above 30%. It did not raise its profitability framework, suggesting that investment and mix remain central to the plan.
- Revenue: 2026 revenue growth is now expected at 32%-34%, versus 30%-32% previously.
- Profitability: The company maintained its Adjusted EBITDA margin outlook at approximately 25.5%.
- Investment plan: Full-year stock-based compensation remains expected at $590 million-$620 million, including approximately $280 million tied to the Employee XSP and CEO Performance Award; CapEx remains guided to $160 million-$190 million.
