What Management Said
Read the full Q2 2026 transcript ↗Hello everyone, and thank you for joining Axon's executive team today your our second quarter 2026 earnings conference call. During this call, we will discuss our business outlook and make forward-looking statements. We had a record quarter, and I could not be more proud of this team. host cities, more than 50 additional sites and surrounding areas, international deployments, multiple agencies with very little margin for error.
Dedrone is delivering tremendous growth, the opportunity continues to expand across state and local public safety, international, federal, enterprise, and corrections. This is a business that was still in its infancy just a year ago and is quickly becoming one of our largest product lines, surpassing $100 million in quarterly revenue. We've now booked more TASER 10 units than we booked over the lifetime of TASER 7, with a ton of pipeline still in front of us. That's on top of nearly 50% bookings growth in Q2 last year.
Normalizing for duration gives us a clear view of the underlying demand across markets. As I review the pipeline, I see a clear line of sight to finishing the year in the 30% range of normalized bookings. We didn't rush to deploy every tool or ask people to use AI for the sake of using AI. From before a call comes in to during an incident to closing a case, the sensor, software, and data work together.
What went well
- Axon delivered a record second quarter with revenue of $904 million, up 35% year over year, marking its 10th consecutive quarter of growth above 30% on broad-based demand across products and geographies.
- Software & services revenue grew 36% to $398 million, annual recurring revenue rose 39% to $1.6 billion, and net revenue retention reached a record 126%; more than one-third of software revenue now comes from offerings beyond the core Evidence platform, which together grew roughly 70% (the AI Era Plan grew almost 700%).
- Platform Solutions revenue surged 123% to $150 million as the Dedrone counter-drone business surpassed $100 million in quarterly revenue, validated by a complex multi-city World Cup deployment across 11 U.S. host cities.
- International bookings ran roughly 3x the prior year and enterprise bookings were also up about 3x; three of the top five AI Era Plan deals came from international customers, and large TASER 10 deals were won in the Middle East and Europe.
- The company signed two nine-figure agreements with major cities (including its largest-ever TASER order), two eight-figure state corrections deals, and its first full-scope Axon 911 (Prepared + Carbyne) customer.
- Future contracted bookings grew more than 40% to $15.1 billion and Q2 gross bookings were up 20% (on top of ~50% growth a year ago); Axon was named a participant in the $1.5 billion DHS Counter-UAS program and raised full-year revenue guidance by 200 basis points.
What went wrong
- GAAP net income fell to $29 million (a 3.3% net income margin, or $0.36 diluted EPS) from $36 million (5.4%) a year earlier, primarily reflecting a large tax benefit recognized in the prior-year period, though pre-tax income increased.
- Non-GAAP net income declined to $155 million ($1.88 diluted EPS) from $179 million ($2.18), with the non-GAAP net income margin compressing to 17.2% from 26.7% year over year.
- Free cash flow was an outflow of roughly $1 million as Axon continued substantial inventory investment to reduce supply-chain risk; management expects that investment to moderate only after this year.
- The Q2 adjusted gross margin of 62.9% benefited from tariff refunds that will not recur, so Q3 adjusted EBITDA margin is expected to step down under rising component costs (especially memory) before recovering in Q4.
- Despite raising the revenue outlook, Axon held full-year adjusted EBITDA margin guidance unchanged at approximately 25.5%, as the tariff refund is offset by higher memory and component costs.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Full-year revenue growth | FY2026 | 32%-34% (raised 200 bps on strong first-half results and demand pipeline) |
| Full-year adjusted EBITDA margin | FY2026 | ~25.5% (unchanged; Q2 tariff refund offset by increasing memory/component costs) |
| Full-year free cash flow | FY2026 | ~$450 million (consistent with Q1 guidance, with strong Q4 seasonality) |
| Normalized (5-year) bookings growth | FY2026 | ~30% range; total future contracted bookings expected to grow faster than 30% |
| Q3 adjusted EBITDA margin | Q3 2026 | Expected to reflect higher memory costs with no tariff-refund benefit, before scaling back up in Q4 |
| Body camera shipments | Q3 2026 | Expected up 20%-30% sequentially (likely closer to 30%) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +35% to $904M | Broad-based demand across state and local, international, enterprise, and federal; 10th straight quarter above 30% growth. |
| Software & services revenue | +36% to $398M | Axon Evidence remains the backbone, with fast-growing contributions from real-time operations (Fusus), Records, AI Era Plan, counter-drone software, and Axon 911. |
| Connected devices revenue | +35% to $507M | Primarily driven by Dedrone counter-drone, TASER 10, and Axon Body 4. |
| Platform Solutions revenue | +123% to $150M | Dedrone counter-drone drove most of the growth; a category added at the end of 2024 that quickly became a consistent contributor. |
| Annual recurring revenue | +39% to $1.6B | Sticky software fed by sensors and enhanced by AI; net revenue retention reached 126%. |
| Adjusted gross margin | 62.9% (+130 bps sequentially) | Primarily tariff refunds, partially offset by increased mix from newer product offerings that are still scaling. |
| Adjusted EBITDA | $242M (26.8% margin) | Strong revenue growth; operating cash flow improved to $20 million from a $92 million outflow a year ago. |
| GAAP diluted EPS | $0.36 (down from $0.44) | Prior-year period included a large tax benefit; pre-tax income rose year over year. |
| Future contracted bookings | +40% to $15.1B | Broad-based momentum across products and end markets; Q2 gross bookings up 20% on top of ~50% growth a year ago. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Counter-drone / Dedrone | New category added end of 2024 | Surpassed $100 million in quarterly revenue; management frames it as durable beyond the World Cup, with demand across enterprise, federal, international, data centers, and eventually state and local as mitigation is legalized. Named to the $1.5 billion DHS Counter-UAS program; strategy is to be the best 'connector' across best-in-class sensor and effector vendors. | — |
| AI and software beyond Evidence | Early-stage AI offerings | More than a third of software revenue now comes from non-Evidence offerings growing ~70%, with the AI Era Plan up almost 700%; Draft One enabled in more markets and a real-time translator driving international interest. | — |
| International expansion | Emerging markets | International bookings ~3x prior year; large TASER 10 wins in the Middle East and Europe comparable to top U.S. deployments; some international customers adopting newest offerings faster than U.S. peers. | — |
| Body camera win-backs | — | Customers are canceling contracts with other vendors to migrate to Axon for reliability (e.g., battery life) plus AI and Evidence.com workflows; shipments expected up 20%-30% sequentially in Q3. | — |
| Axon 911 (Prepared + Carbyne) | Recent acquisitions | Signed first full-scope Axon 911 customer; customers actively seeking 911 alternatives, and management is 'wildly bullish' on winning the category. | — |
| Data privacy and trust | — | Amid the DeFlock anti-surveillance movement and license-plate-reader concerns, Axon is leaning on its ethics council and building AI tools to detect anomalous search behavior; management views trust as a durable competitive asset. | — |
| New bookings disclosure & 2028 targets | Total bookings only | Introduced a five-year normalized bookings metric (up over 30% YoY) to strip out contract-duration noise from long international and short enterprise deals; reaffirmed confidence in the ~$6 billion 2028 revenue target with multiple paths to get there. | — |
Q&A Summary
Meta Marshall (Morgan Stanley) asked where customers are asking Axon to innovate as they gain comfort with AI, and whether there is any lingering resistance.
Rick Smith said the risk-averse public-safety base is asking most about privacy and data security amid the DeFlock anti-surveillance movement, likening it to the early TASER backlash; he argued Axon's ethics council and privacy controls (including AI tools to flag anomalous search behavior) are winning conversions from other LPR vendors. Brittany Bagley added that demand consistently anchors on faster/correct response, saving officer time, and improving officer and community safety.
Michael Ng (Goldman Sachs) asked about Dedrone counter-drone use cases beyond the World Cup and what supports the $100 million+ quarterly run rate.
Rick Smith and Jeff Kunins said counter-drone demand is normalizing across data centers, corporate campuses, CEO residences, enterprise, federal, and international, driven by real threats seen in Ukraine and the Middle East; World Cup trailers are already being repurposed, so they do not view the quarter as an outlier, though large hardware shipments can cause quarter-to-quarter swings.
Joseph Cardoso (J.P. Morgan) asked about the drivers of 20%-30% sequential body-camera shipment growth into Q3 and the Axon Body Mini rollout.
Josh Isner said the growth reflects broad public-safety wins across renewals, expansions, win-backs, U.S. state and local, enterprise, international, and federal rather than Mini specifically; shipments follow bookings (Q1 is seasonally lightest), and he expects closer to 30% sequential growth. Mini is seeding large enterprise trials with hundreds to thousands of cameras per deployment.
James Fish (Piper Sandler) asked how much of the $1.5 billion DHS Counter-UAS contract Axon might capture and about strategy beyond Dedrone.
Josh Isner said the capture amount is still unclear but being one of a handful selected from 55-60 applicants legitimizes the offering and enables broader federal, state/local, and international sales. Rick Smith described a fast-moving space requiring physical mitigation (nets, lasers, interceptor drones) for AI-driven and fiber-optic drones, with Axon positioned as the best 'connector' across partners rather than a single hardware vendor.
Will Power (Baird) asked why Axon introduced the five-year normalized bookings metric now and for historical context.
Josh Isner said five-year bookings grew over 30% year over year (similar to last year), and the metric normalizes contract-duration differences as enterprise skews to three-year deals while very large international deals distort years six through ten. Brittany Bagley added that full-year future contracted bookings will still grow faster than that 30%.
Jeremy Hamblin (Craig-Hallum) asked whether Platform Solutions would surpass TASER by 2028 and what drove re-accelerating ARR growth.
Jeff Kunins and Rick Smith said they manage to broad-based, mission-driven bookings growth across all markets rather than engineering a product mix, and Brittany Bagley said the 2028 ~$6 billion target has many paths, with big upfront Platform Solutions hardware building a long software tailwind; ARR re-acceleration reflects the ~70%-growing non-Evidence software (AI up ~700%, plus Records, 911, and drone software), lifting NRR to 126%.
More on Axon Enterprise, Inc.
Reported 2026-08-05 · figures from the Axon Enterprise, Inc. Q2 2026 earnings call.
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