Axon Enterprise, Inc. Common Stock 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Axon reported revenue of $904 million for Q2 2025, up 35% year over year, marking their 10th consecutive quarter of growth above 30%.
- Software and services revenue increased 36% year over year to $398 million, with more than one third coming from offerings beyond the core evidence platform, growing roughly 70% year over year.
- Connected devices revenue grew 35% to $507 million, driven primarily by drone, counter drone, Taser 10, and Axon body.
- Platform solutions revenue grew 123% to $150 million, with drone driving much of that performance, surpassing $100 million in quarterly revenue.
- Adjusted gross margin was 62.9%, up 130 basis points sequentially, primarily due to tariff refunds.
- Adjusted EBITDA was $242 million, or 26.8% margin, with operating cash flow improving to $20 million from an outflow of $92 million the prior year.
- Free cash flow outflow was $1 million, reflecting inventory investments to support demand and reduce supply chain risk.
- Future contracted bookings grew more than 40% year over year to $15.1 billion, with normalized five-year bookings up over 30%.
- Taser 10 volume was the highest in a quarter to date, with more units booked than the lifetime of Taser 7.
- International bookings tripled year over year in Q2, driven by several large deals including three of the top five AI Aeroplan deals.
- Two nine-figure agreements were signed with major cities, including the largest ever individual Taser order, plus two eight-figure agreements with state corrections customers.
- Axon signed its first full scope Axon 911 customer deploying combined Prepared and Carbine solutions.
- Body camera shipments are expected to increase 20 to 30% sequentially in Q3 and 15 to 20% quarter over quarter.
- Counter drone is a rapidly growing new category, with deployments expanding beyond the World Cup to enterprise, federal, international, and state and local markets.
- Adjusted EBITDA margin guidance for full year remains approximately 25.5%, with Q3 margin reflecting increased memory costs and no tariff refund benefit.
- Operating model changes and disciplined AI tool investments have improved execution despite supply chain disruptions and higher component costs.
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Transcript
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Hello everyone, and thank you for joining Axon's executive team today for our second quarter 2026 earnings conference call. Before we get started, I'll note that our remarks today are intended to build upon our most recent shareholder letter and investor materials, which you can find on our investor website at investor.axon.com. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our expectations as of today and are not guarantees of future performance. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, as discussed in our SEC filings. We will also discuss certain non-GAAP financial measures. Descriptions and reconciliations of non-GAAP to GAAP are included in our shareholder letter and available on our investor website.
As always, before we kick it over to Rick, we have a quick video to get us started. Let's pull it up. This summer, as millions gathered for the World Cup, Dedrone secured the airspace above all 11 U.S. host cities, helping protect stadiums, fan zones, and celebrations everywhere.
Goal! Pretty exciting. To us, the bigger story wasn't what happened there.
It's what didn't. The drones that never reached the stadium, the incidents that never escalated, the thousands of fans who never knew they were protected. That's the kind of impact public safety agencies are creating every day with the Axon Ecosystem, and it's a story we're seeing play out in communities around the world.
The Axon Ecosystem has already enabled us to save significant time in our workflows. With Axon Fusus, everything is on one platform, it makes the response time a lot quicker.
I was able to target the vehicle as it was coming through because I had that information from evidence.com.
Back home, as 4th of July celebrations brought a surge in calls, Skagit 911 in Washington deployed Axon Prepared to handle routine requests operators could focus on emergencies.
911. Answering 98% in under 10 seconds.
Police are on the way. Help is on the way.
Across every part of the Axon Ecosystem, the story is the same. When first responders have better tools and training, better outcomes follow. That's the future we're building together. That's Axon. All right. Thank you, Erik, and great job to the team.
I love those videos. They just get me pumped up. Lucky to get to work here. I'd like to thank all of our analysts and investors who are joining us today. As you can see, we had another record quarter. Again, I was just looking at the numbers, 39%. Wow. Okay. We had a record quarter, and I could not be more proud of this team. None of this, none of it happens without our customers. You guys are the foundation, and we can't do any of this without you. This morning, my Cybertruck drove me to work. I sat behind the wheel and never touched it. A few years ago, that was a keynote fantasy. Today, it's my commute. I've stopped noticing. That's how this goes, right?
The impossible becomes remarkable, and then it becomes Tuesday. Two days ago, OpenAI announced an unreleased model had solved 10 open problems in mathematics, problems that the best mathematicians alive have been stuck on for decades, one of them unsolved for at least 27 years. The compute cost to do all this, to do 10 of these unsolved PhD-career-level problems, was $2,000, or $200 per problem. For many years, the critique was that AI, sure, it could remix human work, but it can't create anything new. Well, that critique is finished. A Fields Medalist, which is math's highest prize, it's been called the Nobel of math, said he would have published a comparable result without hesitation, and there are many that said any of these problems might on their own have qualified a human had they solved it for the Fields Medal.
Within a day, a model from another lab had reproduced half of the list, meaning it could solve half those problems on its own. This isn't about one company getting lucky. The whole field just crossed a line at once. The cost of an original breakthrough has just collapsed. Why does this belong on an Axon earnings call? Because an idea on a page is not an outcome on a street. Every one of these models perceives the world largely through strokes on a keyboard. When Axon deploys AI, we perceive the world through the largest connected network of sensors in public safety. Millions of eyes and ears already in the field, already running and built for this moment.
The intelligence doesn't replace the person, the human making a decision or making the call, but we hand them a clearer picture of what's happening in the seconds that matter most. Then it does the one thing software alone can never do. It acts. A TASER device can stop a violent incident without taking a life. Drones and robotics let us send a machine where a person would otherwise have to go, and both do the same thing. They lower the risk for everyone. The officer, the bystander, and the person that the police were sent to stop. Every person is safer. See it, understand it, act on it. This is the chain of events. It's the same chain that drove me to work this morning, right? Software alone can't close it. Hardware alone can't. In public safety, Axon holds every link in this chain.
When we changed our name from TASER to Axon, we were very specific about that. An axon is the nerve fiber that carries the signal from the senses to the brain and the decision from the brain back out to the body so it can act. We didn't pick a name that just sounded good. We picked a description of what we were building, and we've been busy building it. At the edge, sensors can see what's happening, whether it's body cameras, drones, fixed and in-car cameras, license plate readers, 911 AI assistants. Behind them is the largest customer-controlled data repository in public safety. AI and real-time operations can turn these signals into understanding, and then the means to act, TASER devices, drones, communication, training. At the heart of it, of course, is our mission to protect life. This doesn't just add up, it compounds.
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