Axon Enterprise, Inc (AXON) Earnings & Analysis

Latest quarter

Axon reported Q2 FY2026 revenue of $904.4 million, up 35.3% from Q2 FY2025. Revenue exceeded the consensus of $868.3 million, while adjusted EPS of $1.88 was below the consensus of $1.89.

The filing said Connected Devices sales increased on higher TASER volume, adoption of its newest body camera, warranty revenue and counter-drone equipment volume. Software and Services sales increased as the number of users grew and existing customers adopted premium solutions. Axon reported a gross margin of 60.4%, unchanged from a year earlier, and said the mix of professional-services revenue and scaling new offerings affected gross margin. The company reported operating margin of 5.17%, compared with −0.15% a year earlier.

Axon reported diluted EPS of $0.36, compared with $0.44 in Q2 FY2025. The filing attributed higher operating expenses to headcount and investments in AI and other growth initiatives. Axon reported free cash flow of −$972,000.00 and said it held $600.0 million of cash and cash equivalents at June 30, 2026.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the earnings call, Josh Isner said Q2 gross bookings increased 20% and five-year normalized bookings increased more than 30%. He said the company’s pipeline supported an expectation to finish FY2026 with normalized bookings growth in the 30% range, noting that shorter enterprise contracts and certain large international agreements make duration normalization useful for comparing demand.

Isner said international bookings were roughly three times the prior-year level, driven by several large deals, and that three of the company’s five largest AI Era plan deals in the quarter came from international customers. He also said Axon won a Taser 10 deal in the Middle East and another in Europe. In U.S. state and local public safety, Isner said the company signed two nine-figure city agreements, including its largest individual Taser order, as well as two eight-figure state-corrections agreements.

On product demand, Isner said the company expected body-camera shipments to rise 20.0% to 30.0% sequentially in Q3 FY2026. He said the expected shipment increase reflected renewals, expansions, customer switches and international activity, rather than only Axon Body Mini. He also said enterprise bookings increased about threefold from a year earlier and described early enterprise deployments of body cameras as trials that could develop into later expansion orders.

Analysts asked whether counter-drone demand would continue after World Cup-related activity. Isner said counter-drone revenue could vary quarter to quarter because it includes large hardware shipments, but said demand extended across international, federal and enterprise markets. He said Axon could not quantify how much of the $1.5 billion DHS Counter-UAS program it would capture.

On margins and investment, Isner said Axon was investing aggressively in its counter-drone business. He said the company had raised its expectations while managing supply-chain disruptions, higher component costs and tariffs. The call said Q3 adjusted EBITDA margin would reflect memory costs and the absence of tariff-refund benefits before margins scaled in Q4 to meet the full-year target. Rick Smith said customer trust depends on data privacy and security controls, including tools intended to identify anomalous search behavior.

Guidance

In its Q2 FY2026 results release, Axon raised its FY2026 revenue-growth guidance to 32.0%–34.0% from 30% to 32% previously. The company said the increased revenue outlook was supported by $15.1 billion in Future Contracted Bookings and an expanding pipeline.