EX-99.1 2 axon-20260805xex991.htm EX-99.1 Document Exhibit 99.1 CONTACT: Investor Relations Axon Enterprise, Inc. IR@axon.com Axon reports Q2 2026 revenue of $904 million, up 35% year over year • Annual recurring revenue grows 39% to $1.6 billion; net revenue retention reaches 126% • Software & Services revenue grows 36% year over year to $398 million; AI Era revenue grows nearly 700% • Platform Solutions revenue grows 123% year over year to $150 million; Dedrone revenue surpasses $100 million • Reports net income of $29 million, non-GAAP net income of $155 million and Adjusted EBITDA of $242 million • Raises full-year revenue growth outlook to 32% to 34% ; maintains Adjusted EBITDA margin outlook at 25.5% Fellow shareholders, Axon delivered another record quarter, with revenue increasing 35% year over year to $904 million — our 10th consecutive quarter of revenue growth above 30%. Demand remained robust among both new and existing customers, supporting our vision to build the operating system for public safety and advancing our mission to protect life. Growth was broad-based across both segments. Software & Services revenue increased 36% year over year to $398 million, driven by new users and increased adoption of premium software offerings, including the AI Era Plan. Connected Devices revenue increased 35% year over year to $507 million, driven by Dedrone, TASER 10 and Axon Body 4. This performance reflects continued adoption across the Axon Ecosystem as customers connect more devices, data and workflows. Forward indicators were equally strong, with future contracted bookings growing 41% year over year to $15.1 billion. Notable wins included two nine-figure agreements with major U.S. cities, including the largest individual TASER order in our history, two eight-figure agreements with major state corrections customers and our first full-scope Axon 911 customer agreement. Momentum was also particularly strong in newer markets, with international and enterprise bookings each approximately tripling year over year. As we expand across these markets, where contract durations are often shorter than in state and local public safety, we are beginning to share new contract bookings on a five-year normalized basis to provide a more comparable view of underlying demand across end markets. On that basis, new contract bookings grew more than 30% year over year. Axon’s strategy is rooted in a relentless focus on delivering better outcomes for our customers and the communities they serve, supported by disciplined investment and execution. Alongside our growth, we delivered a net income margin of 3.3%, an Adjusted EBITDA margin of 26.8% and positive operating cash flow. We now expect 2026 revenue growth of 32% to 34%, up from 30% to 32% previously, and continue to expect an Adjusted EBITDA margin of approximately 25.5%. The examples below show the Axon Ecosystem in action—from citywide deployments and a global event to enterprise environments—and provide context for the financial performance and outlook that follow. Select Highlights The Axon Ecosystem Axon is building the largest connected network in public safety, bringing together sensors, customer-controlled data, AI-powered intelligence and response tools across the full mission chain. Fixed, body-worn and in-car cameras, drones and 911 systems create signals from the field. At the center, Axon Evidence and our broader cloud suite form the largest data repository in public safety, preserving and connecting video, audio and operational information across real-time operations, reporting, records and justice workflows. The relationship works in both directions, and the advantage compounds with each additional connection and data point. Each connected device enriches the data platform with additional signal and context, while the data and intelligence in the platform make every device, workflow and response more useful. AI and real-time operations help surface relevant information, automate routine tasks and accelerate decision-making, while keeping people at the center of critical decisions. TASER devices, Drone as First Responder (DFR), communications and training then help people act on that intelligence. As customers add devices, users and workflows, the network becomes more useful, more intelligent and more valuable. At the center of it all is our mission to Protect Life. “ I’m going to add multiple pieces of technology that need to work together — so I look at systems and how they’ll function. ” — Sheriff Michael Adkinson, Walton County, Florida The Network in Action The capabilities of the Axon network come together in different configurations for each customer and mission. Across deployments, the network follows a consistent operating arc: • Sense: Connected sensors identify an incident and add context. • Respond: Real-time awareness, training and response tools help coordinate the right response and shape what happens in the moment. • Resolve: Data moves through evidence, records and justice workflows to close the case and improve the next response. Because customers already rely on Axon across many of these workflows, they have a direct path to expand from one operational need into a comprehensive network. Today, over 80% of Axon customers deploy at least one integrated solution spanning hardware and software, while over 40% subscribe to at least one premium solution beyond our core TASER, body camera and evidence management products. The broadest deployments connect operations end to end across all three functions. Brookhaven Police Department provides one recent example of the measurable impact this model can deliver. Sense With DFR coverage across 96% of the city, Brookhaven achieved a 53-second average drone response time, providing rapid visibility into incidents as they unfolded. Respond By connecting DFR with Axon Respond, Fusus and field cameras, Brookhaven cleared 10% of calls without dispatching an officer . Resolve Brookhaven reported a 77% shoplifting clearance rate in 2025 and a 22% reduction in detective caseloads over two years . According to the department, no DFR-assisted cases had proceeded to trial, with defendants instead accepting plea agreements. Across the full deployment, Brookhaven also reported a 12% reduction in total index crime and a 45% reduction in burglaries in 2025. “ Our response time is under 60 seconds. So while you’re still typing the call into the CAD in another jurisdiction, we’ve already got the drone on the scene of the call. That’s DFR. ” — Captain Abrem Ayana, Brookhaven Police Department World Cup 2026 The same foundation can scale beyond one city to increasingly complex missions. The 2026 World Cup demonstrated the network’s extensibility. Across U.S. host cities, agencies built on existing Axon deployments to support a mission of significantly greater scale and complexity, spanning stadiums, fan zones, transit corridors and surrounding communities. The World Cup deployment highlights: • Dedrone supported all 11 U.S. World Cup stadiums • More than 50 additional sites were supported, including fan zones, team facilities and other key venues • Multiple agencies, jurisdictions and data sources were connected through shared operating pictures “For FIFA, our security strategy is total visibility. Axon’s Ecosystem—from our new First Responder Drones in the air to our real-time intelligence center on the ground—means we aren’t just responding to incidents; we are seeing them unfold before officers even arrive. This technology allows us to de-escalate situations faster, track threats across a crowded city, and ensure that while the world is watching Dallas, everyone inside and outside the stadium stays safe.” — Daniel C. Comeaux, Chief of Police, Dallas The strategic significance extends beyond the event itself. The same real-time operations, DFR, counter-drone, ALPR and communications capabilities remain in place after the tournament, supporting routine patrol, severe weather response, retail crime intelligence and other daily needs. Axon Body Mini Launches for Enterprise In June, Axon Body Mini became generally available across the United States, Canada, the United Kingdom, the European Union, Australia and New Zealand. Purpose-built for frontline enterprise workers, Body Mini combines panic activation, livestreaming, two-way voice and Axon Assistant to provide immediate access to support. Early deployment activity demonstrates how workers are using the device when that support matters most: • 300+ cameras trialed across eight retail and healthcare organizations • 6,400+ recordings captured during early deployments • 620+ panic activations connecting workers with supervisor support • 420+ livestreams providing real-time visibility into unfolding situations Cosentino’s Food Stores provides another enterprise example, showing how an initial body-camera deployment can expand into a system for de-escalation, employee protection and incident management. Across 31 grocery locations, body-worn cameras, Axon Auto-Transcribe, Axon Evidence and retail crime intelligence workflows helped reduce physical confrontations, strengthen employee confidence and improve incident documentation, coaching and training. Together, these examples show how integrated deployments can deepen adoption among existing customers, extend Axon into new markets and strengthen the durability of our growth. Our financial results that follow reflect this momentum. Q2 2026 Summary Results Quarterly revenue of $904 million grew 35% year over year, driven by Software & Services revenue of $398 million, up 36% year over year, and Connected Devices revenue of $507 million, up 35% year over year. Total company gross margin of 60.4% was flat year over year and up 130 basis points sequentially. Excluding non-GAAP adjustments, adjusted gross margin of 62.9% decreased 40 basis points year over year and increased 130 basis points sequentially. Gross margin performance reflected a higher mix of professional services revenue and scaling new product offerings, partially offset by global tariff refunds received in the quarter. Operating income of $47 million increased $48 million year over year, driven by higher revenue and global tariff refunds, partially offset by increased investment to drive future growth. • COGS of $358 million, or 39.6% of revenue, included $11 million in stock-based compensation expense. • SG&A expense of $291 million, or 32.2% of revenue, included $71 million in stock-based compensation expense. • R&D expense of $209 million, or 23.1% of revenue, included $62 million in stock-based compensation expense. Net income of $29 million (3.3% net income margin), or $0.36 per diluted share, decreased from $36 million (5.4% net income margin) year over year. Non-GAAP net income of $155 million (17.2% non-GAAP net income margin), or $1.88 per diluted share, decreased from $179 million (26.7% non-GAAP net income margin), or $2.18 per diluted share. The year-over-year decreases in net income and non-GAAP net income primarily reflect a large tax benefit recognized in the prior year; pre-tax income increased year over year. Adjusted EBITDA of $242 million (26.8% Adjusted EBITDA margin) increased over 40% year over year, driven by higher revenue and global tariff refunds. Operating cash flow improved to $20 million from an outflow of $92 million in the prior year and drove free cash outflow of $1 million, a meaningful year-over-year improvement, primarily driven by higher EBITDA, partially offset by continued inventory investment to support customer demand and timing of customer billing and collections. As of June 30, 2026, Axon had $685 million in cash, cash equivalents and short-term investments and outstanding senior notes with a principal amount of $1.8 billion, resulting in a net debt position of $1.1 billion, up $46 million sequentially. Total cash received from tariff refunds was $47 million, including $18 million in expenses realized in 2025, and the remaining associated with amounts primarily classified as inventory and property and equipment, net, for which the majority would have been expensed in the current year. Detailed definitions of our non-GAAP financial measures and caution on the use of non-GAAP measures are included later in this letter . Financial commentary by segment Software & Services THREE MONTHS ENDED CHANGE 30 JUN 2026 31 MAR 2026 30 JUN 2025 QoQ YoY (in thousands) Revenue $ 397,836 $ 354,524 $ 292,178 12.2  % 36.2  % Gross margin 71.3  % 72.4  % 75.6  % (110) bp (430) bp Adjusted gross margin 75.1  % 75.8  % 78.9  % (70) bp (380) bp • Software & Services revenue grew 36% year over year, primarily driven by new users and increased adoption of premium software solutions by existing customers, including Axon Fusus, the AI Era Plan and Axon 911. • Software & Services gross margin of 71.3% decreased from 75.6% year over year. Excluding non-GAAP adjustments, adjusted gross margin of 75.1% decreased from 78.9%. The decrease in gross margin and adjusted gross margin was primarily driven by a higher mix of professional services revenue and scaling new product offerings. Software-only gross margin continued to exceed 80%. Connected Devices THREE MONTHS ENDED CHANGE 30 JUN 2026 31 MAR 2026 30 JUN 2025 QoQ YoY (in thousands) Revenue $ 506,553 $ 452,821 $ 376,360 11.9  % 34.6  % Gross margin 51.9  % 48.7  % 48.6  % 320   bp 330   bp Adjusted gross margin 53.4  % 50.4  % 51.1  % 300   bp 230  bp • Connected Devices revenue grew 35% year over year, primarily driven by Dedrone, TASER 10 and Axon Body 4. • Connected Devices gross margin increased to 51.9% from 48.6% a year ago and 48.7% in the prior quarter. Excluding non-GAAP adjustments, adjusted gross margin increased to 53.4% from 51.1% a year ago and 50.4% in the prior quarter. The improvement was primarily driven by global tariff refunds, partially offset by a higher revenue mix from Dedrone. Forward-Looking Operating Metrics 30 JUN 2026 31 MAR 2026 31 DEC 2025 30 SEP 2025 30 JUN 2025 Annual recurring revenue ($ millions) (1) $ 1,639  $ 1,493  $ 1,347  $ 1,252  $ 1,183  Net revenue retention (1) 126  % 125  % 125  % 124  % 124  % Future contracted bookings ($ billions) (1) $ 15.1  $ 14.3  $ 14.4  $ 11.4  $ 10.7  ____________________________________________________________________ (1) Refer to “Statistical Definitions” below. • Annual recurring revenue grew 39% year over year to $1.6 billion, reflecting growing demand for premium software offerings, including our newer Axon 911 and AI Era solutions. • Net revenue retention reached 126% in the quarter, reflecting our ability to deliver additional value to customers over time with de minimis at trition. We drive adoption of our cloud software solutions through integrated subscription plans that include a variety of premium software options. This Software-as-a-Service (SaaS) metric excludes the hardware portion of customer subscriptions and is normalized to account for phased customer deployments throughout the year. • Future contracted bookings grew 41% year over year to $15.1 billion. T his operational metric tracks total unfulfilled contracted bookings for products and services, including remaining performance obligations as well as contracts with certain ter mination or other clauses that are not otherwise included in remaining performance obligations. We expect to fulfill between 20% and 25% of this balance over the next 12 months and generally expect the remainder to be fulfilled over the following ten years. 2026 Outlook The following forward-looking statements reflect Axon’s expectations as of August 5, 2026 and are subject to risks and uncertainties. Please refer to “ Forward-Looking Statements ” below for additional information. • 2026 Revenue: Axon expects full-year 2026 revenue growth in a range of 32% to 34%, an increase from 30% to 32% previously. Our increased revenue guidance is supported by our continued execution against $15.1 billion in Future Contracted Bookings, and an expanding pipeline that supports our expectation for greater than 30% growth in five-year normalized bookings year over year for 2026. • 2026 Adjusted EBITDA: Axon expects full-year 2026 Adjusted EBITDA margin of 25.5%. ◦ We provide Adjusted EBITDA guidance, rather than net income guidance, due to the inherent difficulty of forecasting certain types of expenses and gains such as income tax expenses and gains or losses on marketable securities and strategic investments, which affect net income but not Adjusted EBITDA. We are unable to reasonably estimate the impact of such expenses, which could be material, on net income. Accordingly, we do not provide a reconciliation of projected net income to projected Adjusted EBITDA. • 2026 Stock-based compensation: Axon expects full-year 2026 stock-based compensation expense to be approximately $590 million to $620 million, in line with prior guidance. ◦ Full-year 2026 stock-based compensation expense includes approximately $280 million related to the broad-based Employee XSP and the CEO Performance Award, primarily within SG&A and R&D. These performance-based incentive programs are tied to stock price, operational, and time-based requirements. • 2026 CapEx: Axon expects 2026 CapEx to be in the range of $160 million to $190 million. Our 2026 capital expenditure plans include long-term R&D investment projects, continued capacity expansion, global facility build-outs and new product development costs. Expected capital expenditures do not include costs related to investments in a new headquarters. Quarterly conference call and webcast We will host our Q2 2026 earnings conference call webinar on Wednesday, August 5 at 2:00 p.m. PT / 5:00 p.m. ET The webcast will be available via a link on Axon's investor relations website at https://investor.axon.com or can be accessed directly via https://axon.zoom.us/j/92722647497 . Statistical Definitions Annual recurring revenue: Annual recurring revenue is a performance indicator that management believes provides more visibility into the growth of our revenue generated by our highest margin, recurring services. Annual recurring revenue should be viewed independently of revenue and deferred revenue because it is an operating measure and is not intended to be combined with or to replace GAAP revenue or deferred revenue, as they can be impacted by contract start and end dates and renewal rates. Annual recurring revenue is not intended to be a replacement or forecast of revenue or deferred revenue. We calculate annual recurring revenue as monthly recurring license, integration, warranty and storage revenue, annualized. Net revenue retention: Dollar-based net revenue retention is an important metric to measure our ability to retain and expand our relationships with existing customers. We calculate it as the software, camera and TASER warranty subscription and support revenue from a base set of agency customers from which we generated Axon Cloud subscription and warranty revenue in the last month of a quarter divided by the software and camera warranty subscription and support revenue from the year-ago month of that same customer base. This calculation includes high-margin warranty revenue but purposely excludes the lower-margin hardware subscription component of the customer contracts, as it is meant to be a SaaS metric that we use to monitor the health of the recurring revenue business we are building. This calculation also excludes the implied monthly revenue contribution of customers that were added since the year-ago quarter, and therefore excludes the benefit of new customer acquisition. The metric includes customers, if any, that terminated during the annual period, and therefore, this metric is inclusive of customer churn. This metric is downwardly adjusted to account for the effect of phased deployments — meaning that, for the year-ago period, we consider the total contractually obligated implied