Axon Enterprise, Inc.

Axon reported Q2 2026 revenue of $904 million, up 35% year over year. Software and services revenue was $398 million, connected devices revenue was $507 million, and platform solutions revenue was $150 million. Adjusted gross margin was 62.9%, up 130 basis points sequentially, and adjusted EBITDA was $242 million, or a 26.8% margin. Operating cash flow improved to $20 million from an outflow of $92 million in the prior year, and free cash flow was an outflow of $1 million. Annual recurring revenue increased 39% to $1.6 billion, net revenue retention was 126%, future contracted bookings rose more than 40% year over year to $15.1 billion, and Q2 gross bookings were up 20% reported and over 30% on a five-year normalized basis. Management raised full-year revenue growth guidance to 32%-34% from 30%-32%, kept full-year adjusted EBITDA margin guidance at approximately 25.5%, and reiterated full-year free cash flow guidance of $450 million. They also said Q3 adjusted EBITDA margin will reflect memory cost pressure and no tariff refund benefit before margins step back up in Q4.

Rick Smith framed the quarter as evidence that Axon is moving from a product company to an interconnected AI, software, hardware, and services ecosystem. He emphasized that public safety customers are adopting AI only where it improves human decision-making, privacy, and trust, and he repeatedly returned to the idea that Axon’s value comes from linking sensors, software, and action. His tone was highly optimistic and expansive, but he also acknowledged the need for strong data privacy controls, ethics, and responsible deployment.

Brittany Bagley focused on the numbers behind the ecosystem story. She cited 35% revenue growth to $904 million, 62.9% adjusted gross margin, $242 million of adjusted EBITDA, $20 million of operating cash flow, and a $1 million free cash flow outflow, noting that inventory investment to support demand and reduce supply risk is still weighing on cash conversion. She also highlighted 126% net revenue retention, $1.6 billion of ARR, 39% ARR growth, and future contracted bookings of $15.1 billion, while explaining that tariff refunds helped Q2 gross margin but rising component and memory costs keep full-year EBITDA margin guidance unchanged at about 25.5%.

Analysts focused on whether Dedrone’s growth was event-driven, how much of the counter-drone opportunity is tied to the $1.5 billion DHS program, the pace of body camera shipments and Axon Body Mini adoption, and why Axon introduced a five-year normalized bookings metric. Management said World Cup was an accelerant but not the whole story for counter-drone, pointing to enterprise, federal, international, data centers, and broader legalization of mitigation as durable demand drivers. They also said body camera demand is broad-based, with win-backs from competitors contributing, and explained that the five-year booking metric is meant to normalize different contract durations across international and enterprise deals rather than inflate shorter deals.