Full Transcript: Axon Enterprise Q2 2026 Earnings Call

Axon Enterprise (NASDAQ: AXON ) held its second-quarter earnings conference call on Wednesday. Below is the complete transcript from the call. This content is powered APIs. For comprehensive financial data and transcripts, visit View the webcast at Summary Axon Enterprise reported a record quarter with 39% growth, driven by strong demand across its ecosystem, including significant contributions from Dedrone, Taser 10, and Axon Body 4.

The company highlighted strategic investments in AI and public safety technologies, emphasizing its AI capabilities integrated with a robust network of sensors, enhancing real-time operations and safety outcomes. Axon raised its full-year revenue guidance to 32-34% growth, driven by strong bookings and expanding international and federal markets, particularly in counter-drone solutions. Operational highlights included substantial international bookings, an increase in Taser volume, and the expansion of the Axon ecosystem into new markets and applications, such as municipal body cameras for non-police use.

Management emphasized the importance of trust and data privacy in customer relationships, noting their strategy to integrate AI responsibly and enhance customer satisfaction through innovative solutions. Full Transcript Erik Lapinski, Vice President, Head of Investor Relations Axon's executive team today for our second quarter 2026 earnings conference call. 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 GAAP to non-GAAP are included in our shareholder letter and available on our investor website.

Now, as always, before we kick it over to Rick, we have a quick video to get us started. Let's pull it up. Rick Smith, CEO All right. Thank you, Eric, and great job to the team.

I love those videos. They just get me pumped up. So 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 like 39%. Like wow. Okay, so we had a record quarter and I could not be more proud of this team.

And 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 and 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. And the compute cost to do all this, to do 10 of these unsolved 10 like PhD career level problems, was $2,000 or $200 per problem.

So 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.

And yet, within a day, a model from another lab had reproduced half of the list, meaning it could solve half those problems on its own. So this isn't about one company getting lucky. The whole field just crossed the line at once. The cost of an original breakthrough has just collapsed.

So why does this belong on an Axon earnings call? Well, 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. And 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. 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, but in public safety, Axon holds every link in this chain. Now, 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 to connect, 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, 9-1-1 AI assistants. Behind them is the largest customer-controlled data repository in public safety.

Then 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. Every sensor adds a signal. Every workflow adds context. Every outcome improves the next one.

Brookhaven, Georgia shows you exactly what this looks like when you connect it end to end. Drones on the scene in 53 seconds. Coverage across 96% of their city. Burglaries, down 45%.

Look, no single product on the list produces these numbers. The system does. Data shouldn't sit trapped in a silo waiting for someone to find it. It should move securely through the workflows where it does something.

A city's cameras to its 9-1-1 center, to its officers, to real-time intelligence, its evidence to courtroom, a frontline worker in danger to help that arrives in seconds. And all of this depends on trust. We've earned that over years of stewarding our customers' data and never treating it as our own. We'll keep deploying this technology responsibly and thoughtfully alongside our customers and their communities.

With people at the center of every critical decision in public safety. Power without trust isn't an opportunity, it's a liability. I see this coming together everywhere I look. A few weeks ago, a customer bought body cameras for municipal employees.

Not for the police, for building inspectors. A few weeks before that, some of our largest enterprise pilots began putting Axon Body Mini on frontline workers. And during the World Cup, our ecosystem supported agencies across North America through one of the most complex public safety missions in the world. So where we sit today, the world is being flooded with intelligence.

What's scarce is intelligence connected to the real world, trusted by institutions that depend on it, and aimed at problems that matter. That's what we've spent 30 years building. There is no company better positioned to benefit from the intelligence explosion than Axon and through us, our customers and their communities, for whom we operationalize this intelligence with physical hardware and thoughtful design and controls to help maximize benefit with appropriate oversight. What an exciting time to be alive and an even better time to be at Axon.

And with that I'd like to turn it over to Josh Isner. Josh Isner, President Thanks a lot, Rick, and good afternoon, everybody. As Rick said, we can't do any of this without our customers. Every day our focus is on delighting them because when we do that, well, everything else follows.

We also can't do any of this without our team. They have embraced our mission and are working hard every day to deliver outsized societal outcomes, and there have been many of those in the last few months, including on the biggest stage in sports. I am so proud of the Dedrone team for their work to support the World Cup. This was one of the most complex and comprehensive installments we've ever worked on.

The expectations were clear: simultaneous delivery and activation across 11 US host cities, more than 50 additional sites and surrounding areas, international deployments, multiple agencies, with very little margin for error. The team executed with incredible precision, and I believe this deployment further established Axon as the technology leader in public safety. Dedrone is delivering tremendous growth and the opportunity continues to expand across state and local public safety, international, federal, enterprise and corrections. It is also one of the areas where we're investing in most aggressively and the team is earning that investment.

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. Next, I want to give a shout out to our international team. International bookings came in at roughly three times the prior year in Q2, driven by several large deals. What's especially exciting is some of our international customers are adopting our newest offerings right alongside our core products.

In fact, they may be even moving faster than some of our US customers. Three of our top five AI Era Plan deals in the quarter came from international customers. We're also seeing international markets fuel expansion in Taser. S.

state and local deployment, and another in Europe comparable to a top-five US agency deployment. These are massive opportunities showing up more and more, and we're just starting to scratch the surface. State and local public safety and corrections continue to show strength as well, as we signed not one but two nine-figure agreements with major cities in the quarter. One of those was our largest ever individual Taser order.

We also signed two eight-figure agreements with major state corrections customers, and another groundbreaker, our first full-scope Axon 911 customer. This customer will deploy a combined Prepared and Carbyne solution to power the call-to-closure vision we laid out when we announced these acquisitions, committing to that future just months before both deals closed. And lastly, in the US we continue to see more and more customers who bet on other vendors coming to Axon for body camera pain relief. We expect body camera shipments to be up 20 to 30% sequentially in Q3 and 15 to 20% quarter over quarter.

The success across markets led to our Taser volume being the highest in a quarter to date. 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 may sound crazy for a product category that has been around for three decades. Well, it's real and it speaks to how much opportunity remains.

Next, Enterprise. We've been talking about this moment for a long time — the point when those early conversations and pilot programs begin converting into meaningful enterprise deployments. That moment is here. Enterprise bookings were also up about 3x from a year ago and the volume of opportunities continues to grow.

And last but not least, I'm excited to see our federal business showing a lot of promise. We are engaged in opportunities across the federal civilian space and the team is executing with intensity as we approach the end of the fiscal year. Federal was part of the story with Dedrone in the World Cup and we also closed a major deployment of Axon Assistant with a federal agency on our body cameras because they are using them as body cameras. 5 billion DHS program for counter UAS.

I am looking forward to talking more and more about our progress in the federal space. As far as bookings go, every indicator I'm watching looks as good as it ever has. Q2 gross bookings were up 20%. That's on top of nearly 50% bookings growth in Q2 last year.

On a five-year normalized basis, which adjusts for contract duration, bookings were up even more — over 30%. That matters because some of our newer markets like International and Enterprise sign deals in the 1 to 5 year range compared to some of the 10-year agreements we sometimes sign with state and local customers. Normalizing for duration gives us a clear view of the underlying demand across markets. And as I review the pipeline, I see a clear line of sight to finishing the year with normalized bookings in the 30% range.

And before I hand it over, I want to spend a minute on how we're operating internally because this kind of execution doesn't happen by accident. A little over a year ago, we began flattening the organization to empower people closest to the work, reducing layers of friction and moving faster. We paired that organizational change with disciplined investment in AI tools for our teams. We didn't rush to deploy every tool or ask people to use AI for the sake of using AI.

We rolled it out deliberately and we focused on where it could make our people more effective. That has evolved into regular hackathons and recognition for teams finding new ways to move faster and spend more time on the work that matters. We're seeing that operating model pay off in execution. I believe that discipline is a big part of why we've continued to raise our own expectations while navigating supply chain disruptions, higher component costs, and tariffs, all while scaling to meet demand and never missing a beat for our customers.

It is coming together nicely. The team is earning, the mission is fueling them. Our customers can see it and we are investing in Axon and they are investing in Axon as their trusted technology partner. We are a next-play organization and we are stacking next plays like never before.

With that, I'll turn it over to you, Brittany. Brittany Bagley, CFO Thanks, Josh. We continue to see the power of the Axon ecosystem. We're not just one product, but a system that all works together, getting better all the time to solve real problems for our customers — from before a call comes in to during an incident to closing a case.

The sensor, software, and data work together. This is what you're seeing in our results. Revenue was $904 million, up 35% year over year, marking consecutive quarter of growth above 30%. And the demand remains broad-based.

Software and services revenue increased 36% year over year to $398 million. Axon Evidence remains the backbone of our software business and the secure data foundation, powering the vision Rick described. Increasingly, our newer software offerings are also meaningful contributors. More than one-third of our software revenue now comes from offerings beyond our core Evidence platform, consisting of real-time operations, which includes Fusus, productivity applications including Records, the AI Era Plan, Counter Drone software, and Axon 911.

Together that part of our software business grew roughly 70% year over year, with the AI Era Plan a true standout, growing almost 700%. And these businesses are still in early innings. That breadth is supporting strong expansion within our customer base. 6 billion.

Our software, fed by sensors and enhanced by data, is a core pillar for our customers' workflows. We're enhancing these with AI and the numbers continue to show that this is sticky and growing. On the devices side, connected devices revenue grew 35% to $507 million, primarily driven by Dedrone Counter Drone, Taser 10, and Axon Body 4. Platform Solutions revenue grew 123% to $150 million, with Dedrone driving much of that performance.

Counter Drone was a new category for Axon added at the end of 2024 and it has quickly become a consistent contributor to our results, validating our acquisition strategy alongside our organic product development. We continue to see strong demand across customer markets and expect the business to continue to scale. Taser 10 remained a standout in the quarter as Josh highlighted. 9%, up 130 basis points sequentially.

This increase in gross margin was primarily driven by tariff refunds, partially offset by increased mix from newer product offerings which are still scaling. 8% margin. Operating cash flow improved to $20 million from an outflow of $92 million in the prior year. This resulted in a free cash flow outflow of $1 million and reflected continued efforts around free cash flow conversion while still making substantial inventory investments to support customer demand and reduce supply chain risk.

As we scale, we continue to have line of sight to strong free cash flow generation consistent with our Q1 guidance of $450 million for the full year, with strong seasonality expected in the fourth quarter.