Axon Enterprise Q2 2025 Earnings Report

Axon Enterprise EPS Results

• Actual EPS: $2.12
• Consensus EPS: $1.54
• Beat/Miss: Beat by +$0.58
• One Year Ago EPS: $1.20

Axon Enterprise Revenue Results

• Actual Revenue: $668.54 million
• Expected Revenue: $641.77 million
• Beat/Miss: Beat by +$26.77 million
• YoY Revenue Growth: +32.60%

Axon Enterprise Announcement Details

• Quarter: Q2 2025
• Date: 8/4/2025
• Time: After Market Closes
• Conference Call Date: Monday, August 4, 2025
• Conference Call Time: 5:00PM ET

Axon Enterprise (NASDAQ:AXON). develops, manufactures, and sells conducted energy devices (CEDs) under the TASER brand in the United States and internationally. It operates through two segments, Software and Sensors, and TASER. The company also offers hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share, and analyze video and other digital evidence. Its products include axon officer safety plan; taser 10, taser7, taser X26P, taser X2, taser 7 CQ, and civilian series; cameras, such as axon body, axon flex, axon fleet, axon air, axon signal sidearm, axon signal vehicle, axon interview, and axon interview portable kit; software, including axon records, evidence, standards, commander, performance, auto-transcribe, justice, investigate, respond, and justice, my90, and redaction assistant; mobile applications, and training services, as well as hardware extended warranties; and Axon docks, cartridges, and batteries. The company sells its products through its direct sales, distribution partners, online store, and third-party resellers. Axon Enterprise, Inc. has a strategic partnership with Fusus, Inc. to expand bility to aggregate live video, data, and sensor feeds. It serves law enforcement, federal, correction, fire, EMS, campus, justice healthcare, retail, private security, and personal safety industries. The company was formerly known as TASER International, Inc. and changed its name to Axon Enterprise, Inc. in April 2017. Axon Enterprise, Inc. was incorporated in 1993 and is headquartered in Scottsdale, Arizona.

Axon Enterprise Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Axon reported Q2 revenue of $669 million, up 33% year-over-year, and raised its 2025 guidance to $2.65–2.73 billion in revenue (29% growth) and $665–685 million in adjusted EBITDA.
• Positive Sentiment: The company expects year-over-year bookings growth in the high 30% range, fueled by record-sized deals in state & local and corrections and substantial contributions from new product categories.
• Positive Sentiment: Customers are accelerating adoption of AI (with Draft One’s $150 million bookings in Q2), TASER 10, Axon Body 4, drones, counter-drone and VR, marking the fastest roll-outs in each category.
• Positive Sentiment: International and enterprise markets continue to expand, highlighted by a new TASER customer in Africa and a first-of-its-kind gaming sector AI contract, validating global growth investments.
• Negative Sentiment: Axon noted that tariff-related expenses will shift more into the second half of fiscal 2025, partially offsetting margin gains achieved in Q2.

Presentation

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Hello, everyone, and thank you for joining our Axon's executive team today. I hope you've all had a chance to read our shareholder letter released after the market closed, which you can find at investor.axon.com. Our prepared remarks today are meant to build upon the information in that letter. During this call, we will discuss our business outlook and make forward looking statements. Any forward looking statements made today are pursuant to and within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

These comments are based on our predictions and 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. We discuss these risks in our SEC filings. We will also discuss certain non GAAP financial measures. A description of each non GAAP measure and a reconciliation of each non GAAP measure to the most directly comparable GAAP measure can be found in our shareholder letter as well as on our Investor Relations website.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Now before we turn to our quarterly update, we'll take a quick minute to show you a recent some recent highlights from one of the CEO summits that Rick has been hosting.

The world is changing so fast because of AI. From June until ICP, we were able we built eight features in that time frame, like, which is just mind blowing. Think about how we could use AI to build features for real time crime centers.

We started this endeavor called FUSES back in 02/2019. I never thought I was standing in front of a group of professionals who are actually utilizing and now enhancing the technology. So this is as exciting for me as hopefully you find it exciting for you today.

The partnerships that we have with Axon and other great public safety technology companies allow us to reduce that footprint of officers in the field and allow us to do our job more efficiently, quicker. That way we don't have to worry about getting other officers out in the field.

This is only as good as the number of cameras and sensors that you can connect, and most of those you don't own. Right? They're out in the community, and you have a lot of hurdles to get there. Each of you have one story. That is a 100 stories that we can produce and put out into the world and have sort of all boats rise when it comes to trying to get communities involved here.

Drone to drone, drone, drone, you go down the list. Like, this technology in the past three years has come out of nowhere where this is the fundamental technology. Right? This is how we can generally deploy drones today. But in the future, you know, it's really moving towards, we think, autonomous drone deployments.

After the flight, all the data that's generated is automatically uploaded to evidence.com and exists right alongside the body camera data from the officers on the ground. And that's that's the reason that we're so excited about this partnership with Axon.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

All right. Thanks, Eric, and welcome everyone to our second quarter twenty twenty five earnings call. I love hosting those summits. It's all about connecting the dots with our customers so that we can build the tools they need to make their jobs just a little bit easier. We are, of course, proud to come back to you with another fantastic quarter.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

But what we're really proud of are the relationships and partnerships we've built with our customers. I spend most of my time with them, and the more I do, the more excited I am for what's ahead. In fact, there are several trends I'm seeing right now that are fueling that excitement. First, demand for new technology from our customers is accelerating, and it's outpacing even my most optimistic expectations. Artificial intelligence, drones and robotics, real time operations, cameras on our newest TASER devices, and virtual reality, each of those are resonating across our customer base.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

There's no one breakout product driving conversations. It's everything. In the past, it could take a few years for our newest products to start seeing meaningful adoption. Often at least the first year took it to fine tune the application, work through the approval processes and get everything right. Today, we're watching customers adopt new solutions as a standard, faster and in real time.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Draft one remains our fastest adopted software solution. TASER 10, our fastest adopted TASER weapon. Axon Body four, our fastest adopted camera. D drone, FUSIS, and the AI Aeroplan are also being deployed faster than we've seen with prior new technologies while laying the groundwork for future innovations coming over the horizon. Another observation I want to share is that I believe one critical factor enabling this movement is the trust we've built with our customers.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

It is something I'm extremely grateful for. We have a history of being bold. It's only after decades of tireless work, thought leadership, and responsible, careful, balanced approach that we've earned the privilege to partner this deeply. They're able to move faster today because they trust we'll be there with them on the journey and there tomorrow doing things the right way. The final observation I'll make is that collaboration in public safety isn't just critical anymore.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

It is absolutely essential. Roles, responsibilities, and jurisdictions may have fine lines, but effective public safety happens through close collaboration across the landscape from sworn officers to public officials, federal governments, enterprises, and even consumers. To support this, we need to think broader than ever before, ensuring our products enable these different stakeholders to work together. Our work to expand into new customers, introduce new products that rethink how existing systems operate, and build partnerships with industry leaders is about more than growth. It strengthens our ecosystem and makes every layer of connectivity incrementally more valuable for every user.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

This summer, we spent time with our product teams working through our future product investments, and we have the broadest yet most cohesive and synchronized pipeline of products in development we've ever had. It's truly an inspiring time, and we remain committed now more than ever to investing behind our vision and the mission that drives it. With that, I'd like to turn it over to Josh.

[Josh Isner, President at Axon Enterprise]

Thanks, Rick, and good afternoon, everybody. Before we get into our results, I wanna say we're thinking about the NYPD and the victims of last week's horrible tragedy. We are reminded of why we come to work every day, and we'll all continue to pursue Axon's mission of protecting life with vigor. As we reflect on our q two results, the theme continues to be customer obsession. We consider it the honor of a lifetime to work with the men and women of public safety, and our continued emphasis on the customer experience is central to how we run the business.

[Josh Isner, President at Axon Enterprise]

I tend to be the curmudgeon on the team that reminds everyone that no matter how much success we have, we can always be better. I'm not sure that I'll ever change, but I'd like to take a reprieve from that for a few minutes as I'm truly awestruck at what our team is accomplishing. And the most exciting part is we continue to accelerate. This is not a team that slows down. Maybe the best example of this is our state and local team under the leadership of Jessica Duncan.

[Josh Isner, President at Axon Enterprise]

This team took back the record for the largest deal in Axon company history by a wide margin. This contract with a major city police department also marked the largest contract we've seen in terms of new product booking bookings encompassing everything from drones to our AI products. Similarly, our corrections team led by Zach Austin also closed their largest deal in team history and contributed two of the top 10 deals in the quarter. Corrections has been an important area for us to grow our presence because the value our products offer to keep correctional institutions safer is so clear. What's exciting here is that the deals we are seeing in the vertical now include products from across our ecosystem, TASER 10, body cameras, VR, evidence management, and FUSYS.

[Josh Isner, President at Axon Enterprise]

Next, our wins in international and enterprise continue to validate our investments in these areas. Our international team added a new TASER customer in Africa, becoming the largest in the region. And in enterprise, we signed a contract opening up a major opportunity in the gaming space. It was our first win in that vertical to include our AI products and a clear indicator to me that we're on the right path. Zooming out a bit, every quarter that goes by indicates more and more of a contribution from new products.

[Josh Isner, President at Axon Enterprise]

We closed almost a 150,000,000 of bookings for our AI era plan in q two alone, and over 30% of bookings this quarter came from new product categories. We've talked in the past about an opportunity to grow our presence with officers as our product portfolio expands. Just a few years ago, the maximum an agency could spend with us on a per officer basis was less than $300. Today, that sits over $600 due to new products, and we saw the per officer bookings in our largest deals push up against that level. These are just a few examples of the activity we saw in another strong quarter.

[Josh Isner, President at Axon Enterprise]

As I said in q one, the team came out of the gate with speed this year, and that momentum is accelerating. Coming off a strong one h with a growing pipeline, we now have line of sight to deliver year over year bookings growth in the high 30% range, which would once again put our second half in line with the prior year's entire campaign. At Axon, we're a next play shop. We don't fall in love with what we just did or what we did last year or the year before that. But as I said, I am so proud of our sales and product teams.

[Josh Isner, President at Axon Enterprise]

To see bookings accelerating at this stage in our business speaks to the level of execution and innovation going on at Axon. As I digested these results, I was brimming with excitement about what the future holds and the impact that we can have. You are truly seeing a world class team that is capable or you are truly seeing what a world class team is capable of doing when everybody is on the same mission. With that, let's kick it over to Britney.

[Brittany Bagley, COO & CFO at Axon Enterprise]

Thank you, Josh. As Josh and Rick mentioned, we're extremely proud of our second quarter results as we continued to deliver for our customers while investing for the long term. Second quarter revenue of 669,000,000 increased 33% year over year, marking our fourteenth consecutive quarter of over 25% revenue growth. Josh shared some great color on our bookings and why we're so excited for the future. In terms of translating that into revenue today, the top line growth continues to be driven by software and services, which grew 39% year over year to 292,000,000.

[Brittany Bagley, COO & CFO at Axon Enterprise]

Our ability to win new users and to drive adoption of our newest products underpins this continued growth. Net revenue retention increased to 124% and has been near or above 120 for twenty consecutive quarters, demonstrating the result of our ongoing investment in our products and customers. Turning to connected devices, revenue increased 29% year over year to $376,000,000 This growth was driven by strength across categories, including TASER, which grew 19%, driven by TASER 10. Personal sensors grew 24% driven by Axon Body four, and platform solutions grew 86% driven by counter drone and virtual reality. Adjusted gross margin was 63.3%, up 20 basis points year over year, driven by product mix to software and services, partially offset by lower devices margin due to the strong growth in our newer hardware products in newer markets.

[Brittany Bagley, COO & CFO at Axon Enterprise]

We expect this balance to continue in the second half as we mix across new investment areas and our software business growth. Adjusted EBITDA margin of 25.7% came in ahead of expectations due to higher revenue and operating leverage, as well as benefiting from the timing of tariffs, which will now impact us more in the second half of the year. Turning to our outlook, we are raising 2025 revenue guidance to a range of 2.65 to 2,730,000,000.00, representing approximately 29% annual growth at the midpoint. This reflects our performance in Q2 and our confidence in the pipeline for the second half. We are raising our adjusted EBITDA guidance to a range of $665,000,000 to $685,000,000 up from $650,000,000 to $675,000,000 This maintains our 25% margin target for the year and incorporates our planned investments and tariff related expenses in the second half.

[Brittany Bagley, COO & CFO at Axon Enterprise]

We continue to expect to increase hiring over the remainder of the year, particularly in R and D, as we prioritize investing behind the incredible product roadmap Rick talked about, as well as in our exciting new markets. These investments will continue to set us up well for 2026 and beyond. In summary, q two reflects another quarter of strong execution and healthy performance across the business. We remain focused on delivering sustainable growth while investing strategically to serve our customers and drive value creation over the long term. We're also incredibly excited to deliver on the second half of the year for everyone. With that, we'll turn it over for questions.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Britney. We'll move up into gallery view. Alright. For today, I think we'll try to keep it to one question and a brief follow-up if we can just as we've got a full call, and I wanna make sure we can get to everyone. So up first, we have Keith Housum at Northcoast.

[Keith Housum, MD & Research Analyst at Northcoast Research]

Great. Hey. Thanks, guys. Thanks. And, congratulations on a great quarter.

[Keith Housum, MD & Research Analyst at Northcoast Research]

Perhaps you guys can spend a little bit time on the enterprise, addressable market and perhaps some of the success that you guys have had with some of pilots so far. Is it is there a certain pow product or two within the portfolio that is getting more traction than others as you guys are entering into the, I guess, expanded market than enterprise?

[Josh Isner, President at Axon Enterprise]

Sure. I'll take that one. Enterprise certainly is, is is going very well. We're excited about, the breadth of product, interest there between, not only our body cams and evidence.com and Fuses and drones, counter drone, and and, frankly, across all these opportunities, we're seeing more and more interested in the full suite of products there. But, Keith, I I gotta be honest.

[Josh Isner, President at Axon Enterprise]

I'm shocked that after predicting bookings were flat, you weren't wondering why you're off 50%.

[Keith Housum, MD & Research Analyst at Northcoast Research]

Next question.

[Josh Isner, President at Axon Enterprise]

Yeah. That's that's a good idea. Let's go to the next question.

[Keith Housum, MD & Research Analyst at Northcoast Research]

No. No. No. That was my next question, though. In terms of bookings, can you perhaps parse out, you know, where was the best success was?

[Josh Isner, President at Axon Enterprise]

Yeah. I mean, you you had you had said bookings would be flat at a billion dollars. That was up by 50%. You had said new, you know, we didn't have any large deals in the quarter. We booked our largest deal in the company's history, including our largest deal in corrections.

[Josh Isner, President at Axon Enterprise]

You had said the the the bookings growth rate was slowing down, and in fact, it's picking up. And it's all a result of really, really good execution from our product team and our sales team.

[Keith Housum, MD & Research Analyst at Northcoast Research]

Great. Thanks.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Alright. Up next, we have, Andrew Sherman at TD Cowen.

[Andrew Sherman, Vice President at Cowen]

Great, thanks. Good to see everyone. Congrats. Josh impressive, $150,000,000 of bookings from AI era in Q2 alone. Could you just talk about the mix of demand for Draft1 and is the demand for Draft1 itself accelerating, but also the newer products that some of the data you have in the press release is interesting with the time savings that the other newer segments are driving.

[Andrew Sherman, Vice President at Cowen]

Just talk about the demand for the whole bundle and if that's kind of accelerating here, which it sounds like it is.

[Josh Isner, President at Axon Enterprise]

Yeah. Hi, Andrew. Thanks for the question. Good to see you again. Absolutely, it's accelerating.

[Josh Isner, President at Axon Enterprise]

Yeah. We're excited about the result. We had talked about this a lot in the q one call, that the first half, you know, we'd see some incremental growth, and and and we certainly did. But, the pipeline in the back half of this year for the for the AI era plan is loaded, and, we certainly expect to continue to go fast in terms of the, the AI era plan. It's something that's very well received from our customers.

[Josh Isner, President at Axon Enterprise]

I think it's a good indication of not only, you know, the time savings that customers are seeing with these products, but it's also the fact, that there's more and more, products that are making a difference day to day in this in this plan that customers are getting along the way. So they're super pleased with draft one. We continue to see more and more momentum there, but now with the AI assistant and the real time translator as part of that and products like FormOne and BriefOne getting going, there there is a lot of customer excitement around this plan. And a huge shout out for you know, to Rick a year ago, a year plus ago now for for for calling out the need to invest heavily, you know, in the in the AI, world and and and product line. And then, of course, Jeff and his team for implementing these products in a way that makes a real, real difference for our customers. It's just very, very cool to see right now.

[Andrew Sherman, Vice President at Cowen]

Great to hear. I'll pass it on. And, Rick, I love your new podcast.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Thanks. I'm having a ball doing it.

[Josh Isner, President at Axon Enterprise]

Thanks, Andrew.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Andrew. Up next, we have Will Power at Baird.

[William Power, Senior Research Analyst at Baird]

Okay. Great. Thanks. And, yeah, congratulations, the results. I want to start on platform solutions.

[William Power, Senior Research Analyst at Baird]

You obviously have really nice acceleration. I I recognize smaller numbers, but I think, you know, strategically, you know, very important longer term. So I I'd love if you could help us just, you know, understand kind of what really underpinned the, you know, the counter drone success. Maybe any kind of breakdown or color you can share, you know, across law enforcement versus enterprise. If I take that a step further, I'd if I stick with drones, it'd be great to get any perspective as to what you're seeing in terms of pipeline build bookings within DFR and whether the executive orders have started to spur any further activity there.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Let me maybe jump on initially, Josh, and talk about counter drone. I mean, basically, I'm sure you all saw operation spider web. You know, we've seen drones becoming more and more prominent in the war in Ukraine and in The Middle East, but, you know, just the ability for Ukraine to take out a sizable percentage of, Russia's strategic bomber fleet with, you know, thousand dollar FPV drones, and then similar things to be done by Israel deep in the heart of Iran. I think it's got everybody's attention, whether you run a stadium or a nuclear reactor or a power station or responsible for protecting the executive's home. The the world is is is suddenly keenly aware that these small drones are the biggest threat vector at scale because anyone can do it, and none of the traditional defense mechanisms none of our air defense systems are designed, excuse me, around that threat.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

And our acquisition of D Drone and AD and his team have been just phenomenal, to have identified this early, and I think we're in a really strong position to, you know, I'd say we are, certainly a market leader. And, you know, we're seeing just a ton of demand across the spectrum for people realizing that they need solutions here. And so I was spending a lot of my time going deep on, you know, how do we maintain that leadership and grow it and and deal with these new threats like, you know, these fiber optic drones that we're now seeing deployed widely in Russia and Ukraine where those are unjammable because they're flying with a physical connection. And so we're we're digging deep on, okay, how do we extend our solution set to cover this thing is iterating at incredible speed. So and with that, Josh, I don't know if you wanna add anything on any other, like, near

[Josh Isner, President at Axon Enterprise]

You know what? Maybe just maybe just the fact that I one of the reasons and we we had mentioned this when the acquisition closed is we really believe we can lead with d drone in some international markets. And I think, you know, in in certain places, that's that's not only very relevant to today, but but an a nice difference where, you know, some of the new products that we're acquiring, we can we can get in the door, so to speak, with with those and with, you know, a lot of interest from a customer. And then when a customer is ready to move to body cameras or less lethal or video aggregation or AI, you know, we're better positioned to participate in some of those opportunities.

[Brittany Bagley, COO & CFO at Axon Enterprise]

And Amazing. Will, I'll just jump just jump in just so you know. On that segment, you can hear the enthusiasm around counter drone that also has fleet in it. It has VR in it. And so I think part of what you're seeing is every category in that segment is growing really nicely.

[Brittany Bagley, COO & CFO at Axon Enterprise]

We're obviously thrilled to add in the the counter drone. But I would also just say, you know, because of the size of that, you should expect some lumpiness in that segment going forward as as, you know, CounterDrone can win a big deal, you know, at one time. And then I would just you know, we're just we're happy with all the products in that segment. So keep keep in mind they're all doing well.

[William Power, Senior Research Analyst at Baird]

Okay. And then anything you could add just with respect to the DFR, you know, side of the equation in terms of how that pipeline's building and kinda level of activity? That seems like another really nice longer term opportunity as well.

[Josh Isner, President at Axon Enterprise]

Sure thing, Will. I, I would I'd definitely say we're we're excited about DFR, and and one of the things kinda taking shape in DFR or drones as a first responder, is that, while we don't manufacture the hardware for outdoor DFR, there are opportunities popping up around the hardware that that, you know, create a lot of value for the customer, things like live streaming, having the evidence in evidence.com, and so forth, and then even figuring out how we get drones in the sky faster through software even before 911 calls in. So I think there's a lot of exciting work around VFR. Then, you know, frankly, the biggest relevance, you know, at acts on our product portfolio right now is d drone, which make sure the skies are safe for drones to fly. So, you know, a lot of people, you know, associate D drone with counter drone and tracking, you know, nefarious drones and taking them out of the sky.

[Josh Isner, President at Axon Enterprise]

But another big benefit there is, you know, a police department using D drone can see the entire map throughout their city of where the where their own drones are. So, we think we'll be relevant in the DFR space for a long time. Skydio, you know, and us, we have a great partnership. We would say it's going very, very well, and we're excited about what the future holds there.

[William Power, Senior Research Analyst at Baird]

Yep. Great. Thank you all.

[Josh Isner, President at Axon Enterprise]

Thanks, Will.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Will. Up next, have Mike Ng at Goldman Sachs.

[Mike Ng, MD - Global Investment Research at Goldman Sachs]

Great. Good afternoon. Thanks for the question. I I just have one on the high 30% bookings growth guidance. I think it implies about $7,000,000,000 which would be, about $2,000,000,000 of bookings growth year over year.

[Mike Ng, MD - Global Investment Research at Goldman Sachs]

Could you just talk a little bit about what's driving that doubling of annual bookings growth that you've had historically, I think relatively consistently? Is it just the AI error plan and some of the momentum there? Are the length of the deals changing at all? Anything you could just talk a little about in terms of kind of pipeline giving you that confidence or, you know, deals closed to date, would be helpful. Thank you.

[Josh Isner, President at Axon Enterprise]

Sure thing, Mike. Good to hear from me again. And and on your question, I'd say, you know, we've said for a long time, and and Jeff brought, you know, this framework to Axon when he first joined, which was, hey. We wanna be really, really good at selling new products to existing customers. So that's our US customer base.

[Josh Isner, President at Axon Enterprise]

And there, we're talking about, you know, drones, AI, virtual reality, FUSYS, d drone, all of our, you know, software add ons that we continue to build, you know, and and as well as iterating on the TASER and body camera. And then you combine that with selling existing products to new markets. And and there, we're talking about international enterprise and federal where we can take the things that are very successful in state and local, and all of a sudden, you know, customers in those other segments are starting to see really, really good product market fit there. So it's not one thing, and that's one of the things we're most excited about is we feel like we're very diversified. We have a lot of ways to win the game, so to speak, and, and and we're gonna keep investing in all of them because, we see a ton of opportunity ahead.

[Mike Ng, MD - Global Investment Research at Goldman Sachs]

Great. Can I just maybe get a quick follow-up on on international? I mean, I I think, you know, growth, I think the the best year over year and quarter on quarter growth there, you know, maybe some of the key markets where you're getting the most traction. You know, I heard the the mention about, you know, TASER in Africa, but, would love some detail there. Thank you.

[Josh Isner, President at Axon Enterprise]

Yeah. I appreciate the question. We we tend to be a little less specific about where we're where we're going internationally only because, you know, as as a competitive group, we don't we don't wanna tip anything off here. But we do see opportunity across, LatAm, certainly, UK and Europe, and then, certain segments within Asia as well. So, very much, feeling like, hey.

[Josh Isner, President at Axon Enterprise]

You know, over the next few years, international should continue to be really, really exciting. I mentioned Cameron, our our c our CRO had come in, and he just, as of q two, celebrated his one year anniversary, and we're certainly seeing the investments of having a CRO in Europe with the team over there starting to pay off as well. So, yeah, much more to come on that.

[Mike Ng, MD - Global Investment Research at Goldman Sachs]

Great. And thank you, Josh.

[Brittany Bagley, COO & CFO at Axon Enterprise]

I just ongoing you know, one of the things about some of our international deals is they tend to be pretty big deals. So you can see, you know, a little bit in quarters where you have a big international deal come in. I think in q two, you saw us do a couple of really big international deals. Incredibly exciting. I think huge amount of momentum there.

[Brittany Bagley, COO & CFO at Axon Enterprise]

I don't know because there's also so much momentum in state and local and other parts of our business. I don't know that you'll see it maintain at that sort of 20% level that we hit this quarter, but, you know, tons of momentum behind some of those international bookings and the rest of the business.

[Mike Ng, MD - Global Investment Research at Goldman Sachs]

Great. Thank you, Britney.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Mike. Up next, have Mina Marshall at Morgan Stanley.

[Meta Marshall, MD & VP at Morgan Stanley]

Great. Thanks and congrats on the quarter. Just as the AI bookings have picked up, just what kind of lessons have you guys learned about kind of getting through some of the hurdles from state and local? Is it having reference customers? Just getting what kind of oil has been put in the gears to kind of move those along?

[Meta Marshall, MD & VP at Morgan Stanley]

And then maybe just as a second follow-up question, just obviously a lot of immigration dollars, enforcement dollars, and OBBB, you know, just where you guys kind of see opportunity, there. Thanks.

[Josh Isner, President at Axon Enterprise]

Sure. On the AI, bookings question, Meta, I think, really, it's it's the same thing that that we kind of, you know, really believe in across all our products, which, you know, is when you put products in the hands of users and let the users, give you feedback and experience them and and see the value themselves, There is no amount of sales or marketing or packaging or anything else that compares to that. So, you know, when customers start to use a product like draft one for sixty days and they say, man, I'm I'm spending a full day more every week on the road fighting crime as opposed to sitting behind a computer, those are the kinds of stories that just build. Or, you know, with our AI assistant, the real time translator, you know, you have customers at the border or in in in Canada and in Quebec or whatever the case may be saying, like, man, this is this is really relevant and practical for what I need to do my job. And and that's kind of our bar for these AI products is this isn't, like, hand wavy stuff.

[Josh Isner, President at Axon Enterprise]

This is the stuff that keeps police safe, communities safe, and allows police, to be in the communities, fighting crime as opposed to behind a computer. So, you know, and and the best part is we're still on, like, our own five yard line of the football field. We got a long way to go and a lot of great ideas about how to deliver more and more cutting edge AI products to public safety. And then your second question, do you mind reminding me, what that was? Oh, the

[Meta Marshall, MD & VP at Morgan Stanley]

the the immigration enforcement dollars Yeah. That opportunity.

[Josh Isner, President at Axon Enterprise]

Sure thing. So a more yeah. The the the government, you know, the federal government, we believe, between, you know, q '1 of their calendar year, which is, or their fiscal year, which is q four of our calendar year, we'll start to see more and more solicitations, whether they're RFIs or RFPs for products that they're looking into with this, you know, with this money coming out of this bill. And so for us, that's really around counter drone. Certainly, you know, the video products, like FUSYS, drone technology, and and and beyond, maybe some TASER as well.

[Josh Isner, President at Axon Enterprise]

So we're we're con you know, we're right now, you know, as a team, even earlier today, starting to sit down and say, you know, map out the customers and figure out, you know, what we expect the opportunity to be in each each, you know, each of those customers and and see how we can, help. And and, frankly, you know, with with some of these federal agencies being among our largest customers in The US, we we're we believe we're well positioned to be able to demonstrate how much we can help right now.

[Meta Marshall, MD & VP at Morgan Stanley]

Great. Thanks.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Mia. Up next, we have Joe Cardoso at JPMorgan.

[Joseph Cardoso, Vice President, Equity Research at JP Morgan]

Hey, guys. Congrats on the results, and thanks for the question. Maybe a follow-up to the last question, but in a different context. You know, you guys talked about the big beautiful bill and the opportunity there, I think, fairly well in terms of the different avenues you guys can participate in it. Maybe can you just touch on the programs that are ongoing in Europe and in a similar manner in terms of, like, our opportunities there?

[Joseph Cardoso, Vice President, Equity Research at JP Morgan]

So, you know, where is Axon well positioned? Is there anything different in terms of the different programs in The US? And then as we think about both The US programs and the European programs, can you just help us think and think about the timing of these opportunities? And then maybe just hitting it on the nose, is any of this baked into the back half outlook in terms of bookings? Is, like, are you guys already seeing any of this goodness? Thanks for the question.

[Josh Isner, President at Axon Enterprise]

So, Rick, why don't you start since you've been over in Europe for the better part of the summer meeting with customers here?

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Yeah. I would tell you the visibility is is certainly rising. The I had my first ever meeting with a a prime minister of a NATO nation. Last week, I met with several ministers of the interior level folks. There is a ton of, you know, just a ton of need.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

I mean, the social displacement that has been happening in Europe, the amount of they're dealing with their own immigration problems as well that, you know, with the best of intentions, Europe sort of took in a lot of folks and is now realizing that they're they weren't set up to integrate all those people, and they're they're seeing surging social problems. I was getting questions regarded related to, border security where, they're seeing, frankly, hybrid warfare from the Russians, like, pushing sort of an encouraging mass migration across the borders is a destabilizing function. And or, you know, one one example, I had border guards asking if we could tune the TASER 10. Right now, the TASER 10 can handle up to three people that you would hit with it, and we generally discourage thinking about using a TASER 10 on multiple people because in The United States, we're very focused on civil rights. And, like, if you hit the first person, the second person, and then the first person complies, but the second doesn't, you know, you might have a problem legally if you activate, and hit both of them.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Like, when I bring that up as a concern to these European border agencies, they're like, that is not our concern. We're getting overwhelmed, and we're literally gonna be shooting and killing people en masse here at the rate things are going. And there's an opportunity, you know, for TASER to become, really a primary defensive weapon, and I think the need for that is rising in Europe. The, on the other side of things, our real time translation, we we actually had to shift our priorities so that we could get it translating into a non English language as its primary language in order to to meet an Eastern European country's immediate need, and that went extremely well. So think the real time translator as well is, is being seen as just, like, a have to have capability, and that is opening up I'm I'm personally involved in two two countries that, in full disclosure, I probably couldn't have picked out exactly.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

I could point generally where they were on the map. I couldn't have told you which ones they were that that are now, you know, talking to us about very large deals, like larger than deals we'd ever signed as of a few years ago and up with some of the larger ones we're signing now. So, you know, I I don't wanna get too far ahead of my my skis that, you know, it that this is all gonna happen quickly, but the overall level of interest across the board, is is really very high.

[Josh Isner, President at Axon Enterprise]

And, Joe, your question also included kind of bookings as some of that baked in, you know, already. You're in the back half. We do expect q three and q four to be very exciting, quarters for our international business. Now look. There's we gotta go execute and prove it, but certainly, pipeline wise, we're we're we're pleased with what we're seeing there.

[Joseph Cardoso, Vice President, Equity Research at JP Morgan]

No. I appreciate the color, guys. I'll drop out. Thanks.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Joe. Up next, have Jonathan Hollow, William Blair.

[Jonathan Ho, Research Analyst at William Blair]

I apologize for any noise. Is there a way for you to maybe help us understand how your second half bookings are potentially shaping up just given your commentary that it could be as large as last year? And what underpins that confidence here? Is your visibility perhaps even better than what we saw last year?

[Josh Isner, President at Axon Enterprise]

Yeah, Jonathan. I mean, I think our sales leaders would tell you this isn't a hobby Like, this is what they're good at, and this is, you know, what our what our pipeline indicates. And, you know, we've given a lot of bookings commentary over the last three or four years. And I think as you've seen, we've been able to deliver on on on what we've said, and we feel no differently right now.

[Josh Isner, President at Axon Enterprise]

We have a ton of, confidence and and fidelity in our pipeline, and, we're even, you know, frankly, halfway through q three. We're we're already, you know, in a very productive July. And so the things are that that you know, we've we've got very, very, very strong sales professionals, that that believe in our our our mission and that believe in our customers, and it just shows quarter after quarter. And I'm really, really proud of the team, and and, have a feeling I'll I'll continue to be saying that or I'll I'll, you know, I'll continue to say that for a long time. So, we're we're we're very confident we're gonna have a big second half bookings wise.

[Jonathan Ho, Research Analyst at William Blair]

Just a quick follow-up. You know, within your premium software offering, is there a way to maybe unpack for us, you know, what is the most common upgrade path? You know, what is maybe contributing the most to growth, how much runway do you see to sort of sustain that growth from here? Thank you.

[Josh Isner, President at Axon Enterprise]

Sure. And and just across the ecosystem, in terms of upgrades? Jonathan?

[Jonathan Ho, Research Analyst at William Blair]

Yes. Just in terms of the, yeah, the print yeah. Across the ecosystem, you know, what what's driving the premium software offering to, see the the type of growth that is?

[Josh Isner, President at Axon Enterprise]

Sure. You know, I I think, generally speaking, customers tend to buy, their their most price focused in their first contract whenever that may be. And so you see you know, maybe you definitely, you know, don't see OSP as as commonly as you do with existing customers or or officer safety plan. You tend to see a customer buying maybe some tasers and some body cameras and kind of the core feature set of evidence.com. But then, you know, a lot of our products have been built as a result of customers expressing where they wanna go next in their program.

[Josh Isner, President at Axon Enterprise]

So, inevitably, you know, customers that are that are newer are gonna hit those same points along the way and say, hey. It would be nice if I could add this, this, and this. And then that becomes an officer safety plan conversation. And, you know, with AI now, you know, on top of the officer safety program or officer safety plan, again, that's that's just, you know, for those customers that have been on OSP for a while, they start to see the value of these AI features, you know, on top of what they're already doing. So I think it's a really nice path, that our customers take, you know, to to adopting more and more.

[Josh Isner, President at Axon Enterprise]

And and, you know, frankly, we're we're very disciplined about, you know, measuring how customers use new products and making sure that they're very pleased with what they're seeing in new products. And then years later, that kinda manifests itself in terms of adoption. So, yeah, that's a little bit about how we how we get from a to b there.

[Brittany Bagley, COO & CFO at Axon Enterprise]

Think the only thing I would add to that, Jonathan, is is remember that because of the pace of our product innovation, many of the products that are available now might not have been available when the customer was originally signing up. And so as they come back and we naturally have more software features, functionality, capability, it's just a different conversation that we can have with them in terms of what's even in some of these more premium bundles. And I think that's a lot of a lot of what continues to drive that, and AI only helps that conversation.

[Jonathan Ho, Research Analyst at William Blair]

Thank you.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Jonathan. Up next, have George Notter at Wolfe Research. Welcome back, George.

[George Notter, Managing Director at Wolfe Research LLC]

Hey. Thanks for

[Josh Isner, President at Axon Enterprise]

having got a preestablished list here, in terms of how we go through the questions. So sorry. We're we're not intentionally ignoring your hand up. We're just going through the list, ahead of time.

[George Notter, Managing Director at Wolfe Research LLC]

Thanks a lot. Alright. I appreciate that. I I guess kinda tacking on to the last question. You guys threw out a $600 price point, I think, for, some deals this quarter in terms of per officer metric.

[George Notter, Managing Director at Wolfe Research LLC]

I guess I'm just curious, and, you know, what you said, Josh, a few moments ago, I think makes sense just in terms of, you know, customers kind of layering in more pieces of the Axon solution into the into the bundle. But are there comparisons you can give us for a year ago, two years ago, three years ago to help us understand sort of the path to, you know, $600 per officer? What what metrics can you share?

[Josh Isner, President at Axon Enterprise]

Yeah. Certainly. Directionally, for sure. Two or three years ago, you know, maybe call it three years ago, the top offering in OSP, our officer safety plan, might have been in the mid two hundreds. And then we started adding drones and d drone Infuses as additional value.

[Josh Isner, President at Axon Enterprise]

We never just simply inflate the price of officer plan. If the if the price changes, it means there's more ads to the bundle, and that's kind of what's happened, you know, over you know, from year to year. So now we're in the mid 3 hundreds just on officer safety plan alone. And then you combine the AI error plan, which, you know, list price $1.99 a month, and then you add, you know, in car video, for example, you add d drone across your enterprise, you own you you add FUSYS, all things, you know, that you build out more and more, and that's where we're seeing some of these numbers, in, you know, in the in the you know, right around the 6 hundreds in terms of, you know, monthly value per user. And so, certainly, you know, look, like, it's great to see some customers doing that, but our job is is to to, communicate the value to every customer so that they appreciate, you know, still the incredible ROI they get even at those numbers.

[Josh Isner, President at Axon Enterprise]

And so that's really what we're focused on right now.

[George Notter, Managing Director at Wolfe Research LLC]

And was that typical? That number was that a typical number for deals that you closed this quarter, or is that sort of the high end?

[Josh Isner, President at Axon Enterprise]

No. That's the high end. That that that that's definitely you know, that that drove our largest, you know, deal in in US history and company history now. And, you know, we we do think that's a promising side of things to come, but certainly wouldn't, you know, set the expectation that, you know, even even the majority of the customers are there right now.

[George Notter, Managing Director at Wolfe Research LLC]

And then at one point, you guys gave us a mix of, business coming from officer safety plan. Is there is there an updated number there? I I seem to remember a 20% number. Is that is that still the right ballpark, or is it higher now?

[Brittany Bagley, COO & CFO at Axon Enterprise]

No. We don't have an updated number on that. What we said a quarter or two ago was that about 70% of our customers I think we said it last for about 70% of our customers were still on one of our basic plans. And so lots and lots of room to upgrade. So to Josh's point, like, we don't we don't give an actual ARPU number.

[Brittany Bagley, COO & CFO at Axon Enterprise]

It could be as high as 600, but we still have so many customers that are not coming in and buying our whole suite of products. And so when we talk every quarter about our amazing software growth, like, some of it is the natural, like, rotation that you see as our customers come back in and as they do upgrade and as they move up their price points.

[George Notter, Managing Director at Wolfe Research LLC]

Yeah. Super. Thank you.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, George. Up next, we have Alyssa at Barclays.

[Alyssa Shreves, VP - Equity Research at Barclays]

Hey, guys. Just a quick follow-up on that. You know, the 70% still on basic plans with that upsell motion going, are are you kind of seeing that that number decelerate in terms of basic plans pretty quickly or is this kind of a slow expansion? And then I just had a quick follow-up on The US International. Given the outperformance this quarter, should we kinda continue seeing, even with the strength of US, international now becoming a larger piece in the mix? Thanks.

[Josh Isner, President at Axon Enterprise]

Sure thing. Thanks for the question, Alyssa. Maybe the second one first. The hard part about the I do think international is gonna keep growing in in a very exciting fashion. The hard part about talking about the mix is The US is growing very fast as well.

[Josh Isner, President at Axon Enterprise]

So it's hard to, you know, really for for it to take over a bigger bigger part of the mix, that that would mean The US is slowing down, and and it's the opposite right now. And so, so we we think both that, you know, the total bookings rate will will grow excitingly, but also that, you know, the international one, you know, will you know, as a stand alone, I just can't guarantee the mix is gonna change all that much so long as The US keeps going on the path that it is right now, if that makes sense. And I I did forget your first question in answering the second one first. Would you mind?

[Brittany Bagley, COO & CFO at Axon Enterprise]

I got that one, Josh. Alyssa, I think you can go back. We've sort of given that metric, you know, at points in time. I think we gave it when it was, like, 80% and then 75% and then 70%. So we are working our customers up.

[Brittany Bagley, COO & CFO at Axon Enterprise]

It's it's not like it turns all on in one quarter. Right? It's it's like we are over time moving the customers up to those, you know, more premium plans. But the other point I would make is that the what's in the premium plan to Josh's comment, like, we keep adding new things in it. And so how premium the plan is or how much they could pay as we get new products in over time, that also keeps moving up.

[Brittany Bagley, COO & CFO at Axon Enterprise]

So we have we have those two drivers. Right? We have the driver of moving customers further up the plan and then actually just having more product offerings that they could come by.

[Jeff Kunins, Chief Product Officer & Chief Technology Officer at Axon Enterprise]

And then the AI era plan being yet another new plan on top of that plan that they can do.

[Brittany Bagley, COO & CFO at Axon Enterprise]

Thank you.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Alyssa. Up next, we have Jeremy Hamblin at Craig Hallum.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thanks, and congrats on the momentum in the business. So I wanted to come back and see if I could clarify something here in in the platform solutions performance, exceptional growth, a lot of talk about, you know, d drone. And I I just wanted to see if I could kind of pointedly ask it. Is d drone the biggest driver of that growth in terms of kind of percentage or contribution to that year over year growth rate?

[Josh Isner, President at Axon Enterprise]

No.

[Josh Isner, President at Axon Enterprise]

It's I don't Britney, correct me if I'm wrong, but it's actually toward right now, one of the smaller ones, and and, frankly, you know, growing every quarter, but but certainly not the biggest driver of of of new product book bookings growth.

[Brittany Bagley, COO & CFO at Axon Enterprise]

Yeah. For sure. So if you're looking just inside of our platform sensors business

[Josh Isner, President at Axon Enterprise]

Yes.

[Brittany Bagley, COO & CFO at Axon Enterprise]

It was a big driver of the growth this quarter inside of platform sensors. But if you look at the overall business, it's just not a material driver of our overall growth. And, that it'll it'll be a little lumpy inside of that platform segment. I hope that

[Josh Isner, President at Axon Enterprise]

There lies the opportunity. Like, you know, ultimately, we think there's a very relevant product. So we got a lot of white space in front of us, and we're gearing up to execute well there.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Yeah. A lot of times when you hear me waxing and during the call, you you it's rarely about the stuff that's selling well It's stuff that I'm looking a year out.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

No. I understood. I I was clarifying just within that small segment of the business. I just wanted to understand. Okay.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

And and then just in terms of there are a lot of moving parts in the business. There's a lot of, different verticals that you're attacking. And, you know, I wanted to get a sense for from an investment in the team perspective. You know, as you're looking at product, as you're looking at maybe your sales and marketing teams, where do you need I mean, it my sense is there's just a shift in what you're looking at from where you were a year ago. Right?

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

And not that there's a lot of of the regular business. I mean, Taser grew 19% in the quarter. So there's a lot of the core business, that's still doing incredibly well. But, you know, Jeff or or or Rick, Josh, where do you think you need to invest the most from an infrastructure perspective to really get the business where it needs to be over the next two, three, five years?

[Josh Isner, President at Axon Enterprise]

Maybe I'll start there, and I'll kick it over to to Rick and Jeff. But, Jeremy, I think it it's the same formula every year that the numbers might change, but it's really we start with, we are going to relentlessly invest in r and d every year. Like, that's core to who we are as a company. You know, this is an innovative company with an innovative founder, and we are gonna continue to invest in every opportunity we can to pursue our mission and especially when we're seeing such incredible buying signals from our customers. We do that at times, at, you know, at the expense of getting you know, we try to fund that by getting leverage out of s g and a.

[Josh Isner, President at Axon Enterprise]

So, or really g and a. Salespeople, you know, we look at, you know, where the opportunities are, and those are generally the easiest ones to say yes to because, you know, when you're hiring a salesperson for x dollars and their quota might be 5 to $10,000,000 a year, you get a very clear return on that. But but we are very disciplined, you know, in the rest of, you know, the g and a segment around, hey. How do we use AI internally just like our customers are using AI externally? How do we use AI to make sure that that we don't need to our team to balloon as our business grows.

[Josh Isner, President at Axon Enterprise]

And so a lot of discipline in g and a, of course, a lot of investment in sales, and then relentless investment where we see opportunity in product.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Got it. If I could sneak

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

go ahead. I think we're gonna we might move, Jeremy, because you had two, and I just we have ten minutes left to get to five more, so we might try to do one question each. Okay.

[Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thanks.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Yeah.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thank you. So Josh Riley at Needham, you're up next.

[Joshua Reilly, Senior Analyst at Needham & Company]

Yeah. Any update on the, light post and outpost camera opportunities in terms of the manufacturing ramp and the pipeline build? And then I just had a quick follow-up on drones after that.

[Josh Isner, President at Axon Enterprise]

Sure. Very exciting to to be, you know, live with a few customers already in trials. That's, you know, for a product that, you know, we announced in May and and, you know, have have really invested in a lot in the first half of the year to see, you know, poles on the ground and cameras working at certain, large customers right now. That's obviously a great first signal. I also, you know, don't wanna get out of our skis there.

[Josh Isner, President at Axon Enterprise]

There are certainly things that we're learning and things that we need to do better as part of that, but that's, you know, that's just the cycle all of our hardware goes through, and and we really believe we're on the right track. We think we're gonna be very, very competitive in this market, and and and we're excited about the opportunity.

[Joshua Reilly, Senior Analyst at Needham & Company]

Got it. And then just a quick question on on the monetization of drones. When you're looking at the the revenue that you're actually getting from drones, is it is it really just software revenue on the DFR programs, or is part of the hardware from the DFR programs recognizing your income statement then passed along to Skydio? Maybe you could just help us understand how that dynamic's gonna work.

[Josh Isner, President at Axon Enterprise]

Brittany, why don't you take that one if that's alright?

[Brittany Bagley, COO & CFO at Axon Enterprise]

Oh, sure.

[Brittany Bagley, COO & CFO at Axon Enterprise]

So when we're talking about drones and and things like platform sensors and all of that, what you're you're really hearing us talk about is the hardware piece of and then the software piece of dDrone dDrone, would be showing up in our software business. That's by far the the bulk of it. We we do partner with Skydio, and our partnership with Skydio is basically, you know, a referral fee that comes through. I would not think about them, you know, today as being a big part of that business other than, you know, what else we can enable when we do partner with Skydio from a software standpoint, from an experience standpoint for our customers. So, don't don't think about that as as a big chunk of our revenue.

[Brittany Bagley, COO & CFO at Axon Enterprise]

Think about it as d Drone, Drone, everything d Drone can enable through DFR, but that's that's what you're seeing in the numbers.

[Joshua Reilly, Senior Analyst at Needham & Company]

Very helpful. Thank you.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Josh. Up next, we have Jordan at Bank of America.

[Jordan Lyonnais, Equity Research Associate at Bank of America]

Hey. Thank you for taking the question. Could you guys just give an update on FUSIS' FedRAMP status? And then for D Drone, what what is your strategy, to start playing a more meaningful role in DOD counter drone programs, that are getting funded like Replicator two?

[Josh Isner, President at Axon Enterprise]

Yeah. So, Jordan, I'll on the on the strategy one, again, like, we we don't necessarily wanna tip-off our hand on on how we're thinking about the opportunity, but but we'll be in the game when when the lights come on and, we're ready to prove what we can do for sure. Jeff, why don't you take that first question if that's okay?

[Jeff Kunins, Chief Product Officer & Chief Technology Officer at Axon Enterprise]

Yeah. Sure. Just like with everything we do, you know, we get we submit things in as we have new new things in our envelope, and we sort of go through the official certification testing. And then, ultimately, the second part is the FedRAMP body itself going through their final little check boxes. And so exactly on plan, we submitted and completed all the work to make FUSEUS FedRAMP compliant, submitted as part of our last package.

[Jeff Kunins, Chief Product Officer & Chief Technology Officer at Axon Enterprise]

So you can think of it as we are FedRAMP compliant at the moment, and the only thing waiting is the natural course of the of the committee sort of officially giving that last check mark. But we're operating in the market with customers knowing that we've met all those requirements.

[Jordan Lyonnais, Equity Research Associate at Bank of America]

Thank you.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Jordan. Up next, have Trevor Walsh with Citizens.

[Trevor Walsh, Director & Senior Equity Research Analyst at Citizens]

Great. Hey, team. Thanks for taking the questions. You had an interesting stat in the shareholder letter around the survey that you ran towards the beginning of last year. About 14% of departments are, essentially not at full staffing levels.

[Trevor Walsh, Director & Senior Equity Research Analyst at Citizens]

Not necessarily surprised headcount and get hiring of officers is, you know, been a struggle for a while now. And it's pretty clear that AI is gonna help in that a little bit to make officers just more productive. But do you guys see any trends around just more broadly than that of departments knowing that they might not be able to get the headcount that they want just shifting that spend to other kind of areas within the department's needs, whether that's technology and is that generally helping you guys, or do you see that as a a possibility kinda down down the road, if not right now? And then a quick follow-up for Britney. Can you just elaborate on the tariff piece for the kinda second half of the year and if that's related to the kind of the the newer things that we're hearing around tariffs, or is that just more baked in from the April kinda announcements that we've heard? Thanks.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Let me take the first part. We are absolutely having those conversations. You know, draft one is is the baseline of, hey. If I can spend less time doing administrative work and more time doing police work, we're we're hearing across the board, you know, things that we can do with technology. Even, you know, DFR is one of those.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Right? Hey. If there's calls that we can clear without having to send officers, that means we can focus our manpower on the on the calls that make more sense. The same thing is true of inbound call handling. Like, your customers are interested on, hey.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Are there things we could use with technology, to be able to, you know, handle noncritical calls? Maybe we don't send an officer at all. Maybe we port them to an AI agent. Translation, you know, historically, there's, like, multi minute waits to be able to get a translator when you're in the either middle of a critical incident or an inbound call. And and, you know, those are the sorts of things that across our stack or through our partners, you know, we can we can begin to turn those things into real time right now.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

It doesn't need a person at all. It's technology aiding the person, or in some cases, we can hand the whole thing over to tech. And we think it's it's a combination of AI and robotics over the coming years is gonna enable us to take on a greater and greater portion of that workload, allowing the the human beings to to focus on, you know, the the sort of top end of those incidents that really require, you know, a human engagement. And and I'd say there's probably at least 50% of the workload of a police department that's automatable. And and and we are seeing that they're open to thinking their budgets that way.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

I can think of a few conversations we've had where agencies have said, hey. I'm understaffed by this many folks. I'm just gonna take part of that budget and push it over here and and maybe not hire a couple of those. And, Brittany

[Brittany Bagley, COO & CFO at Axon Enterprise]

So on tariffs, Yeah. So on tariffs, we factor in everything we know as of, like, twenty four hours before this call. So we're as up to speed as as we can be on, you know, how we think about guidance for the second half of the year, and then we just bake it into the guidance we give you for second half. I would say, you know, it it continues to to move around, obviously, but, you know, I think more is certainly known now even than it was a quarter ago. And so I think that allows us to do things like come up with good plans to mitigate as much as we can and manage through as much as we can, which we're obviously trying to do.

[Brittany Bagley, COO & CFO at Axon Enterprise]

But our our current view is just baked into the guidance. Thank you.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Trevor. Up next, we have Mike Latimore at Northland.

[Mike Latimore, MD & Senior Research Analyst at Northland Capital Markets]

Great. Thanks. Yeah. Excellent results. In terms of the enterprise segment, you know, I guess prior to this quarter, the the biggest deal was in enterprise.

[Mike Latimore, MD & Senior Research Analyst at Northland Capital Markets]

How's that deployment going? How's the pipeline for enterprise? You know, which products seem to be the most interest? And then on TASER 10 is, maybe just elaborate a little bit on manufacturing capacity there. You know, are you ramping that through your end?

[Brittany Bagley, COO & CFO at Axon Enterprise]

Yeah. So, I'll maybe go in reverse order, and then then Josh can jump in on enterprise too. But, we are continuing to ramp TASER 10 capacity. I would say we are sort of continuing to ramp TASER 10 capacity as as much as we can because we continue to see just great demand for that. So, we're ramping it this year.

[Brittany Bagley, COO & CFO at Axon Enterprise]

You saw us take our CapEx guidance up a bit. That's us continuing to ramp it into next year so that, we continue to meet that demand. From an enterprise standpoint, and and I know Josh will jump in, but we continue to be really excited about the pipeline that we're seeing. I think a lot of our products are really relevant to the enterprise segment, but I will say FUSYS has been particularly exciting as we've brought, brought them in. That's just really resonating well with our enterprise customers and opening a lot of doors and a lot of really great conversations.

[Brittany Bagley, COO & CFO at Axon Enterprise]

Again, I think, you know, obviously, our our cameras, you know, as we talk about retail and frontline workers, you could see CounterDrone. You could see a whole lot of our portfolio being being relevant, but it's a huge market. And so we'll we'll continue to update over time, but, there there's a lot as we start to bite that off.

[Josh Isner, President at Axon Enterprise]

Yeah. The only thing I'd the only other thing I'd add is, you know, the enterprise deployments are are hard by nature. We're talking about, you know, aggregating hundreds of thousands of video screens to one pane of glass. That's hard work. And I'd say we're learning the deployment is going well, and what we learn here will absolutely make us better in the next three, four, five of these that we do.

[Josh Isner, President at Axon Enterprise]

And so, you know, it's, the team's doing great work and and, you know, some some new variables when you have enterprise customers, relative to government, and we're working through those and, and feeling good about where we're gonna land.

[Mike Latimore, MD & Senior Research Analyst at Northland Capital Markets]

Awesome. Thanks.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks, Mike. And up next, we have a new face to our call, Andrew Spanola at UBS. Welcome.

[Andrew Spinola, Director at UBS Group]

Thank you, Eric. Hey. Just following up, or continuing on, the enterprise space, would you be able to willing to elaborate on the gaming contract that you guys announced? What are you doing there? Is it FUSYS centric, or is there are a few of your other product lines in the mix?

[Josh Isner, President at Axon Enterprise]

Let's leave it at video for now. There there probably are opportunities in gaming for for less lethal as well in terms of security, but video between body cameras and FUSYS and, certainly, you know, a lot of applicability applicability given the amount of money on the line, you know, at at each one of those sites. And so, and, Andrew, thanks for the patience. Yeah. No problem. Appreciate it.

[Andrew Spinola, Director at UBS Group]

Appreciate it. Thanks for having me.

[Josh Isner, President at Axon Enterprise]

Thanks.

[Erik Lapinski, Senior Director - IR at Axon Enterprise]

Thanks. Alright. We'll kick it to Rick to close this out.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Oh, man. We're done already? I was ready for a couple more. Hey. I I just gotta say I'm so proud of the team, and and we're just hitting on all cylinders.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

And it's also really great. You know, I you'll see I'm answering less and less of the questions, you know, during the call about the operations of the business. And and, candidly, that's because I I've got just such a great team. I've been traveling like a banshee out with customers, having a ball, have identified a couple more fantastic, you know, things that are gonna be expanding our product portfolio probably a couple years out. And it's really great to have a team that, you know, you can just rely on.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

We're all, you know, we're all running our lanes, and the business just runs like a machine, like a very like a well, no. Ferrari, maybe don't not as the most reliable machine, but a very reliable Ferrari. I mean, this thing's just running. And, of course, you know, having you guys as sort of helping the investment community understand, our business, it it it this is a complex business to understand. We're we're everything from a, you know, a a media a media creation house in VR for creating content and managing training content.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Do do we do pure software plays like our records business. You know, we do electrical weapons and drones and, you know, now counter drone systems. And, it's a lot of fun for us to run the business, and we know you keep you pretty busy trying to understand how it all fits together. But I can tell you one thing that just keeps me excited now from a business perspective is we have so many horses that can run here that, you know, we're we're not dependent on any one part of the business. Know, we just got this truly diversified portfolio, but it all works together so seamlessly.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

And now we're expanding to anybody who needs to interact with law enforcement. Right? If you're a business, your security team needs to interact law enforcement. Frankly, if you're a military, you need to interact with your law enforcement as well now, the these sorts of hybrid threats that we're now seeing in society. And we're able to start from this kernel of a of a business we built around public safety and begin to move out into these next layers.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

It's just a really exciting strategic time to be at the helm. And so with that, I wanna thank you. Josh, you were leaning forward. Did you have anything to add there before we today?

[Josh Isner, President at Axon Enterprise]

Nope. You said it well, Rick. Thank you.

[Rick Smith, Founder, CEO & Director at Axon Enterprise]

Alright. Thanks, everybody, and we'll see you for, well, I'm not gonna jinx it by predicting. We hope to be back with another good quarter. So we'll see you guys in a few months.

[Josh Isner, President at Axon Enterprise]

Thanks.

Participants

Executives

• Erik Lapinski, Senior Director - IR
• Rick Smith, Founder, CEO & Director
• Josh Isner, President
• Brittany Bagley, COO & CFO
• Jeff Kunins, Chief Product Officer & Chief Technology Officer

Analysts

• Keith Housum, MD & Research Analyst at Northcoast Research
• Andrew Sherman, Vice President at Cowen
• William Power, Senior Research Analyst at Baird
• Mike Ng, MD - Global Investment Research at Goldman Sachs
• Meta Marshall, MD & VP at Morgan Stanley
• Joseph Cardoso, Vice President, Equity Research at JP Morgan
• Jonathan Ho, Research Analyst at William Blair
• George Notter, Managing Director at Wolfe Research LLC
• Alyssa Shreves, VP - Equity Research at Barclays
• Jeremy Hamblin, Senior Research Analyst at Craig-Hallum Capital Group LLC
• Joshua Reilly, Senior Analyst at Needham & Company
• Jordan Lyonnais, Equity Research Associate at Bank of America
• Trevor Walsh, Director & Senior Equity Research Analyst at Citizens
• Mike Latimore, MD & Senior Research Analyst at Northland Capital Markets
• Andrew Spinola, Director at UBS Group