Axon Enterprise Q1 Earnings Call Highlights

Key Points

• Raised full-year revenue guidance: Axon posted record Q1 results — revenue $807 million (+34% YoY), ARR $1.5 billion (+35% YoY) and $14.3 billion of future contracted bookings — and raised its full-year revenue growth outlook to 30–32% while targeting a 25.5% adjusted EBITDA margin.
• AI adoption accelerating: Management says Axon is at an AI “system adoption” inflection point as AI bookings rose ~140% YoY, AI product revenue grew >700% (from a small base), and Axon Assistant exceeded 1 million uses, with AI increasingly bundled into long-term contracts.
• Dedrone scaling rapidly: The counter‑drone business saw bookings jump ~500% YoY and combined Dedrone revenue rise >300%, with major event and permanent infrastructure deployments underpinning management’s view of sustainable demand.

Axon Enterprise NASDAQ: AXON executives used the company’s first-quarter 2026 earnings call to highlight continued rapid growth, rising adoption of its AI-focused offerings, and accelerating demand for its counter-drone business, while raising full-year revenue guidance.

Management frames AI as a “system adoption” moment

Chief Executive Officer Rick Smith said the company is entering what he described as an “inflection point,” driven by fast-moving advances in AI and a corresponding shift in customer expectations. Smith argued that the company’s integrated hardware-and-software ecosystem positions it to benefit from this change, as customers look beyond individual products to “system adoption” across sensors, real-time operations, and AI-enabled workflows.

Smith pointed to early examples including Axon Vision, Axon Guardian, and Axon Assistant. He said Axon Assistant has surpassed 1 million uses and “will soon be available wherever officers work.” He also discussed the company’s Axon Gravity initiative as a longer-term effort to bring more customer data together to support additional AI-enabled capabilities.

On the customer side, Smith said interest in AI tools has broadened and accelerated. He described a recent meeting with police chiefs where, compared with two years ago, “100% are using AI tools in their personal lives daily,” and said that dynamic is driving demand for CJIS-secure AI tools for government data.

Record Q1 results and higher revenue guidance

President Josh Isner said Q1 was the company’s “strongest ever first quarter across revenue, bookings, and new products,” including first-quarter bookings records across U.S. public safety, international, and enterprise. He said those indicators support expectations for “another year of 30+% revenue growth.”

Chief Financial Officer Brittany Bagley reported revenue of $807 million, up 34% year-over-year, and said it was Axon’s ninth consecutive quarter with growth above 30%.

• Software and services: $355 million, up 35% year-over-year
• Connected devices: $453 million, up 33% year-over-year
• Net revenue retention: 125%
• ARR: $1.5 billion, up 35% year-over-year

Bagley also said future contracted bookings rose 44% year-over-year to $14.3 billion. International revenue increased more than 100% year-over-year and represented 20% of quarterly revenue, which management attributed to prior bookings momentum and broader demand across product categories.

Given Q1 results and pipeline momentum, Bagley said Axon raised its full-year revenue growth outlook to 30%-32% (from prior guidance), while maintaining its expectation for 25.5% adjusted EBITDA margin for the year. She said the guidance assumes continued tariffs, inflationary component costs including memory, and a product mix shift tied to growth in platform solutions as well as software and services.

AI Era Plan adoption accelerates; pricing tied to added value

Isner called the Axon AI Era Plan a major driver of momentum, saying AI bookings were up 140% from Q1 last year. Bagley said AI product revenue grew more than 700% year-over-year, noting it is still “on a small revenue base” but scaling from prior bookings.

In the Q&A, Isner said nearly all large domestic law enforcement agencies are now including AI in their purchases. He characterized adoption as moving from early interest to standard inclusion in agencies’ future technology stacks, with large deals often taking 8-12 months to close. As an example of recent traction, Isner said “a major city in the Mid-Atlantic region” received city council approval for a $150 million deal that included the AI Era Plan.

Asked about customers in the middle of long-term contracts, Isner said contract rewrites happen “very naturally” as agencies upgrade cameras or add new products, with product launches at events such as Axon Week and IACP serving as catalysts.

On pricing, Isner said the company aims for pricing that reflects the value delivered, noting that as more features are added to bundles, those additions should be reflected in annual pricing updates. He also said the AI Era Plan is designed to reduce the need for repeated procurement cycles by including new capabilities that emerge after a customer signs a contract.

Dedrone scales rapidly; demand described as sustainable

Management repeatedly emphasized momentum in Dedrone, Axon’s counter-drone business. Isner said Dedrone bookings were up 500% year-over-year and described the business as scaling “beyond our most aggressive assumptions.” Bagley said platform solutions revenue, which includes counter-drone hardware, rose 95% year-over-year, and that total Dedrone revenue across hardware and software was up more than 300% year-over-year.

Executives cited high-profile deployments as demonstrations of capability, including protection for the 2026 Super Bowl and the Kentucky Derby, as well as work supporting “American World Cup sites” and other large events. However, Isner argued that demand is not event-dependent and should be viewed as infrastructure.

Responding to questions about sustainability, Isner said events are “nice moments in time where we can show off the product,” but that the long-term value comes from “permanent infrastructure” deployments in cities and businesses. Another executive added that emerging legislation such as the “Safer Skies initiative” supports the view that counter-drone is becoming a multi-year program.

On use cases, Isner said customers often start with situational awareness and unauthorized drone detection, with the ability to locate drone pilots. He said mitigation capabilities could expand over time depending on evolving laws.

Bagley said platform solutions carry the lowest margins of Axon’s three connected devices categories, but she expects improvement as the business scales and gains repeatability. She also highlighted that Dedrone includes a software component that contributes to software gross margins that “continue to be above 80%” when including services.

Enterprise, 911, international and inventory investments

In enterprise, Isner said the company closed a $40 million opportunity in April with “one of the largest telecom providers in the world,” centered on Fusus along with Axon Body Mini and Axon Outpost. He described Fusus as a way to unify large numbers of video streams into a single user experience, with optional connections to public safety.

Isner also said Axon Body Mini production units are expected to start shipping in July, and that the company plans to launch Axon Vision directly into enterprise. He added that Assistant and Draft One are becoming “enterprise-ready.”

On acquisitions, Isner said Axon is “heads down” integrating recent deals and is focused on execution in 2026, while remaining opportunistic with investments. Smith discussed a $10 million investment in Buntar Aerospace, describing it as a partnership-oriented investment in Ukraine’s drone ecosystem rather than a near-term acquisition step.

Regarding Axon 911, Isner said the company expects to contend for leadership in the next few years and described Prepared as winning logos with “over-the-top feature sets,” while Carbyne serves as a “capable fast follow for call handling” when customers are ready. He also said Carbyne has an international rebrand and momentum.

On the balance sheet and cash flow, Bagley reiterated the company’s plan to invest in inventory to support demand and mitigate supply-chain risks, while still targeting approximately $450 million of free cash flow for full-year 2026. She said Q1 is typically the seasonally weakest quarter for free cash flow due to bonus and commission payments and a semi-annual interest payment, and noted that without inventory investments, free cash flow would have been positive in Q1.

Bagley also provided an outlook for stock-based compensation expense of approximately $590 million to $620 million for the year and reiterated a target of average annual dilution below 2.5%.

Closing the call, Smith said Axon plans to continue building new categories and capabilities, telling listeners to “stay tuned” for additional launches over the next year.

About Axon Enterprise NASDAQ: AXON

Axon Enterprise, Inc develops technology and weapons systems for public safety and law enforcement agencies, combining hardware, software and cloud services. The company's hardware portfolio includes conducted energy weapons (commonly known as TASER devices), body-worn cameras and in-car camera systems. Axon pairs these devices with a suite of connected products and accessories designed to capture, store and manage field evidence.

Beyond hardware, Axon operates a subscription-based software platform for digital evidence management, evidence review and records management.

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