Axon Enterprise Q4 Earnings Call Highlights

Key Points

• Record bookings momentum: Axon reported full-year bookings north of $7 billion (up ~40% YoY) with Q4 bookings growth of >50%, including over $1 billion in new product bookings and international/new-market bookings surpassing $2 billion.
• Strong top-line and profitability gains: Q4 revenue rose 39% YoY to $797 million, ARR grew ~35% to >$1.3 billion, net revenue retention hit 125%, and adjusted EBITDA increased 46% to $206 million (25.9% margin), though free-cash-flow conversion was temporarily weighed down by inventory and timing.
• Ambitious guidance and AI-led strategy: Axon guided 2026 revenue growth of 27%–30% with a ~25.5% adjusted EBITDA margin and set 2028 targets of ~$6 billion revenue and a 28% adjusted EBITDA margin while expanding into AI, 911, counter-drone, and a global sensor-network strategy.

Axon Enterprise NASDAQ: AXON used its latest earnings call to highlight accelerating bookings momentum, strong fourth-quarter growth across hardware and software, and an expanded long-term financial model that leans heavily into artificial intelligence, connected sensors, and new markets such as 911 and enterprise.

Bookings surged as new products scaled

Chief Revenue Officer Josh Isner said the company’s most important “scoreboard” metric remains bookings, and 2025 delivered a record year. Full-year bookings surpassed $7 billion and were up more than 40% year-over-year, driven by fourth-quarter bookings growth of more than 50%. Isner characterized the quarter as an acceleration after two years of bookings growth in the high-20% range.

Isner also pointed to several mix and market highlights:

• Axon’s U.S. state and local team delivered three nine-figure deals during 2025.
• New product bookings (including Air, AI, and Fusus) totaled over $1 billion, nearly triple the prior year’s result.
• In its first full year, the AI Era Plan accounted for roughly $750 million of bookings, about 10% of total bookings.
• Bookings in “new and emerging markets” (outside U.S. state and local law enforcement) surpassed $2 billion, with record international, corrections, and justice results.
• International bookings exceeded $1 billion for the first time, including two of Axon’s largest deals in the fourth quarter tied to European cloud deployments and connected devices.

Isner said customer scrutiny around data privacy and license plate reader deployments is “real” and framed it as a tailwind for Axon, citing “privacy by design and ethical governance” as deciding factors for some customers switching from other vendors. He added that license plate recognition and vehicle intelligence have “barely scratched the surface,” with a nine-figure pipeline for that product set.

Fourth-quarter revenue grew 39% as retention and ARR rose

Chief Financial Officer Brittany Bagley said fourth-quarter revenue increased 39% year-over-year to $797 million, marking the company’s eighth consecutive quarter (and fourth consecutive year) of above-30% revenue growth. Software and services revenue rose 40% to $343 million, while connected devices revenue increased 38% to $454 million.

Bagley highlighted several operating metrics and segment drivers:

• Net revenue retention expanded to 125% in the quarter, which she said reflects new product adoption within existing customers.
• ARR grew 35% year-over-year to more than $1.3 billion.
• TASER revenue was $264 million, up 32% year-over-year.
• Personal sensors revenue was $109 million, up 28%.
• Platform solutions revenue grew 81% to $81 million, driven by products including TASER 10, Body 4, counter-drone equipment, and VR training.

Adjusted gross margin was 61.1%, down sequentially due to tariffs and a higher mix of platform solutions, partially offset by continued growth in higher-margin software and services. Bagley said mix could cause quarter-to-quarter volatility, but over time the company expects software mix to benefit margins.

Adjusted EBITDA grew 46% year-over-year to $206 million, with a 25.9% margin that outperformed expectations due to higher revenue and operating leverage. Operating cash flow was $217 million. Bagley said free cash flow conversion on adjusted EBITDA declined year-over-year due to inventory investments and collection timing, which she expects to “catch up” in coming quarters. The company reiterated a longer-term target of 60% conversion and said 2025 should represent a low point, with improvement expected in 2026.

2026 outlook: 27% to 30% revenue growth and stable EBITDA margin

For 2026, Bagley guided to revenue growth of 27% to 30% year-over-year, calling it the company’s strongest outlook entering a year. Axon also expects an adjusted EBITDA margin of 25.5% for the year, incorporating increased investment in product and market expansion, as well as impacts from tariffs, inflationary component costs (including memory), and scaling acquisitions.

On tariffs, Bagley said “very little has changed,” and the company has baked in the implementation of a new 15% global tariff, without assuming refunds until a process is clearer.

She also discussed seasonality, noting that the fourth quarter is typically the strongest for bookings, while the first quarter is usually the slowest for new bookings as pipeline builds. First quarter also typically has lower free cash flow conversion due to bonus and commission payments. Bagley said Axon expects first-quarter revenue growth to be consistent with the full-year guide, but margins may be lower than the annual target early in the year as revenue scales through the year.

New 2028 targets: ~$6 billion revenue and 28% adjusted EBITDA margin

Axon introduced updated long-term targets, including approximately $6 billion in revenue by 2028 and a 28% adjusted EBITDA margin, implying roughly 250 basis points of margin expansion from current levels. Bagley also reiterated the long-term target of approximately 60% free cash flow conversion on adjusted EBITDA and said the company is lowering its stock-based compensation dilution goal to less than 2.5% annually going forward.

Bagley said no material M&A is contemplated in the forecast, though Axon intends to continue tuck-in acquisitions to expand its ecosystem and acquire talent.

Product roadmap and strategy: AI, 911, counter-drone, and a “global sensor network”

Founder and CEO Rick Smith framed Axon’s long-term positioning around an integrated hardware-software ecosystem, arguing the company’s full-stack approach becomes more defensible as AI commoditizes aspects of software development. He described a strategic vision for Axon as “the provider of the world’s largest global sensor network, fully connected and supercharged by AI,” with AI embedded “into every workflow safely, securely, and reliably.”

Smith also returned to Axon’s “moonshot” goal to cut gun-related deaths between police and the public in half by 2033, saying preliminary data suggests 2025 “appears to be the first year” such deaths “went down substantially” in the U.S., while cautioning it is too early to claim a direct causal link to Axon. He cited anecdotes involving TASER 10 and said a major county sheriff’s office reported a 42% reduction in deputy-involved shootings, attributing it in part to TASER 10 and de-escalation training, including VR.

On adoption metrics, Smith said Axon has stored more than 60 million hours of body-worn camera footage on its latest two generations of cameras (Axon Body 3 and Axon Body 4). He also said Fusus powers more than 1 million monthly live streams with more than 300,000 community cameras connected. Smith added that more than 500 public safety agencies are live with Axon Assistant, generating more than 200,000 monthly messages.

In Q&A, management declined to provide formal bookings guidance for 2026, with Isner saying he preferred to share more as visibility improves later in the year. Executives emphasized broad demand across core and new markets, including U.S. state and local, international, federal, and enterprise.

Axon also discussed its 911 expansion following acquisitions. Executives described Prepared as an AI-powered “overlay” for public safety answering points (PSAPs) that can be deployed quickly and is positioned as additive to legacy systems, while Carbyne is aimed at full-stack modernization of call-handling infrastructure when agencies are ready. Bagley said Carbyne had “literally zero impact” on guidance because it closed after the quarter, and Prepared’s contribution in the quarter was immaterial due to timing.

On hardware development, Smith said the Apollo project is testing well in laboratories for performance through heavy clothing and low over-penetration, but he does not expect it to be a meaningful revenue contributor this year. He said the goal is to have it in customers’ hands for the next cold season.

Smith also identified privacy and data handling as a key risk, saying a misstep could have “outsized negative consequences,” and emphasized that customer expectations for value will continue to rise as AI advances.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.