Snapshot
Axon Enterprise, Inc. reported $669M of revenue in Q2 2025, up 32.8% year over year, with diluted EPS of $0.44 and an operating margin of -0.2%.
- Revenue
- $669M
- YoY growth
- +32.8%
- Diluted EPS
- $0.44
- Operating margin
- -0.2%
What management said
- •During this call we will discuss our business outlook and make forward-looking statements.
- •You go down the list, this technology in the past three years has come out of nowhere to where this is the fundamental technology or this is how we generally deploy drones today.
- •First, demand for new technology from our customers is accelerating and it's outpacing even my most optimistic expectations.
- •Draft One remains our fastest adopted software solution, TASER 10 our fastest adopted TASER weapon, Axon Body 4 our fastest adopted camera.
- •Dedrone, Fusus and the AI Era Plan are also being deployed faster than we've seen with prior new technologies, while laying the groundwork for future innovations coming over the horizon.
- •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 and development we've ever had.
- •This team took back the record for the largest deal in Axon company history by a wide margin.
- •Second quarter revenue of $669 million increased 33% year-over-year, marking our 14th 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 million.
- •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 20 consecutive quarters, demonstrating the result of our ongoing investment in our products and customers.
What went well
- •Q2 revenue of $669 million grew 33% year-over-year, marking the 14th consecutive quarter of over 25% revenue growth, with software and services up 39% to $292 million and connected devices up 29% to $376 million.
- •Net Revenue Retention rose to 124% and has been near or above 120% for 20 consecutive quarters, reflecting strong adoption of newer products.
- •The state and local team closed the largest deal in Axon company history, which was also the largest contract for new product bookings, spanning everything from drones to AI products, and the corrections team closed its largest deal ever, contributing two of the top 10 deals in the quarter.
- •Axon booked almost $150 million of AI Era Plan bookings in Q2 alone, with over 30% of bookings coming from new product categories, and per-officer bookings in the largest deals pushed up against the $600 level (up from under $300 a few years ago).
- •Adjusted EBITDA margin of 25.7% came in ahead of expectations on higher revenue and operating leverage, and management raised both 2025 revenue and second-half EBITDA guidance, citing line of sight to high-30% year-over-year bookings growth.
- •New products are being adopted faster than ever: Draft One is the fastest-adopted software, TASER 10 the fastest-adopted weapon, and Axon Body 4 the fastest-adopted camera, with international and Enterprise wins (including a first AI-product win in the gaming vertical and the largest TASER customer in Africa).
What went wrong
- •Adjusted gross margin of 63.3% was only up 20 basis points year-over-year, as strong growth in newer hardware products in newer markets pressured device margins, and management expects this mix dynamic to continue in the second half.
- •Tariffs benefited Q2 results through favorable timing but are now expected to impact the company more heavily in the second half of the year.
- •Enterprise deployments are inherently hard (aggregating hundreds of thousands of video screens into one pane of glass), and management acknowledged there are things they are still learning and need to do better.
- •Management noted the Counter-Drone/platform sensors segment will be lumpy going forward because a single large Counter-Drone deal can swing results.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Revenue (FY2025) | FY2025 | — | $2.65B–$2.73B (~29% growth at midpoint) | Raised |
| Adjusted EBITDA (second half) | 2H 2025 | $650M–$675M | $665M–$685M | Raised |
| Adjusted EBITDA margin (FY2025) | FY2025 | — | ~25% target maintained | Maintained |
| Bookings growth (year-over-year) | FY2025 | — | High 30% range | New |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total revenue | +33% | Broad-based demand; 14th straight quarter of 25%+ growth |
| Software and services revenue | +39% | Winning new users and driving adoption of newest products; NRR of 124% |
| Connected devices revenue | +29% | Strength across categories |
| TASER revenue | +19% | Driven by TASER 10 |
| Personal sensors revenue | +24% | Driven by Axon Body 4 |
| Platform solutions revenue | +86% | Driven by Counter-Drone and Virtual Reality |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI Era Plan adoption | Expected some incremental growth in 1H (Q1 call) | Almost $150M booked in Q2; back-half pipeline loaded and accelerating | Accelerating |
| Counter-Drone / Dedrone | Acquisition rationale of leading in international markets | Market leader with strong demand across stadiums, infrastructure, executive protection; not yet a material overall growth driver | Growing |
| International expansion | Investment area being validated | Best year-over-year and quarter-on-quarter growth; ~20% level this quarter; large European deals in pipeline | Accelerating |
| Per-officer monetization | Mid-$200s top OSP offering ~3 years ago; max under $300 a few years ago | OSP now mid-$300s; combined plans push value to ~$600 per officer in largest deals | Rising |
| Bookings growth | Strong start to year (Q1) | High-30% year-over-year growth guidance; 2H expected to match prior full year | Accelerating |
Q&A summary
What is driving the high-30% bookings growth guidance (~$7B implied) — is it just the AI Era Plan or changing deal lengths?
Isner said it is not one thing: selling new products (drones, AI, VR, Fusus, Dedrone, software add-ons) to existing U.S. customers, plus selling existing products to new markets (international, enterprise). The diversified set of growth drivers gives many ways to win, and the company will keep investing in all of them.
What underpinned the Counter-Drone success, and what is happening with DFR (drones as first responder) pipeline given executive orders?
Smith credited the Dedrone acquisition for identifying the small-drone threat early, making Axon a market leader amid surging demand. On DFR, Isner noted Axon does not build outdoor DFR hardware but creates value via live streaming, evidence.com integration, faster drone launch software, and the Skydio partnership; Dedrone keeps skies safe for drones to fly.
Is Dedrone the biggest driver of the platform solutions growth?
Isner said no — Dedrone is one of the smaller drivers currently, though growing every quarter. Bagley clarified it was a big driver within platform sensors this quarter but is not a material driver of overall company growth, and that segment will be lumpy.
Can you provide comparisons over time for the path to $600 per officer?
Isner said top OSP was mid-$200s about three years ago and is now mid-$300s, with increases only coming from added bundle value. Combining the AI Era Plan ($199/month list), car video, Dedrone, and Fusus pushes value to around $600 per user, but that $600 figure is the high end and drove the largest deal, not the typical deal.
How does drone revenue monetize — is it software only, or hardware passed through to Skydio?
Bagley explained platform sensors revenue is mostly the hardware piece of Dedrone (software piece shows in the software business). The Skydio partnership is essentially a referral fee and not a big part of revenue; the numbers reflect Dedrone and what Dedrone enables through DFR.
With ~70% of customers still on basic plans, is that decelerating quickly, and will international keep gaining mix?
Bagley said the metric has moved over time (80% to 75% to 70%) as customers are worked up to premium plans, while new products keep raising how premium plans can be. Isner said international will keep growing excitingly, but the U.S. is also growing fast, so the mix may not shift much as long as U.S. momentum continues.