Snapshot
Axon Enterprise, Inc. reported $797M of revenue in Q4 2025, up 38.5% year over year, with diluted EPS of $0.03 and an operating margin of -6.3%.
- Revenue
- $797M
- YoY growth
- +38.5%
- Diluted EPS
- $0.03
- Operating margin
- -6.3%
What management said
- •During this call, we will discuss our business outlook and make forward-looking statements.
- •You may recall that over the past few quarters, we laid out an ambitious plan to drive record bookings.
- •2025 full-year bookings surpassed $7 billion, and we're up more than 40% from last year.
- •That's on the back of fourth quarter bookings, up more than 50%, representing a major acceleration relative to two straight years of bookings growth in the high 20% range.
- •We just booked almost as much business in the quarter as we did in the full year, just two years ago, and we see no sign of that slowing down.
- •To that end, in our first full year of selling the AI Era Plan, it accounted for approximately $750 million worth of bookings, or about 10% of the overall bookings total.
- •Our pipeline is sitting in the nine figures for that new product set, and we expect that to continue to grow.
- •We're hearing directly from customers, some of whom came to us from other vendors, that our track record on privacy and ethics was a deciding factor in their decision.
- •Customers aren't just buying hardware and software, they're buying confidence that will help them deploy technology responsibly.
- •Bookings in this category, which include everything outside US state and local law enforcement, surpassed $2 billion on the back of record results in international corrections and justice.
- •It's impossible to talk about explosive growth at Axon without mentioning our corrections team.
- •First, I'll walk through our fourth quarter performance, then we'll move to guidance, our new 2028 targets, and how we think about the future.
What went well
- •Axon delivered Q4 2025 revenue of $797 million, up 39% year over year, marking its eighth straight quarter and fourth consecutive year growing above 30%.
- •Full-year 2025 bookings surpassed $7 billion, up more than 40% from the prior year, on the back of fourth-quarter bookings up more than 50%, and the US state and local team delivered three nine-figure deals in the year.
- •New product bookings (Air, AI, and Fusus) totaled over $1 billion for the year, nearly triple 2024, and the AI Era Plan accounted for approximately $750 million of bookings (about 10% of the total) in its first full year.
- •Software and services revenue grew 40% year over year to $343 million, net revenue retention expanded to 125%, and ARR grew 35% to over $1.3 billion, while connected devices revenue rose 38% to $454 million (TASER +32% to $264 million, platform solutions +81% to $81 million).
- •Adjusted EBITDA grew 46% year over year to $206 million at a 25.9% margin that outperformed expectations, and the international team crossed $1 billion in annual bookings for the first time while the corrections team delivered the largest single customer booking in company history.
- •The company closed the Prepared acquisition in Q4 and Carbyne this month to build out its 911 strategy, and completed redemption of its convertible notes to limit dilution while preserving growth capital.
What went wrong
- •Adjusted gross margin came in at 61.1%, down sequentially due to the impact of tariffs and increased mix from lower-margin platform solutions, partially offset by strong high-margin software growth.
- •Free cash flow conversion on adjusted EBITDA decreased year over year on inventory investments and timing of collections; management expects 2025 to be a low point before returning closer to its 60% target in 2026.
- •Management flagged the new 15% global tariff plus inflationary componentry costs (including memory) as headwinds baked into 2026 guidance, with no assumption of any tariff refunds until the process is clearer.
- •First quarter is seasonally the slowest for new bookings and typically has lower free cash flow conversion because bonuses and commissions are paid then, dynamics expected to repeat heading into Q1 2026.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| 2026 revenue growth | FY2026 | — | 27%-30% year over year (strongest outlook heading into a year) | issued |
| 2026 adjusted EBITDA margin | FY2026 | 25.5% prior framing | 25.5% maintained | maintained |
| Free cash flow conversion on adjusted EBITDA | FY2026 | 60% target; 2025 a low point | Targeting back closer to 60% in 2026 | reaffirmed |
| Tariff assumption | FY2026 | — | New 15% global tariff baked in; no refunds assumed | issued |
| 2028 targets | FY2028 | — | New long-term targets introduced; no major change to assume versus this year's delivery, with all product lines and markets growing | issued |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total revenue | +39% to $797M | Broad-based growth across product lines and new customers |
| Software and services revenue | +40% to $343M | Expansion within existing customers and new customer growth; Fusus, AI, VR, Counter-drone |
| Connected devices revenue | +38% to $454M | TASER 10, Body 4, Counter-drone equipment, VR Training |
| TASER revenue | +32% to $264M | Strong demand and efficacy of TASER 10, plus new corrections and international customers |
| Platform solutions revenue | +81% to $81M | Counter-drone and platform product drivers |
| Personal sensors revenue | +28% to $109M | Body camera demand |
| ARR | +35% to over $1.3B | New product adoption by existing customers |
| Net revenue retention | expanded to 125% | Adoption of new products by existing customers |
| Adjusted EBITDA | +46% to $206M (25.9% margin) | Higher revenue than forecast and operating leverage |
| Adjusted gross margin | 61.1% (down sequentially) | Tariffs and higher platform-solutions mix, partly offset by software growth |
| Full-year bookings | +40%+ to over $7B | Q4 bookings up 50%+, three nine-figure state and local deals, record international and corrections |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| AI Era Plan adoption | first year of selling the plan | ~$750M of bookings (about 10% of total); over 500 agencies live with Axon Assistant generating 200,000+ monthly messages; often bought in tandem with OSP | early-innings growth |
| New product portfolio | — | New product bookings over $1B, nearly triple 2024; ALPR/vehicle intelligence and Dedrone pipelines in the nine figures opening federal and international doors | expanding |
| International expansion | — | Crossed $1B in annual bookings for the first time; two of the largest Q4 deals were large European cloud deployments; AI accelerating cloud adoption | inflecting |
| 911 / acquisitions (Prepared, Carbyne) | Prepared acquired earlier in 2025 | Carbyne closed this month; combination targets breadth (Prepared overlay) and depth (Carbyne call handling); immaterial revenue/EBITDA impact in 2025, expected to scale going forward | building |
| Acquisition strategy | — | Focus on disruptive upstarts with fresh tech stacks (Fusus, Dedrone, Prepared, Carbyne) integrated into the platform rather than rolling up legacy cash cows | consistent |
| Moonshot / mission impact | moonshot to halve police-public gun deaths by 2033 | Preliminary 2025 data suggests first substantial decline in US gun-related deaths; one major county sheriff cited a 42% reduction in deputy-involved shootings | encouraging early signs |
| Enterprise market | — | Multiple large contracts called out; go-to-market focused on making early customers successful rather than logo count; leading with varied products (Body Mini, Fusus, Dedrone, DFR) | early but progressing |
| Hardware innovation | — | Apollo Dart testing better than expected (not a meaningful 2026 revenue contributor but in customer hands by next cold season); at least two new product categories in the pipeline | ongoing |
Q&A summary
What is expected for 2026 bookings growth and the demand environment, and any product or vertical inflections embedded in guidance?
No bookings guidance is being given yet, with more detail possible later in the year; demand confidence has never been higher, and all four core markets are positioned for potential banner years.
How differentiated is the Axon 911 strategy (Prepared/Carbyne) versus incumbents?
Prepared is a low-deployment-complexity AI overlay for any PSAP while Carbyne provides a full modern call-handling stack that outperforms incumbents; both connect into the Fusus/DFR ecosystem, and the go-to-market leans on respected, well-ingrained teams.
What gives confidence in sustaining similar growth into 2027-2028 across existing versus new products?
More products (AI Era Plan, new OSP, Dedrone) provide multiple paths to the CAGR with all four markets growing; management says no major change needs to be underwritten for 2028 versus this year's delivery.
What drove TASER's acceleration to 32% growth, and is the Apollo cartridge still on track for this year?
Growth reflected execution and large deals slipping from Q3 into Q4 plus strong underlying demand; Apollo is testing better than expected but will not be a meaningful 2026 revenue contributor, targeting customers' hands by the next cold season.
How much of 2026 growth could come from TASER 7-to-10 refresh versus new customers?
Management does not view it as a refresh-driven year; TASER 7 will continue to be supported, new customers (corrections, international) are adopting TASER, and demand supports the revenue guidance.
Is the premium OSP / AI Era Plan penetration likely to drive 2028, and how should the 500-agency Axon Assistant figure be read?
The premium plan price point rises each year as new products are added and customers continue rolling onto premium tiers (supporting the 125% NRR); Axon Assistant is one of the newest features and is an adoption indicator, not a one-to-one proxy for AI Era Plan customers.
What is the impact of Carbyne and Prepared on 2026 guidance?
Carbyne had literally zero 2025 impact since it closed this month, and Prepared was immaterial as it closed partway through the quarter; both are expected to start impacting results going forward.