Hello everyone, and thank you for joining Axon's executive team today your our second quarter 2026 earnings conference call. During this call, we will discuss our business outlook and make forward-looking statements. We had a record quarter, and I could not be more proud of this team. host cities, more than 50 additional sites and surrounding areas, international deployments, multiple agencies with very little margin for error.
Dedrone is delivering tremendous growth, the opportunity continues to expand across state and local public safety, international, federal, enterprise, and corrections. This is a business that was still in its infancy just a year ago and is quickly becoming one of our largest product lines, surpassing $100 million in quarterly revenue. We've now booked more TASER 10 units than we booked over the lifetime of TASER 7, with a ton of pipeline still in front of us. That's on top of nearly 50% bookings growth in Q2 last year.
Normalizing for duration gives us a clear view of the underlying demand across markets. As I review the pipeline, I see a clear line of sight to finishing the year in the 30% range of normalized bookings. We didn't rush to deploy every tool or ask people to use AI for the sake of using AI. From before a call comes in to during an incident to closing a case, the sensor, software, and data work together.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year revenue growth | FY2026 | 32%-34% (raised 200 bps on strong first-half results and demand pipeline) |
| Full-year adjusted EBITDA margin | FY2026 | ~25.5% (unchanged; Q2 tariff refund offset by increasing memory/component costs) |
| Full-year free cash flow | FY2026 | ~$450 million (consistent with Q1 guidance, with strong Q4 seasonality) |
| Normalized (5-year) bookings growth | FY2026 | ~30% range; total future contracted bookings expected to grow faster than 30% |
| Q3 adjusted EBITDA margin | Q3 2026 | Expected to reflect higher memory costs with no tariff-refund benefit, before scaling back up in Q4 |
| Body camera shipments | Q3 2026 | Expected up 20%-30% sequentially (likely closer to 30%) |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +35% to $904M | Broad-based demand across state and local, international, enterprise, and federal; 10th straight quarter above 30% growth. |
| Software & services revenue | +36% to $398M | Axon Evidence remains the backbone, with fast-growing contributions from real-time operations (Fusus), Records, AI Era Plan, counter-drone software, and Axon 911. |
| Connected devices revenue | +35% to $507M | Primarily driven by Dedrone counter-drone, TASER 10, and Axon Body 4. |
| Platform Solutions revenue | +123% to $150M | Dedrone counter-drone drove most of the growth; a category added at the end of 2024 that quickly became a consistent contributor. |
| Annual recurring revenue | +39% to $1.6B | Sticky software fed by sensors and enhanced by AI; net revenue retention reached 126%. |
| Adjusted gross margin | 62.9% (+130 bps sequentially) | Primarily tariff refunds, partially offset by increased mix from newer product offerings that are still scaling. |
| Adjusted EBITDA | $242M (26.8% margin) | Strong revenue growth; operating cash flow improved to $20 million from a $92 million outflow a year ago. |
| GAAP diluted EPS | $0.36 (down from $0.44) | Prior-year period included a large tax benefit; pre-tax income rose year over year. |
| Future contracted bookings | +40% to $15.1B | Broad-based momentum across products and end markets; Q2 gross bookings up 20% on top of ~50% growth a year ago. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Counter-drone / Dedrone | New category added end of 2024 | Surpassed $100 million in quarterly revenue; management frames it as durable beyond the World Cup, with demand across enterprise, federal, international, data centers, and eventually state and local as mitigation is legalized. Named to the $1.5 billion DHS Counter-UAS program; strategy is to be the best 'connector' across best-in-class sensor and effector vendors. | — |
| AI and software beyond Evidence | Early-stage AI offerings | More than a third of software revenue now comes from non-Evidence offerings growing ~70%, with the AI Era Plan up almost 700%; Draft One enabled in more markets and a real-time translator driving international interest. | — |
| International expansion | Emerging markets | International bookings ~3x prior year; large TASER 10 wins in the Middle East and Europe comparable to top U.S. deployments; some international customers adopting newest offerings faster than U.S. peers. | — |
| Body camera win-backs | — | Customers are canceling contracts with other vendors to migrate to Axon for reliability (e.g., battery life) plus AI and Evidence.com workflows; shipments expected up 20%-30% sequentially in Q3. | — |
| Axon 911 (Prepared + Carbyne) | Recent acquisitions | Signed first full-scope Axon 911 customer; customers actively seeking 911 alternatives, and management is 'wildly bullish' on winning the category. | — |
| Data privacy and trust | — | Amid the DeFlock anti-surveillance movement and license-plate-reader concerns, Axon is leaning on its ethics council and building AI tools to detect anomalous search behavior; management views trust as a durable competitive asset. | — |
| New bookings disclosure & 2028 targets | Total bookings only | Introduced a five-year normalized bookings metric (up over 30% YoY) to strip out contract-duration noise from long international and short enterprise deals; reaffirmed confidence in the ~$6 billion 2028 revenue target with multiple paths to get there. | — |