AXON Q2 Earnings Call Highlights Higher Revenue Outlook

AXON’s second-quarter non-GAAP EPS of $1.88 missed the Zacks Consensus Estimate by 1 cent. However, revenues of $904.39 million topped the $868.35 million estimate.

AXON Raises the 2026 Revenue Bar

COO and CFO Brittany Bagley said Axon now expects 2026 revenue growth of 32% to 34%, up from 30% to 32%, supported by first-half results and the demand pipeline.

Management expects the fourth quarter to be the strongest period for revenues and year-over-year growth. The full-year adjusted EBITDA margin outlook remains approximately 25.5%.

Bagley said third-quarter margins will absorb higher memory costs without another tariff-refund benefit before scaling back in the fourth quarter.

Axon's Software Expansion Broadens

Software & Services revenues rose 36% to $398 million in the second quarter. More than one-third came from offerings beyond Axon Evidence, and that group grew about 70%.

AI Era Plan revenues increased nearly 700%. Annual recurring revenues rose 39% to $1.6 billion, while net revenue retention reached 126%.

President Joshua Isner told a TD Cowen analyst that international AI demand was driven by Draft One's expansion into more markets and Axon Assistant's real-time translation capabilities.

AXON Sees Dedrone Demand Beyond the World Cup

Dedrone surpassed $100 million in quarterly revenues after supporting all 11 U.S. World Cup stadiums and more than 50 additional sites.

Responding to a Goldman Sachs analyst, Isner said the event should not define the business. He emphasized international, federal and enterprise demand, while noting that large hardware shipments can create quarterly variability.

Founder and CEO Patrick Smith described a partner-led counter-drone strategy. Chief product officer and CTO Jeffrey Kunins said Axon intends to lead in software and sensor fusion while selectively owning critical hardware.

Axon's Bookings Mix Changes the Lens

Future contracted bookings rose 41% to $15.1 billion, and five-year normalized bookings increased more than 30%. Management introduced the measure as shorter enterprise and international contracts become more significant.

A Baird analyst asked why the disclosure was changing. Isner said three-year enterprise deals and large international contracts can distort comparisons when years six through 10 are included.

Bagley clarified that shorter contracts are not increased to five years. Contracts longer than five years are reduced to a common five-year basis, while shorter bookings remain unchanged.

AXON Makes Trust Central to AI Adoption

A Morgan Stanley analyst asked where customers still resist AI. Smith acknowledged concerns around privacy, data security and misuse of license-plate-reader information.

Smith said Axon is developing AI tools to detect anomalous search behavior and framed customer trust as a valuable but fragile business asset.

Kunins said AI investment is centered on faster responses, officer time savings and direct improvements in officer and community safety. Management maintained that AI should support, not replace, human judgment.

Axon's Body Camera and 911 Pipeline Builds

Isner expects third-quarter body camera shipments to rise 20% to 30% sequentially and leaned toward the high end. He said public-safety wins, renewals, expansions and customer returns from competitors are the main drivers.

Responding to JPMorgan and RBC analysts, Isner said Axon Body Mini is generating enterprise trials but is not the primary shipment driver. He tied body-camera winbacks to product fundamentals and connected Evidence.com workflows.

Isner also said customers are actively seeking 911 alternatives. Axon's first full-scope customer will deploy the combined Prepared and Carbyne offering, while other agencies may adopt either component first.

AXON Keeps Focus on Ecosystem Execution

Management's tone remained confident on second-half demand, with international and enterprise bookings each roughly tripling and normalized bookings expected to grow in the 30% range for 2026.

The company is also prioritizing supply-chain resilience, inventory investment and rapid scaling of new offerings that pressure product mix. The call framed these demands as part of building a broader hardware, software, cloud and AI platform.

Axon's Zacks Signals Remain Restrained

AXON currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term estimate-revision signal. Its Value Score, Growth Score, Momentum Score and VGM Score are all F, the weakest grade in the A-to-F framework.

The combination lacks the favorable Rank-and-Style alignment associated with Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks carrying A or B scores. The Zacks Rank can change as analysts revise estimates after the newly reported results.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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