AXON · Q1 2026 Earnings

Bullish

Axon Enterprise

Reported May 6, 2026

30-second summary

Revenue grew 34% YoY to $807M in Q1 FY2026, with management raising FY2026 revenue growth guidance to 30-32% (from 27-30%) just one quarter into the year — answering last quarter's "floor not stretch" question decisively. AI Era Plan product revenue grew 700%+ YoY, counter-drone (D-Drone) 300%+ YoY with bookings up 500%, and international revenue more than doubled, but Q1 FY2026 operating cash flow was negative $31.5M and CapEx was narrowed downward by $25M at both ends — signs that cash conversion is lagging the bookings story even as management declares multiple inflections simultaneously.

Headline numbers

EPS

Q1 FY2026

$1.61

Revenue

Q1 FY2026

$0.81B

+34.0% YoY

Gross margin

Q1 FY2026

59.1%

Free cash flow

Q1 FY2026

$-0.06B

Operating margin

Q1 FY2026

3.6%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$0.81B	+34.0%	$0.80B	+1.3%
EPS	$1.61	—	$2.15	-25.1%
Gross margin	59.1%	—	57.9%	+120bps
Operating margin	3.6%	—	-6.3%	+990bps
Free cash flow	$-0.06B	—	$0.15B	-135.5%

Guidance

Axon raised FY2026 revenue growth guidance to 30–32% YoY (from 27–30%), reaffirmed 25.5% Adjusted EBITDA margin, narrowed CapEx guidance downward to $160–190M, and newly disclosed operating cash flow and free cash flow targets.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

Metric	Period	Guide	YoY
Operating cash flow	FY 2026	over $600 million	—
Free cash flow	FY 2026	approximately $450 million	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue growth (YoY %)	FY 2026	27% to 30%	30% to 32%	+3pts at low end, +2pts at high end	Raised
CapEx	FY 2026	$185 million to $215 million	$160 million to $190 million	-$25M at low end, -$25M at high end	Lowered

Reaffirmed unchanged this quarter: Adjusted EBITDA margin (25.5%), Stock-based compensation expense ($590 million to $620 million)

Segment KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Software & Services	$0.355B	+34.9%
Connected Devices	$0.453B	+32.8%
TASER	$0.233B	+19.0%
Personal Sensors	$0.109B	+23.0%
Platform Solutions	$0.111B	+95.0%

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Annual Recurring Revenue	$1,493 million
Net Revenue Retention	125%
Future Contracted Bookings	$14.3 billion
AI Era Plan product revenue growth	700%+ YoY
Counter-drone product revenue growth	300%+ YoY
Adjusted EBITDA margin	25.0%
Operating cash flow	-$31.5 million
Axon Assistant field uses	>1 million

Management tone

Q1 FY2025 (cautious bookings) → Q2 FY2025 ("I was off by 50%") → Q3 FY2025 ("healthiest indicators ever") → Q4 FY2025 ("lap the field") → Q1 FY2026 ("hyper-exponential"). The escalation in language is now five quarters deep, with management this quarter declaring multiple inflections simultaneously rather than serially.

AI moved from a SKU to the operating model. Three quarters ago AI bookings were disclosed as ">10% of U.S. state and local bookings" — a contribution metric. Two quarters ago the framing shifted to "agentic AI-first operating model" with bookings of ~$750M for the year. This quarter the language is operational: "AI bookings were up 140% versus Q1 last year, and we are seeing AI move from early interest to a standard part of how large agencies think about their future technology stack. In fact, nearly all large domestic law enforcement agencies are now including AI in their purchases." The shift from contribution percentage to attach universality means AI is no longer being modeled as upside — it is the baseline assumption inside customer decisions.

D-Drone vaulted to peer status with the AI Era Plan. Management's framing this quarter: "D-Drone, our counter drone business, is scaling beyond our most aggressive assumptions. Bookings are up 500% year over year... D-Drone is now on a similar trajectory as the AI era plan, and it's relevant to every market we sell into." Pairing D-Drone with the AI Era Plan as the two primary growth engines — and explicitly extending it across all four customer segments — repositions counter-drone from defense-adjacent niche to a core platform vector.

International framed as a structural growth driver. Rick's tone this quarter: "We are seeing some of the smaller countries looking at going all in on a national basis, which is kind of a new dynamic... this is rising up to, like, that level, where they're looking at this going, wow, we could sort of leapfrog and become one of the most advanced police agencies on earth because we could just deploy everything with Axon." The "leapfrog" framing — smaller nations adopting full Axon stack rather than building point solutions — is new vocabulary, and it implies international TAM-per-customer is being re-rated upward.

Enterprise moved to discrete-deal disclosure. Josh disclosed "after a 50% year-over-year Q1, in April, our team closed a $40 million opportunity with one of the largest telecom providers in the world." The disclosure of a specific deal size — and the post-quarter timing — signals management wants the Street to start modeling enterprise as a discrete growth vector rather than a future option.

Posture shifted from acquisition-mode to integration-mode. Josh on M&A: "We acquired Fusus two years ago and D-Drone approximately 18 months ago as of Q1. We have now booked over 1.5 times the combined purchase price of those two companies." Booking 1.5x the combined deal price validates the M&A engine, and management's pivot toward integrating Carbyne and Prepared into Axon 911 suggests portfolio breadth is now sufficient — the next 18 months is about realization, not assembly.

Recurring themes management leaned on this quarter:

AI adoption inflection point - moving from early interest to standard capabilityEcosystem compounding effect - unified hardware/software integration creating transformative valueD-Drone as category creator opening doors across all customer segmentsInternational expansion accelerating with cloud and AI adoptionEnterprise market emergence as major growth vectorTrust and ethical AI as competitive moat enabling faster customer adoption

Risks management surfaced:

Geopolitical risks and tariffs impacting supply chain and component costsMemory cost inflation (though management indicated not material to guidance)Competition for key components in growing demand environmentFederal government dependency and shutdown impactsNeed to scale manufacturing quickly to meet D-Drone and AI demand

Answers to last quarter's watch list

Whether Q1 FY2026 revenue confirms the 27-30% trajectory — Q1 FY2026 revenue printed $807M at +34% YoY, comfortably above the high end of the prior FY2026 27-30% guide. Management raised FY2026 growth guidance to 30-32% one quarter into the year. The "floor not stretch" reading is validated. Status: Resolved positively

Adj. EBITDA margin glide path to 28% by FY2028 — Q1 FY2026 adj. EBITDA margin came in at 25.0%, 50bps below the reaffirmed FY2026 25.5% target. Management held the FY margin guide flat despite raising revenue, implying incremental revenue is being reinvested rather than dropping to EBITDA. No evidence yet of the software-mix-driven margin expansion needed to hit 28% by FY2028. Status: Continue monitoring

Future contracted bookings step-up — Bookings landed at $14.3B, down $0.1B QoQ from Q4 FY2025's $14.4B. The Q4 FY2025 +$3.0B step-up did not repeat, and the absolute balance ticked slightly lower. This reverts to the historical cadence and contradicts the structural reset thesis. Status: Resolved negatively

Enterprise customer count progression — Management did not disclose a specific enterprise customer count this quarter, but did quantify enterprise growth at +50% YoY in Q1 FY2026 and called out a $40M telecom deal closed in April plus the upcoming Axon Vision enterprise launch. Disclosure improved on revenue but not on the "one to four to 12" customer-count framing from Q4 FY2025. Status: Continue monitoring

Carbyne and Prepared revenue contribution — Management disclosed cumulative bookings on the Fusus and D-Drone acquisitions exceeded 1.5x the combined purchase price, but did not provide an organic-vs-inorganic revenue split for Q1 FY2026 nor a specific Carbyne/Prepared contribution. Status: Continue monitoring

International mix breaking 20% — International revenue was $161M of $807M total, exactly ~20% of revenue, with growth doubling YoY. Management explicitly framed international as a structural growth vector with smaller-country national deployments emerging as a new dynamic. The cloud-inflection thesis advanced clearly. Status: Resolved positively

What to watch into next quarter

Whether Q2 FY2026 revenue clears the new FY2026 30-32% trajectory — applying the raised FY2026 guide implies the run-rate accelerates from here; a Q2 FY2026 print materially below trend would suggest the raise is back-half loaded.

Adj. EBITDA margin in Q2 FY2026 vs the 25.5% FY target — Q1 FY2026 came in at 25.0%, 50bps light of the FY guide. With CapEx narrowing downward ($25M at both ends), margin should expand in H2; a Q2 FY2026 print still below 25.5% would put the FY2028 28% glide path at risk.

Future contracted bookings trajectory — Q1 FY2026's flat-to-down $14.3B raises the question of whether Q4 FY2025's $3.0B add was a one-time pull-forward. Watch for a Q2 FY2026 step-up of $500M+ to reset confidence; another flat quarter would be a yellow flag against the bookings-as-structural narrative.

Operating cash flow conversion — Q1 FY2026 OCF was -$31.5M; management guides FY2026 OCF to >$600M. That requires ~$630M+ generated across Q2-Q4 FY2026, a steep step-up. Watch the Q2 FY2026 print for evidence that working-capital drag inverts and the inventory build moderates.

D-Drone discrete revenue disclosure — bookings +500% YoY and "similar trajectory to AI Era Plan" warrants a separate revenue line. Watch whether management starts breaking out counter-drone revenue, as they have begun doing for the AI Era Plan (+700% YoY product revenue this quarter).

Enterprise customer count or revenue line — the $40M telecom deal and +50% Q1 FY2026 enterprise growth merit explicit disclosure. Watch the Q2 FY2026 print for either a customer-count update or an enterprise revenue line.

S&S sequential step-up in Q2 FY2026 — Q1 FY2026 S&S printed lighter sequentially with ARR growing +35% YoY to $1.5B. Watch whether the S&S sequential lifts in line with the ARR step-up; a flat Q2 FY2026 would undercut the seasonality framing.

Sources

Axon Q1 FY2026 Press Release / 8-K Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/1069183/000162828026031285/axon-20260506xex991.htm
Q1 FY2026 earnings call prepared remarks
Prior quarter Tapebrief coverage: Q2 FY2025, Q3 FY2025, Q4 FY2025

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