AXON · Q2 2026 Earnings

Cautious

Axon Enterprise

Reported August 5, 2026

30-second summary

Revenue grew 35% YoY to $904M in Q2 FY2026 and non-GAAP EPS printed $1.88, with management raising FY26 revenue growth guidance to 32-34% (from 30-32%) on the back of $15.1B in Future Contracted Bookings. But the guidance page tells a second story: operating cash flow (prior >$600M) and free cash flow (prior ~$450M) guides were removed entirely without acknowledgement, adjusted EBITDA margin was reaffirmed at 25.5% despite Q2 printing 26.8%, and while Q2 free cash flow of -$1M represents a meaningful YoY improvement from Q2 FY25's -$114.7M, the H1 FY26 FCF of -$55.6M leaves an enormous gap to close against the (now-withdrawn) ~$450M FY target — the cash-conversion question raised on last quarter's brief remains open.

Headline numbers

EPS

Q2 FY2026

$1.88

+2.2% vs est.

Revenue

Q2 FY2026

$0.90B

+35.0% YoY

+3.2% vs est.

Gross margin

Q2 FY2026

60.4%

Free cash flow

Q2 FY2026

$-0.00B

Operating margin

Q2 FY2026

5.2%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$0.90B	$0.67B	+35.1%	$0.81B	+12.0%
EPS	$1.88	$2.12	-11.3%	$1.61	+16.8%
Gross margin	60.4%	60.4%	+0bps	59.1%	+130bps
Operating margin	5.2%	-0.2%	+540bps	3.6%	+160bps
Free cash flow	$-0.00B	$-0.12B	+99.1%	$-0.06B	+98.2%

Guidance

Axon raised full-year revenue growth guidance to 32-34% from 30-32%, reaffirmed EBITDA margin at 25.5%, and quietly withdrew operating and free cash flow guidance.

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

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue growth rate	FY 2026	30% to 32%	32% to 34%	+2 percentage points at both ends	Raised
Operating cash flow	FY 2026	over $600 million	Withdrawn — no replacement	—	Withdrawn
Free cash flow	FY 2026	approximately $450 million	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Adjusted EBITDA margin (25.5%), Stock-based compensation expense ($590 million to $620 million), CapEx ($160 million to $190 million)

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Software & Services	$0.398B	$0.292B	+36.3%
Connected Devices	$0.507B	$0.376B	+34.8%
TASER	$0.261B	$0.216B	+20.8%
Personal Sensors	$0.095B	$0.093B	+2.2%
Platform Solutions	$0.15B	$0.067B	+123.9%
Dedrone Revenue	$100+ million	—	—

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
United States	$0.742B	—	+38.1%
Other countries	$0.162B	—	+23.5%
Annual Recurring Revenue	$1.639 billion	—	—
Net Revenue Retention	126%	124%	—
Future Contracted Bookings	$15.1 billion	$10.7 billion	—
Software & Services Gross Margin	71.3%	75.6%	—
Connected Devices Gross Margin	51.9%	48.6%	—
Adjusted EBITDA Margin	26.8%	25.7%	—
AI Era Plan Revenue Growth	~700% YoY	—	—

Management tone

Q3 FY2025 ("healthiest indicators ever") → Q4 FY2025 ("lap the field") → Q1 FY2026 ("hyper-exponential") → Q2 FY2026 (raise-and-withdraw).

No transcript was available for this quarter's brief, so tone commentary is derived from the press-release language and guidance framework changes only.

The press-release framing anchors the higher revenue guide to "continued execution against $15.1 billion in Future Contracted Bookings" — a defensible mechanical justification, but notably narrower than prior quarters where management paired the revenue narrative with cash flow and margin ambition. The most consequential tonal shift is what is absent: last quarter's prominent disclosure of FY26 operating cash flow (>$600M) and free cash flow (~$450M) targets has been removed from the current release without a replacement figure and without commentary. In a five-quarter arc where the CEO went from "I was off by 50%" to "lap the field," pulling cash disclosure while raising revenue is the first observable contraction in transparency posture. Whether this reflects working-capital drag from the D-Drone/Dedrone hardware ramp, inventory build for Taser 10, deal-timing on the $15.1B backlog conversion, or something structural cannot be resolved without transcript detail — but it warrants immediate scrutiny on the call replay.

Answers to last quarter's watch list

Q2 FY2026 revenue clearing the raised 32-34% FY trajectory — Q2 printed $904M at +35% YoY, running above the FY26 32-34% guide range and supporting the raise. Sequential growth was +12% QoQ, the strongest sequential print of the last four quarters. The raise is not back-half loaded; the run-rate is accelerating. Status: Resolved positively

Adj. EBITDA margin in Q2 FY2026 vs the 25.5% FY target — Q2 printed 26.8%, +130bps above the FY guide and +180bps above Q1's 25.0%. However, management reaffirmed the 25.5% FY target rather than raising it, implying H2 margin compression of ~130bps from the H1 trajectory. Strong Q2 print, but the reaffirmed FY guide leaves the 28% FY28 glide path unresolved. Status: Resolved positively on Q2 print; FY28 glide path continues to monitor

Future contracted bookings trajectory — Bookings stepped up $0.8B QoQ to $15.1B from $14.3B, clearing the $500M+ threshold flagged last quarter. Q4 FY25's $3.0B add still looks like a one-time event, but the base cadence has re-anchored above the historical $500-700M range. Status: Resolved positively

Operating cash flow conversion — Q2 FY2026 free cash flow was -$1M, a meaningful YoY improvement from Q2 FY25's -$114.7M and a sequential improvement from Q1's -$54.6M — the press release explicitly calls this out as a "meaningful year-over-year improvement." However, H1 FCF stands at -$55.6M, leaving a very large gap to close against the (now-withdrawn) ~$450M FY target, and management removed the OCF and FCF guides entirely without commentary. The trajectory is improving, but the withdrawal of the guides keeps the cash-conversion question open. Status: Trajectory improving; guide withdrawal keeps open

D-Drone discrete revenue disclosure — Dedrone revenue was disclosed at "$100+ million" for the year — the first standalone counter-drone disclosure in the reported history. This is a partial resolution: a threshold rather than a discrete quarterly line, but a clear step forward from Q1's qualitative-only framing. Status: Resolved positively

Enterprise customer count or revenue line — Not disclosed on the print. No customer-count update, no enterprise revenue line, no follow-up on the $40M telecom deal from Q1. Status: Continue monitoring

S&S sequential step-up in Q2 FY2026 — S&S printed $398M vs Q1's $355M, a +$43M QoQ step-up (+12% sequential), in line with ARR growing +$146M QoQ to $1.639B. The sequential lift materialized. Status: Resolved positively

What to watch into next quarter

Whether OCF and FCF guides are reinstated on the Q3 FY26 print — silent withdrawal is the single most consequential change this quarter. Watch for either (a) a reinstated FY26 cash flow guide with a lower dollar figure than the prior >$600M / ~$450M framework, which would confirm cash compression, or (b) continued silence, which would be a stronger yellow flag.

Q3 FY26 free cash flow vs Q3 FY25's positive print — Q2 FY26 FCF was -$1M, a meaningful improvement from Q2 FY25's -$114.7M. The trajectory is improving, but H1 FY26 FCF of -$55.6M means H2 must generate materially positive free cash flow to approach any reasonable FY target. Watch the Q3 print as the key inflection.

Adj. EBITDA margin in Q3 FY26 vs the reaffirmed 25.5% FY guide — Q2 printed 26.8%. For management's decision to hold the FY guide at 25.5% to make sense, Q3 or Q4 must compress meaningfully. Watch for a Q3 print in the 24-25% range, which would validate the reaffirmed FY guide but raise questions about margin durability into FY28.

Personal Sensors growth stabilization — Q2 decelerated to +2.7% YoY and -12% sequentially. Watch whether this is a compare artifact or a signal that body camera hardware is saturating; a sub-5% Q3 print or a second consecutive sequential decline would suggest structural saturation in existing accounts.

Future contracted bookings step-up above $16B — Q2 added $0.8B to reach $15.1B. A $500M+ Q3 add sustaining the recovered cadence would consolidate the structural-bookings-reset thesis; a flat print would revive the pull-forward concern.

Dedrone quarterly revenue disclosure — "$100+ million" is a threshold, not a line. Watch whether management adds counter-drone as a discrete quarterly revenue line alongside Platform Solutions.

Enterprise customer count — this is now the second consecutive quarter with no enterprise disclosure improvement despite the $40M Q1 telecom deal. Watch for either a specific customer-count print or an admission that enterprise disclosure has been deferred.

Sources

Axon Q2 FY2026 Press Release / 8-K Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/1069183/000162828026053363/axon-20260805xex991.htm
Prior quarter Tapebrief coverage: Q2 FY2025, Q3 FY2025, Q4 FY2025, Q1 FY2026

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