tapebrief
AXON · Q3 2025
AXON · Q1 2026

AXON · Q4 2025 Earnings

Bullish

Axon Enterprise

Reported February 24, 2026

30-second summary

Revenue grew 39% YoY to $797M in Q4, beating the $750-755M guide by $42-47M, with adjusted EBITDA margin of 25.9% blowing past the ~24% guide by 190bps. FY25 bookings landed at $7.4B (+46% YoY) on the back of Q4 bookings up >50%, and management opened FY26 at 27-30% revenue growth ($3.54-3.61B) with a 25.5% adj. EBITDA margin — plus an unprecedented 2028 target of ~$6B revenue at 28% margin. The bookings acceleration management has been hinting at for three quarters is now structural, not cyclical.

Headline numbers

EPS

Q4 FY2025

$2.15

Revenue

Q4 FY2025

$0.80B

+39.0% YoY

Gross margin

Q4 FY2025

57.9%

Free cash flow

Q4 FY2025

$0.15B

Operating margin

Q4 FY2025

-6.3%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$0.80B+39.0%$0.71B+12.1%
EPS$2.15—$1.17+83.8%
Gross margin57.9%—60.1%-220bps
Operating margin-6.3%—-0.3%-600bps
Free cash flow$0.15B—$0.03B+369.7%

Guidance

Strong Q4 FY2025 beat (revenue +42–47M above guide; margin +190bps) supports confident FY2026 guidance of 27–30% YoY revenue growth at 25.5% Adjusted EBITDA margin.

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

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ4 FY2025$750 million to $755 million$797 million+42-47 million above guideBeat
Adjusted EBITDA MarginQ4 FY2025approximately 24%25.9%+1.9 percentage points above guideBeat

New guidance

MetricPeriodGuideYoY
RevenueFY2026$3,539 billion to $3,609 billion27-30% YoY
Adjusted EBITDA MarginFY202625.5%—
Stock-based Compensation ExpenseFY2026$590 million to $620 million—
Capital ExpendituresFY2026$185 million to $215 million—

Segment KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Software & Services$0.343B+39.8%
Connected Devices$0.454B+37.6%
TASER Revenue$264 million—

Other KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
United States$0.644B+35.3%
Other countries$0.152B+54.1%
Annual Recurring Revenue$1,347 million—
Net Revenue Retention125%—
Future Contracted Bookings$14.4 billion—
Annual Bookings (FY2025)$7.4 billion—
Adjusted EBITDA Margin25.9%—
Non-GAAP Net Income Margin22.3%—
Operating Cash Flow$217 million—

Management tone

Q1 (cautious bookings) → Q2 ("I was off by 50%") → Q3 ("healthiest indicators ever") → Q4 ("lap the field"). The arc moves from defensive recalibration to offensive ambition over four consecutive prints.

Bookings acceleration is being framed as structural, not a single-deal artifact. Two quarters ago Josh walked back his deceleration call after Q2's largest-ever deal; one quarter ago he targeted high-30s full-year bookings growth; this quarter the print is +46% for the year with Q4 alone up >50%. Rick's line — "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" — does the work that a chart would: the new growth baseline is roughly 2x the late-2023 run-rate, and management is anchoring forward expectations to acceleration rather than the prior high-20s CAGR. This is the most direct signal yet that 27-30% FY26 guidance is meant as a floor, not a stretch.

AI moved from "10% of bookings" to the operating model itself. Last quarter management quantified AI at >10% of U.S. state and local bookings — a SKU-level metric. This quarter the AI era plan booked ~$750M (10% of total bookings) and new product bookings nearly tripled to >$1B, but the framing shifted: "By embracing an agentic AI-first operating model, Axon will be even faster... We are positioned to be a winner in this AI-driven environment, and we intend to lap the field." The phrase "lap the field" has not appeared in prior quarter language. Combined with the FY28 $6B target — which implies a ~25% three-year CAGR sustained through 2028 — management is signaling that AI economics will compound, not commoditize.

Privacy and license-plate-reader scrutiny flipped from regulatory risk to competitive moat. This is the cleanest tone reversal of the quarter. Rick: "The industry-wide scrutiny on data privacy and license plate readers is real, and we believe it's a tailwind for Axon... Customers aren't just buying hardware and software, they're buying confidence that will help them deploy technology responsibly. That's a durable competitive advantage." In prior quarters privacy was acknowledged as a risk factor on the risk slate; this quarter it is repositioned as a barrier that disadvantages point-product competitors who can't underwrite the same trust posture.

The hardware-software integration debate is being settled internally. Rick offered an extended first-principles defense of the integrated stack — "As AI increasingly commoditizes software development, the companies with defensible positions are those that own the full stack, including hardware, and we do" — which reads as a response to a multi-year internal argument the CEO is now declaring won. That this argument is being aired publicly, rather than left implicit, suggests management wants the Street to model the hardware drag on gross margin as a strategic feature rather than a structural problem.

Enterprise graduated from "patient build" to "next stone across the creek." Last quarter enterprise was a multi-product narrative; this quarter Rick disclosed "we also solidified our second high-volume U.S. enterprise customer" and framed the customer count progression as "we go from one to four to 12 customers, and each of those is the next stone across the creek." The exponential-curve language is new — enterprise is now being modeled internally as a step-function expansion, not a linear ramp.

Recurring themes management leaned on this quarter:

AI-driven acceleration and market leadership in public safetyIntegrated hardware-software ecosystem as defensible competitive advantageExpansion beyond state/local into federal, corrections, enterprise, and international marketsNew product adoption (AI era plan, Taser 10, Body 4, D-Drone) driving bookings growthMission-driven outcomes (moonshot to cut gun-related deaths in half by 2033)Margin expansion with software growing faster than hardware

Risks management surfaced:

Privacy and data handling missteps could have outsized negative consequencesTariff impacts and inflationary componentry costs including memoryCustomer expectations for continued value delivery outpacing cost of developmentMaintaining innovation pace in AI as competitors gain access to same frontier modelsExecution risk scaling across multiple new markets (enterprise, federal, corrections, international)

Q&A highlights

Jeremy Hamblin · Craig Howell

Given that Axon raised sales growth guidance from 20% CAGR three years ago to 27-30% this year, what is driving this increased confidence? Is it more product offerings and markets, or something else?

Management attributes increased confidence primarily to accelerating bookings growth rates year-over-year, which translate into revenue visibility through future contracted bookings. The combination of larger contracted bookings base, higher NRR, expanding product portfolio, and larger pipeline gives them confidence in hitting higher revenue guidance targets.

Bookings growth accelerating each year to high point last year20% to 25% of future contracted bookings converts in following year5-year normalized bookings accelerating nicely year-over-year27-30% revenue growth guidance for current year vs 20% CAGR assumed three years ago

Joe Cardozo · JPMorgan

Since AI Aeroplan has been in market for over a year, what are customer adoption trends? Is adoption happening in isolation or driving expansion across the broader portfolio?

AI Aeroplan is typically bought in tandem with OSP and newer versions of OSP with additional products, not in isolation. Customer success team focuses on adoption of new products. Management is bullish on future AI adoption and expects new capabilities to be added to the plan in coming months.

AI Aeroplan often bought together with OSP and newer OSP versionsCustomer success team's sole measure is adoption of new productsNew AI products coming to plan in coming months and into next yearMultiple product capabilities being bundled together in customer purchases

Josh Riley · Needham

Was 2025 an inflection point for international business outside Commonwealth countries? What is the impact of Carbine and Prepared acquisitions on current year guidance?

Management views 2025 as potentially an inflection point but emphasizes need to prove it by delivering strong 2026 performance. Carbine closed this month with zero impact to current quarter (not closed until post-quarter). Prepared had only immaterial impact being only partway through quarter. Both expected to significantly impact going forward.

Carbine acquisition closed this month with zero impact to reported resultsPrepared acquisition only partway through quarter with immaterial impact2025 characterized as having 'wind at back' for international businessInternational outside Commonwealth showing signs of becoming bigger contributor

Trevor Walsh · Citizens

Given recent National Defense Act language on state and local drone powers, what regulatory gaps remain for Axon's drone mitigation capabilities?

Management acknowledges regulatory evolution in progress. Currently, state and local have narrowly limited drone mitigation capabilities, but expects broader authority within a few years. Company is building sensor network for future mitigation work. Administration has been open to modernizing drone policy. A specific bill is being pursued to create less-lethal category exempting T-10 from Firearms Act.

Special accommodations for World Cup cities for drone capabilitiesBill in progress to create new less-lethal category exempting T-10 from Firearms ActCurrently state and local drone mitigation is narrowly allowedExpectation that private security, stadiums, and critical infrastructure operators will gain capabilities within few years

Answers to last quarter's watch list

Whether Q4 revenue lands above the $755M high end — Q4 revenue printed $797M, +$42M above the high end of the $750-755M guide. FY25 closed at $2.78B, above the ~$2.74B FY guide. Bookings growth is converting cleanly. Status: Resolved positively
International revenue mix recovery in Q4 — International grew to $152M (+54% YoY) from Q3's $131M, recovering the QoQ absolute decline. Mix sits at ~19% of revenue — back above 18% but still below the Q2 ~20% peak. The cloud-inflection thesis advanced but didn't fully clear the 20%+ bar. Status: Continue monitoring
Adj. EBITDA margin in Q4 vs the ~24% guide — Margin came in at 25.9%, +190bps above the ~24% guide and ahead of Q3's 24.9% rather than compressing as the guide implied. FY adj. EBITDA margin closed in line with the ~25% target. Status: Resolved positively
2026 framing on the Q4 call — Management formalized FY26 guidance at 27-30% revenue growth ($3.54-3.61B) with a 25.5% adj. EBITDA margin — comfortably above the prior high-20s CAGR baseline and only marginally below the FY25 print of +33.5%. Management also established an FY28 target of ~$6B revenue at 28% margin. Status: Resolved positively
AI bookings contribution percentage — AI era plan booked ~$750M, ~10% of total bookings (vs. prior >10% of U.S. state and local). Management did not raise the contribution percentage but did disclose new product bookings (which include AI products and Fusus) nearly tripled to >$1B. Disclosure moved away from a discrete bookings line and toward an operating-model framing. Status: Continue monitoring
Free cash flow inflection — Q4 FCF was $155M, the second consecutive positive quarter after Q2's -$115M, bringing FY25 FCF to $75M. The H2 conversion management implied has materialized, though FY26 CapEx guide of $185-215M (up from FY25's $170-180M) suggests FCF margin pressure persists. Status: Resolved positively

What to watch into next quarter

Whether Q1 FY26 revenue confirms the 27-30% trajectory — FY26 guide implies a Q1 print in the high-$800M to low-$900M range; anything that materially undershoots would suggest the guide is back-half loaded and challenge the "floor not stretch" reading.

Adj. EBITDA margin glide path to 28% by FY28 — FY26 guide of 25.5% is only +50bps vs FY25; getting to 28% by FY28 requires ~125bps of expansion per year for two years. Watch the FY26 quarterly cadence for evidence that software mix is doing the work.

Future contracted bookings step-up — Q4 added $3.0B QoQ to reach $14.4B. Watch whether Q1 sustains a $1B+ QoQ add or reverts to the historical $500-700M cadence; the former would confirm a structural bookings reset.

Enterprise customer count progression — Rick disclosed two high-volume U.S. enterprise customers and a "one to four to 12" trajectory. Watch for explicit customer-count or enterprise-revenue disclosure in the Q1 print; without it, the "next stone across the creek" framing is unverifiable.

Carbyne and Prepared revenue contribution — both acquisitions had near-zero Q4 impact. Watch the Q1 print for the first quarter of full contribution, and whether management discloses inorganic vs. organic growth splits.

International mix breaking 20% — international closed Q4 at ~19% of revenue. With the EU cloud deal now embedded and Rick's NATO-level engagement disclosed for three quarters running, a Q1 print at 20%+ would confirm the cloud-inflection thesis as structural.

Sources

  1. Axon Q4 2025 Press Release / 8-K Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/1069183/000162828026011106/axon-20260224xex991.htm
  2. Q4 2025 earnings call commentary (as referenced in Q&A and tone extractions)
  3. Prior quarter Tapebrief coverage: Q2-2025, Q3-2025

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