Axon Enterprise (AXON) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue reached $807.3M, up 34% year-over-year, marking the ninth consecutive quarter of 30%+ growth, driven by strong demand across product lines including AI and counter-drone solutions.

• Net income was $169.3M (21% margin), with non-GAAP net income at $133M and Adjusted EBITDA at $202M (25% margin).

• AI product revenue grew over 700% year-over-year, with counter-drone product revenue up over 300% and rapid adoption across large agencies and international markets.

• Platform Solutions revenue rose 95% year-over-year, reflecting rapid adoption of Dedrone and related technologies.

• International revenue more than doubled, now representing 20% of total revenue.

Financial highlights

• Gross margin was 59.1%, down 150 bps year-over-year but up 120 bps sequentially; adjusted gross margin was 61.6%.

• Software & Services revenue grew 35% to $355M, with Connected Devices revenue up 33% to $453M, and Platform Solutions up 95%.

• Annual recurring revenue reached $1.5B, up 35% year-over-year; net revenue retention was 125%.

• Future contracted bookings climbed 44% year-over-year to $14.3B.

• Adjusted EBITDA margin was 25% in Q1, with a full-year target of 25.5%.

Outlook and guidance

• Full-year 2026 revenue growth outlook raised to 30–32% (from 27–30%), with Adjusted EBITDA margin guidance maintained at 25.5%.

• Expected full-year operating cash flow over $600M and free cash flow around $450M.

• 2026 stock-based compensation expected at $590–$620M; CapEx projected at $160–$190M.

• Free cash flow conversion expected to improve, despite inventory investments.

• Management expects to recognize 20–25% of $9.7B in remaining performance obligations over the next 12 months.