Axon Enterprise (AXON) Q4 2025 earnings summary

Executive summary

• Achieved record full-year bookings of $7.4 billion, up 46% year-over-year, and annual revenue of $2.8 billion for 2025, up 33% year-over-year.

• Annual recurring revenue surpassed $1.3 billion, with 95%+ of revenue tied to subscription plans and net revenue retention at 125%.

• Future contracted bookings totaled $14.4 billion as of Q4 2025, supporting high visibility into future revenue.

• Major product launches and acquisitions, including Prepared, Carbyne, Dedrone, and Fūsus, expanded the AI-driven ecosystem and real-time operations capabilities.

• Strong performance across all product lines and international markets, with significant contributions from new AI-powered products.

Financial highlights

• Adjusted EBITDA for 2025 was $710 million with a 25.5% margin; Q4 Adjusted EBITDA was $206 million with a 25.9% margin.

• Adjusted gross margin for 2025 was 62.6%; Q4 adjusted gross margin was 61.1%.

• Software & Services revenue grew 40% year-over-year to $343 million in Q4, with a 77.5% adjusted gross margin.

• Connected Devices revenue rose 38% year-over-year to $454 million in Q4.

• Operating cash flow for 2025 was $217 million; free cash flow was $155 million, with adjusted free cash flow conversion at 12% in 2025.

Outlook and guidance

• 2026 revenue growth forecasted at 27% to 30% year-over-year, with adjusted EBITDA margin guidance of 25.5%.

• 2028 targets: revenue of ~$6 billion and 28% adjusted EBITDA margin.

• Capital expenditures for 2026 projected at $185–$215 million; stock-based compensation expense expected at $590–$620 million.

• Free cash flow conversion expected to average 60% long-term.