Axon Enterprise Inc. reported fourth‑quarter 2025 results that surpassed expectations, delivering revenue of $796.7 million—an increase of 38.5% year‑over‑year—and adjusted earnings of $2.15 per share, beating the consensus estimate of $1.60 by $0.55. The earnings beat was driven by robust demand for the company’s AI‑enabled software, particularly the Draft One and Axon Assistant platforms, and by disciplined cost management that preserved margin despite higher input costs.
Segment‑level data show that Software & Services revenue rose to $343 million, up 38% from the same quarter a year earlier, while Connected Devices revenue fell to $453.7 million, a decline driven by a shift in product mix and the impact of a new 15% global tariff. The mix shift and tariff exposure contributed to a modest compression in the Connected Devices gross margin, but the high‑margin Software & Services segment helped keep overall adjusted EBITDA margin at 25.5%.
Management guided for fiscal 2026 revenue of $3.53 billion to $3.61 billion, representing a 27%‑30% increase from the prior year, and maintained an adjusted EBITDA margin of 25.5%. The guidance reflects confidence in continued AI adoption, enterprise expansion, and the integration of recent acquisitions such as Prepared and Carbyne, all of which are expected to accelerate bookings and revenue growth.
CEO Rick Smith emphasized the company’s AI focus, stating, "Nobody should be more aggressive or more thoughtful on AI than Axon. If we get that balance right, we won't just be a vendor, we'll be the partner our customers can't imagine operating without." He also highlighted Draft One as the fastest‑growing product, saying, "Man, we knew we had a hit on our hands: Draft One is the fastest growing product or service we have ever launched." CFO Brittany Bagley noted that the company has baked in the new 15% global tariff without assuming refunds until the process is clearer, underscoring the firm’s readiness to manage tariff headwinds.
Investors responded positively to the results, citing the strong earnings beat, accelerated bookings—annual bookings grew 46% to $7.4 billion with future contracted bookings reaching $14.4 billion—and the steady guidance for revenue and margin. The market’s reaction reflects confidence in Axon’s high‑margin software and AI strategy, its ability to navigate tariff and mix challenges, and its expanding enterprise footprint.
The earnings beat and guidance signal that Axon’s integrated hardware‑software ecosystem is delivering sustained growth, while the company’s focus on AI and enterprise markets positions it to capture new revenue streams and maintain a competitive edge in the public‑safety technology sector. The company’s backlog and bookings provide a clear view of future revenue, reinforcing the outlook for continued expansion and margin stability in the coming years.
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