Axon Enterprise, Inc. (AXON) Q4 2025 Financial Results Summary

Released on February 24, 2026, Axon Enterprise, Inc. reported its financial results for the fourth quarter and full year ended December 31, 2025, highlighting notable achievements and future guidance.

---

Key Financial Metrics

• Quarterly Revenue: $797 million, representing a 39% increase year over year.
• Annual Revenue: $2.8 billion, showing a 33% growth compared to the previous year.
• Software & Services Revenue: $343 million, a 40% increase year over year.
• Connected Devices Revenue: $454 million, up 38% year over year.
• Net Income: $3 million, compared to $135 million in the prior year (down 97.8%).
• Non-GAAP Net Income: $178 million, a rise from $168 million, translating to a non-GAAP net income margin of 22.3%.
• Adjusted EBITDA: $206 million, up 46% year over year, with an Adjusted EBITDA margin of 25.9%.
• Operating Loss: $50 million, compared to a loss of $2 million in the prior year.
• Operating Cash Flow: $217 million, a decline from $250 million year over year.
• Free Cash Flow: $155 million.

Dividends and Stock Repurchase

• No quarterly dividend was declared by Axon.
• The report did not mention any share repurchase activity.

Financial Analysis

Revenue Growth

• Total Revenue: Increased by 39% year over year, driven primarily by strong demand for software solutions and connected devices:
• Software & Services: Revenue reflected a significant contribution, with a 40% growth, pointing to higher premium software adoption.
• Connected Devices: Annual revenue from these products surged by 38%, attributed to high demand for key products like TASER 10 and Axon Body 4.

Profitability Metrics

• Gross Margin: At 57.9%, it decreased by 220 basis points year over year, while adjusted gross margin was 61.1%, down by 210 basis points due to increased tariffs and product mix.
• Net Income: Decreased sharply to $3 million from $135 million previously, impacted by strategic investments.
• Non-GAAP Adjusted EBITDA: The substantial increase of 46% suggests strong operational efficiency, despite challenges in achieving overall net profitability.

Future Outlook

• 2026 Guidance:
• Revenue growth is expected at 27% to 30%.
• An Adjusted EBITDA margin target of 25.5%.
• 2028 Targets: Axon aims for $6 billion in annual revenue and an 28% Adjusted EBITDA margin.

Operational Highlights

• Axon’s annual recurring revenue reached $1.3 billion, growing 35% year over year.
• Increased net revenue retention to 125% indicates a strong value proposition to existing customers, with minimal churn.
• Future contracted bookings grew by 43% to $14.4 billion, underpinning a robust long-term revenue stream.

Product Innovations

• Continued investment in AI capabilities with products such as Axon Assistant, enhancing operational efficiency and decision-making for frontline users.
• Significant product releases included Axon Vehicle Intelligence and Axon Body Mini, positioning Axon for growth in various sectors including public safety and enterprise.

Cash Flow Management

• Axon reported a healthy cash position of $1.7 billion in cash and equivalents, with a noted decrease in net debt position of $112 million, highlighting strong liquidity.
• Ongoing investments in technology and infrastructure indicate a commitment to growth despite recent operational challenges.

Conclusion

The fourth quarter of 2025 showcased Axon’s commitment to growth in software and services, while navigating challenges in profitability metrics. The company’s forward-looking guidance suggests continued confidence in achieving substantial revenue growth while maintaining significant investments in technology and innovation. With no dividends or share repurchases noted, Axon appears focused on reinvesting in its business to sustain momentum.

Note: All amounts in the following tables are in thousands.

CONSOLIDATED STATEMENTS OF OPERATIONS	(in thousands, except per share data)
THREE MONTHS ENDED	TWELVE MONTHS ENDED
31 DEC 2025	30 SEP 2025	31 DEC 2024	31 DEC 2025	31 DEC 2024
Net sales from products	$454,209	$405,399	$330,205	$1,576,864	$1,221,292
Net sales from services	$342,515	$305,242	$244,940	$1,202,672	$861,234
Net sales	$796,724	$710,641	$575,145	$2,779,536	$2,082,526
Cost of product sales	$242,442	$203,173	$167,182	$809,303	$618,136
Cost of service sales	$92,987	$80,120	$62,114	$312,108	$223,010
Cost of sales	$335,429	$283,293	$229,296	$1,121,411	$841,146
Gross margin	$461,295	$427,348	$345,849	$1,658,125	$1,241,380
Operating expenses:	Selling, general and administrative	$317,369	$252,803	$227,019	$1,035,893	$741,247
Research and development	$194,044	$176,674	$134,585	$684,308	$441,593
Total operating expenses	$511,413	$429,477	$361,604	$1,720,201	$1,182,840
Income (loss) from operations	-$50,118	-$2,129	-$15,755	-$62,076	$58,540
Interest income	$17,633	$23,941	$7,286	$75,431	$43,693
Interest expense	-$28,819	-$28,912	-$1,825	-$94,238	-$7,098
Other income (loss), net	-$4,933	$22,803	$94,859	$99,857	$286,369
Income (loss) before provision for income taxes	-$66,237	$15,703	$84,565	$18,974	$381,504
Provision for (benefit from) income taxes	-$68,982	$17,889	-$50,619	-$105,682	$4,470
Net income (loss)	$2,745	-$2,186	$135,184	$124,656	$377,034
Net income (loss) per common and common equivalent shares:	Basic	$0.03	-$0.03	$1.77	$1.60	$4.98
Diluted	$0.03	-$0.03	$1.67	$1.51	$4.80
Weighted average number of common and common equivalent shares outstanding:	Basic	78,994	78,416	76,360	78,081	75,748