Axon Enterprise (AXON) Q4 2025 earnings summary

Executive summary

• Full-year 2025 revenue reached $2.8 billion, up 33% year-over-year, with Q4 revenue at $797 million, up 39% year-over-year.

• Record bookings of $7.4 billion in 2025, with future contracted bookings totaling $14.4 billion, up 43%, supporting high visibility into future revenue.

• Annual recurring revenue surpassed $1.3 billion, up 35% year-over-year, with 95%+ of revenue tied to customers on subscription plans.

• Net revenue retention stood at 125%, reflecting strong customer expansion and retention.

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

Financial highlights

• Adjusted gross margin for 2025 was 62.6%, with Q4 at 61.1%, down sequentially due to tariffs and product mix.

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

• Operating cash flow for 2025 was $217 million; free cash flow was $155 million, with conversion on Adjusted EBITDA impacted by inventory investments and timing.

• Non-GAAP net income for 2025 was $564 million, with non-GAAP EPS of $6.85.

• Software & Services segment delivered a 77.5% adjusted gross margin and accounted for a growing share of total revenue.

Outlook and guidance

• Fiscal year 2026 revenue guidance projects 27–30% year-over-year growth, with Adjusted EBITDA margin expected at 25.5%.

• 2028 targets: $6 billion in annual revenue, 28% Adjusted EBITDA margin, and 60% free cash flow conversion.

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

• Q1 is typically the slowest for bookings and free cash flow due to seasonality, with ramp-up expected through the year.

• No material M&A included in forecast; focus remains on organic growth and tuck-in acquisitions.