管理層發言
Hello everyone, and thank you for joining Axon's executive team today for our second quarter 2026 earnings conference call. Before we get started, I'll note that our remarks today are intended to build upon our most recent shareholder letter and investor materials, which you can find on our investor website at investor.axon.com. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our expectations as of today and are not guarantees of future performance. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially, as discussed in our SEC filings. We will also discuss certain non-GAAP financial measures. Descriptions and reconciliations of non-GAAP to GAAP are included in our shareholder letter and available on our investor website. As always, before we kick it over to Rick, we have a quick video to get us started. Let's pull it up.
All right. Thank you, Erik, and great job to the team. I love those videos; they just get me pumped up. I'm lucky to get to work here. I'd like to thank all of our analysts and investors who are joining us today. As you can see, we had another record quarter. Again, I was just looking at the numbers, 39% — wow, okay. We had a record quarter, and I could not be more proud of this team. None of it happens without our customers. You guys are the foundation, and we can't do any of this without you. This morning, my Cybertruck drove me to work. I sat behind the wheel and never touched it. A few years ago, that was a keynote fantasy. Today, it's my commute. I've stopped noticing — that's how this goes, right? The impossible becomes remarkable, and then it becomes Tuesday. Two days ago, OpenAI announced an unreleased model had solved 10 open problems in mathematics, problems that the best mathematicians alive have been stuck on for decades, one of them unsolved for at least 27 years. The compute cost to do all this, to do 10 of these unsolved PhD-career-level problems, was $2,000, or $200 per problem. For many years, the critique was that AI, sure, it could remix human work, but it can't create anything new. Well, that critique is finished. A Fields Medalist, which is math's highest prize — it's been called the Nobel of math — said he would have published a comparable result without hesitation, and there are many who said any of these problems might on their own have qualified a human had they solved it for the Fields Medal. Within a day, a model from another lab had reproduced half of the list, meaning it could solve half those problems on its own. This isn't about one company getting lucky; the whole field just crossed a line at once. The cost of an original breakthrough has just collapsed. Why does this belong on an Axon earnings call? Because an idea on a page is not an outcome on a street. Every one of these models perceives the world largely through strokes on a keyboard. When Axon deploys AI, we perceive the world through the largest connected network of sensors in public safety — millions of eyes and ears already in the field, already running and built for this moment. The intelligence doesn't replace the person, the human making a decision or making the call, but we hand them a clearer picture of what's happening in the seconds that matter most. Then it does the one thing software alone can never do. It acts. A TASER device can stop a violent incident without taking a life. Drones and robotics let us send a machine where a person would otherwise have to go, and both do the same thing. They lower the risk for everyone: the officer, the bystander, and the person that the police were sent to stop. Every person is safer. See it, understand it, act on it. This is the chain of events. It's the same chain that drove me to work this morning, right? Software alone can't close it. Hardware alone can't. In public safety, Axon holds every link in this chain. When we changed our name from TASER to Axon, we were very specific about that. An axon is the nerve fiber that carries the signal from the senses to the brain and the decision from the brain back out to the body so it can act. We didn't pick a name that just sounded good. We picked a description of what we were building, and we've been busy building it. At the edge, sensors can see what's happening, whether it's body cameras, drones, fixed and in-car cameras, license plate readers, 911 AI assistants. Behind them is the largest customer-controlled data repository in public safety. AI and real-time operations can turn these signals into understanding, and then the means to act: TASER devices, drones, communication, training. At the heart of it, of course, is our mission to protect life. This doesn't just add up, it compounds. Every sensor adds a signal. Every workflow adds context. Every outcome improves the next one. Brookhaven, Georgia shows you exactly what this looks like when you connect it end to end. Drones on the scene in 53 seconds; coverage across 96% of their city; burglaries down 45%. No single product on the list produces these numbers. The system does. Data shouldn't sit trapped in a silo waiting for someone to find it. It should move securely through the workflows where it does something: a city's cameras to its 911 center, to its officers, to real-time intelligence. It's evidence to the courtroom, a frontline worker in danger to help that arrives in seconds. All of this depends on trust. We've earned that over years of stewarding our customers' data and never treating it as our own. We'll keep deploying this technology responsibly and thoughtfully alongside our customers and their communities, with people at the center of every critical decision. In public safety, power without trust isn't an opportunity, it's a liability. I see this coming together everywhere I look. A few weeks ago, a customer bought body cameras for municipal employees, not for the police, for building inspectors. A few weeks before that, some of our largest enterprise pilots began putting Axon Body Mini on frontline workers. During the World Cup, our ecosystem supported agencies across North America through one of the most complex public safety missions in the world. Where we sit today, the world is being flooded with intelligence. What's scarce is intelligence connected to the real world, trusted by institutions that depend on it, and aimed at problems that matter. That's what we've spent 30 years building. There is no company better positioned to benefit from the intelligence explosion than Axon, and through us, our customers and their communities for whom we operationalize this intelligence with physical hardware and thoughtful design and controls to help maximize benefit with appropriate oversight. What an exciting time to be alive, and an even better time to be at Axon. With that, I'd like to turn it over to Josh Isner.
Thanks a lot, Rick, good afternoon, everybody. As Rick said, we can't do any of this without our customers. Every day, our focus is on delighting them, because when we do that well, everything else follows. We also can't do any of this without our team. They have embraced our mission and are working hard every day to deliver outsized societal outcomes. There have been many of those in the last few months, including on the biggest stage in sports. I am so proud of the Dedrone team for their work to support the World Cup. This was one of the most complex and comprehensive installations we've ever worked on. The expectations were clear: simultaneous delivery and activation across 11 U.S. host cities, more than 50 additional sites and surrounding areas, international deployments, multiple agencies with very little margin for error. The team executed with incredible precision; I believe this deployment further established Axon as the technology leader in public safety. Dedrone is delivering tremendous growth, and the opportunity continues to expand across state and local public safety, international, federal, enterprise, and corrections. It is also one of the areas where we're investing most aggressively; the team is earning that investment. This is a business that was still in its infancy just a year ago and is quickly becoming one of our largest product lines, surpassing $100 million in quarterly revenue. Next, I want to give a shout-out to our international team. International bookings came in at roughly three times the prior year in Q2, driven by several large deals. What's especially exciting is some of our international customers are adopting our newest offerings right alongside our core products. In fact, they may be even moving faster than some of our U.S. customers. Three of our top five AI Era Plan deals in the quarter came from international customers. We're also seeing international markets fuel expansion in TASER. In Q2, we won a TASER 10 deal in the Middle East comparable in scale to our largest current U.S. state and local deployment, and another in Europe comparable to a top-five U.S. agency deployment. These are massive opportunities showing up more and more, and we're just starting to scratch the surface. State and local public safety and corrections continues to show strength as well. We signed not one, but two nine-figure agreements with major cities in the quarter. One of those was our largest-ever individual TASER order. We also signed two eight-figure agreements with major state corrections customers. And another groundbreaker: our first full-scope Axon 911 customer. This customer will deploy a combined Prepared and Carbyne solution to power the call-to-closure vision we laid out when we announced these acquisitions, committing to that future just months before both deals closed. Lastly, in the U.S., we continue to see more and more customers who bet on other vendors coming to Axon for body camera pain relief. We expect body camera shipments to be up 20%-30% sequentially in Q3 and 15%-20% quarter-over-quarter. The success across markets led to our TASER volume being the highest in a quarter to date. We've now booked more TASER 10 units than we booked over the lifetime of TASER 7, with a ton of pipeline still in front of us. That may sound crazy for a product category that has been around for three decades. Well, it's real, and it speaks to how much opportunity remains. Next, enterprise: we've been talking about this moment for a long time, the point when those early conversations and pilot programs begin converting into meaningful enterprise deployments. That moment is here: enterprise bookings were also up about 3x from a year ago, and the volume of opportunities continues to grow. Last but not least, I'm excited to see our federal business showing a lot of promise. We are engaged in opportunities across the federal civilian space, and the team is executing with intensity as we approach the end of the fiscal year. Federal was part of the story with Dedrone in the World Cup, and we also closed a major deployment of Axon Assistant with a federal agency on our body cameras because they are using them as body cameras. Just yesterday, we were named one of the participants in the $1.5 billion DHS program for Counter-UAS. I am looking forward to talking more and more about our progress in the federal space. As far as bookings go, every indicator I'm watching looks as good as it ever has. Q2 gross bookings were up 20%. That's on top of nearly 50% bookings growth in Q2 last year. On a five-year normalized basis, which adjusts for contract duration, bookings were up even more, over 30%. That matters because some of our newer markets, like international and enterprise, sign deals in the 1-to-5-year range, compared to some of the 10-year agreements we sometimes sign with state and local customers. Normalizing for duration gives us a clear view of the underlying demand across markets. As I review the pipeline, I see a clear line of sight to finishing the year in the 30% range of normalized bookings. Before I hand it over, I want to spend a minute on how we're operating internally, because this kind of execution doesn't happen by accident. A little over a year ago, we began flattening the organization to empower people closest to the work, reducing layers of friction and moving faster. We paired that organizational change with disciplined investment in AI tools for our teams. We didn't rush to deploy every tool or ask people to use AI for the sake of using AI. We rolled it out deliberately, and we focused on where it can make our people more effective. That has evolved into regular hackathons and recognition for teams finding new ways to move faster and spend more time on the work that matters. We're seeing that operating model pay off in execution. I believe that discipline is a big part of why we've continued to raise our own expectations while navigating supply chain disruptions, higher component costs, and tariffs, all while scaling to meet demand and never missing a beat for our customers. It is coming together nicely: the team is earning it, the mission is fueling them, our customers can see it. We are investing in Axon, and they are investing in Axon as their trusted technology partner. We are a next-play organization. We are stacking next plays like never before. With that, I'll turn it over to you, Brittany.
Thanks, Josh. We continue to see the power of the Axon Ecosystem. We're not just one product, but a system that all works together, getting better all the time to solve real problems for our customers. From before a call comes in to during an incident to closing a case, the sensor, software, and data work together. This is what you're seeing in our results. Revenue was $904 million, up 35% year-over-year, marking our 10th consecutive quarter of growth above 30%. The demand remains broad-based: software and services revenue increased 36% year-over-year to $398 million. Axon Evidence remains the backbone of our software business and the secure data foundation powering the vision Rick described. Increasingly, our newer software offerings are also meaningful contributors. More than one-third of our software revenue now comes from offerings beyond our core Evidence platform, consisting of real-time operations, which includes Fusus, productivity applications, including Records, the AI Era Plan, counter-drone software, and Axon 911. Together, that part of our software business grew roughly 70% year-over-year with the AI Era Plan a true standout, growing almost 700%. These businesses are still in early innings. That breadth is supporting strong expansion within our customer base. Net revenue retention reached 126%, and annual recurring revenue increased 39% to $1.6 billion. Our software, fed by sensors and enhanced by data, is a core pillar for our customers' workflows. We're enhancing these with AI, and the numbers continue to show that this is sticky and growing. On the devices side, connected devices revenue grew 35% to $507 million, primarily driven by Dedrone, counter-drone, TASER 10, and Axon Body 4. Platform solutions revenue grew 123% to $150 million, with Dedrone driving much of that performance. Counter-drone was a new category for Axon added at the end of 2024, and it has quickly become a consistent contributor to our results, validating our acquisition strategy alongside our organic product development. We continue to see strong demand across customer markets and expect the business to continue to scale. TASER 10 remained a standout in the quarter, as Josh highlighted. Turning to margins, adjusted gross margin was 62.9%, up 130 basis points sequentially. This increase in gross margin was primarily driven by tariff refunds, partially offset by increased mix from newer product offerings, which are still scaling. Adjusted EBITDA was $242 million, or a 26.8% margin. Operating cash flow improved to $20 million from an outflow of $92 million in the prior year. This resulted in a free cash flow outflow of $1 million and reflected continued efforts around free cash flow conversion while still making substantial inventory investments to support customer demand and reduce supply chain risk as we scale. We continue to have line of sight to strong free cash flow generation consistent with our Q1 guidance of $450 million for the full year, with strong seasonality expected in the fourth quarter. As we've noted before, we also expect long-term free cash flow conversion to improve from these levels but need to get through this period of inventory investment, which we expect to moderate after this year. Future contracted bookings grew more than 40% year-over-year to $15.1 billion, reflecting the broad-based momentum we're seeing across products and end markets. As Josh mentioned, we continue to feel very good about the momentum we're seeing in the second half of the year. We're raising our full-year revenue guidance to a range of 32%-34%, 200 basis points above our prior range of 30%-32%. Based on the strong demand pipeline and results in the first half, we expect seasonality similar to last year, where Q4 is our strongest quarter, both in terms of revenue and year-over-year growth. We continue to expect full-year adjusted EBITDA margin of approximately 25.5%. We received a refund in Q2 for tariffs. We are also facing increasing component costs for the year, especially on memory, which leaves our full-year guidance unchanged. We expect Q3 adjusted EBITDA margin to reflect the impact of those memory costs with no benefit from tariff refunds before we scale margins back in Q4 to these levels to hit our full-year target. We are also thrilled with the performance of our counter-drone segment. As we scale this and other new businesses rapidly, we are absorbing the mix impact. Over time, these are well worth the investment on the bottom line as well as the top. There are a lot of moving pieces in our business; we continue to deliver for our customers, our shareholders, and our employees and are very proud of our results this quarter. As you think about a rule of 45, we delivered above 60 and are looking forward to continuing to drive a strong second half of the year. With that, I'll turn it over for questions.
Thanks, team. I think we're all up in gallery view. We have one note today: we're going to try to take one question, and then if we have time, we'll come back to everyone around the circle. We're going to start with Meta Marshall at Morgan Stanley.
分析師問答
Great. Thanks so much, congrats on the quarter. I guess, Rick, I wanted to ask: as customers gain comfort with AI, where are your customers asking you to innovate around? Are there any areas where you're still finding any resistance from customers?
Well, sure. Change is always hard; this is a very risk-averse customer base when it comes to tech. I would say actually some of the new areas we're being asked a lot about are around privacy and data security. I'm sure you all have seen the DeFlock movement, which has some broader anti-surveillance sort of momentum. For me, this feels a bit familiar — like when TASERs first came out, there was a massive backlash. I view this as part of the birthing process that almost any new real technology in public safety is going to go through an adjustment period. The critics aren't all wrong. There have been some mistakes that could have been handled better in terms of data privacy and security — a couple high-profile uses where police employees were abusing their access to license plate reader data to do things like track an ex. Those are exactly the sorts of things where I think our approach to data privacy, where we have a critic-based system and we bring in critical thinkers who are going to challenge us early, matters. I think we're about to post a new episode of the Boldly Go podcast with a couple folks from our Ethics and Equity Advisory Council. I think that's become a real superpower. Like our customers, when we talk about trust, it's not just hand-wavy. We've hit a point where our trust with our customers is an incredibly valuable and fragile asset. If we break that trust, it would be very damaging to the overall business. If we protect, cherish, and continue to earn that trust, it makes our business more durable. I would say we're seeing a significant number of agencies want to come over to Axon and convert from existing license plate readers to us specifically because of the controls and privacy work that we've done around the space. For example, one of the things we're doing is we'll be building AI tools to watch for anomalous search behavior so that we're monitoring for potentially abusive patterns when people have access to the data. I would say in general, where there are concerns about AI, we just have to be thoughtful and understand those concerns and say, 'Look, this is a tool to amplify human ability, not to replace human judgment.'
Maybe just to add, I think you asked about where the demand is. I think there are three broad themes that are always present. Number one: anything that helps them get response faster and more effective. Number two: anything that helps save officer time to give them more time to do their jobs in the community. Number three: anything that drives officer and community safety directly. Across all of our lines of business and all the investments you see us make in AI, almost all of them line up directly on those three broad categories.
Thank you, Meta. Up next we have Michael Ng at Goldman Sachs.
Hey, good afternoon. Thanks for the question. I just have two as well. First, on the momentum that you're seeing in Dedrone and counter-drone: maybe you could talk a little bit about other use cases that you're seeing beyond the World Cup. I think it's natural for some people to think that you guys saw some outsized demand because of the event. What are some of the other private infrastructure and other use case demands that you're seeing on a go-forward basis to give you confidence around that greater than $100 million quarterly revenue run rate? Second, on professional services within software and services: historically we've thought of that as tied closely to fleet. I would imagine there are much broader use cases for professional services now. Just wondering what drives that use case.
Let me take the first one, then I'll let Jeff take the second one. Counter-drone: there's a war going on in the Middle East and the one in Russia where you can see what Ukrainians have been able to do to certain warehouses; now they're being targeted. The Iranians are threatening to go after American infrastructure and data centers. These aren't confined to just tools of war. Our customers get it. I think the World Cup was certainly an accelerant. Every data center understands, especially with the rising controversy around data centers, that any disgruntled person with a 3D printer, access to a drone, and the internet could build something that could cause real problems. I think anyone who's prone to gun violence could be prone to drone violence. It's not just us saying that. Our customers broadly — even in enterprise — have deployments at CEOs' houses as part of their security protocol. We're seeing it at data centers and corporate campuses. It's at the World Cup now, but I think it's going to be at every Friday Night Football game in five or ten years. The World Cup was certainly a surge, but it's part of just a normalizing acceptance that there's a three-dimensional aspect to safety that we need to be able to address.
I'll add a little bit to that. Michael, thanks for the question. Ultimately, one of the more exciting things about our Dedrone business is, yes, federal is a piece of it, but we're seeing far more opportunity internationally. I would not tie much of our Dedrone revenue to one specific event. Those trailers, for example, that we sent to the World Cup are already being repurposed by the customer for other use cases; we certainly expect the Dedrone demand to endure. Now, it's important to recognize that these are large revenue shipments of hardware, so quarter to quarter they can swing a little, but when you add it all up, I don't think it'll look like the World Cup was an outlier. On top of that, as Rick said, right now it's really enterprise, federal, and international; as drone mitigation becomes legalized for state and local, again, we view that as another potential surge in demand. We're feeling really good about Dedrone beyond the World Cup. Now, second on professional services: we view this as an enabler to customer happiness, but also to customer usage of our products. A couple of years ago, professional services meant show up and deploy body cams or TASERs or integrate to a records system. Now professional services are showing up and starting to build things on site for customers using our AI tools.
Very much like some other companies in other markets, we really view the opportunity here to start to delight our customers with more and more on-site solutions that could be rapidly built and custom deployed. Professional services will certainly be a strategic enabler to more usage and more purchases of products.
Thanks, Mike. Up next, we have Jonathan Ho at William Blair.
Good afternoon. Really appreciate the additional disclosure on your five-year annualized deals. One thing I would like to understand a little bit better: when you commented about the nine-figure deals that you signed with municipal police, some of these are likely longer-term deals. Can you help us understand, first, how much you've really expanded with these customers versus prior deals and what this potentially looks like as you broaden your engagement with the entire customer base? Thank you.
Sure thing. I think it's following a trend that we expect to see in a lot of places. It's what we've talked about with the idea that we sell products, we delight the customer, then we earn the right to sell more. Ultimately, I think that's what's happened in those couple large deals, and they are meaningful deployments or expanded deployments of our products. It's not simply a renewal. Oftentimes there's more hardware and a lot more software in those deals. I think it's something we can start to see internationally here and there as well, potentially this year. Ultimately, our bookings — I feel equally good about them as I did at this time and on this call last year. We're very excited to see how we got out of the gate in the first half of the year. I was just at our sales summit all week in Scottsdale and talking to our state and local team, and the attitude is we're expecting a really massive second half of the year, especially like last year, a little more weighted toward Q4, but certainly plenty of room for growth. When you add it up, we'll be in the 30% range again for bookings. So we've got it all in front of us, and now it's time to go do the work.
Thanks, Jonathan. Up next we have Trevor Walsh at Citizens.
Great. Thanks, Erik. Thanks for taking the questions, team. Josh, great to hear about the full-scope Prepared and Carbyne deal that you signed. That seems a little bit counter to how you guys set up the go-to-market there in terms of landing more with the Prepared use case of bringing some AI capability then shifting to Carbyne later, which is more of a larger lift-and-shift of larger systems and databases. Are we seeing maybe an early trend that that's now changing and people are going to go whole kit and caboodle from the outset and then follow on to that? If and when they do that full-scope deal, what's the uplift look like, generally speaking, if a customer already has some flavor of maybe an OSP type of bundle? Thank you.
Sure thing. The one thing that's becoming apparent to us is customers are actively looking for alternatives in 911, and we're excited that we're in exactly the right place to help them by virtue of the Prepared and Carbyne acquisitions. One of the things we did early on, to your question, Trevor, is when we acquired Carbyne, we actually integrated them into Prepared, not into Axon. Now this apparatus is Axon 911, and now we are seeing a little more combination in certain places of the desire to do both of these at once. That's the beauty of it, right? Some customers are going to be ready for that, but a lot of customers are going to buy one or the other up front with a clear intention of moving away from their current vendors. I am wildly bullish on the 911 space and our ability to win there. The APCO conference was this week, and our Prepared team was telling us how much momentum they're picking up and how universally they're hearing that more alternatives and competition in that market is welcome, and we're excited to compete.
Thanks, Trevor. Up next we have Joseph Cardoso at J.P. Morgan.
Hey, good afternoon. Thanks for the question. Maybe wanted to touch on the body camera shipments commentary that you made in terms of sequential growth going into Q3. First question: any way you can contextualize the growth that you're seeing from there and maybe bifurcate it between Axon Body Mini and Axon Body 4? As a second part to that question, I'm curious how you're thinking about the Axon Body Mini rollout now that it's at GA. I think your expectations around adoption, at least in terms of some of the early conversations, was more measured and thinking about it as more of a tranche deployment. Some of the early data points in your prepared comments as well as in the presentation material seem like things could be moving a bit faster and more widespread. Is that a fair read and how should we think about it? If there are any limitations we should keep in mind, let us know.
Thanks, Joe, and thanks for hosting us at your conference a couple months ago. Ultimately, on the body cameras, I wouldn't consider Axon Body Mini as a big driver of that guidance I mentioned for next quarter. I think there's some in there, but the real story is we are winning in public safety across all of our markets. There's a few different flavors of those deals: renewals, expansions, and win-backs, where more and more customers that made a different decision up front are migrating to Axon. So I think it's every bit as much a commentary around U.S. state and local as it is enterprise. Then, of course, international is also showing real signs of life. As it's been reported publicly, we've got some exciting federal opportunities in the body camera space as well. I think hitting on all cylinders, and certainly very pleased that this late in the product's life cycle, we continue to see so much demand from so many different places. I don't want that to be mistaken for a lack of demand in U.S. state and local — it's certainly there. The last thing I'll say is on the quarter-to-quarter shipments, remember body camera shipments are a function of our bookings. In Q1, we tend to have seasonally the lightest quarter in bookings of the year, and thus when we ship those — since a lot of the deals come in late in the quarter — we ship them in Q2. That's a reflection of Q1 bookings. As we go through the year, you should certainly expect those body camera shipments to pick up and I think if I were betting, I'd say it'd be closer to 30% sequentially next quarter versus this quarter; we are giving the range of 20%-30%. On Axon Body Mini, it's driving a lot of interest. We've kicked off a number of trials with AB Mini that are starting to gain momentum, with brands you've heard of in the market. It does take time. Ultimately, we need to succeed in trials, capture initial orders, and then the second cycle of expansion is where we see the highest volume. Right now it's about seeding the market in a number of different large enterprises with maybe even hundreds of body cameras per deployment, even though some will certainly be in the thousands. Then building from there, as more interest comes online with Fusus, Outpost, and Evidence, and with a number of enterprise customers.
Thanks, Joseph Cardoso. Up next, we have Keith Housum at Northcoast Research.
Yep. Good afternoon, guys. In terms of Outpost and Lightpost being out there for several months now, perhaps you can touch on what you're seeing in terms of adoption. We saw some takeaways in the quarter. Talk about success there and the lineups that you guys have.
Keith, in the first half of 2025, I believe our Outpost and Lightpost bookings were somewhere around single-digit millions. From the second half of last year through the first half of this year, a full rolling 12 months, we're right around $100 million in bookings already in Outpost and Lightpost. That business is certainly growing. We're very proud of how we've built these products, keeping privacy and information security, auditing, and all the accountability features around how this data is used. We're very proud of what we've built there, and we think that is a major tailwind to adoption of these products. Customers are looking for an alternative to what they've been using historically, and they're seeing a responsibly built product that protects everybody with Outpost and Lightpost.
Great. Thanks. I'll keep it simple there. Thanks, guys. Up next, we have Andrew Sherman at TD Cowen.
Great. Hey, guys. Good to see you. Josh, great to hear the international commentary, especially the three big AI deals. Were you surprised by the early action there? What is really turning the light bulb on for them with some of the newer products, including AI? Are there more of these in the second-half pipeline?
The second-half pipeline is full with a lot of exciting international opportunities. In terms of what they're seeing internationally with the AI Era Plan, I'd point to a couple things. Number one, we've enabled Draft One in more markets now, and that is picking up a lot of steam. That does take some work because reporting is different in every country. There's some work to bring countries online, and that work has happened and continues to happen. The second is the translator. Whenever people are speaking two different languages, the real-time translator via the Axon system is driving a lot of the interest there as well. Our international team has made tremendous progress. The quality of the team, the work ethic, the delivery — everything it takes to build an exciting business internationally — has been outstanding. Not a lot surprises me about our sales teams these days. They're pretty effective.
Great. Thank you. Up next we have Brenden Rogers at Wolfe.
Hey, guys. Thanks for taking my question. In the past, you've talked about longer sales cycles for AI and the OSP bundles with bigger price tags. Are those cycles shortening now that the products have been in the market for longer and customers are more familiar? Are you noticing these conversations still taking a long time, and maybe that's driving some of the more budget-flush conversations?
In terms of timing, I don't know that there's a material difference because ultimately, even when we were selling TASERs standalone 15 years ago, you still have to go through a government procurement process to buy something. I would say if anything there's more acceptance of the products up front, but it's offset by the sheer size of some of these deals. When you're up at these levels of contract value, you do have several approvals and a lot of contract negotiation. The team had a fantastic Q4 last year and got out of the gate fast. While delivering the results you've seen in the first half, they've rebuilt the pipeline for the second half. A lot of the work we've done in the first half you'll see come through clearly in Q4 this year, with another massive bookings quarter and some build-up to that in Q3. I'd say everything generally within a year, but you still have to go through the process, and our team's become very good at that.
Thanks, Brenden. Up next we have James Fish at Piper Sandler.
Hey guys. Maybe just on Dedrone, nice to see the greater than $100 million. Clearly a lot of momentum around counter-drone generally. First, is there a way to think about how much of the DHS contract you guys are looking at? Secondly, Rick, how are you thinking about the strategy here between moving beyond Dedrone and into other mitigation and prevention strategies with that counter-drone business? Thanks, guys.
On the $1.5 billion DHS contract, it's still a little unclear how much of that will be captured, but the important thing is out of roughly 55 or 60 applicants for that contract, a handful were selected, including us. I think that very much legitimizes the offering. This DHS initiative isn't the only way money will be spent on counter-drones. I would expect we'll capture a portion of it, and it also enables more sales across federal, and equally across state and local and international.
For me, this is a very fluid space moving quickly. Today, state and local are just getting the ability to begin to do mitigation, such as jamming or cyber takeover of a drone. With more advanced drones that are AI-driven or flown with a fiber optic cable, jamming and cyber takeover won't work; you'll need physical ways to stop the drone. We've had ongoing partnerships and discussions with teams in Ukraine and other countries on what types of interceptor drones or other interception methods to use — everything from nets to lasers and different ways to mitigate drones. We view Dedrone's footprint as being the best connector: we partner with best-in-class vendors across a variety of different approaches, create the best overall user experience, and move at the speed at which drone and counter-drone technology is moving. We don't think any one hardware vendor is going to be able to keep up and win. Having a great partner strategy and our own first-party capabilities on some sensors and key elements of the ecosystem is the winning play. I've been to Ukraine a couple of times in the past year. I was planning to go to the Defense Tech Valley Conference next month, but that's been canceled. Since they ran out of interceptors, the threat of Russian ballistic missiles is much greater. I may be sharing that if anyone listening is in a position to help get more interceptors to Ukraine, that would be helpful. I've personally been engaged there because I think it's important that we help them win and because that's where the next technologies are likely to come from, especially at commercial price points. I was joking at a customer summit that I bet for a police chief, running a small air force was not on their bingo card. They're going to have to have ways to intercept small drones. You typically don't want big things detonating over American cities, but deploying nets or parachute-based solutions and collaboration with partners like Skydio on their drone capabilities are examples of the work we're doing. Expect experimentation, innovation, and continued evolution.
To wrap that back to strategy: it's really three things. Number one is our software experience and sensor fusion engine that ties any combination of hardware from any vendors together to deliver the best possible detection and defeat results. Number two, we're going to be the fastest, most flexible, and highest quality at integrating the dizzying array of new vendors on both the sensor and effector sides. Number three, we'll choose which pieces of the hardware side we want to be first-party leaders on while partnering liberally across others.
Thanks, Jim. Up next we have Will Power at Baird.
Okay, great. Thanks. Congratulations on the broad-based product traction. I wanted to focus on the five-year normalized bookings metric. Why now? It sounds tied to an expectation for ramping international growth and enterprise, and you're trying to normalize for duration. Anything else you're signaling we should take away? For context, are there any historical comparisons you can provide to help frame it up?
Sure thing, Will. On the historicals: in our first earnings call of the year, we cited that five-year bookings were also in the 30% range last year, similar to the 10-year bookings of last year. This year, we're over 30% year-over-year in five-year bookings. The reason is twofold. One is enterprise deals are more commonly three-year deals. Normalizing contract durations is important as the business wins in different markets. Two is some international deals are so large in size they represent big swings in years six through ten, which doesn't give a clear year-to-year picture. Normalizing to a common denominator gives us a better view of what the future looks like. Part of what gives us confidence in revenue growth in the out years is that we look at bookings to inform those expectations. Looking at five-year bookings helps provide context for out-year revenue growth.
I'll add that we've gotten a lot of questions about how duration is impacting our bookings. This is a way for us to help normalize that so the duration question is clearer. I do think we can still say that our future contracted bookings for the whole year will grow faster than the 30% we gave for the five-year normalized bookings. There are strong numbers on both metrics and we wanted to start providing this to be helpful.
Thanks, Will. Up next we have David Paige at RBC.
Hi. Thank you for taking my question. A lot of good color on the call. I just had one on body cameras. You mentioned some of the growth was due to winning back customers. What's driving that? Is it that customers like the Axon camera better, the connected Axon Ecosystem, or the trust credibility you've built up? Any extra color would be helpful. Thank you.
Sure thing. It's quite simple in some ways: customers were sold one thing or expected one thing, and through their usage, they weren't getting what they expected or what they were promised. We're seeing customers cancel contracts early with other providers to come to Axon. It has happened publicly in a couple of cases this year. We're proud that even the first time we're not successful, we remain in open lines of communication with these customers and support them however we can. Often some of our best and most loyal customers had initially chosen a different vendor. We continue to invest heavily in these products, and the experience is really showing — basic things like whether the battery lasts the full shift are critically important to our customers. As they see that play out, they tell their peers. The value-added features on top — whether it's AI Era Plan Draft One, the real-time translator, or Evidence workflows that share from the police department to the prosecutor and through the court system — are things that often don't come out until you start using the products. Our customers are very pleased with how we do those things. The network effects matter a lot, and we're seeing those play out. I'm proud of our teams for keeping their heads down, working hard, and continuing to win in public safety.
Thanks, David. Up next we have Jeremy Hamblin at Craig-Hallum.
Thanks. Appreciate it, and congratulations on the results. Wanted to ask a question that builds on something Michael asked earlier: the evolution of your business. Platform Solutions has really exploded as a reportable segment and has outpaced personal sensors quickly. As you look ahead to your 2028 targets, do you expect Platform Solutions to be bigger than the TASER segment by 2028 when you're hitting $6 billion in revenues? How should we think about how the business model evolves over the next couple of years?
Jeremy, I think ultimately that's not really the way we look at the business day to day. It's more about seeing growth across U.S. state and local on all products, growth in international across all products, and the same in federal and enterprise. When you add it up, using bookings as an example, last year we booked over $7 billion. Normalizing that and understanding the trend line is what's informing revenue growth, rather than focusing on whether platform or TASER is bigger. These things are sold in concert with each other. We look at the sum of the parts in terms of bookings, understanding that hardware and software will look a little different quarter to quarter. When you add it all up, we feel very confident in our guidance.
I'd add that what we've built is the interconnectedness of everything. Individual capabilities may be more or less valuable to a specific customer, but our focus is on making them leverage each other in ways that create outsized value. We focus on solving the most valuable customer problems because that's what they'll pay for. We're customer driven: we talk to customers and work with the team to translate emerging needs into product and strategy. Sometimes we find things are more valuable than we thought and double down. It's about being responsive to customer needs to grow revenue overall.
As you look at our 2028 guide, we have a lot of ways to get there; Platform Solutions is performing incredibly well and we have a lot of enthusiasm behind it. I wouldn't discount what our TASER business can continue to do as we look ahead to 2028. Everything is connected, including the software pieces that get tied to these hardware businesses. What you're seeing in Platform Solutions right now is a lot of big upfront hardware sales, and we'll be building the software business on the back of that, which will be a long tailwind. The body camera business already has everything attached to it and has a huge software business that goes hand in hand with it. Don't separate them. Also consider tailwinds from counter-drone software and other new software product lines. As we get to 2028, everything will be growing.
Great.
Just a quick follow-up on that last point. Your ARR growth has re-accelerated in 2026. Is that largely more AI Era Plan adoption and getting more of your installed base onto these plans? Should we expect this higher ARR growth rate to continue into 2027, 2028, and beyond?
AI is certainly part of it; the AI Era Plan is growing quickly — almost 700%. But it's not just AI: it's Axon Records, Axon 911, software tied to counter-drone and drones, and other software businesses we've been investing in and incubating that are starting to contribute meaningfully. While they're contributing nicely, they're still relatively small and have a lot of room to grow and attach to our customers. That drives net revenue retention, which ticked up to 126% this quarter. We're attaching more products to customers, and that helps ARR growth.
All right. Well, that was our last question. Rick, you can close us out.
Awesome. Okay. I pinch myself every day that I get to do this job with these people and these customers working on these problems. It is a privilege. I am deeply thankful to you, our shareholders, who make that possible, and of course the analysts who help our shareholders understand our business, which has grown immensely in its complexity from the simple book-and-ship business we were 20 years ago to this amazing ecosystem of hardware, software, cloud, and now AI services. We're in the midst of another major transformation. It's going to be exciting. I can't even tell you what kind of business we're going to be in the next 10 years because the world is changing so fast. The people I work with give me hope that we will solve the problems faster than any of our competitors, and we will continue to make this moment an epic moment for our company to leverage this change. With that, we'll see you all in November. If you get a chance to come to IACP and visit us in Orlando, we have some cool new stuff and some new ways to tell the story that differentiates us. I think you'll find it very interesting. Come see us in Orlando, and I look forward to telling you about the next phase of the Axon story.
Some new products, Rick, at IACP as well.
Shoot me an email if you want to join our booth. All right. Thank you, everyone.
Thanks a lot.