AXON Q2 Earnings Miss Estimates Despite Strong Software and Device Growth

Axon Enterprise, Inc. AXON reported second-quarter 2026 adjusted earnings of $1.88 per share, down 13.8% year over year. The figure missed the Zacks Consensus Estimate of $1.89 by 0.5%.

Total revenues were $904.4 million, up 35.3% year over year and ahead of the consensus estimate of $868.4 million by 4.1%.

AXON’s Q2 Business Segment Performance

Effective first-quarter 2025, AXON realigned its business segments. The company now reports results under two segments, namely Connected Devices and Software & Services.

Connected Devices: The segment’s revenues increased 34.6% year over year to $506.6 million, driven by strong demand for Dedrone, TASER 10 and Axon Body 4. The adjusted gross margin expanded to 53.4% from 51.1% in the year-ago quarter, primarily aided by tariff refunds, partly offset by a higher mix of Dedrone revenues.

Software & Services: The segment’s revenues rose 36.2% year over year to $397.8 million, supported by new users and increased adoption of premium software offerings, including Axon Fusus, the AI Era Plan and Axon 911. However, the adjusted gross margin decreased to 75.1% from 78.9% in the prior-year quarter, reflecting a higher mix of professional services revenues and investments in newer offerings.

AXON’s Margin Profile

Axon’s cost of sales increased 35.2% year over year to $357.9 million. Selling, general and administrative expenses were $291 million, while research and development expenses totaled $209 million.

The adjusted gross margin decreased to 62.9% from 63.3% in the year-ago period. A higher mix of professional services revenues and the scaling of newer products more than offset the benefits from global tariff refunds.

AXON’s Balance Sheet & Cash Flow

At the end of second-quarter 2026, Axon had cash and cash equivalents of $597.7 million compared with $1.20 billion at December 2025-end. Long-term lease liabilities totaled $101.7 million compared with $98.9 million at 2025-end.

In the first six months of 2026, the company used net cash of $11.4 million in operating activities compared with $65.9 million used in the prior-year period. Adjusted free cash outflow was $55.6 million in the first six months of 2026 compared with $113.7 million in the prior-year period.

Axon Raises 2026 Revenue Outlook

Management raised its full-year revenue outlook to 32-34% annual growth, up from 30-32% expected earlier, while maintaining an adjusted EBITDA margin target of approximately 25.5%. The updated view reflects continued momentum across the company’s connected devices and software offerings.

Axon also maintained its capital expenditure projection at $160-$190 million.

AXON’s Zacks Rank

The company currently carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Constellium SE CSTM came out with quarterly earnings of $1.04 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $0.91 per share. This compares with earnings of $0.25 per share a year ago.

Constellium posted revenues of $2.75 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 3.5%. This compares with year-ago revenues of $2.1 billion.

Generac Holdings Inc. GNRC came out with quarterly earnings of $2.91 per share in the second quarter of 2026, beating the Zacks Consensus Estimate of $1.95 per share. This compares with earnings of $1.65 per share a year ago.

Generac Holdings posted revenues of $1.17 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 0.37%. This compares with year-ago revenues of $1.06 billion.

Graco Inc. GGG reported second-quarter 2026 adjusted earnings of 91 cents per share, up 17% from 78 cents in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 81 cents by 12.4%.

The company’s net sales rose 3% year over year to $590.6 million but lagged the consensus estimate of $609 million by 3%. Organic order backlog (excluding acquisitions) rose 28% from the end of 2025.

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