Axon jumps 6% after Q2 beat and analyst target hikes

Axon Enterprise reported Q2 revenue of $904.4 million, up 35 percent year over year and beating consensus by $27.9 million, sending shares up 6 percent.

Northcoast Research lifted its price target to $680 from $650, and the Street's average target now sits at $691.83 against 18 buy ratings.

Adjusted EPS of $1.88 topped the $1.84 estimate. Platform Solutions revenue jumped 123 percent to $149.84 million, AI Era Plan revenue grew nearly 700 percent, and Dedrone counter-drone revenue crossed $100 million for the first time. Future contracted bookings sit at $15.10 billion, up 41 percent.

Management raised the full-year 2026 revenue growth outlook to 32 percent to 34 percent from the prior 30 percent to 32 percent.

Metric	Actual	Consensus	Beat/Miss
Revenue	$904.4M	$876.5M	+$27.9M
EPS	$1.88	$1.84	+$0.04

Adjusted EBITDA climbed to $242 million, a 26.8 percent margin, up from 25.7 percent a year earlier. Net revenue retention reached 126 percent, extending a five-year climb from 119 percent in Q2 2022.

The company guided for a slightly lower adjusted gross margin of 62.9 percent, down from 63.3 percent, citing a higher mix of professional services revenue and new product offerings in the process of scaling. Axon also withdrew its guidance for operating cash flow and free cash flow, previously set at $600 million and $450 million in Q1. The initial gross-margin concern tied to climbing memory prices and Dedrone hardware scaling has been reframed as the price of growth, with margins expected to rebuild in the fourth quarter.

The peer set tells a divided story. Motorola Solutions reported the same day, posting Q2 revenue of $3.13 billion, up 13 percent, and non-GAAP EPS of $4.41 versus a $3.85 estimate, while announcing a $1.5 billion acquisition of counter-drone specialist D-Fend Solutions. Tyler Technologies missed revenue estimates by 0.50 percent at $645.10 million despite SaaS revenue climbing 21.7 percent for a 22nd consecutive quarter above 20 percent.

Axon carries a premium valuation of roughly $51.5 billion in market cap, versus Motorola's $76.9 billion and Tyler's $13.2 billion. Even after Tuesday's move, Axon shares remain down 29 percent from a year ago, trading near $634 after opening the session at $596. The stock's 52-week range spans $339.01 to $878.62, and Tuesday's close keeps it above the 50-day moving average of $508.70.

Wall Street has kept relatively stable EPS estimates for the company in 2027. Ninety days ago the Street modeled $10.57; today that number is $10.56.

The guidance raise shows management expects demand to accelerate. Investors will watch whether the company's subscription success and growing backlog lead to near-term earnings revisions, which could form the next driver for the stock.

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