Axon Enterprise (NASDAQ:AXON) Chief Operating Officer and Chief Financial Officer Brittany Bagley said the company saw broad-based momentum in 2025, with strength across product categories and geographies, and pointed to expanding contract durations and increased adoption of newer offerings such as AI tools and real-time operations software.
2025 performance driven by “strength across the board”
Speaking at a Morgan Stanley event, Bagley said it was difficult to attribute Axon’s 2025 performance to any single product line or region because “it was really everything working together well.” She highlighted continued strength in the company’s core domestic state and local business, supported in part by new products and offerings that contributed to strong new product bookings.
On AI-related demand, Bagley said the company disclosed $750 million of bookings in new AI products tied to its AI Era Plan in the first full year since release. Addressing questions that followed third-quarter results, she emphasized the company’s focus on annual performance and noted that the fourth quarter is typically a large quarter for Axon.
Multi-year outlook and bookings visibility
Bagley said Axon’s multi-year targets, including a goal of reaching $6 billion in revenue in 2028, reflect a continuation of trends the company has been discussing as they begin to show up first in bookings and then in revenue. She described the AI Era Plan as still “really new,” noting it has been available for about a year.
Discussing Axon’s disclosed $14.4 billion in bookings as of year-end, Bagley said the company expects roughly 20% to 25% to convert in the next year, a range she said has been consistent for at least the past four years. She also addressed investor questions about contract length, saying the shift toward longer durations has “already happened to some extent.” According to Bagley, average contract duration in 2024 versus 2025 was about the same, with Axon now generally operating in a 10-year contract timeframe while still signing five-year and longer agreements.
AI strategy, sensor data, and privacy focus
Bagley framed Axon’s competitive position in AI as rooted in the combination of software, data, and its installed base of sensors. She said Axon’s customer base is fragmented, making it less likely that a single customer could build and replace the company’s solutions, and emphasized that substantial customer data is already stored in Axon products. Bagley noted the company is “privacy-centric” and that customers own their data, but added Axon can still use data in careful ways to improve AI capabilities.
She described Axon as building a “public safety sensor network,” citing body cameras, fleet cameras, and automatic license plate recognition (ALPR) cameras as data sources that feed into software tools and AI product development. Bagley said data privacy is a frequent internal discussion and that Axon has developed and published a responsible innovation framework reflecting long-standing practices handling sensitive customer data.
Explaining the rationale behind the AI Era Plan, Bagley said Axon wanted to “future-proof” AI access for customers because contracting cycles can be lengthy and innovation is moving quickly. She referenced customer feedback following the launch of Draft One, saying some agencies wished new AI capabilities had been included when they signed their contracts, and the plan was designed to make access to future innovation more seamless.
Bagley described Axon’s AI rollout as focused heavily on productivity tools, including Draft One for report writing, Axon Assistant, Brief One, and Policy Chat, as well as translation features. She said these tools can help reduce friction in day-to-day work and can support ROI-based justifications for customers.
9-1-1 market: Prepared and Carbyne acquisitions
Bagley discussed Axon’s expansion into the 9-1-1 space, including its Prepared and Carbyne acquisitions. She said Axon had explored building its own CAD platform but decided against it, while still seeing strategic value in the 9-1-1 workflow because it brings the company closer to the origin of calls and information used in dispatch. She suggested that in the future, responses could include drones being dispatched in addition to officers, increasing the importance of early data.
Bagley said customers “were raving about Prepared,” describing it as AI-first and positioned as an overlay on existing products, making it easier to add. Carbyne, she said, modernizes the underlying call platform by moving call handling systems to the cloud. Bagley noted most of Axon’s software is cloud-based, and argued that combining modern cloud call handling with AI overlays could improve efficiency, including triage and routing for non-emergency calls so emergency calls can move through more quickly.
Market expansion: corrections, federal, international, enterprise, and drones
Bagley differentiated corrections and federal as growth areas. Corrections, she said, resembles Axon’s state and local model and aligns well with products such as body cameras. The federal segment, however, was described as an area that was “maybe not firing on all cylinders” in 2025 due to uncertainty around funding and multiple government shutdowns. Still, she said Axon remains optimistic about federal opportunities, referencing events such as the World Cup and potentially the Olympics. In a later audience Q&A, Bagley also pointed to opportunities across agencies such as the Department of Homeland Security and the Coast Guard, and noted Axon already has some umbrella contracts with certain agencies.
Internationally, Bagley said Axon has long had a successful business in Commonwealth countries such as Australia, New Zealand, and the U.K., while adoption in Western Europe had been slower. She highlighted two cloud deals signed in Europe toward the end of 2025 as an encouraging sign, adding that broader AI adoption is difficult without cloud deployment. Bagley said Axon expects to continue investing in areas such as data residency, localization, and international sales and customer success, and that such investments are already factored into the company’s guidance and longer-term model.
In enterprise, Bagley said Axon sees opportunity primarily beyond TASER devices, focusing instead on front-line workers and security-related use cases. She said the company is “really excited” for the ABW Mini, a smaller body camera expected to launch in the second half of the year, and mentioned interest in drones and counter-drone technology for large enterprise and campus security scenarios. She described enterprise go-to-market as different from public safety, involving education and often starting with security teams before expanding to C-level engagement. In response to a question about retail deployments, Bagley said earlier trials of an Axon Body Workforce camera showed utility but that “nobody liked wearing them” because they were big and heavy, and that a smaller, lighter form factor could be important for wider rollout.
On drones, Bagley said Axon partners with domestic drone company Skydio for its drone programs, including DFR (drones as first responders), and acquired Dedrone for counter-drone capabilities. She said Dedrone has operated in Ukraine and that counter-drone demand tends to follow drone proliferation across federal, state and local, and enterprise markets.
Bagley also discussed customer expansion dynamics, noting Axon’s net revenue retention increased 200 basis points year-over-year to 125% in the fourth quarter and attributing growth to low churn and customers purchasing more as new products are added to bundles. She cited increased pricing on the Officer Safety Plan (OSP) driven by added innovations, and said the top price point combining the highest OSP bundle and the AI Era Plan is $570, with additional products potentially increasing that further.
On profitability, Bagley said Axon intends to expand EBITDA margins by 250 basis points over the next three years while continuing to invest in R&D. She said leverage is expected to come from gross margin tailwinds as software grows faster than the core business and from SG&A leverage. She also cited potential headwinds, including a full year of tariffs and memory costs, and noted mix shifts such as growth in the platform solutions business.
Regarding cash flow, Bagley reiterated a longer-term goal of about 60% free cash flow conversion, noting that 2025 was impacted by significant inventory investments and collection timing. She said the company remains focused on certainty of supply for customers. Finally, she said Axon’s stock-based compensation approach has been consistent, emphasizing its performance-based XSP plan and guiding to flat stock-based compensation for the current year.
About Axon Enterprise (NASDAQ:AXON)
Axon Enterprise, Inc develops technology and weapons systems for public safety and law enforcement agencies, combining hardware, software and cloud services. The company’s hardware portfolio includes conducted energy weapons (commonly known as TASER devices), body-worn cameras and in-car camera systems. Axon pairs these devices with a suite of connected products and accessories designed to capture, store and manage field evidence.
Beyond hardware, Axon operates a subscription-based software platform for digital evidence management, evidence review and records management.
