Axon (NASDAQ: AXON) reported Q4 EPS of $2.15, $0.55 better than the analyst estimate of $1.60. Revenue for the quarter came in at $797 million versus the consensus estimate of $755.55 million.

Outlook & Target Model

The following forward-looking statements reflect Axon's expectations as of February 24, 2026 and are subject to risks and uncertainties. Please refer to "Forward-Looking Statements" below for additional information.

Full Year 2026 Guidance

Revenue growth of 27% to 30% year over year
Adjusted EBITDA margin of 25.5%
Stock-based compensation expense of $590 million to $620 million
Capital expenditures in the range of $185 million to $215 million

Full-year 2026 stock-based compensation expense includes approximately $230 million related to the broad-based Employee XSP and the CEO Performance Award, primarily within SG&A and R&D. These performance-based incentive programs are tied to stock price, operational, and time-based requirements, and include seven substantially equal tranches.

2026 capital expenditure plans include long-term R&D investment projects, continued capacity expansion, global facility build-outs and new product development costs. Expected capital expenditures do not include costs related to investments in a new headquarters.

2028 Target Model

Axon has established a new 2028 target model to guide our focus as we create meaningful value for society and our shareholders. We exceeded our prior 3-year targets of $2 billion in annual revenue and a 25% Adjusted EBITDA margin for 2025, delivering $2.8 billion in revenue at a 25.5% adjusted EBITDA margin and now we're providing an updated forecast. The strength in our business including an expanded product portfolio across hardware, software and AI, strong future contracted bookings, and deep customer relationships reinforces our confidence in our ability to deliver sustained, robust performance in the years ahead.

Looking forward to 2028, we intend to:

Achieve $6 billion in annual revenue
Deliver Adjusted EBITDA margins of approximately 28%
Generate strong cash flow with Adjusted Free Cash Flow conversion of 60% of Adjusted EBITDA
Limit annual dilution from stock-based compensation to less than 2.5%

We provide Adjusted EBITDA and Adjusted EBITDA margin guidance, rather than net income and net income margin guidance, due to the inherent difficulty of forecasting certain expenses and gains, such as income tax expense and gains or losses on marketable securities and strategic investments. We are unable to reasonably estimate their potential impact, which could be material. Accordingly, we do not provide a reconciliation of projected net income and net income margin to projected Adjusted EBITDA and Adjusted EBITDA margin, respectively.

We provide an Adjusted Free Cash Flow target, rather than a cash flow from operating activities target, to provide additional transparency into conversion inclusive of expected capital expenditures and sources or uses of cash that are consistent with our core operations. Accordingly, because of inherent challenges associated with predicting capital expenditures and other cash activities that may not be core to our operations in the future, we do not provide a reconciliation of projected cash flow from operating activities to projected Adjusted Free Cash Flow.

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