Axon Enterprise Expands Q2 Margin to 26.8% as Revenues Jump 35%

Axon Enterprise, Inc. (AXON) reported a 35.3% year-over-year increase in second-quarter 2026 revenues to $904.4 million. Higher operational costs included a 35.2% jump in cost of sales to $357.9 million, a 20.1% rise in selling, general, and administrative expenses to $291 million, and a 28.4% increase in research and development costs to $209 million. Despite these expenses, the company expanded its adjusted EBITDA margin by 110 basis points to 26.8%, aided by strong revenue growth and global tariff refunds.

Revenue expansion was fueled by solid demand for Dedrone, TASER 10, and Axon Body 4 products, alongside broader adoption of software solutions. International demand grew significantly, with global bookings nearly tripling year over year during the quarter and major contract wins for TASER 10 across Europe and the Middle East. Similar cost pressures were visible across the defense and security industry, with peers like Kratos Defense & Security Solutions, Inc. (KTOS) and Teledyne Technologies Incorporated (TDY) also experiencing higher operating costs alongside revenue growth.

Looking ahead, Axon Enterprise projects a full-year 2026 adjusted EBITDA margin of approximately 25.5%, remaining mostly flat compared to the previous year. For the longer term, the company is targeting an adjusted EBITDA margin of around 28% by 2028, supported by annual revenue goals of $6 billion.