Axon: Counter-Drone Revenue Topped $100 Million in a Single Quarter, Now Bigger Than Body Cameras, as AI Era Plan Revenue Surges 700%
Goldman Sachs Communacopia + Technology Conference, September 8, 2026
Axon Enterprise Chief Financial Officer and Chief Operating Officer Brittany Bagley used a fireside chat at Goldman Sachs' Communacopia + Technology Conference to lay out just how far the company's business has diversified beyond its legacy TASER and body camera franchise, and the numbers she disclosed suggest the market may still be underestimating the scale of some newer product lines. The most striking disclosure: counter-drone revenue, built from the Dedrone acquisition roughly two years ago, exceeded $100 million in the quarter that included the World Cup, making it larger than body camera revenue for that period.
Counter-Drone Becomes a Real Business, Not a Novelty
Bagley pushed back on the notion that the $100 million counter-drone quarter was a one-off tied to a single marquee event. "It's less going to be like there's a single event that has to be bigger than the World Cup and more that this is just becoming a standard required capability for everyone to have when they're doing events," she said. Axon was recently named a participant in a Department of Homeland Security counter-drone program, and Bagley described the federal and state-and-local opportunity as "a pretty nascent market" with "an enormous opportunity" as drone proliferation makes counter-drone sensing a default requirement for large gatherings, sporting events, and parades. She was careful to temper expectations on near-term margins, noting the hardware side of Dedrone is still a drag on connected devices profitability as the company scales deployment and service capabilities, though she does not expect that to be permanent.
AI Era Plan: 700% Growth and Global Reach
The AI Era Plan, Axon's subscription bundle for AI-driven products, grew revenue 700% year-over-year last quarter, and three of the top five AI Era Plan deals in the period came from international customers. Bagley attributed the momentum to an expanding product set that began with Draft One and transcription and has since added Form One and translation, with more coming. She framed the value proposition less around take-rate economics and more around vendor lock-in through innovation: "They know that we're going to do it, and we're going to do it in a way where we have thought through the ethics of it... I think that's some of the stuff that's really exciting about the AI Era Plan." On efficiency, she cited previously disclosed data showing Draft One can save officers up to four hours per week, an ROI case she says resonates as much internationally as domestically, though localization work for forms and languages is required market by market. On pricing, Bagley confirmed 2027 pricing will be set in the coming months but declined to preview specifics, reiterating a philosophy of adding value before raising price and prioritizing long-term positioning as customers' embedded AI provider over near-term monetization.
TAM and Penetration: Still Early Days
Bagley sized Axon's total addressable market at $159 billion to $160 billion, calling the estimate deliberately conservative since it only includes products Axon currently sells in markets it can currently serve. Within state and local, the company estimates it is only 15% penetrated. On a per-customer basis, Axon captures somewhere between 1% and 5% of a given police department's budget today, with the largest customers buying the full portfolio approaching the high end. Bagley noted police budgets have grown, but Axon's growth has significantly outpaced that trend because of expanding share of wallet, not just budget growth. The message to investors is straightforward: even after years of taking share, the addressable market inside existing customer budgets remains largely untapped.
Bookings Metrics and Near-Term Guidance
Axon introduced a new five-year normalized bookings metric last quarter to address investor questions about how much bookings growth was being driven by contract duration rather than genuine demand. The metric strips out any contract years beyond year five and does not gross up shorter deals. Five-year normalized bookings grew over 30% in the second quarter of 2026, while gross bookings grew 20%, a comparison complicated by the fact that gross bookings were comping a 50% growth rate from the prior year. Bagley said investors should expect future contracted bookings to grow "well above" the 30%-plus normalized bookings guidance for the year, while cautioning that gross and normalized bookings should not differ materially in aggregate for 2026.
On the top line, Axon raised its full-year revenue growth guidance last quarter to 32% to 34%, and Bagley said the growth curve should look similar to last year's, with growth well above 30% in the third quarter followed by the highest growth quarter of the year in the fourth quarter. She attributed the seasonal skew to year-end procurement dynamics, particularly city council approval cycles that create urgency to close deals before they slip into the next fiscal year.
TASER 10 Still Has Room to Run
Despite being three years into its product cycle, TASER 10 delivered the largest single TASER order in company history last quarter, an upgrade deal in the U.S. Bagley confirmed Axon was still selling the prior-generation TASER 7 as recently as last year, underscoring how much of the installed base has yet to transition. She reiterated the historical assumption of a five-year TASER refresh cycle and a 2.5-year body camera cycle, suggesting Axon has runway before a TASER 11 conversation becomes relevant. Internationally, TASER 10's "higher efficacy and more use cases" are opening markets Axon previously had not penetrated, she said.
Enterprise and International: Early but Accelerating
Enterprise bookings tripled year-over-year last quarter, driven in part by trials of the newly launched Axon Body Workforce Mini camera targeted at retail and healthcare customers, though Bagley noted the ABW Mini launched at the start of the third quarter and therefore contributed nothing to second-quarter results. International bookings grew 3x year-over-year, powered by TASER 10, counter-drone, and AI product adoption, with Bagley specifically flagging that some of the company's largest AI Era Plan deals in the quarter came from international customers.
911 Strategy: Call-to-Closure Build-Out
Axon's acquisitions of Carbyne and Prepared are aimed at extending its platform to the front end of the public safety workflow, what Bagley called "call to closure." The company signed its first customer to buy the full 911 suite last quarter. She offered a concrete efficiency data point: one customer that implemented Prepared's AI agent ahead of July 4 saw the volume of calls its human agents had to handle drop 33% even as call volume spiked over the holiday. Bagley was explicit that Axon has no ambition to build its own computer-aided dispatch system, having tried and abandoned that approach previously, opting instead to integrate with existing CAD providers.
Gross Margin Puts and Takes
Software gross margins remain above 80%, a level Bagley does not expect to change structurally, though services mix, now spanning Fusus, records, Dedrone, and hardware implementations rather than just fleet cameras, will continue to create quarter-to-quarter fluctuation in the blended software-and-services line. On connected devices, rising memory costs are pressuring camera margins, with Bagley pointing to potential relief from new memory capacity coming online in 2028. Dedrone's hardware business remains a near-term margin drag as Axon scales deployment and service operations, though she framed this as a temporary scaling issue rather than a permanent structural feature.
Competitive Dynamics in Body Cameras
Asked about competitive win-backs, Bagley kept her answer high-level but pointed to a recurring pattern: customers who trial competitor body camera systems sometimes find that promised integrations and reliability, particularly with Evidence.com, do not hold up in field deployment, prompting a return to Axon. She framed this as a function of Axon's discipline in only committing to features it has already validated will work as advertised.