AXON · 8-K · 20260805PR053363

Gross Margin Drivers

AXON ENTERPRISE, INC. · 2026-08-05 · Importance 43 · Surprise 32

Total gross margin was 60.4% in Q2 2026, flat year over year and up 130 basis points sequentially, while adjusted gross margin was 62.9%, down 40 basis points year over year and up 130 basis points sequentially. The year-over-year pressure reflected a higher mix of professional services revenue and the scaling of new product offerings, partially offset by $47 million of global tariff refunds received during the quarter. Software & Services gross margin declined to 71.3% from 75.6% a year earlier, while software-only gross margin remained above 80%. Connected Devices gross margin increased to 51.9% from 48.6% a year earlier, primarily because of tariff refunds, partly offset by a higher Dedrone revenue mix.

Key facts

• Q2 2026 total company gross margin: 60.4%, flat year over year and up 130 basis points sequentially source
• Adjusted gross margin for the company: 62.9%, decreased 40 basis points year over year and increased 130 basis points sequentially source
• Connected Devices gross margin increased to 51.9% from 48.6% a year ago and 48.7% in the prior quarter source
• Connected Devices adjusted gross margin increased to 53.4% from 51.1% a year ago and 50.4% in the prior quarter source
• Software & Services gross margin was 71.3% for Q2 2026, down from 75.6% year over year source
• Software & Services adjusted gross margin was 75.1% for Q2 2026, down from 78.9% year over year source