AXON · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

AXON ENTERPRISE, INC. · 2026-08-06 · Importance 49 · Surprise 32 · No source text

Second-quarter gross margin dollars increased $142.7 million year over year, while GAAP gross margin remained 60.4%; six-month gross margin declined to 59.8% from 60.5%. Adjusted gross margin decreased to 62.9% from 63.3% in the quarter and to 62.3% from 63.4% year to date. Connected Devices gross margin improved to 51.9% from 48.6% in the quarter and to 50.4% from 49.3% year to date, primarily because of $47.4 million of tariff refunds, partly offset by a higher counter-drone mix. Software and Services gross margin fell to 71.3% from 75.6% in the quarter and to 71.8% from 75.0% year to date because professional services represented a larger mix and new offerings were being scaled.

Key facts

• Gross margin dollars increased $142.7 million and gross margin percentage was 60.4% for the three months ended June 30, 2026, unchanged from the prior year period. source
• Gross margin for the three months ended June 30, 2026 was $546,447 thousand (60.4% of net sales). source
• Gross margin dollars for the six months ended June 30, 2026 increased $254.3 million and gross margin percentage decreased to 59.8% from 60.5% in the prior year. source
• For the six months ended June 30, 2026 gross margin was $1,023,733 thousand (59.8% of net sales). source
• Gross margin for the three months ended June 30, 2026: $546,447 (in thousands). source
• Cost of sales for the three months ended June 30, 2026: $357,942 (in thousands). source
• The decrease in gross margin and adjusted gross margin was primarily driven by a higher mix of professional services revenue and scaling new product offerings, partially offset by tariff refunds received in the quarter. source
• Adjusted gross margin decreased to 62.9% for the three months ended June 30, 2026 compared to 63.3% for the same period in the prior year. source

Impact estimates