Q2 2025 Earnings Call Transcript

Hello, everyone, and thank you for joining Axon's executive team today. I hope you've all had a chance to read our shareholder letter released after the market closed, which you can find at investor.axon.com. Our prepared remarks today are meant to build upon the information in that letter. During this call, we will discuss our business outlook and make forward-looking statements.

Any forward-looking statements made today are pursuant to and within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These comments are based on our predictions and expectations as of today and are not guarantees of future performance. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. We discuss these risks in our SEC filings. We will also discuss certain non-GAAP financial measures.

A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our shareholder letter as well as on our Investor Relations website. Now before we turn to our quarterly update, we'll take a quick minute to show you some recent highlights from one of the CEO summits that Rick has been hosting. [Presentation]

All right. Thanks, Erik, and welcome, everyone, to our second quarter 2025 earnings call. I love hosting those summits. It's all about connecting the dots with our customers so that we can build the tools they need to make their jobs just a little bit easier.

We are, of course, proud to come back to you with another fantastic quarter. But what we're really proud of are the relationships and partnerships we've built with our customers. I spend most of my time with them. And the more I do, the more excited I am for what's ahead.

In fact, there are several trends I'm seeing right now that are fueling that excitement. First, demand for new technology from our customers is accelerating, and it's outpacing even my most optimistic expectations. Artificial intelligence, drones and robotics, real-time operations, cameras and our newest TASER devices and virtual reality, each of those are resonating across our customer base. There's no one breakout product driving conversations, it's everything.

In the past, it could take a few years for our newest products to start seeing meaningful adoption. Often at least the first year took it to fine-tune the application, work through the approval processes and get everything right. Today, we're watching customers adopt new solutions as a standard faster and in real time. Draft One remains our fastest adopted software solution.

TASER 10, our fastest adopted TASER weapon. Axon Body 4, our fastest adopted camera. Dedrone, Fusus and the AI Era Plan are also being deployed faster than we've seen with prior new technologies while laying the groundwork for future innovations coming over the horizon. Another observation I want to share is that I believe one critical factor enabling this movement is the trust we've built with our customers.

It is something I'm extremely grateful for. We have a history of being bold. It's only after decades of tireless work, thought leadership and responsible, careful balanced approach that we've earned the privilege to partner this deeply. They're able to move faster today because they trust we'll be there with them on the journey and their tomorrow, doing things the right way.

The final observation I'll make is that collaboration and public safety isn't just critical anymore, it is absolutely essential. Roles, responsibilities and jurisdictions may have fine lines, but effective public safety happens through close collaboration across the landscape from sworn officers to public officials, federal governments, enterprises and even consumers. To support this, we need to think broader than ever before, ensuring our products enable these different stakeholders to work together. Our work to expand into new customers, introduce new products that rethink how existing systems operate and build partnerships with industry leaders is about more than growth.

It ** strengthens our ecosystem and makes every layer of connectivity incrementally more valuable for every user**. This summer, we spent time with our product teams working through our future product investments, and we have the broadest, yet most cohesive and synchronized pipeline of products in development we've ever had. It's truly an inspiring time, and we remain committed now more than ever to investing behind our vision and the mission that drives it. With that, I'd like to turn it over to Josh.

Thanks, Rick, and good afternoon, everybody. Before we get into our results, I want to say we're thinking about the NYPD and the victims of last week's horrible tragedy. We are reminded of why we come to work every day, and we'll all continue to pursue Axon's mission of protecting life with vigor. As we reflect on our Q2 results, the theme continues to be customer obsession.

We consider it the honor of a lifetime to work with the men and women of public safety and our continued emphasis on the customer experience is central to how we run the business. I tend to be the curmudgeon on the team that reminds everyone that no matter how much success we have, we can always be better. I'm not sure that will ever change, but I'd like to take a reprieve from that for a few minutes as I'm truly awestruck at what our team is accomplishing. And the most exciting part is we continue to accelerate.

This is not a team that slows down. Maybe the best example of this is our state and local team under the leadership of Jessica Duncan. This team took back the record for the largest deal in Axon company history by a wide margin. This contract with a major city police department also marked the largest contract we've seen in terms of new product bookings, encompassing everything from drones to our AI products.

Similarly, our corrections team, led by Zach Austin, also closed their largest deal in team history and contributed 2 of the top 10 deals in the quarter. Corrections has been an important area for us to grow our presence because the value our products offer to keep correctional institutions safer is so clear. What's exciting here is that the deals we are seeing in the vertical now include products from across our ecosystem, TASER 10, body cameras, VR, evidence management and Fusus. Next, our wins in international and enterprise continue to validate our investments in these areas.

Our international team added a new TASER customer in Africa, becoming the largest in the region. And in Enterprise, we signed a contract opening up a major opportunity in the gaming space. It was our first win in that vertical to include our AI products and a clear indicator to me that we're on the right path. Zooming out a bit, every quarter that goes by indicates more and more of a contribution from new products.

We closed almost $150 million of bookings for our AI Era Plan in Q2 alone and over 30% of bookings this quarter came from new product categories. We've talked in the past about an opportunity to grow our presence with officers as our product portfolio expands. Just a few years ago, the maximum an agency could spend with us on a per officer basis was less than $300. Today, that sits over $600 due to new products, and we saw the per officer bookings in our largest deals push up against that level. These are just a few examples of the activity we saw in another strong quarter.

As I said in Q1, the team came out of the gate with speed this year, and that momentum is accelerating. Coming off a strong 1H with a growing pipeline, we now have line of sight to deliver year-over-year bookings growth in the high 30% range, which would once again put our second half in line with the prior year's entire campaign. At Axon, we're next play shop. We don't fall in love with what we just did or what we did last year or the year before that.

But as I said, I am so proud of our sales and product teams to see bookings accelerating at this stage in our business speaks to the level of execution and innovation going on at Axon. As I digested in these results, I was brimming with excitement about what the future holds and the impact that we can have. You are truly seeing a world-class team that is capable -- you are truly seeing what a world-class team is capable of doing when everybody is on the same mission. With that, let's kick it over to Brittany.

Thank you, Josh. As Josh and Rick mentioned, we're extremely proud of our second quarter results as we continue to deliver for our customers while investing for the long term. Second quarter revenue of $669 million increased 33% year-over-year, marking our 14th consecutive quarter of over 25% revenue growth. Josh shared some great color on our bookings and why we're so excited for the future.

In terms of translating that into revenue today, the top line growth continues to be driven by software and services, which grew 39% year-over-year to $292 million. Our ability to win new users and to drive adoption of our newest products underpins this continued growth. Net revenue retention increased to 124% and has been near or above 120% for 20 consecutive quarters demonstrating the results of our ongoing investment in our products and customers. Turning to Connected Devices, revenue increased 29% year-over-year to $376 million.

This growth was driven by strength across categories, including TASER, which grew 19%, driven by TASER 10. Personal sensors grew 24%, driven by Axon Body 4 and Platform Solutions grew 86%, driven by counter-drone and virtual reality. Adjusted gross margin was 63.3%, up 20 basis points year-over-year, driven by product mix to software and services, partially offset by lower devices margin due to the strong growth in our newer hardware products and newer markets. We expect this balance to continue in the second half as we mix across new investment areas and our software business growth. Adjusted EBITDA margin of 25.7% came in ahead of expectations due to higher revenue and operating leverage as well as benefiting from the timing of tariffs, which will now impact us more in the second half of the year.

Turning to our outlook. We are raising 2025 revenue guidance to a range of $2.65 billion to $2.73 billion, representing approximately 29% annual growth at the midpoint. We are raising our adjusted EBITDA guidance to a range of $665 million to $685 million, up from $650 million to $675 million. This maintains our 25% margin target for the year and incorporates our planned investments and tariff-related expenses in the second half.

We continue to expect to increase hiring over the remainder of the year, particularly in R&D, as we prioritize investing behind the incredible product road map we've talked about as well as in our exciting new markets. These investments will continue to set us up well for 2026 and beyond. In summary, Q2 reflects another quarter of strong execution and healthy performance across the business. We remain focused on delivering sustainable growth while investing strategically to serve our customers and drive value creation over the long term.

We're also incredibly excited to deliver on the second half of the year for everyone. With that, we'll turn it over for questions.

Thanks, Brittany. We'll move up into gallery view. All right. For today, I think we'll try to keep it to one question and a brief follow-up, if we can just because we've got a full call and I want to make sure we can get to everyone. So first, we have Keith Housum at Northcoast.

Great. Congratulations on a great quarter. Perhaps you guys can spend a little bit of time on the enterprise addressable market and perhaps some of the success that you guys have had with some of the pilots so far. Is there a certain product or 2 within the portfolio that is getting more traction than others as you guys are entering into the, I guess, expanded market than enterprise?

Sure. I'll take that one. Enterprise certainly is going very well. We're excited about the breadth of product interest there between not only our body cams and Evidence.com and Fuses and drones, counter-drone and frankly, across all these opportunities, we're seeing more and more interested in the full suite of products there.

But Keith, I got to be honest. I'm shocked that after predicting bookings were flat, you weren't wondering why you're off of 50%.

Next question.

Yes, that's a good idea. Let's go to the next question.

No, no, that was my next question though. In terms of bookings, can you perhaps parse out where was that success was?

Yes. I mean you had said bookings would be flat at $1 billion. That was up by 50%. You had said new -- we didn't have any large deals in the quarter.

We booked our largest deal in the company's history, including our largest deal in Corrections. You had said the bookings growth rate was slowing down and in fact, it's picking up, and it's all a result of really, really good execution from our product team and our sales team.

Next, we have Andrew Sherman at TD Cowen.

Great. Congrats Josh, impressive $150 million of bookings from AI Era in Q2 alone. Could you just talk about the mix of demand for Draft One? And is the demand for Draft One itself accelerating, but also the newer products, the -- some of the data you have in the press release is interesting with the time savings that the other newer segments you're driving.

Just talk about the demand for the whole bundle and if that's kind of accelerating here, which it sounds like it is.

Yes, Andrew, thanks for the question. Good to see you again. Absolutely, it's accelerating. Yes, we're excited about the result.

We had talked about this a lot in the Q1 call that the first half, we'd see some incremental growth, and we certainly did. But the pipeline in the back half of this year for the AI Era Plan is loaded, and we certainly expect to continue to go fast in terms of the AI Era Plan. It's something that's very well received from our customers. I think it's a good indication of not only the time savings that customers are seeing with these products, but it's also the fact that there's more and more products that are making a difference day-to-day in this plan that customers are getting along the way.

So they're super pleased with Draft One. We continue to see more and more momentum there. But now with the AI assistant and the real-time translator as part of that and products like Form One and Brief One getting going, there is a lot of customer excitement around this plan. And huge shout out to Rick a year ago, a year plus ago now for calling out the need to invest heavily in the AI world in product line.

And then, of course, Jeff and his team for implementing these products in a way that makes a real, real difference for our customers. It's just very, very cool to see right now.

Thanks, Andrew. Up next we have Will Power at Baird.

Okay. Great. And congratulations on the results. I want to start on Platform Solutions.

Obviously, a really nice acceleration. I recognize smaller numbers, but I think strategically, very important longer term. I wonder if you could help us just understand kind of what really underpinned the counter-drone success. Maybe you kind of breakdown or color you can share across law enforcement versus enterprise.

If I take that a step further, if I stick with drones, it would be great to get any perspective as to what you're seeing in terms of pipeline build bookings within DFR and whether the executive orders have started to spur any further activity there.

Let me maybe jump on initially, Josh, and talk about counter drone. I mean basically -- I'm sure you all saw Operation Spiderweb, we've seen drones becoming more and more permanent in the war in Ukraine and in the Middle East. But just the ability for Ukraine to take out a sizable percentage of Russia's strategic bomber fleet with $1,000 FPV drones. And then similar things being done by Israel deep in the heart of Iran.

I think he's got everybody's attention, whether you run a stadium or a nuclear reactor or a power station or responsible for protecting the executives home, the world is suddenly keenly aware that these small drones are the biggest threat vector at scale because anyone can do it. And none of the traditional defense mechanisms, none of our air defense systems are designed around that threat. And our acquisition of Dedrone and AD and his team have been just phenomenal to have identified this early, and I think we're in a really strong position to -- I'd say we are certainly a market leader. And we're seeing just a ton of demand across the spectrum for people realizing they need solutions here.

And I'm spending a lot of my time going deep on how do we maintain that leadership and grow it and deal with these new threats like these fiber optic drones that we're now seeing deployed widely in Russia and Ukraine, where those are unjammable because they're flying with a physical connection. And so we're digging deep on, okay, how do we extend our solution set to cover. This thing is iterating at incredible speed. So -- and with that, Josh, I don't know if you want to add anything on any other...

Maybe just the fact that one of the reasons, and we had mentioned this when the acquisition closed is we really believe we can lead with Dedrone in some international markets. And I think in certain places, that's not only very relevant to today, but a nice difference where some of the new products that we're acquiring, we can get in the door, so to speak, with those and with a lot of interest from a customer. And then when a customer is ready to move to body cameras or less lethal or video aggregation or AI, we're better positioned to participate in some of those opportunities.

And Will, I'll just jump in. Just so you know, on that segment, you can hear the enthusiasm around counter drone that also has a fleet in it. It has VR in it. And so I think part of what you're seeing is every category in that segment is growing really nicely.

We're obviously thrilled to add in the counter-drone. But I would also just say because of the size of that, you should expect some lumpiness in that segment going forward as counter-drone can win a big deal at one time. And then I would just -- we're just -- we're happy with all the products in that segment. So keep in mind, they're all doing well.

Okay. And anything you can add just with respect to the DFR side of the equation in terms of how that pipeline is building and kind of level of activity? Because that seems like another really nice longer-term opportunity as well.

Sure thing, Will. I would definitely say we're excited about DFR. And one of the things kind of taking shape in DFR or drones as a first responder is that while we don't manufacture the hardware for outdoor DFR, there are opportunities popping up around the hardware that create a lot of value for the customer, things like live streaming, having the evidence in Evidence.com and so forth and then even figuring out how we get drones in the sky faster through software even before 911 calls in. So I think there's a lot of exciting work around DFR, and then frankly, the biggest relevance at Axon in our product portfolio right now is Dedrone, which makes sure the skies are safe for drones to fly.

So a lot of people associate Dedrone with counter drone and tracking nefarious drones and taking them out of the sky. But another big benefit there is a police department using Dedrone can see the entire map throughout their city of where their own drones are. So we think we'll be relevant in the DFR space for a long time. Skydio, and us, we have a great partnership.

We would say it's going very, very well, and we're excited about what the future holds there.

Up next we have Mike Ng at Goldman Sachs.

I just have one on the high 30% bookings growth guidance. I think it implies about $7 billion, which would be about $2 billion of bookings growth year-over-year. Could you just talk a little bit about what's driving that doubling of annual bookings growth that you've have had historically, I think, relatively consistently, is it just the AI Era Plan and some of the momentum there? Are the length of the deals changing at all?

Anything you could just talk a little about in terms of kind of pipeline giving you that confidence or deals closed to date would be helpful.

Sure thing, Mike. Good to hear from me again. And on your question, I'd say, we've said for a long time, and Jeff brought this framework to Axon when he first joined which was, hey, we want to be really, really good at selling new products to existing customers. So that's our U.S. customer base.

And there, we're talking about drones, AI, virtual reality, Fuses, Dedrone, all of our software add-ons that we continue to build and as well as iterating on the TASER and body camera. And then you combine that with selling existing products to new markets. And there, we're talking about international enterprise and federal, where we can take the things that are very successful in state and local and all of a sudden customers in those other segments are starting to see really, really good product market fit there. So it's not one thing, and that's one of the things we're most excited about is we feel like we're very diversified.

We have a lot of ways to win the game, so to speak, and we're going to keep investing in all of them because we see a ton of opportunity ahead.

Great. And can I just maybe get a quick follow-up on international. I mean I think accelerating growth, I think the best year-over-year and quarter-on-quarter growth there. Maybe some of the key markets where you're getting the most traction, I heard the mention about TASER in Africa, but I would love some detail there.

Yes. I appreciate the question. We tend to be a little less specific about where we're going internationally only because as a competitive group, we don't want to tip anything off here, but we do see opportunity across LATAM, certainly the U.K. and Europe and then certain segments within Asia as well. So very much feeling like, hey, over the next few years, International should continue to be really, really exciting.

I mentioned Cameron, our CRO had come in, and he just as of Q2, celebrated his 1-year anniversary and we're certainly seeing the investments of having a CRO in Europe with the team over there starting to pay off as well. So yes, much more to come on that.

I'll just add ongoing -- one of the things about some of our international deals is they tend to be pretty big deals. So you can see a little bit in quarters where you have a big international deal come in. I think in Q2, you saw us do a couple of really big international deals, incredibly exciting. I think a huge amount of momentum in there.

I don't know because there's also so much momentum in state and local in other parts of our business. I don't know that you'll see it maintain at that sort of 20% level that we hit this quarter, but tons of momentum behind some of those international bookings and the rest of the business.

Thanks, Mike. Up next, we have Meta Marshall at Morgan Stanley.

Congrats on the quarter. Just as the AI bookings have picked up, just what kind of lessons have you guys learned about kind of getting through some of the hurdles from state and local? Is it having reference customers? Just getting kind of oil has been put in the gears to kind of move those along?

And then maybe just as a second follow-up question, just obviously, a lot of immigration dollars, enforcement dollars and OBBB just where you guys kind of see opportunity there?

Sure. On the AI bookings question, Meta, I think really, it's the same thing that we kind of really believe in across all our products, which is when you put products in the hands of users and let the users give you feedback and experience them and see the value themselves, there is no amount of sales or marketing or packaging or anything else that compares to that. So when customers start to use a product like Draft One for 60 days and they say, "Man, I'm spending a full day more every week on the road fighting crime as opposed to sitting behind a computer." Those are the kinds of stories that just build.

Or with our AI assistant the real-time translator you have customers at the border or in Canada in Quebec or whatever the case may be, saying like, "Man, this is really relevant and practical for what I need to do my job." And that's kind of our bar for these AI products is this isn't like hand-wavy stuff. This is the stuff that keeps police safe, community safe and allows police to be in the communities fighting crime as opposed to behind a computer. So -- and the best part is we're still on like our own 5-yard line on the football field. We've got a long way to go and a lot of great ideas about how to deliver more and more cutting-edge AI products to public safety.

And then your second question, do you mind reminding me what that was?

Immigration enforcement dollars, that opportunity.

Yes. Sure thing. So more -- the government -- the federal government, we believe, between Q1 of their calendar year, which is or their fiscal year, which is Q4 of our calendar year, will start to see more and more solicitations, whether they're RFIs or RFPs for products that they're looking into with this money coming out of this bill. And so for us, that's really around counter-drone certainly, the video products like Fusus, drone technology, and beyond maybe some TASER as well.

So we right now as a team even earlier today, starting to sit down and say, map out the customers and figure out what we expect the opportunity to be in each of those customers and see how we can help. And frankly, with some of these federal agencies being among our largest customers in the U.S., we believe we're well positioned to be able to demonstrate how much we can help right now.

Thanks, Meta. Up next, we have Joe Cardoso at JPMorgan.

Congrats on the results. Maybe a follow-up to the last question but in a different context. You guys talked about the Big Beautiful Bill and the opportunity there, I think, fairly well in terms of the different avenues you guys can participate in it. Maybe can you just touch on the programs that are ongoing in Europe in a similar manner in terms of their opportunities there's?

And where is Axon well positioned? Is there anything different in terms of the different programs in the U.S. And then as we think about both the U.S. programs and the European programs, can you just help us think about the timing of these opportunities? And then maybe just hitting it on the nose, is any of this baked into the back half outlook in terms of bookings is like, are you guys already seeing any of this goodness?

So Rick, why don't you start since you've been over in Europe for the better part of the summer meeting with customers here.

Yes. I would tell you the visibility is certainly rising. The -- I had my first ever meeting with Prime Minister of a NATO nation. Last week, I met with several ministers of the interior level folks.

There is a ton of -- just a ton of need. I mean the social displacement that has been happening in Europe, the amount of -- they're dealing with their own immigration problems as well but with the best intentions, Europe sort of took in a lot of folks and is now realizing that they weren't set up to integrate all those people, and they're seeing surging social problems. I was getting questions regarded -- related to border security, where they're seeing, frankly, hybrid warfare from the Russians like pushing sort of an encouraging mass migration across the borders is a destabilizing function. And one example had border guards asking if we could tune the TASER 10. Right now, the TASER 10 can handle up to 3 people that you would hit with it, and we generally discourage thinking about using a TASER 10 on multiple people because in the United States, we're very focused on civil rights.

And like if you hit the first person, the second person and then the first person complies but the second doesn't, you might have a problem legally if you activate and hit both of them. Like when I bring that up as a concern to these European Border agencies, they're like that is not our concern. We're getting overwhelmed, and we're literally going to be shooting and killing people en masse here at the rate things are going, and there's an opportunity for TASER to become really a primary defensive weapon. And I think the need for that is rising in Europe.

The -- on the other side of the things are real-time translation. We actually had to shift our priorities so that we could get it translating into a non-English language as its primary language in order to meet an Eastern European countries immediate need, and that went extremely well. So I think the real-time translator as well is being seen as just like a have to have capability, and that is opening up. I'm personally involved in two countries that in full disclosure, I probably couldn't have picked out exactly.

I could point it generally where they were on the map. I couldn't have told you which ones they were that are now talking to us about very large deals, like larger the deals we had ever signed as of a few years ago and up with some of the larger ones we're signing now. So I don't want to get too far ahead of my skis that this is all going to happen quickly, but the overall level of interest across the board is really very high.

And Joe, your question also included kind of bookings as some of that baked in already or in the back half we do expect Q3 and Q4 to be very exciting quarters for our international business. Now look, there's -- we got to go execute and prove it. But certainly, pipeline-wise, we're pleased with what we're seeing there.

Thanks, Joe. Next, we have Jonathan Ho, William Blair.

Is there a way for you to maybe help us understand how your second half bookings are potentially shaping up, just given your commentary that it could be as large as last year? And what underpins that confidence here? Is your visibility perhaps even better than what we saw last year?

Yes, Jonathan. I mean, I think our sales leaders would tell you, this isn't a hobby at this point, like this is what they're good at, and this is what our pipeline indicates and we've given a lot of bookings commentary over the last 3 or 4 years. And I think as you've seen, we've been able to deliver on what we've said and we feel no differently right now. We have a ton of confidence in fidelity in our pipeline.

And we're even, frankly, halfway through Q3, we're already at a very productive July. And so the things are -- that we've got very, very, very strong sales professionals that believe in our mission and believe in our customers, and it just shows quarter after quarter. And really, really proud of the team and have a feeling I'll continue to be saying that, I'll continue to say that for a long time. So we're very confident we're going to have a big second half bookings wise.

Just a quick follow-up. Within your premium software offering, is there a way to maybe unpack for us? What is the most common upgrade path? What does maybe contributing the most to growth? And how much runway do you see to sort of sustain that growth from here?

Sure. And just across the ecosystem in terms of upgrades, Jonathan?

Yes. Just in terms of the -- yes, the -- yes, across the ecosystem, what's driving the premium software offering to see the type of growth that it had?

Sure. I think generally speaking, customers tend to buy -- they're most price focused in their first contract whenever that may be. And so you see maybe you definitely don't see OSP as commonly as you do with existing customers or Officer Safety Plan, you tend to see a customer buying maybe some TASERs and some body cameras and kind of the core feature set of Evidence.com. But then a lot of our products have been built as a result of customers expressing where they want to go next in their program.

So inevitably, customers that are newer are going to hit those same points along the way and say, "Hey, it would be nice if I could add this, this and this. And then that becomes an Officer Safety Plan conversation." And with AI now on top of the Officer Safety Program or Officer Safety Plan, again, that's just for those customers that have been on OSP for a while. They start to see the value of these AI features on top of what they're already doing. So I think it's a really nice path that our customers take to adopting more and more.

And frankly, we're very disciplined about measuring how customers use new products and making sure that they're very pleased with what they're seeing in new products. And then years later, that kind of manifests itself in terms of adoption. So yes, that's a little bit about how we get from A to B there.

I think the only thing I would add to that, Jonathan, is remember that because of the pace of our product innovation, many of the products that are available now might not have been available when the customer was originally signing up. And so as they come back and we naturally have more software features, functionality, capability, it's just a different conversation that we can have with them in terms of what's even in some of these more premium bundles and I think that's a lot of what continues to drive that, and AI only helps that conversation.

Thanks, Jonathan. Up next, we have George Notter at Wolfe Research.

I think Erik's got a preestablished list there in terms of how we go through the questions. So sorry, we're not intentionally ignoring your hand up. We're just going through the list ahead of time.

All right. I appreciate that. I guess kind of tacking on to the last question, you guys threw out a $600 price point, I think, for some deals this quarter in terms of per officer metric. I guess I'm just curious what you said, Josh, a few moments ago, I think makes sense just in terms of customers kind of layering in more pieces of the Axon solution into the bundle.

But are there comparisons you can give us for a year ago, 2 years ago, 3 years ago to help us understand sort of the path to $600 per officer. What metrics can you share?

Yes, certainly, directionally, for sure 2 or 3 years ago, maybe, call it, 3 years ago, the top offering in OSP, our Officer Safety Plan might have been in the mid-200s. And then we started adding drones and Dedrone and Fusus as additional value. We never just simply inflate the price of Officer Safety Plan. If the price changes, it means there's more adds to the bundle, and that's kind of what's happened over -- from year to year.

So now we're in the mid-300s just on office or safety plan alone. And then you combine the AI Era Plan, which list price $199 a month, and then you add in-car video, for example, you add Dedrone across your Enterprise, you add Fusus, all things that you build out more and more, and that's where we're seeing some of these numbers in the -- right around the 600s in terms of monthly value per user. And so certainly, look, like it's great to see some customers doing that, but our job is to communicate the value to every customer so that they appreciate still the incredible ROI they get even at those numbers.

And so that's really what we're focused on right now.

And was that typical that number? Was that a typical number for deals that you closed this quarter? Or is that sort of the high end?

No, that's the high end. That's definitely -- that drove our largest deal in U.S. history and company history now. And we do think that's a promising side of things to come, but certainly wouldn't set the expectation that even the majority of the customers are there right now.

And then at one point, you guys gave us a mix of business coming from Officer Safety Plan. Is there an updated number there? I seem to remember a 20% number. Is that still the right ballpark? Or is it higher now?

No, we don't have an updated number on that. What we said a quarter or 2 ago was that about 70% of our customers. I think we said it last quarter, about 70% of our customers, we're still on one of our basic plans. And so lots and lots of room to upgrade.

So to Josh's point, look, we don't give an actual ARPU number. It could be as high as $600, but we still have so many customers that are not coming in and buying our whole suite of products. And so when we talk every quarter about our amazing software growth, like some of it is the natural like rotation that you see as our customers come back in and as they do upgrade and as they move up their price points.

Up next, we have Alyssa at Barclays.

Just a quick follow-up on that. The 70% still on basic plans with that upsell motion going, are you kind of seeing that number decelerate in terms of basic plans pretty quickly? Or is this kind of a slow expansion? And then I just had a quick follow-up on the U.S.

International given the outperformance this quarter, should we kind of continue seeing -- even with the strength of the U.S. international now becoming a larger piece in the mix?

Sure thing. Thanks for the question, Alyssa. Maybe the second one first. The hard part about -- I do think international is going to keep growing in a very exciting fashion.

The hard part about talking about the mix is the U.S. is growing very fast as well. So it's hard to really for it to take over a bigger and bigger part of the mix, that would mean the U.S. is slowing down, and it's the opposite right now. And so we think both that the total bookings rate will grow excitingly but also that the international one will as a standalone. I just can't guarantee the mix is going to change all that much, so long as the U.S. keeps going on the path that it is right now, if that makes sense.

And I did forget your first question in answering the second one first, if you don't mind.

Alyssa I think you can go back. We've sort of given that metric at points in time. I think we gave it when it was like 80% and then 75% and then 70%. So we are working our customers up?

It's not like it turns all on in one quarter, right? It's like we are over time moving the customers up to those more premium plans. But the other point I would make is that what's in the premium plan to Josh's comment like we keep adding new things in it, and so how premium the plan is or how much they could pay as we get new products in over time that also keeps moving up. So we have those 2 drivers, right?

We have the driver of moving customers further up the plan and then actually just having more product offerings that they could come by.

Thanks, Alyssa. Up next, we have Jeremy Hamblin at Craig-Hallum.

Congrats on the momentum in the business. So I wanted to come back and see if I could clarify something here in the Platform Solutions performance, exceptional growth, a lot of talk about Dedrone. And I just wanted to see if I could kind of pointedly ask it. Is Dedrone the biggest driver of that growth in terms of kind of percentage or contribution to that year-over-year growth rate?

No, it's -- I don't -- Brittany, correct me if I'm wrong, but it's actually toward right now one of the smaller ones and frankly, growing every quarter, but certainly not the biggest driver of new product bookings growth.

Yes, for sure. So if you're looking just inside of our platform sensors business, it was a big driver of the growth this quarter inside of platform sensors. But if you look at the overall business, it's just not a material driver of our overall growth. And again it will be a little lumpy inside of that platform segment, I hope over time.

And therein lies the opportunity. Ultimately, we think there's a very relevant product. So we've got a lot of white space in front of us, and we're gearing up to execute well there.

Yes. A lot of time when you hear me waxing during the call, it's rarely about the stuff that's selling well this quarter, it's stuff that I'm looking a year out.

No, I understood. I was clarifying, just within that small segment of the business, I just wanted to understand. Okay. And then just in terms of there are a lot of moving parts in the business.

There's a lot of different verticals that you're attacking and I wanted to get a sense for from an investment in the team perspective. As you're looking at product, as you're looking at maybe your sales and marketing teams, where do you need -- I mean my sense is there's just a shift in what you're looking at from where you were a year ago, right? And not that -- there's a lot of the regular business. I mean, TASER grew 19% in the quarter.

There's a lot of the core business that's still doing incredibly well. But Jeff or Rick, Josh, where do you think you need to invest the most from an infrastructure perspective to really get the business where it needs to be over the next 2, 3, 5 years?

Maybe I'll start there, and I'll kick it over to Rick and Jeff. But Jeremy, I think it's the same formula every year, the numbers might change, but it's really we start with we are going to relentlessly invest in R&D every year. Like that's core to who we are as a company. This is an innovative company with an innovative founder, and we are going to continue to invest in every opportunity we can to pursue our mission and especially when we're seeing such incredible buying signals from our customers.

We do that at times at the expense of getting -- we try to fund that by getting leverage out of SG&A so -- or really G&A. Salespeople, we look at where the opportunities are, and those are generally the easiest ones to say yes to because when you're hiring a salesperson for X dollars and their quota might be $5 million to $10 million a year. You get a very clear return on that, but we are very disciplined in the rest of the G&A segment around, hey, how do we use AI internally, just like our customers are using AI externally? How do we use AI to make sure that we don't need our team to balloon as our business grows.

And so a lot of discipline in G&A, of course, a lot of investment in sales and then relentless investment where we see opportunity in product.

If I could sneak...

I think we're going to -- we might move, Jeremy, because you had 2 -- we have 10 minutes left to get to 5 more. So we may try to do one question each. So Josh Reilly, at Needham you're up next.

Any update on the light post and outpost camera opportunities in terms of the manufacturing ramp and the pipeline build? And then I just had a quick follow-up on drones after that.

Sure. Very exciting to be live with a few customers already in trials. That's for a product that we announced in May and have really invested in a lot in the first half of the year to see pulls on the ground and cameras working at certain large customers right now. That's obviously a great first signal.

I also don't want to get out over our skis there. There are certainly things that we're learning and things that we need to do better as part of that. But that's just the cycle all of our hardware goes through, and we really believe we're on the right track. We think we're going to be very, very competitive in this market, and we're excited about the opportunity.

Got it. And then just a quick question on the monetization of drones. When you're looking at the revenue that you're actually getting from drones, is it really just software revenue on the DFR programs? Or as part of the hardware from the DFR programs recognized in your income statement then passed along to Skydio. You could just help us understand how that dynamic is going to work.

Brittany, why don't you take that one, if that's all right.

Sure. So when we're talking about drones and things like platform sensors and all of that, what you're really hearing us talk about is the hardware piece of Dedrone and then the software piece of Dedrone would be showing up in our software business. That's by far the bulk of it. We do partner with Skydio, and our partnership with Skydio, is basically a referral fee that comes through.

I would not think about them today as being a big part of that business other than what else we can enable when we do partner with Skydio, from a software standpoint, from an experience standpoint for our customers. So don't think about that as a big chunk of our revenue. Think about it as Dedrone, everything Dedrone can enable through DFR, but that's what you're seeing in the numbers.

Thanks, Josh. Up next, we have Jordan at Bank of America.

Could you guys just give an update on Fusus' FedRAMP status? And then for Dedrone, what is your strategy to start playing a more meaningful role in DoD counter drone programs that are getting funded like Replicator 2?

So Jordan, on the strategy one, again, like we don't necessarily want to tip off our hand on how we're thinking about the opportunity. But we'll be in the game when the lights come on and we're ready to prove what we can do for sure. Jeff, why don't you take that first question, if that's okay.

Yes, sure. Just like with everything we do, we get -- we submit things in as we have new things in our envelope and we sort of go through the official certification testing. And then ultimately, the second part is the FedRAMP body itself going through their final little check boxes. And so exactly on plan, we submitted and completed all the work to make Fusus FedRAMP compliant, submitted as part of our last package.

So you can think of it as we are FedRAMP compliant at the moment. And the only thing waiting is the natural course of the committee sort of officially giving that last check mark. We're operating in the market with customers knowing that we've met all those requirements.

Thanks, Jordan. Up next, we have Trevor Walsh at Citizens.

Great. You had an interesting stat in the shareholder around the survey that you ran towards the beginning of last year. About 14% of departments are essentially not at full staffing levels. Not necessarily surprise headcount and the hiring of the officers has been a struggle for a while now.

And it's pretty clear that AI is going to help in that a little bit to make officers just more productive. But do you guys see any trends around just more broadly than that of departments knowing that they might not be able to get the head count that they want, just shifting that spend to other kind of areas within the department's needs, whether that's technology and that generally helping you guys? Or do you see that as a possibility kind of down the road, if not right now? And then a quick follow-up for Brittany, can you just elaborate on the tariff piece for the kind of second half of the year?

And if that's related to kind of the newer things that we're hearing around tariffs? Or is that just more baked in from the April kind of announcements that we've heard?

Let me take the first part. We are absolutely having those conversations. Draft One is the baseline of, hey, if I can spend less time doing administrative work and more time doing police work. We're hearing across the board, things that we can do with technology, even DFR is one of those, right?

Hey, if there's calls that we can clear without having to send officers, that means we can focus our manpower on the calls that make more sense. The same thing is true of inbound call handling, like your customers are interested on, hey, are there things we can use with technology to be able to handle noncritical calls, maybe we don't send an officer at all, maybe report them to an AI agent. Translation, historically, there's like multi-minute weights to be able to get a translator during either middle of a critical incident or an inbound call, and those are the sorts of things that across our stack or through our partners, we can begin to turn those things into real time right now.

It doesn't need a person at all. It's technology aiding the person or in some cases, we can handle the whole thing over to tech, and we think it's a combination of AI and robotics over the coming years is going to enable us to take on a greater and greater portion of that workload, allowing the human beings to focus on the sort of top end of those incidents that really require a human engagement. And I'd say there's probably at least 50% of the workload of police department that's automatable. And we are seeing that they're open to thinking their budgets that way.

I can think of a few conversations we've had where agencies have said, "Hey, I'm understaffed by this many folks. I'm just going to take part of that budget and push it over here and maybe not hire a couple of those."

Yes. So on tariffs, we factored in everything we know as of like 24 hours before this call. So we're as up to speed as we can be on how we think about guidance for the second half of the year. And then we just bake into the guidance we give you for second half.

I would say it continues to move around, obviously. But I think more is certainly known now even than it was a quarter ago. And so I think that allows us to do things like come up with good plans to mitigate as much as we can and manage through as much as we can, which we're obviously trying to do. But our current view is just baked into the guidance.

Thanks, Trevor. Up next, we have Mike Latimore at Northland.

Great. Yes. Excellent results. In terms of the Enterprise segment, I guess, prior to this quarter, the biggest deal was in enterprise, how is that deployment going? How is the pipeline for enterprise, which products seem to be the most interest? And then on TASER 10 is maybe just elaborate a little bit on manufacturing capacity there. Are you ramping that through year-end?

Yes. So I'll maybe go in reverse order and then Josh can jump in on enterprise, too. But we are continuing to ramp TASER 10 capacity. I would say we are sort of continuing to ramp TASER 10 capacity as much as we can because we continue to see just great demand for that.

So we're ramping it this year. You saw us take our CapEx guidance up a bit. That's us continuing to ramp it into next year so that we continue to meet that demand. From an enterprise standpoint, and I know Josh will jump in, but we continue to be really excited about the pipeline that we're seeing.

I think A lot of our products are really relevant to the enterprise segment. But I will say Fusus has been particularly exciting as we've brought them in. That's just really resonating well with our enterprise customers and opening a lot of doors and a lot of really great conversations. Again, I think, obviously, our cameras, as we talk about retail and frontline workers, you could see counter-drone, you could see a whole lot of our portfolio being relevant, but it's a huge market.

And so we'll continue to update over time. But there's a lot as we start to fight that off.

Yes. The only other thing I'd add is the Enterprise deployments are hard by nature. We're talking about aggregating hundreds of thousands of video screens to one pane of glass. That's hard work and I'd say we're learning, the deployment is going well.

And what we learned here will absolutely make us better in the next 3, 4, 5 of these that we do. And so it's -- the team is doing great work and some new variables when you have enterprise customers relative to government, and we're working through those and feeling good about where we're going to land.

Thanks, Mike. And up next, we have a new face to our call, Andrew Spinola at UBS. Welcome.

Just following up or continuing on the Enterprise space. Would you be able to willing to elaborate on the gaming contract that you guys announced? What are you doing there? Is it Fusus centric? Or is there are a few of your other product lines in the mix?

Let's leave it at video for now. There probably are opportunities in gaming for less lethal as well in terms of security, but video between body cameras and Fusus and certainly, a lot of applicability given the amount of money on the line at each one of those sites. And so -- and Andrew, thanks for the patience.

Thanks, Andrew. We'll kick it to Rick to close this out.

Oh man, we're done already. I was ready for a couple more. I just got to say I'm so proud of the team, and we're just hitting on all cylinders. And it's also really great.

You'll see I'm answering less and less of the questions during the call about the operations of the business. And candidly, that's because I've got just such a great team. I've been traveling like a banshee out with customers, having a ball. Have identified a couple more fantastic things that are going to be expanding our product portfolio probably a couple of years out.

And it's really great to have a team that you can just rely on that we're all -- we're all running our lanes and the business just runs like a machine, like a very -- like a Ferrari -- no not Ferrari, maybe not as most reliable machine, but a very reliable Ferrari and this thing is just running. And of course, having you guys as sort of helping the investment community understand our business. This is a complex business to understand. We're everything from a media creation house in VR for creating content and managing training content.

We do pure software plays like our records business. We do electrical weapons and drones and now counter drone systems. And it's a lot of fun for us to run the business, and we know you keep you pretty busy trying to understand how it all fits together. But I can tell you one thing that just keeps me excited now from a business perspective is we have so many horses that can run here that we're not dependent on any one part of the business.

We just got this truly diversified portfolio, but it all works together so seamlessly. And now we're expanding to anybody who needs to interact with law enforcement, right? If you're a business, your security team is to interact with law enforcement. Frankly, if you're a military, you need to interact with your law enforcement as well now, these sorts of hybrid threats that we're now seeing in society, and we're able to start from this kernel of a business we've built around public safety and begin to move out into these next layers.

It's just a really exciting strategic time to be at the helm. And so with that, I want to thank you. Josh, you were leaning forward. Do you have anything to add there before we wrap today?

No. You said, well, Rick, thank you.

All right. Thanks, everybody, and we'll see you for -- well, I'm not going to jinx it by predicting. We hope to be back with another good quarter. So we'll see you guys in a few months.

Thanks.