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Date

Wednesday, May 6, 2026, at 5 p.m. ET

Call participants

  • Chief Executive Officer — Rick Smith
  • President — Joshua M. Isner
  • Chief Financial Officer — Brittany Bagley
  • Chief Product Officer — Jeffrey C. Kunins

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Takeaways

  • Revenue -- $807 million, up 34% year over year, marking the ninth consecutive quarter above 30% revenue growth.
  • Software and services revenue -- $355 million, representing growth of 35% year over year.
  • AI product revenue -- Increased more than 700%, moving from a small base but reflecting growing adoption and delivering on prior bookings.
  • Net revenue retention -- 125% for the quarter, indicating persistent upsell activity into the existing customer base.
  • Annual recurring revenue (ARR) -- $1.5 billion, up 35% year over year.
  • Connected devices revenue -- $453 million, a 33% year-over-year increase, driven by TASER 10, Body 4, and platform solutions.
  • Platform solutions revenue -- Grew 95% year over year, with platform solutions including counter-drone hardware.
  • Dedrone revenue -- Grew over 300% year over year; bookings up 500% in the period, highlighting strong demand for counter-drone capabilities.
  • International revenue -- Rose by over 100% and comprised 20% of total revenue for the quarter.
  • Future contracted bookings -- $14.3 billion, up 44% year over year, reflecting broad momentum.
  • Raised revenue guidance -- Full-year revenue growth guidance increased to 30%-32% from previous expectations.
  • Annual EBITDA margin guidance -- Company reaffirmed target of 25.5%, with Q1 adjusted EBITDA margin at 25% and operating leverage expected in the second half.
  • Free cash flow guidance -- Management expects approximately $450 million in free cash flow for the full year 2026, even accounting for elevated inventory investment.
  • Stock-based compensation -- Forecasted at $590 million to $620 million for the year, with company committed to average annual dilution below 2.5%.
  • AI Era Plan bookings -- Up 140% compared to the prior year period; described as becoming a standard part of purchasing by large agencies.
  • Enterprise segment bookings -- Up 50% year over year in Q1, highlighted by a $40 million FUSUS-centric contract with a major telecom provider in April.
  • Acquisition payback -- Cumulative bookings from FUSUS and Dedrone now exceed 1.5 times their combined purchase price, about two years post-acquisition for FUSUS and 18 months for Dedrone.
  • Inventory strategy -- Inventory investment is intended to ensure supply stability amid high demand, geopolitical risks, and component competition.

Summary

Axon Enterprise (AXON +1.58%) reported a 34% year-over-year revenue increase to $807 million, achieving continued 30%+ growth across key segments and raising its full-year revenue guidance to 30%-32%. AI product revenue grew more than 700%, and AI Era Plan bookings rose 140%, reflecting accelerating customer adoption of its AI platform; nearly all large U.S. law enforcement agencies now include AI in their purchases. Dedrone’s counter-drone solutions expanded markedly, with revenue surging over 300% and bookings up 500%, as both domestic and international momentum contributed to international revenue exceeding 100% growth and now comprising 20% of the quarterly total. The company emphasized recurring revenue strength with ARR at $1.5 billion (up 35%) and net revenue retention at 125%, underpinned by growth in both user adoption and upgrade activity. Operating leverage is expected to increase second-half EBITDA margins, and Axon projects $450 million in free cash flow for the year, even as it invests heavily in inventory to support global demand and supply chain durability.

  • Management described customer engagement with new AI features as "overwhelmingly" positive, noting broad-based demand across public safety, enterprise, and international sectors.
  • Dedrone was cited as accelerating growth beyond initial assumptions, protecting high-profile events and infrastructure, and was described as "relevant to every market we sell into."
  • International expansion benefited from improved go-to-market operations, partner networks, and a "land-and-expand" strategy similar to the U.S, including new national-scale deployments.
  • Large enterprise wins were driven by FUSUS, which integrates disparate video systems and offers unified situational awareness; this product is expanding into enterprises with major deployments.
  • Platform solutions, including counter-drone hardware, have the lowest gross margin within hardware, but management expects margin improvement as the business scales and software attaches.
  • Inventory investments were characterized as proactive measures tied to demand growth and supply chain readiness rather than solely to inflationary pressures or component costs.
  • Company clarified that event deployments serve as marketing catalysts but the primary Dedrone demand is for permanent infrastructure integration.
  • Axon's acquisitions—including FUSUS, Dedrone, Prepared, and Carbine—were called a source of new revenue streams, with further integration expected to drive future growth.
  • Regarding pricing, management intends to align annual contractual increases with the incremental value delivered as new features and products are added to bundles.
  • Management noted resilient interest and pipeline growth in the federal sector after team rebuilds and leadership changes, including renewed demand for body cameras, TASERs, and Dedrone solutions.

Industry glossary

  • AI Era Plan: A bundled subscription offering that consolidates Axon's latest AI-enabled software, hardware, and services into an integrated solution for public safety and enterprise customers.
  • FUSUS: A software platform acquired by Axon that aggregates and integrates video streams from disparate camera systems, providing unified situational awareness for enterprises and public safety agencies.
  • Dedrone: Axon's counter-drone business focused on hardware and software solutions that detect, track, and mitigate unauthorized drone activities.
  • Rule of 40: A commonly used SaaS metric calculated as the sum of revenue growth rate and EBITDA margin, used to benchmark efficient growth.
  • DFR: Acronym for "Drones as First Responder," referring to programs where drones are deployed for rapid incident response or airspace management.
  • XSP program: Axon's long-term share-based compensation plan, with vesting tied to share price and operational milestones.

Full Conference Call Transcript

Rick Smith: [inaudible]. Welcome to Axon Week, and welcome to Nashville, Tennessee. Welcome to the Singularity, where AI changes the equation entirely. We are standing on the most extraordinary frontier our species has ever stood at. The explosion of AI we have introduced this past year has been mind-blowing. For example, Axon Assistant grew from a few skills to a chatbot with real-time detection on the way. Prepared and Carbine doing AI for 911 and voice. Vehicle intelligence, Outpost and Light Post with computer vision. Draft One, Form One, Brief One are streamlining records. Smart detection, auto ingest, attribute search help you make sense of your evidence. Case Compass and PeopleSearch go through your records management.

MediCoach and VR are transforming how you train with interactive AI. And next, we are bringing Axon Gravity, one program to pull all of your agencies' data into one place. So we have a super-intelligent analyst. You can ask it any question powered by AI. Twenty years ago, we were a company with one product, the TASER. Today, we operate the largest network of public safety sensors and technology on Earth. And everything we built sets us up for this moment now. We can layer AI on top of all of this, but we must do this ethically. This is not automation replacing judgment. Humans make 100% of decisions.

It is helping humans do things they could not do on their own, speak 30 languages, surface the right information at the right moment. Mission is about connection. The most important connections we have ever made are not just in the technology, they are here in this room. And the relationships that we have with Axon, the one thing that really sold me is this is much more than a company. The relationships with the people who trust us with the hardest moments of their lives—that is the network that matters most. Alright. Thank you everyone for joining us for our first quarter 2026 earnings call.

I am really pleased with how the year started, and I am even more excited about where we are going. I always say Axon Week is one of my favorite events of the year. And every year, it somehow gets better. What we shared with customers this April felt fundamentally different. It is no longer just about our new products. After decades of partnership, it is about how we have earned our customers' trust at a moment when it matters most. I am more convinced than ever that we are building something the world genuinely needs. I spend my time thinking about how we can make an impact, how we can do more, faster.

Today, I think we have passed the inflection point. We are entering what I believe will be a generational leap in both the pace of innovation we can achieve and the speed of customer adoption we will see. There are two things I am looking at that drive my conviction. First, technology is no longer evolving linearly, or even exponentially. It is evolving across multiple dimensions at once—a hyper-exponential. The result is a compounding effect where more data, more tools, and more connections multiply what is possible. Our ecosystem is built for exactly this moment. We have created secure end-to-end operational workflows across products, customers, and verticals.

We made the decision over a decade ago to invest in tightly integrated solutions across hardware and software, creating an ecosystem that allows customers to scale and grow as fast as technology is moving. Our software is better because of our hardware, and our hardware enables software features that would not be possible without capable, connected sensors at the edge. No single tool, or even a collection of individual tools, delivers the same value as this kind of unified system. And as technology advances, the difference is not incremental. It is transformative.

The simplest way to think about it is this: outcomes now depend on the fusion of sensors, available and connected in real time, with an increasingly intelligent AI backbone. Across AI, real-time operations, drones, and connected devices, we are moving beyond product adoption towards system adoption. A system that operates faster, safer, and with more awareness. Axon Vision, Guardian, and Assistant are early examples of what this phase looks like—always on, always available, and more and more intelligent. Axon Vision enables teams to understand what is happening in time they can respond with the best and most informed resources. Axon Guardian monitors alongside officers and can call for help before they can.

Axon Assistant has already surpassed 1 million uses and will soon be available wherever officers work. And over time, our Axon Gravity initiative will bring in more data that can be harnessed to make even more possible. Our position as the leading repository of data for our customers continues to broaden to be the leading unleasher. Importantly, every capability we add now makes every other capability more valuable. Data flowing through Axon 911 becomes more powerful when connected to first responder drones or body cameras. Insights from Vision become more impactful when integrated into real-time operation centers. Draft One improves with every report and every sensor. The value of each will continue to get stronger.

My second observation is just as important. Adoption is now accelerating akin to innovation and expanding in scope. In the past, new technologies were adopted gradually. Today, demand is immediate. Customers want these tools now, and they want more of them. They are ready. Just yesterday, I hosted a collection of chiefs in San Francisco. Two years ago, when I queried the room who had used AI, it was almost zero. Today, it is 100% are using AI tools in their personal lives daily. But they know those tools cannot be used on government data. And that is why we added the Axon chatbot into the system, so that they have a CJIS-secure, accredited AI they can use at work.

It is just one of many features we are bringing to them. This is not limited to law enforcement. FUSUS, Dedrone, Axon 911, license plate readers, vehicle intelligence are being deployed across entire cities and countries. And now enterprises are seeing similar needs. The environments may differ, but the requirements and the needs are the same: safety, efficiency, and trust in a fast-moving world. Everything we do is built on trust. Our customers move faster than anyone else to adopt AI because they trust how we build it—carefully, deliberately, with the hard conversations happening upfront, not after the fact. That is what makes our technology more durable, more trusted, more widely adopted.

And that trust is what earns us the privilege to keep pushing forward. Three decades of building, millions of sensors, millions of users, trillions of data points flowing through one connected network—every camera, every device, every line of code—it has all been leading here. To this moment. The AI breakout. And no one in public safety is positioned like we are—positioned to change the world, positioned to create extraordinary value for our shareholders, our customers, and society itself. I am incredibly proud of what this team has built. And as I look at all this coming together, I am even more excited about what comes next. And with that, I will turn it over to Josh.

Joshua M. Isner: Thanks a lot, Rick. And good afternoon, everybody. I am proud to report that we are off to another incredible start here at Axon. As Rick mentioned, we welcomed 3 thousand people to Axon Week in April. We quickly learn what customers are excited about, what is gaining traction, and ultimately, where our pipeline goes from here. The reception from agencies, enterprises, and international partners was unlike anything I have seen before. Frankly, it is reflective of the growth we are seeing every day. Our flywheel is spinning. We are delighting customers with market-leading products, pairing that with customer obsession.

We are earning the right to do more, and we wear that as a badge of honor and a badge of responsibility. And that expanding opportunity set is already showing up in our results. We entered 2026 with tremendous momentum coming off a massive Q4, and the team came out of the gates even faster than we did last year. Q1 was our strongest ever first quarter across revenue, bookings, and new products, and it was a record in markets. U.S. public safety, international, and enterprise each set first quarter bookings records. The core is off to a great start with sustained TASER growth rates. And the breadth of overall demand is compelling.

It tells us that the growth we are seeing is not isolated to one product, one geography, or one customer segment. Across the business, we are tracking indicators like customer engagement, pipeline quality, adoption of new products, and continued strength in the core. And those indicators support another year of 30+% revenue growth. A major driver of that momentum is the continued adoption of the AI Era Plan. AI bookings were up 140% versus Q1 last year, and we are seeing AI move from early interest to a standard part of how large agencies think about their future technology stack. In fact, nearly all large domestic law enforcement agencies are now including AI in their purchases.

This is a powerful signal that customers are treating AI as a core capability for improving productivity, accelerating workflows, and giving officers time back. We expect the rapid adoption to continue as we deliver more AI-enabled capabilities into the platform, including Axon 911, Axon Vision, Axon Gravity, and an expanded Axon Assistant functionality. We are determined to become the AI company in public safety—we are well on our way. But the AI Era Plan is not the only thing driving explosive growth. Dedrone, our counter-drone business, is scaling beyond our most aggressive assumptions. Bookings are up 500% year over year, and we are continuing to see rising demand.

Dedrone is now on a similar trajectory as the AI Era Plan, and it is relevant to every market we sell into. Rick saw this opportunity years ago, and as it is coming into fruition, we are well positioned to serve our growing and diversified customer base with this product line. For example, Dedrone protected the 2026 Super Bowl, as well as last week’s Kentucky Derby. We are proud to support the American World Cup sites, as well as several other large-scale events throughout the year. Dedrone is also featured in some of our largest international opportunities of the year. This allows for expansion into other product categories, and we are seeing that play out in real time.

We have laid the infrastructure to sell globally over the last several years, and now Dedrone has established itself as a further accelerant to our growth. And finally, it is no secret that physical AI infrastructure is going to be a source of record spending in the years to come. Our enterprise team is in conversations with many of the largest infrastructure providers to protect their ever-growing portfolio of sites and data centers. And speaking of enterprise, we have exciting news to announce on this front as well. After a 50% year-over-year Q1, in April our team closed a $40 million opportunity with one of the largest telecom providers in the world.

The deployment centers around FUSUS, which continues to garner interest and drive growth in this segment along with Axon Body Mini and Axon Outpost. We will also be launching Axon Vision directly into enterprise. By recognizing abnormalities as they occur, this product will add immediate value to any security operation. At the same time, Assistant and Draft One are becoming enterprise-ready. We are showing up as a true technology leader in this space with the advantage of already knowing how to deploy at a large scale securely. Something very special is happening at Axon right now. Our core investments in both products and markets are paying off just as our acquisitions are hitting the steepest part of their respective curves.

We acquired FUSUS two years ago and Dedrone approximately 18 months ago as of Q1. We have now booked over 1.5 times the combined purchase price of those two companies. We see a similarly disruptive opportunity in Axon 911 as we integrate Carbine and Prepared. We are proving our momentum is sustained. And because we expect a lot more growth, I have sponsored a significant investment in core product inventory. We are fortunate that our TASER CEW life cycles are 10 to 15 years, and our body cameras continue to sell for 5+ years. Thus, we have minimal obsolescence risk as compared to most hardware.

Given the expanding geopolitical risks, the competition for key components, and the growing demand of our products worldwide, we are investing in inventory with durability in mind. We never want inventory to be the reason we cannot maximize our growth and impact. After all, our customers do the most important jobs in the world, and they rely on more and more of Axon products. We will not let them down. Thanks, everyone, and over to you, Brittany.

Brittany Bagley: Thanks, Josh. Well said on what an exciting opportunity we continue to see in front of us. Rick has consistently provided a compelling vision, and we are seeing the results of that come through in our numbers. Revenue of $807 million was up 34% year over year and marks our ninth consecutive quarter of growth above 30%. Software and services increased 35% year over year to $355 million. While all of our software products continue to grow, AI was a standout, with AI product revenue growing more than 700% year over year. This is on a small revenue base, but it is delivering on the strong bookings from last year and will continue to scale.

Our AI products are also continuously improving, including with the launch of new features at Axon Week, which we highlighted in the shareholder letter. The value proposition is clearly resonating and adds another leg to our consistent software growth. This growth supports strong net revenue retention, which was 125% in the quarter, and strong ARR, which grew 35% year over year to $1.5 billion. Connected devices revenue grew 33% to $453 million. This was a particularly strong Q1 for connected devices. TASER 10 and Body 4 remained durable drivers of growth, and platform solutions, which includes our counter-drone hardware, grew 95% year over year. In total across hardware and software, Dedrone revenue was up over 300% year over year.

The need for counter-drone capabilities is becoming increasingly obvious and critical, and we are proud to have a leading solution in the space. As Josh mentioned, we expect this strength to continue, and counter-drone is another major leg supporting our growth. In addition to strength across our products, we are seeing strength across end markets. International revenue was up over 100% year over year as we delivered on the bookings momentum we highlighted last year, and it represented 20% of our revenue for the quarter. Future contracted bookings were up 44% year over year to $14.3 billion, reflecting this broad-based momentum.

Given these trends, our strong Q1 results, and the momentum we are seeing in our pipeline, we are well positioned to deliver on our top-line expectations and are raising our revenue guidance for the year to a range of 30% to 32% growth. We still expect to deliver 25.5% EBITDA margins for the year, consistent with our prior guidance. This improves upon the 25% adjusted EBITDA margin we delivered in Q1, with operating leverage expected in the second half of the year allowing us to hit that annual target. Incorporated in this guidance is continued tariffs, inflationary component costs inclusive of memory, and product mix shift from continued platform solutions growth as well as software.

As we scale the business, we are also focusing on our free cash flow conversion from adjusted EBITDA. Josh talked about the continued investments we are making in inventory this year, which you can see in Q1. These investments will position us well to deliver on demand through the rest of this year. Even with these investments, we expect free cash flow conversion to improve meaningfully and expect to deliver approximately $450 million of free cash flow for the full year in 2026. On stock-based compensation, we expect a full year expense of approximately $590 million to $620 million.

As a reminder, a portion of our stock-based compensation expense is tied to our performance plans and will only be realized if we hit the share price and operational milestones laid out as part of our XSP program. This program is long term in nature and does not scale linearly with growth because of how we account for the probability of the tranches. The expected expense from this plan is down from last year. The other portion of stock-based compensation is run-rate RSU grants, which are important to hire and retain the best talent. Inclusive of both of these programs, we are committed to average annual dilution less than 2.5%.

As the impact from our performance plans normalizes, stock-based compensation dollars should remain roughly flat over the next few years, meaning it will decline as a percentage of revenue with our continued growth. We talk about hitting 55 on the Rule of 40, and yet again, we delivered in excess of that goal this quarter. We are very happy with the results, especially in what is typically a seasonally softer quarter, pointing to the underlying momentum we continue to see in the business. We are focused on growing and scaling for many years to come, supported by our great customers, diversifying end markets, and broad product portfolio. We are excited to deliver another great quarter.

We will now open the call for questions.

Joshua M. Isner: Thanks, everyone.

Erik Lapinski: Alright. Today, up first, we have William Power at Baird.

William Power: Okay, great. Thanks, everybody. Congratulations on another really strong start to the year. I probably, for Rick, Josh, Jeff, really whoever wants to take it, just coming out of Axon Week, a lot of focus on some of the new AI capabilities—Axon Vision, Guardian, Form One, etcetera. It would be great just to get a sense for where you saw the highest levels of customer engagement and interest, and how that might kind of fold into the pipeline build for the year as you think about the broader AI portfolio? Then I have a question for Brittany too.

Rick Smith: Yeah, so let me start with that one. I would say, look, the keynote ran a bit long because we had so many things to talk about and then, frankly, across so many different personas in the audience. We had leaders from healthcare. We had leaders from enterprise. We had prosecutors, police chiefs, TASER instructors. And part of what I really wanted to do was to just share the breadth of everything becoming possible in every role with AI that can impact anybody who is touching this information, and then wrap it up at the end like, hey, this is more than you can really wrap your head around, and we simplify it all with this AI Era Plan.

And the feedback I got pretty overwhelmingly from customers was that really hit home. There is a sense of, like, my god, the world is moving fast. It is almost disorienting, but we know we have to keep up. And the general sense was, look, you guys have always—you brought us TASERs when we did not think we needed it. You brought us body cameras when nobody wanted to wear them. And thanks for making this something where we have a partner that we feel like you guys can help us make sense of all this because it is head-spinning.

And so, really, each of those features is targeting different personas—like, Brief One is really focused much more on an investigator or command staff or a prosecutor compared to Form One, the new feature that enables them to use their data to fill out any form, not just ours, but any web-based form. And so for me, it was pretty evenly distributed. This was the first year I felt that the entire vibe—nobody was saying, like, I do not know if this AI thing is for real. Everybody is like, wow, it is everywhere. And, you know, help us figure this out. I do not know if Josh or Jeff, you want to add anything.

Joshua M. Isner: Yeah, I will just add one quick thought, which is I think in times of uncertainty, this is where the 17, 18, 20 years in the cloud and software space and wearable space really pays off. Customers trust us to bring market-leading products to market in responsible ways. And I am really proud of Jeff and our team as to how fast we have been able to release new features into our AI Era Plan. I think that is incumbent upon us to continue to delight customers. And look, we are—like, the Kentucky Derby was last week, the Belmont is in a few weeks. We look at ourselves like Secretariat at the Belmont.

We want to be accelerating ahead of everybody in AI. And the sheer volume of new useful tools we are sending out to our customers—our customers had, we do the Shock Tank idea where they come up with new ideas, and we are building one, and our goal is to release that to every customer who came to Axon Week in the next couple months just to show we can go from idea to execution to output in a very condensed period of time now, and we think that is going to be a massive tailwind for our customers, our investors, and our company.

William Power: Okay. And then if I can—I appreciate that, great perspective. Brittany, I guess some of the questions I have gotten early here are a bit on the free cash flow side. I know you addressed it on the inventory piece and inventory commentary. Is there any way to share, as you think about the higher inventory investment, how much of that relates to higher memory cost and inflationary pressure versus just trying to meet customer demand? And then anything you can share on the capex, which I think came down a little bit. And just putting all that together, how you get comfortable with the free cash flow conversion targets given the moving pieces here.

Brittany Bagley: Yeah, thank you for asking. So as we look at inventory, of course, memory is included in that overall number. But this is really about inventory investments to make sure we have supply across all of our products and have the ability to scale to meet demand as we look forward into the next year. So I would view it as including memory and making sure that we are in a good place on memory, but not at all solely driven by memory. We would be doing this with or without memory, just to make sure that we are in a good supply chain position.

If you look at Q1, Q1 is generally our seasonally softest quarter from a free cash flow standpoint. We have bonus payments, we have commission payments, we have one of our two semiannual interest payments in Q1. And even with all of that, without the inventory investments, we would have been positive from a free cash flow standpoint in Q1. So as we look at the next three quarters of the year, we are very comfortable that with the inventory investments we have in mind, with everything we can do around working capital, and the fact that we will not have some of those Q1 events reoccurring, that we can get to that target for the year.

From a capex standpoint, as we go into the year, we tend to have a lot of projects, a lot of things on our plate. And then as we get into the year and we see what we are actually executing on, we can refine that capex. And so that is really all you are seeing there—we are just refining and tightening up that capex forecast for the year.

William Power: Okay. Thank you.

Joshua M. Isner: Thanks, Will.

Erik Lapinski: Thanks, Will. Up next, we have Andrew Michael Sherman at TD Cowen.

Andrew Michael Sherman: Oh, great. Thanks. Good to see everybody. Congrats on the quarter. Josh, the AI Era bookings up 140%, revenue up, I think, 700%. That was a lot higher than I thought. And interesting comment on all large agencies including that now. Maybe just to expand on that. Are we hitting a tipping point now where the bundle has been out for a while, so you are seeing more viral type of adoption? Are you seeing that in the pipeline?

Joshua M. Isner: Thanks, Andrew. Glad we could beat your expectations on how many of these things we were going to sell in Q1 here, and it has been a great start to the year. I think these deals take a long time to come into fruition. You are talking $50 million to $200 million deals with some of these large major cities, and as a result, sometimes it takes 8 to 12 months to get these things across the goal line. So we announced the AI Era Plan at the very, very end of 2024. Last year was a great start—we had said we had booked $750 million on it—but we certainly expect that number to keep rising.

There is more and more belief in what we are doing. There is more and more engagement across the features in the bundle itself, which are driving a better view of the ROI that we are offering. And so just today, a major city in the Mid-Atlantic region went in front of their city council and had a $150 million deal approved that included the AI Era Plan. We are seeing this all over. We are very excited about it. We know that responsibility comes with it. We have to keep iterating and making sure that we are delighting our customers with this feature set.

But I certainly have a lot of confidence in our team to be able to do that.

Andrew Michael Sherman: Excellent, thanks. One more for you, Josh. The enterprise telco deal in April—very impressive. That is your second big deal in enterprise focused on FUSUS. What is the use case in this example? What problems does FUSUS solve for them? Are there more of these in the pipeline? Thanks.

Joshua M. Isner: Sure thing. I think about our enterprise business in really three buckets: FUSUS, Dedrone, and then ABW, or Axon Body Workforce—the Axon Body Mini. With FUSUS, all of these businesses have dozens, hundreds of thousands, and in some cases, millions of video streams around the world. As they have brought those online, a lot of times they are siloed across different systems, and they do not have a real unified user experience. We are able to come in with FUSUS and bring everything together in one place, and be able to connect it with public safety at the customer's option in terms of the protocols there. That has been very valuable.

As camera infrastructure has grown across all cities and businesses, that has been a tailwind for FUSUS adoption. We are seeing similar interest in Dedrone right now, as I said, protecting data centers, high-value warehouses, headquarters, other physical infrastructure. And then, of course, the Axon Body Mini—production units start shipping in July. As we get through beta there, we are seeing a lot of momentum, with a couple major customers growing their deployments already of ABW. So we are seeing it really start to happen in enterprise. It is exciting. But it is also really exciting to see it continue to happen in public safety and to see international grow explosively as well.

A lot to be looking forward to this year.

Andrew Michael Sherman: Awesome. Thanks, Josh.

Joshua M. Isner: Sure thing, Andrew. Thank you.

Erik Lapinski: Thanks, Andrew. Up next, we have James Fish at Piper Sandler.

James Fish: Hey, guys. Nice quarter. Look, multiple large events are coming up here. You just highlighted a few this past weekend—hopefully horse spawn. But just how is this impacting bookings and pipeline? And how much of the Dedrone kind of uptick and outperformance is being tied to these events? And really the crux of it all, guys, is just trying to understand: is this event-driven, or is it sustainable kind of demand?

Joshua M. Isner: I would think of this as infrastructure. Certainly, events are nice moments in time where we can show off the product. They are not super large deployments, and they are ephemeral in nature. But what it does do is it gives the host city and federal law enforcement a view into what is happening. Federal law enforcement was very complimentary to us about our Dedrone installation at Super Bowl, and that drove interest in that segment. Think of these as great opportunities to show what we can do, but it is really about translating that into permanent infrastructure in these cities and businesses. That is where the real long-term value lies, and that is happening.

Dedrone—we were very bullish about the acquisition and what it would mean for our business and our ability to protect lives, and all of those expectations have been shattered. The demand for this product is, in terms of hardware, about as fast as I have ever seen adoption of a hardware product that we have made. Very exciting, and a lot of work to do to continue to build out the ecosystem there. But certainly a lot to get us very optimistic about being a leading counter-drone provider.

Brittany Bagley: I would just add, even if you look at some of the legislation like the Safer Skies Initiative that is coming through, it is really enabling counter-drone technology to be sustainable, and that is a multi-year program. Events are great, but I would not view Dedrone as being successful only because of those events. This is a real trend and a real change in the trajectory and the need for adoption of counter-drone. And we are seeing that. I would say right now, we are more limited by our actual ability to scale and get the product out the door than we are by opportunities out there.

It is really these things are all a catalyst for a shift in mindset to viewing counter-drone as an essential infrastructure capability for cities, for enterprises—for all of these things. And it triggers the notion of them viewing it as a sacrosanct thing they have to add to their portfolio.

James Fish: I appreciate all the details there, guys. And Brittany, not to belabor the point, but what are your purchase commitments at this point? If I look at your inventory today—and I understand the investment you are making—it is about half of your product cost for the year. What is giving you enough confidence here that you have the inventory availability to meet the demand for the year?

Brittany Bagley: Look, I think part of the thesis behind this investment is you can see how quickly we are growing and how quickly we are ramping all of our hardware. We want to make sure that we have the ability to hit that demand, and that is part of the investment behind it. We work really closely with all of our suppliers. We have mission-critical hardware. This hardware is not a nice to have; it is a must-have for our customers.

As we look at our investments and we look at the year, we are making sure that we work with our partners to get in what we need to get in, and to give them those long-term forecasts because we have products that last for a long time. We have a lot of stability in our demand and our need. So I would just say it is really, really close collaboration with our partners and our supply chain.

Joshua M. Isner: And can I just add to that, just so there is no confusion? We have been investing in inventory for quite a while, and we entered the year—one of the reasons that we have not had much impact from the memory costs in terms of our guidance is because of our inventory philosophy. We had a lot of inventory coming into the year, and thus we were able to be a little more patient, and are still able to be a little more patient to ride this wave out on the memory costs.

Really, we are looking toward next year at this point and how we can position ourselves well across our core products so that large international orders are not taking away from our ability to ship to U.S. customers and not putting a ceiling on our revenue growth. Certainly, with geopolitical risk going into next year, we have our eye on that, and we do not want anything that happens in the world to have an impact on our ability to support our customers. We are looking at this as an inventory investment to get up to certain levels where we think we can support the growth and hedge some of the risk.

But like Brittany said in her remarks, that is already contemplated in our free cash flow guidance for the year.

James Fish: Makes sense. Thanks, guys.

Rick Smith: Thank you.

Erik Lapinski: Thanks, Jim. Up next, we have Jonathan Frank Ho at William Blair.

Jonathan Frank Ho: Hi. Congratulations on the excellent quarter. Maybe talk a little bit about your AI cross-sell cadence, particularly for customers that are in the middle of existing long-term contracts. Are most waiting until their contracts expire? Is there a way for you to restructure these mid-flow, particularly for those contracts that are in place? Any color would be helpful there.

Joshua M. Isner: Sure thing, Jonathan. A lot of that happens very naturally. Even before the AI Era Plan, that was happening relatively naturally because we do release new products every single year. We release some at Axon Week; we will have more exciting things to talk about at IACP, and those are often catalysts to rewrite contracts. A customer sees something they like and says, okay, if I am going to buy this, we might as well put everything together and create a new contract that contemplates all of this. Between camera upgrades, new products, urgency around AI—these are all catalysts for those conversations.

We do rewrite these contracts as we go according to new product availability, and it has been a great driver of bookings growth.

Jonathan Frank Ho: Got it. And then just as a follow-up, you referenced multiple times the strength in international growth, and I just wanted to better understand the drivers here. It seems like you have initially landed with many of the national police forces. Are you seeing this strength come from filter down? Is this new national police forces? Any color would definitely be helpful.

Joshua M. Isner: Sure thing. It is a good question. I guess it is not one individual thing, but I think it is a combination of having a far better team and go-to-market operation. That is not only our own internal team, but that is partners—technology partners, system integrators, and distributors. We have really figured out the right way to go to market in some of these different nations around the world, and that has been wind at our back. Now we can parlay that into better product-market fit. There is demand for FUSUS. There is demand for Records. There is certainly a lot of demand for Dedrone, and that is driving a lot of conversations into other product categories.

Ultimately, I just think we are showing up as more of a global company at this point. It is not one person in a very large country showing up trying to sell TASERs for the first time. We are showing up like a technology vendor that can help across a number of different product lines, and that land-and-expand strategy is starting to really work like it did in the U.S. The consistency of our results now is showing—last year was our first year over a billion dollars in bookings. This year, we have a very strong pipeline and certainly hope to grow well beyond that. We are as confident as we have ever been in the international business.

I think that is attributed to Cameron, our Chief Revenue Officer. He has done a really nice job rebuilding a lot of that function, as well as a lot of folks on the ground doing really good work every single day.

Rick Smith: I would add in, I just got back from a two-week, two-and-a-half-week overseas trip. We are seeing some of the smaller countries looking at going all-in on a national basis, which is kind of a new dynamic, and I think that is really quite helpful—especially within some of these different blocs where maybe there has historically not been as much comfort with the cloud. Seeing some of these smaller countries go all-in gives us proof points.

I had one of my first 90-minute sessions with a prime minister where this is rising up to that level—where they are looking at this going, wow, we could sort of leapfrog into one of the most advanced police agencies on Earth, because we could just deploy everything with Axon, which has been a pretty solid dynamic to feel that shift happening. I think as these smaller countries do it, it will give us the ability to earn our way up into the larger ones. As with everything, the really mega forces move much more slowly, and that is true of these big national forces compared to maybe some of the smaller ones we are finding a bit more nimble.

Again, it is plowing the ground by having, for example in the EU, some people leading the way really going all-in on cloud.

Jeffrey C. Kunins: The last thing I will say there really fast, similar to the enterprise discussion that Josh said before—in a lot of these other countries, they have spent a tremendous amount on massive networks of CCTV cameras. That is another place where FUSUS is a catalyzing part of the equation. It is not just our body cameras and just DEMS. FUSUS is a socket to let them get more value out of the investment they have already made in these other cameras, and that just makes the overall ecosystem story from Axon easier to reach the tipping point of their interest. It is a great catalyst.

Erik Lapinski: Thank you. Up next, we have Keith Housum at Northcoast.

Keith Housum: Great. Thanks, guys. Good morning. Obviously, a very solid quarter for you guys. Brittany, if there is anything to pick out from an investor standpoint, it might be in the software and services standpoint. Software and services tends to be very lumpy. I think what we saw here is, sequentially, probably a little bit lower than what we were expecting. Perhaps walk us through some of the puts and takes about software and services for the quarter and how we should be thinking about it.

Brittany Bagley: Sure. Happy to. I would say this is pretty typical for our seasonality in Q1, and you saw a similar dynamic in 2025. We tend to have a slightly smaller software step in Q1. If you want to look at our ARR, that is usually where it shows up first, and we had absolutely phenomenal ARR growth this quarter. I would look at ’25 and say it comes through first in the ARR growth, and then you could expect you will start to see that in the software step for next quarter. So I would dive a little deeper on the picking and look at it as pretty typical seasonality, with very nice strength continuing in our software business.

You just see that picking up in ARR first.

Keith Housum: Okay. Appreciate it. And then, Josh, on the enterprise question before—maybe I missed this. Was this a telecom or retail? Because I understand FUSUS, Axon Body Mini—only, is it a retailer? But also, is this an auction process? Was this you guys going to them? Pressing the background behind the adoption by this customer.

Joshua M. Isner: Sure thing, Keith. I have said on the call a couple times historically, I am generally a little more uncomfortable about sharing names of enterprise partners because sometimes they are competitive with our other customers, and sometimes there are other dynamics where it does not necessarily serve us to be front and center with other brands versus just supporting them behind the scenes and talking about the customer in more general terms. When you think of telecom providers, this is one of the first three or four that is going to enter your brain—I would say that.

The use cases are across retail locations and other company physical assets—certainly any video stream that is in their ecosystem of one of their cameras. That is now being managed and integrated into FUSUS. This is really about having complete situational awareness across all of their physical assets.

Keith Housum: Great. Thank you.

Rick Smith: Thank you, Keith.

Erik Lapinski: Thanks, Keith. Up next, we have Brennan Rogers at Wolfe.

Brennan Rogers: Hi, guys. Thanks for taking my question. I wanted to ask a quick one on AI. Coming out of Axon Week, there was a ton of innovation, ton of new products. How do you think about pricing to value as you furiously add these new products into the bundle over the course of the year? I think traditionally a pricing cycle would happen, and you would revise the pricing in Q4, Q1. Just given—even in the shareholder letter, you are talking about Axon Vision being GA in Q4, just heard about that in Axon Week—you probably will not have a chance to update pricing. How do you think about that?

Joshua M. Isner: Sure, great question. As always, we want our price to be commensurate with the value we are creating. In our bundles, you could compare the sum of the parts of all the individual features versus the bundle price, and generally we want those things to tie out. So the more features we add, you should expect that to be reflected in the price as we revise it each year. There is an annual escalator in the contracts to account for the fact that each year will represent more value and functionality in the plan. Generally speaking, it serves customers well to get in early. The longer you wait, the more the sum of the parts adds up.

But no matter what, we are going to make sure that the customer feels like there is a hit-your-forehead simple ROI on what we are providing relative to the cost.

Rick Smith: This is where the Era Plan is just really loved by customers. This idea that, hey, this is moving so fast. We cannot even predict with certainty what we are going to be building next year, and to avoid having to constantly be going back to procurement cycles—it would just be exhausting. They really love this idea that, you know what, Axon Vision is new, you did not know about it when you signed your contract—frankly, maybe we did not either—but you are going to get it if you are on that plan.

Brittany Bagley: I would say we are really careful on pricing to make sure that we are delivering more value to our customers before we take prices up. That is a pretty strongly held belief of ours—that it is tied to value. What you are seeing is we are putting more value into the AI Era Plan, which is great because then it means our customers will see that value. When we do get to our annual pricing discussions, we will look at the value we are delivering relative to the price.

Brennan Rogers: Got it. Thank you. And then just one more. On the memory side, any chance you can quantify the impact in terms of margins? I am assuming it is probably not big enough to reprice, or maybe that is the wrong assumption.

Brittany Bagley: That is right. It is not big enough for us to break it out for all of you. If you think about it, the products that we have memory going into the most are our camera products. They are clearly important for us, but they are only a part of our overall portfolio. You can imagine that the basis point impact to gross margin is not meaningful enough to break it out. It is certainly something we are looking at. It is one of the many puts and takes going into our gross margin for the year, and it is all contemplated as we think about our guidance. But I would not over-index on it.

Brennan Rogers: Got it. Thank you.

Erik Lapinski: Thanks, Brennan. Up next, we have Meta Marshall at Morgan Stanley.

Meta Marshall: Great. Thanks so much, guys. Maybe a couple of questions for me. You noted it is still very early days of Carbine and Prepared. What are you seeing in terms of how you are looking at that market opportunity? And then second, on federal—obviously some shutdowns at various points this year. I know it is not a major business for you, but how are you seeing the deal environment on the federal side?

Joshua M. Isner: Sure. On 911, I would say I have a lot of confidence that we will be contending for market leadership in this space in the next few years. I believe we have the most talented team in the market. I believe we have the most talented leadership, all the way down to the folks building the products and selling the products. I think the value proposition is very strong there. It reminds me of when we first got into cloud 15 years ago when the options were all on-premise. It was like, hey, this is kind of the next generation, and there is a lot of benefit to doing it this way.

Our customers are now seeing that after being entrenched in very outdated technology. Ultimately, there is a lot that goes into it, but I am pleased with the early progress here. As a reminder, we really think Prepared is out there winning logos with their over-the-top feature sets, and then Carbine is the capable fast follow for call handling when the time is right for the customer. One of the things I think we are seeing that we are particularly excited about is Carbine has a large international brand and a lot of momentum there as well—certainly not limited to the U.S. in Carbine’s case. We are feeling good about it.

Still early innings, and we have a lot of work to do to keep building. But we have already signed some of the largest jurisdictions in the country on Prepared in the last three to six months, and we expect that to continue. Feeling really good about what 911 is going to look like for the year to come.

Rick Smith: Yeah. I would tell you my natural inclination—I am highly biased towards building things ourselves. But when we met both Amir and his team at Carbine and Michael Chime and his team at Prepared, we were like, wow, these are great teams. It takes time to go build great teams, and they built great products. Customer feedback has been just phenomenal. I was just with them recently at some customer events, and I can tell you we are getting glowing customer feedback. It is also kind of fun for me as an entrepreneur who is getting a little further in my career. The energy these younger entrepreneurs are bringing into the organization is great.

It is just a fresh wave of energy into the whole company. It has been great.

Jeffrey C. Kunins: It is yet another example of how the whole is greater than the sum of the parts. The enthusiasm that we are seeing customers have for how quickly we brought the data from Prepared and 911 alerts directly into FUSUS and then also bringing that directly into Skydio as part of DFR—those things together make shorter response times happen. That is a perfect example of the flywheel that Josh was referring to before.

Joshua M. Isner: And then, Meta, on federal—renewed momentum there. Last year, we rebuilt a large portion of the team, including our leadership. Claudia Davidson has come in from Palantir and is a fantastic fit at the company and is someone that I think is going to be a long-ball hitter here for a long time. She has done a nice job rebuilding the momentum. We are seeing renewed interest in body cameras and TASERs in federal law enforcement. We are seeing a lot of interest in Dedrone. And then, of course, on the DoD side, we are also seeing some Dedrone applicability there. Really, the federal business is trending very much in the right direction.

With a few things going our way, it could be a banner year in federal. But again, we have to do the work still.

Meta Marshall: Great. Thanks so much.

Erik Lapinski: Thanks, Meta. Up next, we have Joseph Cardoso at JPMorgan.

Joseph Cardoso: Hey. Good evening, guys. Thanks for the questions here. I wanted to circle back on the FUSUS conversation and then more specifically the level of attach that you are seeing with some of the opportunities here, particularly as it relates to Outpost. You mentioned it with the telecom win, but I am curious how much more pervasive that dynamic is playing out. What is exactly driving customers to adopt the hardware side of things? The crux of the question really comes down to: are you actually seeing folks rip and replace hardware to essentially install Outpost, and what is the driving force behind that? And then I have a follow-up. Thank you.

Joshua M. Isner: Sure thing. We absolutely are. There are two or three driving forces behind it. Number one is the product is performing exceptionally well in the field and relative to incumbents in the space. Our product is outperforming them in terms of lane coverage, plate reads, performance in bad weather—all the things that our customers would expect from an Axon product, this product is doing. It is cheaper—that is certainly helping in the context of competing against incumbents. Third, it is a new sensor in this broader ecosystem. You can run AI on it at the edge. You have immediate utility from the plate reads. It fits in this broader play with Axon Vision and so forth.

Reminder on Outpost is it has two cameras in it. One is for plate reads, and the other is for CCTV streaming. We think this is physical infrastructure that is going to lead to more and more utility, safer outcomes, more AI. Ultimately, it is one of those where the trust in Axon, the belief from our customers that we do things the right way—from data privacy, from making sure the community had a voice in product development—all these things combine into what looks like another transformative hardware program.

Rick Smith: If I could add in, if you go search, the mayor of Denver did a great video post where he is talking about—they moved from a competing system to Axon largely because of the data privacy, data ownership. We really structured this in a way where it is not just talk. When we think about building products rigorously in a way we are going to be proud of, we do that both so our insides match our outsides—employees want to be authentic and know that we are doing things in a way that they are going to be proud of—but it stands up to scrutiny.

Ultimately, that pays when customers are like, oh, wow, we did not realize our plate reads were being shared with a federal agency that is frankly not popular with our constituents in this area, and we do not want that happening certainly without our knowledge. When we come in, we say: look, here is how this system works. It is your data. We do not have any right, title, or interest to it. We certainly enable you to share with anybody you want to share it to, but in ways that are very explicit and well controlled, and it is you making the decision so you are never getting surprised.

Those sort of things pay off pretty big when controversy sets in. One of the things you will hear from the customers we are positioned with is: we can help you get your job done and stay out of the headlines, and that is important to them.

Brittany Bagley: I am just going to add that one of the fun things talking about Prepared and Carbine and Outpost is that these are all things that are not called out in our revenue commentary because they are still immaterial to our revenue in this quarter. So we did 34% growth without any of these, and these are amazing drivers to support our long-term growth in our future.

Joseph Cardoso: I appreciate the color, guys. And then as my follow-up—on the drone opportunity, maybe this one is more geared towards you, Brittany. Obviously, nice growth this quarter. It appears to be a strong pipeline building. Given its infancy, I am sure it is weighing on the device margins here. Can you help us frame where this business sits today within the margin structure versus your ambitions at scale? And what level of scale would you need to achieve that?

Brittany Bagley: It is a great question, and you are absolutely right. We have called out before that our platform solutions business is the lowest of our three hardware businesses inside of connected devices, and certainly the Dedrone hardware is a portion of that. I think there is room for us to continue to improve that margin as we scale. I do not have an exact level for you, but that is something where it is small today. As we scale and as we get repeatability, and as we get larger numbers that we can leverage, we would, of course, expect it to improve over time. I would also remind that there is a nice software component to our Dedrone business.

That spreads out over more years. We get more of the hardware upfront, but there is a great software component to Dedrone that shows up inside of our software business, and our software-only gross margins, if you include the services piece, continue to be above 80%. We are still really happy with the contribution of Dedrone. But with the type of growth we are seeing, we will take a little bit of movement quarter to quarter in our connected devices gross margin in return for that.

Joseph Cardoso: Fair. Thank you. Appreciate the response.

Erik Lapinski: Thanks, Joe. Next, we have Trevor James Walsh at Citizens.

Trevor James Walsh: Great. Thanks, Erik. Josh and/or Jeff, maybe for you guys—also want to ask about Dedrone, but in a different way. The commentary you had around the strength and the momentum there seems very event-driven—protecting of infrastructure, counter-drone. But we have thought of Dedrone as well as more of the airspace management and it can relate to DFR opportunities. Is it really being driven by that counter-drone piece, or is that DFR element still present, and how is that going? Can you think of it as two separate buckets, or do they really need to be together?

Joshua M. Isner: I think there are two advantages to deploying Dedrone. Right now it is far more predicated on the counter-drone than it is on DFR, and that is more a reflection on who is buying it now. U.S. state and local is buying it, but international, enterprise, and federal are buying it as much or more, and in those three markets it is far more for counter-drone. As DFR continues to proliferate, certainly there will be a lot of utility with Dedrone, and there is opportunity to make it much more tightly ingrained with FUSUS so you see everything on one map, and then it is just a very clean user experience.

But the counter-drone functionality is what is driving the Dedrone interest upfront.

Jeffrey C. Kunins: Just to connect those dots, the technology piece is shared, so that thesis is still 100% right. As DFR is also growing super fast, there is a mixture of where they are relying on the onboard versus where they are relying on the Dedrone tech to do it. It is just a mix and situational. You have all of these things growing super fast. Right now at this moment, I totally agree with Josh—the majority of the Dedrone growth is on the counter side, but the tech thesis is the same, and it fits hand in glove with the overall DFR hypergrowth as well.

Trevor James Walsh: Thanks, gents. Maybe just based on your answers, a quick follow-up for Brittany. Are you currently or in the future going to be able to differentiate between what revenue is more DFR-related for Dedrone versus counter? Do you have that level of visibility? Could we maybe expect something to give us some breadcrumbs as to how that is all flowing in which direction for that line of the business?

Brittany Bagley: I think you might expect us to give breadcrumbs and continue to give color on the call. I think we are a pretty long way from further breaking out platform solutions as a segment. But as we always do on some of these segments, we will, of course, try and give you color as we see developments going places.

Trevor James Walsh: Cool. Great. Thanks all. Appreciate it.

Joshua M. Isner: Thanks, Trevor.

Erik Lapinski: Up next, we have Jeremy Scott Hamblin at Craig-Hallum.

Jeremy Scott Hamblin: Thanks and congrats on the strong results. I want to start with your annual recurring revenue. We saw an uptick in the year-over-year growth rate on that. From a sequential and total dollar amount, the fastest growth that you have ever had. In terms of quantifying what is driving that, is the portion of growth more being driven by user growth, or is that being driven by more adoption of the AI Era Plan and getting higher monthly user pricing as a result of adoption of more premium plans?

Brittany Bagley: It is really both, honestly. We continue to see nice growth in our user counts and our user adoption, and you are seeing AI come in. There is really no one driver. You are seeing the business hit on all cylinders. You are seeing the AI plan really kick in on top. You are seeing the benefit in ARR of our big bookings quarter in Q4; you are starting to see that show up. We continue to have NRR of 125%. That has been very consistent, but you are seeing those existing customers come back in and trade up and buy more. As I said earlier, it is strength across the board, but you are seeing it in ARR first.

Jeremy Scott Hamblin: And then on the commentary around Dedrone and your international business—you saw huge growth internationally, the best in quite some time, and 20% of your total business here. What portion of that is being driven by Dedrone? Because of that and what is going on geopolitically, should we expect international is going to be a bigger portion of the total here for the foreseeable future?

Joshua M. Isner: It is a great question, Jeremy. The challenge we always have in predicting that one is just a question of how fast the U.S. is going to keep growing. Every time international grows fast, we also have a great quarter from U.S., and so the mix does not change all that much. If we isolated international, it is a little bit of both. We have some markets last year where we opened up on cloud, and then the conversations have really quickly advanced to following fast with Dedrone in large ways.

Then there is the inverse of that where we have had some large Dedrone deals, and now we have built some equity with those customers, and we are talking about how else we can help. On a revenue basis, Dedrone does factor in a little more because there is a lot of hardware versus some of our services that are more bookings-oriented that hit revenue over time. You might see international revenue still be lumpy from quarter to quarter. But as we zoom out on the year, I am sure Dedrone will be a driver of increased international revenue. I would say that is a pretty safe bet.

Brittany Bagley: It is going to move around. As Josh said, it is lumpy, it is quarter to quarter, but we are seeing fundamentally more strength in international. I would expect you will continue to see it be a big topic for us and some of the momentum. We have had two quarters in a row now up at that 20% level. It is really contributing nicely to the business.

Jeremy Scott Hamblin: Thanks so much. Best wishes.

Erik Lapinski: Thanks, Jeremy. We would love to try to get everyone in here knowing that we are coming up above the hour here. Maybe if folks could pick their favorite question for the next few. We will start with Michael Ng at Goldman Sachs.

Michael Ng: Great. Good afternoon. Thank you for the question. I think implied bookings in the quarter were up roughly 75% year over year. I certainly appreciate it is the smallest seasonal bookings quarter of the year. What does that tell you about the momentum for full-year bookings growth? Could we expect full-year bookings growth growing in line with revenue growth? Thank you.

Joshua M. Isner: I would say so, Michael. Directionally, I think that is how we look at it as well. The back-of-the-napkin is: if bookings grow at the same rate as revenue, then we can assume the revenue growth rate continues way out into the future. There is a lot of opportunity out there. We see a relatively similar pipeline ratio to what we saw last year versus the goals, which gives us confidence that bookings are continuing to grow. As you know, quarter to quarter, they can change a little. The back half is very weighted—Q4, with the growing size of these deals.

But we are bullish on bookings like we always are, and feeling really good about where we started the year.

Erik Lapinski: Thanks, Mike. Up next, we will go to Andrew Carl Spinola at UBS. Are you still with us? Maybe we lost Andrew. Okay, David Page at RBC.

David Page: Hi. Thank you for taking my question. Maybe just a quick one again on the drone. It looks like—there is a quote here in the deck that says over 400 unauthorized drone detections by Dedrone. When you actually go to market and sell the drone offering, what are people looking to protect against? What is their main use case? Thank you.

Joshua M. Isner: Sure thing. I think it starts with situational awareness. My guess is a lot of those 400 were people who just did not know what they were doing and were irresponsibly flying a drone, but not necessarily nefarious predatory drones. The first step is having a basic understanding of what is going on in your airspace day to day. As some of these U.S. state and local laws start to change that allow for mitigation, I think you will see customers follow with jamming capabilities, nets.

Interceptors are probably a little bit of a toss-up—that feels like making things explode in the sky will be a lot more highly regulated—but at least those first couple I think are more likely to start to happen faster. It is a case of one thing building to the next, and customers are seeing a lot of value in that. They are able to locate the pilots as a result of understanding what drone it is and where the pilot is out in the wild, so they can send the drone home and meet the pilot there. Again, this is a new and growing segment, and technology is changing fast, and our job is to stay ahead of that curve.

Jeff is doing a fantastic job with his team doing that. Plenty of problems to still go out and solve in counter-drone. That will be a continued place of focus and momentum for us. Thank you.

Erik Lapinski: Thanks, David. Up next, Jordan Lyonnais at Bank of America.

Jordan Lyonnais: Hey. Thanks for taking the question. On Dedrone, how you are going to market for it—how is it different than your other products? Is it customers coming to you, selling through distributors? And then for the defense and international side, how much more do you think we could see this accelerate if FUSUS gets FedRAMP status?

Erik Lapinski: Yeah. Thanks, Jordan. Jeff?

Joshua M. Isner: Thanks, Jordan. On the counter-drone go-to-market, I think it varies a little by market. U.S. state and local—we very much sell direct. It is in our packaging there, and you can buy it as a standalone as well. The real takeaway on Dedrone—outside of its pure momentum and revenue growth and bookings growth—is the idea that this product is truly opening up opportunity across all four of our customer segments. Even more so than TASER, more so than body cameras, this product solves a need in all four customer segments that is urgent.

Our job is to not only win those deals and delight customers out of the gate, but that land-and-expand play that is the hallmark of our execution as a go-to-market apparatus—we have to do that well in Dedrone across all four markets. You will see the tailwinds of that in our other product sales. Really excited about not only the growth, but the doors that are opening as a result of the interest in that one product. FUSUS FedRAMP certainly opens up opportunity in the federal government.

I am not sure that if I were stack-ranking the products, I would still say there is interest across the board—in our core business and core products, as well as Dedrone and DFR and others. FUSUS is in that bucket, and it will certainly help, especially across some of these ecosystem deployments where you are adding to an Evidence.com environment with these FUSUS streams.

Jordan Lyonnais: Thank you.

Erik Lapinski: Thanks, Jordan. We will take our final question today from Alex Latimore at Northland.

Alex Latimore: Hey, guys. Thanks for taking my question here. I was curious what your acquisition interest looked like for the year. I saw that you had a $10 million investment in Bruntar Aerospace. Maybe is the acquisition a drone manufacturer? Anything there would be great.

Joshua M. Isner: We are heads down, working on integrating and maximizing the potential of all the acquisitions we have made over the last couple years, and there have been a bunch of them. I think this is a year where, of course, we will be opportunistic. Of course, we will continue to invest in other companies that we think could be great partners or future acquisition targets. But really, for this year, it is about going into execution mode, integrating the acquisitions we have made very well, and putting up more results like we are seeing out of Dedrone, FUSUS, and our 911 business right now.

Brittany Bagley: Alex, I would just note that was an investment, and I would expect—like we have been historically—that we will continue to make investments in places that we think are interesting in the ecosystem. I differentiate that pretty dramatically from us making acquisitions where we have to bring the companies and the teams on and integrate them and all of that. We will continue to make investments consistently as we go.

Rick Smith: Yep. That one in particular—Bruntar—they are in Ukraine. They are one of the leading reconnaissance drone makers. They are one of several companies we invested in to help build our footprint and our relationship across the Ukrainian drone and counter-drone space, because that is where the fastest level of innovation is happening. Our Dedrone is one of the key systems there. I would look at that one more as a key market partnership than any sort of a near-term acquisition. Lord knows what could happen way down the road, but I would say in Ukraine right now, their hands are pretty busy.

They are not looking to get acquired, but we do think it is important for us to put some investments in the market to build those relationships and for us to be able to learn together with them and have people that can help us grow our footprint in Ukraine. Long term, we could also be a great sales channel for some of the technology coming out of Ukraine. When the war is over, we think there are going to be a lot of go-to-market opportunities where we might be able to bring that tech into other markets.

Alex Latimore: Thank you.

Erik Lapinski: Thanks, Alex. And, Rick, we will let you close this out.

Rick Smith: Awesome. Well, it has been a wild year geopolitically. The optimist in me hopes that the universe is clearing its throat, and we are going to get back—after the pandemic and the wars that have happened—to maybe a little more stability in the world. I am proud of the role that we are playing in helping to mitigate some of those threats, to help to reduce some of the effects of violence in society that at times is feeling more polarized and unstable than ever—or at least maybe it feels that way. I am really proud of our team’s ability to continue to execute and to continue to build out the team with great people and great technology.

It continues to be a real privilege for me to get to work with awesome people on problems that really matter, doing things that are fundamentally moving the ball down the field. We never look to be second or third in a category. We like to create new categories—new capabilities that have never existed. Stay tuned over the next year. In addition to the great stuff we have been doing, we have whole new categories coming. And that is what keeps us really invigorated and excited. Great seeing you all, and we will see you on next quarter’s call.

Erik Lapinski: Thank you.