During this call, we will discuss our business outlook and make forward-looking statements. So I'd like to welcome everybody to our third quarter 2025 earnings call. When you make that call, a network of connected devices and software across your city will activate instantly, analyzing information, prompting decisions, and allowing the human operator to coordinate a faster, more informed response. The AI Aeroplan continues to be the fastest booked Axon software product to date.
The momentum highlights another key part of our growth strategy, how we pour fuel on the fire when we acquire great businesses. Looking ahead, we're executing against a growing pipeline, and we're not slowing down. I have no doubt we will deliver another record year in 2026, something that I'm sure many of you are wondering about. Going into next year, look for us to continue to drive record growth, ensuring better execution through the use of AI tools and efficient decentralized ownership to tackle new markets and opportunities.
Third-quarter revenue of $711 million increased 31% year-over-year, marking our seventh consecutive quarter of 30% or greater growth, underscoring the robust demand we are seeing. Software and services was again the leader, increasing 41% year-over-year to $305 million of revenue. This growth reflects both new customers and existing customers expanding their use of our platform and capabilities. We continue to have strong net revenue retention at 124% again this quarter, and ARR grew 41% to $1.3 billion.
| Metric | Period | Current guidance |
|---|---|---|
| Q4 revenue | Q4 2025 | $750–$755 million (new) |
| Full-year revenue | FY2025 | about $2.74 billion (~31% growth at midpoint) (raised) |
| Q4 Adjusted EBITDA | Q4 2025 | $178–$182 million (new) |
| Full-year Adjusted EBITDA margin | FY2025 | 25% (maintained) (maintained) |
| Bookings growth | FY2025 | high 30s% year-over-year (reaffirmed) (reaffirmed) |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +31% | Robust broad-based demand; seventh consecutive quarter of 30%+ growth |
| Software and services revenue | +41% | New customers plus existing customers expanding use of the platform and capabilities |
| ARR | +41% | Continued expansion of recurring software business; reached $1.3 billion |
| Connected devices revenue | +24% | Broad-based demand across hardware lines |
| TASER revenue | +17% | Led by TASER 10 |
| Personal sensors revenue | +20% | Driven by Axon Body 4 |
| Platform solutions revenue | +71% | Driven by CounterDrone, virtual reality, and Fleet |
| Adjusted gross margin | -50 bps (to 62.7%) | First full quarter of tariff impact and scaling of lower-margin platform solutions, partly offset by software growth |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Axon 911 / voice communications | — | Acquired Prepared and announced Carbyne to build Axon 911, entering the 911 call-handling and voice-infrastructure layer; Prepared can autonomously handle up to half of non-critical calls | New |
| AI Aeroplan / AI bookings | Fastest-booked software product to date | On pace for AI bookings to exceed 10% of U.S. state-and-local bookings this year; adding live translation and policy chat features | Up |
| International expansion | Investing for years to open the cloud in Europe | Nine-figure E.U. cloud deal closed in October, two top-10 deals; first major customer going all-in on the cloud in the E.U. | Up |
| Per-user value / ten-year contracts | A few deals approaching $600 per user per month last quarter | Two top-10 deals broke the $600 per-user-per-month threshold; shift toward more ten-year contracts driven by customer trust | Up |
| Acquisitions (Fusus, Dedrone) | Recently acquired, integrating | Outperforming initial bookings expectations; bookings for newer offerings up more than 3x year-to-date | Up |
| Enterprise / Axon Body Workforce Mini | Retail trials in pipeline | ABW Mini launches next year with pent-up demand; enterprise viewed as potentially the biggest part of the business long term | Up |
| Tariffs | — | First full quarter of impact on connected devices, treated as a one-time step-down baked into margins going forward | Headwind |
| Federal | Not a big part of guidance for the year | Expect Q4 to be the best federal quarter of the year despite the government shutdown; more upside than risk | Up |