Axon Enterprise, Inc. (AXON): Business Model Canvas [Dec-2025 Updated]

You're looking at a company that successfully pivoted from just selling TASERs to running a high-margin public safety ecosystem, and honestly, the numbers for 2025 are what really grab my attention as an analyst. We're talking about full-year revenue guided near $2.74 billion, driven by sticky software where the Annual Recurring Revenue (ARR) already hit $1.3 billion by Q3 2025, showing a 124% Net Revenue Retention-that's incredible stickiness for government contracts. If you want to see exactly how they lock in law enforcement with integrated hardware and SaaS, check out the full Business Model Canvas breakdown below; it maps out the whole strategy, from their R&D spend to their key partnerships.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Key Partnerships

You're looking at the relationships Axon Enterprise, Inc. (AXON) relies on to keep its ecosystem growing, and honestly, the numbers show just how embedded they are in public safety infrastructure.

Law Enforcement Agencies (LEAs) and Government Institutions for product feedback and adoption.

The relationship with LEAs is foundational, driving both product development and revenue scale. Axon Enterprise, Inc. (AXON) has an ambitious goal to reduce all related gun deaths between police and the public in the United States by 50% by 2033. Product feedback loops are tight; for instance, the Edmonton Police Service (EPS) became the first police department in the world to trial facial-recognition-enabled bodycams from Axon Enterprise, Inc. (AXON) starting in December 2025, involving up to 50 officers in the proof-of-concept. Furthermore, the Retail Crime Hub integrates with 26,000+ retail locations across the U.S. using Auror to help law enforcement identify repeat offenders.

Cloud Service Providers (e.g., AWS, Microsoft Azure) for global data storage and infrastructure.

Axon Enterprise, Inc. (AXON) relies heavily on hyperscalers for its cloud services, which are central to Evidence.com and Axon Evidence. Axon Evidence is built on the Microsoft Azure platform, selected due to Microsoft's investments in security, transparency, and compliance, including adherence to the Criminal Justice Information Services (CJIS) security policy. Axon Cloud Services systems are designed to minimize single points of failure, replicating Customer Content over multiple systems. The Software & Services segment, which is cloud-dependent, saw revenue rise 38.8% year over year to $292.2 million in Q2 2025.

• Axon Cloud Services replicate Customer Content over multiple systems.
• Azure compliance includes the CJIS security policy.
• Software & Services revenue for Q3 2025 was $305 million.

Strategic technology firms like Leonardo DRS for AI-driven Counter-UAS solutions in defense.

A new strategic cooperation agreement was announced on December 3, 2025, between Axon Vision (an Axon Enterprise, Inc. (AXON) entity) and Leonardo DRS to pursue AI-enabled situational awareness and Counter-UAS (C-UAS) solutions for the U.S. defense market. This agreement builds on previous joint demonstrations, such as showcasing unmanned ground vehicle platforms integrated with Axon Vision's AI at the Association of the United States Army (AUSA) exposition. The partnership combines Leonardo DRS's advanced sensors and system integration with Axon Vision's AI-based perception and autonomy technologies.

Global network of distributors and resellers for international market penetration.

While specific distributor counts aren't public, the overall financial scale suggests a broad network is in place to support growth. The company raised its full-year 2025 revenue guidance to a band of $2.65 billion to $2.73 billion, representing approximately 29% growth at the midpoint. Annual recurring revenue grew 34% to $1.1 billion as of Q1 2025. The company also made significant strategic purchases in late 2025, acquiring Prepared for $637.5 million and Carbyne for $625 million, indicating investment in expanding service reach.

Hardware component suppliers for TASER devices and body camera manufacturing.

The Connected Devices segment, which includes TASER devices and body cameras, is a major revenue driver, necessitating robust supplier relationships. This segment generated revenues of $376.4 million in Q2 2025, growing 28.6% year over year. For Q3 2025, Connected Devices revenue was roughly $405 million, a 24% increase compared to the prior year third quarter. The TASER product line specifically brought in $238 million in Q3 2025.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Key Activities

You're looking at the core engine driving Axon Enterprise, Inc.'s growth as of late 2025. The key activities are heavily weighted toward innovation and locking customers into the ecosystem via long-term software contracts. It's a capital-intensive model right now, prioritizing market share over immediate GAAP profitability.

Aggressive Research and Development (R&D) in AI, VR training, and new hardware like TASER 10

Axon Enterprise, Inc. is pouring capital into future-proofing its platform. This is evident in the significant year-over-year jump in R&D spending. For the twelve months ending September 30, 2025, research and development expenses hit $0.625B, marking a substantial 59.82% increase year-over-year. This investment fuels the development of next-generation hardware and AI-driven software features.

Capital expenditures for the full year 2025 are budgeted between $170 million and $180 million, specifically earmarked to support these long-term R&D projects and new product development. For the third quarter of 2025, R&D expense alone was $177 million, representing 24.9% of that quarter's revenue. This high spend is directly tied to scaling products like the TASER 10, which is selling at twice the rate of its predecessor, and advancing VR training solutions.

Managing and scaling the Axon Cloud platform (Evidence.com) for digital evidence

The shift to a subscription-based Software as a Service (SaaS) model is the primary value driver. The Software & Services segment is growing significantly faster than the hardware side. For instance, in Q3 2025, this segment generated $305 million in revenue, soaring 41% year-over-year. This momentum is captured in the Annual Recurring Revenue (ARR), which reached $1.3 billion as of Q3 2025, also up 41% YoY.

The stickiness of this platform is quantified by the Net Revenue Retention Rate (NRR), which stood at 124% in Q3 2025, meaning existing customers are expanding their spend significantly. The gross margin for Software & Services remains high, reported at 73.8% in Q3 2025. This activity involves managing the data infrastructure for Evidence.com and scaling premium offerings like AI tools.

Manufacturing and global supply chain management for connected devices

This activity focuses on producing and distributing the hardware that feeds the cloud platform. The Connected Devices segment showed revenue growth of 26% year-over-year in the first nine months of 2025. The core TASER product line, fueled by the TASER 10, saw revenue increase 17% year-over-year in Q3 2025. Meanwhile, the emerging Platform Solutions category, which includes items like drones and Fleet car cams, grew an impressive 71% to reach $61 million in Q3 2025.

Supply chain management is critical given the cost pressures. The Cost of Sales as a percentage of sales for the company was 39.9% in Q3 2025.

Here's a quick look at the segment performance driving this activity through Q3 2025:

Direct sales and long-term contract negotiation with public safety agencies

Securing multi-year contracts is essential for the recurring revenue model. Axon Enterprise, Inc.'s backlog, reported as Remaining Performance Obligations, grew to $11.4 billion as of Q3 2025, a 39% increase year-over-year. This backlog represents future contracted revenue, with Axon expecting to recognize 20-25% of that $11.4 billion within the next 12 months. The full-year 2025 revenue guidance is set at approximately $2.74 billion, reflecting about 31% annual growth.

The company is also focused on international expansion, targeting a European footprint tripling in size, with specific focus on markets like Italy's police force, which represents a market size equivalent to 30% of U.S. law enforcement.

Developing new enterprise verticals like Axon 911 and Vehicle Intelligence

This involves integrating acquired technology and developing new software solutions that expand beyond traditional body camera and TASER sales. The acquisition of Prepared, which powers the AI-powered 911 intelligence, is key here. Prepared already partners with over 1,000 agencies across 49 states, protecting nearly 100 million people. The AI tool Draft One has already saved officers 2.2 million minutes in report writing time.

Vehicle Intelligence components, like the Axon Fusus platform, are showing enterprise potential outside of core public safety; for example, Fusus was part of a $300 million logistics deal to consolidate 300,000 video streams. The premium AI Era Plan, which layers on top of existing systems, has reached 30,000 active users.

• AI Era Plan active users: 30,000.
• Prepared agencies protected: Nearly 100 million people.
• Draft One minutes saved: 2.2 million.

Finance: review the Q4 2025 cash flow projections against the $170 million to $180 million CapEx guidance by next Tuesday.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Key Resources

You're looking at the core assets that power Axon Enterprise, Inc.'s market position as of late 2025. These aren't just line items on a balance sheet; they are the engines driving that massive recurring revenue stream.

The financial foundation is incredibly strong, built on long-term commitments from public safety agencies. This predictability is a key differentiator. For instance, the Annual Recurring Revenue (ARR) base hit a significant milestone.

Here's a quick look at the quantifiable assets underpinning the business model:

The Axon Cloud platform is central to this, holding petabytes of digital evidence, which locks customers into the ecosystem. The value of this platform is directly reflected in the software segment's performance; Software & Services revenue grew 41% year-over-year in Q3 2025, reaching $305 million.

The intellectual property portfolio is critical for maintaining the moat around the TASER energy devices and the growing suite of AI algorithms integrated across their offerings. The company's ability to secure and defend this technology is paramount.

The human capital is equally vital. You need to consider the highly specialized engineering and AI talent focused on public safety technology, which is necessary to continue developing products like the TASER 10 and Axon Body 4, which saw robust demand in Q3 2025.

Finally, the intangible asset of strong brand equity and trust within the global law enforcement community cannot be overstated. This trust underpins the high net revenue retention rate, which remained strong at 124% in Q3 2025.

• Intellectual Property (IP) and patents for TASER energy devices and AI algorithms.
• The Axon Cloud platform, which holds petabytes of digital evidence.
• Annual Recurring Revenue (ARR) base, which hit $1.3 billion in Q3 2025.
• Highly specialized engineering and AI talent focused on public safety technology.
• Strong brand equity and trust within the global law enforcement community.

Finance: draft 13-week cash view by Friday.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Value Propositions

You're looking at the core reasons why agencies buy into the Axon Enterprise, Inc. ecosystem, which is now guiding for full-year 2025 revenue of approximately $2.74 billion, representing about 31% annual growth. The value is built around a tightly integrated offering.

Integrated ecosystem of hardware and high-margin Software-as-a-Service (SaaS).

The value proposition centers on combining physical tools with cloud services, making the software the high-margin engine. Software & Services revenue saw a 39.6% year-over-year jump in the first nine months of 2025. In the third quarter of 2025 alone, this segment brought in $305 million, a 41% increase compared to the prior year. The gross margin for this segment reflects its high-value nature, coming in at 75.6% in the second quarter of 2025. The stickiness is clear in the Annual Recurring Revenue (ARR), which reached $1.3 billion by Q3 2025, up 41%. Furthermore, the Net Revenue Retention Rate (NRR) stood strong at 124%, meaning existing customers are spending significantly more each year. Honestly, with nearly 70% of the domestic user base still on basic plans, there's substantial room for future expansion within current accounts.

Less-lethal force options (TASER 10) to reduce gun-related deaths.

The TASER product line remains a core offering, with the next-generation TASER 10 driving growth since its 2023 shipment start. In the third quarter of 2025, TASER revenue was $238 million, marking a 17% year-over-year increase. This is a direct value proposition aimed at providing officers with a less-lethal alternative in high-stress situations.

Digital Evidence Management (DEM) for streamlined workflow and accountability.

Momentum in Digital Evidence Management is a primary driver for the high-growth Software & Services segment. The platform allows agencies to centralize evidence storage and sharing, which feeds into the overall ecosystem value. The growth in premium software features, which often include advanced DEM capabilities, is directly tied to the 41% growth in Software & Services revenue in Q3 2025.

Real-time operations and situational awareness tools for field officers.

This is where Axon Enterprise, Inc. is rapidly expanding beyond its traditional scope, often bundled into premium software tiers like the AI Era Plan. The Platform Solutions category, which includes emerging technologies, showed explosive growth, increasing 71% to $61 million in Q3 2025. The AI Era Plan, which bundles tools like Axon Assistant and Auto-Transcribe, already had over 30,000 active users as of May 2025. Furthermore, bookings for the AI Era Plan alone hit $150 million in Q2 2025. These tools, which include Community Shield uniting Real-Time Crime Center (RTCC), Drone as First Responder (DFR), and Counter-Unmanned Aircraft Systems (CUAS) technologies, aim to give officers an integrated operating picture.

• Platform Solutions Revenue (Q3 2025): $61 million.
• Platform Solutions YoY Growth (Q3 2025): 71%.
• AI Era Plan Bookings: Nearly $150 million in Q2 2025.

Transparency and trust through verifiable, tamper-proof video evidence.

Building community trust is supported by tools that enhance communication and allow for controlled, voluntary evidence sharing. Community Link, integrated within Axon Evidence, offers solutions like Community Request for secure, voluntary video sharing from residents, including from Ring cameras. Also, the Real-Time Translation feature on the Axon Body 4 camera helps officers communicate more easily in diverse communities, which is a key component in building trust.

Finance: review the Q4 2025 backlog recognition schedule against the $11.4 billion remaining performance obligations.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Customer Relationships

You're looking at how Axon Enterprise, Inc. keeps its government agency customers locked in and spending more, which is the core of their relationship strategy. It's not about quick transactions; it's about multi-year commitments to mission-critical infrastructure. This approach is why their subscription metrics look so strong.

The sales model is defintely long-term and high-touch, focusing on consultative engagement with public safety agencies. This deep integration is reflected in the massive contract pipeline. As of the third quarter of 2025, Axon Enterprise, Inc. reported future contracted bookings, or backlog, totaling $11.4 billion. This backlog reflects multi-year contracts, with the company expecting to recognize a portion of that $11.4 billion within the next 12 months, and the rest over the following decade. This long-term visibility underpins the stability of the customer relationship.

The subscription focus is paramount, with 95% of revenue tied to subscription plans. This drives the impressive expansion within the existing customer base, measured by the dollar-based net revenue retention. For the third quarter of 2025, Axon Enterprise, Inc. reported a net revenue retention of 124%. This means that even without adding new agencies, the existing customer base increased their spending by 24% year-over-year, primarily through adopting premium software features. Software & Services revenue, which is heavily subscription-based, hit $305 million in Q3 2025, growing 41% year-over-year. Annual Recurring Revenue (ARR) also stood strong at $1.3 billion as of that quarter, up 41% year-over-year.

Here's a quick look at the key financial metrics showing the strength of these recurring relationships as of late 2025:

The ecosystem lock-in is a direct result of designing devices to feed into the proprietary Axon Cloud platform. Once an agency integrates its body cameras, TASER devices, and in-car systems with the cloud for evidence management (like Evidence.com), the switching costs become brutal. This integration is further deepened by recent strategic moves to expand the platform's utility, such as the acquisitions of Prepared for $637.5 million and Carbyne for $625 million in late 2025, aimed at modernizing 911 call handling. This shows a commitment to owning the entire workflow, not just one piece of hardware.

Dedicated customer support and training are non-negotiable for mission-critical public safety tools. Axon Enterprise, Inc. supports this through several channels, ensuring users can master the technology:

• Axon Academy for training and certification.
• Evidence.com for device management and evidence viewing.
• Live chat support available 7 am-5 pm MST, Monday through Friday.
• Access to product guides, release notes, and e-learning videos on MyAxon.

The collaborative product development is implied by the high NRR and the continuous expansion of software features. Law enforcement agencies provide real-world feedback that directly informs the premium add-on features driving that 124% retention rate. If onboarding takes 14+ days, churn risk rises, so rapid, effective training via Axon Academy is key to realizing the value of those long-term contracts.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Channels

You're mapping out how Axon Enterprise, Inc. (AXON) gets its technology-from TASER 10 devices to its AI Era Plan software-into the hands of public safety agencies, and honestly, it's a sophisticated, multi-pronged approach. The channels are heavily weighted toward direct engagement, especially for those big, sticky government deals.

Direct Sales Force Focused on Securing Large, Multi-Year Government Contracts

The direct sales force is the engine for securing the largest, most complex agreements, particularly with U.S. state and local law enforcement. This team is responsible for driving the adoption of the entire connected ecosystem, not just individual hardware sales. We see the success of this channel reflected in the massive deal flow; for instance, a record-setting largest deal in Axon history was announced in Q2 2025, encompassing everything from drones to their AI products.

The penetration in their core U.S. state and local law enforcement segment is still under 15%, suggesting significant runway for this direct channel, even as the total addressable market (TAM) is estimated to be around $159 billion. The focus is clearly on locking in customers with bundled subscriptions like the Officer Safety Plans, which create that high-margin recurring revenue base. This is evident in the 124% net revenue retention rate reported in Q3 2025.

Here's a snapshot of the revenue driven through these core channels in Q3 2025:

Axon.com for Product Information and Customer Service Portals

Axon.com serves as the digital front door for both prospective and existing customers. It's where agencies research the latest offerings, like the Axon Vehicle Intelligence platform or Axon Assistant, and where current users access customer service portals and product documentation. While the direct sales team closes the big deals, the website supports the entire sales cycle and customer success. This digital presence is crucial for supporting the high-margin Software & Services segment, which grew 41% year-over-year in Q3 2025 to $305 million.

The digital channel underpins the stickiness of the platform through:

• Access to digital evidence management solutions.
• Information on virtual reality training platforms.
• Portals for managing the $1.3 billion in Annual Recurring Revenue (ARR) as of Q3 2025.

International Distribution Partners to Reach Non-US Public Safety Agencies

To capture the global opportunity, Axon Enterprise, Inc. relies on international distribution partners, though the U.S. market remains dominant, accounting for a significant portion of sales. The importance of international sales has actually decreased relative to the faster U.S. growth in recent periods. Still, international expansion is a stated priority, and the company is seeing traction.

We know they secured international wins, such as a major TASER customer in Africa in Q2 2025. Furthermore, the Platform Solutions category, which includes emerging tech like counter-drone and VR training, saw revenue growth of 71% in Q3 2025, suggesting these newer products are finding their way into global markets via partners.

Key international contract evidence includes:

• A major TASER customer win reported in Africa during Q2 2025.
• The overall global TAM is estimated at $159 billion.

Strategic Channel Partners for Emerging Markets like Defense and Commercial Security

Axon Enterprise, Inc. is deliberately moving beyond its core law enforcement base into areas like defense, corrections, fire/EMS, and even large enterprises. This expansion requires strategic channel partners who have established relationships in these non-traditional verticals. The company has started selling to federal agencies and corrections, and even secured its first enterprise AI contract in the gaming sector.

The growth in the Platform Solutions revenue category, which hit $61 million in Q3 2025, up 71% year-over-year, is a strong indicator of success in these emerging markets, often facilitated by specialized partners. For example, the company is also making strategic investments and partnerships in areas like drone defense, evidenced by their investment in Skydio as a DFR (Drone For Response) partner.

Examples of channel-supported expansion include:

• Platform Solutions revenue reached $61 million in Q3 2025.
• Partnerships are key for deploying new technologies like counter-drone systems.
• The company is actively expanding into corrections vertical deals.

Finance: review the Q4 2025 cash flow forecast against the $356 million net cash position as of September 30, 2025, by Monday.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Customer Segments

You're looking at Axon Enterprise, Inc. (AXON) as of late 2025, and the customer base is clearly diversifying beyond its traditional core. The company raised its full-year 2025 revenue guidance to approximately $2.74 billion, showing that expansion into new areas is happening alongside continued strength in public safety. The shift is evident in the revenue mix, where Software and Services revenue hit $305 million in Q3 2025, growing 41% year-over-year, compared to Connected Devices revenue of $405 million for the same quarter.

Here is a breakdown of the key customer segments driving that business:

• Local, State, and Federal Law Enforcement Agencies (primary market): This remains the bedrock. North America, where Axon Enterprise, Inc. (AXON) is strongest, holds an estimated 41.8% share of the global Body Worn Camera Market in 2025. The global Body Worn Camera Market itself is valued at USD 8.5 Billion in 2025. The TASER 10 adoption rate is noted as being double that of the prior TASER 7 model. Axon Enterprise, Inc. (AXON) manages about 40 times the data of the Netflix library in the cloud for its police customers.
• Corrections and Prison Facilities (a growing market for body-worn cameras): This segment is covered under the broader law enforcement and security umbrella, benefiting from the same push for transparency and accountability driving BWC adoption. Frost & Sullivan noted that unauthorized drones create new vulnerabilities at correctional facilities, which Dedrone by Axon addresses.
• Military and Defense Agencies (emerging segment for Counter-UAS and AI): Following the October 2024 acquisition of Dedrone, this segment is gaining traction. Dedrone by Axon participated in Project VANAHEIM in June 2025, a rapid procurement program for the British and US Armies focused on Counter Uncrewed Aircraft Systems (C-UAS). A report from Dedrone by Axon revealed a 4.3x increase in DIY drone detections in 2025 compared to 2024. Furthermore, Germany selected Tytan Technologies, a partner of Dedrone by Axon, for a multi-hundred-million-euro interceptor drone program for the Bundeswehr.
• Commercial Security and Enterprise Clients (new vertical for Axon Body Workforce Mini): This is the newest major push. Axon Enterprise, Inc. (AXON) unveiled the Axon Body Workforce Mini (ABW Mini) on September 29, 2025, specifically for retail, healthcare, and other frontline workers. Early deployments are scheduled for the first half of 2026 in the U.S. and Canada. The need is clear: seven out of 10 retail workers report rising workplace violence, and a 2024 study showed body-worn cameras led to an average 37% drop in retail violence incidents. The ABW Mini weighs under 100 grams and offers over 12 hours of battery life.

It helps to see how these segments map against the company's overall revenue structure as of Q3 2025, even though the specific contribution of the new enterprise segment isn't broken out yet:

The stickiness of the customer base across all these areas is shown by the Net Revenue Retention rate, which stood at 124% in Q2 2025, meaning existing customers are expanding their spend by 24% year-over-year. Also, the total future contracted bookings, or backlog, grew 43% year-over-year to $10.7 billion in Q2 2025.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Cost Structure

You're looking at the expense side of the Axon Enterprise, Inc. equation, which is heavily weighted toward future growth and platform expansion. It's defintely not a low-cost operation right now, as the company is pouring capital into R&D and sales expansion to secure that long-term recurring revenue moat.

Research and Development (R&D) is a major cost driver, designed to keep the ecosystem ahead of the curve. For the third quarter of 2025, Axon Enterprise, Inc. reported R&D expenses totaling $177 million. This spending fuels innovation across their entire suite, from TASER devices to AI-enabled software like the emerging Axon 911 stack.

Stock-based compensation (SBC) is another significant, non-cash component of the cost structure. For the full fiscal year 2025, Axon Enterprise, Inc. guided SBC expenses to be in the range of $580 million to $630 million. This reflects incentive programs like the 2024 eXponential Stock Plan and the 2024 CEO Performance Award, with approximately $330 million of that expected to fall within SG&A and R&D.

The costs associated with manufacturing the physical goods, the Cost of Goods Sold (COGS), are substantial, though the company maintains a strong overall gross margin by balancing hardware with high-margin software. In Q3 2025, total COGS reached $283 million, representing 39.9% of that quarter's revenue. This covers the production of TASER 10 devices and Axon Body 4 cameras, and it included $13 million in stock-based compensation expense for the quarter.

For the cloud infrastructure and data storage costs tied to the Evidence.com platform and other Software & Services, the direct cost isn't broken out separately in the primary expense lines, but we can infer its relative cost structure. The Software & Services segment, which includes Evidence.com, posted a very strong gross margin of 73.8% in Q3 2025. This high margin suggests that while cloud hosting and data management are real costs, the subscription revenue scales very effectively on top of them. You can see the cost breakdown for Q3 2025 below:

Expanding the global sales force falls under Sales, General, and Administrative (SG&A) costs, which were $253 million in Q3 2025. This reflects the investment in headcount needed to support the growing Annual Recurring Revenue (ARR), which hit $1.3 billion as of Q3 2025. The company noted that operating loss in Q3 2025 was primarily driven by increased headcount to support business growth and stock-based compensation expense.

Here are the key components of the expense structure for Q3 2025:

• R&D expense: $177 million
• SG&A expense: $253 million
• COGS: $283 million
• Q3 SBC within COGS: $13 million
• Q3 SBC within SG&A: $75 million
• Q3 SBC within R&D: $58 million

The focus on platform expansion means costs are being managed to maintain a strong Adjusted EBITDA margin, which management guided to approximately 25% for the full year 2025.

Axon Enterprise, Inc. (AXON) - Canvas Business Model: Revenue Streams

You're looking at how Axon Enterprise, Inc. actually brings in the money, and it's clear they've successfully shifted toward a recurring model. For the third quarter of 2025, the total revenue hit $711 million, marking the seventh straight quarter of growth above 30% year-over-year. This top-line number is a blend of high-margin software commitments and the continued sale of their core hardware.

The Software and Services segment is the engine for predictability, contributing $305 million in Q3 2025, which was a 41% jump from the prior year. This segment is underpinned by the Annual Recurring Revenue (ARR), which climbed to $1.3 billion, also growing 41% year-over-year. Honestly, this recurring stream is what analysts watch most closely.

The Connected Devices segment, while growing slower at 24% year-over-year in the quarter, still brought in $405 million. This category isn't just one thing; it's a mix of their established products and newer, high-growth platforms. Here's the quick math on how that $405 million broke down:

That Platform Solutions revenue, which includes things like Fleet car cams, drones, and now capabilities from the recent Prepared and Carbyne acquisitions for modernizing 911, is defintely a key growth vector, surging 71% in the quarter. It shows Axon Enterprise, Inc. is successfully monetizing its ecosystem expansion beyond the traditional body camera and TASER sales.

The stickiness of those multi-year SaaS contracts is evident in the 124% net revenue retention rate. This means existing customers are not only staying but are significantly increasing their spend year-over-year, which is where those extended warranties and device upgrade programs fit in-they are bundled or sold as add-ons that lock in future service revenue.

• Sticky, multi-year SaaS contracts provide high revenue visibility.
• Net Revenue Retention stood strong at 124% as of Q3 2025.
• Future Contracted Bookings (backlog) reached $11.4 billion.
• This backlog is up 39% year-over-year, showing strong forward momentum.

Finance: draft 13-week cash view by Friday.