TenQ

The Axon story

Axon connects TASER devices, cameras and public safety software, with the central question whether broader agency deployments can turn recurring revenue growth into durable cash generation.

Axon stock reportTenQ Score 10/36 · every chart and check from its filings
  • $390.29share price, last close
  • $31.7Bmarket value
  • 10/36TenQ Score checks passed

The story in brief

  • Subscriptions deepen relationships. In the quarter to June 2026, annual recurring revenue grew 39% to $1.6 billion and net revenue retention reached 126%.
  • Contracts extend demand. Future contracted bookings reached $15.1 billion in the quarter to June 2026, including two nine-figure agreements with major U.S. cities and Axon's largest individual TASER order.
  • Cash conversion trails growth. Revenue rose 35% to $904 million in the quarter to June 2026, but free cash outflow was $1 million despite $242 million of Adjusted EBITDA.

What drives the business

  • Axon's business rests on government and law enforcement relationships, expanding from TASER devices and body cameras into evidence management, communications and response software that connect agency workflows.
  • Integrated subscriptions encourage customers to add users and premium services, with annual recurring revenue reaching $1.6 billion and net revenue retention reaching 126% in the quarter to June 2026.
  • Software & Services revenue grew 36% to $398 million in the quarter to June 2026, while Connected Devices revenue grew 35% to $507 million, driven by Dedrone, TASER 10 and Axon Body 4.
  • Future contracted bookings grew 41% to $15.1 billion in the quarter to June 2026, supported by major city agreements, state corrections contracts and the first full-scope Axon 911 customer agreement.
  • Expansion beyond core police equipment includes Dedrone, whose revenue surpassed $100 million in the quarter to June 2026, and enterprise deployments such as Cosentino's Food Stores, which connected cameras and evidence workflows across 31 grocery locations.

What the price assumes

TenQ's reverse DCF cannot establish a measurable implied growth rate because its negative cash flow and operating earnings premise conflicts with positive reported free cash flow over the last twelve months and operating income in the quarter to June 2026.

At $406.00, Axon's valuation is 167.8x earnings and 10.2x revenue, alongside revenue growth of 34.6% over the last twelve months but profit growth of -38.9%.

TenQ's Value checks passed 0 of 6, with the 0.4% free cash flow yield below its 3.0% threshold.

What could change the story

  • Axon depends on continued law enforcement acceptance of its products, particularly Conducted Energy Devices, while government procurement rules and contract cancellations can affect revenue.
  • Rapid technological change can weaken existing products, and security breaches involving sensitive customer information could damage confidence and create legal and financial exposure.
  • Software & Services gross margin fell to 71.3% from 75.6% in the quarter to June 2026 as professional services and newer offerings expanded, while tariff refunds helped operating income and Connected Devices margins.
  • Stock-based pay of $633 million exceeded free cash flow of $133 million over the last twelve months, highlighting the gap between cash generation and equity compensation.
  • Axon priced a $1.0 billion offering of 0% convertible senior notes due 2031 in September 2026 to support corporate purposes and potential investments, adding financing obligations and potential dilution while TenQ's interest coverage check failed.

What to watch next

  • Axon's full-year 2026 outlook calls for revenue growth of 32% to 34% and an Adjusted EBITDA margin of approximately 25.5%, making growth alongside margin retention the next operating test.
  • Axon expects to fulfill between 20% and 25% of June 2026 future contracted bookings over the next twelve months, though the balance includes contracts with termination clauses and amounts that may not become recognized revenue.
  • Full-year 2026 stock-based compensation guidance of approximately $590 million to $620 million and capital expenditure guidance of $160 million to $190 million frame the spending demands on cash generation.
  • Cash flow in subsequent releases will show whether billing, collections and inventory investment improve conversion after the quarter to June 2026 included $47 million of tariff refund receipts.

Sources

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