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AXON Gains From Strength in Software & Services Unit: Can the Momentum Sustan?
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Key Takeaways
AXON's Software & Services revenues rose 35% in Q1 2026, driven by growth in network users.
Software growth is fueled by digital evidence management, software adoption and premium add-on demand.
Dedrone platform revenues grew about 300% as Axon launched the upgraded Dedrone C2 platform.
Axon Enterprise, Inc. (AXON - Free Report) is benefiting from persistent strength in its Software & Services segment. In the first quarter of 2026, the segment’s revenues increased 35% year over year, driven by an increase in the aggregate number of users to the Axon network.
Growing popularity for the company’s digital evidence management and higher adoption of its latest software offerings are driving the segment’s growth. Also, strong demand for premium add-on features is aiding the segment. Existing customers are consistently returning to purchase additional services, reflecting strong customer satisfaction and engagement. This ongoing expansion supports a growing base of annual recurring revenues (ARR).
Given the rising global demand for Counter-Unmanned Aircraft Systems (CUAS), Axon is also witnessing strong momentum in its Dedrone platform. Revenues from the Dedrone platform saw robust growth of about 300% year over year in first-quarter 2026. The company also recently launched Dedrone C2, an upgraded version of the platform. This C2 version comes with enhanced sensor fusion technology, offering stronger detection capabilities.
Strong customer alignment, increased adoption across sectors and continuous product innovation led Axon to issue bullish guidance for 2026. The company currently expects revenues to increase approximately 30-32% year over year compared with 27-30% guided earlier.
Segment Performance of AXON's Peers
Among its major peers, Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) Government Solutions segment’s first-quarter 2026 revenues increased 20.4% year over year to $288.4 million. Higher sales of Kratos’ Defense and Rocket Support, Turbine Technologies and Microwave Products units aided the results. Kratos Defense derived 77.7% of its total revenues from this segment during the quarter.
Its another peer, Woodward, Inc.’s (WWD - Free Report) Industrial business segment reported net sales of $387 million in the second quarter of fiscal 2026, up 20% year over year. Woodward generated 35% of its total sales from this segment in the quarter. The revenue growth for Woodward’s Industrial business segment was driven by higher demand for power generation equipment and services, along with favorable conditions in marine transportation and steady investment in parts of oil and gas.
AXON’s Price Performance, Valuation and Estimates
Shares of Axon have gained 14.4% in the past month against the industry’s decline of 0.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, AXON is trading at a forward price-to-earnings ratio of 60.72X, above the industry’s average of 48.00X. Axon carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AXON’s 2026 earnings has increased 15.6% over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
AXON Gains From Strength in Software & Services Unit: Can the Momentum Sustan?
Key Takeaways
Axon Enterprise, Inc. (AXON - Free Report) is benefiting from persistent strength in its Software & Services segment. In the first quarter of 2026, the segment’s revenues increased 35% year over year, driven by an increase in the aggregate number of users to the Axon network.
Growing popularity for the company’s digital evidence management and higher adoption of its latest software offerings are driving the segment’s growth. Also, strong demand for premium add-on features is aiding the segment. Existing customers are consistently returning to purchase additional services, reflecting strong customer satisfaction and engagement. This ongoing expansion supports a growing base of annual recurring revenues (ARR).
Given the rising global demand for Counter-Unmanned Aircraft Systems (CUAS), Axon is also witnessing strong momentum in its Dedrone platform. Revenues from the Dedrone platform saw robust growth of about 300% year over year in first-quarter 2026. The company also recently launched Dedrone C2, an upgraded version of the platform. This C2 version comes with enhanced sensor fusion technology, offering stronger detection capabilities.
Strong customer alignment, increased adoption across sectors and continuous product innovation led Axon to issue bullish guidance for 2026. The company currently expects revenues to increase approximately 30-32% year over year compared with 27-30% guided earlier.
Segment Performance of AXON's Peers
Among its major peers, Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) Government Solutions segment’s first-quarter 2026 revenues increased 20.4% year over year to $288.4 million. Higher sales of Kratos’ Defense and Rocket Support, Turbine Technologies and Microwave Products units aided the results. Kratos Defense derived 77.7% of its total revenues from this segment during the quarter.
Its another peer, Woodward, Inc.’s (WWD - Free Report) Industrial business segment reported net sales of $387 million in the second quarter of fiscal 2026, up 20% year over year. Woodward generated 35% of its total sales from this segment in the quarter. The revenue growth for Woodward’s Industrial business segment was driven by higher demand for power generation equipment and services, along with favorable conditions in marine transportation and steady investment in parts of oil and gas.
AXON’s Price Performance, Valuation and Estimates
Shares of Axon have gained 14.4% in the past month against the industry’s decline of 0.2%.
Image Source: Zacks Investment Research
From a valuation standpoint, AXON is trading at a forward price-to-earnings ratio of 60.72X, above the industry’s average of 48.00X. Axon carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AXON’s 2026 earnings has increased 15.6% over the past 60 days.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.