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Part of the case for a 50% jump in Axon Enterprise (AXON) stock rests on a business you may not connect with it: counter-drone systems, a category Axon added at the end of 2024. You probably still think of Axon as the maker of TASERs and body cameras. The stock has also gone the wrong way, falling 43.5% over the past year while the S&P 500 gained 14.0%. Yet a rise that size is no stretch for this stock. In August 2025 it closed 105.8% above the latest price, and in nine of the ten calendar years from 2016 to 2025 it rose 50% or more from one close to a later close within that year. That is the contradiction: a new business growing inside a stock that has fallen. So how big has counter-drone become at Axon?
Axon’s Platform Sales More Than Doubled, Led By Counter-Drone
Counter-drone already shows up in Axon’s sales. Platform solutions revenue grew 123% to $150 million in fiscal Q2 2026, and management said much of that rise came from Dedrone, its counter-drone business. Platform solutions as a whole brought in about 17% of Axon’s $904 million in revenue for the quarter. Management said counter-drone has quickly become a consistent contributor to results.
So far, counter-drone demand has also reached past a single event. On the August 5, 2026 call, management said the World Cup was certainly a surge, but that it is also seeing the demand at data centers and corporate campuses. The day before that call, Axon was named a participant in the $1.5 billion DHS program for counter-drone systems, making it one of a handful picked from 55 or 60 applicants. Management said it is still a little unclear how much of that program Axon will capture.
Axon Still Earns Little Profit On Growing Sales
Profit, not sales, appears to be the worry. Axon’s fiscal Q2 2026 earnings per share missed estimates even as revenue topped them, news reports said on August 6, 2026. Axon earned an operating margin of 5.2% that quarter, up from a small loss a year earlier. Over the twelve months to June 2026, though, its operating margin was under 1%, against 25.2% at Motorola Solutions over its own latest four quarters.
Axon’s counter-drone growth is still weighing on its margins. Management said a larger mix of newer products, which are still scaling, held back gross margin in the quarter, and that Axon is absorbing that mix as it scales counter-drone and other new businesses.
The cash has not arrived yet either. Axon’s free cash flow was an outflow of about $56 million over the first half of 2026. Management guides to $450 million for the full year, with strong seasonality in the fourth quarter, so the second half has to bring in more cash than the full-year guide. Management tied the weak cash to the inventory Axon is building to meet demand, and expects that spending to moderate after 2026.
