Axon Enterprise (AXON) is expected to sustain more than 25% revenue growth as its software mix expands and adoption of premium subscription plans increases, RBC Capital Markets said Monday in a report.

The brokerage said Axon's integrated hardware-software ecosystem creates a product-led "flywheel," reinforcing customer reliance and driving cross-sell and up-sell opportunities across US state and local public safety agencies.

The model also supports expansion into enterprise, federal, and international markets while enabling margin expansion and higher recurring revenue.

The firm highlighted Axon's durable revenue base, backed by multi-year contracts, subscription growth, and a growing backlog of around $11.4 billion, as providing strong visibility into future performance.

RBC initiated coverage on Axon with an outperform rating and an $860 price target.

Shares of Axon were down more than 2% in recent trading.

Price: 542.73, Change: -11.64, Percent Change: -2.10