Axon reports record Q3 2026 revenue of $909 million, up 28% year over year
AXON ENTERPRISE, INC. (AXON) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 CONTACT: Investor Relations Axon Enterprise, Inc. IR@axon.com Axon reports record Q3 2026 revenue of $909 million, up 28% year over year • Announces increased stake in Skydio to 37%, cementing leadership in Drone as First Responder • Software & Services revenue growt
How this was made
The 30-second read
Why it matters
The record revenue and higher guidance could drive the stock higher, while the disclosed $130 million revenue reduction from delayed federal deployments introduces a downside risk.
Market read
First‑time disclosure of strong quarterly performance and guidance makes this a high‑impact earnings event for Axon.
What to watch
execution risk on future federal contracts and integration of Skydio may affect long‑term profitability
Axon reports record Q3 2026 revenue of $909 million, up 28% year over year
Revenue, Software & Services growth, bookings and Adjusted EBITDA were strong, but the full-year revenue outlook was reduced following the removal of approximately $130 million of Federal Dedrone deployments, gross margins declined and free cash flow was an outflow.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net salesGAAP | $908.6M | – | 28% |
| Q3 2026 net sales from productsGAAP | $471.5M | – | – |
| Q3 2026 net sales from servicesGAAP | $437.0M | – | – |
| Q3 2026 gross marginGAAP | 56.7% | – | – |
| Q3 2026 adjusted gross marginnon-GAAP | 59.2% | – | – |
| Q3 2026 gross marginGAAP | $515.0M | – | – |
| Q3 2026 operating expensesGAAP | $472.9M | – | – |
| Q3 2026 selling, general and administrative expenseGAAP | $280.5M | – | – |
| Q3 2026 research and development expenseGAAP | $192.4M | – | – |
| Q3 2026 income from operationsGAAP | $42.08M | – | – |
| Q3 2026 net incomeGAAP | $57.01M | – | – |
| Q3 2026 net income marginGAAP | 6.3% | – | – |
| Q3 2026 diluted earnings per shareGAAP | $0.68 | – | – |
| Q3 2026 non-GAAP net incomenon-GAAP | $143.5M | – | – |
| Q3 2026 non-GAAP net income marginnon-GAAP | 15.8% | – | – |
| Q3 2026 non-GAAP diluted earnings per sharenon-GAAP | $1.72 | – | – |
| Q3 2026 Adjusted EBITDAnon-GAAP | $235.7M | – | 33% |
| Q3 2026 Adjusted EBITDA marginnon-GAAP | 25.9% | – | – |
| Q3 2026 operating cash flowGAAP | $19.69M | – | – |
| Q3 2026 free cash flownon-GAAP | −$18.90M | – | – |
| Q3 2026 capital expendituresGAAP | $38.59M | – | – |
| Q3 2026 annual recurring revenueother | $1.75B | – | 40% |
| Q3 2026 net revenue retentionother | 126% | – | – |
| Q3 2026 future contracted bookingsother | $15.8B | – | 39% |
| Nine months ended 30 SEP 2026 net salesGAAP | $2.62B | – | – |
| Nine months ended 30 SEP 2026 gross marginGAAP | $1.54B | – | – |
| Nine months ended 30 SEP 2026 income from operationsGAAP | $118.1M | – | – |
| Nine months ended 30 SEP 2026 net incomeGAAP | $255.7M | – | – |
| Nine months ended 30 SEP 2026 diluted earnings per shareGAAP | $3.08 | – | – |
| Nine months ended 30 SEP 2026 Adjusted EBITDAnon-GAAP | $679.3M | – | – |
| Nine months ended 30 SEP 2026 free cash flownon-GAAP | −$74.52M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Software & ServicesGrowth in users and increasing adoption of premium solutions by existing customers, including AI, real-time operations, Axon Records and Axon 911. | $437.0M | 9.9% | 43.2% |
| Connected DevicesLed by Dedrone and continued adoption of Axon Body 4, partially offset by lower legacy TASER volume and the timing of an approximately $30 million Federal Dedrone deployment. | $471.5M | (6.9)% | 16.3% |
| TASERIncludes TASER devices, cartridges and related extended warranties. | $233.0M | – | – |
| Personal SensorsPrimarily includes body cameras and accessories, signal sidearm, and related extended warranties. | $113.5M | – | – |
| Platform SolutionsGrowth was led by Platform Solutions; the category primarily includes fleet in-car video, interview room, fixed cameras, drones and counter-drone equipment, virtual reality training hardware, and related extended warranties. | $125.0M | – | 106% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Q4 2026 and full year 2026 outlook
- RevenueQ4 2026: $990 million to $1.01 billion; full year 2026: approximately $3.61 billion to $3.63 billion, representing approximately 30% annual growth
- NoteQ4 2026 Adjusted EBITDA: $245 million to $250 million
- NoteFull-year 2026 Adjusted EBITDA: $924 million to $929 million
- NoteFull-year 2026 Adjusted EBITDA margin: approximately 25.6%
- NoteFull-year 2026 free cash flow: $350 million to $400 million
- NoteFull-year 2026 stock-based compensation expense: approximately $570 million to $600 million
- Note2026 CapEx: $130 million to $150 million
- NoteInventory strategy expected to utilize $225 million in cash for the full year
What drove it
- Software & Services revenue grew 43% year over year, driven by growth in users and increasing adoption of premium solutions by existing customers.
- Newer software offerings, including real-time operations, Axon Records, Axon AI, Axon 911 and Dedrone software, collectively reached an annual revenue run rate of nearly $500 million.
- AI annual recurring revenue surpassed $100 million, and AI bookings were up over 50% year to date.
- Platform Solutions revenue increased 106% year over year to $125 million.
- New five-year bookings were up 25% year to date.
- Future contracted bookings grew 39% year over year to $15.8 billion.
- Axon announced an additional $1.2 billion investment in Skydio, increasing fully diluted ownership to 37%, alongside an exclusive public safety distribution partnership in the U.S. and Canada.
Concerns
- The full-year revenue outlook excludes approximately $130 million from three Federal Dedrone deployments no longer expected in 2026, including approximately $30 million previously expected in Q3 and $100 million previously expected in Q4.
- Total company gross margin declined to 56.7% from 60.1%, while adjusted gross margin declined to 59.2% from 62.7%, primarily due to counter-drone equipment mix, higher memory costs and scaling new product categories.
- Connected Devices gross margin declined to 43.0% from 49.9%; management cited increased counter-drone equipment mix and higher memory costs.
- Free cash flow was an outflow of $19 million, primarily reflecting approximately $100 million of strategic inventory investment.
- The company reported a net debt position of $1.2 billion as of September 30, 2026.
What to watch
- Timing and fulfillment of the three Federal Dedrone deployments totaling approximately $130 million excluded from the 2026 outlook.
- Whether Q4 revenue reaches the $990 million to $1.01 billion guidance range.
- Whether Software & Services maintains its 43% year-over-year growth rate and whether newer offerings continue to scale.
- Gross-margin effects from counter-drone equipment mix, memory costs and new product-category scaling.
- The pace at which the approximately $225 million full-year inventory investment moderates after the first quarter of 2027.
- Closing timing and financial impact of the $1.2 billion Skydio investment and ramp of Axon's exclusive distribution relationship.
Balance sheet and cash flow
- As of September 30, 2026, cash, cash equivalents and short-term investments were $1.7 billion.
- As of September 30, 2026, outstanding convertible and senior notes were $2.9 billion.
- As of September 30, 2026, Axon had a net debt position of $1.2 billion, up $182 million sequentially.
- Cash and cash equivalents were $1,458,817 (in thousands) at 30 SEP 2026, compared with $1,201,147 (in thousands) at 31 DEC 2025.
- Inventory was $579,225 (in thousands) at 30 SEP 2026, compared with $341,811 (in thousands) at 31 DEC 2025.
- Q3 operating cash flow was $19,687 (in thousands), including approximately $100 million of cash used for strategic inventory investment.
- Q3 free cash flow was an outflow of $19 million, compared to an inflow of $33 million in the prior-year period.
- Long-term notes payable, principal amount, were $(2,900,000) (in thousands) at 30 SEP 2026.
Analysis
Axon delivered record Q3 revenue of $909 million, up 28% year over year, with the revenue mix continuing to shift toward software. Software & Services grew 43% to $437 million, outpacing Connected Devices, which grew 16% to $472 million. Management attributed software growth to user growth and adoption of premium solutions, while newer offerings including AI, real-time operations, Axon Records, Axon 911 and Dedrone software collectively reached an annual revenue run rate of nearly $500 million. Annual recurring revenue rose 40% to $1.8 billion, net revenue retention was 126%, and future contracted bookings rose 39% to $15.8 billion.
Profitability improved substantially from the prior-year loss. GAAP operating income was $42 million versus a $2 million loss from operations, GAAP net income was $57 million versus a $2 million net loss, and Adjusted EBITDA increased 33% to $236 million. However, gross-margin pressure was material. Total gross margin declined to 56.7% from 60.1% and adjusted gross margin declined to 59.2% from 62.7%. Connected Devices was the principal pressure point, with gross margin falling to 43.0% from 49.9%, reflecting counter-drone equipment mix and higher memory costs. Software & Services gross margin also declined to 71.4% from 73.8% as new product offerings and professional services scaled.
Connected Devices revenue declined sequentially to $472 million from $507 million. Management identified normal third-quarter seasonality and the delayed timing of an approximately $30 million Federal Dedrone deployment as factors. Platform Solutions nevertheless grew 106% year over year to $125 million, while lower legacy TASER volume partially offset growth from Dedrone and Axon Body 4. The company also announced a $1.2 billion investment in Skydio that raises its fully diluted ownership stake to 37%, plus an exclusive U.S. and Canada public-safety distribution partnership. Skydio channel revenue will be recognized on a net basis in Software & Services.
Cash conversion was weak in the quarter because of inventory investment. Operating cash flow was $20 million, down from $60 million, and free cash flow was an outflow of $19 million versus an inflow of $33 million. The company said approximately $100 million of cash was used for strategic inventory investment during the quarter. Cash, cash equivalents and short-term investments were $1.7 billion, while convertible and senior notes were $2.9 billion, resulting in a net debt position of $1.2 billion.
The outlook was reduced because Axon no longer expects three large Federal Dedrone deployments totaling approximately $130 million to occur in 2026. Q4 revenue guidance is $990 million to $1.01 billion, implying full-year revenue of approximately $3.61 billion to $3.63 billion and approximately 30% growth, versus prior full-year growth guidance of 32% to 34%. Full-year Adjusted EBITDA guidance is $924 million to $929 million and the approximately 25.6% margin is 10 basis points above prior margin guidance of 25.5%. Full-year free-cash-flow guidance of $350 million to $400 million is below the prior $450 million target, while stock-based compensation and CapEx guidance were both reduced.
Not in the filing
stated, not guessed- Prior-release outlook was not provided; therefore, no actual-versus-prior-guidance comparisons are included.
- No share repurchases were reported.
- No dividends were reported.
- Q4 2026 gross margin guidance was not provided.
- Q4 2026 operating expense guidance was not provided.
- Q4 2026 tax rate guidance was not provided.
- No named company executive quote was provided in the filing text.
- Year-over-year and sequential percentage changes were not separately printed for all income-statement line items and product-category revenue lines.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Axon Enterprise, Inc. filed a Form 8‑K reporting its Q3 2026 financial results and updated outlook.
Ticker impact
Axon reported record Q3 2026 revenue of $909 million, up 28% YoY, and issued guidance for full-year revenue growth of ~30% with adjusted EBITDA guidance.
likely upward pressure as investors price in the record revenue and higher full-year outlook
The 8‑K filing is the first public disclosure of these results and guidance, providing fresh material for traders.
Market effects
strengthens the public‑safety technology sector and highlights demand for AI‑driven hardware and drone solutions
U.S. public‑safety and law‑enforcement markets see increased spending potential
Axon's partnership with Skydio may influence global drone adoption trends
Counterpoint
the $130 million revenue shortfall from delayed federal deployments could temper growth expectations
Key entities
- companyAxon Enterprise, Inc.
Public‑safety technology and equipment provider
- companySkydio
Drone manufacturer in which Axon now holds a 37% stake
