# Axon Enterprise (AXON)

Sector: Public safety software and devices

| Field | Value |
|---|---|
| Price | $315.42 |
| Market cap | $26B |
| Intrinsic value source | Analysts |
| Data as of | 2026-11-12 |
| Next earnings | 2027-02-23 (estimate) |

Analysts: Bullish

Picks: Top pick

Discount category: Below intrinsic value

## In short

The market doubts that Axon can keep fast growth while counter-drone equipment, memory costs and delayed federal deals pull margin down, and steady software growth through 2027 can lift its value.

## Themes and gap

- Themes: AI supplier (ai-supplier)
- Gap type: Can close (closable)
- Why: The Q4 2026 report, expected in late February 2027, and the first 2027 quarters show whether software growth holds and the Connected Devices margin recovers.

## About

Axon Enterprise, Inc. (Axon) is based in Scottsdale, Arizona. It makes TASER devices, body cameras, in-car video, drones and counter-drone systems, and cloud software for police and other public safety agencies. Its software includes evidence storage, records, real-time operations, 911 call handling and AI tools. It has two segments: Connected Devices and Software & Services. Revenue was $909 million in Q3 2026 and $2,620 million for nine months. Software & Services made $437 million of the Q3 revenue. Annual recurring revenue was $1,750 million at September 30, 2026. The common stock trades on Nasdaq in US dollars. Axon files 10-K and 10-Q reports.

## Thesis

The price of Axon depends on whether its software growth can stay fast while hardware-heavy work pulls margin down. Software & Services revenue grew 43% in Q3 2026, and annual recurring revenue grew 40%. Total gross margin fell to 56.7% from 60.1%, because of counter-drone equipment, higher memory costs and new products. Management cut its 2026 revenue growth outlook to about 30%, because three Federal Dedrone deployments of about $130 million moved out of 2026. It also announced up to $1.2 billion of new investments in Skydio. For the price to hold or rise, four things must be true. Software & Services growth must stay above 35%. The Connected Devices margin must stop falling as memory costs and product mix settle. The delayed federal deployments must start to add revenue in 2027. The Skydio investments must stay within the cash and shares that the 10-Q describes. The Q4 2026 report, expected in late February 2027, and the first 2027 quarters are the next tests. If software growth slows or margin keeps falling, the price can fall.

## Checkpoints

- Feb 23, 2027 (estimate): Q4 2026 results and 2027 outlook. Status: Pending. Watch: Q4 revenue is in the guided range of $990 million to $1.01 billion and Software & Services growth stays above 35%, and this passes; revenue below the range or slower software growth fails.
- Q1 2027 (estimate): Skydio tender offer and secondary purchases close. Status: Pending. Watch: The investments close within the up to $1.2 billion in the 10-Q and the cash part stays near $720 million, and this passes; a larger cash use fails.

## Balance sheet

- Cash: $1.7B
- Debt: $2.9B
- Net debt: $1.2B
- Undrawn credit line: $491M, to September 2031
- Last debt due: 2033

At September 30, 2026, Axon had cash and cash equivalents of $1,458.8 million, short-term investments of $181.6 million and marketable securities of $14.8 million. Notes payable had a principal of $2,900 million: $1,000 million of 6.125% notes due 2030, $750 million of 6.250% notes due 2033 and $1,150 million of 0% convertible notes due 2031. The release gives net debt of $1.2 billion. Nothing was drawn under the $500.0 million revolving credit facility, and $490.9 million was available. Strategic investments were $924.9 million. Deferred revenue was $1,177.6 million in all. After the quarter, Axon agreed to pay up to about $720 million in cash for Skydio shares.

As of 2026-09-30.

Sources:

- https://www.sec.gov/Archives/edgar/data/1069183/000162828026071242/axon-20260930.htm
- https://www.sec.gov/Archives/edgar/data/1069183/000162828026071086/axon-20261105xex991.htm

## Dividends

Axon Enterprise does not pay a dividend.

Source: company filings and market data, read on 2026-11-13.

## Recent events

- 2026-11-05: Axon reported Q3 2026 results. Revenue rose 28% to $909 million. Software & Services revenue rose 43% to $437 million. Net income was $57 million, or $0.68 per diluted share, and adjusted EBITDA was $236 million. Axon guided Q4 2026 revenue to $990 million to $1.01 billion and 2026 free cash flow to $350 million to $400 million. It said that it introduced Axon Body 5 and TASER Ion in October.
- 2026-11-05: Axon announced investments of up to $1.2 billion in Skydio, a maker of autonomous drones. They raise its fully diluted stake from 15% to about 37%. Axon also became the exclusive public safety distributor of Skydio in the United States and Canada. A first investment of about $254.9 million closed on this date, half in cash and half in Axon shares. The rest closes in Q4 2026 and Q1 2027.
- 2026-10-07: The Patent Trial and Appeal Board cancelled two of the three patents that Airspace Systems asserts against Axon and Dedrone, and it invalidated all but two claims of the third patent. The court case stays on hold during appeals.
- 2026-09-18: Axon raised its revolving credit facility to $500.0 million, as part of the issue of $1.15 billion of 0% convertible senior notes due 2031. The initial conversion price is $652.06 per share. Axon paid $114.9 million for capped calls that cover the 1,763,640 shares under the notes.
- 2026-02-18: Axon bought the rest of Carbyne, a maker of cloud emergency communications software, for about $551.7 million in cash, net of cash acquired.

## Latest news and filings

- Last earnings: 2026-11-05 (8-K: https://www.sec.gov/Archives/edgar/data/1069183/000162828026071086/)
- Next earnings: 2027-02-23 (expected; the company has not confirmed it)

| Filed | Form | Headline | Period end | XBRL document | Link |
| --- | --- | --- | --- | --- | --- |
| 2026-11-06 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | axon-20260930 | https://www.sec.gov/Archives/edgar/data/1069183/000162828026071242/axon-20260930.htm |
| 2026-11-05 | 8-K | New material agreement and Investor disclosure |  | axon-20261105 | https://www.sec.gov/Archives/edgar/data/1069183/000162828026071150/axon-20261105.htm |
| 2026-11-05 | 8-K | Earnings release |  | axon-20261105 | https://www.sec.gov/Archives/edgar/data/1069183/000162828026071086/ |
| 2026-09-21 | 8-K | New material agreement and New debt or financial obligation |  |  | https://www.sec.gov/Archives/edgar/data/1069183/000119312526395997/d476163d8k.htm |
| 2026-09-15 | 8-K | New material agreement and New debt or financial obligation |  |  | https://www.sec.gov/Archives/edgar/data/1069183/000119312526391320/d17675d8k.htm |
| 2026-08-06 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | axon-20260630 | https://www.sec.gov/Archives/edgar/data/1069183/000162828026053646/axon-20260630.htm |
| 2026-08-05 | 8-K | Earnings release |  | axon-20260805 | https://www.sec.gov/Archives/edgar/data/1069183/000162828026053363/ |
| 2026-07-10 | 8-K | Change of directors or officers |  | axon-20260708 | https://www.sec.gov/Archives/edgar/data/1069183/000162828026047888/axon-20260708.htm |
| 2026-06-01 | 8-K | Shareholder vote results |  | axon-20260528 | https://www.sec.gov/Archives/edgar/data/1069183/000162828026039483/axon-20260528.htm |
| 2026-05-07 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | axon-20260331 | https://www.sec.gov/Archives/edgar/data/1069183/000162828026031542/axon-20260331.htm |

Every filing on SEC EDGAR (CIK 1069183): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001069183&type=&dateb=&owner=include&count=40

## Risks

- High: Margin is falling. Connected Devices gross margin fell to 43.0% in Q3 2026 from 49.9% a year before. Axon names counter-drone equipment and higher memory costs as the causes. More hardware-heavy deployments and further memory cost rises can lower margin more.
- Medium: Large deployments make revenue uneven. Axon moved about $130 million of Federal Dedrone revenue out of 2026. Counter-drone orders are large and their timing can change from quarter to quarter.
- Medium: Axon takes on more investment and debt. It has notes of $2,900 million in principal, and the Skydio investments use up to about $720 million of cash. Inventory rose to $579.2 million from $341.8 million at December 31, 2025.
- Medium: Lawsuits are open. An antitrust class action about the 2018 purchase of Vievu is pending. Two class actions about license plate reader laws in California and a patent suit against Carbyne are also pending. Axon denies all of them.
- Low: Customers are public agencies. Budgets and procurement rules can delay orders. Axon reports net revenue retention of 126%, which shows that customers expand, but the sales cycle can still be long.

## Links

- Page: https://picks.utilarium.app/company/AXON/
- History of changes: https://picks.utilarium.app/company/AXON/history/
- JSON with full history: https://picks.utilarium.app/data/company/AXON.json

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