0001628280-26-031542
SEC filingRevenue surged 33.7% to $807.3M, driven by Platform Solutions and Software & Services, while gross margin contracted 150 bps due to tariffs and mix.
For the three months ended March 31, 2026, Axon reported revenue of $807.3 million, a 33.7% increase from $603.6 million in the prior-year period. The growth was broad-based, with Connected Devices revenue up 32.8% and Software and Services revenue up 34.9%. Gross margin declined to 59.1% from 60.6%, and adjusted gross margin fell to 61.6% from 63.6%, driven by global tariffs, a higher mix of lower-margin Platform Solutions revenue, and increased professional services costs. Operating income swung to a profit of $29.2 million from a loss of $8.8 million, as operating expenses grew 19.6% (slower than revenue). Net income nearly doubled to $169.3 million from $88.0 million, benefiting from $196.6 million in income from strategic investments (primarily an observable price change for one investee), partially offset by a $5.5 million loss on marketable securities and a $28.7 million inducement expense from the early repurchase of 2027 Notes in the prior year. EPS rose to $2.11 basic / $2.05 diluted from $1.14 / $1.08.
Connected Devices revenue of $452.8 million grew 32.8%, with TASER up 19.1% on higher TASER 10 handle and cartridge volume, Personal Sensors up 23.0% on AB4 adoption and warranty revenue, and Platform Solutions surging 95.1% on counter-drone and fleet system sales. Segment gross margin fell to 48.7% from 50.1% (adjusted: 50.4% vs 52.8%) due to tariffs and mix shift toward Platform Solutions. Software and Services revenue of $354.5 million grew 34.9%, driven by user growth and premium add-on adoption. Segment gross margin declined to 72.4% from 74.2% (adjusted: 75.8% vs 77.7%) due to higher professional services costs.
Management did not provide explicit forward guidance in the MD&A. However, the company highlighted ongoing tariff uncertainty following a Supreme Court ruling that IEEPA tariffs were unauthorized, with no benefit recorded for potential refunds. Operating cash flow turned negative (-$31.5 million) due to inventory build for TASER 10, counter-drone equipment, and AB4 to support future sales. The company believes its liquidity (cash, investments, and $291.1 million available under its credit facility) is sufficient for at least the next 12 months. Strategic priorities include continued investment in R&D (up 25.1% to $189.0 million) and opportunistic debt issuance to fund growth.
As of March 31, 2026, Axon held $458.9M in cash and cash equivalents and $18.1M in marketable securities, totaling $477.0M in liquid assets. Short-term investments of $260.0M further bolstered liquidity. Total debt (net) stood at $1.731B, down from $1.811B at year-end 2025, primarily due to the redemption of all outstanding 2027 Notes ($81.1M). Shareholders' equity increased to $3.534B from $3.243B, driven by net income of $169.3M and stock-based compensation of $134.7M.
Axon reported $9.7B in remaining performance obligations (RPO) as of March 31, 2026, with 20%-25% expected to be recognized within 12 months. Off-balance-sheet commitments include $8.9M in letters of credit and $8.1M in surety bonds. The company is self-insured for the first $5.0M per product liability claim.
No share buybacks or dividends were reported. Capital expenditures totaled $23.1M (2.86% of sales). Debt activity centered on the redemption of the 2027 Notes for $81.1M cash and shares. The company has $291.1M available under its $300M revolving credit facility.
Segment data (Note 13) shows Connected Devices net sales of $452.8M (+32.8% YoY) and Software and Services of $354.5M (+34.9% YoY). Adjusted gross margin for Connected Devices was $228.3M and for Software and Services $268.6M. The CODM uses adjusted gross margin as the profit measure. Geographic mix: 80% U.S., 20% international (Note 2).