Axon Invests an Additional $1.2 Billion in Skydio, Becomes Its Exclusive Distributor
Key Facts
Axon announced on November 5, 2026, an additional investment of about $1.2 billion in Skydio, calling it the largest single investment in its history. The investment coincides with an expanded partnership between the two companies, with Axon becoming the exclusive distributor of Skydio products for the public safety sector in the United States and Canada. Axon founder and CEO Rick Smith said Skydio is "poised to lead in every sector" in which it operates. He added that his company is securing a significant stake in a high-value technology category. The agreement puts Axon in a direct commercial position to distribute Skydio products to public safety agencies in both markets. Parts of the deal are expected to close in stages from the fourth quarter of 2026 through the first quarter of 2027, subject to customary closing conditions.
The investment consists of about $1.2 billion in a mix of cash and Axon shares, according to an Axon statement. It includes new capital for Skydio and purchases of shares from existing shareholders, with part of the cash consideration allocated to fund growth. The company said the agreement will add about 20% to its fully diluted ownership in Skydio. It set Skydio’s pre-money valuation at $5.2 billion. The structure therefore combines funding for the target company with purchases of existing stakes, according to the statement. The information provided in the statement did not specify a separate value for the cash and shares or for each component of the deal.
Skydio serves more than 1,500 public safety agencies, according to Axon’s statement. The company said more than 28 million Americans live within two miles of a launch and landing platform for Skydio’s drone response service. Axon said response times for priority calls fell by as much as 65% at agencies operating the service. It added that drones arrive before officers in about 80% of calls in which they are deployed. The company ties these figures to drone operations under its drone response program, without generalizing them to all calls or agencies. Axon estimated the addressable market for these services at about $13 billion in the United States and Canada alone.
In connection with the announcement, Axon said Skydio expects to generate nearly $1 billion in gross bookings in its current fiscal year. Axon reported net income of $57 million in the third quarter of 2026, compared with a net loss of $2 million in the same period a year earlier. The company cut its 2026 revenue growth outlook to about 30%, from a previous range of 32% to 34%. It attributed the change to excluding three federal Dedrone deployments, worth about $130 million, from its previous outlook. It also forecast fourth-quarter revenue of between $990 million and $1.01 billion. The company said full-year free cash flow could range from $350 million to $400 million, below its previous target of $450 million, because of accelerated investment in inventory.
Axon shares fell about 14% to $329 in after-hours trading on November 5, according to Reuters, after the company cut its annual revenue growth outlook and missed analysts’ estimates for third-quarter profit. The decline came in the same session in which the company announced its Skydio investment and financial results. The deal marks a new commercial path for the partnership through exclusive distribution in the United States and Canada. The closing dates for parts of the investment remain spread between the fourth quarter of 2026 and the first quarter of 2027, according to Axon. Completion is subject to customary closing conditions.