Axon Posts Record Third-Quarter Revenue and Invests $1.2 Billion in Skydio
Key Facts
Axon reported record third-quarter revenue of $908.554 million on November 5, 2026, compared with $710.641 million in the same period a year earlier, alongside an additional investment of about $1.2 billion in Skydio. The company said the investment would raise its fully diluted stake in the drone specialist to 37% after the deal closes. The transaction had not closed when it was announced and remains subject to customary closing conditions. The investment announcement was accompanied by an agreement under which Axon will become Skydio’s exclusive distributor in the public safety sector in the United States and Canada. The deal combines Axon’s public safety network and products with Skydio drones, which the company said serve more than 1,500 public safety agencies.
Software and services were the leading drivers of revenue, with sales in the business rising 43% to $437 million, compared with $305.242 million in the third quarter of 2025. Axon attributed the increase to user growth and greater adoption of premium solutions by existing customers. The company said newer offerings contributed to the expansion, including artificial intelligence tools, real-time operations, records and Axon 911. In platform solutions, revenue rose 106% year over year to $125 million. The figures show that the company’s growth extended beyond software, with platform solutions revenue accelerating at a faster pace during the quarter.
Net income turned to $57 million in the third quarter, compared with a net loss of $2 million in the same period of 2025. Adjusted earnings before interest, taxes, depreciation and amortization also rose 33% year over year to $236 million. Annual recurring revenue was $1.75 billion on September 30, 2026, up 40% from $1.252 billion a year earlier. Contracted demand, measured by future bookings, reached $15.8 billion at the end of September, up 39% year over year. Axon expects to deliver about 20% to 25% of that backlog over the following twelve months, indicating the portion it expects to convert into delivered work in the near term.
Despite revenue growth and the return to profitability, Axon shares fell about 14% to $329 in extended trading on November 5. Reuters said the decline followed the company’s cut to its annual revenue growth forecast, along with adjusted earnings per share falling short of analysts’ estimates. Adjusted earnings per share came in at $1.72, versus expectations of $1.88, according to LSEG data. Operating cash flow fell to $20 million in the third quarter from $60 million in the same period a year earlier. The company said the figure included about $100 million in cash used for strategic investment in inventory during the quarter.
By contrast, Reuters said Axon’s drone program cut priority response times by up to 65% at agencies using it. It added that drones arrived before officers in about 80% of published calls covered by the program. Axon estimated the available market for first-response drones in the United States and Canada at about $13 billion. The announced exclusive distribution agreement gives the company a direct role in marketing Skydio drones to public safety agencies in both countries, while Axon’s targeted stake in Skydio remains contingent on the investment transactions closing. The company expects the transactions comprising the investment to close in the fourth quarter of 2026 and the first quarter of 2027, subject to customary closing conditions.
For the fourth quarter of 2026, Axon forecast revenue of between $990 million and $1.01 billion, and adjusted earnings before interest, taxes, depreciation and amortization of between $245 million and $250 million. The guidance sets out the company’s financial framework for the next period, as the stock’s extended trading showed investors’ sensitivity to the cut in its annual growth forecast. The Skydio investment transactions are expected to close across the fourth quarter of 2026 and the first quarter of 2027, subject to customary closing conditions. The company also said it expects to deliver about 20% to 25% of its contracted future bookings over the following twelve months.