Axon Revenue Reaches $908.6 Million in Third Quarter, Missing Analyst Estimates

Key Facts

Axon reported revenue of $908.6 million in the third quarter on November 5, 2026, up 27.8% year over year but below analyst estimates of $940.02 million. Adjusted earnings per share were $1.72, versus an average forecast of $1.91, according to Investing.com data. The company's shares also fell 14% in after-hours trading that day, following the earnings miss and cut to its annual outlook. That puts strong revenue growth against a clear gap with market estimates. The company reported results after the market closed.

Growth came from expansion in software and services and connected devices, with greater acceleration in software. Software and services revenue rose 43% year over year to $437 million, while connected devices revenue increased 16% to $472 million, according to an Axon statement. Within software, platform solutions revenue surged 106% to $125 million. These figures show different growth rates across the business, with software and services outperforming connected devices. Those increases were part of total revenue that fell short of analyst estimates for the quarter.

By contrast, gross margin declined to 56.7% from 60.1% in the same period a year earlier. Axon said the decline was linked to a higher share of counter-drone equipment, increased memory costs and the expansion of new product categories. Adjusted earnings before interest, taxes, depreciation and amortization were $236 million, up 33% year over year, with a margin of 25.9%. The metrics show growth in adjusted profitability alongside pressure on gross margin. The improvement in adjusted earnings from a year earlier did not prevent earnings per share from missing analyst estimates.

Axon cut its 2026 adjusted earnings before interest, taxes, depreciation and amortization forecast to a range of $924 million to $929 million, according to an Investing.com report. Analysts had estimated $949.4 million for the metric, above the company's new range. Axon attributed the cut to the deferral of three large Federal Dedrone projects. Those projects represent about $130 million in revenue that the company no longer expects to record during 2026. The deferral reflects the effect of contract execution timing on the annual outlook, alongside the margin pressure cited by the company.

For the fourth quarter, Axon forecast revenue of $990 million to $1.01 billion and adjusted earnings before interest, taxes, depreciation and amortization of $245 million to $250 million. Its fiscal 2026 revenue forecast is $3.61 billion to $3.63 billion. These ranges provide a measure of what the company expects to deliver after a quarter that missed analyst estimates. Axon also lowered its full-year adjusted earnings before interest, taxes, depreciation and amortization forecast to $924–929 million, compared with analysts' estimate of $949.4 million. The deferred Federal Dedrone projects, equivalent to about $130 million in revenue not expected in 2026, remain part of the backdrop to the outlook revision.

The results announcement coincided with Axon's disclosure of an additional $1.2 billion investment in Skydio, raising its fully diluted ownership to 37%. It also announced an exclusive distribution partnership for the public safety sector in the United States and Canada. On liquidity, operating cash flow was $20 million in the third quarter, versus $60 million a year earlier. The company said this included the use of about $100 million to increase inventory during the quarter. These figures place the Skydio investment and inventory increase in the broader financial context accompanying Axon's results and outlook.

For future contracted business, annual recurring revenue stood at $1.75 billion on September 30, 2026, compared with $1.252 billion on the same date in 2025. Future contracted bookings totaled $15.8 billion, versus $11.4 billion a year earlier. Axon said it expects to execute about 20% to 25% of its bookings backlog over the following twelve months, with the remainder generally to be executed over the next ten years. These balances offer an indication of the scale of contracted business and its expected execution schedule. The company's quarterly and annual guidance remains the closest measure of the period ahead.