Axon Cuts 2026 Revenue Growth Forecast to 30% After Contract Delays
Key Facts
Axon cut its 2026 revenue forecast to a range of $3.61 billion to $3.63 billion, equivalent to annual growth of about 30%, according to guidance issued on November 5. Its previous range called for growth of 32% to 34%. The company attributed the cut to three federal Dedrone system deployment projects whose revenue it no longer expects to include in this year's results. The projects are worth approximately $130 million combined. Axon said its growth forecast would have been about 500 basis points higher if the projects had remained on their expected timelines.
The delayed projects include a deployment worth about $30 million that was expected to be completed in the third quarter, and two projects worth a total of $100 million that were expected to be completed in the fourth quarter. Axon said the first project was not completed by the third-quarter deadline the company had assumed. The other two had been included in its previous fourth-quarter expectations before being excluded from its 2026 revenue estimate. This detail shows how timing affected the annual forecast: the company attributed the adjustment to delays in specific federal contract deployments, not to broad weakness in demand. It said the three projects account for the difference between its previous growth trajectory and revised forecast.
The forecast cut followed Axon's previous guidance, issued on August 5, when it projected annual revenue growth of 32% to 34% in 2026. That estimate was based on future contracted bookings of $15.1 billion as of June 30. In the third quarter, those bookings rose 39% year over year to $15.8 billion. The company expects to execute 20% to 25% of its bookings over the following twelve months. Axon's outlook therefore combines near-term delays in specific projects with a substantial contracted backlog, part of which it expects to convert into deployments over the coming year.
Axon reported third-quarter revenue of $909 million, up 28% year over year, and net income of $57 million, compared with a net loss of $2 million in the same period of 2025. The company said growth in its connected devices segment was driven by demand for Dedrone and adoption of Axon Body 4, partly offset by lower sales volumes of older TASER devices. It added that the segment was also affected by typical third-quarter seasonality and the timing of the federal deployment project worth about $30 million. Axon said connected devices revenue growth would have been stronger without the timing of that project deployment. The company's account indicates that segment performance reflected a mix of growth in new products, weaker sales of some older products and the delay of a specific contract.
Gross margin was 56.7% in the third quarter, compared with 60.1% in the same period a year earlier. Axon attributed the decline to the mix of hardware used in counter-drone work, higher memory costs and the expansion of new product categories. In its revised 2026 free cash flow forecast, the company set a range of $350 million to $400 million, down from its previous target of $450 million. It also said its strategy to accelerate investment in inventory will use $225 million in cash during the year. Axon expects this investment to ease after the first quarter of 2027, linking part of the current cash pressure to its decision to build inventory ahead of a later moderation in investment.
For the fourth quarter, Axon expects revenue of $990 million to $1.01 billion and adjusted EBITDA of $245 million to $250 million. The guidance is the company's estimate for the period that was expected to include two delayed Dedrone projects, worth a combined $100 million. Over the following twelve months, the company says it expects to execute 20% to 25% of its $15.8 billion in future contracted bookings. The timing of those deployments remains an important factor in converting the contracted backlog into revenue and cash flow. Axon also expects cash use related to accelerated inventory investment to ease after the first quarter of 2027.