10-QPeriod: Q1 FY2026

AXON ENTERPRISE, INC. Quarterly Report for Q1 Ended Mar 31, 2026

Filed May 7, 2026For Securities:AXON

Summary

Axon Enterprise, Inc. reported strong revenue growth of 33.7% to $807.3 million for the first quarter of 2026 compared to the prior year period. This top-line expansion was driven by robust performance across both its Connected Devices segment (up 32.8%) and Software and Services segment (up 34.9%). The company successfully transitioned from an operating loss in the prior year's quarter to an operating income of $29.2 million. Net income also saw a significant increase, rising to $169.3 million from $88.0 million in the same quarter last year, with diluted EPS growing to $2.05 from $1.08. The company made a substantial strategic acquisition of Carbyne Ltd. for $549.7 million, funded by existing cash and investments, which contributed to a significant decrease in cash and cash equivalents. While gross margins saw a slight compression due to tariffs and a higher mix of Platform Solutions revenue, the overall financial performance demonstrates continued strong execution and market demand for Axon's integrated technology solutions.

Financial Highlights

53 data points
Beta

Revenue

$807.35M

59.1% Gross Margin

Net Income

$169.31M

21.0% Net Margin

EPS (Diluted)

$2.05

Total Assets

$7.07B

Cash & Equivalents

$458.92M

Free Cash Flow

-$54.64M

Financial Statements
Beta
Revenue$807.35M
Cost of Revenue$330.06M
Gross Profit$477.29M
R&D Expenses$188.95M
SG&A Expenses$259.09M
Operating Expenses$448.04M
Operating Income$29.24M
Net Income$169.31M
EPS (Basic)$2.11
EPS (Diluted)$2.05
Shares Outstanding (Basic)80.15M
Shares Outstanding (Diluted)82.48M

Key Highlights

  • 1Net sales increased by 33.7% to $807.3 million for the three months ended March 31, 2026, compared to $603.6 million for the three months ended March 31, 2025.
  • 2Income from operations turned positive at $29.2 million for the current quarter, compared to a loss of $8.8 million in the prior year period.
  • 3Net income more than doubled to $169.3 million from $88.0 million year-over-year.
  • 4Diluted earnings per common share increased to $2.05 from $1.08.
  • 5The company completed the acquisition of Carbyne Ltd. for approximately $549.7 million.
  • 6Total current assets decreased significantly, primarily due to a reduction in cash and cash equivalents and short-term investments, influenced by the Carbyne acquisition and investment activities.
  • 7Gross margin as a percentage of net sales slightly decreased to 59.1% from 60.6%, attributed to global tariffs and a higher mix of Platform Solutions revenue.

Frequently Asked Questions

The primary driver for the significant decrease in cash and cash equivalents from $1.2 billion at December 31, 2025, to $458.9 million at March 31, 2026, was the acquisition of Carbyne Ltd. for approximately $549.7 million. Additionally, proceeds from the sale and maturity of investments were lower than purchases of new investments during the period.

The acquisition of Carbyne Ltd. on February 18, 2026, for approximately $549.7 million, was a significant investing activity that reduced cash and cash equivalents. The transaction added $524.7 million in goodwill and $108.2 million in identifiable intangible assets to the balance sheet, and its results are now consolidated into the Software and Services segment.

Axon has approximately $9.7 billion of remaining performance obligations as of March 31, 2026. The company expects to recognize about 20%-25% of this balance over the next 12 months, with the remainder substantially recognized over the following ten years, subject to potential risks such as deployment delays or contract cancellations.

The decrease in gross margin percentage to 59.1% from 60.6% was primarily driven by global tariffs and a higher mix of Platform Solutions revenue within the Connected Devices segment. For the Software and Services segment, higher professional services costs also contributed to the decrease.