01—Abstract
Summary
Summary of the 10-Q filed May 7, 2026. Cited figures are marked; the original filing is the authoritative source.
Axon Enterprise, Inc. reported strong revenue growth of 33.7% to $807.3 milliona 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 millionb. 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 millionc, 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.
02—Key points
Key Highlights
- Net 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.
- Income 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.
- Net income more than doubled to $169.3 million from $88.0 million year-over-year.
- Diluted earnings per common share increased to $2.05 from $1.08.
- The company completed the acquisition of Carbyne Ltd. for approximately $549.7 million.
- Total 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.
- Gross 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Axon Enterprise, Inc. kept $0.21.
- Revenue$807.3M100.0%
- Cost of revenue−$330.1M40.9%
- Gross profit$477.3M59.1%
- Operating costs−$448.0M55.5%
- Operating income$29.2M3.6%
- Interest, other & tax$140.1M17.3%
- Net income$169.3M21.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 7, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $807.35M$603.63M | +33.7% |
| Cost of Revenue | $330.06M$237.89M | +38.7% |
| Gross Profit | $477.29M$365.74M | +30.5% |
| R&D Expenses | $188.95M$151.02M | +25.1% |
| SG&A Expenses | $259.09M$223.51M | +15.9% |
| Operating Expenses | $448.04M$374.53M | +19.6% |
| Operating Income | $29.24M-$8.79M | +432.6% |
| Net Income | $169.31M$87.98M | +92.4% |
| EPS (Basic) | $2.11$1.14 | +85.1% |
| EPS (Diluted) | $2.05$1.08 | +89.8% |
| Shares Outstanding (Basic) | 80.15M76.89M | +4.2% |
| Shares Outstanding (Diluted) | 82.48M81.48M | +1.2% |
05—Questions
Frequently Asked Questions
What was the primary driver for the significant decrease in cash and cash equivalents?
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.
How did the acquisition of Carbyne impact the financial statements?
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.
What is the outlook for remaining performance obligations?
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.
What are the main reasons for the slight decrease in gross margin percentage?
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.
06—Continue