Key Highlights

  • Quarterly sales climbed 28% to USD 908.6 million, led by Software and Services at USD 437.0 million, up 43.2%, and Connected Devices at USD 471.5 million, up 16.3%.
  • The 2026 growth forecast slipped to about 30% from 32% to 34%, with Revenue of USD 3.61 billion to USD 3.63 billion, once roughly USD 130 million of federal drone revenue was taken out.
  • The Skydio commitment adds USD 1.2 billion, taking Axon's fully diluted holding to 37% and making it the sole public safety distributor for that drone maker in the U.S. and Canada.
  • Quarterly free Cash Flow was negative USD 18.9 million, and the full-year target now sits at USD 350 million to USD 400 million, down from USD 450 million.

Third-Quarter Sales Growth Versus a Smaller Full-Year Forecast

Axon Enterprise (NASDAQ:AXON) released its third-quarter figures on November 5, 2026. Revenue of USD 908.6 million was up 28% from USD 710.6 million, annual Recurring Revenue hit USD 1.75 billion, a 40% gain, and future contracted bookings reached USD 15.8 billion. Profitability swung upward: GAAP Net Income landed at USD 57.0 million, which is USD 0.68 per diluted share, compared with a small Deficit in the prior-year period. Adjusted EBITDA grew 33% to USD 235.7 million, a 25.9% margin. Adjusted gross Margin stood at 59.2%, Platform Solutions revenue passed double its prior level to reach USD 125.0 million, and AI recurring revenue cleared USD 100 million. An evening quote on Thursday put the shares about 6.7% lower after hours, per published market data, and other evening quotes were not verified.

How Lost Federal Drone Revenue Reshaped the Forecast

Management said roughly USD 130 million of federal drone revenue has come out of 2026 expectations, made up of a USD 30 million deployment slated for the third quarter, plus USD 100 million that had been expected in the fourth. Without that change, growth would have been almost 500 basis points higher. The fourth quarter now carries revenue projected at USD 990 million to USD 1.01 billion, with adjusted EBITDA expected at USD 245 million to USD 250 million. For the whole year, adjusted EBITDA is projected between USD 924 million and USD 929 million, which equals a margin near 25.6%. Guidance for stock-based compensation was lowered as well, while the Capital spending target shrank to USD 130 million to USD 150 million, against a previous USD 160 million to USD 190 million range.

The Skydio Commitment Against Cash and Debt

The Skydio transaction marks the biggest Investment in Axon's history, and it will give Axon exclusive distribution of the drone maker's products. Cash and short-term investments totaled roughly USD 1.64 billion at quarter-end, compared with USD 2.9 billion of long-term note principal, so net Debt sits near USD 1.2 billion, a USD 182 million increase over the prior quarter. Operating Cash Flow came in at just USD 19.7 million after roughly USD 100 million went into strategic inventory. Key risks include the timing of federal procurement, further guidance revisions and how large the commitment is relative to cash on hand. No consensus estimates were verified for this article.

Where Things Stand

The after-hours decline reflects a trimmed growth outlook rather than a weak quarter. Sales rose 28%, recurring revenue climbed 40%, and profitability improved, but the 2026 growth range dropped to about 30% as federal drone deployments slipped. Cash flow turned negative, the cash target was cut, and the USD 1.2 billion Skydio commitment raises the stakes. Watch fourth-quarter revenue relative to the USD 990 million to USD 1.01 billion range, plus new federal drone orders.