Item 1. Financial Statements

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Item 1. Financial Statements

AXON ENTERPRISE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	September 30, 2025		December 31, 2024
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,423,871	$	454,844
Short-term investments	952,786		333,235
Marketable securities	68,179		198,270
Accounts and notes receivable, net of allowance of $3,237 and $3,322 as of September 30, 2025 and December 31, 2024, respectively	700,742		547,572
Contract assets, net	537,198		367,929
Inventory	317,513		265,316
Prepaid expenses and other current assets	216,447		130,315
Total current assets	4,216,736		2,297,481
Property and equipment, net	283,208		247,324
Deferred tax assets, net	344,803		304,282
Intangible assets, net	159,048		175,157
Goodwill	773,386		756,838
Long-term notes receivable, net	2,893		3,460
Long-term contract assets, net	163,956		119,876
Strategic investments	386,947		332,550
Other long-term assets	326,388		237,620
Total assets	$	6,657,365	$	4,474,588
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	114,995	$	71,955
Accrued liabilities	293,344		279,193
Current portion of deferred revenue	639,087		612,955
Current portion of notes payable, net	279,560		680,289
Customer deposits	15,045		20,626
Other current liabilities	7,699		12,857
Total current liabilities	1,349,730		1,677,875
Deferred revenue, net of current portion	364,519		360,685
Liability for unrecognized tax benefits	22,354		25,007
Long-term deferred compensation	22,675		15,877
Long-term lease liabilities	90,209		41,383
Long-term notes payable, net	1,729,366		—
Other long-term liabilities	50,762		26,096
Total liabilities	3,629,615		2,146,923
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively	—		—
Common stock, $0.00001 par value; 200,000,000 shares authorized, 99,111,447 shares issued and 78,891,165 shares outstanding as of September 30, 2025, and 200,000,000 shares authorized, 96,839,558 shares issued and 76,619,331 shares outstanding as of December 31, 2024	1		1
Additional paid-in capital	2,262,306		1,689,781
Treasury stock at cost, 20,220,282 shares and 20,220,227 shares as of September 30, 2025 and December 31, 2024, respectively	(155,952)		(155,947)
Retained earnings	933,925		812,014
Accumulated other comprehensive loss	(12,530)		(18,184)
Total stockholders’ equity	3,027,750		2,327,665
Total liabilities and stockholders’ equity	$	6,657,365	$	4,474,588

The accompanying notes are an integral part of these consolidated financial statements.

AXON ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net sales from products	$	405,399	$	327,900	$	1,122,655	$	891,087
Net sales from services	305,242		216,374		860,157		616,294
Net sales	710,641		544,274		1,982,812		1,507,381
Cost of product sales	203,173		156,167		566,861		450,954
Cost of service sales	80,120		57,360		219,121		160,896
Cost of sales	283,293		213,527		785,982		611,850
Gross margin	427,348		330,747		1,196,830		895,531
Operating expenses:
Selling, general and administrative	252,803		192,189		718,524		514,228
Research and development	176,674		114,477		490,264		307,008
Total operating expenses	429,477		306,666		1,208,788		821,236
Income (loss) from operations	(2,129)		24,081		(11,958)		74,295
Interest income	23,941		12,624		57,798		36,407
Interest expense	(28,912)		(1,646)		(65,419)		(5,273)
Other income, net	22,803		44,510		104,790		191,510
Income before provision for income taxes	15,703		79,569		85,211		296,939
Provision for (benefit from) income taxes	17,889		12,544		(36,700)		55,089
Net income (loss)	$	(2,186)	$	67,025	$	121,911	$	241,850
Net income (loss) per common and common equivalent shares:
Basic	$	(0.03)	$	0.89	$	1.57	$	3.20
Diluted	$	(0.03)	$	0.86	$	1.48	$	3.12
Weighted average number of common and common equivalent shares outstanding:
Basic	78,416		75,697		77,774		75,543
Diluted	78,416		78,080		82,218		77,614
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income (loss)	$	(2,186)	$	67,025	$	121,911	$	241,850
Foreign currency translation adjustments	(25)		4,640		5,492		1,112
Unrealized gain on available-for-sale investments	213		434		162		447
Comprehensive income (loss)	$	(1,998)	$	72,099	$	127,565	$	243,409

The accompanying notes are an integral part of these consolidated financial statements.

AXON ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)


	Common Stock			Additional Paid-in Capital			Treasury Stock				Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount				Shares		Amount
Balance, December 31, 2024	76,619,331	$	1	$	1,689,781		20,220,227		$	(155,947)	$	812,014	$	(18,184)	$	2,327,665
Issuance of common stock under employee plans, net	190,558	—		(5,035)			—		—		—		—		(5,035)
Stock-based compensation	—	—		140,239			—		—		—		—		140,239
Induced conversion of convertible debt	1,038,259	—		20,819			—		—		—		—		20,819
Tax effect of partial repurchase of convertible debt	—	—		(16,049)			—		—		—		—		(16,049)
Net income	—	—		—			—		—		87,980		—		87,980
Other comprehensive income, net	—	—		—			—		—		—		234		234
Balance, March 31, 2025	77,848,148	$	1	$	1,829,755		20,220,227		$	(155,947)	$	899,994	$	(17,950)	$	2,555,853
Issuance of common stock	250,000	—		183,643			—		—		—		—		183,643
Issuance of common stock under employee plans, net	404,893	—		(187,800)			—		—		—		—		(187,800)
Stock-based compensation	—	—		139,244			—		—		—		—		139,244
Tax effect of partial repurchase of convertible debt	—	—		111			—		—		—		—		111
Net income	—	—		—			—		—		36,117		—		36,117
Other comprehensive income, net	—	—		—			—		—		—		5,232		5,232
Balance, June 30, 2025	78,503,041	$	1	$	1,964,953		20,220,227		$	(155,947)	$	936,111	$	(12,718)	$	2,732,400
Issuance of common stock	213,088	—		178,498			—		—		—		—		178,498
Issuance of common stock under employee plans, net	175,033	—		(27,305)			—		—		—		—		(27,305)
Stock-based compensation	—	—		146,152			—		—		—		—		146,152
Conversion of convertible debt and shares received from convertible note hedge, net	3	—		8			55		(5)		—		—		3
Net loss	—	—		—			—		—		(2,186)		—		(2,186)
Other comprehensive income, net	—	—		—			—		—		—		188		188
Balance, September 30, 2025	78,891,165	$	1	$	2,262,306		20,220,282		$	(155,952)	$	933,925	$	(12,530)	$	3,027,750


	Common Stock			Additional Paid-in Capital			Treasury Stock				Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount				Shares		Amount
Balance, December 31, 2023	75,301,424	$	1	$	1,347,410		20,220,227		$	(155,947)	$	434,980	$	(10,679)	$	1,615,765
Issuance of common stock under employee plans, net	164,747	—		(2,710)			—		—		—		—		(2,710)
Stock-based compensation	—	—		75,115			—		—		—		—		75,115
Issuance of replacement awards in connection with acquisitions	—	—		1,265			—		—		—		—		1,265
Net income	—	—		—			—		—		133,352				133,352
Other comprehensive loss, net	—	—		—			—		—		—		(907)		(907)
Balance, March 31, 2024	75,466,171	$	1	$	1,421,080		20,220,227		$	(155,947)	$	568,332	$	(11,586)	$	1,821,880
Issuance of common stock under employee plans, net	107,043	—		(2,185)			—		—		—		—		(2,185)
Stock-based compensation	—	—		74,821			—		—		—		—		74,821
Net income	—	—		—			—		—		41,473		—		41,473
Other comprehensive loss, net	—	—		—			—		—		—		(2,608)		(2,608)
Balance, June 30, 2024	75,573,214	$	1	$	1,493,716		20,220,227		$	(155,947)	$	609,805	$	(14,194)	$	1,933,381
Issuance of common stock under employee plans, net	160,847	—		(17,430)			—		—		—		—		(17,430)
Stock options exercised	350,118	—		10,006			—		—		—		—		10,006
Stock-based compensation	—	—		101,780			—		—		—		—		101,780
Net income	—	—		—			—		—		67,025		—		67,025
Other comprehensive income, net	—	—		—			—		—		—		5,074		5,074
Balance, September 30, 2024	76,084,179	$	1	$	1,588,072		20,220,227		$	(155,947)	$	676,830	$	(9,120)	$	2,099,836

The accompanying notes are an integral part of these consolidated financial statements.

AXON ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2025		2024
Cash flows from operating activities:
Net income	$	121,911	$	241,850
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation	425,635		251,716
Gain on strategic investments and marketable securities, net	(134,647)		(192,158)
Debt inducement expense	28,584		—
Depreciation and amortization	56,216		30,745
Provision for bad debts and inventory	8,828		13,824
Deferred income taxes	(53,696)		(27,061)
Other noncash items	15,930		13,183
Change in assets and liabilities:
Receivables and contract assets	(366,053)		(226,759)
Inventory	(58,177)		(11,629)
Deferred revenue	21,556		56,720
Accounts payable, accrued and other liabilities	44,730		10,243
Prepaid expenses and other assets	(116,713)		(2,528)
Net cash provided by (used in) operating activities	(5,896)		158,146
Cash flows from investing activities:
Purchases of investments	(2,045,738)		(615,414)
Business combinations, net of cash acquired	(22,809)		(237,796)
Proceeds from call, maturity, and sale of investments	1,644,556		858,326
Purchases of property and equipment	(74,450)		(53,984)
Other, net	(49)		34
Net cash used in investing activities	(498,490)		(48,834)
Cash flows from financing activities:
Net proceeds from equity offering	362,241		—
Proceeds from issuance of notes	1,750,000		—
Proceeds from options exercised	—		9,717
Principal payments for conversion of convertible debt	(407,472)		—
Payments to third-parties for debt issuance, amendment and repurchase activity	(26,888)		—
Income and payroll tax payments for net-settled stock awards	(209,631)		(22,325)
Other, net	(226)		—
Net cash provided by (used in) financing activities	1,468,024		(12,608)
Effect of exchange rate changes on cash and cash equivalents	5,741		75
Net increase (decrease) in cash and cash equivalents	969,379		96,779
Cash and cash equivalents and restricted cash, beginning of period	466,763		600,670
Cash and cash equivalents and restricted cash, end of period	$	1,436,142	$	697,449

Supplemental disclosures:
Cash and cash equivalents	$	1,423,871	$	695,144
Restricted cash (Note 1)	12,271		2,305
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	1,436,142	$	697,449

Cash paid for interest	$	56,468	$	1,725
Cash paid for income taxes, net of refunds	$	51,608	$	60,670

Non-cash transactions:
Leased assets obtained in exchange for new operating lease liabilities	$	51,780	$	11,728
Expense for induced conversion of convertible debt, debt offering and revolver modification	$	31,570	$	—
Taxes withheld on stock-based awards included in accrued expenses	$	10,510	$	—
Property and equipment purchases in accounts payable and accrued liabilities	$	3,432	$	10,214

The accompanying notes are an integral part of these consolidated financial statements.

Note 1 - Organization and Summary of Significant Accounting Policies

Axon Enterprise, Inc. (“Axon”, the “Company”, “we”, or “us”) is a provider of public safety technology solutions. Our mission is to protect life in service of promoting peace, justice and strong institutions.

The accompanying unaudited consolidated financial statements include the accounts of Axon Enterprise, Inc. and our subsidiaries. All intercompany accounts, transactions and profits have been eliminated.

Basis of Presentation and Use of Estimates

These unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC. Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited consolidated financial statements are consistent with those followed in our consolidated financial statements for the year ended December 31, 2024, as filed on our amended 2024 Annual Report on Form 10-K/A. In the opinion of management, these unaudited consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with the financial statements included in our amended 2024 Annual Report on Form 10-K/A for the year ended December 31, 2024. Certain amounts in prior periods’ consolidated financial statements have been reclassified to conform to current period presentation.

Our results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the full year (or any other period). The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. We believe the estimates used in the preparation of these unaudited consolidated financial statements are reasonable; however, actual results could differ materially from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist of accounts and notes receivable, contract assets and cash. Historically, we have experienced an immaterial level of write-offs related to uncollectible accounts.

We hold the majority of our cash and cash equivalents accounts at three depository institutions. As of September 30, 2025, the aggregate balances in such accounts were $1.3 billion. Our balances with these and other institutions regularly exceed Federal Deposit Insurance Corporation insured limits for domestic deposits and various deposit insurance programs in countries such as Australia, Belgium, Canada, Finland, France, Germany, Greece, India, Italy, the Netherlands, Spain, the United Kingdom and Vietnam. To manage the related credit exposure, management continually monitors the creditworthiness of the financial institutions where we have deposits.

Major Customers / Suppliers

For the three and nine months ended September 30, 2025 and 2024, no customer represented more than 10% of total net sales. At September 30, 2025 and December 31, 2024, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. For additional details, refer to Note 2.

We currently purchase both off-the-shelf and custom components, including finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components and sub-assemblies from suppliers located in the United States, Taiwan, Mexico, China, Germany and the Republic of Korea, among others. Although we currently obtain components from single source suppliers, we own substantially all injection-molded component tooling, designs and test fixtures used in production for all custom components. As a result, we believe we could obtain alternative suppliers in most cases. We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers.

Segment Information

As previously disclosed within our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, we realigned our business into two reportable segments, Connected Devices and Software and Services (the “Segment Realignment”). As a result of the Segment Realignment, we have recast our segment and other relevant disclosures for the three and nine months ended September 30, 2024 to conform to the new presentation.

Reportable segments are determined based on discrete financial information provided to our Chief Executive Officer who is our chief operating decision maker (“CODM”). In deciding how to allocate resources and assess performance, the CODM reviews adjusted gross margin by segment to evaluate segment profitability, identify cost trends and make operational decisions to support our segments. Accordingly, the segment measure of profit and loss used by the CODM is adjusted gross margin, defined as gross margin before stock-based compensation expense, amortization of acquired intangible assets, inventory step-up amortization related to acquisitions, and payroll taxes related to the Axon Enterprise, Inc. 2024 Employee eXponential Stock Plan vesting (the “2024 Employee XSP”). For additional details, refer to Note 16.

In addition, the CODM reviews consolidated financials and revenue by major geography and product and service lines. Consolidated financials provide a holistic view of our overall financial health to guide capital allocation and entity-wide decisions. Disaggregated views of revenue by major geography and product line support the evaluation of specific market and product performance to understand customer trends. There are no operating segments that are aggregated, and there are no inter-segment sales. Assets and other expense items, such as research and development and selling, general, and administrative expenses, are not provided to the CODM by segment, as our CODM does not evaluate our operating segments using this discrete information. As such, these items are not relevant to adjusted gross margin leveraged by the CODM to assess segment performance. As a result, they are not disclosed by segment. We perform an analysis of our reportable segments at least annually.

Geographic Information

Most of our sales to international customers are transacted in foreign currencies and are attributed to each country based on the shipping address of the distributor or customer. For the three and nine months ended September 30, 2025 and 2024, no individual country outside the United States represented more than 10% of total net sales. Substantially all of our assets are located in the United States. For additional details, refer to Note 2.

Most of our long-lived assets, including property, plant and equipment and right-of-use lease assets are located within the United States. International long-lived assets are immaterial. Additionally, the majority of our revenues are generated within the United States.

Restricted Cash

Restricted cash balances were $12.3 million and $11.9 million as of September 30, 2025 and December 31, 2024, respectively. This balance is primarily attributable to a $9.7 million payment held in escrow related to the potential construction of our headquarters building in Scottsdale, Arizona. Restricted cash also includes funds held in international bank accounts for various operating and financing activities. As of September 30, 2025, approximately $12.2 million was included in prepaid expenses and other current assets on our consolidated balance sheets, with the remainder in other long-term assets.

Warranty Reserves

We warranty our conducted energy devices (“CEDs”), Axon cameras and other hardware on a limited basis for a period of primarily one year after purchase. Changes in our estimated product warranty liabilities were as follows (in thousands):


	Nine Months Ended September 30,
	2025		2024
Balance, beginning of period	$	8,284	$	7,374
Utilization of reserve	(6,757)		(5,007)
Warranty expense	9,378		4,860
Balance, end of period	$	10,905	$	7,227

Income (Loss) per Common Share

Basic income per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the periods presented. Diluted income per share reflects the potential dilution from outstanding stock-based awards, our 2027 Notes, and warrants to acquire shares of our common stock (the “Warrants” or “2027 Warrants”). The effects of outstanding stock-based awards, our 2027 Notes, and our 2027 Warrants are excluded from the computation of diluted net income (loss) per share in periods in which the effect would be antidilutive. For additional information regarding our 2027 Notes and 2027 Warrants, refer to Note 10.

The calculation of the weighted average number of shares outstanding and earnings per share is as follows (in thousands except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Numerator for basic and diluted earnings per share:
Net income (loss)	$	(2,186)	$	67,025	$	121,911	$	241,850

Denominator:
Weighted average shares outstanding	78,416		75,697		77,774		75,543
Dilutive effect of stock-based awards	—		1,317		1,846		1,298
Dilutive effect of 2027 Notes (1)	—		1,015		1,092		773
Dilutive effect of 2027 Warrants	—		51		1,506		—
Diluted weighted average shares outstanding	78,416		78,080		82,218		77,614

Net income (loss) per common share:
Basic	$	(0.03)	$	0.89	$	1.57	$	3.20
Diluted	$	(0.03)	$	0.86	$	1.48	$	3.12

(1)For the nine months ended September 30, 2025, the impact of the early repurchase of a portion of the 2027 Notes is weighted based upon the number of days in each corresponding period of time for (a) the period between January 1, 2025 and the closing date of the repurchase, which includes the total amount of shares issuable upon a conversion of all of the 2027 Notes; and (b) subsequent to the closing date of the repurchase through September 30, 2025, which includes the amount of shares issuable upon a conversion of the 2027 Notes that remain outstanding after the early repurchase. Refer to Note 10 for additional details.

Potentially dilutive securities that are not included in the calculation of diluted net income (loss) per share because doing so would be antidilutive are as follows (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2025	2024	2025	2024
Stock-based awards	5,138	4,574	3,299	4,620
2027 Notes	1,235	2,002	401	2,244
2027 Warrants	3,017	2,966	1,511	3,017
Total potentially dilutive securities	9,390	9,542	5,211	9,881

Accounting Guidance and Disclosure Rules - Recently Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2024-04, Debt (Topic 470): Debt with Conversion and Other Options. ASU 2024-04 clarifies the assessment of whether certain transactions should be accounted for as an induced conversion or debt extinguishment. The provisions of ASU 2024-04 are effective for our Annual Report on Form 10-K for the year ending December 31, 2026, with early adoption permitted. We elected to early adopt ASU 2024-04 in the first quarter of 2025 and applied the standard when assessing the accounting treatment for our convertible debt repurchase. For additional details, refer to Note 10.

Accounting Guidance and Disclosure Rules - Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures by requiring (1) consistent categories and additional disaggregation of information in the effective tax rate reconciliation, and (2) income taxes paid disaggregated by jurisdiction. We plan to adopt ASU 2023-09 on a prospective basis for our Annual Report on Form 10-K for the year ending December 31, 2025. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures. ASU 2024-03 is intended to enhance the level of detail disclosed related to expense categories and provide additional disclosure of expenses by nature. The provisions of ASU 2024-03 are effective for our Annual Report on Form 10-K for the year ending December 31, 2027, with early adoption permitted. We are currently evaluating the impact of this update on our consolidated financial statements.

In July 2025, the FASB issued ASU 2025‑05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025‑05 is intended to provide a practical expedient for estimating expected credit losses on current trade receivables and current contract assets. The provisions of ASU 2025‑05 are effective for annual periods beginning after December 15, 2025, with early adoption permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In September 2025, the FASB issued ASU 2025‑06 Intangibles - Goodwill and Other - Internal‑Use Software (Sub-topic 350-40): Targeted Improvements to the Accounting for Internal‑Use Software. ASU 2025‑06 is intended to modernize the internal‑use software model primarily by removing software development stages and introducing a “probable-to-complete recognition threshold”. The provisions of ASU 2025‑06 are effective for annual periods beginning after December 15, 2027, with early adoption permitted. Entities may apply the guidance prospectively, retrospectively, or using a modified prospective approach. We are currently evaluating the impact of this update on our consolidated financial statements.

Note 2 - Revenues

Nature of Products and Services

The following tables present our revenues by primary product and service offering and reportable segment (in thousands). All periods presented reflect the impact of the Segment Realignment discussed in Note 1.


	Three Months Ended September 30, 2025						Three Months Ended September 30, 2024
	Connected Devices		Software and Services		Total		Connected Devices		Software and Services		Total
TASER (1)	$	237,950	$	—	$	237,950	$	203,612	$	—	$	203,612
Personal Sensors (2)	106,677		—		106,677		88,660		—		88,660
Platform Solutions (3)	60,772		—		60,772		35,628		—		35,628
Software and Services	—		305,242		305,242		—		216,374		216,374
Total	$	405,399	$	305,242	$	710,641	$	327,900	$	216,374	$	544,274


	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
	Connected Devices		Software and Services		Total		Connected Devices		Software and Services		Total
TASER (1)	$	649,679	$	—	$	649,679	$	549,759	$	—	$	549,759
Personal Sensors (2)	287,901		—		287,901		231,773		—		231,773
Platform Solutions (3)	185,075		—		185,075		109,555		—		109,555
Software and Services	—		860,157		860,157		—		616,294		616,294
Total	$	1,122,655	$	860,157	1,982,812		$	891,087	$	616,294	$	1,507,381

(1)'TASER' includes TASER handles, cartridges and related extended warranties.

(2)'Personal Sensors' primarily includes body cameras and accessories, signal sidearm, and related extended warranties.

(3)'Platform Solutions' primarily includes interview room, fleet in-car video, fixed cameras, drones and counter-drone equipment, virtual reality training hardware, and related extended warranties.

The following table presents our revenues disaggregated by geography (dollars in thousands):


	Three Months Ended September 30,								Nine Months Ended September 30,
	2025				2024				2025				2024
United States	$	593,939	84	%	$	482,596	89	%	$	1,660,695	84	%	$	1,298,775	86	%
Other countries	116,702		16		61,678		11		322,117		16		208,606		14
Total	$	710,641	100	%	$	544,274	100	%	$	1,982,812	100	%	$	1,507,381	100	%

Contract Balances

The following table presents our contract assets, contract liabilities and certain information related to these balances as of and for the nine months ended September 30, 2025 and year ended December 31, 2024 (in thousands):


	September 30, 2025		December 31, 2024
Contract assets, net	$	701,154	$	487,805
Contract liabilities (deferred revenue)	1,003,606		973,640

During the nine months ended September 30, 2025 and 2024, we recognized revenue of $590.3 million and $432.4 million, respectively, from the beginning contract liabilities balance as of December 31, 2024 and 2023, respectively.

Remaining Performance Obligations

As of September 30, 2025, we had approximately $8.1 billion of remaining performance obligations, which included both recognized contract liabilities as well as amounts that will be invoiced and recognized in future periods. The remaining performance obligations are limited only to arrangements that meet the definition of a contract under ASC 606 as of September 30, 2025. We currently expect to recognize approximately 20% - 25% of this balance over the next 12 months, and expect the remainder to be recognized over the following ten years, subject to risks related to delayed deployments, budget appropriation or other contract cancellation clauses.

Note 3 - Cash, Cash Equivalents and Investments

The following tables summarize our cash, cash equivalents, marketable securities and available-for-sale debt investments at September 30, 2025 and December 31, 2024 (in thousands):


	As of September 30, 2025
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities		Short-Term Investments
Cash	$	878,921	$	—	$	—	$	878,921	$	878,921	$	—	$	—

Level 1:
Money market funds	334,128		—		—		334,128		334,128		—		—
U.S. Treasury bills	213,516		69		—		213,585		151,483		—		62,102
Marketable securities	36,794		31,385		—		68,179		—		68,179		—
Agency bonds	25,911		4		—		25,915		—		—		25,915
U.S. Government bonds	6,485		—		—		6,485		—		—		6,485
Subtotal	616,834		31,458		—		648,292		485,611		68,179		94,502
Level 2:
Term deposits	749,618		—		—		749,618		59,339		—		690,279
Corporate bonds	125,936		68		(7)		125,997		—		—		125,997
Commercial paper	40,507		—		—		40,507		—		—		40,507
Certificates of deposit	1,500		1		—		1,501		—		—		1,501
Subtotal	917,561		69		(7)		917,623		59,339		—		858,284
Total	$	2,413,316	$	31,527	$	(7)	$	2,444,836	$	1,423,871	$	68,179	$	952,786

During the three and nine months ended September 30, 2025, proceeds from the sale of available-for-sale securities were $24.0 million. As of September 30, 2025, we had $191.0 million of available-for-sale debt investments with unrealized losses, of which none have been in a continuous unrealized loss position for 12 months or longer. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases.

Acquired common stock is recorded as marketable securities in the consolidated balance sheets and its fair value is adjusted every reporting period. Changes in fair value are recorded in the consolidated statements of operations and comprehensive income (loss) as unrealized gain (or loss) on marketable securities, which is included in other income, net. During the three and nine months ended September 30, 2025, net proceeds from the sales of marketable securities were $84.1 million, representing a $30.9 million net realized gain from the time of purchase. During the three and nine months ended September 30, 2025, net losses of $1.0 million and $33.1 million were recognized for securities sold in the period, respectively, within other income, net in the consolidated statements of operations and comprehensive income (loss). During the three and nine months ended September 30, 2025, we recorded an unrealized gain of $9.3 million and an unrealized loss of $12.9 million on marketable securities still held as of the reporting date, respectively. We recorded an unrealized gain on marketable securities of $44.0 million and $73.6 million, respectively, for the same periods in the prior year.


	As of December 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Cash and Cash Equivalents		Marketable Securities		Short-Term Investments
Cash	$	94,919	$	—	$	—	$	94,919	$	94,919	$	—	$	—

Level 1:
Money market funds	322,874		—		—		322,874		322,874		—		—
Marketable securities	90,000		108,270		—		198,270		—		198,270		—
U.S. Government bonds	75,994		7		(5)		75,996		—		—		75,996
U.S. Treasury bills	14,431		25		—		14,456		—		—		14,456
Agency bonds	996		—		—		996		—		—		996
Subtotal	504,295		108,302		(5)		612,592		322,874		198,270		91,448
Level 2:
Term deposits	136,480		—		—		136,480		11,480		—		125,000
Corporate bonds	122,018		10		(63)		121,965		24,075		—		97,890
Commercial paper	20,393		—		—		20,393		1,496		—		18,897
Subtotal	278,891		10		(63)		278,838		37,051		—		241,787
Total	$	878,105	$	108,312	$	(68)	$	986,349	$	454,844	$	198,270	$	333,235

As of December 31, 2024, we had $136.7 million of available-for-sale investments with unrealized losses, of which none have been in a continuous unrealized loss position for 12 months or longer. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases.

Note 4 - Expected Credit Losses

Accounts and notes receivable and contract assets are presented net of a reserve for expected credit losses. The following table provides a roll-forward of the allowance for expected credit losses. The expected credit losses for receivables are deducted from the amortized cost basis of accounts receivable, contract assets and notes receivable to present the net amount expected to be collected (in thousands):


	Three Months Ended September 30, 2025						Three Months Ended September 30, 2024
	United States		Other countries		Total		United States		Other countries		Total
Balance, beginning of period	$	5,506	$	1,112	$	6,618	$	4,961	$	791	$	5,752
Provision for expected credit losses	628		207		835		615		(34)		581
Amounts written off charged against the allowance	(770)		(71)		(841)		(301)		(13)		(314)
Other, including foreign currency translation	—		—		—		—		(1)		(1)
Balance, end of period	$	5,364	$	1,248	$	6,612	$	5,275	$	743	$	6,018


	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
	United States		Other countries		Total		United States		Other countries		Total
Balance, beginning of period	$	4,785	$	824	$	5,609	$	3,369	$	597	$	3,966
Provision for expected credit losses	4,564		682		5,246		2,606		216		2,822
Amounts written off charged against the allowance	(3,985)		(258)		(4,243)		(700)		(84)		(784)
Other, including foreign currency translation	—				—		—		14		14
Balance, end of period	$	5,364	$	1,248	$	6,612	$	5,275	$	743	$	6,018

As of September 30, 2025 and December 31, 2024, the allowance for expected credit losses for each type of customer receivable were as follows (in thousands):


	September 30, 2025		December 31, 2024
Accounts receivable and notes receivable, current	$	3,237	$	3,322
Contract assets, net	3,327		2,239
Long-term notes receivable, net of current portion	48		48
Total allowance for expected credit losses on customer receivables	$	6,612	$	5,609

Note 5 - Inventory

Inventory consisted of the following at September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025		December 31, 2024
Raw materials	$	129,703	$	86,840
Work-in-process	7,861		6,230
Finished goods	179,949		172,246
Total inventory	$	317,513	$	265,316

Note 6 – Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2025 were as follows (in thousands):


	Connected Devices		Software and Services		Total
Balance, beginning of period (1)	$	46,674	$	710,164	$	756,838
Goodwill acquired	4,733		15,517		20,250
Purchase accounting adjustments	(446)		(7,082)		(7,528)
Foreign currency translation adjustments	281		3,545		3,826
Balance, end of period	$	51,242	$	722,144	$	773,386

(1)Due to the Segment Realignment, the beginning goodwill balances have been recast to conform to the new segment presentation. Refer to Note 1 for additional details.

Intangible assets (other than goodwill) consisted of the following at September 30, 2025 and December 31, 2024 (in thousands):


		September 30, 2025						December 31, 2024
	Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable (definite-lived) intangible assets:
Developed technology	3 ‑ 8 years	$	136,972	$	(36,884)	$	100,088	$	118,322	$	(21,337)	$	96,985
Customer relationships	5 ‑ 10 years	34,027		(7,663)		26,364		33,223		(4,716)		28,507
Issued trademarks	3 ‑ 23 years	6,704		(3,221)		3,483		6,706		(1,784)		4,922
Issued patents	8 ‑ 26 years	2,990		(1,552)		1,438		2,931		(1,470)		1,461
Domain names	5 ‑ 10 years	3,043		(2,662)		381		3,043		(2,433)		610
Total amortizable		183,736		(51,982)		131,754		164,225		(31,740)		132,485
Non-amortizable (indefinite-lived) intangible assets:
In-process research and development (1)		25,750		—		25,750		41,000		—		41,000
Trademarks		1,068		—		1,068		1,068		—		1,068
Patents and trademarks pending		476		—		476		604		—		604
Total non-amortizable		27,294		—		27,294		42,672		—		42,672
Total intangible assets		$	211,030	$	(51,982)	$	159,048	$	206,897	$	(31,740)	$	175,157

(1)Consists of in-process research and development costs pertaining to the acquisition of Dedrone Holdings, Inc. (“Dedrone”). During the nine months ended September 30, 2025, approximately $15.3 million has been placed into service.

Amortization expense of intangible assets for the three and nine months ended September 30, 2025 was $6.9 million and $20.2 million, respectively. Amortization expense of intangible assets for the three and nine months ended September 30, 2024 was $3.8 million and $10.7 million, respectively. Estimated amortization for intangible assets with definite lives for the remaining three months of 2025, the next five years ended December 31, and thereafter, is as follows (in thousands):


2025 remaining	$	7,048
2026	28,179
2027	26,946
2028	24,714
2029	22,366
2030	13,377
Thereafter	9,124
Total	$	131,754

Note 7 - Strategic Investments

Strategic investments include equity and debt investments in a number of non-public technology driven companies. We generally account for strategic equity investments under the ASC 321 measurement alternative for equity securities without readily determinable fair values, as there are no quoted market prices for the equity investments. The equity investments are measured at cost less impairment, adjusted for observable price changes and are assessed for impairment whenever events or changes in circumstances indicate that the fair value may be less than its carrying value. For the debt security strategic investments, we have elected to account for these investments and the associated embedded derivatives utilizing the fair value option. Unrealized and realized changes in fair value for the entire hybrid instruments are recorded within other income, net in the consolidated statements of operations and comprehensive income (loss).

During the nine months ended September 30, 2025, we closed a series of transactions to acquire additional equity interests in an existing strategic investee for an aggregate amount of $215.1 million.

During the first quarter of 2025, we also recognized a gain of $167.4 million related to an observable price change of a separate existing strategic investee. Furthermore, we entered into a series of transactions to sell certain interests and recognized proceeds from the sales of $340.7 million for the nine months ended September 30, 2025. Previously unrealized gains of $320.8 million were realized from the collective sales, net of $1.3 million of transaction costs.

During the third quarter of 2025, a strategic investee completed a change-of-control transaction resulting in liquidation of the entity and distribution of consideration to its shareholders. In connection with the transaction, we received consideration of $36.9 million. We recognized a gain of $14.6 million from the sale, net of $0.1 million of transaction costs. Previously unrealized gains of $2.6 million were realized as a result of this sale.

The following table presents the carrying value of our strategic investments (in thousands) as of:


	September 30, 2025
	Strategic investments		Warrants		Call options		Total
Equity securities:
Non-marketable equity securities	$	368,184	$	6,617	$	11,600	$	386,401
Debt securities:
Non-marketable debt securities	546		—		—		546
Total strategic investments	$	368,730	$	6,617	$	11,600	$	386,947


	December 31, 2024
	Strategic investments		Warrants		Call options		Total
Equity securities:
Non-marketable equity securities	$	319,598	$	4,368	$	—	$	323,966
Debt securities:
Non-marketable debt securities	8,584		—		—		8,584
Total strategic investments	$	328,182	$	4,368	$	—	$	332,550

The life to date cumulative upward and downward adjustments to the carrying value of our strategic equity investments accounted for under the ASC 321 measurement alternative and still held as of September 30, 2025 were $10.4 million and $16.3 million, respectively.

The following tables summarize the gains and losses associated with our strategic investments during the three and nine months ended September 30, 2025 and 2024 (in thousands):


	Three Months Ended September 30, 2025								Three Months Ended September 30, 2024
	Strategic Investments		Warrants		Call options		Total		Strategic Investments		Warrants		Call options		Total
Realized gains recognized on strategic investments during the period, net	$	17,157	$	—	$	—	$	17,157	$	—	$	—	$	—	$	—
Reversal of prior period cumulative unrealized gains, net, for securities sold during the period	(2,585)		—		—		(2,585)		—		—		—		—
Unrealized gains on strategic investments still held at the reporting date (1)	46		—		—		46		449		—		—		449
Unrealized losses, including impairments, on strategic investments still held at the reporting date	—		—		—		—		—		—		—		—
Gains on strategic investments, net	$	14,618	$	—	$	—	$	14,618	$	449	$	—	$	—	$	449

(1)Includes unrealized gains of $0.5 million for the entire hybrid debt security strategic investment instrument of a strategic investee for the three months ended September 30, 2024.


	Nine Months Ended September 30, 2025								Nine Months Ended September 30, 2024
	Strategic Investments		Warrants		Call options		Total		Strategic Investments		Warrants		Call options		Total
Realized gains (losses) recognized on strategic investments during the period, net (1)	$	337,974	$	—	$	—	$	337,974	$	45,162	$	—	$	(2,849)	$	42,313
Reversal of prior period cumulative unrealized gains, net, for securities sold during the period (1)	(161,820)		—		—		(161,820)		—		—		—		—
Unrealized gains on strategic investments still held at the reporting date (2)	6,536		—		—		6,536		75,370		855		—		76,225
Unrealized losses, including impairments, on strategic investments still held at the reporting date	(2,048)		—		—		(2,048)		—		—		—		—
Gains (losses) on strategic investments, net	$	180,642	$	—	$	—	$	180,642	$	120,532	$	855	$	(2,849)	$	118,538

(1)Includes realized gains and reversal of prior unrealized gains of $2.6 million and $1.1 million, respectively, for a hybrid debt security strategic investment instrument related to a strategic investee liquidation event for the nine months ended September 30, 2025.

(2)Includes unrealized gains of $0.6 million for the entire hybrid debt security strategic investment instrument of a strategic investee for the nine months ended September 30, 2024.

Note 8 - Variable Interest Entities

We evaluate our investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If we conclude that an investee is a VIE, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a VIE, we will consolidate such entity and reflect the non-controlling interest of other beneficiaries of that entity.

We determine whether we are the primary beneficiary of a VIE by performing an analysis that principally considers:

The VIE’s purpose, design, and risks the VIE was designed to create and pass through to its variable interest holders;
The VIE’s capital structure;
The terms between the VIE and its variable interest holders and other parties involved with the VIE; and
Related party affiliations.

As of September 30, 2025 and December 31, 2024, the unconsolidated non-public VIEs in which we hold variable interests were as follows (in thousands):


			September 30, 2025						December 31, 2024
Carrying value of variable interest - assets (1)			$	3,824					$	25,171

(1)Balance reflects the maximum exposure to loss, which is limited to the carrying value of the interest.

The primary purpose of our U.S.-based, unconsolidated VIE investments is to create strategic partnerships with market-leading providers of public safety technology solutions. We present all variable interests in unconsolidated VIEs as strategic investments within the long-term assets section of the consolidated balance sheets.

We have provided financial support to the unconsolidated VIEs in exchange for investments in debt and equity securities as well as warrants or call options that give us the ability to commit additional capital over time. Financial support provided to the unconsolidated VIEs is used to continue to finance their operations.

Note 9 - Accrued Liabilities

Accrued liabilities consisted of the following at September 30, 2025 and December 31, 2024 (in thousands):


	September 30, 2025		December 31, 2024
Accrued commissions	$	57,705	$	88,237
Accrued bonus	56,183		59,780
Accrued salaries and benefits	34,881		25,233
Accrued income and other taxes	21,811		27,863
Accrued third-party product costs	21,708		6,728
Accrued cloud hosting fees	13,903		10,673
Accrued inventory in transit	12,690		13,101
Accrued warranty expense	10,905		8,284
Accrued consulting and IT fees	7,072		7,846
Accrued interest	5,222		134
Other accrued expenses	51,264		31,314
Total accrued liabilities	$	293,344	$	279,193

Note 10 – Notes Payable, Net

Notes payable, net, consisted of the following (in thousands):


	September 30, 2025		December 31, 2024
2030 Notes	$	1,000,000	$	—
2033 Notes	750,000		—
2027 Notes	282,528		690,000
Total principal	2,032,528		690,000
Unamortized debt issuance costs	(23,602)		(9,711)
Total carrying amount of notes payable, net	2,008,926		680,289
Less: current portion (1)	(279,560)		(680,289)
Long-term notes payable, net	$	1,729,366	$	—

(1)Pursuant to the terms of the 2027 Notes, as of September 30, 2025 and December 31, 2024, the last reported sale price per share of our common stock exceeded 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. Therefore, the 2027 Notes, net of unamortized debt issuance costs, were classified as current liabilities within the consolidated balance sheets as of September 30, 2025 and December 31, 2024.

2030 and 2033 Notes

In March 2025, we issued $1.0 billion aggregate principal amount of Senior Notes due 2030 (the “2030 Notes”) and $750.0 million aggregate principal amount of Senior Notes due 2033 (the “2033 Notes” and, together with the 2030 Notes, the “Senior Notes”) in a private offering. The 2030 Notes will mature on March 15, 2030 unless earlier redeemed or repurchased. Interest on the 2030 Notes accrues from March 11, 2025 and is payable semiannually in arrears on March 15 and September 15 of each year, commencing on September 15, 2025, at a rate of 6.125% per year. The 2033 Notes will mature on March 15, 2033 unless earlier redeemed or repurchased. Interest on the 2033 Notes accrues from March 11, 2025 and is payable semiannually in arrears on March 15 and September 15 of each year, commencing on September 15, 2025, at a rate of 6.250% per year. The total combined gross proceeds from the issuance of the Senior Notes, were $1.75 billion, and after deducting initial purchasers’ discounts and commissions and other debt issuance costs of approximately $22.4 million, the total combined net proceeds were approximately $1.73 billion. The effective interest rate for the 2030 Notes and 2033 Notes was 6.42% and 6.45%, respectively, including interest payable and amortization of debt issuance costs.

Each of the series of Senior Notes were issued pursuant to an indenture. Such indentures contain certain restrictions on liens, mergers, consolidations and transfers of all or substantially all of the Company’s assets. Additionally, upon the occurrence of specified change of control triggering events, we will be required to offer to repurchase the Senior Notes at 101% of the principal amount, plus accrued and unpaid interest to the purchase date. The indentures set forth certain events of default after which the Senior Notes may be declared immediately due and payable, as well as certain types of bankruptcy or insolvency events of default after which the Senior Notes become automatically due and payable.

Prior to March 15, 2027, we may redeem the 2030 Notes at our option, in whole or in part at any time, at a redemption price equal to 100% of the principal amount of the 2030 Notes redeemed, plus a “make whole” premium and accrued and unpaid interest, if any. In addition, we may redeem up to 40% of the aggregate principal amount of the 2030 Notes at any time before March 15, 2027, with the net cash proceeds from certain equity offerings at a redemption price equal to 106.125% of the principal amount of the 2030 Notes, plus accrued and unpaid interest, if any. On or after March 15, 2027, we may redeem the 2030 Notes at our option, in whole or in part at any time, at a redemption price equal to the percentage of principal amount set forth below, plus accrued and unpaid interest, if any:


Year	Percentage
2027	103.063	%
2028	101.531	%
2029 and thereafter	100.000	%

Prior to March 15, 2028, we may redeem the 2033 Notes at our option, in whole or in part at any time, at a redemption price equal to 100% of the principal amount of the 2033 Notes redeemed, plus a “make whole” premium and accrued and unpaid interest, if any. In addition, we may redeem up to 40% of the aggregate principal amount of the 2033 Notes at any time before March 15, 2028, with the net cash proceeds from certain equity offerings at a redemption price equal to 106.250% of the principal amount of the 2033 Notes, plus accrued and unpaid interest, if any. On or after March 15, 2028, we may redeem the 2033 Notes at our option, in whole or in part at any time, at a redemption price equal to the percentage of principal amount set forth below, plus accrued and unpaid interest, if any:


Year	Percentage
2028	103.125	%
2029	101.563	%
2030 and thereafter	100.000	%

Interest expense related to the Senior Notes was as follows (in thousands):


	Three Months Ended		Nine Months Ended
	September 30, 2025		September 30, 2025
Contractual interest expense	$	27,031	$	60,069
Amortization of debt issuance costs	791		1,741
Total interest expense	$	27,822	$	61,810

2027 Notes

In December 2022, we issued $690.0 million aggregate principal amount of our Convertible Senior Notes due 2027 (the “2027 Notes”) in a private offering, of which the aggregate principal amount included the exercise in full of the initial purchasers’ option to purchase up to an additional $90.0 million principal amount. The 2027 Notes mature on December 15, 2027 and bear interest at a fixed rate of 0.50% per annum, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2023. The total combined gross proceeds from the issuance of the 2027 Notes were $690.0 million, and after deducting initial purchasers’ discounts and commissions and other debt issuance costs of $16.2 million, the total combined net proceeds were approximately $673.8 million. The effective interest rate for the 2027 Notes was 0.99% and included interest payable and amortization of debt issuance costs.


			Maturity Date						Initial Conversion Price per Share						Initial Conversion Rate per $1,000 Par Value						Initial Number of Shares (Prior to Repurchase)
2027 Notes			December 15, 2027						$228.73						4.3720 shares						3,016,680

The terms of the 2027 Notes require conversion into cash up to the principal amount, with conversion into common stock, cash, or a combination of cash and common stock, at our option, for any amount in excess of the principal. Any shares issued upon conversion are recorded in stockholders' equity. The 2027 Notes are convertible, in multiples of $1,000 principal amount, at the option of the holders prior to the close of business on the business day immediately preceding September 15, 2027 only under the following circumstances:

during any calendar quarter commencing after the calendar quarter ending on March 31, 2023 (and only during such fiscal quarter), if the last reported sale price per common stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;
any time preceding September 15, 2027, when during the five consecutive business days immediately after any 10 consecutive trading day period (the “Measurement Period”), if the trading price per $1,000 principal amount of 2027 Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day;
upon the occurrence of certain corporate events or distributions on our ordinary shares, as provided in the indenture governing the 2027 Notes;
if we call the 2027 Notes for redemption; or any time from, and including, September 15, 2027 until the close of business on the second scheduled trading day immediately before the maturity date

If we undergo a fundamental change (as defined in the indenture governing the 2027 Notes), holders may require us to repurchase for cash all or any portion of their 2027 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2027 Notes to be repurchased, plus accrued and unpaid interest, if any, up to but excluding the fundamental change repurchase date. In addition, following certain corporate events or if we issue a notice of redemption, it may increase the conversion rate for holders who elect to convert their 2027 Notes in connection with such corporate event or during the relevant redemption period.

On or after December 22, 2025, we may redeem for cash all or any portion of the 2027 Notes in accordance with the optional redemption terms of the convertible debt agreement.

In March 2025, we entered into and closed separate, privately negotiated agreements with certain holders (the “Holders”) of the 2027 Notes to exchange approximately $407.5 million aggregate principal amount of the 2027 Notes for consideration consisting of cash and shares of our common stock that were determined over an averaging period commencing on March 7, 2025 and ending on March 10, 2025 (the “Exchange Transactions”). The consideration transferred to the Holders aggregated to $408.0 million in cash (inclusive of accrued interest and cash paid for fractional shares) and an aggregate of 1,038,259 shares of our common stock. The Exchange Transactions were accounted for as induced conversions, and we recognized an expense of $26.2 million, calculated as of the date the inducement offers were accepted, representing the excess of the equity consideration transferred in the Exchange Transactions over the fair value of securities and other consideration issuable pursuant to the original conversion terms defined in the indenture governing the 2027 Notes. We also recognized approximately $2.5 million of third-party transaction costs which were expensed as a cost of inducement. As a result, we recorded an aggregate of $28.7 million of induced conversion expense within other income, net in the consolidated statements of operations and comprehensive income (loss). As a result of the Exchange Transactions, we recorded $26.1 million in additional paid-in capital and we reclassified $5.3 million of unamortized debt issuance costs into equity as part of the derecognition of the associated net carrying amount of the portion of the 2027 Notes which were exchanged, resulting in a net impact of $20.8 million to equity related to the Exchange Transactions. Following the closing of the Exchange Transactions, we have approximately $282.5 million aggregate principal amount of 2027 Notes outstanding. The effective interest rate for the outstanding 2027 Notes after the Exchange Transactions is 0.98% and includes interest payable and amortization of debt issuance costs. The Exchange Transactions did not impact the Note Hedge or Warrants, which remain outstanding and are discussed in further detail below.

Interest expense related to the 2027 Notes was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Contractual interest expense	$	354	$	862	$	1,487	$	2,588
Amortization of debt issuance costs	332		803		1,411		2,368
Total interest expense	$	686	$	1,665	$	2,898	$	4,956

We consider the fair value of each of our outstanding notes payable to be a Level 2 measurement. The estimated fair value at September 30, 2025 and December 31, 2024 is based on the closing trading price of the respective notes payable as of the last day of trading for each period (in millions):


	September 30, 2025		December 31, 2024
2027 Notes	$	882.0	$	1,798.5
2030 Notes	1,027.5		—
2033 Notes	775.4		—

Convertible Note Hedge

To reduce the impact of potential economic dilution upon conversion of the 2027 Notes, we entered into a convertible note hedge transaction (the “Note Hedge” or “2027 Note Hedge”) with certain investment banks, with respect to our common stock, concurrently with the issuance of the 2027 Notes.


			Purchase Price (in thousands)						Shares Purchased
2027 Note Hedge			$	194,994					3,016,680

The Note Hedge covers shares of our common stock at a strike price per share that corresponds to the initial conversion price of the respective 2027 Notes, subject to adjustment, and is exercisable upon conversion of the 2027 Notes. If exercised, we may elect to receive cash, shares of our common stock, or a combination of cash and shares. Any shares received upon exercise of the options underlying the 2027 Notes are considered treasury stock. We have accounted for the aggregate amount of purchase price for the Note Hedge as a reduction to additional paid-in capital. The Note Hedge will expire upon the maturity of the 2027 Notes. The Note Hedge is intended to reduce the potential economic dilution upon conversion of the 2027 Notes in the event that the market value per share of our common stock at the time of exercise is greater than the conversion price of the 2027 Notes. The Note Hedge is a separate transaction and is not part of the terms of the 2027 Notes. Holders of the 2027 Notes do not have any rights with respect to the Note Hedge. The Note Hedge does not impact earnings per share, as it was entered into to offset any dilution from the 2027 Notes. Considering the impact of any voluntary conversions and concurrent hedge option exercises as of September 30, 2025, 3,016,597 shares remain subject to the Note Hedge.

Convertible Note Warrants


			Proceeds (in thousands)						Shares						Strike Price						First Expiration
2027 Warrants			$	124,269					3,016,680						$	338.86					March 15, 2028

Separately, we entered into warrant transactions with certain investment banks, whereby we sold Warrants to acquire, subject to adjustment, the number of shares of our common stock shown in the table above. If the average market value per share of our common stock exceeds the strike price of the Warrants, such Warrants would have a dilutive effect on our earnings per share to the extent we report net income. According to the terms of the Warrants, the Warrants will be automatically exercised over a 60-trading day period beginning on the first expiration date as set forth above.

Future Maturities of Notes Payable

Maturities of principal amounts of notes payable are as follows for each respective year (in thousands). These maturities do not reflect the impact of any put or conversion provisions associated with certain debt instruments:


Remainder of 2025	$	—
2026	—
2027 (1)	282,528
2028	—
2029	—
2030	1,000,000
After 2030	750,000
Total principal	$	2,032,528

(1)The Notes are contractually due in fiscal year 2027. However, as of December 31, 2024 and September 30, 2025, the Notes were convertible at the option of the holders into cash up to the principal amount, with conversion into common stock, cash, or a combination of cash and common stock, at our option, for any amount in excess of the principal. Therefore, the Notes were classified as current liabilities within our consolidated balance sheets as of December 31, 2024 and September 30, 2025.

Note 11 - Income Taxes

In the third quarter of 2025, we implemented the relevant provisions of the One Big Beautiful Bill Act (“OBBBA”), enacted on July 4, 2025. As a result, we recognized a reduction in our R&D tax credit and we have accelerated the expense recognition of certain previously capitalized R&D costs.

Effective Tax Rate

The overall effective tax rate for the three months ended September 30, 2025 was 113.9%, significantly higher than the federal statutory rate due to lower pre-tax book income in the current period, magnifying the relative impact of permanent and discrete items. A major driver of the increase in rate was the enactment of the OBBBA in the quarter, which resulted in a reduction in our R&D tax credit. The effective tax rate was favorably impacted by a $15.4 million net tax benefit related to stock-based compensation for stock awards that vested during the three months ended September 30, 2025.

By comparison, our overall effective tax rate for the three months ended September 30, 2024 was 15.8%. This rate differed from the federal statutory rate due to the net favorable impacts of stock-based compensation and R&D tax credits. The effective tax rate was favorably impacted by a $5.6 million net tax benefit related to stock-based compensation for stock awards that vested during the three months ended September 30, 2024.

Our overall effective tax rate for the nine months ended September 30, 2025 was (43.1)%. This rate differs from the federal statutory rate due to the net favorable impacts of stock-based compensation and R&D tax credits, partially offset by an increase in uncertain tax positions. The effective tax rate was favorably impacted by a $84.2 million net tax benefit related to stock-based compensation for stock awards that vested during the nine months ended September 30, 2025.

By comparison, our overall effective tax rate for the nine months ended September 30, 2024 was 18.6%. This rate differed from the federal statutory rate due to the net favorable impact of stock-based compensation, R&D tax credits, and a net gain related to an investment transaction not recognized for tax purposes. The effective tax rate was favorably impacted by a $13.0 million net tax benefit related to stock-based compensation for stock awards that vested during the nine months ended September 30, 2024.

Deferred Tax Assets

The change in deferred tax balances from $301.9 million as of December 31, 2024 to $342.7 million as of September 30, 2025, was primarily driven by a reduction and realization of previous unrealized mark-to-market gains, increase in stock-based-compensation expense not deductible until vest; partially offset by the reversal of certain deferred tax assets through additional paid-in-capital, associated with the partial repurchase of our 2027 Notes.

Note 12 - Stockholders’ Equity

Common Stock and Preferred Stock

We have authorized the issuance of two classes of stock designated as “common stock” and “preferred stock,” each having a par value of $0.00001 per share. We are authorized to issue 200 million shares of common stock and 25 million shares of preferred stock.

2024 Employee XSP and 2024 CEO Performance Award

On May 10, 2024, our shareholders approved the 2024 Employee XSP. The 2024 Employee XSP includes an approved pool of approximately 4.5 million shares of common stock reserved for grants of eXponential Stock Units (“XSUs”) to employees, of which approximately 0.8 million XSUs remain available to grant to employees under this program as of September 30, 2025. A total of approximately 0.1 million XSUs were granted during the nine months ended September 30, 2025. The program includes seven substantially equal tranches that will vest upon certification by the Compensation Committee of the Board of Directors upon achievement of three independent vesting conditions: (1) stock price goals; (2) operational goals; and (3) minimum service conditions.

Additionally, on May 10, 2024, shareholders approved a grant of 679,102 XSUs to our CEO, Patrick Smith, (the “2024 CEO Performance Award”). The stock price goals and operational goals applicable to the 2024 CEO Performance Award are identical to those under the 2024 Employee XSP, but Mr. Smith is subject to a longer minimum required service period.

The three independent vesting conditions are described in the following table:


	Operational Goals(1) (in millions)						Stock Price Goal				Minimum Service Requirement
Tranche(2)	Revenue			Adj. EBITDA(3)						2024 Employee XSP		2024 CEO Performance Award		Goal Expiration
1	$	1,834	or	$	382	and	$	247.40	and		June 2025		December 2028		December 31, 2026
2	2,293		or	497		and	309.25		and		December 2025		December 2028		December 31, 2027
3	2,866		or	611		and	386.56		and		June 2026		December 2029		December 31, 2028
4	3,583		or	801		and	483.20		and		December 2026		December 2029		December 31, 2029
5	4,479		or	1,044		and	604.00		and		June 2027		December 2030		December 31, 2030
6	5,599		or	1,356		and	755.00		and		December 2027		December 2030		December 31, 2031
7	6,999		or	1,706		and	943.75		and		June 2028		December 2030		December 31, 2032

(1) Operational goals are measured, as of any date, for the previous four consecutive fiscal quarters, beginning with the Company's first full fiscal quarter ending after the fiscal quarter in which the grant date occurred.

(2) Tranche 1 vested and settled in June 2025. For certain grantees, the shares acquired upon vesting and settlement of Tranche 1 are subject to a holding period requirement under the plan, which will expire on the earlier of (i) December 31, 2030 and (ii) the date on which the subsequent tranche vests and settles.

(3) In connection with certain acquisitions which were completed during fiscal year 2024, the adjusted EBITDA goals were adjusted as required by the terms of the 2024 Employee XSP and 2024 CEO Performance Award. As the operational goals for Tranches 1 and 2 were met as of December 31, 2024, no further adjustment to the adjusted EBITDA goals for these tranches was made in the current period, in accordance with the terms of the awards.

Restricted Stock Units

The following table summarizes restricted stock unit (“RSU”) activity for the nine months ended September 30, 2025 and 2024 (number of units and aggregate intrinsic value in thousands):


	Nine Months Ended September 30,
	2025				2024
	Number of Units		Weighted Average Grant-Date Fair Value		Number of Units		Weighted Average Grant-Date Fair Value
Units outstanding, beginning of year	1,684		$	356.31	1,615		$	193.09
Granted	121		696.46		595		269.18
Released	(533)		265.47		(488)		185.33
Forfeited	(73)		446.21		(128)		202.01
Units outstanding, end of period	1,199		425.48		1,594		223.16
Aggregate intrinsic value at period-end	$	860,416			$	636,869

Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $717.64 per share, multiplied by the number of RSUs outstanding. As of September 30, 2025, there was $381.1 million in unrecognized compensation expense related to RSUs under our stock plans for shares that are expected to vest. We expect to recognize the cost related to the RSUs over a weighted average period of 1.89 years. Shares underlying RSUs are generally released when vesting requirements are met.

Performance Stock Units

The following table summarizes performance stock unit (“PSU”) activity, inclusive of XSUs, for the nine months ended September 30, 2025 and 2024 (number of units and aggregate intrinsic value in thousands):


	Nine Months Ended September 30,
	2025				2024
	Number of Units		Weighted Average Grant-Date Fair Value		Number of Units		Weighted Average Grant-Date Fair Value
Units outstanding, beginning of year	4,865		$	261.18	394		$	201.61
Granted	137		603.12		4,517		240.07
Released	(532)		293.78		(11)		149.49
Forfeited	(143)		317.66		(345)		232.01
Units outstanding, end of period	4,327		266.10		4,555		237.57
Aggregate intrinsic value at period-end	$	3,105,220			$	1,820,338

Aggregate intrinsic value represents our closing stock price on the last trading day of the period, which was $717.64 per share, multiplied by the number of PSUs outstanding. As of September 30, 2025, there was $555.3 million in unrecognized compensation expense related to PSUs under our stock plans for awards that are expected to vest. We expect to recognize the cost related to PSUs over a weighted average period of 3.62 years. Shares underlying PSUs are generally released when vesting requirements are met.

Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2025 and 2024 (number of units and aggregate intrinsic value in thousands):


	Nine Months Ended September 30,
	2025					2024
	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)
Options outstanding, beginning of year	21		$	28.58		531		$	28.58
Granted	—		—			—		—
Exercised	—		—			(350)		28.58
Expired / terminated	—		—			—		—
Options outstanding and exercisable, end of period	21		$	28.58	2.41	181		$	28.58	3.41
Aggregate intrinsic value at period-end	$	14,423				$	67,085

Aggregate intrinsic value represents the difference between the exercise price of the underlying stock options and the closing stock price on the last trading day of the period ended September 30, 2025, which was $717.64 per share. There was no stock option activity during the nine months ended September 30, 2025.

Stock-based Compensation Expense

The following table summarizes the composition of stock-based compensation expense for the three and nine months ended September 30, 2025 and 2024 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Cost of product and service sales	$	12,703	$	10,123	$	38,151	$	48,235
Selling, general and administrative expenses	75,072		55,248		218,606		117,036
Research and development expenses	58,377		36,409		168,878		86,445
Total stock-based compensation expense	$	146,152	$	101,780	$	425,635	$	251,716

Stock Incentive Plan

In May 2024, our shareholders approved the Axon Enterprise, Inc. Amended and Restated 2022 Stock Incentive Plan (the “Amended 2022 Plan”) authorizing an additional 2.2 million shares, plus remaining available shares under prior plans, for issuance under the Amended 2022 Plan. Combined with the shares of our common stock available under our legacy stock incentive plans, there are 3.2 million shares of our common stock available for grant under the Amended 2022 Plan as of September 30, 2025.

At-The-Market Equity Offering

We participate in an “at-the-market” equity offering program (the “ATM”), pursuant to which we are authorized to sell up to a total of approximately 2.0 million shares of our common stock.

During the nine months ended September 30, 2025, we sold approximately 0.5 million shares of our common stock under our ATM. We generated approximately $366.3 million in aggregate gross proceeds from sales under the ATM. We recorded aggregate net proceeds of $362.1 million in additional paid-in capital after deducting related expenses, including commissions to the sales agent and issuance costs of $4.2 million. As of September 30, 2025, $0.1 million of these costs were not yet paid.

As of September 30, 2025, there were approximately 1.5 million shares remaining. We utilize the net proceeds from this offering program for general corporate purposes, which may include providing capital to satisfy a portion of the tax obligations related to the vesting and settlement of stock compensation awards granted to our employees under our stock plans and funding ongoing strategic investments and acquisitions as we continue to expand our product ecosystem.

Stock Repurchase Plan

In February 2016, our Board of Directors authorized a stock repurchase program to acquire up to $50.0 million of our outstanding common stock subject to stock market conditions and corporate considerations. As of September 30, 2025, $16.3 million remained available under the plan for future purchases.

Note 13 - Line of Credit

In December 2022, we entered into a credit agreement that provides for a senior unsecured multi-currency revolving credit facility (the “Credit Agreement”) in an aggregate principal amount of up to $200.0 million, $30.0 million of which is available for the issuance of letters of credit. The Credit Agreement originally matured on the earlier of December 15, 2027 or the date that is six months prior to the stated maturity date of the 2027 Notes unless the 2027 Notes had been redeemed, repurchased, converted or defeased in full. Additionally, the Credit Agreement had an accordion feature which allowed for an increase in the total line of credit up to $300.0 million, in each lender’s sole discretion.

In March 2025, immediately prior to the consummation of the closing of the 2030 and 2033 Notes offering, we entered into an amendment (the “Amendment”) to the Credit Agreement. The Amendment increased the existing revolving credit facility by $100.0 million to a total aggregate principal amount of $300.0 million (with an accordion feature which allows for an increase in the total line of credit up to $400.0 million), increased availability for the issuance of letters of credit by $20.0 million to $50.0 million, extended the maturity date of the Credit Agreement from December 15, 2027 to March 11, 2030 (or, in each case, the date that is six months prior to the stated maturity date of the 2027 Notes unless the 2027 Notes have been redeemed, repurchased, converted or defeased in full), permitted the 2030 and 2033 Notes offering, and provided for other updates to the covenants and terms of the Credit Agreement.

As of September 30, 2025, no amounts were drawn under the Credit Agreement. Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit. As of September 30, 2025, we had letters of credit outstanding of approximately $8.9 million under the facility and available borrowing of $291.1 million, excluding amounts available under the accordion feature. Advances under the line of credit bear interest at Term SOFR plus 1.25 to 1.75% per year determined in accordance with a pricing grid based on our net leverage ratio and consolidated interest coverage ratio discussed further below. “SOFR” is defined as a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York or a successor administrator of the secured overnight financing rate.

We are required to comply with a net leverage ratio, defined as consolidated total indebtedness to EBITDA, and a consolidated interest coverage ratio, defined as EBITDA to consolidated interest expense. As of September 30, 2025, we are in compliance with the associated covenants under the Credit Agreement.

Note 14 - Commitments and Contingencies

Product Litigation

As a manufacturer of weapons and other law enforcement tools used in high-risk field environments, we are often the subject of products liability litigation concerning the use of our products. We are currently named as a defendant in two such lawsuits in which the plaintiffs allege either wrongful death or personal injury in situations in which a TASER CED was used by law enforcement officers in connection with arrests or training. While the facts vary from case to case, these product liability claims typically allege defective product design, manufacturing, and/or failure to warn. They seek compensatory and sometimes punitive damages, often in unspecified amounts.

We continue to aggressively defend all product litigation. As a general rule, it is our policy not to settle suspect injury or death cases. Exceptions are sometimes made where the settlement is strategically beneficial to us. Due to the confidential nature of our litigation strategy and the confidentiality agreements that are executed in the event of a settlement, we do not identify or comment on specific settlements by case or amount. Based on current information, we do not believe that the outcome of any such legal proceeding will have a material effect on our financial position, results of operations or cash flows. We are self-insured for the first $5.0 million of any product claim made after 2014. No judgment or settlement has ever exceeded this amount in any products liability case. We continue to maintain product liability insurance coverage, including an insurance policy fronting arrangement, above our self-insured retention with various limits depending on the policy period.

Other Matters

Despite the Federal Trade Commission’s (“FTC”) dismissal of its administrative enforcement complaint against us without consent decree or other condition in October 2023, other parties continue to allege that our May 2018 acquisition of an insolvent body camera competitor, Vievu LLC, was anticompetitive. Pending in the District of New Jersey (Case No. 3:23-cv-7182) is a purported antitrust class action brought by three municipalities based largely on the FTC’s unproven allegations. We deny all allegations of anticompetitive or other misconduct and are vigorously defending the case.

Pending in the Eastern District of Virginia (Case No. 1:24-CV-01625) is a patent infringement suit filed by Airspace Systems, Inc. (“Airspace”) against Dedrone involving certain drone technology. After we acquired Dedrone on October 1, 2024, Airspace amended its complaint and added us as a defendant. Airspace seeks injunctive relief and treble damages in an unspecified amount. We and Dedrone deny infringement and further contend that the three asserted patents are invalid and/or contain patent ineligible subject matter. To that end, we have simultaneously challenged all three patents in the United States Patent and Trademark Office and the court has stayed the litigation. On October 8, 2025, the Patent Trial and Appeal Board granted our petitions and instituted review on all claims of all three asserted patents. By statute, a decision is required within one year or October 8, 2026. It is expected that the district court litigation will remain stayed during this time.

General

From time to time, we are notified that we may be a party to a lawsuit or that a claim is being made against us. After carefully assessing the claim, and assuming we determine that we are not at fault or we disagree with the damages or relief demanded, we vigorously defend any lawsuit filed against us. We record a liability when losses are deemed probable and reasonably estimable. When losses are deemed reasonably possible but not probable, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim, if material for disclosure. In evaluating matters for accrual and disclosure purposes, we take into consideration factors such as our historical experience with matters of a similar nature, the specific facts and circumstances asserted, the likelihood of our prevailing, the availability of insurance, and the severity of any potential loss. We reevaluate and update accruals as matters progress over time.

Based on our assessment of outstanding litigation and claims as of September 30, 2025, we have determined that it is not reasonably possible that these losses, if any, from lawsuits will individually, or in the aggregate, materially affect our results of operations, financial condition or cash flows. However, the outcome of any litigation is inherently uncertain and there can be no assurance that any expense, liability or damages that may ultimately result from the resolution of these matters will be covered by our insurance or will not be in excess of amounts recognized or provided by insurance coverage and will not have a material adverse effect on our operating results, financial condition or cash flows.

Off-Balance Sheet Arrangements

Under certain circumstances, we use letters of credit and surety bonds to guarantee our performance under various contracts, principally in connection with the installation and integration of Axon cameras and related technologies. Certain of our letters of credit and surety bonds have stated expiration dates with others being released as the contractual performance terms are completed. At September 30, 2025, we had outstanding letters of credit issued under our credit facility of $8.9 million that are expected to expire through 2026. We also had outstanding letters of credit of $0.3 million that do not draw against our credit facility. Additionally, we had $22.0 million of outstanding surety bonds as of September 30, 2025, with expiration dates ranging through 2029.

Note 15 – Accumulated Other Comprehensive Income (Loss)

The following tables reflect the changes in accumulated other comprehensive income (loss), net of tax (in thousands):


	Unrealized (Losses) Gains on Available-for-Sale Investments		Foreign Currency Translation		Total
Balance, December 31, 2024	$	(30)	$	(18,154)	$	(18,184)
Other comprehensive (loss) income	(124)		358		234
Balance, March 31, 2025	$	(154)	$	(17,796)	$	(17,950)
Other comprehensive income	73		5,159		5,232
Balance, June 30, 2025	$	(81)	$	(12,637)	$	(12,718)
Other comprehensive income (loss)	213		(25)		188
Balance, September 30, 2025	$	132	$	(12,662)	$	(12,530)


	Unrealized (Losses) Gains on Available-for-Sale Investments		Foreign Currency Translation		Total
Balance, December 31, 2023	$	(399)	$	(10,280)	$	(10,679)
Other comprehensive loss	(106)		(801)		(907)
Balance, March 31, 2024	$	(505)	$	(11,081)	$	(11,586)
Other comprehensive income (loss)	119		(2,727)		(2,608)
Balance, June 30, 2024	$	(386)	$	(13,808)	$	(14,194)
Other comprehensive income	434		4,640		5,074
Balance, September 30, 2024	$	48	$	(9,168)	$	(9,120)

Note 16 - Segment Data

Segment information for the three and nine months ended September 30, 2024 has been recast to reflect the Segment Realignment. Refer to Note 1 for additional details. Information relative to our reportable segments was as follows (in thousands):


	Three Months Ended September 30,
	2025						2024
	Connected Devices		Software and Services		Total		Connected Devices		Software and Services		Total
Net sales	$	405,399	$	305,242	$	710,641	$	327,900	$	216,374	$	544,274
Cost of sales	203,173		80,120		283,293		156,167		57,360		213,527
Other segment items (1)	8,902		9,200		18,102		7,104		6,039		13,143
Adjusted gross margin	$	211,128	$	234,322	$	445,450	$	178,837	$	165,053	$	343,890
Other segment items (1)					(18,102)						(13,143)
Selling, general and administrative					(252,803)						(192,189)
Research and development					(176,674)						(114,477)
Interest income					23,941						12,624
Interest expense					(28,912)						(1,646)
Other income, net					22,803						44,510
Income before provision for income taxes					$	15,703					$	79,569

(1) Other segment items includes the adjustment for noncash stock-based compensation expense and amortization of acquired intangible assets to arrive at the profit measure used by the CODM.


	Nine Months Ended September 30,
	2025						2024
	Connected Devices		Software and Services		Total		Connected Devices		Software and Services		Total
Net sales	$	1,122,655	$	860,157	$	1,982,812	$	891,087	$	616,294	$	1,507,381
Cost of sales	566,861		219,121		785,982		450,954		160,896		611,850
Other segment items (1)	27,872		27,922		55,794		41,490		15,043		56,533
Adjusted gross margin	$	583,666	$	668,958	$	1,252,624	$	481,623	$	470,441	$	952,064
Other segment items (1)					(55,794)						(56,533)
Selling, general and administrative					(718,524)						(514,228)
Research and development					(490,264)						(307,008)
Interest income					57,798						36,407
Interest expense					(65,419)						(5,273)
Other income, net					104,790						191,510
Income before provision for income taxes					$	85,211					$	296,939

(1) Other segment items includes the adjustment for noncash stock-based compensation expense, amortization of acquired intangible assets, inventory step-up amortization related to acquisitions and payroll taxes related to 2024 Employee XSP vesting to arrive at the profit measure used by the CODM.

The following table presents supplemental information included within the measure of profit or loss, adjusted gross margin, reviewed by our CODM (in thousands). There are no other material items presented to our CODM by segment or included within adjusted gross margin for supplemental disclosure.


	Three Months Ended September 30,
	2025						2024
	Connected Devices		Software and Services		Total		Connected Devices		Software and Services		Total
Depreciation and amortization	$	9,188	$	4,324	$	13,512	$	4,545	$	4,291	$	8,836
Significant noncash items:
Stock-based compensation expense	7,584		5,119		12,703		6,722		3,401		10,123
Provisions for inventory	1,737		—		1,737		2,204		—		2,204
Warranty reserve expense	2,584		—		2,584		3,047		—		3,047


	Nine Months Ended September 30,
	2025						2024
	Connected Devices		Software and Services		Total		Connected Devices		Software and Services		Total
Depreciation and amortization	$	26,783	$	12,381	$	39,164	$	15,393	$	8,120	$	23,513
Significant noncash items:
Stock-based compensation expense	22,643		15,508		38,151		40,432		7,803		48,235
Provisions for inventory	3,578		—		3,578		11,047		—		11,047
Warranty reserve expense	9,378		—		9,378		4,860		—		4,860

Note 17 – Business Combinations

Fusus

On January 31, 2024, we acquired the remaining 79.7% interest in Fusus, LLC ("Fusus") for incremental consideration transferred of approximately $241.3 million. Based on the final purchase price allocation, we recorded $249.9 million of goodwill, $72.9 million of identifiable intangible assets, and other net liabilities assumed of $7.8 million, excluding deferred taxes. We also recorded a net deferred tax liability of $10.4 million. As of the acquisition date, the identifiable intangible assets recognized in the acquisition included $56.6 million of developed technology, $14.4 million of customer relationships, and $1.9 million of trademarks.

As a result of the Segment Realignment, the goodwill recognized in the acquisition has been reallocated between our two reportable segments, Connected Devices and Software and Services.

Dedrone

On October 1, 2024, we acquired the remaining 79.8% interest in Dedrone, a global leader in air space security, for incremental consideration transferred of approximately $391.1 million. We recorded incremental acquisition-related transaction and integration costs of $0.5 million and $2.6 million for the three and nine months ended September 30, 2025, respectively. These costs were expensed as incurred in selling, general, and administrative ("SG&A") expenses in our consolidated statements of operations and comprehensive income (loss).

The purchase price allocation was subject to revision during the measurement period through September 30, 2025. As of the nine months ended September 30, 2025, we recorded various measurement period adjustments primarily consisting of adjustments to working capital resulting in a $7.5 million decrease to goodwill. These measurement period adjustments also include $3.3 million indemnification assets related to certain pre-acquisition contingencies.

Based on the final purchase price allocation, including measurement period adjustments, we have recorded $443.6 million of goodwill, $100.5 million of identifiable intangible assets, and other net liabilities assumed of $43.9 million, excluding deferred taxes. We have also recorded a net deferred tax asset of $3.1 million. As of the acquisition date, the identifiable intangible assets recognized in the acquisition included $41.0 million of developed technology, $41.0 million of in-process research and development, $15.0 million of customer relationships, and $3.5 million of trademarks.

As a result of the Segment Realignment, the goodwill recognized in the acquisition has been reallocated between our two reportable segments, Connected Devices and Software and Services.

Other Acquisitions

During the nine months ended September 30, 2025, we completed certain acquisitions for total purchase consideration of approximately $24.0 million primarily to enhance our end-to-end public safety ecosystem. The acquisitions were not material to our consolidated statements of operations, either individually or in the aggregate.

Note 18 - Subsequent Events

Invictus Apps, Inc.

In October 2025, we acquired the remaining outstanding stock of Invictus Apps, Inc. (“Prepared”), a leading provider of AI-powered emergency communications software, for a base purchase price of $637.5 million, subject to customary purchase price adjustments. The goodwill associated with this acquisition is currently expected to be recorded to our Software and Services segment. The acquisition aligns with our mission and positions us to accelerate next-generation public safety communications and emergency response solutions.

Prior to this transaction, we held an approximately 1% ownership interest in Prepared. This transaction is considered a “step acquisition” under GAAP whereby our ownership interest held before the acquisition is required to be remeasured to fair value at the date of the acquisition.

Due to the proximity of the closing date of the acquisition to the date of this filing, the initial accounting for the acquisition is not yet complete. Transaction costs related to the acquisition were approximately $3.5 million for the nine months ended September 30, 2025. These transaction costs were expensed as incurred in SG&A in our consolidated statements of operations and comprehensive income (loss).

Carbyne Ltd.

On November 4, 2025, we entered into a definitive agreement to acquire Carbyne Ltd. (“Carbyne”), a leading cloud-native emergency communications and response platform for a base purchase price of $625.0 million, subject to customary purchase price adjustments and closing conditions. The acquisition is expected to be completed in the first quarter of 2026.

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