Axon Enterprise 10-Q 2026-03-31

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

or

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to __________

Commission File Number: 001-16391

			Axon Enterprise, Inc.
			(Exact name of registrant as specified in its charter)

Delaware			86-0741227
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
17800 North 85th Street
Scottsdale, Arizona			85255
(Address of principal executive offices)			(Zip Code)

(480) 991-0797

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, $0.00001 Par Value			AXON			The NASDAQ Stock Market LLC

---

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			x			Accelerated filer			o
Non-accelerated Filer			o			Smaller reporting company			o
						Emerging growth company			o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of the registrant’s common stock outstanding as of April 30, 2026 was 80,602,077.

Table of Contents

AXON ENTERPRISE, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026

									Page
Special Note Regarding Forward-Looking Statements									ii
PART I - FINANCIAL INFORMATION									1
			Item 1. Financial Statements (unaudited)						1
						Consolidated Balance Sheets			2
						Consolidated Statements of Operations and Comprehensive Income			3
						Consolidated Statements of Stockholders’ Equity			4
						Consolidated Statements of Cash Flows			5
						Condensed Notes to Consolidated Financial Statements			6
			Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						21
			Item 3. Quantitative and Qualitative Disclosures About Market Risk						31
			Item 4. Controls and Procedures						31
PART II - OTHER INFORMATION									32
			Item 1. Legal Proceedings						32
			Item 1A. Risk Factors						32
			Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						32
			Item 3. Defaults Upon Senior Securities						32
			Item 4. Mine Safety Disclosures						33
			Item 5. Other Information						33
			Item 6. Exhibits						33
			SIGNATURES						34

Table of Contents

Special Note Regarding Forward-Looking Statements

Statements contained in this Quarterly Report on Form 10-Q that are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding our expectations, beliefs, intentions and strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Words such as “may,” “will,” “should,” “could,” “would,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” and similar expressions, as well as statements in future tense, identify forward-looking statements. However, not all forward-looking statements contain these identifying words.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. Many events beyond our control may determine whether results we anticipate will be achieved. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. The material factors, which could cause our actual results to differ from our forward-looking statements, are set forth in our description of risk factors included in Part I, Item 1A, “Risk Factors” in our 2025 Annual Report on Form 10-K for the year ended December 31, 2025, which should be read in conjunction with the forward-looking statements in this Quarterly Report on Form 10-Q. These factors are intended as cautionary statements for investors within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 8-K, 10-Q and 10-K reports to the Securities and Exchange Commission (“SEC”). Our filings with the SEC may be accessed at the SEC’s web site at www.sec.gov.

ii

Table of Contents

PART I - FINANCIAL INFORMATION

Table of Contents

AXON ENTERPRISE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

			March 31, 2026						December 31, 2025
			(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents			$	458,921					$	1,201,147
Short-term investments			260,000						505,417
Marketable securities			18,052						27,213
Accounts and notes receivable, net of allowance of $3,771 and $4,198 as of March 31, 2026 and December 31, 2025, respectively			674,598						777,486
Contract assets, net			641,597						582,630
Inventory			408,010						341,811
Prepaid expenses			178,632						149,800
Other current assets			104,320						127,548
Total current assets			2,744,130						3,713,052
Property and equipment, net			336,443						330,979
Deferred tax assets, net			339,546						359,803
Intangible assets, net			295,069						196,972
Goodwill			1,894,376						1,370,189
Long-term notes receivable, net			1,933						6,066
Long-term contract assets, net			195,737						178,249
Strategic investments			838,243						416,833
Other long-term assets			421,372						428,170
Total assets			$	7,066,849					$	7,000,313
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	175,135					$	139,086
Accrued liabilities			312,428						510,538
Current portion of deferred revenue			690,419						714,708
Current portion of notes payable, net			—						80,552
Customer deposits			18,125						16,156
Other current liabilities			12,190						9,107
Total current liabilities			1,208,297						1,470,147
Deferred revenue, net of current portion			362,242						359,902
Liability for unrecognized tax benefits			27,238						24,376
Long-term deferred compensation			29,313						23,675
Long-term lease liabilities			97,182						98,942
Long-term notes payable, net			1,730,987						1,730,170
Other long-term liabilities			77,477						50,443
Total liabilities			3,532,736						3,757,655
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively			—						—
Common stock, $0.00001 par value; 200,000,000 shares authorized, 100,846,774 shares issued and 80,572,201 shares outstanding as of March 31, 2026, and 200,000,000 shares authorized, 100,444,971 shares issued and 80,211,537 shares outstanding as of December 31, 2025			1						1
Additional paid-in capital			2,619,564						2,475,035
Treasury stock at cost, 20,274,573 shares and 20,233,434 shares as of March 31, 2026 and December 31, 2025, respectively			(180,164)						(157,242)
Retained earnings			1,105,982						936,670
Accumulated other comprehensive loss			(11,270)						(11,806)
Total stockholders’ equity			3,534,113						3,242,658
Total liabilities and stockholders’ equity			$	7,066,849					$	7,000,313

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

Table of Contents

AXON ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

			Three Months Ended March 31,
			2026						2025
Net sales from products			$	452,821					$	340,896
Net sales from services			354,524						262,737
Net sales			807,345						603,633
Cost of product sales			232,156						170,181
Cost of service sales			97,903						67,713
Cost of sales			330,059						237,894
Gross margin			477,286						365,739
Operating expenses:
Selling, general and administrative			259,093						223,509
Research and development			188,950						151,023
Total operating expenses			448,043						374,532
Income (loss) from operations			29,243						(8,793)
Interest income			10,611						10,604
Interest expense			(28,643)						(7,821)
Other income, net			189,010						114,401
Income before provision for income taxes			200,221						108,391
Provision for income taxes			30,909						20,411
Net income			$	169,312					$	87,980
Net income per common and common equivalent shares:
Basic			$	2.11					$	1.14
Diluted			$	2.05					$	1.08
Weighted average number of common and common equivalent shares outstanding:
Basic			80,150						76,890
Diluted			82,478						81,484
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income			$	169,312					$	87,980
Foreign currency translation adjustments			647						358
Unrealized loss on available-for-sale investments			(111)						(124)
Comprehensive income			$	169,848					$	88,214

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

Table of Contents

AXON ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)

			Common Stock												**Additional P

Showing the first 8K of 86K characters. Open the full section

The following discussion and analysis of our financial condition as of March 31, 2026, and results of operations for the three months ended March 31, 2026 and 2025, should be read in conjunction with the unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes in our 2025 Annual Report on Form 10-K for the year ended December 31, 2025. The discussion includes references to non-GAAP financial measures, such as adjusted gross margin, which supplement our GAAP results by providing additional insight into our financial and operational performance. For definitions and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, refer to “Non-GAAP Measures” within this Quarterly Report on Form 10-Q. This discussion also contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in such forward-looking statements.

Overview

Axon is a technology company that provides integrated hardware and software solutions. Our products and services allow customers across the public and private sector to capture and use critical data to support fully-connected operational workflows. Our trusted network seamlessly integrates software and hardware with a range of connected devices, including TASER energy devices, cameras and sensors, drones and robotics, cloud-based evidence management, records management, real-time operations software, critical incident and emergency response systems, immersive training, and productivity tools – all enhanced by artificial intelligence.

Our revenues for the three months ended March 31, 2026 were $807.3 million, an increase of $203.7 million, or 33.7%, from the three months ended March 31, 2025. We had income from operations of $29.2 million, compared to loss from operations of $8.8 million for the same period in the prior year. Gross margin dollars increased $111.5 million and decreased as a percentage of revenue to 59.1% from 60.6% compared to the three months ended March 31, 2025. Adjusted gross margin decreased to 61.6% for the three months ended March 31, 2026 compared to 63.6% for the same period in the prior year. The decrease in gross margin and adjusted gross margin was primarily driven by global tariffs, a higher mix of Platform Solutions revenue, and higher professional services costs. Operating expenses increased by $73.5 million, reflecting increased headcount and commissions to support business growth and consulting expenses. Net income of $169.3 million included a $30.9 million tax provision, income from strategic investments, net, of $196.6 million, and a net realized and unrealized loss of $5.5 million related to our marketable securities. Net income of $88.0 million for the three months ended March 31, 2025 included net realized and unrealized gains from strategic investments of $167.3 million, offset by a noncash unrealized loss of $23.4 million related to our investment in marketable securities and inducement expense of $28.7 million associated with the early repurchase of a portion of our 2027 Notes.

On February 20, 2026, the Supreme Court determined that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. The ruling did not provide guidance regarding the recovery of amounts previously remitted. As of March 31, 2026, we have not recorded a benefit for any potential refunds of IEEPA tariffs previously paid, as recovery is not considered probable. We continue to monitor trade policy developments and will reassess the accounting treatment as additional information becomes available.

Table of Contents

Results of Operations

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

The following table presents data from our consolidated statements of operations as well as the percentage relationship to total net sales (dollars in thousands):

			Three Months Ended March 31,
			2026												2025
Net sales from products			$	452,821					56.1		%				$	340,896					56.5		%
Net sales from services			354,524						43.9						262,737						43.5
Net sales			807,345						100.0						603,633						100.0
Cost of product sales			232,156						28.8						170,181						28.2
Cost of service sales			97,903						12.1						67,713						11.2
Cost of sales			330,059						40.9						237,894						39.4
Gross margin			477,286						59.1						365,739						60.6
Operating expenses:
Selling, general and administrative			259,093						32.1						223,509						37.0
Research and development			188,950						23.4						151,023						25.0
Total operating expenses			448,043						55.5						374,532						62.0
Income (loss) from operations			29,243						3.6						(8,793)						(1.4)
Interest income			10,611						1.3						10,604						1.8
Interest expense			(28,643)						(3.5)						(7,821)						(1.3)
Other income, net			189,010						23.4						114,401						19.0
Income before provision for income taxes			200,221						24.8						108,391						18.1
Provision for income taxes			30,909						3.8						20,411						3.4
Net income			$	169,312					21.0		%				$	87,980					14.7		%

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

			Three Months Ended March 31,
			2026												2025
United States			$	646,527					80		%				$	529,383					88		%
Other countries			160,818						20						74,250						12
Total			$	807,345					100		%				$	603,633					100		%

International revenue increased compared to the prior year March 31, 2025 comparative period, primarily driven by increased sales in our EMEA region.

Table of Contents

Net Sales

Net sales by product line were as follows (dollars in thousands):

			Three Months Ended March 31,																								Dollar Change						Percent Change
			2026												2025
Connected Devices segment:
TASER (1)			$	232,853					28.8		%				$	195,495					32.4		%				$	37,358					19.1		%
Personal Sensors (2)			108,751						13.5						88,405						14.7						20,346						23.0
Platform Solutions (3)			111,217						13.8						56,996						9.4						54,221						95.1
Total Connected Devices segment			452,821						56.1						340,896						56.5						111,925						32.8
Total Software and Services segment			354,524						43.9						262,737						43.5						91,787						34.9
Total net sales			$	807,345					100.0		%				$	603,633					100.0		%				$	203,712					33.7		%

(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 fleet in-car video, interview room, fixed cameras, drones and counter-drone equipment, virtual reality training hardware, and related extended warranties.

Net sales for the Connected Devices segment increased 32.8% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase of $37.4 million in TASER is primarily driven by higher TASER 10 handle and cartridge volume. Personal Sensors increased $20.3 million on continued adoption of our newest body camera, AB4, and higher warranty revenue from more devices in the field. The $54.2 million increase in Platform Solutions is primarily driven by higher volume for counter-drone equipment and fleet systems.

Net sales for the Software and Services segment increased 34.9% for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase in the aggregate number of users and growing adoption of our premium add-on features by existing customers drove the majority of the increase of $91.8 million.

Gross Margin

As a percentage of net sales, gross margin for the Connected Devices segment decreased to 48.7% from 50.1% for the three months ended March 31, 2026 and 2025, respectively. Adjusted gross margin for the Connected Devices segment was 50.4% for the three months ended March 31, 2026, compared to 52.8% for the three months ended March 31, 2025. The decrease in gross margin and adjusted gross margin was primarily driven by global tariffs and a higher mix of Platform Solutions revenue.

As a percentage of net sales, gross margin for the Software and Services segment decreased to 72.4% from 74.2% for the three months ended March 31, 2026 and 2025, respectively. Adjusted gross margin for the Software and Services segment decreased to 75.8% for the three months ended March 31, 2026, compared to 77.7% for the three months ended March 31, 2025. The decrease in gross margin and adjusted gross margin was primarily driven by higher professional services costs.

Selling, General and Administrative Expenses

SG&A expenses were as follows (dollars in thousands):

			Three Months Ended March 31,												Dollar Change						Percent Change
			2026						2025
Total selling, general and administrative expenses			$	259,093					$	223,509					$	35,584					15.9		%
As a percentage of net sales			32.1%						37.0%

Salaries, benefits and bonus expense increased $10.8 million in comparison to the prior year March 31, 2025 comparable period, primarily attributable to an increase in headcount and higher wages.

Table of Contents

Sales and marketing expense increased $10.2 million in comparison to the prior year March 31, 2025 comparable period, primarily attributable to increased commissions.

Other SG&A expenses increased $14.6 million in comparison to the prior year March 31, 2025 comparable period, primarily driven by an increase in professional and consulting expenses of $9.1 million.

Research and Development Expenses

R&D expenses were as follows (dollars in thousands):

			Three Months Ended March 31,												Dollar Change						Percent Change
			2026						2025
Total research and development expenses			$	188,950					$	151,023					$	37,927					25.1		%
As a percentage of net sales			23.4		%				25.0		%

Salaries, benefits and bonus expense increased $21.3 million in comparison to the prior year March 31, 2025 comparable period, which was primarily attributable to an increase in headcount and higher wages.

Other R&D expenses increased $16.6 million in comparison to the prior year March 31, 2025 comparable period, partially driven by an increase in professional and consulting expenses of $6.8 million.

Interest Income (Expense), Net

Interest income (expense), net, was as follows (in thousands):

			Three Months Ended March 31,
			2026						2025
Interest income			$	10,611					$	10,604
Interest expense (1)			(28,643)						(7,821)
Total interest income (expense), net			$	(18,032)					$	2,783

(1)Interest expense increased in comparison to the prior year March 31, 2025 comparable period primarily as a result of the issuance of the Senior Notes in March 2025, as discussed further within Note 8.

Other Income, Net

Other income, net, was as follows (in thousands):

			Three Months Ended March 31,
			2026						2025
Income from strategic investments, net (1)			$	196,600					$	167,321
Realized and unrealized loss on marketable securities, net (2)			(5,511)						(23,400)
Loss on foreign currency transactions, net			(2,166)						(803)
Induced conversion of convertible debt			—						(28,666)
Other, net			87						(51)
Other income, net			$	189,010					$	114,401

(1)Reflects the net realized and unrealized income associated with our strategic investments, during the three months ended March 31, 2026 and 2025, as discussed within Note 6.

(2)Reflects the net realized and unrealized loss on marketable securities, during the three months ended March 31, 2026 and 2025, as discussed within Note 3.

Table of Contents

Provision for Income Taxes

The effective tax rate was 15.4%, for the three months ended March 31, 2026, compared to 18.8% for the three months ended March 31, 2025. The decrease in effective tax rate for the quarter was primarily driven by a nontaxable gain on an investment transaction and an increase in pre-tax book income, which reduced the relative impact of other permanent and discrete items.

Provision for income taxes and effective tax rates were as follows (dollars in thousands):

			Three Months Ended March 31,
			2026						2025						Change
Income before provision for income taxes			$	200,221					$	108,391					$	91,830
Provision for income taxes			$	30,909					$	20,411					$	10,498
Effective tax rate			15.4		%				18.8		%

Net Income

We recorded net income of $169.3 million for the three months ended March 31, 2026 compared to net income of $88.0 million for the three months ended March 31, 2025. Net income per basic share was $2.11 for the three months ended March 31, 2026 compared to $1.14 for the three months ended March 31, 2025. Net income per diluted share was $2.05 for the three months ended March 31, 2026 compared to $1.08 for the three months ended March 31, 2025.

Non-GAAP Measures

We utilize certain non-GAAP financial measures such as EBITDA, adjusted EBITDA, and adjusted gross margin as defined below to enhance understanding of our financial results and related measures. We have adjusted for expenses that we believe are not indicative of our core operating results. Our management uses these non-GAAP financial measures in evaluating our operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance, and when planning and forecasting our future periods. A reconciliation of GAAP to the non-GAAP financial measures is presented below.

Beginning in the quarterly period ended March 31, 2026, we updated the calculation of Adjusted EBITDA to exclude all components of other income (loss), net – primarily resulting in incremental adjustments for foreign currency exchange gains and losses, net and fees incurred related to our Credit Agreement, as we do not consider these adjustments to be representative of our core operating results. For all comparable prior periods presented, our adjustment for other income (loss), net does not include the above incremental items, as the impact of this change on historical periods was determined to be de minimis. Accordingly, other income (loss), net for all comparable prior periods has not been recast and solely reflects adjustment for the impacts of net realized and unrealized gains on strategic investments and marketable securities, net realized gains on previously held minority interests acquired in business combinations and debt inducement expense.

• EBITDA (most comparable GAAP measure: Net income) – Earnings before interest expense, investment interest income, income taxes, depreciation and amortization.

• Adjusted EBITDA (most comparable GAAP measure: Net income) – Earnings before interest expense; investment interest income; income taxes; depreciation; amortization; all components of other income (loss), net, which is primarily comprised of fair value adjustments and income or losses related to strategic investments and marketable securities, debt inducement expense associated with the early repurchase of a portion of our 2027 Notes, foreign currency exchange gains and losses, net, and fees incurred related to our Credit Agreement; noncash stock-based compensation expense; transaction and integration costs related to strategic investments and acquisitions, including the change in fair value of contingent consideration arrangements; non-recurring severance costs, including employee cash payments, equity, and related benefits; costs (or subsequent recoveries of prior costs) related to certain legal or regulatory matters we consider outside of our core operating activities; mark-to-market adjustments on our non-qualified deferred compensation liabilities; payroll taxes related to Employee XSP vesting; losses incurred as a result of the disposal, abandonment, and impairment of property, equipment and intangible assets, net; and inventory step-up amortization related to acquisitions.

• Adjusted gross margin (most comparable GAAP measure: Gross margin) – Gross margin before noncash stock-based compensation expense; amortization of acquired intangible assets; non-recurring severance costs, including employee cash payments, equity, and related benefits; and inventory step-up amortization related to acquisitions.

Table of Contents

Although these non-GAAP financial measures are not consistent with GAAP, management believes investors will benefit by referring to these non-GAAP financial measures when assessing our operating results, as well as when forecasting and analyzing future periods. However, management recognizes that:

• these non-GAAP financial measures are limited in their usefulness and should be considered only as a supplement to our GAAP financial measures;

• these non-GAAP financial measures should not be considered in isolation from, or as a substitute for, our GAAP financial measures;

• these non-GAAP financial measures should not be considered to be superior to our GAAP financial measures; and

• these non-GAAP financial measures were not prepared in accordance with GAAP and investors should not assume that the non-GAAP financial measures presented in this Quarterly Report on Form 10-Q were prepared under a comprehensive set of rules or principles.

Table of Contents

EBITDA and adjusted EBITDA reconcile to net income as follows (in thousands):

			Three Months Ended
			March 31, 2026						December 31, 2025						March 31, 2025
Net income			$	169,312					$	2,745					$	87,980
Depreciation and amortization			29,346						26,960						19,195
Interest expense			28,643						28,819						7,821
Investment interest income			(10,611)						(17,633)						(10,604)
Provision for (benefit from) income taxes			30,909						(68,982)						20,411
EBITDA			$	247,599					$	(28,091)					$	124,803
Non-GAAP adjustments:
Other (income) loss, net			(189,010)						4,880						(115,255)
Stock-based compensation expense			133,685						184,516						140,239
Transaction costs related to strategic investments and acquisitions			6,488						5,857						2,727
Severance costs (1)			2,049						31,816						—
Litigation and regulatory costs			1,334						1,266						2,049
Non-qualified deferred compensation liability adjustments			(630)						484						—
Payroll taxes related to Employee XSP vesting			115						4,986						—
Loss on disposal, abandonment, and impairment of property, equipment and intangible assets, net			—						629						—
Inventory step-up amortization			—						—						607
Adjusted EBITDA			$	201,630					$	206,343					$	155,170

(1)For the three months ended March 31, 2026, non-recurring severance costs of $2.0 million consisted of stock-based compensation, cash payments and employee benefits.

Adjusted gross margin reconciles to gross margin as follows (in thousands):

			Three Months Ended March 31,
			2026																		2025
			Connected Devices						Software and Services						Total						Connected Devices						Software and Services						Total
Gross margin			$	220,665					$	256,621					$	477,286					$	170,715					$	195,024					$	365,739
Stock-based compensation expense			5,775						4,728						10,503						7,476						5,411						12,887
Amortization of acquired intangible assets			1,730						7,236						8,966						1,337						3,626						4,963
Severance costs (1)			146						20						166						—						—						—
Inventory step-up amortization			—						—						—						607						—						607
Adjusted gross margin			$	228,316					$	268,605					$	496,921					$	180,135					$	204,061					$	384,196
Gross margin %			48.7		%				72.4		%				59.1		%				50.1		%				74.2		%				60.6		%
Adjusted gross margin %			50.4		%				75.8		%				61.6		%				52.8		%				77.7		%				63.6		%

(1)For the three months ended March 31, 2026, non-recurring severance costs recorded to cost of service and product sales of $0.2 million consisted of stock-based compensation, cash payments and employee benefits.

Table of Contents

Liquidity and Capital Resources

Summary

			March 31, 2026						December 31, 2025						Dollar Change
Cash and cash equivalents			$	458,921					$	1,201,147					$	(742,226)
Available-for-sale investments			260,000						505,417						(245,417)
Total			$	718,921					$	1,706,564					$	(987,643)

Our most significant source of liquidity typically includes funds generated by operating activities and available cash and cash equivalents and short-term investments. As of March 31, 2026, we had $0.5 billion of cash and cash equivalents, a decrease of $742.2 million from December 31, 2025. As of March 31, 2026, we had $260.0 million of available-for-sale investments, a decrease of $245.4 million from December 31, 2025, primarily due to sales and maturities of available-for-sale securities during the period. Refer to Note 3 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

In addition, our Credit Agreement is available for additional working capital needs or investment opportunities. As of March 31, 2026, we had letters of credit outstanding of approximately $8.9 million under the facility and available borrowing of $291.1 million. Refer to Note 8 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

As of March 31, 2026, we have an aggregate of $1.75 billion of Senior Notes outstanding. As of March 31, 2026, none of our subsidiaries guarantee the Senior Notes. Our non-guarantor subsidiaries accounted for approximately 20% of our total revenue for the three months ended March 31, 2026, and approximately 20% and 7% of our total consolidated assets and liabilities (excluding the effect of intercompany transactions), respectively, as of March 31, 2026. Refer to Note 8 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

We believe we have access to additional financing. However, there is no assurance that such funding will be available on terms acceptable to us, or at all. We believe that our sources of funding will be sufficient to satisfy our currently anticipated cash requirements, including capital expenditures, working capital requirements, potential acquisitions or investments, income and payroll tax payments for net-settled stock awards, and other liquidity requirements through at least the next 12 months.

Going forward, we expect to continue to be an opportunistic issuer of debt securities and may issue new debt securities from time to time to fund our growth or refinance future debt maturities, among other things. In addition, from time to time, we may acquire our debt securities through open market purchases, redemptions, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may from time to time determine, for cash or other consideration.

Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities (in thousands):

			Three Months Ended March 31,												Dollar Change
			2026						2025
Operating activities			$	(31,517)					$	25,794					$	(57,311)
Investing activities			(616,937)						(702,217)						85,280
Financing activities			(92,288)						1,313,226						(1,405,514)
Effect of exchange rate changes on cash and cash equivalents			(1,495)						1,192						(2,687)
Net increase (decrease) in cash and cash equivalents and restricted cash			$	(742,237)					$	637,995					$	(1,380,232)

Table of Contents

Operating activities

Net cash used in operating activities was $31.5 million for the three months ended March 31, 2026 compared to net cash provided by operating activities of $25.8 million for the three months ended March 31, 2025. The net operating cash outflow for the three months ended March 31, 2026 includes net income of $169.3 million, a net add-back of non-cash income statement items of $5.7 million and a $206.5 million net change in operating assets and liabilities.

Primary drivers of the non-cash items include $134.7 million of stock-based compensation expense for employee equity programs and $30.4 million of depreciation and amortization, partially offset by $191.1 million in fair value adjustments for net realized and unrealized gains and losses on our strategic investments and marketable securities and $18.0 million for deferred income taxes. The realized and unrealized gains on our strategic investments were primarily related to an observable price change for one of our investees. The change in deferred income taxes was primarily driven by investment-related gains and a decrease in R&D capitalization, partially offset by unused R&D credit carryfowards and unvested stock-based compensation.

The change in operating assets and liabilities includes $48.9 million of receivables and contract assets primarily driven by invoice cash collection and increased sales, $215.8 million of inventory and accounts payable primarily driven by commission and bonus payments and advanced raw material purchases for TASER 10 CEDs, counter-drone equipment, and AB4 to support future sales and $40.3 million of deferred revenue.

Investing activities

Net cash used in investing activities was $616.9 million for the three months ended March 31, 2026 compared to $702.2 million for the three months ended March 31, 2025. The net investing cash outflow is primarily driven by our acquisition of Carbyne for $549.7 million, $292.0 million for strategic investments purchases, and $23.1 million for purchases of property and equipment. The cash outflow was partially offset by $249.3 million of proceeds from calls, maturities and sales of available-for-sale and marketable securities investments. The decrease in net cash outflow compared to the prior period is primarily driven by reduced investments in available-for-sale securities, partially offset by the cash paid in the current year for the acquisition of Carbyne.

Financing activities

Net cash used in financing activities was $92.3 million for the three months ended March 31, 2026 compared to net cash provided by financing activities of $1.3 billion for the three months ended March 31, 2025. The financing cash outflow in the current period was primarily driven by $81.1 million of principal payments related to the redemption of our 2027 Notes. Furthermore, we had $10.2 million of income and payroll tax payments made on behalf of employees who net-settled stock awards during the period, as well as $2.0 million which remains unpaid as of three months ended March 31, 2026. The change in financing cash flow compared to the prior period primarily reflects gross proceeds of $1.8 billion from the Senior Note issuance, partially offset by principal payments of $407.5 million related to the induced conversion of our 2027 Notes during the three months ended March 31, 2025.

Table of Contents

Critical Accounting Estimates

Our management’s discussion and analysis of our financial condition and results of operation is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances, and we evaluate our estimates and assumptions on an ongoing basis. While we do not believe that a change in these estimates is reasonably likely, there can be no assurance that our actual results will not differ from these estimates.

Our critical accounting estimates are discussed in our 2025 Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no significant changes to these critical accounting estimates for the three months ended March 31, 2026.

Table of Contents

Interest Rate Risk

We historically invested in various financial instruments which have consisted principally of money market accounts, certificates of deposit, and corporate and municipal bonds with a typical long-term debt rating of “A” or better by any nationally recognized statistical rating organization, denominated in U.S. dollars. All of our cash equivalents and investments are treated as “available-for-sale”. Based on investment positions as of March 31, 2026, no investments are subject to interest rate risk.

Additionally, we have access to a $300.0 million line of credit borrowing facility which bears interest at 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. Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit, which totaled $8.9 million at March 31, 2026. At March 31, 2026, there was no amount outstanding under the line of credit, and the available borrowing under the line of credit was $291.1 million. We have not borrowed any funds under the line of credit since its inception; however, should we need to do so in the future, such borrowings could be subject to adverse or favorable changes in the underlying interest rate.

Exchange Rate Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, in each case compared to the U.S. dollar, related to transactions by our foreign subsidiaries. The majority of our sales to international customers are transacted in foreign currencies and therefore are subject to exchange rate fluctuations on these transactions. The cost of our products to our customers increases when the U.S. dollar strengthens against their local currency, and we may have more sales and expenses denominated in foreign currencies in future years which could increase our foreign exchange rate risk. Additionally, intercompany sales to our non-U.S. dollar functional currency international subsidiaries are transacted in U.S. dollars which could increase our foreign exchange rate risk caused by foreign currency transaction gains and losses.

To date, we have not engaged in any currency hedging activities. However, we may enter into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows and net investments in foreign subsidiaries. However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, the prohibitive economic cost of hedging particular exposures. As such, fluctuations in currency exchange rates could harm our business in the future.

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer are responsible for the evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, 2026 due to a material weakness in our internal control over financial reporting related to revenue recognition as disclosed in Part II, Item 9A of our 2025 Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Table of Contents

Remediation Efforts to Address the Material Weakness Related to Revenue Recognition

With respect to this material weakness, management, under the oversight of the Audit Committee, continues to execute the remediation plan as disclosed in Part II, Item 9A of our 2025 Annual Report on Form 10-K. We have completed the design and implementation of control activities to i) periodically assess our revenue accounting policies, ii) make updates to the policies to reflect changes in product offerings or terms and conditions of the arrangements with customers, and iii) monitor and appropriately account for our existing and new revenue streams.

We expect to conclude that the material weakness is remediated once we determine that the applicable controls have operated effectively for a sufficient period of time.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The discussion in Note 11 to our consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q is incorporated by reference herein.

As of the three months ended March 31, 2026, there have been no significant changes to the risk factors outlined in our Annual Report on Form 10-K for the year ended December 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2026, we redeemed $0.8 million aggregate principal amount of the 2027 Notes, and we settled conversions in respect of $80.3 million aggregate principal amount with $80.3 million in cash and issued 211,870 shares of our common stock. We relied on the exemption provided by Section 3(a)(9) of the Securities Act in connection with the issuance of 211,870 shares. In connection with these conversions, we received 41,139 shares from option counterparties in connection with partial termination of the Note Hedge and Warrants.

Period			Total number of shares purchased						Average price paid per share						Total number of shares purchased as part of publicly announced plans or programs						Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
January 1, 2026 - January 31, 2026			—						—						—						—
February 1, 2026 - February 28, 2026			41,139 (1)						—						—						—
March 1, 2026 - March 31, 2026			—						—						—						—

(1) Represents shares of common stock received from option counterparties in connection with the partial termination of the Note Hedge and Warrants in February 2026, which is separate from the stock repurchase plan discussed in our 2025 Annual Report on Form 10-K

Item 3. Defaults Upon Senior Securities

None.

Table of Contents

Item 4. Mine Safety Disclosures

None.

The table below describes the contracts, instructions or written plans for the purchase or sale of securities adopted or terminated by our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) during the three months ended March 31, 2026, that are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).

Name and Title			Action						Date of Termination or Adoption						Expiration Date						Aggregate Number of Securities to be Sold
Joshua Isner, President			Termination (1)						March 3, 2026						December 31, 2026						52,480						(3)
Isaiah Fields, Chief Legal Officer			Termination (2)						March 9, 2026						December 31, 2026						7,125						(3)
Joshua Isner, President			Adoption						March 4, 2026						December 31, 2026						135,466						(3)

(1)Trading arrangement was originally adopted on December 17, 2025.

(2)Mr. Fields was appointed as an officer, as defined in Rule 16a-1(f) under the Exchange Act, effective January 1, 2026. On March 9, 2026, he terminated this trading arrangement originally adopted on August 19, 2025. As Mr. Fields was not an officer subject to the disclosure requirements of Item 408(a) of Regulation S-K at the time of the adoption of this trading arrangement, no prior disclosure of this trading arrangement was made. No transactions were effected under the plan prior to its termination.

(3)Reflects the maximum number of shares to be sold, excluding the effect of shares withheld for taxes.

No other Rule 10b5-1 trading arrangements or “non-Rule 10b5-1 trading arrangements” (as defined by Item 408(c) of Regulation S-K) were entered into, modified, or terminated by our directors or officers during such period.

3.1			Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q, filed August 9, 2022)
3.2			Bylaws, as amended and restated (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, filed December 21, 2023)
31.1*			Principal Executive Officer Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a)
31.2*			Principal Financial Officer Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32**			Principal Executive Officer and Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*			Inline XBRL Taxonomy Extension Schema Document
101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*			The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline XBRL

---

+Management contract or compensatory plan or arrangement

*Filed herewith

**Furnished herewith

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AXON ENTERPRISE, INC.
Date:			May 6, 2026
						By:			/s/ PATRICK SMITH
									Chief Executive Officer
									(Principal Executive Officer)
Date:			May 6, 2026			By:			/s/ BRITTANY BAGLEY
									Chief Operating Officer and Chief Financial Officer
									(Principal Financial Officer)