Axon Enterprise (AXON) reported third-quarter revenue of $908.6M on Nov. 5, 2026, below the analyst estimate of $934.3M, and adjusted EPS of $1.72 versus an estimate of $1.89. Management said one $30 million Federal Dedrone (counter-drone) deployment expected in the third quarter slipped, and Brittany Bagley said growth would have been over 30% had it landed. That shows how uneven government technology orders can be. Figures are current as of Nov. 9, 2026 and cover the quarter ended Sept. 30, 2026 unless noted.
Key facts
- Nov. 5, 2026: Axon reported adjusted EPS of $1.72 against an estimate of $1.89, and revenue of $908.6M against an estimate of $934.3M.
- Quarter ended Sept. 30, 2026: Revenue was higher than a year earlier (up 27.8%). Operating income was $42.1M, versus a small operating loss of $2.1M a year earlier. GAAP diluted EPS was $0.68.
- Nov. 9, 2026: The stock was quoted at $303.18, down 3.14% on the latest quote. Its 52-week range is $296.78 to $885.92.
- Balance sheet, Sept. 30, 2026: Cash and short-term investments were $1.66B and total debt was $2.97B.
- Next earnings date: Feb. 23, 2027. The EPS estimate is $2.25 and the revenue estimate is $1.07B.
| Metric (Q3 FY2026) | Latest | Year-ago or estimate |
|---|---|---|
| Revenue | $908.6M | $710.6M year-ago; $934.3M estimate |
| Adjusted EPS | $1.72 | $1.89 estimate |
| Software and Sensors revenue (FMP's label; management calls it Software and Services) | $437.0M | $305.2M year-ago |
| Platform Solutions revenue | $125.0M | $60.8M year-ago |
| TASER X2 revenue | $233.0M | $237.9M year-ago |
| Axon Body revenue | $113.5M | $106.7M year-ago |
The theme: government tech orders arrive in lumps
Axon is shifting from selling devices (TASER weapons, body cameras) to selling software and connected systems that customers pay for over time. Software revenue tends to recur and carries better margins. But the newest products, such as Dedrone counter-drone systems sold to federal and international buyers, depend on a handful of large government deals. Those deals depend on procurement calendars, budget cycles and hardware supply. A single order moving from one quarter to the next can swing reported results.
That is what happened this quarter.
What happened
Management pointed to timing. Management said one Federal Dedrone deployment moved out of the period, and that the fourth-quarter outlook no longer assumes two more large ones. Joshua Isner told analysts the delays were "more so" about deals closing than hardware, citing election-cycle and procurement timing, though hardware availability also played a part. He said the company would not "force a deployment or bank on timing we don't fully control just because our fiscal year is ending." Bagley said there was no underlying demand risk, only timing, and that "demand remains very strong and the pipeline of large projects keeps building."
The software side still grew. Software and Sensors revenue (FMP's segment label; management calls this $437M line Software and Services, so it does not mean sensor hardware) was $437.0M, up from $305.2M a year earlier. Platform Solutions, which management said was driven mainly by Dedrone, rose to $125.0M from $60.8M. According to management, annual recurring revenue (contracted yearly subscription revenue) grew 40% to $1.8B, with net revenue retention of 126%. TASER X2 revenue was $233.0M against $237.9M a year earlier. Management attributed that to lower TASER 7 sales.
Margins slipped from the prior quarter. Gross margin was 56.7%, down from 60.4% in the quarter ended June 30, 2026. Management pointed to product mix and component costs, especially memory chips. Operating margin was 4.6%, versus 5.2% in the prior quarter.
| Quarter ended | Revenue | Gross margin | Operating margin | Free cash flow |
|---|---|---|---|---|
| Sept. 30, 2025 | $710.6M | 60.1% | -0.3% | $33.4M |
| Dec. 31, 2025 | $796.7M | 57.9% | 1.3% | $155.4M |
| March 31, 2026 | $807.3M | 59.1% | 3.6% | negative $54.6M |
| June 30, 2026 | $904.4M | 60.4% | 5.2% | slightly negative |
| Sept. 30, 2026 | $908.6M | 56.7% | 4.6% | negative $18.9M |
Operating margin has improved over the five quarters, though it was lower this quarter than last. Cash generation has been weak in the last three quarters. Operating cash flow in the latest quarter was $19.7M, and capital spending was $38.6M, leaving free cash flow negative. Management said a large inventory build reduced cash flow, and it now expects full-year free cash flow below its earlier target. The company bought back $27.0M of stock in the quarter and $130.0M in the prior one.
Skydio and financing. Patrick Smith called the $1.2 billion Skydio investment, which takes Axon to 37% fully diluted ownership, "the largest investment in Axon's history." Bagley said it will be paid roughly 60-40 in cash and stock, and that Axon raised $1.15 billion through convertible notes in the quarter, using the proceeds to add cash and fund part of the Skydio deal. Both bear on the $2.97B debt figure, possible dilution and how cash is used.
Guidance. Management guided to fourth-quarter revenue of $990 million to $1.01 billion and said full-year growth should still be above 30% even without the Federal Dedrone deals. Bagley said the company looks forward to "sharing more on 2027 and our longer-term outlook" when it reports fourth-quarter results in February.
Separately, a plaintiff law firm issued a promotional notice on Nov. 9, 2026 saying it was investigating possible securities claims tied to the Dedrone timing. That is a solicitation for clients, not a court finding, and we have not verified any filed case.
Why it matters for investors
Valuation is high. On trailing 12-month figures, AXON trades at a P/E of 94.45, price/sales of 7.21 and EV/EBITDA of 46.29. Net margin is 7.6%. Peers are priced lower: Cadre Holdings (CDRE) has a P/E of 35.24 and net margin of 5.6%; Napco Security (NSSC) has a P/E of 25.55 and net margin of 21.6%; Zebra Technologies (ZBRA) has a P/E of 26.85 and net margin of 9.8%. CDRE and NSSC are much smaller companies, so the comparison is imperfect. The takeaway is that the market is paying for growth that has to keep arriving.
Analysts remain positive. Of 22 ratings, 18 are Buy and 4 are Hold, with none at Sell. Analysts' consensus price target averages $612.56, with a median of $615.00 and a range of $500.00 to $715.00. Those are analyst targets, not ours, and the stock was quoted well below the low end on Nov. 9, 2026. Several firms, including Needham, JP Morgan, RBC Capital and Piper Sandler, reiterated positive ratings on Nov. 6, 2026. One third-party model, the FMP discounted cash flow model, gives a value of -79.82 USD per share. It is a mechanical estimate that is very sensitive to the cash flow inputs, so treat it as a sign of weak recent cash generation rather than a verdict.
Our MoonshotScore is middling. Stock Expert AI's MoonshotScore V2 is 51.6 (Fair). Among its sector-relative pillars, quality is the strongest at 60, followed by safety at 50 and growth at 44. Momentum is weak at 27 and valuation is weakest at 14. In plain terms, the business scores decently, while the price and recent trading trend count against it. Financial strength readings are mixed: Piotroski score of 4 (on a 0-9 scale) and Altman Z of 3.99.
What could go wrong.
- Dedrone timing: Management said roughly $130 million of second-half revenue and $200 million of bookings tied to three large Federal Dedrone deployments are now uncertain. Isner said one deal can move reported growth by hundreds of basis points between quarters.
- Memory costs: Management expects the margin headwind to last through 2027 and 2028.
- Supply risk: Management cited geopolitical risk to batteries and chips, including China and Taiwan.
- License plate readers (ALPR): Some jurisdictions are removing or pausing them. Patrick Smith said the political landscape had changed quickly. Isner said bookings and conversion were "business as usual."
- Product timing: The Apollo Dart is delayed by what management called a difficult problem, and a possible first-quarter pause in Personal Sensors ahead of Body 5 was flagged.
- Insider selling: Among the most recent 30 insider filings, those in the last 90 days show 25 sales and 0 open-market purchases. Insider sales are often routine, so this is context rather than a signal.
What to watch next
- Feb. 23, 2027 earnings: Do the delayed Dedrone deals show up, and what does management share on 2027 and its longer-term outlook?
- Free cash flow: Management said fourth-quarter cash flow should be strong as inventory targets come into view in the first half of next year. Check whether that happens.
- Gross margin: Does it recover from 56.7% or keep drifting with memory costs?
- Software mix: Does Software and Services (FMP's Software and Sensors line) keep growing faster than hardware, as it did this quarter?
Frequently asked questions
Q: Did Axon miss earnings in the third quarter of 2026?
Yes. For the quarter ended Sept. 30, 2026, Axon reported adjusted EPS of $1.72 against an analyst estimate of $1.89, and revenue of $908.6M against an estimate of $934.3M. Bagley said the third quarter reflected normal seasonality plus the one delayed $30 million Federal Dedrone deployment, and that management saw no underlying demand risk.Q: Why did Axon stock fall after earnings?
Our data shows only the Nov. 9, 2026 quote: $303.18, down 3.14% on the latest quote, near the low end of a 52-week range of $296.78 to $885.92. That move came days after the Nov. 5 report, and we cannot tie it to a specific cause. A SueWallSt notice, a law-firm solicitation, says the stock "declined sharply" after the Nov. 5 disclosure; we have not verified that from our own data.Q: What do analysts expect for Axon now?
As of Nov. 9, 2026, 18 of 22 analysts rate Axon Buy and 4 rate it Hold. Their consensus price target averages $612.56, with a range of $500.00 to $715.00. The next report, due Feb. 23, 2027, covers the quarter ending Dec. 31, 2026 (Q4 FY2026), with an EPS estimate of $2.25 and a revenue estimate of $1.07B.What our data could not verify: the legal notice's claims, the exact size of the delayed Dedrone orders in FMP data, and the full-year free cash flow outcome. Management's statements come from the Nov. 5, 2026 earnings call transcript.
Sources: Stock Expert AI data (FMP financials, estimates and MoonshotScore V2); Axon's Nov. 5, 2026 earnings call; third-party report: SueWallSt press release, Nov. 9, 2026.
This is educational content, not investment advice. Past performance does not guarantee future results.