Axon Stock Falls on Q3 Miss, Guidance, Increases Investment in Drone Response Company Skydio

Axon Enterprise Inc (NASDAQ:AXON) reported record third-quarter revenue Thursday after market close.

Here are the financial results and a look at what’s next.

• Axon Enterprise shares are retreating from recent levels. Why are AXON shares down?

Axon Enterprises Q3 Financials

Axon reported third-quarter revenue of $908.55 million, up 28% year-over-year. The revenue total missed a Street consensus estimate of $937.59 million, according to data from Benzinga Pro.

Software & Services revenue was $437 million in the quarter, up 43% year-over-year. AI annual recurring revenue passed $100 million in the quarter.

Connected Devices revenue was $472 million, up 16% year-over-year. Within the Connected Devices segment, Platform Solutions revenue hit $125 million and was up 106% year-over-year. The company said the total would have been higher, but $30 million in Federal Dedrone deployment was not recognized in the quarter as expected due to delayed timing.

The company reported earnings of $1.72, which missed a Street consensus estimate of $1.88.

Axon said demand is strong across different platforms and devices and the company is working on "building a platform, not a product line."

Investment in Skydio

Axon also announced a $1.2 billion additional investment in Skydio, which brings total ownership to 37% of the company.

Axon is now the exclusive distributor of Skydio for public safety in the U.S. and Canada.

The company said deployed Skydio docks through Axon Air have more than doubled year-over-year.

Axon said Drone as First Responder is becoming a new standard.  

"We believe Skydio is positioned to lead in nearly every sector that flying robots touch," the company said.

Skydio expects bookings of $1 billion for the fiscal year.

"We expect millions of flying robots to reshape American life in the years ahead and we intend to be at the center of it."

What’s Next for Axon

The company is guiding for fourth-quarter revenue to be in a range of $990 million to $1.01 billion. The Street estimate is $1.06 billion.

For fiscal 2026, Axon lowered full-year revenue to a new range of $3.610 billion to $3.630 billion, down from a prior range of $3.670 billion to $3.725 billion. The Street estimate for the full year is $3.699 billion.

Updated guidance includes the exclusion of $130 million in three Federal Dedrone deployments that were in prior estimates.

Axon Stock Price Action

Axon stock is down 9.84% to $344.90 in after-hours trading Thursday versus a 52-week trading range of $339.23 to $665.07.

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