# AXON ENTERPRISE, INC. (AXON)

Informational only - not investment advice.

CIK: 0001069183
SIC: 3480 Ordnance & Accessories, (No Vehicles/Guided Missiles)
SIC breadcrumb: [Manufacturing](/division/D/) > [SIC Major Group 34](/major-group/34/) > [SIC 3480 Ordnance & Accessories, (No Vehicles/Guided Missiles)](/industry/3480/)
Latest 10-K filed: 2026-02-25
SEC page: https://www.sec.gov/edgar/browse/?CIK=1069183
Filing source: https://www.sec.gov/Archives/edgar/data/1069183/000162828026011360/axon-20251231.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 2779536000 | USD | 2025 | 2026-02-25 |
| Net income | 124656000 | USD | 2025 | 2026-02-25 |
| Assets | 7000313000 | USD | 2025 | 2026-02-25 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001069183.json. Derived margins are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 268,245,000 | 343,798,000 | 420,068,000 | 530,860,000 | 681,003,000 | 863,381,000 | 1,187,143,000 | 1,560,699,000 | 2,082,526,000 | 2,779,536,000 |
| Net income | 17,297,000 | 5,207,000 | 29,205,000 | 882,000 | -1,724,000 | -60,018,000 | 146,930,000 | 175,783,000 | 377,034,000 | 124,656,000 |
| Operating income | 31,851,000 | 13,023,000 | 24,841,000 | -6,394,000 | -14,150,000 | -168,123,000 | 92,973,000 | 156,850,000 | 58,540,000 | -62,076,000 |
| Gross profit | 170,536,000 | 207,088,000 | 258,583,000 | 307,286,000 | 416,331,000 | 540,910,000 | 726,113,000 | 955,453,000 | 1,241,380,000 | 1,658,125,000 |
| Diluted EPS | 0.32 | 0.10 | 0.50 | 0.01 | -0.03 | -0.91 | 2.03 | 2.33 | 4.80 | 1.51 |
| Assets | 278,163,000 | 338,112,000 | 719,540,000 | 845,639,000 | 1,381,023,000 | 1,688,210,000 | 2,851,894,000 | 3,409,174,000 | 4,474,588,000 | 7,000,313,000 |
| Liabilities | 127,275,000 | 170,668,000 | 252,216,000 | 302,144,000 | 404,768,000 | 640,361,000 | 1,583,403,000 | 1,793,409,000 | 2,146,923,000 | 3,757,655,000 |
| Stockholders' equity | 150,888,000 | 167,444,000 | 467,324,000 | 543,495,000 | 976,255,000 | 1,050,233,000 | 1,270,666,000 | 1,615,765,000 | 2,327,665,000 | 3,242,658,000 |
| Cash and cash equivalents | 40,651,000 | 75,105,000 | 349,462,000 | 172,250,000 | 155,440,000 | 356,332,000 | 353,684,000 | 598,545,000 | 454,844,000 | 1,201,147,000 |
| Net margin | 6.45% | 1.51% | 6.95% | 0.17% | -0.25% | -6.95% | 12.38% | 11.26% | 18.10% | 4.48% |
| Operating margin | 11.87% | 3.79% | 5.91% | -1.20% | -2.08% | -19.47% | 7.83% | 10.05% | 2.81% | -2.23% |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance

## Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization.
Confidence: high

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) provides the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. MD&A should be read in conjunction with the other sections of this Annual Report on Form 10-K. 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 Annual Report on Form 10-K. The various sections of our MD&A contain forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this filing.

MD&A discusses our results of operations for the year ended December 31, 2025 as compared to the year ended December 31, 2024. For discussion of the year ended December 31, 2024 as compared to the year ended December 31, 2023, refer to MD&A included in Part II, Item 7 of our amended 2024 Annual Report on Form 10-K/A for the year ended December 31, 2024, filed with the SEC on May 7, 2025.

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 AI.

During the year ended December 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 year ended December 31, 2024 to conform to the new presentation.

Our revenues for the year ended December 31, 2025 were $2.8 billion, an increase of $697.0 million, or 33.5%, from the year ended December 31, 2024. We had loss from operations of $62.1 million for the year ended December 31, 2025, compared to income from operations of $58.5 million for the same period in the prior year. Gross margin dollars increased $416.7 million and increased as a percentage of revenue to 59.7% from 59.6% compared to the year ended December 31, 2024. Adjusted gross margin decreased to 62.6% for the year ended December 31, 2025 compared to 63.2% for the year ended December 31, 2024. The decrease was primarily driven by global tariffs and a higher mix of Platform Solutions revenue. Operating expenses increased by $537.4 million, reflecting increased headcount to support business growth and stock-based compensation expense. Net income of $124.7 million included net realized and unrealized gains of $186.4 million related to our strategic investments and a $105.7 million tax benefit, partially offset by a net realized and unrealized loss of $46.4 million related to our marketable securities, inducement expense of $38.9 million associated with the early repurchase of a portion of our 2027 Notes, and interest loss, net of $18.8 million. Net income of $377.0 million for the year ended December 31, 2024 included net realized and unrealized gains of $162.9 million related to our strategic investments, a net unrealized gain of $120.3 million related to our marketable securities, and interest income, net of $36.6 million.

40

Table of Contents

Results of Operations

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

Year Ended December 31,

2025

2024

Net sales from products

$

1,576,864 

56.7 

%

$

1,221,292 

58.6 

%

Net sales from services

1,202,672 

43.3 

861,234 

41.4 

Net sales

2,779,536 

100.0 

2,082,526 

100.0 

Cost of product sales

809,303 

29.1 

618,136 

29.7 

Cost of service sales

312,108 

11.2 

223,010 

10.7 

Cost of sales

1,121,411 

40.3 

841,146 

40.4 

Gross margin

1,658,125 

59.7 

1,241,380 

59.6 

Operating expenses:

Selling, general and administrative

1,035,893 

37.3 

741,247 

35.6 

Research and development

684,308 

24.6 

441,593 

21.2 

Total operating expenses

1,720,201 

61.9 

1,182,840 

56.8 

Income (loss) from operations

(62,076)

(2.2)

58,540 

2.8 

Interest income

75,431 

2.7 

43,693 

2.1 

Interest expense

(94,238)

(3.4)

(7,098)

(0.3)

Other income, net

99,857 

3.6 

286,369 

13.8 

Income before provision for income taxes

18,974 

0.7 

381,504 

18.4 

Provision for (benefit from) income taxes

(105,682)

(3.8)

4,470 

0.2 

Net income

$

124,656 

4.5 

%

$

377,034 

18.2 

%

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

Year Ended December 31,

2025

2024

United States

$

2,305,012

83 

%

$

1,775,194

85 

%

Other countries

474,524

17 

307,332

15 

Total

$

2,779,536

100 

%

$

2,082,526

100 

%

International revenue increased compared to the prior year 2024 comparative period, primarily driven by increased sales in our Americas region.

41

Table of Contents

Net Sales

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

Year Ended December 31,

Dollar

Change

Percent

Change

2025

2024

Connected Devices segment:

TASER (1)

$

913,883 

32.9 

%

$

750,141 

36.0 

%

$

163,742 

21.8 

%

Personal Sensors (2)

397,035 

14.2 

316,938 

15.2 

80,097 

25.3 

Platform Solutions (3)

265,946 

9.6 

154,213 

7.4 

111,733 

72.5 

Total Connected Devices segment

1,576,864 

56.7 

1,221,292 

58.6 

355,572 

29.1 

Total Software and Services segment

1,202,672 

43.3 

861,234 

41.4 

341,438 

39.6 

Total net sales

$

2,779,536 

100.0 

%

$

2,082,526 

100.0 

%

$

697,010 

33.5 

%

(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 29.1% for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The increase of $163.7 million in TASER is primarily driven by higher TASER 10 handle and cartridge volume. Personal Sensors increased $80.1 million, which was primarily driven by the continued adoption of our newest body camera, AB4, and higher warranty revenue from more devices in the field. The $111.7 million increase in Platform Solutions is primarily driven by higher volume for counter-drone equipment, virtual reality training, and fleet systems.

Net sales for the Software and Services segment increased 39.6% for the year ended December 31, 2025 as compared to the year ended December 31, 2024. 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 $341.4 million.

Gross Margin

As a percentage of net sales, gross margin for the Connected Devices segment decreased to 48.7% from 49.4% for the years ended December 31, 2025 and 2024, respectively. Adjusted gross margin for the Connected Devices segment was 51.2% for the year ended December 31, 2025, compared to 53.6% for the year ended December 31, 2024. The decrease in gross margin and adjusted gross margin is primarily driven by higher mix of Platform Solutions revenue and global tariffs.

As a percentage of net sales, gross margin for the Software and Services segment decreased to 74.0% from 74.1% for the years ended December 31, 2025 and 2024, respectively. The decrease was primarily driven by higher stock-based compensation expense and acquired intangibles amortization. Adjusted gross margin for the Software and Services segment increased to 77.5% for the year ended December 31, 2025, compared to 76.8% for the year ended December 31, 2024. The increase was primarily driven by higher software mix.

Selling, General and Administrative Expenses

SG&A expenses (dollars in thousands):

Year Ended December 31,

Dollar

Change

Percent

Change

2025

2024

Total selling, general and administrative expenses

$

1,035,893

$

741,247

$

294,646 

39.8 

%

As a percentage of net sales

37.3 

%

35.6 

%

We incurred non-recurring severance costs during the three months ended December 31, 2025 of $28.7 million, which consisted of stock-based compensation, cash payments and employee benefits.

42

Table of Contents

Stock-based compensation expense, excluding the impact of non-recurring severance costs, increased $127.8 million in comparison to the prior year December 31, 2024 comparable period, which was primarily related to an increase in headcount and a full year of expense recognized in the current year for grants of Employee XSP and the CEO Performance Award (as defined below), compared to a partial year of expense recognized in the prior year.

Salaries, benefits and bonus expense, excluding the impact of non-recurring severance costs, increased $73.2 million in comparison to the prior year December 31, 2024 comparable period, which was primarily attributable to an increase in headcount and higher wages.

Sales and marketing expense increased $17.5 million in comparison to the prior year December 31, 2024 comparable period, which was primarily attributable to increased commissions.

Other SG&A expenses increased $47.4 million in comparison to the prior year, partially driven by $11.9 million in increased travel expenses. Further increases were driven by litigation and regulatory costs, as well as professional and consulting costs.

Research and Development Expenses

R&D expenses (dollars in thousands):

Year Ended December 31,

Dollar

Change

Percent

Change

2025

2024

Total research and development expenses

$

684,308

$

441,593

$

242,715 

55.0 

%

As a percentage of net sales

24.6 

%

21.2 

%

We incurred non-recurring severance costs during the three months ended December 31, 2025 of $1.1 million, which consisted of stock-based compensation, cash payments and employee benefits.

Stock-based compensation expense, excluding the impact of non-recurring severance costs, increased $106.6 million in comparison to the prior year December 31, 2024, which was primarily related to an increase in headcount and a full year of expense recognized in the current year for grants of Employee XSP and the CEO Performance Award (as defined below), compared to a partial year of expense recognized in the prior year.

Salaries, benefits, and bonus expense, excluding the impact of non-recurring severance costs, increased $78.7 million in comparison to the prior-year December 31, 2024, which was primarily attributable to an increase in headcount and higher wages.

Other R&D expenses increased $56.3 million in comparison to the prior year December 31, 2024, partially driven by an increase in professional and consulting expenses of $24.9 million related to the development of new products.

Interest Income (Loss), Net

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

Year Ended December 31,

2025

2024

Interest income (1)

$

75,431 

$

43,693 

Interest expense (2)

(94,238)

(7,098)

Total interest income (loss), net

$

(18,807)

$

36,595 

(1)Interest income increased in comparison to the year ended December 31, 2024 comparable period primarily as a result of higher balances of available-for-sale securities during the year.

(2)Interest expense increased in comparison to the year ended December 31, 2024 comparable period primarily as a result of the issuance of the Senior Notes in March 2025, as discussed further within Note 10.

43

Table of Contents

Other Income, Net

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

Year Ended December 31,

2025

2024

Realized and unrealized gain on fair value adjustments of strategic investments, net (1)

$

186,392 

$

162,887 

Realized and unrealized gain (loss) on marketable securities, net (2)

(46,422)

120,330 

Loss on foreign currency transactions, net

(1,454)

3,463 

Induced conversion of convertible debt (3)

(38,868)

— 

Other, net

209 

(311)

Other income, net

$

99,857 

$

286,369 

(1)Reflects the net realized and unrealized gain associated with our strategic investments during the years ended December 31, 2025 and December 31, 2024, as discussed within Note 7.

(2)Reflects the net realized and unrealized gain (loss) on marketable securities during the years ended December 31, 2025 and December 31, 2024, as discussed within Note 3.

(3)Reflects the inducement expense associated with the early repurchase of a portion of our 2027 Notes in both the first and fourth quarters of 2025, as discussed further within Note 10.

Provision for Income Taxes

The effective tax rate was (557.0)% for the year ended December 31, 2025, compared to 1.2% for the year ended December 31, 2024. The change is primarily attributable to the net tax benefit related to stock-based compensation and R&D tax credits, partially offset by increased unrecognized tax benefits. The overall change in the effective tax rate also reflects the impact of lower pre-tax book income in the current period, which magnifies the relative effect of permanent adjustments.

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

Year Ended December 31,

2025

2024

Change

Income before provision for income taxes

$

18,974

$

381,504

$

(362,530)

Provision for (benefit from) income taxes

(105,682)

4,470

(110,152)

Effective tax rate

(557.0)

%

1.2 

%

Net Income

We recorded net income of $124.7 million for the year ended December 31, 2025 compared to net income of $377.0 million for the year ended December 31, 2024. Net income per basic share was $1.60 and diluted net income per share was $1.51 for the year ended December 31, 2025, compared to net income per basic share of $4.98 and diluted net income per share of $4.80 for the year ended December 31, 2024.

The reduction in net income when compared to the prior period is partially driven by a loss from operations of $62.1 million for the year ended December 31, 2025 compared to income from operations of $58.5 million for the year ended December 31, 2024. This loss from operations was primarily driven by stock-based compensation expense and increased headcount to support business growth. Further drivers of the reduction in net income include our net realized and unrealized loss of $46.4 million related to our marketable securities, inducement expense of $38.9 million associated with the early repurchase of a portion of our 2027 Notes, and interest loss, net of $18.8 million, among other items.

44

Table of Contents

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, including stock-based compensation expense and amortization of acquired intangible assets. To improve comparability, prior periods have been conformed to the current period presentation. Our management uses these non-GAAP financial measures in evaluating our operating performance in comparison to prior periods. 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.

•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; noncash stock-based compensation expense; fair value adjustments related to strategic investments, marketable securities, and mark-to-market on our non-qualified deferred compensation liabilities; debt inducement expense associated with the early repurchase of a portion of our 2027 Notes; non-recurring severance costs, including employee cash payments, equity, and related benefits; transaction and integration costs related to strategic investments and acquisitions, including the change in fair value of contingent consideration arrangements; payroll taxes related to Employee XSP vesting and 2018 CEO Performance Award option exercises; costs (or subsequent recoveries of prior costs) related to certain legal or regulatory matters we consider outside of our core operating activities; losses incurred as a result of the disposal, abandonment, and impairment of property, equipment and intangible assets; 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; payroll taxes related to Employee XSP vesting; and inventory step-up amortization related to acquisitions.

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 2025 Annual Report on Form 10-K were prepared under a comprehensive set of rules or principles.

45

Table of Contents

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

Year Ended December 31,

2025

2024

Net income

$

124,656 

$

377,034 

Depreciation and amortization

86,789 

56,815 

Interest expense

94,238 

7,098 

Investment interest income

(75,431)

(43,693)

Provision for (benefit from) income taxes

(105,682)

4,470 

EBITDA

124,570 

401,724 

Non-GAAP adjustments:

Stock-based compensation expense

610,151 

382,604 

Unrealized and realized (gains) on investments and marketable securities, net

(134,658)

(189,277)

Realized (gains) on previously held minority interests acquired in business combinations, net

(2,193)

(93,940)

Debt inducement expense

38,868 

— 

Severance costs (1)

31,816 

— 

Transaction costs related to strategic investments and acquisitions

15,588 

15,249 

Payroll taxes related to Employee XSP vesting and 2018 CEO Performance Award option exercises

14,768 

2,645 

Litigation and regulatory costs

9,579 

1,761 

Loss on disposal, abandonment, and impairment of property, equipment and intangible assets, net

1,059 

— 

Inventory step-up amortization

607 

609 

Adjusted EBITDA

$

710,155 

$

521,375 

(1)For the year ended December 31, 2025, non-recurring severance costs of $31.8 million consisted of stock-based compensation, cash payments and employee benefits.

As a result of the Segment Realignment, we have recast adjusted gross margin for the year ended December 31, 2024 to conform to the new presentation. Adjusted gross margin reconciles to gross margin as follows (in thousands):

Year Ended December 31,

2025

2024

Connected Devices

Software and

Services

Total

Connected Devices

Software and

Services

Total

Gross margin

$

767,561

$

890,564

$

1,658,125

$

603,156

$

638,224

$

1,241,380

Stock-based compensation expense

31,298

21,919

53,217

47,953

12,136

60,089

Amortization of acquired intangible assets

5,443

17,620

23,063

2,318

11,051

13,369

Severance costs (1)

1,724

283

2,007

—

—

—

Payroll taxes related to Employee XSP vesting

933

1,141

2,074

—

—

—

Inventory step-up amortization

607

—

607

609

—

609

Adjusted gross margin

$

807,566

$

931,527

$

1,739,093

$

654,036

$

661,411

$

1,315,447

Gross margin %

48.7 

%

74.0 

%

59.7 

%

49.4 

%

74.1 

%

59.6 

%

Adjusted gross margin %

51.2 

%

77.5 

%

62.6 

%

53.6 

%

76.8 

%

63.2 

%

(1)For the year ended December 31, 2025, non-recurring severance costs recorded to cost of service and product sales of $2.0 million consisted of stock-based compensation expense, cash payments and employee benefits.

46

Table of Contents

Liquidity and Capital Resources

Summary

December 31, 2025

December 31, 2024

Dollar Change

Cash and cash equivalents

$

1,201,147 

$

454,844 

$

746,303 

Available-for-sale investments

505,417 

333,235 

172,182 

Total

$

1,706,564 

$

788,079 

$

918,485 

Our most significant source of liquidity continues to be funds generated by operating activities and available cash and cash equivalents and short-term investments. As of the year ended December 31, 2025, we had $1.2 billion of cash and cash equivalents, an increase of $746.3 million from December 31, 2024. Refer below for further discussions related to the change in cash and cash equivalents. As of December 31, 2025, we had $505.4 million of available-for-sale investments, an increase of $172.2 million from December 31, 2024 primarily as a result of investment activity following the issuance of the Senior Notes in March 2025. Refer to Note 10 in Part II, Item 8 of this Annual Report on Form 10-K for additional details on the issuance.

In addition, our revolving credit facility (the “Credit Agreement”) is available for additional working capital needs or investment opportunities. The Credit Agreement provides for a senior unsecured multi-currency revolving credit facility in an aggregate principal amount of up to $300.0 million, $50.0 million of which is available for the issuance of letters of credit. As of December 31, 2025, and December 31, 2024, respectively, 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 December 31, 2025, we had letters of credit outstanding of approximately $8.9 million under the facility and available borrowing of $291.1 million. Refer to Note 13 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

Furthermore, during the year ended December 31, 2025, we sold approximately 0.7 million shares of our common stock under our ATM. We generated approximately $494.7 million in aggregate gross proceeds from sales under an “at-the-market” equity offering program (the “ATM”). We recorded aggregate net proceeds of $489.4 million in additional paid-in capital after deducting related expenses, including commissions to the sales agent and issuance costs of $5.3 million. Refer to Note 14 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

As of December 31, 2025, we had an aggregate of $1.75 billion of Senior Notes outstanding. None of our subsidiaries guarantee the Senior Notes. Our non-guarantor subsidiaries accounted for approximately 15% of our total revenue for the year ended December 31, 2025, and approximately 20% and 7% of our total consolidated assets and liabilities (excluding the effect of intercompany transactions), respectively, as of December 31, 2025. Refer to Note 10 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

In addition, we had approximately $81.1 million aggregate principal amount of 2027 Notes outstanding as of December 31, 2025. Subsequent to the year ended December 31, 2025, we redeemed $0.8 million aggregate principal amount of the 2027 Notes on February 10, 2026, and we settled conversions in respect of $80.3 million aggregate principal amount of the 2027 Notes on February 11, 2026, with $80.3 million in cash and 211,870 shares of our common stock, in each case, pursuant to a notice of redemption delivered on December 18, 2025 and the terms of the indenture governing the 2027 Notes. As a result, we have no 2027 Notes outstanding following settlement of the aforementioned redemption. Refer to Note 10 and Note 20 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

Subsequent to the year ended December 31, 2025, we acquired 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 and working capital adjustments. We funded this transaction using our available cash on-hand. Refer to Note 20 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

47

Table of Contents

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. We and our Board of Directors may consider repurchases of our common stock. Further, repurchases of our common stock would take place on the open market, would be financed with available cash and are subject to authorization as well as market and business conditions.

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):

Year Ended December 31,

Dollar

Change

2025

2024

Net cash provided by operating activities

$

211,339 

$

408,312 

$

(196,973)

Net cash (used in) investing activities

(724,930)

(490,573)

(234,357)

Net cash provided by (used in) financing activities

1,252,465 

(45,437)

1,297,902 

Effect of exchange rate changes on cash and cash equivalents

7,756 

(6,209)

13,965 

Net increase (decrease) in cash and cash equivalents and restricted cash

$

746,630 

$

(133,907)

$

880,537 

Operating activities

Net cash provided by operating activities was $211.3 million for the year ended December 31, 2025 compared to net cash provided by operating activities of $408.3 million for the year ended December 31, 2024. The net operating cash outflow for the year ended December 31, 2025 includes net income of $124.7 million, a net add-back of non-cash income statement items of $568.4 million and a $481.7 million net change in operating assets and liabilities.

Primary drivers of the non-cash items include $634.2 million of stock-based compensation expense for employee equity programs, $83.2 million of depreciation and amortization and $38.9 million of debt inducement expense related to the induced conversion for our 2027 Notes, partially offset by $140.0 million in fair value adjustments for net realized and unrealized gains and losses on our strategic investments and marketable securities and $82.7 million for deferred income taxes. The realized and unrealized gains on our strategic investments and related warrants were primarily related to an observable price change and subsequent sale for one of our strategic investments and a liquidation event for a separate strategic investment. The change in deferred income taxes was primarily driven by a reduction and realization of previously unrealized investment gains, with additional deferred tax assets generated from R&D credit carryforwards and net operating losses, both driven by stock-based compensation windfall and changes as a result of the One Big Beautiful Bill Act which was signed into law on July 4, 2025.

The change in operating assets and liabilities includes $505.6 million of receivables and contract assets primarily driven by increased sales and the timing of invoicing and cash collections, $204.9 million of inventory and accounts payable primarily driven by advanced raw material purchases for Axon Body 4 and TASER 10 CEDs to support future sales, third party product costs and future interest payments on our Senior Notes, $264.6 million of prepaid expenses and other assets primarily driven by supplier prepayments, receivables for income tax, and commissions as bookings continue to grow, and $83.5 million of deferred revenue.

48

Table of Contents

Investing activities

Net cash used in investing activities was $724.9 million for the year ended December 31, 2025 compared to $490.6 million for the year ended December 31, 2024. The net investing cash outflow is primarily driven by $2.1 billion of investment purchases which include $1.8 billion for short-term investments and $279.6 million for strategic investments, $646.9 million related to business combinations and $136.3 million for purchases of property and equipment. The cash outflow was partially offset by $1.8 billion of proceeds from calls, maturities and sales of available-for-sale and marketable securities investments and $376.9 million of proceeds from the sale and liquidation of strategic investments. The increase in net cash outflow compared to prior period is primarily driven by greater available-for-sale and strategic investment activity in the current period.

Financing activities

Net cash provided by financing activities was $1.3 billion for the year ended December 31, 2025 compared to cash used in financing activities of $45.4 million for the year ended December 31, 2024. The financing cash inflow was primarily driven by gross proceeds of $1.8 billion from the Senior Notes issuance and net proceeds of $489.6 million from our ATM equity offering program. The proceeds were partially offset by $608.9 million of principal payments related to the conversions for our 2027 Notes, $27.0 million of transaction costs related to the induced conversions, debt issuance, and revolver modifications, and cash payments totaling $351.0 million for income and payroll taxes on behalf of employees who net-settled stock awards during the period. The increase in income and payroll tax payments in the period is largely driven by the vesting of Tranche 2 of the Employee XSP program, of which $0.9 million remains unpaid as of the year ended December 31, 2025.

Contractual Obligations

The following table outlines our future contractual financial obligations, as of December 31, 2025 (in thousands):

Total

Short

Term

Long

Term

Operating lease obligations

$

155,541 

$

15,094 

$

140,447 

Purchase obligations

1,370,239 

1,072,995 

297,244 

Principal and interest payable on our 2027 Notes (1)

81,171 

81,171 

— 

Principal and interest payable on our 2030 Notes

1,275,625 

61,250 

1,214,375 

Principal and interest payable on our 2033 Notes

1,101,563 

46,875 

1,054,688 

Total contractual obligations

$

3,984,139 

$

1,277,385 

$

2,706,754 

(1)The 2027 Notes are contractually due on a long-term basis. However, as of December 31, 2025, the Notes were convertible at the option of the holders. Furthermore, subsequent to the year ended December 31, 2025, we redeemed and converted all of the outstanding 2027 Notes on February 10, 2026, and February 11, 2026, respectively, and we have no 2027 Notes outstanding. Therefore, the Notes were classified as current liabilities within our consolidated balance sheet as of December 31, 2025 and have been presented within short-term above. Refer to Note 10 and Note 20 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

Operating lease obligations include operating leases for office space, manufacturing and logistical functions, discussed further within Note 16 in Part II, Item 8 of this Annual Report on Form 10-K, as well as legally binding minimum lease payments for leases signed but not yet commenced totaling $3.2 million. We regularly evaluate our real estate needs to identify opportunities to reduce long-term cash requirements where practicable.

Purchase obligations include both open purchase orders and other purchase commitments, discussed further within Note 11 in Part II, Item 8 of this Annual Report on Form 10-K. Open purchase orders represent both cancellable and non-cancellable purchase orders with key vendors, which are included in this table due to our strategic relationships with these vendors.

Subsequent to the year ended December 31, 2025, we redeemed and converted all of our outstanding 2027 Notes on February 10, 2026, and February 11, 2026, respectively, and in each case, pursuant to a notice of redemption delivered on December 18, 2025, and the terms of the indenture governing the 2027 Notes. Refer to Note 10 and Note 20 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

49

Table of Contents

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”). Refer to Note 10 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

Obligations related to our uncertain tax positions have been excluded from the table above because of the uncertainty surrounding the timing and final amounts of any settlement. For additional details, refer to Note 12 in Part II, Item 8 of this Annual Report on Form 10-K.

Critical Accounting Estimates

We have identified the following accounting estimates as critical to our business operations and the understanding of our results of operations. The preparation of this Annual Report on Form 10-K requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. While we do not believe that a significant change in these estimates is reasonably likely, there can be no assurance that our actual results will not differ from these estimates.

Inventory

Inventories are stated at lower of cost and net realizable value, using a standard cost method which approximates the first-in, first-out method. Additional provisions are made to reduce excess, obsolete or slow-moving inventories to their net realizable value. These provisions are based on our best estimate after considering historical demand, projected future demand, inventory purchase commitments, industry and market trends, and a variety of other factors. Changes in these underlying assumptions can materially affect our provisions and the resulting net realizable value of our inventories. For additional discussion, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.

Revenue Recognition

We apply the five-step model outlined in ASC 606, as discussed further in Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. For contracts with multiple performance obligations, we allocate the contract transaction price to each performance obligation using our estimate of the standalone selling price (“SSP”) of each distinct good or service in the contract. Revenues are recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. For additional discussion, refer to Note 2 in Part II, Item 8 of this Annual Report on Form 10-K.

We determine the term of our arrangements based on identifying the contract with the customer. In certain of our arrangements, the customer may have termination rights. In these instances, we determine if there is a substantive penalty. For contracts with a substantive penalty, the accounting term will be the legal contract term, inclusive of the periods for which the customer termination rights exist. In these contracts with no substantive penalty, we also consider if the option for our customer to purchase additional goods or services represents an additional performance obligation in the form of a material right.

The timing of revenue recognition may differ from the timing of invoicing to customers. We generally have an unconditional right to consideration when we invoice our customers and record a receivable. We record a contract asset when revenue is recognized prior to invoicing, or a contract liability (deferred revenue) when revenue will be recognized subsequent to invoicing. For additional discussion, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.

50

Table of Contents

Valuation of Goodwill, Intangible and Long-lived Assets

We evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets and identifiable intangible assets, excluding goodwill and intangible assets with indefinite useful lives, may warrant revision or that the remaining balance of these assets may not be recoverable. Such circumstances could include a change in the product mix, a change in the way products are created, produced or delivered, or a significant change in the way products are branded and marketed. In performing the review for recoverability, we estimate the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. The amount of the impairment loss, if impairment exists, is calculated based on the excess of the carrying amounts of the assets over their estimated fair values computed using discounted cash flows. As such, the key inputs into this analysis are inherently subject to uncertainty and require significant judgments to be made.

Finite-lived intangible assets and other long-lived assets are amortized over their estimated useful lives. We do not amortize goodwill and intangible assets with indefinite useful lives; rather such assets are tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. In performing our annual impairment assessments for goodwill and indefinite-lived intangible assets, we consider a variety of factors including (1) events impacting the carrying value or composition of a reporting unit or asset group, respectively, (2) changes in the macroeconomic environment, (3) adverse changes in our financial performance, (4) industry and market conditions, among others. Any significant changes in these underlying assumptions may significantly affect our impairment conclusions and net book value of corresponding assets in our consolidated financial statements. Based on our annual impairment assessments, no goodwill or indefinite-lived intangible asset impairment was indicated. For additional details, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.

Income Taxes

We recognize federal, state and foreign current tax liabilities or assets based on our estimate of taxes payable or refundable in the current fiscal year by tax jurisdiction. We also recognize federal, state and foreign deferred tax assets or liabilities, as appropriate, for our estimate of future tax effects attributable to temporary differences and carry forwards.

Our calculation of current and deferred tax assets and liabilities is based on certain estimates and judgments and involves dealing with uncertainties in the application of complex tax laws. Our estimates of current and deferred tax assets and liabilities may change based, in part, on added certainty or finality to an anticipated outcome, changes in accounting or tax laws domestically and internationally, or changes in other facts or circumstances.

Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the net deferred tax assets will not be realized. In evaluating our ability to recover our deferred income tax assets, we consider all available positive and negative evidence, including our operating results, the future reversals of deferred tax liabilities, forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income can affect the realization of net deferred tax assets. We exercise significant judgment in determining our provision for income taxes, our deferred income tax assets and liabilities, and our future taxable income for purposes of assessing our ability to utilize any future tax benefit from our deferred income tax assets.

We operate in multiple tax jurisdictions and are subject to audit in these jurisdictions, generally years after our returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws. We record uncertain tax positions when it has been determined that it is more-likely-than-not that a tax position will not be sustained upon examination by taxing authorities based on the technical merits of the position. We use the criteria established in the accounting guidance to determine whether an item meets the definition of more-likely-than-not. The Company’s policy is to recognize these uncertain tax positions when the more-likely than-not threshold is met, when the statute of limitations has expired or upon settlement. Changes in assessments may result in income tax benefit or additional expense in our consolidated financial statements. For additional details, refer to Note 12 in Part II, Item 8 of this Annual Report on Form 10-K.

51

Table of Contents

Stock-Based Compensation

Our stock-based compensation program includes grants of service-based restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and performance-based stock options (“stock options”) under the Axon Enterprise, Inc. Amended and Restated 2022 Stock Incentive Plan (the “Amended 2022 Plan”) and grants of eXponential stock units (“XSUs”) under the Axon Enterprise, Inc. Employee eXponential Stock Plan (the “Employee XSP”) and the CEO Performance Award, each of which is discussed further in Note 1 in Part II, Item 8 of this Annual Report.

Compensation expense for performance awards is recognized based on our best estimate of the probability of the performance criteria being satisfied using the most currently available projections, adjusted at each balance sheet date. Stock-based compensation expense associated with XSUs is recognized over the requisite service period, which is considered the longest explicit, implicit or derived service period for each respective tranche. We utilized Monte Carlo simulations to evaluate a range of possible future stock price goals over the term of the awards at each of the respective grant dates, the median of which was used as the basis for the derived service period for each tranche. Furthermore, we measured the grant date fair value of each tranche utilizing a Monte Carlo simulation which considered various assumptions, including expected volatility and an illiquidity discount. This simulation is based on a subjective assessment of our forward-looking financial projections, taking into consideration statistical analysis. There is significant judgment required to determine the requisite service period, grant date fair value, and probability of the performance criteria being satisfied. Changes in the subjective and probability-based assumptions can materially affect the estimates of the fair value of the awards and timing of recognition of stock-based compensation and consequently, the related amount recognized in our consolidated statements of operations and comprehensive income. For additional details, refer to Note 1 and Note 14 in Part II, Item 8 of this Annual Report on Form 10-K.

Contingencies and Accrued Litigation Expense

We are subject to the possibility of various loss contingencies arising in the ordinary course of business, including product-related and other litigation. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted and whether new accruals are required. We do not believe any currently identified claims or litigation will materially affect our financial condition, results of operations or cash flows. However, litigation is subject to inherent uncertainties. If an unfavorable ruling were to occur, it may cause a material adverse impact on the financial condition, results of operations or cash flows for the period in which the ruling occurs, or future periods. For additional details, refer to Note 11 in Part II, Item 8 of this Annual Report on Form 10-K.

Strategic Investments

Our strategic investments are generally accounted for under the ASC 321 measurement alternative for equity securities without readily determinable fair values. Accordingly, the equity investments will be carried at cost less impairment. These investments are subsequently remeasured to fair value upon observable price changes in an orderly transaction for the identical or similar investments. Additionally, if a qualitative assessment identifies impairment indicators, then the equity investments must be evaluated for impairment and written down to fair value in the event carrying value exceeds fair value. For additional details relating to our valuation techniques, refer to Note 1 and Note 7 in Part II, Item 8 of this Annual Report on Form 10-K.

Business Combinations

When we acquire a business, we allocate the purchase consideration to the liabilities assumed, intangible assets and other assets acquired based on their estimated respective fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Additionally, in step acquisitions in which we acquire incremental equity interests that provide us control of a business, the previously held equity interest is remeasured to fair value at the date the controlling interest is acquired.

52

Table of Contents

Critical estimates used in valuing certain acquired intangible assets include, but are not limited to, significant assumptions with respect to time and resources required to recreate the assets acquired, actual and forecasted cash flows, long-term growth rates, market royalty rates, and discount rates associated, amongst other factors. The values and estimated useful lives assigned to intangible assets acquired in business combinations impact the amount and timing of future amortization expense. Remeasurement of previously held equity interests to fair value is also dependent on these estimates. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may vary. For additional details, refer to Note 19 in Part II, Item 8 of this Annual Report on Form 10-K.

53

Table of Contents