Axon Sets Q4 Outlook, Expands Skydio Stake

Axon guided fourth-quarter revenue to $990 million to $1.01 billion while raising its stake in drone maker Skydio to 37%.

Updated on Nov. 7, 2026 in Corporate Finance

Axon Sets Q4 Outlook, Expands Skydio Stake

Axon set fourth-quarter revenue guidance of $990 million to $1.01 billion and disclosed a $1.2 billion investment in Skydio, which raised its fully diluted ownership to 37%. The company also lowered its full-year free cash flow outlook.

Why it matters

The revised free cash flow outlook reflects higher inventory investment, while the Skydio deal deepens Axon's commercial tie to the drone maker as its exclusive public safety distributor in the United States and Canada.

Full-year free cash flow is now projected at $350 million to $400 million, down from $450 million, as higher inventory investment weighs on results. Two federal Dedrone deployments worth about $100 million are excluded from guidance because shipment timing is uncertain.

The players

Axon

Axon is a public safety technology company known for body cameras and related law enforcement software and hardware.

Skydio

Skydio is a drone manufacturer whose products are used for public safety and other applications.

The details

Axon invested an additional $1.2 billion in Skydio, about 60% in cash and 40% in stock, and became Skydio's exclusive public safety distributor in the United States and Canada. Memory costs are expected to weigh on margins by about 50 basis points this year.

Fourth quarter: Axon's revenue guidance of $990 million to $1.01 billion applies.
This year: Memory costs weigh on margins by about 50 basis points.
2027 and 2028: Elevated memory costs are expected to remain a headwind.

Market Landscape

The Skydio investment deepens Axon's position in public safety drones by pairing an equity stake with exclusive U.S. and Canadian distribution. It signals a push to bundle hardware, software and aerial platforms within a single public safety ecosystem.

Investors tracking Axon should note the lowered full-year free cash flow outlook, which now sits at $350 million to $400 million. Shareholders may also see margin pressure from memory costs expected to persist through 2027 and 2028.

The takeaway

Watch free cash flow and margin trends in Axon's upcoming results, since inventory build and memory costs are the key drivers of the revised outlook. The Skydio stake makes its drone business a larger factor in future performance.