Axon Enterprise Sinks 18% to Two-Year Low After Q3 Miss and Revenue Guidance Cut on Dedrone Delays

Axon Enterprise shares collapsed 18.18% on Friday, the worst performance in the S&P 500 and the stock's weakest close in two years, after the company reported a weaker-than-expected third quarter and slashed its full-year revenue outlook due to delays in federal drone contracts. The stock hit a 52-week intraday low of $334.96 and finished as the worst performer in the Nasdaq 100, while the broader S&P 500 edged up 0.31%.

For the third quarter of 2026, Axon posted revenue of $909 million, up 28% year over year but short of the $931 million consensus estimate by 2.4%. Adjusted earnings per share of $1.72, while up 38.7% from a year earlier, missed the Zacks consensus of $1.90 by 9.5%. Software and Services revenue accelerated to 43% year-over-year growth, reaching $437 million, and Platform Solutions revenue more than doubled to $125 million. Connected Devices revenue grew 16% to $472 million, though that segment was held back by the delayed recognition of roughly $30 million tied to a federal Dedrone deployment.

The bigger blow came from the company's revised full-year outlook. Axon cut its 2026 revenue guidance to approximately $3.61 billion to $3.63 billion, representing about 30% annual growth, down from a prior forecast that pointed to growth of roughly 32% to 34%. Management attributed the entire shortfall to three large federal Dedrone deployments, representing about $130 million of revenue it no longer expects to recognize in 2026, citing contracting and deployment timing delays rather than any loss of business. The company said that if those contracts had stayed on schedule, full-year growth would have been roughly 500 basis points above the new guidance. For the fourth quarter, Axon guided revenue of $990 million to $1.01 billion with adjusted EBITDA of $245 million to $250 million.

Following the results, Needham cut its price target on Axon, and several other analysts also reduced their forecasts. The stock was added to a broad list of Friday downgrades. Despite the selloff, the average analyst price target stood at $688.38, with 14 of 17 covering analysts maintaining buy ratings and three at hold, reflecting continued confidence in the company's longer-term trajectory. Nasdaq also flagged that AXON had moved into technically oversold territory by the close.