Axon plans to offer $1 billion of 0% convertible senior notes due 2031, with proceeds earmarked for capped call costs and general corporate purposes, including growth initiatives and potential acquisitions or investments in other businesses.

  • Axon expects to give underwriters an option to purchase up to an additional $150 million of notes to cover over-allotments.
  • The notes will mature on Sept. 15, 2031, will carry no regular interest and will not accrete in principal.
  • Axon expects to enter into capped call transactions designed to generally reduce potential dilution upon conversion of the notes, subject to a cap.

Axon Enterprise Inc. (AXON) shares fell around 4% in Tuesday’s premarket session after the public safety technology company announced plans to raise $1 billion through an offering of 0% convertible senior notes due 2031.

Axon also expects to grant the underwriters an option to purchase up to an additional $150 million of notes solely to cover any over-allotments.

Use Of Proceeds

Axon said it intends to use a portion of the net proceeds to pay the costs of the capped call transactions tied to the notes.

The company expects to use the remaining net proceeds for general corporate purposes, including providing capital to support its growth and acquiring or investing in product lines, products, services or technologies.

Axon’s 0% Convertible Notes

The notes will mature on Sept. 15, 2031, unless converted, redeemed or repurchased earlier. The notes will be senior, unsecured obligations of Axon and will not bear regular interest. The principal amount will also not accrete, the firm said.

Noteholders will have the right to convert their notes under certain circumstances and during specified periods. Upon conversion, Axon may settle the obligation in cash, common stock, or a combination of both.

The initial conversion rate and other terms of the notes will be determined when the offering is priced. This means the number of shares that could be involved in a future conversion cannot be determined from Tuesday's announcement alone.

Alongside the offering, Axon said it expects to enter into privately negotiated capped call transactions with one or more financial institutions.

The capped calls will cover the number of shares initially underlying the notes, subject to anti-dilution adjustments.

Axon said the transactions are generally designed to reduce potential dilution of its common stock upon conversion of the notes and/or to offset certain cash payments it may be required to make above the principal amount of the converted notes, subject to a cap.

Axon’s Existing Debt And Cash Position

As of June 30, 2026, Axon reported $685 million in cash, cash equivalents and short-term investments and $1.8 billion of outstanding senior notes, leaving the company with a net debt position of approximately $1.1 billion.

The new notes would therefore add to Axon's debt obligations if the proposed offering is completed, although the 0% coupon means the notes would not require regular cash interest payments.

Axon's Earnings Highlights

The company reported $904 million in second-quarter (Q2) revenue, up 35% year over year, marking its 10th consecutive quarter of revenue growth above 30%. Annual recurring revenue rose 39% to $1.6 billion.

Axon reported $15.1 billion in future contracted bookings as of June 30, up 41% year over year. The company said it expected to fulfill 20% to 25% of that balance over the next 12 months, with the remainder generally expected to be fulfilled over the following 10 years.

The firm raised its full-year 2026 revenue-growth outlook to 32% to 34% from 30% to 32% previously, while maintaining its Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA)  margin outlook at approximately 25.5%.

Retail Take On AXON

On Stocktwits, retail sentiment for AXON stayed ‘neutral’ over the past 24 hours.

AXON stock has dropped over 15% year-to-date.

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