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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)


x			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 001-16391

_________________________________________________________________

Axon Enterprise, Inc.

(Exact name of registrant as specified in its charter)

_________________________________________________________________


Delaware (State or other jurisdiction of incorporation or organization)			86-0741227 (I.R.S. Employer Identification No.)

17800 North 85th Street			85255
Scottsdale, Arizona			(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code:

(480) 991-0797

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.00001 par value per share	AXON	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 762(b)) by the registered public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. x o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). xo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

As of June 30, ~~2024~~2025, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $2162.82 billion based on the closing sale price as reported on The NASDAQ Stock Market LLC.

The number of shares of the registrant’s common stock outstanding as of February 2418, ~~2025~~2026 was 7680,~~623~~397,~~266~~675

DOCUMENTS INCORPORATED BY REFERENCE

Parts of the registrant’s definitive proxy statement for its ~~2025~~2026 Annual Meeting of Shareholders to be prepared and filed with the Securities and Exchange Commission not later than 120 days after December 31, ~~2024~~2025 are incorporated by reference into Part III of this Form 10-K.

Table o f Contents

AXON ENTERPRISE, INC.

INDEX TO ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, ~~2024~~2025

	PART I	Page
Item 1.	Business	4
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	3836
Item 1C.	Cybersecurity	3836
Item 2.	Properties	4138
Item 3.	Legal Proceedings	4138
Item 4.	Mine Safety Disclosures	4138
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4138
Item 6.	[Reserved]	4239
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4340
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	5654
Item 8.	Financial Statements and Supplementary Data	5755
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	~~112~~107
Item 9A.	Controls and Procedures	~~112~~107
Item 9B.	Other Information	~~114~~109
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent ~~Inspection~~Inspections	~~115~~109
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	~~115~~109
Item 11.	Executive Compensation	~~115~~109
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~115~~110
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~116~~110
Item 14.	Principal Accountant Fees and Services	~~116~~110
	PART IV
Item 15.	Exhibits, and Financial Statement Schedules	~~116~~110
Item 16.	Form 10-K Summary	~~118~~113

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PART I

Statements contained in this Annual Report on Form 10-K that are not historical are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements regarding our expectations, beliefs, intentions and strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Words such as “may,” “will,” “should,” “could,” “would,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” and similar expressions, as well as statements in future tense, identify forward-looking statements. However, not all forward-looking statements contain these identifying words.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. Many events beyond our control may determine whether results we anticipate will be achieved. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements. This Annual Report on Form 10-K lists various important factors that could cause actual results to differ materially from historical and expected results, which are set forth more fully in Part I, Item 1A. These factors are intended as cautionary statements for investors within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Readers can find them under the heading “Risk Factors” in this Annual Report on Form 10-K, and investors should refer to them. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 8-K, 10-Q and 10-K reports to the Securities and Exchange Commission (“SEC”). Our filings with the SEC may be accessed at the SEC’s web site at www.sec.gov.

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Item 1. Business

Overview

Axon Enterprise, Inc. (“Axon,” the “Company,” “we” or “us”) is a technology ~~leader~~company inthat ~~global~~provides ~~public~~integrated ~~safety~~hardware and software solutions. InFounder-led ~~2022~~since 1993, weAxon ~~announced~~began ~~our~~with ~~moonshot~~a ~~goal~~mission to ~~cut~~protect ~~gun-related~~life ~~deaths~~and ~~between~~has ~~police~~grown into a global technology company serving a range of customers. Our products and services allow customers across the public inand ~~the~~private ~~United~~sector ~~States~~to incapture ~~half~~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 ~~2033~~artificial intelligence (“AI”). Designed to work together, these solutions create a unified, data-driven operating system that prioritizes safety and helps protect people and places with greater speed, accuracy, transparency, and accountability.

~~Axon~~Our isintegrated ~~building~~technology ~~the~~platform ~~public~~of ~~safety~~hardware ~~operating~~and ~~system~~software ofsolutions ~~the~~advances ~~future~~our bymission ~~integrating~~to a(i) ~~suite~~make ofthe ~~hardware~~bullet ~~devices~~obsolete, ~~and~~(ii) ~~cloud~~reduce ~~software~~social ~~solutions~~conflict, ~~that~~and ~~not~~(iii) ~~only~~enable ~~revolutionize~~a ~~modern~~fair ~~policing~~and ~~but~~effective ~~also~~justice ~~cater~~system. toOur ~~federal~~products ~~agencies,~~and ~~corrections,~~technology ~~justice~~solutions ~~and~~address ~~enterprise~~complex, high-~~level~~stakes ~~security~~challenges, ~~needs.~~and ~~Axon’s~~our ~~suite~~mission ~~includes~~attracts ~~cloud-hosted~~top ~~digital~~talent. ~~evidence~~We ~~management~~aim ~~solutions,~~to ~~productivity~~invent and ~~real-time~~deliver ~~operations~~technology ~~software,~~solutions ~~body~~that ~~cameras,~~progressively ~~in-car~~make ~~cameras,~~the ~~TASER~~right ~~energy~~things ~~devices,~~easier ~~drone~~ and ~~robotic~~the ~~security,~~wrong ~~and~~things ~~training~~harder ~~solutions~~every day.

~~Our~~Axon ~~hardware~~is ~~and~~a ~~software~~diversified ~~solutions~~technology ~~advance~~company ~~our~~with ~~mission~~employees todistributed ~~(i)~~across ~~make~~multiple ~~the~~geographies. ~~bullet~~Alongside ~~obsolete,~~our ~~(ii)~~primary ~~reduce~~corporate ~~social~~headquarters ~~conflict~~in Scottsdale, ~~and~~Arizona, ~~(iii)~~we ~~enable~~have ahubs ~~fair~~in ~~and~~many ~~effective~~major ~~justice~~cities ~~system.~~across ~~Our~~the ~~products~~United ~~solve~~States ~~some of society's most challenging problems~~ and ~~our~~ongoing ~~mission~~international ~~attracts~~expansion ~~top~~across ~~talent.~~Europe, WeAsia, ~~aim to invent~~ and ~~deliver public safety products that progressively make~~ the ~~right~~Americas, ~~things~~as ~~easier~~we ~~and~~continue ~~the~~to ~~wrong~~drive ~~things~~our ~~harder~~mission ~~every day~~globally.

~~Our~~Business ~~research~~Segments & development (“R&D”) investments support continuous innovation on behalf of our customers. Our financial strategy is to build highly recurring, highly profitable businesses and to drive growth through this purposeful product innovation.

~~Axon’s~~During ~~operations~~the ~~comprise~~year ended December 31, 2025, we realigned our business to better reflect our continued growth and expansion of our technology solutions. Previously reported within two reportable segments:, TASER and Software and Sensors, we realigned our business in a manner that provides increased transparency and distinction between our software and services and hardware components.

~~1.Software~~Axon’s ~~and~~operations ~~Sensors:~~comprise Wea ~~develop, manufacture and sell~~ fully integrated ~~hardware~~suite and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence. Our software offerings also support productivity and real-time operations. The Software and Sensors segment includes the sale of ~~sensors,~~products ~~including~~across ~~body~~connected ~~cameras, in-car cameras, other~~ hardware ~~sensors~~, ~~warranties on sensors~~software, and ~~other products, as well as recurring cloud-hosted software revenue, related non-recurring professional~~ services ~~revenue,~~which ~~and~~are ~~revenue~~disclosed ~~from~~in ~~certain~~two ~~software,~~reportable ~~including on-premise licenses.~~segments:

21.~~TASER~~Software and Services: ~~Axon~~We isdevelop, ~~the~~manufacture ~~market~~and ~~leader~~sell incloud-based ~~the~~Software-as-a-Service ~~development,~~(“SaaS”) ~~manufacture~~solutions that leverage AI and ~~sale~~enable ofour ~~conducted~~customers ~~energy~~to ~~devices~~capture, ~~("CEDs")~~securely store, ~~which~~manage, weshare ~~sell~~and ~~under~~analyze ~~our~~video ~~brand~~and ~~name,~~other ~~TASER~~digital evidence. ~~The~~Our ~~TASER~~software ~~segment~~offerings ~~includes~~also ~~the~~support ~~manufacture~~productivity and ~~sale~~real-time ofoperations. ~~CEDs,~~Our ~~batteries,~~offerings ~~accessories~~include ~~and~~Axon ~~extended~~Evidence, ~~warranties~~Draft One, ~~digital~~Axon ~~subscription~~Records, ~~training~~Axon ~~content~~Standards, ~~virtual~~Axon ~~reality~~Fusus, ~~("VR")~~and ~~training~~Axon ~~content~~Assistant, ~~TASER~~among ~~Evidence~~others.~~com~~ ~~license~~The Software and Services segment includes recurring cloud-hosted software revenue, ~~and~~related ~~other~~non-recurring professional services ~~tied~~revenue, toand ~~TASER~~revenue ~~and~~from VRcertain ~~deployments~~software, including on-premise licenses.

2.Connected Devices: We develop, manufacture and sell fully integrated hardware solutions such as conducted energy devices (“CEDs”) sold under the TASER brand, body cameras, fixed and in-car cameras, drone and counter-drone technologies, and a broad ecosystem of accessories, extended warranties and related hardware products.

For further information about our reportable segments and sales by geographic region, refer to Note 1 of Part II, Item 8 of this Annual Report on Form 10-K.

Axon employees are distributed across multiple geographies and report to work via a remote-hybrid model, which leverages both in-person collaboration environments as well as cloud-based software tools that enable remote productivity. Our headquarters in Scottsdale, Arizona and our hubs in Seattle, Washington; San Francisco, California; Boston, Massachusetts; Atlanta, Georgia; and Sterling, Virginia house the majority of our in-person employees located in the United States, including members of our executive management team, and sales, marketing, certain engineering, manufacturing, finance and other administrative support functions. We also have subsidiaries and/or offices located in Australia, Belgium, Canada, Finland, France, Germany, Greece, India, Italy, the Netherlands, Spain, the United Kingdom and Vietnam.

Key Product Category Revenue Drivers: What We Offer

Axon’s products ~~are~~and ~~generally~~services ~~cloud-connected,~~are designed to ~~drive~~operate ~~better~~as ~~outcomes~~an ~~and~~integrated ~~customer~~ecosystem ~~experiences,~~consisting ~~and~~of ~~sold~~integrated ~~via~~connected ~~mutually~~hardware ~~reinforcing~~devices, ~~integrated~~cloud-hosted ~~subscription~~software ~~plans~~applications and real-time operational tools. Our ~~key~~ revenue ~~drivers~~is ~~belong~~derived tofrom ~~three~~a ~~broad~~combination of hardware sales, multi-year recurring software subscriptions, professional services, and extended warranties. The following describes the principal product categories: that drive revenue across our two reportable segments.

•Software: Axon is building a suite of cloud-based, Software-as-a-Service (“SaaS”) solutions that integrate with our sensors and TASER devices to benefit customers and drive annual recurring revenue, which totaled

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~~$1.0~~Software ~~billion1 as of December 31, 2024. We have many SaaS solutions, which can best be trisected into three categories: digital evidence management, productivity~~ and ~~real-time~~Services operations solutions. Axon Evidence is the world’s largest cloud-hosted public safety data repository of public safety video data and other types of digital evidence. Our productivity suite, which includes Axon Records and artificial intelligence ("AI"), is designed to save officers time spent writing reports and doing paperwork. Our real-time operations capabilities, which include Axon Respond, integrates location data, signal alerts and video feeds to provide a complete picture of evolving situations.

~~•Sensors:~~ Axon ~~devices~~has ~~address~~a ~~many~~suite ~~needs~~of cloud-based, ~~including~~SaaS ~~transparency,~~solutions ~~real-time~~that ~~situational~~deeply ~~awareness,~~integrate ~~and~~with ~~accurate~~our ~~capture~~hardware ~~and~~to ~~integration~~benefit ofcustomers ~~evidence~~and ~~with~~drive ~~software~~annual ~~workflows.~~recurring ~~Product~~revenue, ~~categories~~which ~~within~~totaled ~~sensors~~$1.3 ~~include~~billion1 ~~Axon~~as ~~Body~~of ~~cameras~~December 31, ~~Axon~~2025. ~~Fleet~~Revenue ~~in-car~~from ~~systems,~~our ~~drones~~SaaS ~~and~~solutions ~~robotics,~~is ~~and~~primarily ~~other~~driven ~~devices~~from ~~that~~subscription ~~work~~licensing, ~~with~~premium ~~our~~offering ~~software~~adoptions, and ecosystem expansion. Our ~~software~~SaaS solutions ~~also~~can ~~support~~be anbest ~~open~~categorized ~~ecosystem~~into ofthree ~~connected~~categories: ~~devices produced by other vendors.~~

•~~TASER~~Digital Evidence Management: WeAxon ~~develop~~Evidence ~~smart~~is ~~devices~~a secure, ~~tools~~cloud-based ~~and~~platform ~~services~~ that ~~support~~enables public safety officers in de-escalating situations, avoiding or minimizing use of force and aiding consumer personal protection. These tools include TASER devices, VR training services and consumer devices. Research has shown that TASER devices are the most effective less-than-lethal force option, with the lowest likelihood of injury to ~~officers~~efficiently ~~and assailants. Since our inception in 1993~~store, ~~TASER~~manage ~~devices have been adopted by a majority of U.S. state~~ and ~~local~~share ~~law~~critical ~~enforcement~~evidence ~~and~~while ~~are~~ensuring ~~used~~chain ~~daily to help keep communities safe. Global adoption~~ of ~~TASER~~custody ~~devices remains early~~ and ~~we are expanding into new geographies~~compliance. Axon VR solutions make public safety training more accessible, relevant and affordable — with the goal of using new immersive VR technologies to better prepare officers for real-life situations in the field.

•Productivity Solutions: Our productivity suite includes Axon Records, Axon Standards, and a suite of solutions available under our AI Era Plan, including Real-Time Translation, Draft One, Policy Chat, and Auto-Transcribe, among others. These offerings are designed to boost efficiency and improve decision-making through automation, data integration, and intelligent workflows.

•Real-time Operations: Our real-time operations capabilities, which include Axon Respond, integrates location data, signal alerts and video feeds to provide a complete picture of evolving situations as they occur.

In addition to subscription SaaS revenue, this segment includes non-recurring professional services revenue supporting implementation, configuration, and ongoing workflow integration, as well as revenue from certain on-premise software licenses.

Connected Devices

Our Connected Devices segment consists of hardware products that seamlessly integrate with our suite of software solutions to revolutionize our customers' capabilities for capturing, analyzing, and responding to real-world events. Revenue in this segment is derived from device sales, accessories, and related extended warranties. These products are designed to operate as a networked system and include devices such as cameras, sensors, drones, and personal protection equipment across the following three categories:

•TASER: We develop smart devices, tools and services that support public safety officers in de-escalating situations, avoiding or minimizing use of force and aiding consumer personal protection. TASER energy devices are used by public safety customers as a less-lethal force option to de-escalate conflict. Revenue is generated through device sales, cartridges, accessories, and extended warranties.

•Personal Sensors: Axon devices address many needs, including transparency, real-time situational awareness, and accurate capture and integration of evidence with software workflows. Product categories within personal sensors include Axon Body cameras and accessories. Our software solutions also support an open ecosystem of connected devices produced by other vendors.

•Platform Solutions: Platform Solutions include Axon Fleet in-car video systems, fixed cameras, drone and counter-drone technology, virtual reality (“VR”) training hardware, and other devices that support operational awareness.

Our research & development (“R&D”) investments support continuous innovation on behalf of our customers. Our financial strategy is to build highly recurring, highly profitable businesses and to drive growth through this purposeful product innovation.

1 Calculated as monthly recurring license, integration, warranty, and storage revenue for the year ended December 31, 2025. Annual recurring revenue is a forward-looking performance indicator that management believes provides more visibility into the growth of our revenue generated by our highest margin, recurring services. Annual recurring revenue should be viewed independently of revenue and deferred revenue because it is an operating measure and is not intended to be combined with or to replace GAAP revenue or deferred revenue, as they can be impacted by contract start and end dates and renewal rates. Annual recurring revenue is not intended to be a replacement or forecast of revenue or deferred revenue.

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Sales and Distribution: Who We Sell To and Where We Deliver

WeOur ~~think of our~~ core customers asacross ~~falling~~the ~~into~~public ~~roughly~~and ~~four~~private ~~categories~~sectors ofinclude ~~funding sources:~~ U.S. federal, state, and local governments, ~~the~~international ~~U.S.~~governmental ~~federal~~entities, ~~government~~commercial enterprises, ~~international~~and ~~government~~consumers. ~~customers~~Axon’s sales force and ~~commercial~~strong ~~enterprises~~customer relationships represent key strategic advantages. ~~Additionally,~~Although the ~~types~~majority of ~~customers~~our ~~who~~revenues ~~find~~are ~~value~~generated invia ~~our~~direct ~~product~~sales, ~~offerings~~we ~~are~~also ~~expanding~~leverage ~~beyond~~distribution ~~law~~partners ~~enforcement~~and tothird ~~include~~party ~~customers~~resellers. ~~such~~No ascustomer ~~attorneys~~represented more than 10% of total net sales for the years ended December 31, ~~corrections~~2025, ~~fire~~2024 ~~and~~or ~~emergency~~2023. ~~medical~~As ~~services~~we ~~personnel,~~diversify ~~commercial~~into ~~enterprise~~new ~~security~~markets, ~~frontline~~we ~~enterprise~~have ~~workers,~~been investing in sales personnel and ~~the~~strategic ~~U.S.~~headcount ~~military~~additions to support growth in these markets.

Axon’s sales force and strong customer relationships represent key strategic advantages. The majority of our revenues are generated via direct sales, including our online store, although we do leverage distribution partners and third-party resellers. No customer represented more than 10% of total net sales for the years ended December 31, 2024, 2023 or 2022. As we diversify into new markets, we have been investing in sales personnel and strategic headcount additions to support growth in these markets.

Governmental agencies generally have the ability to terminate our contracts, in whole or in part, for reasons including non-appropriation of funds. We continue to monitor developments in federal government funding.

Resources

Manufacturing and Supply Chain

We perform ~~light~~ manufacturing, final assembly and final test operations at our facilities in ~~Scottsdale,~~ Arizona and own substantially all of the equipment required to develop, prototype, manufacture and assemble our finished products. We have continued to maintain both our ISO 9001 and our ISO 9001:2015 certifications.

We ~~continue~~purchase tomany ~~take~~components ~~steps~~and toraw ~~diversify~~materials used in manufacturing our ~~supply~~products ~~chain~~from ~~and~~numerous ~~global~~suppliers ~~manufacturing~~in ~~footprint~~various countries. Although we currently obtain certain components from single source suppliers, ~~which~~we ~~positions~~own ussubstantially ~~well~~all toinjection-molded ~~manage~~component tooling, designs and test fixtures used in production for all custom components. We continuously monitor our supply chain, ~~disruptions.~~identify ~~Material~~alternate ~~availability~~shipping ~~has~~and ~~mostly~~logistic ~~stabilized~~sources, ~~from~~and ~~prior~~work ~~supply~~with foreign regulators so our suppliers can provide high quality parts. Supply chain ~~challenges~~disruptions ~~while~~are ~~general~~an ~~levels~~ongoing ofoccurrence ~~risk~~and ~~continue~~our continuous monitoring allows us to ~~exist~~minimize intheir ~~all~~impact. ~~businesses~~For ~~that~~more ~~manufacture~~information ~~products~~on the risks associated with manufacturing and supply chain, see “Item 1A. ~~Supplier~~Risk ~~decommitments~~Factors ~~remain~~— aOperational ~~top~~Risks”.

1 Calculated as monthly recurring license, integration, warranty, and storage revenue for the year ended December 31, 2024. Annual recurring revenue is a forward-looking performance indicator that management believes provides more visibility into the growth of our revenue generated by our highest margin, recurring services. Annual recurring revenue should be viewed independently of revenue and deferred revenue because it is an operating measure and is not intended to be combined with or to replace GAAP revenue or deferred revenue, as they can be impacted by contract start and end dates and renewal rates. Annual recurring revenue is not intended to be a replacement or forecast of revenue or deferred revenue.

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area of risk. However, we have put programs in place to mitigate this risk. We proactively manage our supply chain down to third tier suppliers to mitigate and overcome material shortages. These actions align to our strategic model to help meet strong product demand while also preparing us to stagger factory work schedules as needed, which enables us to meet compressed build schedules over short periods of time. We continue to adjust strategic inventory levels in both raw materials and finished goods based on areas of risk to mitigate potential supply disruptions.

In light of our broad domestic and international supplier base, we are continuously monitoring our supply chain to manage through potential impacts, identifying alternate shipping and logistic sources, and working with foreign regulators to ensure that our suppliers can provide high quality parts. Despite past supply chain disruptions relating to material shortages and port constraints, we remain focused on actively managing our supply chain by strengthening strategic relationships, securing secondary and alternate sourcing, adjusting build plans, maintaining strategic inventory and utilizing flexible logistics to support growing demand while minimizing customer disruptions.

Even as we continue to expand our second sourcing of materials across our supply chain, we still obtain some unique components from single source suppliers. However, because we own substantially all of the injection molded component tooling used in their production, we believe we could obtain alternative suppliers in most cases with varying levels of interruption. In addition, we also have programs to hold additional raw materials (such as resins, battery components and critical semiconductors) to mitigate supply interruptions and better manage costs. For additional discussion of sources and availability of raw materials, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.

We offer both limited and extended manufacturer’s warranties on our Axon devices and CEDs. For additional information about our warranties, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.

Intellectual Property

We protect our intellectual property with U.S. and foreign patents, U.S. and foreign trademark registrations, and U.S. copyright registrations. Our patents and pending patent applications relate to technology used by us in connection with our products. We also rely on international treaties, organizations and laws to protect our intellectual property. As of December 31, ~~2024~~2025, we hold over ~~330~~370 U.S. patents, over ~~150~~170 U.S. registered trademarks, over ~~270~~350 international patents and over ~~460~~480 international registered trademarks, as well as numerous pending patent and trademark applications.

We continuously assess whether and where to seek formal protection for particular ~~innovations and~~ technologies based on such factors as the ~~commercial~~ significance to our operations and our competitors’ operations in particular ~~countries and~~ regions, our ~~strategic~~strategies ~~technology or product directions~~ in different countries, and the degree to which intellectual property laws exist and are meaningfully enforced in different jurisdictions. We have the exclusive rights to many Internet domain names, primarily including “Axon.com,” “Evidence.com,” ~~and~~ “TASER.com.,” ~~We also vigorously protect our intellectual property, including our patents~~ and ~~trademarks against third-party infringement~~ “911.com.”

We also execute non-disclosure agreements with employees, consultants and key suppliers ~~to help ensure the confidentiality of our trade secrets~~.

Competition

Sensors — Connected Cameras and Digital Evidence Management Software: The body camera and in-car video/automatic license plate readers industry is highly competitive. Our competition includes 10-8 Video Systems, 365Labs, Applied Concepts, Axis Communications, ABCoreforce, Digital Ally ~~Inc.~~, Duress, ~~Getac~~Genetec, ~~Technology Corporation~~Getac, ~~Halo~~HALOS Body Cameras, Hikvision, Hytera, Insight LPR, IONODES, i-PRO, ~~LensLock~~Kustom ~~Inc.~~Signals, LensLock, Motorola Solutions, ~~M-View~~Tait Communications, Oracle, ~~Patrol Eyes~~PatrolEyes, Pinnacle Response, Pro-Vision, Recoda, Reveal Media, Safe Fleet, ~~Utility Associates~~Versaterm, ~~Versaterm~~Wireless ~~Inc.~~CCTV, ~~WCCTV,~~ Wolfcom Enterprises, Wrap Technologies ~~Inc.~~ and Zepcam B.~~V., Applied Concepts Inc., Genetec Inc. and Insight LPR.~~

~~The~~Our ~~market~~fixed ~~for~~automatic ~~software~~license ~~solutions~~plate torecognition ~~improve~~(“ALPR”) ~~public~~offerings, ~~safety~~including ~~agency~~Axon ~~workflows~~Outpost isand ~~both~~Axon ~~highly~~Lightpost, ~~fragmented~~together ~~and~~with ~~highly~~integrations ~~competitive.~~enabled ~~Our~~through ~~cloud-based~~our ~~digital~~Works ~~evidence~~with ~~management system,~~ Axon ~~Evidence~~partnership program, ~~competes~~compete with ~~both~~providers ~~cloud-based~~of ~~platforms~~fixed and onsemi-~~premises~~fixed ~~based~~ALPR ~~systems~~cameras ~~designed~~and byassociated ~~third~~analytics ~~parties~~software orused ~~developed~~by ~~internally~~public bysafety anagencies ~~agency's~~and ~~technology~~enterprise ~~staff~~customers. Our competition in this area includes ~~FileOnQ,~~Flock ~~FotoWare~~Safety, Genetec ~~Inc.~~(AutoVu), ~~IBM~~Jenoptik, ~~i-PRO,~~ Motorola Solutions, ~~NICE,~~(including ~~OpenText~~its ~~Corporation,~~Vigilant ~~Oracle,~~and ~~QueTel~~fixed ~~Corporation~~LPR solutions), ~~Revir~~Neology ~~Technologies,~~(including ~~Utility~~its ~~Associates~~PIPS ~~and~~Technology ~~Vidizmo~~business), ~~LLC~~NDI Recognition Systems, ~~among~~PlateSmart ~~others~~Technologies, and Rekor Systems.

Key competitive factors in this product category include product performance, product features (including live-streaming, GPS tracking and pre-event buffering), battery life, product quality and warranty, total cost of ownership, data

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~~security,~~The ~~data~~market ~~and~~for ~~information~~software solutions to improve public safety agency workflows, ~~company~~is ~~reputation~~both highly fragmented and ~~financial~~highly ~~strength~~competitive. Our cloud-based digital evidence management system, Axon Evidence, competes with both cloud-based platforms and ~~customer~~on-premises ~~satisfaction~~based systems designed by third parties or developed internally by an agency's technology staff. Our competition includes 365Labs, Coreforce, FileOnQ, FotoWare, Genetec, Guardify, i-PRO, Motorola Solutions, NiCE, Omnigo, OpenText Corporation, Oracle, Revir Technologies, Safe Fleet, Veritone, and ~~relationships~~Vidizmo.

~~Productivity~~Key ~~and~~competitive ~~Real-Time~~factors ~~Operations~~in ~~Software~~these —product ~~Records~~categories ~~Management~~include ~~System~~product ~~(“RMS”)~~performance and ~~Axon~~reliability; ~~Fusus:~~product ~~The~~features ~~RMS vertical area is competitive and highly fragmented. We have identified more than 50 software providers,~~ (including ~~365Labs~~live-streaming, ~~Beacon~~GPS ~~Software Solutions Inc.~~tracking, ~~Caliber~~pre-event ~~Public Safety (parent~~buffering, ~~Harris~~real-time ~~Computer~~alerting ~~Systems),~~and ~~Central~~license ~~Square~~plate ~~Technologies~~recognition ~~(formerly Superion, TriTech and Aptean~~accuracy),; ~~CivicEye,~~battery ~~Core~~life Technology Corporation, CSI Technology Group, EForce Software, Executive Information Services Inc., Hexagon AB, Kologik, LawSoft Inc., Mark43 Inc, Motorola Solutions, Niche Technology Inc., Saab, SmartCop, SOMA Global, Sopra Steria, Southern Software, Sun Ridge Systems Inc. and ~~Tyler~~power ~~Technologies.~~options; Inease ~~addition, not all law enforcement agencies use software for report writing — some still use paper. We believe our network~~ of ~~camera~~deployment ~~sensors~~ and ~~digital~~integration ~~evidence~~with ~~management~~existing ~~platform~~infrastructure; ~~give us a strategic advantage in these~~ product ~~categories.~~quality ~~Our~~and ~~Axon~~warranty; ~~Fusus~~total ~~offering~~cost ~~competes~~of ~~both~~ownership; ~~with~~data ~~real-time operations platforms that ingest body camera video feeds~~security, ~~like~~privacy ~~Genetec's Citigraf, Motorola’s CommandCentral Aware~~ and ~~Utility’s~~information ~~Strax~~workflows; ~~Response,~~interoperability ~~Flock~~with ~~Safety’s~~other ~~FlockOS,~~public ~~Hitachi~~safety ~~Vantara’s~~systems; ~~Visualization~~company ~~Platform,~~reputation and ~~MIDL~~financial ~~Technology,~~strength; asand ~~well~~customer assatisfaction ~~platforms that ingest video feeds exclusively from surveillance cameras, like Hexagon's Connect, Live Earth~~ and ~~Spatialitics's GeoShield, among others~~relationships.

~~Draft~~Productivity ~~One:~~and ~~The AI~~Real-~~enabled~~Time ~~report~~Operations ~~narrative~~Software ~~drafting~~— ~~space~~Records isManagement ~~relatively~~System ~~new~~(“RMS”) ~~but~~and ~~fast~~Axon ~~growing~~Fusus: The RMS vertical area is competitive and highly fragmented. We have identified amore ~~few~~than 50 software providers, inincluding ~~this~~365Labs, ~~space~~Beacon Software Solutions, ~~including~~Caliber ~~Abel~~Public Safety (parent, ~~Blueline~~Harris AIComputer Systems), ~~GovWorx~~Central Square Technologies, ~~Karda~~CivicEye, ~~Analytics~~Coreforce, Core Technology Corporation, CSI Technology Group, EForce Software, Executive Information Services, Hexagon, LawSoft, Mark43, Motorola Solutions, Niche Technology, Oracle, Saab, SmartCop, Sopra Steria, Southern Software, Sun Ridge Systems, Tyler Technologies and Versaterm. In addition, not all law enforcement agencies use software for report writing — some still use paper. We believe our network of camera sensors and digital evidence management platform give us a strategic advantage in these product categories. Our Real Time Crime Center Platform, Axon Fusus, competes both with real-time operations platforms that ingest body camera video feeds, like Genetec's Citigraf, Motorola’s ~~ReportAI~~CommandCentral Aware, ~~Policereports.ai~~Coreforce’s Real Time Intelligence, Flock Safety’s FlockOS, Hitachi Vantara’s Visualization Platform, and ~~Truleo~~MIDL Technology, as well as platforms that ingest video feeds exclusively from surveillance cameras, like Hexagon's Connect, Live Earth and Spatialitics's GeoShield.

VREmergency ~~De-Escalation~~Communications ~~Training~~Software ~~for~~— ~~Law~~911 ~~Enforcement~~Data, ~~Corrections~~AI and ~~Private~~Call ~~Security~~Handling Platforms: Our VRemergency ~~Training~~communications ~~platform~~solutions ~~competes~~are ~~with~~designed ~~several~~for ~~other~~public ~~companies~~safety inanswering ~~the~~points ~~space~~(“PSAPs”) ~~who~~and ~~offer~~emergency ~~simulation~~communications ~~scenarios~~centers. Today, ~~including~~these ~~simulated~~offerings ~~training~~primarily onconsist ~~the~~of ~~use~~cloud-based ofapplications ~~both~~that ~~lethal~~operate ~~and~~alongside ~~less~~existing 911 call-~~than-lethal~~handling ~~alternatives.~~systems ~~Our~~and ~~competition~~provide inAI-powered ~~this~~triage, ~~space~~supplemental ~~includes~~data ~~Adaptive~~and VRmultimedia ~~Ltd~~streaming capabilities., ~~Apex~~These ~~Officer,~~include ~~Hologate~~real-time ~~GmbH,~~video ~~InVeris~~and ~~Training~~text ~~Solutions~~from ~~Inc.~~callers, ~~Laser~~enhanced ~~Shot~~device ~~Inc.,~~location ~~MILO,~~information ~~OperatorXR,~~and ~~Street~~AI-enabled ~~Smarts~~transcription, VRtranslation, Ticall ~~Training~~summarization ~~Corp,~~and Vpost-~~Armed~~call analytics, ~~VirTra~~derived ~~Inc~~in part from technologies we acquired with Prepared. These offerings compete with both over-the-top data and ~~Wrap~~AI ~~Technologies,~~platforms ~~among~~that ~~others~~integrate with incumbent 911 infrastructure and with more fully integrated Next Generation 911 (“NG911”) platforms.

~~Key~~Furthermore, ~~competitive~~our ~~factors~~acquisition inof ~~this~~Carbyne, ~~product~~a ~~category~~provider ~~include~~of ~~scale~~cloud-native ofemergency ~~content~~communications ~~library,~~platforms ~~integration~~that tocombine ~~additional~~NG911 ~~sensors~~call-handling, location and ~~devices~~multimedia ~~(e.g.~~capabilities ~~haptic~~with ~~suit,~~AI ~~TASER),~~and ~~ease~~rich ofdata ~~use~~integrations, ~~visual~~extends ~~fidelity~~our ~~and~~offerings ~~realism,~~more ~~quality~~deeply into the core call-handling layer of ~~immersion~~the ~~experience~~NG911 ~~(enhanced~~workflow. byRefer ~~capabilities~~to ~~such~~Note as20 ~~eye~~in ~~tracking~~Part ~~and~~II, ~~speech~~Item ~~recognition)~~8 ~~and~~of ~~portability~~this Annual Report on Form 10-K for additional details.

~~Axon Air:~~ Our ~~end-to-end drone management software platform competes with a select set of companies in the space who offer drone programs and flight management software solutions. Our~~ competition in this space includes ~~Auterion~~CentralSquare ~~Ltd.,~~Technologies ~~BRINC~~(Vertex ~~Drones’~~NG911 ~~LiveOps,~~Call ~~Flock Safety’s Aerodome~~Handling), ~~Motorola~~Hexagon ~~Solutions’~~AB ~~CAPE,~~(call-handling ~~Paladin~~capabilities ~~Drones’~~within ~~Watchtower~~its ~~and~~public ~~Votix,~~safety ~~LLC,~~platforms ~~among~~such ~~others.~~as ~~Key~~I/CAD ~~competitive~~and ~~factors~~OnCall), inIntrado ~~this~~Life ~~product~~& ~~category~~Safety ~~include~~(including ~~integration~~its ~~and~~VIPER ~~compatibility with various drone hardware providers~~ and ~~other~~Power ~~technology~~911 ~~systems~~offerings), ~~used~~Motorola bySolutions ~~first responders~~ (~~e.g.,~~including ~~digital~~its ~~evidence~~VESTA ~~management)~~9-1-1, ~~drone~~its ~~program~~other ~~management~~NG911 ~~and real~~call-~~time~~handling ~~situational~~solutions ~~awareness~~and ~~capabilities,~~its ~~intuitiveness~~Rave of911 ~~the~~suite), ~~user~~RapidSOS, ~~interface~~Versaterm, ~~the level of training~~ and ~~customer~~Zetron ~~support provided~~ (~~particularly~~MAX ~~for~~Call ~~the drone-as-first-responder use case~~Taking), ~~the~~among ~~customization~~other ~~and~~providers ~~flexibility allowed by the platform to meet specific operational needs and requirements~~ of ~~different~~NG911 ~~customers (e.g.~~call-handling, ~~customizable~~data ~~flight restrictions)~~ and ~~the~~analytics ~~autonomy capabilities provided by the platform (e~~platforms.~~g., creation of autonomous missions).~~

~~Our~~Key ~~indoor~~competitive ~~tactical~~factors ~~drone~~in ~~hardware~~this ~~platform,~~product ~~Sky-Hero,~~category ~~competes~~include ~~with a few other companies in~~ the ~~space~~reliability, ~~including~~resiliency ~~BRINC,~~and ~~Indoor~~scalability ~~Robotics,~~of ~~XTEND,~~call handling and ~~FLIR.~~routing; ~~Key~~support ~~competitive~~for ~~factors~~NG911 instandards ~~this~~and ~~product~~multimedia ~~category~~communications ~~include~~(including ~~variety~~text, video, and ~~weight~~rich ~~limits~~device-generated ofdata); ~~compatible~~the ~~payloads,~~breadth ~~battery life~~ and ~~associated~~depth ~~flight~~of ~~range,~~integrations ~~maneuverability~~with ~~and~~computer-aided ~~size~~dispatch, ~~autonomy~~mapping and ~~onboard~~other ~~intelligence~~public ~~(including~~safety software; the ability to ~~navigate~~leverage inAI ~~GPS~~to ~~denied~~assist ~~environments)~~telecommunicators, ~~sensor~~improve call-taking efficiency and ~~imaging~~quality ~~technology,~~assurance; ~~durability~~cybersecurity and ~~robustness~~data ofprivacy; the ~~drone,~~ability ~~cost~~to ~~and~~integrate ~~maintenance~~with ~~required,~~a ~~reliability~~wide ~~and~~range ~~security~~ of ~~communication~~legacy and ~~control~~cloud-based ~~systems,~~PSAP ~~the~~infrastructure; ~~simplicity~~ease ofand ~~the~~speed ~~drone~~of ~~piloting~~deployment ~~user~~and ~~interface~~migration ~~and~~from ~~the~~legacy ~~training~~systems; ~~required~~and tooverall ~~operate~~total ~~the~~cost ~~drones~~of ownership.

~~Dedrone~~Draft ~~by Axon~~One: The ~~counter~~AI-enabled ~~drone~~report narrative drafting space is ~~fast~~relatively ~~growing~~new ~~and~~but ~~very~~fast ~~fragmented~~growing. ~~Within~~We ~~it,~~have ~~Dedrone~~identified ~~competes~~several ~~with~~providers ~~Advanced~~in ~~Protection~~this ~~Systems~~space, ~~Anduril,~~including ~~ApolloShield~~Abel, ~~ARTSys360,~~Central ~~Aselsan,~~Square Belgian Advanced Technology Systems, Big Bang Boom Solutions, Bligther Surveillance Systems, BlueHalo, BSS Holland, CACI, Cerbair, Chess Dynamics, DEFSYS, Department 13, D-Fend, DroneDefence, Droneshield, Dynamite Global Strategies, DZYNE Technologies,’ ~~EDGE,~~Centerline ~~EdgeSource~~AI, ~~Elbit Systems~~Clipr.ai, ~~ELT Group~~GovWorx, ~~ESG,~~Karda ~~Fortem Technologies~~Analytics, FNMark43’s ~~Herstal~~ReportAI, ~~General~~Motorola ~~Atomics~~Solutions, ~~Gradiant~~Policereports.ai, ~~Guardion,~~and Havelsan, Hensoldt, Hertz New Technologies, IEC Infrared Systems, Indra, L3 Harris, Leidos, Leonardo DRS, LiveLink Aerospace, Lockheed Martin, Marduk, MBDA, MC2 Technologies, Meteksan Savunma, Metis, MSI Defense Systems, MyDefence, Northrop Grumman, NSO Group, Openworks, QinetiQ, Raytheon, Regulus, Rheinmetall, SAAB, SAIC, SAMI Advanced Electronics, Securiton, Sensofusion, Sentrycs, Sentry View Systems, Skycope, Skylock, Skysafe, Truleo.

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~~SNC~~VR De-Escalation Training for Law Enforcement, ~~Sopra~~Corrections ~~Steria~~and Private Security: Our VR Training platform competes with several other companies in the space who offer simulation scenarios, ~~SRC~~including simulated training on the use of both lethal and less lethal alternatives. Our competition in this space includes Adaptive VR, ~~Teledyne~~Apex ~~FLIR~~Officer, ~~Terma~~Hologate, ~~Thales~~InVeris Training Solutions, ~~TRD~~Laser ~~Systems~~Shot, ~~UAVOS~~MILO, ~~Unifly~~OperatorXR, ~~Vector~~Street ~~Solutions~~Smarts VR, ~~Vigilant~~Ti ~~Drone~~Training ~~Defense~~Corp, ~~Vorpal~~V-Armed, ~~Whitefox~~VirTra ~~Defense,~~ and ~~Zen~~Wrap Technologies, among others.

Key competitive factors in this product category include ~~the~~scale ~~breadth and accuracy~~ of ~~detection~~content ~~sensors (e.g.~~library, ~~pan-tilt-zoom~~integration ~~cameras,~~to ~~radar,~~additional ~~and~~sensors ~~acoustic)~~ and ~~multi-sensor fusion approaches~~devices, ~~the~~ease ~~chosen~~of ~~methodology for radio frequency-based detection (e.g.~~use, RFvisual ~~signature~~fidelity ~~matching~~and ~~or RF demodulation)~~realism, ~~integration~~quality of ~~detection~~immersion ~~platforms~~experience ~~with robust mitigation solutions~~ (~~e.g.,~~enhanced ~~jammers,~~by ~~cyber-takeover,~~capabilities ~~kinetic~~such ~~and~~as ~~high-energy),~~eye ~~the~~tracking ~~capacity to improve detection through scale~~ and ~~continuous~~speech ~~exposure to diverse drone makes and models in areas of high drone activity (e.g., urban centers, active war zones~~recognition) and ~~the seamless interoperability with existing security and defense ecosystems~~portability.

~~TASER~~Axon ~~for Professional Users~~Air: Our ~~CEDs compete with a variety of less~~end-~~than~~to-~~lethal~~end ~~alternatives~~drone tomanagement ~~firearms,~~software ~~including~~platform ~~rubber~~competes ~~bullets~~with orseveral ~~rubber~~companies ~~baton~~in ~~rounds,~~the ~~such~~space aswho ~~those~~offer ~~made~~drone byprograms ~~Combined Systems, Inc.; pepper spray~~ and ~~pepper~~flight ~~spray~~management ~~projectiles,~~software ~~such~~solutions. asOur ~~those~~competition ~~made~~in bythis ~~Byrna~~space ~~Technologies~~includes ~~Inc~~Auterion Ltd., ~~(dba~~BRINC ~~Fox~~Drones’ ~~Labs)~~LiveOps, ~~SABRE~~Flock ~~Corporation~~Safety’s ~~and~~Aerodome, ~~Mace~~Motorola ~~Security~~Solutions’ ~~International~~CAPE, ~~Inc.;~~Paladin ~~traditional~~Drones’ ~~stun guns~~Watchtower, ~~such~~Versaterm’s asDroneSense, ~~those made by UZI~~ and ~~Jolt;~~Votix, ~~hand-held~~LLC. ~~remote~~Key ~~restraint~~competitive ~~devices~~factors ~~involving~~in athis ~~tether,~~product ~~such~~category asinclude ~~those~~integration ~~made~~and bycompatibility ~~Wrap~~with ~~Technologies~~various ~~Inc.;~~drone ~~laser~~hardware ~~dazzlers~~providers ~~that~~and ~~cause~~other ~~temporary~~technology ~~blindness,~~systems ~~such~~used ~~as those made~~ by ~~B.E.~~first ~~Meyers~~responders ~~& Co~~(e.~~, Inc~~g.~~; stun grenades~~, ~~such~~digital asevidence ~~those made by Combined Systems~~management), ~~Inc.;~~drone ~~long-range~~program ~~acoustic~~management ~~devices, such as those made by Genasys Inc.;~~ and ~~police~~real-time ~~batons~~situational ~~and~~awareness ~~night sticks~~capabilities, ~~such~~intuitiveness asof ~~those~~the ~~made~~user byinterface, ~~Monadnock~~the ~~and~~level ~~Armament~~of ~~Systems~~training and ~~Procedures,~~customer ~~Inc.~~support ~~TASER~~provided ~~devices~~(particularly ~~offer~~for ~~advanced~~the ~~technology,~~drone-as-first-responder ~~versatility,~~use ~~portability~~case), ~~effectiveness,~~the ~~built-in~~customization ~~accountability systems~~ and ~~low~~flexibility ~~injury~~allowed ~~rates,~~by ~~which~~the ~~enable~~platform us to ~~compete~~meet ~~effectively~~specific ~~against~~operational ~~other~~needs ~~less-than-lethal~~and ~~alternatives.~~requirements ~~TASER~~of ~~devices~~different ~~also~~customers ~~offer connectivity to our cloud network~~(e.g., ~~which~~customizable ~~allows~~flight ~~law~~restrictions) ~~enforcement agencies~~ and ~~other~~the ~~professional~~autonomy ~~users~~capabilities toprovided ~~more~~by ~~effectively~~the ~~manage~~platform ~~their~~(e.g., ~~less-than-lethal~~creation ~~programs and automate use-~~of~~-force~~ ~~reporting~~autonomous missions).

Our indoor tactical drone hardware platform, Sky-Hero, competes with several companies in the space, including BRINC, Cleo Robotics, Darkhive, DJI, Indoor Robotics, XTEND, FLIR and Flock Safety (through its acquisition of Uniform Sierra Aerospace). Key competitive factors in this product category include variety and weight limits of compatible payloads, battery life and associated flight range, maneuverability and size, autonomy and onboard intelligence (including ability to navigate in GPS denied environments), sensor and imaging technology, durability and robustness of the drone, cost and maintenance required, reliability and security of communication and control systems, the simplicity of the drone piloting user interface and the training required to operate the drones.

Dedrone: The counter drone space is fast growing and very fragmented. Within it, Dedrone competes with Advanced Protection Systems, Anduril, ApolloShield, ARTSys360, Aselsan, Belgian Advanced Technology Systems, Big Bang Boom Solutions, Bligther Surveillance Systems, BlueHalo, BSS Holland, CACI, Cerbair, Chess Dynamics, DEFSYS, Department 13, D-Fend, DroneDefence, Droneshield, Dynamite Global Strategies, DZYNE Technologies, EDGE, EdgeSource, Elbit Systems, ELT Group, ESG, Fortem Technologies, FN Herstal, General Atomics, Gradiant, Guardion, Havelsan, Hensoldt, Hertz New Technologies, IEC Infrared Systems, Indra, L3 Harris, Leidos, Leonardo DRS, LiveLink Aerospace, Lockheed Martin, Marduk, MBDA, MC2 Technologies, Meteksan Savunma, Metis, MSI Defense Systems, MyDefence, Northrop Grumman, NSO Group, Openworks, QinetiQ, Raytheon, Regulus, Rheinmetall, SAAB, SAIC, SAMI Advanced Electronics, Securiton, Sensofusion, Sentrycs, Sentry View Systems, Skycope, Skylock, Skysafe, SNC, Sopra Steria, SRC, Teledyne FLIR, Terma, Thales, TRD Systems, UAVOS, Unifly, Vector Solutions, Vigilant Drone Defense, Vorpal, Whitefox Defense, and Zen Technologies, among others.

Key competitive factors in this product category include the breadth and accuracy of detection sensors (e.g., pan-tilt-zoom cameras, radar, and acoustic) and multi-sensor fusion approaches, the chosen methodology for radio frequency-based detection (e.g., radio frequency signature matching or demodulation), integration of detection platforms with robust mitigation solutions (e.g., jammers, cyber-takeover, kinetic and high-energy), the capacity to improve detection through scale and continuous exposure to diverse drone makes and models in areas of high drone activity (e.g., urban centers, active war zones) and the seamless interoperability with existing security and defense ecosystems.

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TASER for Professional Users: Our CEDs compete with a variety of less-than-lethal alternatives to firearms, including rubber bullets or rubber baton rounds, such as those made by Combined Systems, Inc.; pepper spray and pepper spray projectiles, such as those made by Byrna Technologies, Condor Non-Lethal Technologies, FN Herstal, PepperBall, and SABRE Corporation and Mace Security International; traditional stun guns, such as those made by UZI and Jolt; hand-held remote restraint devices involving a tether, such as those made by Wrap Technologies; laser dazzlers that cause temporary blindness, such as those made by B.E. Meyers & Co; stun grenades, such as those made by Combined Systems; long-range acoustic devices, such as those made by Genasys; and police batons and night sticks, such as those made by Monadnock and Armament Systems and Procedures. TASER devices offer advanced technology, versatility, portability, effectiveness, built-in accountability systems and low injury rates, which enable us to compete effectively against other less-than-lethal alternatives. TASER devices also offer connectivity to our cloud network, which allows law enforcement agencies and other professional users to more effectively manage their less-than-lethal programs and automate use-of-force reporting.

The key competitive factors in this product category include a device’s accuracy, effectiveness, reputation, safety, cost, ease of use, and exceptional customer experience. The design maturity of the TASER platform, as well as our development and sale of a multi-shot device, are also key competitive differentiators. We are aware of competitors providing competing CED products primarily outside of the United States.

TASER for Personal Safety: In the private citizen space, TASER devices compete with firearms and other less-than-lethal self-defense options such as stun guns and pepper spray-based products. Leading competitors in the less-than-lethal space include Byrna Technologies, Inc., Mace, PepperBall, SABRE, Salt Supply Co. and Vipertek. The TASER StrikeLight competes in the flashlight category, in which there are dozens, if not hundreds, of competitors, including tactical flashlight providers with and without stun gun capabilities.

~~TASER~~ Bolt 2 and ~~TASER~~ Pulse 2 are not stun guns, and have different capabilities, including neuromuscular incapacitation functionality. The broader market for personal safety and home defense is far-reaching, and categories range from threat detection and accountability (e.g., dash and doorbell cameras), to home security (e.g., home alarms, locks and response services) to personal defense (e.g., firearms, stun guns, TASER devices, pepper spray, tactical flashlights and personal alarms), to personal tracking and emergency notification mobile applications.

The primary benefit of TASER devices is in less-than-lethal incapacitation. Other competitive factors include a device’s cost, effectiveness, safety, ease of use, and available training options.

Non-Axon trademarks are property of their respective owners. Axon Air, Axon Evidence, Axon Fusus, Dedrone, Draft One, TASER, TASER Bolt, TASER Pulse, and StrikeLight are trademarks of Axon Enterprise, Inc., some of which are registered in the U.S. and other countries.

Seasonality

Our business operations are influenced by ~~municipal~~customer budget and technology adoption cycles. Additionally, new product introductions can significantly impact the cadence of net sales, product costs and operating expenses. ~~Municipal~~A ~~law~~larger ~~enforcement~~share ~~budgets tend to feature a mix~~ of ~~fiscal~~our ~~years~~annual ~~that~~bookings ~~end~~traditionally occurs in ~~either~~the ~~June,~~fourth ~~September or December, while U~~quarter.S. ~~federal budget year end is in September.~~ However, historical seasonal patterns, ~~municipal~~customer budgets or historical patterns of product introductions should not be considered reliable indicators of our future net sales or financial performance.

Governmental Regulation

WeU.S. ~~are~~and ~~subject~~foreign ~~to a variety of~~ laws and regulations ingovern ~~the United States and abroad that involve~~ matters central to our business, including ~~laws~~privacy and ~~regulations~~data ~~related~~protection; ~~to:~~regulation ~~privacy~~of ~~and~~certain ~~data~~of ~~protection,~~our ~~security,~~conducted ~~retention~~energy ~~and~~devices ~~deletion~~(“CEDs”) as firearms; ~~rights~~telecommunications ofand ~~publicity~~spectrum use; ~~content~~export controls; ~~intellectual~~government ~~property~~procurement; ~~regulation~~environmental ofand ~~certain~~sustainability ofrequirements; ~~our~~economic ~~CEDs~~and astrade ~~firearms~~restrictions; ~~advertising;~~and ~~marketing;~~other ~~distribution;~~regulatory ~~electronic~~regimes ~~contracts~~applicable to our products and ~~other~~operations. ~~communications;~~The ~~competition;~~application ~~consumer~~and ~~protection;~~interpretation ~~telecommunications;~~of ~~product~~these ~~liability;~~laws ~~taxation;~~are ~~labor~~subject to change and ~~employment;~~may ~~sustainability;~~vary ~~economic~~across orjurisdictions. ~~other~~See ~~trade~~“Item ~~prohibitions~~1A. orRisk ~~sanctions;~~Factors ~~securities;~~– Legal and ~~online~~Compliance Risks” for additional information.

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payment services. A number of federal and state legislative proposals in the United States could impose new obligations in areas affecting our business. Foreign laws and regulations can impose different obligations or be more restrictive than those in the United States.

These U.S. federal and state and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices. See “Item 1A. Risk Factors – Legal and Compliance Risks” for additional details.

Radio Spectrum and Unmanned Aerial and Ground-Based Robotic Devices

Certain of our products utilize radio spectrum to provide wireless voice, data and video communications services. The allocation of spectrum is regulated in the United States and other countries and limited spectrum space is allocated to wireless services and specifically to public safety users. We manufacture and market products in spectrum bands already made available by regulatory bodies. If current products do not comply with the regulations set forth by these regulatory bodies, we may be unable to sell our products or could incur penalties. Our results could be negatively affected by the rules and regulations adopted from time to time by the U.S. Federal Communications Commission (“FCC”), Innovation, Science and Economic Development Canada, the European Union Directorate-General for Environment or regulatory bodies in other countries. Regulatory changes in current spectrum bands may also require modifications to some of our products so they can continue to be manufactured and marketed.

Axon body cameras, docks, Axon Fleet vehicle cameras and Axon Signal devices are subject to the FCC’s rules and regulations in the United States, as well as rules and regulations as applicable outside of the United States. These regulations affect our CEDs with Axon Signal technology, including the TASER 7 CED, Signal Performance Power Magazine (“SPPM”), the TASER 10 CED, and future CEDs implementing wireless technology. Compliance with government regulations could increase our operations and product costs and impact our future financial results.

Additionally, some of our products depend on drones or other unmanned aerial and ground-based systems that operate on the radio spectrum. We have also recently started offering hardware sensors combined with software to detect, identify, track and mitigate drones through our acquisition of Dedrone. The FCC, the Federal Aviation Administration and other agencies at the federal, state and local levels (as well as in foreign jurisdictions) are beginning to address some of the numerous certification, regulatory and legal challenges associated with drones, but a comprehensive set of standards and enforcement procedures has yet to be developed. Changes to the regulation of drones or other unmanned aerial systems may impact our future financial results.

Axon and TASER CEDs

For our CED products, we rely on the opinions of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), including the determination that a device that does not expel projectiles by the action of an explosive is not classified as a firearm. Changes in laws, regulations, and interpretations outside of our control may result in our products being classified or reclassified as firearms. If this were to occur, our private citizen demand could be substantially reduced because consumers would be required to comply with federal, state or local firearm transfer requirements prior to purchasing our product. For additional details, see “Item 1A. Risk Factors – Legal and Compliance Risks.”

Federal regulation of sales in the United States: The majority of our currently offered CEDs are not classified as firearms regulated by the ATF. However, the ATF regulates the TASER 10 CED as a firearm under the Gun Control Act of 1968 due to a technological advancement specific to the propulsion design of the TASER 10 CED cartridges. In the event we make the TASER 10 CED available to our private citizen and enterprise customers, demand could be substantially reduced as a result of this classification because non-governmental end-users would be required to comply with federal, state or local firearm transfer requirements prior to purchasing the TASER 10 CED. In addition, the implications of such classification on use-of-force standards and regulations could impact our ability to sell the TASER 10 CED to law enforcement and government entities. Because Axon must maintain a federal firearms license to manufacture and sell the TASER 10 CED, we are subject to periodic compliance inspections by the ATF. License violations discovered by the ATF can result in fines, penalties, warning letters or license revocation, leading to disruptions in operations. Further, we are required to administer, track and remit firearm and ammunition excise taxes as applicable.

Our CED products are also subject to testing, safety and other standards by organizations such as the American National Standards Institute, the International Electrotechnical Commission, the National Institute of Standards and

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~~Technology~~Radio ~~and~~Spectrum ~~Underwriters Laboratories. These regulations also affect CEDs with Axon Signal technology, including SPPM technology,~~ and ~~the~~Unmanned ~~TASER 7 and TASER 10 battery packs.~~Systems

~~Federal~~Certain ~~regulation~~ of ~~international~~our ~~sales:~~products ~~Our~~use ~~CEDs~~radio ~~are~~spectrum ~~considered~~to aprovide ~~“crime~~wireless ~~control” product by the U.S. Department of Commerce (“DOC”) for export directly from the United States~~voice, ~~which~~data ~~requires~~and usvideo tocommunications ~~obtain~~and anare ~~export~~subject ~~license from the DOC for the export of our CED devices from the United States~~ to ~~any country other than Canada~~U.S. ~~Future products~~ and ~~services~~foreign ~~may~~regulations ~~require~~governing ~~classifications~~spectrum ~~from~~use, ~~the~~equipment ~~DOC~~authorization, ~~before~~and ~~they~~operating ~~may be shipped internationally~~requirements. ~~Our~~Products ~~inability~~incorporating towireless ~~obtain~~technology ~~DOC~~include ~~export~~Axon ~~licenses~~Signal-enabled orCEDs ~~classifications on a timely basis for sales of our products~~ and ~~services~~accessories tosuch ~~our~~as ~~international customers could significantly and adversely affect our international sales. Although~~ the TASER 107 CED, isSignal ~~regulated~~Performance byPower ~~the~~Magazine ~~ATF for domestic sales~~(“SPPM”), ~~the DOC has ruled that the product’s unique propulsion design has no impact on its export classification~~ and ~~the export classification of the~~ TASER 10 CED, ~~remains~~as ~~consistent~~well ~~with~~as ~~all~~future ~~other~~wireless-enabled ~~TASER CED models~~CEDs.

~~Federal~~We ~~regulation of foreign national employees: Our CED development and production is~~ also ~~considered~~offer ~~controlled~~unmanned ~~“technology”~~aerial ~~by the DOC~~ and isground-based ~~categorized~~systems, as awell ~~“deemed~~as ~~export”~~products ~~for~~that ~~any~~detect, ~~foreign~~identify, ~~national~~track ~~employees~~or ~~exposed~~mitigate tosuch ~~the technology within the United States. Consequently~~systems, weall ~~must~~of ~~obtain~~which ~~export~~operate ~~licenses~~on ~~from~~radio ~~the~~spectrum ~~DOC~~and ~~for any deemed export within the United States made to a foreign national employee exposed to the controlled technology. Deemed export licenses~~ are subject to ~~DOC~~evolving ~~approvals~~regulatory ~~and~~frameworks, ~~issued~~many ~~licenses~~of ~~require~~which ~~annual~~continue ~~status reports for the stated employees. Inability~~ to ~~obtain~~develop ~~proper~~without ~~licensing~~comprehensive ~~could curtail our ability to execute R&D and production related to CED technology~~standards.

~~State~~Changes ~~and~~in ~~local~~spectrum ~~regulation: Our CEDs are controlled~~allocation, ~~restricted~~licensing orrequirements, ~~less~~equipment ~~frequently~~authorization standards, ~~prohibited~~operating ~~by some state and local governments. Other jurisdictions may ban or restrict the sale of our TASER-branded devices~~restrictions, or ~~restrict~~regulatory ~~their~~interpretations ~~use~~could ~~through~~delay ~~changes~~product tocertification ~~use-of-force laws~~ or ~~regulations~~deployment, ~~and~~require ~~our~~ product ~~sales~~modification ~~may~~or berecertification, ~~significantly~~increase ~~affected~~compliance bycosts, ~~additional~~limit ~~state~~functionality, ~~county~~or ~~and~~restrict ~~city~~sales ~~governmental regulation. The change~~ in ~~the~~certain ~~TASER~~jurisdictions, 10which ~~CED's~~could ~~propulsion~~adversely ~~design~~affect ~~may~~our ~~impact~~business ~~how the TASER 10 CED is regulated at the state~~ and~~/or~~ ~~local~~financial ~~level depending on each state’s firearm laws~~results.

~~International~~CED ~~regulation~~Products ~~of foreign imports~~ and ~~sales:~~Related Certain jurisdictions prohibit, restrict or require a permit for the importation, sale, possession or use of our CEDs (and other select Axon products), including in some countries by law enforcement agencies, impacting our international sales opportunities.Operations

~~U.S.~~Our ~~and~~CEDs ~~international~~are regulation of component movements globally: We rely on a global supply chain of components across our product lines with most final assembly occurring in the United States. Export of these components is subject to ~~shifting~~federal, ~~regulatory~~state, ~~landscapes~~local, ~~imposed by both foreign~~ and ~~U.S.~~international ~~authorities.~~laws ~~Abrupt~~that ~~changes~~affect totheir ~~these~~classification, ~~regulations~~sale, ~~can result in delays or interruptions to final product supplies. Additionally~~export, ~~ATF~~and ~~regulation of certain imports of the TASER 10 CED components may impact our supply chain agility~~use.

~~International~~U.S. ~~regulation~~Federal Regulation: Most of ~~foreign-based~~our ~~operations:~~currently Weoffered ~~maintain~~CEDs ~~foreign~~are ~~operations~~not inclassified ~~several~~as ~~countries~~firearms ~~globally~~by ~~for~~the ~~purposes~~U.S. Bureau of ~~logistics~~Alcohol, ~~selling~~Tobacco, ~~general~~Firearms and ~~administrative~~Explosives (“~~SG&A~~ATF”) ~~services,~~because ~~and~~they ~~R&D~~do ~~support.~~not ~~Depending~~expel onprojectiles ~~these~~by ~~activities,~~the ~~applicable~~action ~~regulations~~of ~~may~~an ~~include~~explosive. ~~business~~However, ~~activity~~the ~~licensing~~TASER ~~and~~10 ~~registration,~~CED ~~import~~is ~~permits~~classified ~~and~~as ~~recordkeeping,~~a ~~warehousing~~firearm ~~and~~under ~~storage~~the ~~security~~Gun ~~and~~Control ~~permitting,~~Act ~~and~~of ~~government~~1968 ~~reporting.~~due ~~Any failure~~ to ~~comply~~its ~~with~~propulsion ~~these~~design. ~~requirements~~Accordingly, ~~could~~the ~~impact~~Company ~~our~~must ~~ability~~maintain toa ~~sell,~~federal ~~support~~firearms orlicense ~~develop~~to ~~our~~manufacture ~~products~~ and ~~services~~sell ~~both~~the ~~internationally~~TASER 10 CED and inis ~~the~~subject ~~United~~to ~~States~~ATF compliance inspections.

WeIf ~~offer~~the ~~products~~TASER ~~and~~10 ~~services~~CED ~~that~~is ~~some~~made ~~jurisdictions~~available ~~determine~~ to beprivate ~~“prohibited”~~citizen or ~~“controlled”~~enterprise ~~weapons under applicable local arms brokering regulations. Consequently~~customers, ~~jurisdictions~~demand ~~with~~could ~~such~~be ~~regulations,~~reduced ~~particularly~~because ~~those~~purchasers ~~that~~would ~~are~~be ~~signatories~~required to ~~the~~comply ~~Arms~~with ~~Trade~~applicable ~~Treaty,~~firearm ~~can~~transfer ~~require certain covered groups and our employees to receive weapons brokering licenses~~requirements. ~~Brokering~~Changes ~~license~~in ~~issuance~~laws, ~~and~~regulations, ~~approval~~or isinterpretations ~~not~~could ~~always~~result ~~guaranteed~~in ~~and~~additional isproducts ~~subject~~being toclassified ~~the applicable policy of the approving jurisdiction. Denial~~ or ~~limitations~~reclassified onas ~~brokering~~firearms, ~~activity~~which ~~can~~could ~~impact~~adversely ~~the~~affect ~~ability of individual employees to proceed with weapons brokering activity in certain instances~~sales.

Export Controls and International Regulation: Our CEDs are classified as “crime control” products by the U.S. Department of Commerce (“DOC”), and exports from the U.S. generally require a DOC export license, except for sales to Canada. Delays in obtaining export licenses or classifications could adversely affect international sales. Although the TASER 10 CED is regulated by the ATF for domestic sales, its export classification remains consistent with other TASER CED models.

Certain aspects of CED development and production constitute controlled “technology” under U.S. export regulations. Access by foreign national employees within the U.S. may therefore require “deemed export” licenses. Failure to obtain required licenses could impair research, development, or production activities.

Foreign jurisdictions may restrict, regulate, or prohibit the importation, sale, possession, or use of CEDs. Certain jurisdictions treat our products as controlled or prohibited weapons under applicable arms brokering laws, which may require licenses that are discretionary and not guaranteed.

State and Local Regulation and Supply Chain Regulation: State and local governments may restrict the sale or use of CEDs, and changes in use-of-force laws or firearm classifications may affect demand, particularly for products such as the TASER 10 CED.

Our global supply chain and foreign operations are subject to evolving regulatory requirements, including import controls, licensing, recordkeeping, modern slavery and human rights disclosure laws, and related compliance obligations.

Federal Procurement Regulations

Our U.S. government business is subject to ~~specific~~ procurement regulations, ~~such~~including as the Federal Acquisition Regulation, and arelated ~~variety of~~ socioeconomic and ~~other~~statutory requirements ~~imposed by executive order and statute~~. These requirements, ~~although customary in U.S. government contracts,~~ increase ~~our performance and~~ compliance costs. ~~These costs might increase in the future, thereby reducing our margins, which could have an adverse effect on our business, financial condition, results of operations~~ and ~~cash~~may ~~flows.~~affect ~~In addition,~~ the ~~U.S.~~terms ~~government will likely continue to implement new requirements focused on initiatives to drive efficiencies, affordability~~ and ~~cost~~conditions ~~savings~~under ~~and~~which ~~other~~we ~~changes~~provide toproducts ~~its procurement practices to meet governmental interests. These initiatives~~ and ~~changes~~services to ~~procurement~~government ~~practices may~~ customers.

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~~change~~Privacy ~~the way U.S. government contracts are solicited, negotiated~~ and ~~managed,~~AI which may affect whether and how we pursue opportunities to provide our products and services to the U.S. government, including the terms and conditions under which we do so, which may have an adverse impact on our business, financial condition, results of operations, and cash flows.Regulation

~~Failure~~We toare ~~comply~~subject ~~with~~to ~~applicable~~evolving ~~regulations~~U.S. and ~~requirements~~foreign ~~could~~laws ~~lead~~governing tothe ~~contractual~~collection, ~~civil~~processing, ~~criminal~~storage, and ~~administrative~~transfer ~~remedies~~of ~~such~~personal asand ~~termination,~~sensitive ~~fines~~information, ~~penalties,~~as ~~repayments~~well oras ~~compensatory~~the ordevelopment ~~treble~~and ~~damages,~~deployment ~~or suspension or debarment from U.S. government contracting or subcontracting for a period~~ of ~~time~~AI ~~or indefinitely~~systems. ~~Among~~AI ~~the~~capabilities ~~causes for suspension or debarment~~ are ~~violations~~integrated ofacross ~~various~~our ~~laws~~product portfolio, and ~~regulations,~~we ~~including~~market ~~those~~AI-enabled ~~related~~functionality to ~~procurement~~customers ~~integrity,~~as ~~export~~part ~~control, U.S. government security, employment practices, protection~~ of ~~the~~our ~~environment,~~long-term ~~accuracy~~product ~~of records, proper recording of costs and foreign corruption~~strategy. ~~The~~As ~~termination of~~ a ~~U.S. government contract or relationship as a~~ result, ofregulatory ~~any~~developments ofaffecting ~~these~~AI ~~violations~~systems ~~would~~may ~~have~~directly ~~an adverse~~ impact on our ~~operations~~products and ~~could have an adverse effect on our standing and eligibility for future U~~services.~~S. government contracts.~~

~~Privacy~~In ~~Regulations~~providing solutions to public safety agencies, we process sensitive law enforcement and evidentiary information, increasing the potential impact of unauthorized access, disclosure, or misuse.

WeCertain ~~are~~jurisdictions ~~subject~~restrict tocross-border various U.S. and foreign laws and regulations associated with the collection, processing, storage and transmission of personally identifiable information and other sensitive and confidential information. This data istransfers wide ranging and relates to our employees, customers and other third parties, including the subjects of law enforcement. Our compliance obligations include those prescribed under laws and regulations that dictate whether, how and under what circumstances we can receive, control, process, hold and/or ~~transfer~~impose ~~certain~~ data ~~that~~localization ~~is critical to our operations~~requirements, ~~including data shared between countries or regions in~~ which we operate and data shared among our products and services. If one or more of the legal mechanisms for transferring data from other countries to the United States is invalidated, if we are unable to transfer data between and among countries and regions in which we operate, or if we are prohibited from sharing data among our products and services, it could affect ~~the manner in which we provide~~ our ~~products and services or adversely affect our financial results~~operations. Countries may also pass legislation implementing data protection requirements or requiring local storage and processing of data or similar requirements that could increase the cost and complexity of delivering our products and services and expose us to significant penalties for non-compliance. For example, the European ~~Parliament~~Union’s ~~adopted~~(“EU”) ~~the~~ General Data Protection Regulation, ~~effective~~and ~~May~~AI ~~2018,~~Act ~~that~~impose ~~extended~~compliance ~~the~~obligations ~~scope~~relating ~~of European privacy laws~~ to ~~any entity that controls or processes~~ personal data ~~of European Union residents in connection with the offer of goods or services or the monitoring of behavior~~ and ~~imposes~~AI ~~compliance~~system ~~obligations~~deployment. ~~concerning~~In the handling of personal data. Further, Vietnam's Personal Data Protection Decree, which entered into force July 1, 2023, applies to organizations (wherever based) so long as they participate in personal data processing in Vietnam. We are also subject to U.S., laws ~~and~~such ~~regulations,~~as ~~including~~ the California Privacy Rights Act, ~~which~~provide ~~provides~~ enhanced consumer protections ~~for~~and ~~California~~create ~~residents, a~~ private ~~right~~rights of action for certain data breaches. ~~and~~Compliance ~~statutory~~with ~~ﬁnes~~these and ~~damages~~similar ~~for~~laws ~~data~~has ~~breaches~~required, orand ~~other~~may ~~California~~continue ~~Consumer~~to ~~Privacy Act violations~~require, assignificant ~~well~~resources asand amay ~~requirement~~expose ~~of “reasonable” cybersecurity, which could subject~~ us to ~~additional~~regulatory ~~compliance costs as well as potential fines~~enforcement, ~~individual claims~~litigation, ~~class actions~~ and ~~commercial~~other ~~liabilities~~liability.

Any inability, or perceived inability, by us to adequately address privacy concerns, or comply with applicable laws, regulations, policies, industry standards and guidance, contractual obligations or other legal obligations, even if unfounded, could result in signiﬁcant regulatory and third-party liability, increased costs, disruption of our business and operations, and a loss of conﬁdence and other reputational damage. Furthermore, as new privacy laws and regulations are implemented, the time and resources needed for us to comply with such laws and regulations continues to increase and become a signiﬁcant compliance workstream.

Environmental Regulations

We are subject to ~~various~~ U.S. ~~federal, state, local~~ and foreign environmental laws ~~and~~that ~~regulations~~restrict ~~governing the environment, including restricting the presence of~~ certain substances in our products and ~~making~~may usimpose ~~financially responsible for the collection, treatment, recycling and disposal~~ end-of-life ~~such~~management ~~products~~obligations. ~~The~~These ~~European~~include ~~Union~~EU ~~has~~directives ~~published~~governing ~~Directives on the restriction of certain~~ hazardous substances ~~in electronic~~ and ~~electrical~~waste ~~equipment (the “RoHS Directive”) and on electronic and~~ electrical waste management (the “WEEE Directive”). The RoHS Directive restricts the use of a number of substances, including lead. The WEEE Directive directs members of the European Union to enact laws, regulations and ~~administrative provisions to ensure that producers of electric and~~ electronic equipment ~~are financially responsible for the collection~~, ~~recycling,~~as ~~treatment~~well ~~and~~as ~~environmentally responsible disposal of certain products sold into the European Union. In addition,~~ similar ~~environmental~~regimes ~~legislation has been enacted~~ in other jurisdictions~~, including the United States (under federal and state laws) and other countries~~.

InRegulators ~~addition,~~are ~~the~~increasingly ~~European~~focused ~~Union~~on ~~has~~per- ~~defined~~and apolyfluoroalkyl ~~regulation~~substances ~~for the registration~~(“PFAS”), ~~evaluation,~~which ~~authorization~~may ~~and~~be ~~restriction~~present ofin ~~chemicals~~certain ~~that~~products. ~~places~~Laws ~~responsibility~~addressing onreporting, ~~companies~~restriction, toor ~~manage~~phase-out ~~the~~of ~~risks~~PFAS ~~from~~are ~~chemicals~~under ~~contained~~consideration inor ~~products~~being ~~and to~~ implemented.

11Additional sustainability and climate-related disclosure requirements have been enacted or proposed in jurisdictions in which we operate, including the EU Corporate Sustainability Reporting Directive, the UK Streamlined Energy and Carbon Reporting regime, and California SB 253 and SB 261.

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provide safety information about such substances. Manufacturers and importers are required to gather information on the properties of the chemical substances in their products and provide for their safe handling. As of January 5, 2021, companies supplying products in the European Union containing substances of very high concern as identified by the European Union have to submit information on these products to the European Chemicals Agency. The information in their database is then made available to waste operators and consumers.

Other countries have adopted chemical restrictions regulations, including the United States, Canada and Australia. For example, U.S. governmental authorities are increasingly focused on preventing environmental contamination from per-and polyfluoroalkyl substances (“PFAS”), which may be contained in certain Axon products. Federal and state governments and agencies are in various stages of considering and/or implementing laws and regulations requiring the reporting, restriction and/or phase-out of PFAS in products.

In addition, further environmental or climate change disclosure legislation may be enacted in the jurisdictions in which we operate, including the United States (under federal and state laws) and other countries, the cumulative impact of which could be significant. For example, the European Union’s Corporate Sustainability Reporting Directive and the United Kingdom’s Streamlined Energy and Carbon Reporting introduce additional due diligence and disclosure requirements addressing sustainability that apply or we expect will apply, as applicable, to us over the coming years. Further, in September 2023, California passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act, requiring increased climate-related reporting. While currently stayed, the SEC’s recently adopted climate-related reporting requirements, to the extent they become effective, will also require extensive additional disclosure regarding sustainability.

These requirements will, and changes in environmental or climate change disclosure laws, regulations or rules could, lead to increased costs of compliance, including remediations of any discovered issues and changes to our operations. Such changes could include those related to our manufacturing practices and/or product designs, which may be significant and could negatively impact our business, results of operations, financial condition and competitive position. Any failures to comply could result in governmental action, including the imposition of fines, or demands or orders that we modify or cease existing business practices, which could adversely affect our financial results.

Human Capital Resources

~~Our~~We ~~success~~attract, ~~depends~~retain onand ~~the~~motivate ~~continued~~top ~~service~~talent ofby ~~our~~offering ~~employees~~equitable ~~and~~opportunities onfor ~~our~~growth ~~ability~~and todevelopment, ~~continue~~supported toby ~~attract,~~strong ~~retain~~compensation and ~~motivate top talent~~benefits. ToAs ~~achieve~~of ~~this~~December 31, 2025, we ~~strive~~had tomore ~~foster~~than a5,100 ~~diverse~~full-time employees and ~~inclusive~~more ~~environment~~than ~~at Axon~~1,200 ~~offering~~temporary ~~equitable~~employees ~~opportunities~~(which ~~for~~include ~~growth~~contractors, interns and ~~development~~individual consultants). During 2025, ~~supported~~the bynumber ~~strong~~of ~~compensation~~our ~~and~~full-time ~~benefits~~employees ~~and~~increased by ~~programs~~approximately ~~that~~1,000 ~~build~~or ~~connections~~24%, ~~between~~primarily in our ~~employees~~sales and ~~their~~R&D ~~communities~~organizations. ~~Axon’s~~Employee ~~mission~~growth iswas ~~central~~further todriven by our ~~recruiting~~acquisitions ~~and~~that ~~retention~~were ~~efforts~~completed in the year.

AsOur ofglobal ~~December 31,~~benefits ~~2024,~~include webroad-based ~~had~~stock ~~more~~grants ~~than~~and 4performance-based bonuses,~~100~~ ~~full-time~~comprehensive ~~employees~~healthcare and ~~more~~retirement ~~than~~benefits, ~~870~~paid ~~temporary~~parental ~~employees~~and ~~(which~~family ~~include contractors~~leave, ~~interns~~commuter ~~and individual consultants). During 2024~~benefits, ~~the~~unlimited ~~number~~paid ~~of our full-~~time ~~employees~~off ~~increased~~for byU.S. ~~approximately~~exempt ~~770 or 23%~~employees, ~~primarily~~and inflexible ~~our~~leave ~~R&D,~~options ~~operations~~for non-exempt and ~~sales~~international ~~organizations~~employees. ~~Employee~~We ~~growth~~review ~~was~~our ~~further~~programs ~~driven~~annually byto ~~our~~ensure ~~acquisitions~~they ~~that~~align ~~were~~with ~~completed~~market practices in the ~~year~~industries and countries where we operate.

We ~~are~~hire, ~~committed~~evaluate, toand ~~providing~~promote aemployees ~~comprehensive~~based ~~and~~on ~~competitive~~merit, ~~total~~skills, ~~rewards~~and ~~package~~performance. toWe ~~attract,~~prioritize ~~motivate,~~career advancement and ~~retain~~internal ~~top~~mobility ~~talent.~~through Wementorship ~~review~~and ~~our~~rotational programs, ~~annually~~as towell ~~ensure~~as ~~they~~access ~~align~~to ~~with~~self-directed ~~market~~virtual ~~practices~~training inplatforms, role-specific on-the-job ~~industries~~learning opportunities, and ~~countries~~leadership ~~where~~and wetechnical ~~operate~~skill-building workshops. Our ~~global~~focus ~~benefits~~on ~~include~~development, ~~broad-based~~combined ~~stock~~with ~~grants~~competitive ~~and~~benefits, ~~performance-based~~enabled ~~bonuses,~~us ~~comprehensive~~to ~~healthcare~~close ~~and~~the ~~retirement~~year ~~benefits,~~with ~~paid~~a ~~parental~~regrettable ~~and~~attrition ~~family~~rate2 ~~leave,~~of ~~commuter~~less ~~benefits~~than 1.0%, ~~unlimited~~below ~~paid~~our ~~time~~annual ~~off~~goal ~~for~~of U1.S0%. ~~exempt~~Employees ~~employees,~~reported ~~and~~a ~~flexible~~higher ~~leave~~than ~~options~~88% satisfaction score for ~~non-exempt~~feeling ~~and~~proud ~~international~~to ~~employees.~~work ~~Additionally,~~at weAxon ~~provide~~during ~~free~~our ~~access~~2025 toemployee ~~virtual~~engagement ~~coaching~~survey and ~~therapy~~an ~~through~~84% ~~Modern~~satisfaction ~~Health,~~score ason ~~well~~recommending Axon as ~~support~~a ~~programs~~great ~~for~~place ~~employees~~to ~~navigating significant life events~~work.

WeThe ~~prioritize~~health ~~career advancement~~ and ~~internal~~safety ~~mobility~~of byour ~~encouraging~~ employees tois ~~explore~~of ~~traditional~~utmost ~~career paths or pursue cross-functional opportunities that often result in promotions~~importance. ~~Employees~~We ~~are~~conduct ~~supported~~regular ~~through~~audits ~~structured mentorship and rotational programs, as well as access~~ to ~~self-directed~~ensure ~~virtual~~compliance ~~training~~with ~~platforms,~~our ~~role-specific~~health ~~on-the-job~~and ~~learning~~safety ~~opportunities,~~guidelines and ~~leadership~~regulatory ~~and technical skill-building workshops~~requirements. Our ~~focus~~ultimate ongoal ~~development,~~is ~~combined with competitive benefits, enabled us~~ to ~~close~~achieve ~~the year with~~ a ~~regrettable~~level ~~attrition rate2~~ of ~~less~~work-related ~~than~~injuries ~~1%,~~as ~~well~~close ~~below~~to ~~our~~zero ~~annual~~as ~~goal~~possible ofthrough ~~1.5%.~~continuous ~~Employees~~investment ~~reported~~in ~~a higher than 89% satisfaction score for feeling proud to work at Axon during~~ our ~~2024~~safety ~~employee engagement survey and an 86% satisfaction score on recommending Axon as a great place to work~~programs.

2 Regrettable attrition is defined as rolling 12-month attrition of employees rated as top performing in the prior performance rating cycle.

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We are committed to maintaining a workplace where all employees feel respected and valued. We hire, evaluate, and promote employees based on merit, skills, and performance, with zero tolerance for harassment, retaliation, violence, or discrimination based on race, color, religion, national origin, gender, sexual orientation, gender identity, gender expression, age, disability, or veteran status. To reinforce this commitment, all employees complete anti-harassment training during onboarding and repeat it annually. Leadership training is provided throughout the year to ensure managers are equipped to address and resolve employee concerns effectively.

Health and Safety

The health and safety of our employees is of utmost importance to us. We conduct regular self-assessments and audits to ensure compliance with our health and safety guidelines and regulatory requirements. Our ultimate goal is to achieve a level of work-related injuries as close to zero as possible through continuous investment in our safety programs. We provide protective gear (e.g., eye protection, masks and gloves) as required by applicable standards and as appropriate given employee job duties.

Corporate Information

We were incorporated in Arizona in September 1993 as ICER Corporation. We changed our name to AIR TASER, Inc. in December 1993 and to TASER International, Incorporated in April 1998. In January 2001, we reincorporated in Delaware as TASER International, Inc. and, in April 2017, changed our name to Axon Enterprise, Inc.

Available Information

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports filed with or furnished to the SEC are available free of charge on our website at http://investor.axon.com as soon as reasonably practicable after we electronically file with or furnish to the SEC such material. We routinely post information that may be important to investors on our website at http://investor.axon.com and https://www.axon.com/newsroom, and we use ~~this~~these ~~website~~websites ~~address~~ as a means of disclosing material information to the public in a broad, non-exclusionary manner for purposes of the SEC’s Regulation Fair Disclosure (Reg FD). The information on our ~~website~~websites, including information about our trademarks, is not incorporated by reference into or otherwise a part of this Annual Report on Form 10-K. The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

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Item 1A. Risk Factors

Risk Factor Summary

The following is only a summary of the principal risks that may materially adversely affect our business, financial condition, results of operations and cash flows. The following should be read in conjunction with the more complete discussion of the risks we face, which are set forth more fully below.

Strategic Risks

•We substantially depend on continued acceptance of our products and services by law enforcement agencies ~~throughout~~worldwide, ~~the~~and ~~world.~~any Ifreduction ~~law~~in ~~enforcement~~demand ~~agencies~~could domaterially ~~not~~adversely ~~continue~~affect ~~to purchase and use~~ our ~~products and services, our~~ business ~~prospects, operating results and financial condition will be materially adversely affected~~.

•We substantially depend on sales of our CEDs, and if these products do not continue to be widely accepted, our ~~business~~growth prospects, operating results and financial condition will be diminished.

•If we are unable to design, introduce, sell and deploy new products or new product features successfully, our business and financial results could be adversely affected.

•We face risks associated with rapid technological change and new competing products.

•Our future success depends on our ability to expand sales through direct sales and distributors and our inability to increase direct sales or recruit new distributors would negatively affect our sales.

•Negative publicity could adversely impact sales, which could cause our revenues or operating results to decline.

•Acquisitions of, or investments in, other products, technologies or businesses could disrupt our business, dilute shareholder value, ~~and~~or adversely affect our operating results.

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•We may not successfully manage our growth or plan for future growth.

•We depend on the services of our executive officers, including Patrick W. Smith, our Chief Executive Officer. Our failure to retain executive officers could adversely impact our business.

Operational Risks

•Unavailability of materials or higher costs could adversely affect our financial results.

•Material adverse developments in domestic and global economic conditions, or the occurrence of other sufficiently disruptive world events, could materially adversely affect our revenue and results of operations.

•If demand for our products increases, our future success will depend on our ability to manage our growth and to increase manufacturing production capacity.

•Delays in product development schedules could adversely affect our revenues and cash flows.

•We expend significant resources in anticipation of a sale due to our lengthy sales cycle and may receive no revenue in return.

•If our security measures or those of our third- party providers, including cloud storage providers, are breached, resulting in unauthorized access to our ~~and~~or our customers’ data, it could undermine ~~the~~ confidence in our network, data centers, and services, leading to reduced customer use of our products and services and significant legal and financial exposure and liabilities.

•Catastrophic events could materially adversely affect our business prospects, operating results and financial condition.

•Uncertainty in the development, deployment, and use of AI in our products and services, as well as our business more broadly, could adversely affect our business and reputation.

•Defects or disruptions in our services could impact demand for our services and subject us to substantial liability.

•Defects in our products could reduce demand for our products or result in product recalls and result in a loss of sales, delay in market acceptance and damage to our reputation.

•Our international operations expose us to additional risks that could harm our business prospects, operating results and financial condition.

•We depend on our ability to attract and retain our key management, sales and technical personnel.

•Failure to comply with federal, state, or local regulations applicable to our firearm product, the TASER 10 CED, could result in governmental actions or litigation, potentially harming our business prospects, operating results, and financial condition.

•Failure to maintain effective internal control over financial reporting may adversely affect our ability to report our financial condition and operating results in a timely and accurate manner, which may cause investor confidence to diminish and the value of our common stock to decline.

•Our revision and our restatement of previously issued consolidated financial statements may adversely affect investor confidence and could result in regulatory actions and stockholder litigation.

Financial Risks

•An increasing percentage of our revenue is derived from subscription billing arrangements that may result in delayed cash collections and may increase customer credit risk on receivables and contract assets.

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•Our gross margin depends on a number of factors, including our product mix, cost structure and acquisitions we may make, any of which could cause our gross margin to fluctuate.

•Revenue for our SaaS products is recognized over multi-year contract terms, which may delay the reflection of new business in our operating results.

•Most of our end-user customers are subject to budgetary and political constraints, which may delay or prevent sales, result in cancellations, or lead to the non-renewal of contracts.

•The open bidding process introduces uncertainty in securing future contract awards.

•We hold the majority of our cash balances, some of which are not insured, at ~~two~~three depository institutions.

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•Stock transactions may have a material, unpredictable impact on our operating results and may result in dilution to existing shareholders.

•Our financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies.

•Unanticipated changes in our effective tax rate and additional tax liabilities could adversely affect our operating results and financial condition.

•Our revenue and operating results may fluctuate unexpectedly from quarter-to-quarter, which could impact our stock price.

•Our profitability could suffer from declines in fair value or impairment of our investments, including our strategic investments, and could fluctuate if the fair values of our investments increase.

Legal and Compliance Risks

•We may face personal injury, wrongful death, product liability and other liability claims that could harm our reputation and adversely affect our business prospects, operating results and financial condition.

•Other litigation, government inquiries and regulatory actions may result in significant costs and judgments and divert management attention from our business.

•We have in the past and may in the future be subject to intellectual property infringement and other claims, which could incur substantial litigation costs, result in significant damages awards, inhibit our use of certain technologies, and divert management attention from our business.

•If we are unable to protect our intellectual property, the value of our brands and products may decrease and we may lose our competitive market advantage.

•We may be unable to enforce patent rights internationally, which may limit our ability to prevent our product features from being used by competitors in some foreign jurisdictions.

•The use of open-source software in our products, services and technologies may expose us to additional risks and harm our intellectual property rights.

•A variety of new and existing laws and/or interpretations could materially and adversely affect our business.

•WeUncertainties ~~are~~with ~~subject~~complex toU.S. ~~evolving~~federal, ~~corporate~~state ~~governance~~and local and ~~public~~foreign ~~disclosure~~procurement ~~regulations~~laws and ~~expectations,~~regulations ~~including~~could ~~with~~cause ~~respect~~us to ~~environmental,~~incur ~~social~~costs ~~and~~that ~~governance~~could ~~(“ESG”)~~have ~~matters~~a material adverse effect on our business, ~~that~~financial ~~could~~position, ~~expose~~results usof tooperations ~~numerous~~and ~~risks~~cash flow.

•We are subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks.

•Our amended and restated bylaws include exclusive forum provisions that could increase costs to bring a claim, discourage claims or limit the ability of our shareholders to bring a claim in a judicial forum viewed by shareholders as more favorable for disputes.

Risks Related to our ~~Convertible Notes~~Indebtedness

•Fulfilling our debt obligations requires significant cash resources, which may exceed our available cash flow.

•The ~~conditional~~2027 ~~conversion~~Note ~~feature~~Hedge ofand ~~the~~Warrant ~~Notes,~~transactions ifmay ~~triggered,~~impact ~~may~~the ~~adversely~~value ~~affect~~of our ~~financial~~common ~~condition and operating results~~stock.

•~~Conversion~~We ofare ~~the~~exposed ~~Notes~~to ~~may~~counterparty ~~dilute~~risk ~~the~~with ~~shareholder~~respect ~~ownership~~to ~~and could depress~~ the ~~price~~2027 ofNote ~~our~~Hedge ~~common stock~~transactions.

•~~Changes~~Our inindebtedness ~~the~~contains ~~accounting~~restrictive ~~treatment~~covenants ~~for~~that ~~the~~could ~~Notes~~limit ~~may~~our ~~have~~operational aflexibility ~~material~~and ~~effect~~adversely onaffect ~~our~~the ~~reported~~value ~~financial~~of ~~results~~our common stock.

~~•The 2027 Note Hedge and Warrant transactions may impact the value of the Notes and our common stock.~~14

•We are exposed to counterparty risk with respect to the 2027 note hedge transactions.

Our past financial performance may not be a reliable indicator of our future performance and historical trends should not be used to anticipate our results or trends in future periods because of the following factors and other variables affecting our operating results. You should carefully consider the trends, risks and uncertainties described below and other information in this Annual Report on Form 10-K and subsequent reports filed with or furnished to the SEC before making any investment decision with respect to our securities. If any of the following trends, risks or uncertainties actually occurs or continues, our business prospects, financial condition, results of operations or cash flows could be materially adversely affected, the trading prices of our securities could decline, and you could lose all or part of your investment. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

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Strategic Risks

We substantially depend on continued acceptance of our products and services by law enforcement agencies ~~throughout~~worldwide, ~~the~~and ~~world.~~any Ifreduction ~~law~~in ~~enforcement~~demand ~~agencies~~could domaterially ~~not~~adversely ~~continue~~affect ~~to purchase and use~~ our ~~products and services, our~~ business ~~prospects, operating results and financial condition will be materially adversely affected~~.

Our largest customer vertical is U.S. federal, state and local law enforcement. Axon has a customer relationship with a substantial number of federal, state and local law enforcement agencies in the United States. At any point, whether or not related to the performance of our products and services, law enforcement agencies may elect to no longer purchase or use our CEDs or other products and services. For example, we believe that in the past our sales were adversely impacted by negative coverage and publicity surrounding our products and services and their use and this could occur in the future, including as a result of factors beyond our control. If law enforcement agencies nomaterially ~~longer~~reduce ~~purchase~~or discontinue purchases of our products and services, ~~or materially decrease their purchases,~~ our business prospects, operating results and financial condition will be materially adversely affected.

We substantially depend on sales of our CEDs, and if these products do not continue to be widely accepted, our ~~business~~growth prospects, operating results, and financial condition ~~could~~will be diminished.

~~For~~We ~~the~~derive ~~years ended December 31, 2024, 2023 and 2022, we derived~~ a significant portion of our revenues from sales of CEDs and related products and services, whether sold individually or as part of a subscription plan offering. We anticipate that these products will continue to account for a significant portion of our revenue for the foreseeable future. ~~The acceptance of these devices is critical to our business prospects, operating results and financial condition.~~ If we cannot continue to meet customer demands or achieve more widespread market acceptance of these products, our business prospects, operating results, and financial condition will be materially adversely affected.

Demand for CED products is affected by several factors, many of which are beyond our control, including continued market acceptance of our products by our customers, technological change, and growth or contraction of the economy in general. Additionally, our CEDs and other offerings or products could fail to maintain or attain sufficient customer acceptance for many reasons, some of which are beyond our control, including:

•our failure to predict market demand accurately, whether as a result of a failure to anticipate demand for product features or functionality or to supply offerings that meet this demand;

•real or perceived defects, errors or failures;

•negative publicity about product performance or effectiveness;

•delays in releasing to the market our improved offerings or enhancements, or defects, errors or failures while releasing such offerings or enhancements;

•~~real or perceived~~ failure to offer complementary products that enhance the functionality of our offerings;

•introduction or anticipated introduction of competing products; and

•budget constraints or other limitations for our customers.

A decrease in the selling prices of or demand for these products, or ~~their~~ failure to maintain broad market acceptance, ~~would~~could significantly harm our competitive position, ~~business~~and ~~prospects,~~adversely affect our business operating results and financial condition.

If we are unable to design, introduce, sell and deploy new products or new product features successfully, our business and financial results could be adversely affected.

Our future success will likely depend on our ability to develop new products or product features that achieve market acceptance in a timely and cost-effective manner and in a way that is responsive to customer demand. The development of new products and product features is complex, time-consuming and expensive, and we may experience delays or incur significant additional costs in completing the development and introduction of new products. We may choose to carry higher levels of inventory to mitigate the risk of production delays, which may expose us to an increased risk of obsolescence.

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We have devoted, and continue to devote, significant resources to develop and deploy SaaS solutions to a large number of customers. If there is a substantial increase of new customers in a small window, we may have difficulty deploying these solutions in a way that meets market demand. Increases in customer demand may require us to change our information technology (“IT”) infrastructure, expand our IT infrastructure or replace our IT infrastructure entirely. Scaling and adapting our IT infrastructure is likely to be complex and require additional technical expertise. If we are required to make any changes to our IT infrastructure, we may incur substantial costs and experience delays or interruptions in our solutions. These delays or interruptions may cause customers to become dissatisfied with our solutions and move to competing providers. Our failure to accommodate increased traffic, increased costs, inefficiencies or failures to adapt to new technologies or customer requirements and the associated adjustments to our IT infrastructure could harm our business prospects, operating results and financial condition.

Additionally, customers’ requirements for these products are complex and varied. If we cannot develop scalable solutions that can be consistently configured for customers with minimal effort or ~~grow and~~ maintain asufficient professional ~~services~~service ~~team~~resources ~~that~~to ~~can consistently~~ configure our products to meet the requirements of large numbers of customers in a timely and cost-effective manner, our ability to broadly scale SaaS solutions could be negatively impacted, and our business prospects, operating results and financial condition could be negatively impacted.

We cannot ~~provide~~assure ~~any~~you ~~assurance~~ that new products ~~that~~or weproduct ~~may~~features ~~develop in the future~~ will achieve market acceptance. If we fail to develop new products or new product features on a timely basis that achieve market acceptance, our business, financial results and competitive position could be adversely affected.

We face risks associated with rapid technological change and new competing products.

The technology associated with law enforcement devices and software ~~receives significant attention and~~ is rapidly evolving. The introduction of products embodying new technologies and the emergence of new industry standards can render existing products obsolete ~~and unmarketable~~. In particular, AI and machine learning technologies are rapidly developing and as these technologies are incorporated into our products and the operations of our customers, the pace of change has in the past and may in the future continue to accelerate. Additionally, we expect our products to meet and keep pace with evolving security standards and requirements of our industry and customers, including those of the U.S. federal government and international governments. While we have some patent protection in certain key areas of our Axon devices, CEDs and SaaS technology, new technology may result in competing products that operate outside our patents and could present significant competition for our products, which could adversely affect our business, financial results and competitive position. Additionally, our competitors may develop competing technologies or products with superior features or lower costs, respond ~~quicker~~more quickly to emerging technologies, conduct more extensive marketing campaigns, ~~have~~or ~~greater~~otherwise ~~financial,~~compete ~~marketing, manufacturing and other resources, and may be~~ more ~~successful~~effectively inthan ~~attracting~~we ~~potential customers, employees and strategic partners~~do. If we cannot compete effectively, our business and financial results could be adversely affected.

Our future success depends on our ability to expand sales through direct sales and distributors and our inability to increase direct sales or recruit new distributors would negatively affect our sales.

Our distribution strategy is to pursue sales through multiple channels primarily through direct sales and independent distributors. We focus on direct sales to larger agencies and our inability to grow sales to these agencies in this manner would materially adversely affect our business prospects, operating results, and financial condition. In addition, our inability to establish relationships with and retain distributors who we believe can successfully sell our products would materially adversely affect our business prospects, operating results, and financial condition. If we do not competitively price our products, meet the requirements of our distributors or end-users, provide adequate marketing support, or comply with the terms of our distribution arrangements, our distributors may fail to aggressively market our products or may terminate their relationships with us. These developments would likely have a material adverse effect on our sales. Our reliance on the sales of our products by others also makes it more difficult to predict our revenue, cash flow, and operating results.

In certain states and foreign jurisdictions, we have chosen to sell directly with law enforcement customers rather than through established distribution channels. However, some of our customers may have strong working relationships with distributors, and we may face resistance to this change. Failure to overcome this resistance and successfully establish direct relationships with our customers could negatively impact sales, or our competitors may be better positioned by continuing to sell through distributors, which could adversely affect our business prospects, operating results and financial condition.

Negative publicity could adversely impact sales, which could cause our revenues or operating results to decline.

17Our business depends on the reputation of the Axon brand. If we are unable to maintain the position of the Axon brand, our business may be adversely affected by diminishing the appeal of the brand to our customer base, resulting in lower sales and earnings.

Our reputation and our brands have in the past been, and could in the future be, damaged by negative publicity, whether or not merited. Negative publicity could relate to our company, our brands, our products, or other aspects of our business. We could experience negative publicity (which may be raised by consumer advocacy groups, third party interest groups, investors, employees or other stakeholders) for a variety of reasons, including product safety issues, threatened or pending legal or regulatory proceedings, product claims, advertising and promotional practices, sustainability or policy issues, materials sourcing or cybersecurity incidents. Negative publicity that damages one of our brands could be compounded by having an adverse effect on our other brands or our company as a whole.

In addition, unfavorable media or investor and analyst reports related to our industry, company, brand, marketing, personnel, operations, business performance, or prospects may affect our common stock price and the performance of our business, even if the publicity is not directly related to our company or our brands and even if the publicity is not accurate. Furthermore, the speed at which negative publicity is disseminated has dramatically increased through use of electronic communication, including social media outlets, websites and other digital platforms. Additionally, our employees' use of digital or social media platforms in ways that may not be aligned with our digital or social media policies could damage our reputation or brands. Our success in maintaining and enhancing our brand depends on our ability to adapt to rapidly changing media environments. Adverse publicity or negative commentary from any media outlet could damage our reputation, require us to expend substantial resources to remedy the damage or reduce the demand for our products and services, adversely affecting our business and financial results.

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~~Our~~Acquisitions ~~business depends on the reputation~~ of, ~~the~~or ~~Axon~~investments ~~brand.~~in, Ifother weproducts, ~~are~~technologies ~~unable~~or tobusinesses ~~maintain~~could ~~the~~disrupt ~~position~~our ofbusiness, ~~the~~dilute ~~Axon~~shareholder ~~brand~~value, ~~our~~or ~~business may be~~ adversely ~~affected~~affect ~~by diminishing the appeal of the brand to~~ our ~~customer~~operating ~~base~~results. ~~This could result in lower sales and earnings.~~

Our ~~reputation~~business ~~and~~strategy ~~our~~has ~~brands have in the past been~~included, and ~~could~~may incontinue ~~the~~to ~~future be~~include, ~~damaged~~acquiring ~~by negative publicity, whether~~ or ~~not~~investing ~~merited~~in orcomplementary ~~as a result of actions that are within our control. Negative publicity could relate to our company, our brands, our~~ products, ~~our supply chain~~technologies, ~~our packaging, our employees~~ or ~~any other aspect of our business~~businesses. WeIdentifying, ~~could~~negotiating, ~~experience~~and ~~negative~~completing ~~publicity~~these ~~(which~~transactions ~~may~~can be ~~raised by consumer advocacy groups, third~~time-~~party interest groups~~consuming, ~~investors~~difficult, ~~employees~~and orexpensive. ~~other~~In ~~stakeholders)~~some ~~for a variety of reasons~~cases, ~~including~~our asability ato ~~result~~close ofsuch ~~product~~transactions ~~safety~~depends ~~issues,~~on ~~threatened~~obtaining orthird ~~pending~~party ~~legal or regulatory proceedings~~approvals, ~~product~~which ~~claims,~~are ~~advertising~~beyond ~~and~~our ~~promotional~~control. ~~practices,~~As ~~sustainability~~a ~~or policy issues~~result, ~~materials~~there ~~sourcing~~can orbe ~~cybersecurity~~no ~~incidents.~~assurance ~~Negative publicity~~ that ~~damages~~any ~~one~~announced ofacquisition ~~our~~or ~~brands~~investment, ~~could~~will beclose ~~compounded by having an adverse effect~~ on ~~our~~the ~~other~~anticipated ~~brands~~timeline or ~~our~~at ~~company as a whole~~all.

InAcquisitions ~~addition,~~and ~~unfavorable~~investments ~~media~~may present unforeseen operating, financial, or ~~investor~~compliance ~~and~~challenges. ~~analyst~~Many ~~reports~~of ~~related~~these tochallenges ~~our~~may ~~industry,~~arise ~~company,~~from ~~brand~~actions, ~~marketing~~omissions, ~~personnel,~~business ~~operations~~practices, ~~business~~contractual ~~performance~~arrangements, or ~~prospects~~operational ~~may~~decisions ~~affect~~of ~~our common stock price and~~ the ~~performance~~acquired ~~of our~~ business, ~~even~~or ifinvestee ~~the~~entity ~~publicity~~that isoccurred ~~not~~prior ~~directly related~~ to ~~our~~or ~~company~~independently orof our ~~brands~~ownership ~~and~~or ~~even~~involvement. ifIntegrating ~~the~~acquired ~~publicity~~personnel, ~~is not accurate. Furthermore~~operations, ~~the speed at which negative publicity is disseminated has dramatically increased through use of electronic communication~~systems, ~~including social media outlets~~technologies, ~~websites~~ and ~~other~~products ~~digital platforms. Alternatively, our employees may knowingly~~ or ~~inadvertently~~effectively ~~use~~managing ~~digital~~the orcombined ~~social~~business ~~media~~can ~~platforms in ways that may not~~ be ~~aligned~~complex, ~~with~~costly, ~~out digital or social media strategy~~ and ~~could damage our reputation or our brands~~disruptive. Our ~~success in maintaining and enhancing our brand depends on our~~ ability to ~~adapt~~identify toand ~~rapidly~~assess ~~changing~~material ~~media~~risks ~~environments.~~and ~~Adverse~~liabilities ~~publicity~~through ordue ~~negative~~diligence ~~commentary~~may ~~from~~be ~~any~~limited, ~~media~~particularly ~~outlet~~where ~~could~~sellers ~~damage~~restrict ~~our~~access ~~reputation, require us~~ to ~~expend~~information, ~~substantial~~transaction ~~resources~~timelines toare ~~remedy~~compressed, ~~the damage~~ or ~~reduce~~we ~~the~~acquire ~~demand~~a ~~for~~non-controlling ~~our~~interest. ~~products~~Anticipated ~~and~~benefits ~~services,~~of ~~which~~such ~~would~~transactions ~~all~~may ~~adversely~~not ~~affect~~materialize ~~our~~due ~~business~~to ~~and~~factors ~~financial~~such ~~results.~~as:

~~Acquisitions~~•inability ~~of,~~to integrate or ~~investments~~profitably ~~in,~~benefit ~~other~~from acquired products, technologies (including AI and machine learning models), or businesses; ~~could~~inherited ~~disrupt~~risks ~~our~~associated ~~business~~with AI or machine learning models (including model performance limitations, ~~dilute~~bias, ~~shareholder~~explainability ~~value~~challenges, ~~and~~or ~~adversely~~reliance ~~affect~~on ~~our~~training ~~operating~~data) ~~results.~~that may be incomplete, inaccurate, or subject to regulatory restrictions;

~~Our~~•failure ~~business strategy has included, and may continue~~ to ~~include,~~obtain ~~acquiring~~required orregulatory investing in other complementary products, technologies, or businesses. Identifying and negotiating these transactions can be time-consuming, difficult, and expensive. Additionally, our ability to close these transactions has previously, and may in the future, depend on obtaining third-party approvals, ~~such as government regulatory approvals and~~ clearances, ~~which~~or ~~are beyond our control. Consequently, we can make no assurance that these transactions once undertaken and announced, will close.~~ certifications;

~~Acquisitions~~•exposure orto ~~investments~~unexpected ~~may~~regulatory ~~present unforeseen operating difficulties and expenses. If we acquire businesses~~obligations, ~~technologies~~including orthose ~~products,~~related weto ~~may~~export ~~encounter difficulties in successfully integrating the acquired personnel~~controls, ~~operations,~~data ~~systems~~protection, ~~technologies~~AI, or ~~products~~product ~~successfully~~safety, orwhich ~~effectively~~could ~~managing~~require ~~the~~significant ~~combined~~investment ~~business. Anticipated benefits of such transactions may not materialize due~~ to ~~factors such as:~~satisfy;

•~~inability~~unanticipated costs, liabilities, or risks related to ~~integrate~~litigation (including intellectual property claims and disputes, government inquiries, or ~~profitably~~regulatory ~~benefit~~actions); exposure to actual or alleged intellectual property infringement, misappropriation, or other intellectual property claims arising from the technologies, products, software, data, or business practices of an acquired company or an entity in which we hold a minority investment (including claims that pre-date our acquisition or investment, discontinuation of products, modification of technologies, commencement of licensing arrangements on unfavorable terms, or ~~businesses~~payment of damages, settlements, or ongoing royalties);

•~~failure~~identification toof ~~obtain~~previously ~~regulatory~~unknown ~~approvals,~~cybersecurity ~~clearances~~vulnerabilities in acquired technologies that expose us to security or ~~certifications~~privacy risks;

•~~exposure~~cultural tomisalignment ~~new~~with ~~regulations related to~~ the acquired ~~products~~company, ~~technologies,~~disruptions orto ~~business~~our ~~that~~workplace ~~are unexpectedly burdensome~~environment, ~~negatively impact existing products, technologies~~ or ~~business,~~adverse orimpacts ~~require~~on ~~significant~~investor ~~investment in order to achieve compliance~~perception;

•~~unanticipated costs~~unionization, ~~liabilities~~labor organization efforts, or ~~risks~~grievances ~~related~~leading to ~~the~~work ~~transaction~~stoppages, ~~such as those arising from litigation~~strikes, ~~government~~or ~~inquiries,~~operational ~~regulatory actions~~disruptions;

•~~identified~~difficulties orintegrating ~~unknown~~accounting, ~~security~~financial ~~vulnerabilities~~reporting, inand ~~acquired~~internal ~~technologies~~control ~~that~~systems, ~~expose~~consistent uswith toour ~~additional~~corporate ~~security~~standards ~~risks~~and orthe ~~delay~~requirements ~~integration~~of the Sarbanes-Oxley Act of 2002;

•~~cultural~~difficulties ~~misalignment~~supporting ~~with~~legacy ~~the~~products, ~~acquired company~~software, asor ~~well~~infrastructure asof ~~disruptions~~the toacquired ~~our workplace environment or investor perception~~business;

•unionization or labor organization efforts leading to work stoppages, strikes, or disruptions in business operations;

•incurrence of costs related to the transaction and integration;

•difficulty integrating the accounting and information systems, operations and personnel of the acquired business;

•inability to enhance the acquired technologies and platforms to meet the quality, performance, and brand standards expected by our customers;

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•difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business;

•challenges aligning the acquired company’s revenue recognition policies and forecasting methods;

•write-~~offs~~downs ~~of acquired assets~~ or ~~investments,~~impairment ~~credit~~of goodwill ~~risks,~~ or other ~~financial~~intangible ~~impacts~~assets ~~associated~~if ~~with~~the acquired ~~customers~~business underperforms expectations;

•~~challenges~~credit ~~transitioning~~risks, ~~acquired~~or ~~customers~~other tofinancial ~~our~~impacts ~~systems,~~associated ~~processes,~~with ~~and~~acquired customers or contractual ~~terms~~obligations;

•~~diversion~~challenges oftransitioning ~~management’s~~acquired ~~attention~~customers to our systems, processes, and contractual terms, including risks related to contract assignability or change-of-control provisions;

•~~harm~~loss, tomodification, ~~existing~~or ~~business~~non-renewal ~~relationships~~of ~~with~~government ~~business~~contracts, ~~partners~~framework ~~and~~agreements, ~~customers~~or sole-source arrangements following a change of control or integration into our operations;

•~~loss~~diversion of ~~key~~management’s ~~employees;~~attention and critical resources away from existing business priorities;

•~~diversion~~disruption ofto ~~critical~~relationships ~~resources,~~with ~~including~~existing ~~substantial~~customers, ~~portions of available cash~~suppliers, ~~away~~or ~~from~~strategic ~~other parts of our business~~partners;

•~~shareholder~~supply ~~dilution~~chain, ~~resulting~~manufacturing, ~~from~~or ~~the~~sourcing ~~issuance~~disruptions ofaffecting ~~new~~acquired ~~equity to finance the transaction~~businesses;

•~~incurrence~~difficulties ofscaling ~~debt~~manufacturing ~~on unfavorable terms~~capacity, ~~repayment~~production ~~difficulties~~volumes, or ~~significant~~supply ~~financial~~chain ~~liabilities~~operations ~~arising out~~ of ~~the~~acquired ~~acquisition or investment~~businesses; ~~and~~

•~~exposure~~loss toof ~~adverse~~key ~~tax~~employees ~~consequences,~~of ~~substantial~~the ~~asset~~acquired ~~depreciation,~~business; ~~or deferred compensation expenses.~~and

We cannot assure you that the anticipated benefits of any acquisition or investment will be realized, that projected synergies will materialize, or that we will not be exposed to unknown liabilities or risks. Integrating an acquired technology, asset, or business into our operations can be challenging, complex, and costly, and we cannot assure you that we will be successful or that the anticipated benefits of the acquisitions or investments that we complete will outweigh their costs. If our integration and development efforts are unsuccessful and the anticipated benefits of the acquisitions we complete are not achieved, our business prospects, operating results and financial condition could be adversely affected.17

In connection with these types of transactions, we may issue additional equity securities that would dilute our shareholders, use cash that we may need in the future to operate our business, incur debt on terms unfavorable to us or that we are unable to repay, incur large charges or substantial liabilities, encounter difficulties integrating diverse business cultures and values or become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges. These challenges could adversely affect our business prospects, operating results and financial condition.

We may not successfully manage our growth or plan for future growth.

Since our founding in 1993, we have experienced rapid growth. The growth and expansion of our business places a continuous and significant strain on our management, operational, and financial resources. Further growth of our operations to support our customer base, our expanding third-party relationships, our information technology systems, and our internal controls and procedures may not be adequate to support our operations. Managing our growth will also require significant expenditures and allocation of valuable management resources, including the challenges of integrating, developing, and motivating a growing employee base in various countries around the world.

In addition, our rapid growth may make it difficult to evaluate our future prospects. Our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth. We have encountered in the past, and may encounter in the future, risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If we fail to achieve the necessary level of efficiency in our organization as it grows, or if we are not able to accurately forecast future growth, our business would be harmed.

We depend on the services of our executive officers, including Patrick W. Smith, our Chief Executive Officer. Our failure to retain executive officers could adversely impact our business.

Our future success depends upon our ability to retain executive officers, including Patrick W. Smith, and any failure to do so could adversely impact our new product development, business prospects, operating results and financial condition.

Among other qualifications, Patrick W. Smith is the founder of Axon and brings extensive executive leadership experience in the technology industry, including the management of worldwide operations, sales, service and support as well as technology innovation as an inventor listed on over 50 U.S. patents. Mr. Smith has been instrumental in building

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~~the~~•exposure ~~public safety operating system of the future by integrating a suite of hardware devices and cloud-based software solutions that lead~~ to ~~modern~~adverse ~~policing~~tax ~~and help save lives. From the early days of founding the organization to today as a market leader~~consequences, ~~Mr.~~deferred ~~Smith’s~~compensation ~~expertise~~or ~~has brought forth entirely new product categories, including the less~~employment-~~than-lethal~~related ~~TASER de-escalation platform~~liabilities, ~~body~~or ~~cameras~~depreciation ~~and~~charges ~~cloud~~associated ~~software~~with ~~that~~the ~~modernize~~acquired ~~public safety~~assets.

~~The~~In ~~loss~~the ofcase ~~any~~ of ~~our~~minority ~~senior~~or ~~management~~non-controlling investments, ~~including~~we ~~Patrick~~may W.have ~~Smith,~~limited ~~could~~ability ~~interrupt~~to ~~our~~influence ~~ability~~the tostrategic ~~execute~~direction, ~~our~~governance, ~~business~~regulatory ~~plan~~compliance, asrisk ~~such~~management, ~~individuals~~or operations of the investee business, may be ~~difficult~~subject to ~~replace~~conflicts with other shareholders or founders, and may receive less timely or less complete information regarding the investee’s performance or risks.

We may finance acquisitions or investments through the issuance of equity or debt. The issuance of equity could dilute existing shareholders, and the issuance of debt could reduce liquidity or increase leverage and interest expense. Debt financing activities may also include restrictive covenants or repayment obligations that limit operational flexibility or our ability to pursue additional strategic transactions.

Significant acquisitions typically result in the recognition of goodwill and other intangible assets. If the acquired business does not perform as expected, we may be required to record non-cash impairment charges, which could materially affect our operating results and financial condition.

We cannot assure you that the anticipated benefits of any acquisition or investment will be realized, that projected synergies will materialize, or that we will not be exposed to unknown liabilities or risks. Integrating new assets, operations, or personnel is inherently uncertain and resource intensive. If we fail to successfully integrate or manage the acquired businesses or investment, including effectively addressing the risks described above, or if anticipated benefits do not outweigh incurred costs, our business prospects, operating results, and financial condition could be materially adversely affected.

We may not successfully manage our growth or plan for future growth.

Since our founding in 1993, we have experienced rapid growth. The growth and expansion of our business places a continuous and significant strain on our management, operational, and financial resources. Our operations, including our customer base, third party relationships, information technology systems, and internal controls and procedures may not be adequate to support further growth. Managing our growth will also require significant expenditures and allocation of valuable management resources, including the challenges of integrating, developing, and motivating a growing employee base in various countries around the world.

Our rapid growth may make it difficult to evaluate our future prospects. Our ability to forecast our future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth. We have encountered in the past, and may encounter in the future, risks and uncertainties frequently experienced by growing companies in rapidly changing industries. If we fail to achieve the necessary level of efficiency in our organization as it grows, or if we are not able to accurately forecast future growth, our business could be harmed.

Operational Risks

Unavailability of materials or higher costs could adversely affect our financial results.

We depend on U.S. domestic and international suppliers for the delivery of components used in the assembly of our products. Our reliance on third- party suppliers creates risks, ~~related~~including to our ~~potential~~ability ~~inability~~ to obtain an adequate supply of components or sub-assemblies and both single or sole-source components used in the manufacture of our products. Further risks include reduced control over pricing and timing of delivery of components and sub-assemblies, ~~including~~and ~~single~~potential oreffects ~~sole-source~~of ~~components~~evolving ~~used~~international intrade ~~the~~controls ~~manufacture~~or ofother ~~our~~government-imposed ~~products~~supplier restrictions. ~~Specifically,~~We we depend on suppliers of ~~sub-assemblies,~~ machined parts, injection molded plastic parts, printed circuit boards, semiconductors, custom wire fabrications and other ~~miscellaneous~~ custom and off-the-shelf parts for our products. Although we may implement long-term agreements with strategic suppliers to mitigate the risk of supply continuity, disruptions remain possible. ~~Additionally~~However, iffor ~~our~~molded ~~suppliers do not allocate sufficient production~~materials, ~~they~~because ~~may decommit from agreed supply levels, or inaccurately forecast demand,~~ we ~~may~~own ~~face~~substantially ~~reduced~~all ~~access~~of tothe ~~components~~injection ~~and~~molded ~~need~~component totooling ~~secure~~used ~~new~~in ~~suppliers.~~their ~~As the scale of our hardware~~ production ~~increases~~, we ~~need~~believe towe ~~accurately~~could ~~forecast,~~obtain ~~purchase,~~alternative ~~warehouse~~suppliers ~~and~~in ~~transport~~most ~~components at high volumes to our manufacturing facilities~~cases. IfWe wehave ~~are~~programs ~~unable~~ to ~~accurately~~hold ~~match~~additional ~~the~~materials ~~timing~~(such ~~and~~as ~~quantities of component purchases to our actual needs~~resins, webattery ~~may incur costs related to unexpected production disruption~~components, ~~storage,~~major ~~transportation,~~semiconductors ~~expedite,~~ and ~~write-offs,~~other ~~which~~critical ~~may~~components) ~~harm~~to ~~our~~mitigate ~~business~~supply ~~prospects~~interruptions and ~~financial~~better ~~condition~~manage costs.

~~The~~Additionally, ~~TASER~~if 10our ~~CED~~suppliers ~~presents~~do ~~additional~~not ~~supply~~allocate ~~chain~~sufficient ~~challenges~~production, ~~due~~decommit tofrom ~~its~~agreed ~~unique~~supply ~~design~~levels, ~~and~~or ~~regulatory~~inaccurately ~~requirements,~~forecast ~~including~~demand, ~~for~~we ~~example,~~may ~~the~~face ~~regulation~~reduced ofaccess ~~imports~~to components and ~~exports~~need ofto ~~certain~~secure ~~TASER~~new ~~10 CED components~~suppliers. WeAs ~~also~~the ~~purchase~~scale ~~raw~~of ~~materials~~our ~~for~~hardware ~~TASER~~production 10increases, ~~CEDs~~we ~~from~~need ato ~~limited~~accurately ~~number~~forecast, ~~of suppliers~~purchase, ~~some~~warehouse ofand ~~which~~transport ~~may~~components beat ~~subject~~high volumes to ~~market~~our ~~price~~manufacturing ~~fluctuations~~facilities. ~~that~~If we ~~may~~are be unable to ~~pass~~accurately ~~through~~match tothe ~~our~~timing ~~customers.~~and ~~Because~~quantities of ~~the~~component ~~unique~~purchases ~~requirements~~to ofour ~~TASER~~actual ~~10 CEDs~~needs, we ~~cannot~~may ~~change~~incur ~~suppliers~~costs ~~easily.~~related ~~Any~~to ~~delay~~unexpected orproduction ~~interruption~~disruption, instorage, ~~the~~transportation, ~~supply~~expedite, ~~of the raw materials that are used in TASER 10 CEDs could impair our ability to manufacture~~ and ~~deliver~~write-offs, ~~TASER~~which 10may ~~CEDs,~~ harm our ~~reputation,~~business orprospects ~~cause~~and afinancial ~~reduction in revenues~~condition.

A significant number of our raw materials or components comprise petroleum-based products or incur some form of landed cost associated with transporting the raw materials or components. Our freight and import costs and the timely delivery of our products could be adversely affected by the materialization or re-emergence of a number of factors that could reduce the profitability of our operations, including, for example: higher fuel costs (including increased petroleum prices as a result of, among other things, climate change-related regulations); supply chain shortages; potential port closures or shipping disruptions; customs clearance issues; increased government regulation or regulatory changes for imports of foreign products into the United States and exports from foreign sources; and delays created by war, terrorist attacks or threats, public health issues, national disasters or work stoppages. We are also subject to supply chain disruption if any of our suppliers violate legislation that bans the import of goods based on their method of production, such as using forced labor or sanctioned raw material suppliers. This may also result in negative publicity regarding our production methods, and alleged unethical or illegal practices of any of our suppliers could adversely affect our reputation. Any interruption of supply for any material components of our products could significantly delay the shipment of our products and have a material adverse effect on our revenues, profitability and financial condition. For example, there have been and may continue to be disruptions in the semi-conductor supply chain that could negatively impact our ability to make our products.18

If significant tariffs or other restrictions continue to be placed on foreign imports by the United States, our sales and results of operations may be harmed. For example, ongoing trade tensions between the United States and China have led to a series of significant tariffs on the importation of certain product categories into the United States over recent years. In retaliation for these tarrifs, China has recently placed restrictions on the export of certain raw materials, including gallium and germanium. Further, President Trump has proposed significantly increased tariffs on foreign imports into the United States, particularly from China, Mexico and Canada. Such tariffs could have a significant impact on our business, particularly the importation of products used in our business that are manufactured outside the United States, or could result in our products exported from the United States being subject to retaliatory tariffs imposed by other countries. We

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~~also~~The ~~source~~TASER ~~certain~~10 ~~raw~~CED ~~materials~~presents ~~from~~additional ~~foreign~~supply ~~countries,~~chain aschallenges dodue ~~some~~to ofits ~~our~~unique ~~suppliers.~~design ~~The implementation of tariffs~~ and ~~trade~~regulatory ~~restrictions~~requirements, asincluding, ~~well~~for asexample, ~~changes in trade policies between~~ the ~~United~~regulation ~~States~~of ~~and~~imports ~~such foreign countries could lead to increases in our supply costs~~ and ~~make~~exports itof ~~more~~certain ~~difficult~~TASER to10 ~~obtain~~CED ~~suppliers~~components. ~~and~~We ~~may~~also ~~have~~purchase anraw ~~adverse~~materials ~~effect~~for onTASER ~~our~~10 ~~supply~~CEDs ~~chain~~ from a ~~cost~~limited ~~and~~number ~~sourcing~~of ~~perspective. If we attempt to renegotiate prices with~~ suppliers, orsome ~~diversify~~of ~~our~~which ~~supply~~may ~~chain~~be insubject ~~response~~ to ~~tariffs,~~market ~~such~~price ~~efforts~~fluctuations ~~may~~that ~~not~~we ~~yield immediate results or~~ may be ~~ineffective.~~unable Weto ~~might~~pass ~~also~~through ~~consider increasing prices~~ to ~~the~~our ~~end~~customers. ~~consumer;~~Because ~~however,~~of ~~this could reduce~~ the ~~competitiveness~~unique requirements of ~~our~~TASER ~~products~~10 ~~and~~CEDs, ~~adversely~~we ~~affect~~cannot ~~net~~change ~~sales~~suppliers easily. IfAny wedelay ~~fail~~or tointerruption ~~manage~~in ~~these~~the ~~dynamics~~supply ~~successfully,~~of ~~gross~~the ~~margins~~raw ~~and~~materials ~~profitability~~that ~~could~~are beused ~~adversely~~in ~~affected.~~TASER ~~Increased~~10 ~~tariffs~~CEDs orcould ~~trade~~impair ~~restrictions~~our ~~implemented~~ability byto ~~the~~manufacture ~~United~~and ~~States~~deliver ~~could~~TASER ~~have~~10 aCEDs, ~~material~~harm ~~adverse effect on~~ our ~~business prospects~~reputation, ~~operating~~or ~~results~~cause ~~and~~a ~~financial~~reduction ~~condition~~in revenues.

A significant number of our raw materials or components comprise petroleum-based products or incur some form of landed cost associated with transporting the raw materials or components. Our freight and import costs and the timely delivery of our products could be adversely affected by the materialization or re-emergence of a number of factors that could reduce the profitability of our operations, including, for example: higher fuel costs; supply chain shortages; potential port closures or shipping disruptions; customs clearance issues; increased government regulation or regulatory changes for imports of foreign products into the United States and exports from foreign sources; and delays created by war, terrorist attacks or threats, public health issues, national disasters or work stoppages. We are also subject to supply chain disruption if any of our suppliers violate legislation that bans the import of goods based on their method of production, such as using forced labor or sanctioned raw material suppliers. This may also result in negative publicity regarding our production methods, and alleged unethical or illegal practices of any of our suppliers could adversely affect our reputation. Any interruption of supply for any material components of our products could significantly delay the shipment of our products and have a material adverse effect on our revenues, profitability and financial condition. For example, there have been and may continue to be disruptions in the semiconductor supply chain that could negatively impact our ability to make our products.

As significant tariffs or other restrictions continue to be placed on foreign imports by the United States, our sales and results of operations may be harmed. Recently, the U.S. government has indicated its intent to modify U.S. trade policy and, in some cases, to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements. It has also imposed or has indicated its intent to impose increased tariffs on foreign imports into the United States, particularly from the People’s Republic of China (“PRC”), Mexico, and Canada. Such tariffs could have a significant impact on our business, particularly the importation of products used in our business that are manufactured outside the United States, which have resulted and could result in retaliatory tariffs imposed on products we export. We also source certain raw materials from foreign countries, as do some of our suppliers. The implementation of tariffs and trade restrictions as well as changes in trade policies between the United States and such foreign countries have resulted and could continue to lead to increases in our supply costs and make it more difficult to obtain suppliers and may have an adverse effect on our supply chain from a cost and sourcing perspective. If we attempt to renegotiate prices with suppliers or diversify our supply chain in response to tariffs, such efforts may not yield immediate results or may be ineffective. Finally, tariffs and international trade arrangements may continue to change, potentially without warning and to an extent that is difficult to predict. Changing tariff rates and shifting trade regulations may create significant uncertainty for vendors, consumers, and us; may increase our merchandise costs; negatively impact consumer demand for our products and services; or otherwise negatively impact our operating results. We may not be able to forecast such impacts accurately. If we fail to manage these dynamics successfully, gross margins and profitability could be adversely affected. Increased tariffs or trade restrictions implemented by the United States could have a material adverse effect on our business prospects, operating results and financial condition.

Material adverse developments in domestic and global economic conditions, or the occurrence of other sufficiently disruptive world events, could materially adversely affect our revenue and results of operations.

Global economic uncertainty continues to pose risks to our business, driven by factors such as ongoing conflicts in ~~Gaza~~the Middle East and Ukraine, the volatility of interest rates, high inflation, changes in U.S. immigration policy, an actual recession or fears of a recession, trade policies and tariffs, and geopolitical tensions. Our inability to offset price inflation in our materials, components, shipping or labor through increased prices to customers with long-term fixed-price contracts and formula-based or long-term fixed-price contracts with suppliers could adversely affect our business prospects, operating results and financial condition. Global supply chain and labor market challenges could also negatively affect our and our suppliers’ performance. Interest rate increases have also created financial market volatility and could further negatively impact financial markets, lead to an economic downturn or recession, or have an adverse effect on our financial results. Economic slowdowns can also negatively impact municipal and state tax collections and put pressure on law enforcement budgets, which may increase the risk that our customers will be unable to appropriate funds for existing or future contracts with us. In addition, geopolitical risks could affect our customers’ budgets and policies. These and other factors may adversely affect customer demand and ability to pay, cause decrease in sales, and negatively impact the realizability of our accounts and notes receivable and contract assets.

~~If demand for our products increases, our future success will depend on our ability to manage our growth and to increase manufacturing production capacity.~~19

A significant increase in demand for our products may require us to expand our production capacity while maintaining product quality. Our primary strategies to meet this challenge include introducing additional shifts, increasing the physical size of our assembly facilities, hiring additional production staff, and implementing additional customized manufacturing automation equipment. As we develop additional products, we may need to bring new equipment online, implement new systems, technology, methods and processes, and hire personnel with different qualifications. The costs associated with implementing new manufacturing technologies, methods and processes, including the purchase of new equipment, and any resulting delays, inefficiencies or loss of sales, could harm our financial results. The investments we make in equipment, technologies or personnel may not yield the anticipated labor and material efficiencies, and we may experience difficulty in attracting, integrating and retaining qualified personnel. Our inability to meet any future increase in sales demand or effectively manage our expansion could have a material adverse effect on our revenues, operating results and financial condition.

Delays in product development schedules may adversely affect our revenues and cash flows.

The development of CEDs, devices, sensors, and software is complex and time-consuming. Achieving market acceptance requires accurately anticipating customer needs and delivering products that adapt to evolving demands in a timely and cost-effective manner. Customers may require product features and capabilities that our current products do not have. If we fail to develop products that satisfy customer requirements, our ability to create or increase demand for our products could be adversely affected.

Without the timely and cost-effective introduction of new products, services, and enhancements, our offerings will likely become less competitive over time, in which case our competitive position and operating results could suffer. New products and services, and enhancements to existing products and services, can require long development and testing periods and significant investment, including substantial R&D, development of different engineering and manufacturing workflows, and adjustments to our data and analytics infrastructure. Our focus on our SaaS platform also presents complex development issues. Significant delays in new product or service releases or problems in creating new products or services could adversely affect our business, growth prospects, operating results, cash flows, and competitive position.

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Delays in product development schedules could adversely affect our revenues and cash flows.

We expend significant resources in anticipation of a sale due to our lengthy sales cycle and may receive no revenue in return.

Before committing to purchase our products, our end-user customers typically consider a wide range of issues such as product benefits, training costs, the cost to use our products in addition to or in place of other products, budget constraints and product reliability, safety and efficacy. Because we sell to various types of non-government and government entities of multiple sizes, including national agencies, state agencies, county agencies and municipal agencies, which can require varying levels of approvals followed by appropriations, the length of our sales cycle may range from a few weeks to as long as several years. Adverse publicity surrounding our products or the safety of such products has in the past, and could in the future, lengthen our sales cycle with customers. We believe that in the past our sales were adversely impacted by negative coverage and publicity surrounding our products or the use of our products. We may incur substantial selling costs and expend significant effort in connection with the evaluation of our products by potential customers before they place an order. If these potential customers do not purchase our products, we will have expended significant resources and received no revenue in return.

If our security measures or those of our third- party providers, including cloud storage providers, are breached, resulting in unauthorized access to our or our customers’ data, it could undermine confidence in our network, data centers, and services leading to reduced customer use of our products and services and significant legal and financial exposure and liabilities.

Security breaches of our products and services could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our customers’ data. Additionally, breaches of our network or data security measures or those of our third- party providers—including cloud storage providers, suppliers and vendors—could disrupt the security of our internal systems and business applications, impair our ability to provide products and services to our customers ~~and protect the privacy of their data~~, result in product development delays, result in theft or misuse of our intellectual property or other assets, require us to allocate ~~more~~additional resources to improve technologies, or otherwise materially adversely affect our business. Supply chain vulnerabilities, such as compromised third- party software, hardware, or components, could further expose our systems to cyber risks ~~which~~that could materially adversely affect our business.

Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently, grow more complex over time, and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. ~~The~~Delayed ~~delayed~~ detection of sophisticated threats could allow attackers to remain undetected ~~within our systems~~ for extended periods, increasing ~~the~~ potential damage to our operations, intellectual property, and customer data. Moreover, our security measures and those of our third- party service providers or customers ~~have not in the past and~~ may not ~~in the future~~ immediately detect such security breaches ~~if they occur~~. Although we have developed systems and processes that are designed to protect our data and user data, and to prevent or detect data loss and security breaches, we have been in the past and are likely to remain a frequent target of ~~third-party~~ cybersecurity intrusion attempts and we cannot assure that such measures will provide absolute security. We have in the past and may in the future incur significant costs into ~~protecting~~protect against or ~~remediating~~remediate cyber- attacks.

We also face increasing and evolving disclosure obligations related to cyber and other security events. Despite rigorous processes, we risk failing to meet ~~all our~~ existing or future disclosure obligations or having our disclosures misinterpreted. National security or public safety considerations may also affect, or in limited instances prevent, ~~our~~ public disclosure of a cybersecurity incident ~~in certain circumstances~~.

We devote significant resources to engineer secure products and ensure security vulnerabilities are mitigated, and we require our third-party service providers to do so as well. Remote-work arrangements may increase our exposure to cyberattacks due to vulnerabilities in unsecured devices, networks, and employee environments. Breaches could occur during transfer of data-to-data centers or at any time, and result in unauthorized physical or electronic access to our or our customers’ data. Third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information to gain access to our data or our customers’ data. Additionally, hackers may develop and deploy viruses, worms and other malicious software programs that attack or gain access to our networks and data centers. Recent developments in the threat landscape include use of AI and machine learning by attackers to automate, enhance, and evade detection during cyberattacks, along with an increased number of cyber extortion and ransomware incidents. These attacks can feature higher financial ransom demands and demonstrate increasing sophistication, including novel ransomware techniques, diverse methodologies, and advance capabilities such as adaptive malware and deepfake-enabled phishing schemes. Increasing socioeconomic and political instability in some 20

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We devote significant resources to engineer secure products and ensure security vulnerabilities are mitigated, and we require our third party service providers to do so as well. Remote-work arrangements may increase our exposure to cyber attacks due to vulnerabilities in unsecured devices, networks, and employee environments. Breaches could occur during transfer of data-to-data centers or at any time, and result in unauthorized physical or electronic access to data. Third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords or other information to gain access to our data or our customers’ data. Additionally, hackers may develop and deploy viruses, worms and other malicious software programs that attack or gain access to our networks and data centers. Recent developments in the threat landscape include the use of AI and machine learning by attackers to automate, enhance, and evade detection during cyber attacks, along with an increased number of cyber extortion and ransomware incidents. These attacks may involve higher financial ransom demands and demonstrate increasing sophistication, including novel ransomware techniques, diverse methodologies, and advance capabilities such as adaptive malware and deepfake-enabled phishing schemes. Increasing socioeconomic and political instability in some countries has heightened these risks. In addition, retaliatory acts by foreign governments in response to Western sanctions could include cyber- attacks that could directly or indirectly impact our operations.

A security breach could expose us to a risk of loss or inappropriate use of proprietary and sensitive data, or the denial of access to ~~this~~such data. A real or perceived security breach could also result in areduced ~~loss of~~ confidence in the security of our products and services, damage our reputation, disrupt our business, subject us to third- party lawsuits, regulatory fines or investigations or otherwise subject us to legal liability, ~~negatively impact our future sales and~~ significantly harm our business prospects, operating results and financial condition. Even the perception of inadequate security may damage our reputation and negatively affect our ability to attract or to win new customers or retain existing customers.

Catastrophic events could materially adversely affect our business prospects, operating results, and financial condition.

A disruption or failure of our systems or operations in the event of a major earthquake, weather event, fire, water shortage, explosion, failure to contain hazardous materials, industrial accident, utility failure, cyber- attack, terrorist attack, public health crisis, pandemic, or other catastrophic event could cause delays in completing sales, providing products and services, or performing other mission-critical functions. A catastrophic event that results in the destruction or disruption of any of our critical operations, or of the capacity, reliability or security of our information technology systems, could harm our ability to conduct normal business activities and our operating results, as well as expose us to claims, litigation and governmental investigations and fines. Such events may also jeopardize employee safety and availability, causing additional delays or operational challenges. In addition, catastrophes may put pressure on federal, state and municipal government budgets, which may increase the risk that our customers will be unable to appropriate funds for existing or future contracts with us. These and other factors may adversely affect customer demand and their ability to pay, cause decrease in sales, and negatively impact the realizability of our accounts receivable and contract assets. Furthermore, service delays or failures during such events could damage our reputation, especially with public safety customers, and erode trust in our ability to deliver reliable solutions during critical times.

Public health emergencies have adversely affected workforces, economies and financial markets globally, and led to an economic downturn in the past and may do so again in the future.

We may also face threats to our physical security, including to our facilities and the safety and well-being of our people. In addition to the potential catastrophic events described above, these threats could involve insider threats, workplace violence, or civil unrest, which could adversely affect our company. Our customers and suppliers face similar risks that, if realized, could also adversely impact our operations. Such acts could cause delays, manufacturing downtime, or other impacts that could detrimentally impact our ability to perform our operations. We could also incur unanticipated costs to remediate impacts and lost business.

If our backup and mitigation plans are insufficient to minimize business disruption, our financial results could be adversely affected. We are continuously monitoring our operations and intend to take appropriate actions to mitigate the risks arising from catastrophic events, but there can be no assurances that we will be successful in doing so.

Uncertainty in the development, deployment, and use of AI in our products and services, as well as our business more broadly, could adversely affect our business and reputation.

We offer systems and tools that incorporate AI~~-based~~ technologies, including generative AI, for our customers. We also leverage and expect to continue leveraging AI-based technologies for internal use to drive efficiency ~~in our business operations~~. As with many new and emerging technologies, AI presents numerous risks and challenges to our internal business operations and our customers. For example, unexpected failures or inaccuracies in AI-driven systems could expose our customers to operational risks, particularly in high-stakes use cases such as law enforcement or public safety.

The development, adoption, integration and use of generative AI technology remains in the early stages and consequently, our AI technology may contain material defects or errors. Additionally, ineffective or inadequate AI or generative AI governance, development, use or deployment practices by us or third parties could result in unintended consequences. For example, AI algorithms that we use may be flawed or may be (or perceived to be) based on datasets that are biased or insufficient, a risk raised by the ACLU in a report dated December 10, 2024. Biases in AI models could result in discriminatory outcomes, eroding trust among customers and communities we serve.21

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~~Any~~The ~~latency~~development, ~~disruption~~adoption, orintegration ~~failure~~and inuse ~~our~~of AIgenerative ~~systems, third-party~~ AI ~~systems~~technology ~~that~~remains ~~we utilize, or infrastructure could cause delays or errors~~ in ~~our~~the ~~offerings.~~early ~~Additionally,~~stages ~~inadequate~~and ~~governance~~consequently, ~~testing,~~our orAI ~~quality~~technology ~~assurance processes could result in flawed deployments, including those that result in physical harm or which produce erroneous or harmful outputs that~~ may ~~damage~~contain ~~our~~material ~~reputation and expose us to legal liabilities. Correcting such~~ defects or errors ~~may be costly and time-consuming and could harm our business~~. ~~Failure~~Additionally, toineffective ~~adequately~~or ~~train~~inadequate ~~customers on the use and limitations of~~ AI~~-driven~~ ~~products~~or ~~could also compound these risks. Thoroughly testing~~ generative AI ~~models is challenging due to their complexity and the unpredictability of their outputs. Developing~~governance, ~~testing~~development, ~~and~~use ~~deploying~~or ~~resource-intensive~~deployment AIpractices, ~~systems~~including ~~may~~businesses ~~require~~we ~~additional~~have ~~investment and increase our costs~~acquired. ~~There also may be real~~ or ~~perceived~~third ~~social~~parties ~~harm,~~could ~~environmental~~result ~~harm, unfairness or other outcomes that undermine public confidence~~ in ~~the~~unintended ~~deployment and use of AI~~consequences. ~~Furthermore~~For example, ~~third parties may deploy~~ AI ~~technologies~~algorithms ~~in a manner~~ that ~~reduces~~we ~~customer~~use ~~demand~~may ~~for~~be ~~our~~flawed ~~products~~or ~~and services. Competitive pressures~~ may ~~also~~be ~~drive rapid AI development~~ (or ~~deployment,~~perceived ~~increasing~~to ~~the~~be) ~~risk~~based ofon ~~releasing~~datasets ~~inadequately~~that ~~tested~~are biased or ~~unreliable features~~insufficient. ~~Any~~Biases ofin ~~the~~AI ~~foregoing~~models ~~may~~could result in ~~decreased~~discriminatory ~~demand~~outcomes, ~~for~~eroding ~~our~~trust ~~products~~among customers and ~~services~~communities orwe ~~harm to our business, financial results, or reputation~~serve.

~~The~~Any ~~legal~~latency, ~~and~~disruption, ~~regulatory~~or ~~landscape~~failure ~~surrounding~~in our AI ~~technologies~~systems, isthird ~~rapidly~~party ~~evolving~~AI ~~and~~systems ~~uncertain~~that we utilize, ~~particularly~~or infrastructure could cause delays or errors in ~~areas~~our ofofferings. ~~intellectual~~Additionally, ~~property~~inadequate governance, ~~cybersecurity~~testing, ~~privacy~~or quality assurance processes could result in flawed deployments, including those that result in physical harm or which produce erroneous or harmful outputs that may damage our reputation and ~~data~~expose ~~protection~~us to legal liabilities. ~~For~~Correcting ~~example,~~such ~~there~~defects isor ~~uncertainty~~errors ~~around~~may ~~the~~be ~~validity~~costly and ~~enforceability~~time-consuming ofand ~~intellectual~~could ~~property~~harm ~~rights~~our ~~related~~business. Failure to ~~our~~adequately ~~development,~~train ~~deployment~~customers ~~and~~or employees on the use and limitations of AI-driven features could also compound these risks. ~~Cyber~~Thoroughly ~~attacks~~testing ~~that~~generative ~~use~~AI models is challenging due to their complexity and the unpredictability of their outputs. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs. There also ~~become~~may ~~increasingly~~be ~~frequent~~real or perceived social harm, environmental harm, unfairness or other outcomes that undermine public confidence in the deployment and ~~effective~~use of AI. ~~Additionally~~Furthermore, third parties ~~that~~may ~~license~~deploy AI technologies toin usa manner that reduces customer demand for our products and services. Competitive pressures may ~~impose~~also ~~unfavorable~~drive ~~licensing~~rapid ~~terms~~AI development or ~~terminate~~deployment, increasing the ~~licenses~~risk ~~altogether,~~of ~~requiring~~releasing usinadequately totested ~~seek~~or ~~licenses~~unreliable ~~from~~features. ~~alternative~~Any ~~sources~~of tothe ~~avoid~~foregoing ~~disruptions~~may result in ~~feature~~decreased ~~delivery.~~demand for our products and services or harm to our business, financial results, or reputation.

~~Compliance~~The ~~with~~legal ~~new or changing laws, regulations, or industry standards relating to AI may impose significant operational costs~~ and ~~may~~regulatory ~~limit~~landscape ~~our~~surrounding ~~ability to develop, deploy or use~~ AI technologies. Inis ~~part~~rapidly ~~due~~evolving ~~to our global scope~~ and ~~law enforcement customer base~~uncertain, weparticularly ~~may~~in ~~face~~areas ~~heightened~~of ~~scrutiny~~intellectual ~~and~~property, ~~regulatory~~cybersecurity, ~~requirements~~privacy, ~~which could further increase compliance costs~~ and ~~limit~~data ~~our ability to develop, deploy or use our AI solutions or other AI technologies~~protection. For example, ~~the~~there AIis ~~Act~~uncertainty inaround the ~~European~~validity ~~Union~~and ~~imposes~~enforceability ~~compliance~~of ~~requirements~~intellectual onproperty arights ~~variety~~related ofto AIour ~~uses~~development, ~~by law enforcement~~deployment, asand ~~well~~use asof onAI. ~~the~~Cyber ~~companies~~attacks that ~~develop~~use ~~those~~AI ~~products, including us. Other jurisdictions~~ may ~~adopt~~also ~~similar~~become ~~measures~~increasingly infrequent ~~the~~and ~~future~~effective. ~~In the future~~Additionally, wethird ~~may~~parties ~~voluntarily~~that orlicense ~~involuntarily~~AI ~~initiate~~technologies ~~recalls~~to ~~if our products are determined by~~ us ormay aimpose ~~regulatory~~unfavorable ~~authority~~licensing toterms ~~be noncompliant with applicable laws and regulations. Such recalls, whether voluntary~~ or ~~involuntary,~~terminate ~~could~~the ~~result~~licenses ~~in significant expense~~altogether, ~~supply~~requiring ~~chain~~us ~~complications,~~to ~~and~~seek ~~may~~licenses ~~harm~~from ~~our~~alternative ~~brand,~~sources business, prospects, financial condition and operating results. Please also see “Operational Risks—Defects in our products could reduce demand for our products or result in product recalls and result in a loss of sales, delay in market acceptance, and damage to ~~our~~avoid ~~reputation”~~disruptions in ~~Part~~feature ~~I, Item 1A of this Annual Report on Form 10-K below for additional information~~delivery.

WeCompliance ~~may~~with ~~also~~new ~~face~~or ~~increased~~changing ~~scrutiny~~laws, ~~regarding~~regulations, ~~data~~or ~~privacy~~industry standards relating to AI may impose significant operational costs and ~~security~~constrain ~~risks~~our ~~related~~ability to ~~the~~develop, ~~data~~deploy weor use AI technologies. In part due to ~~train~~our global scope and ~~evaluate~~law AIenforcement ~~models~~customer base, aswe ~~breaches~~may orface ~~misuse~~heightened ofscrutiny ~~this~~and ~~data~~regulatory ~~and~~requirements, ~~associated~~which ~~terms~~could ~~and~~further ~~conditions~~increase ~~could~~compliance ~~expose~~costs usand limit our ability to ~~significant~~develop, ~~liabilities~~deploy or use our AI solutions or other AI technologies. For example, ~~while~~the weAI doAct ~~not~~in ~~use~~the ~~customer~~European ~~data~~Union toimposes ~~train~~compliance AIrequirements ~~models~~on ~~today,~~a wevariety doof ~~occasionally~~AI ~~use~~uses ~~data~~by ~~obtained~~law ~~from~~enforcement, ~~the~~as ~~Axon~~well ~~Customer~~as ~~Evidence~~on ~~Improvement~~the ~~Program~~companies ~~(“ACEIP”)~~that ~~for~~develop ~~evaluation~~those ~~and~~products, weincluding ~~may~~us. ~~use~~Other ~~ACEIP~~jurisdictions ~~data~~may toadopt ~~also~~similar ~~train~~measures ~~models~~ in the future. In the future, ~~while~~we ~~ensuring~~may ~~proper~~voluntarily ~~consents~~or ~~and~~involuntarily ~~compliance~~initiate ~~with~~recalls ~~applicable~~if ~~laws.~~our ~~This~~products ~~approach~~are ~~reflects~~determined ~~our~~by ~~commitment~~us or a regulatory authority to ~~responsible~~be ~~data~~noncompliant ~~usage~~with applicable laws and ~~governance~~regulations. ~~However~~Such recalls, ~~there~~whether ~~remains~~voluntary aor ~~significant~~involuntary, ~~risk~~could result in ~~the~~significant ~~nature~~expense, ofsupply ~~data~~chain ~~used~~complications, byand ~~third-party~~may ~~providers~~harm toour ~~train~~brand, ~~the~~business, AIprospects, ~~models~~financial wecondition ~~rely~~and ~~on,~~operating ~~including~~results. ~~whether~~Please ~~such~~also ~~third-party~~see ~~providers~~“Operational ~~have~~Risks—Defects ~~trained~~in AIour ~~models~~products oncould ~~data~~reduce ~~that~~demand ~~they~~for ~~did~~our ~~not~~products ~~have~~or ~~proper~~result ~~consents~~in ~~for.~~product ~~Failure~~recalls toand ~~appropriately~~result ~~respond~~in toa ~~this~~loss ~~evolving~~of ~~landscape~~sales, ~~may~~delay ~~result~~ in ~~legal~~market ~~liability~~acceptance, ~~regulatory~~and ~~action,~~damage orto ~~brand~~our ~~and~~reputation” ~~reputational~~for ~~harm~~additional information.

We may also face increased scrutiny regarding data privacy and security risks related to the data we use to train and evaluate AI models, as breaches or misuse of this data and associated terms and conditions could expose us to significant liabilities. Additionally, there remains a significant risk in the nature of data used by third party providers to train the AI models we rely on, including whether such third party providers have trained AI models on data that they lacked rights to. Failure to appropriately respond to this evolving landscape may result in legal liability, regulatory action, or brand and reputational harm.

Defects or disruptions in our services could impact demand for our services and subject us to substantial liability.

We rely on third- party cloud service providers located in the United States and other countries to deliver our cloud services. The use of these cloud service providers gives us greater flexibility ~~in efficiently~~ delivering a ~~more~~ tailored, scalable customer experience, but also exposes us to additional risks and vulnerabilities. Lack of availability of this infrastructure could beresult ~~due~~from ~~to several potential causes such as~~ technical failures, natural disasters, fraud or security attacks that we cannot predict or prevent. Interruptions in our ~~service~~services, or loss or corruption of digital evidence, may reduce our revenue, ~~cause~~require us to issue credits or pay penalties, ~~cause~~expose ~~customers~~us to ~~file~~ litigation ~~against us~~, ~~cause~~lead customers to terminate their subscriptions, and adversely affect our renewal rates and ~~our~~ ability to attract new customers.

Our business will also be harmed if our customers and potential customers believe our service is unreliable. Since our customers use our services for important aspects of their operations, any errors, defects, disruptions in service or other performance problems could hurt our reputation and may damage our customers’ operations. Additionally, the inability to recover or restore lost or corrupted digital evidence in a timely manner could result in significant reputational damage. This 22

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Our business may also be harmed if our customers and potential customers believe our services are unreliable. Since our customers use our services for important aspects of their operations, any errors, defects, service disruptions or other performance problems could hurt our reputation and damage our customers’ operations. Additionally, the inability to recover or restore lost or corrupted digital evidence in a timely manner could result in significant reputational damage. This risk is particularly acute for law enforcement and public safety customers, where service reliability is critical, and disruptions could have serious operational or legal consequences. As a result, customers could elect not to renew our services or to delay or withhold payment ~~to us~~. Delayed resolution of service outages or technical defects could also lead to prolonged dissatisfaction and erosion of customer trust. We could also lose future sales or customers may make warranty or other claims against us, which could result in anincreased ~~increase in our~~ warranty expense, anlonger ~~increase in~~ collection cycles, ~~for~~reduced ~~and decline in the~~ collectability of accounts receivable, orreduced inconversion ~~the convertibility~~ of contract assets to cash, and anincreased ~~increase in the~~ expense and risk of litigation.

Defects in our products could reduce demand for our products or result in product recalls and result in a loss of sales, delay in market acceptance, and damage to our reputation.

Complex components and assemblies used in our products may contain undetected defects that could be subsequently discovered at any point in the life of the product. Errors or defects in our products, including software-related errors or defects, may only be discovered after they have been tested, commercialized and deployed. In such event, we may incur significant additional development costs and product recall, repair or replacement costs, or liability for personal injury or property damage caused by such errors or defects. In particular, defects in products designed for public safety or law enforcement use could undermine customer and community trust, erode confidence in our brand, and result in heightened scrutiny or regulatory enforcement. Our reputation or brand may be damaged as a result of these problems and may result in difficulty retaining current customers and securing new contracts. Defects in our products could result in a loss of sales, delay in market acceptance, damage to our reputation and increased warranty costs, which could adversely affect our business, financial results and competitive position.

Additionally, we are subject to the U.S. Consumer Products Safety Act of 1972, as amended by the Consumer Product Safety Improvement Act of 2008, which empowers the Consumer Products Safety Commission to exclude from the market products that are found to be unsafe or hazardous, and similar laws under foreign jurisdictions. We could also face challenges with cross-border compliance if products are recalled in multiple jurisdictions, further increasing operational and financial burdens. Under certain circumstances, the Consumer Products Safety Commission or comparable foreign agencies could require us to repurchase or recall one or more of our products. If we were required to remove, or we voluntarily remove, our products from the market, our reputation could be tarnished, and we might have large quantities of finished products that we could not sell. A recall of critical components may also disrupt manufacturing and delay delivery of other products in our portfolio, compounding the adverse effect on our business.

Our international operations expose us to additional risks that could harm our business prospects, operating results, and financial condition.

We have significant international operations and plan to continue growing internationally by acquiring existing entities and ~~setting~~establishing up new legal entities in ~~new~~additional markets. In certain international markets, we have limited operating experience and may not benefit from first-to-market advantages or otherwise succeed. Our international operations expose us to ~~other~~additional risks, including:

•restrictions on foreign ownership and investments, ~~along~~and ~~with stringent~~ foreign exchange controls, could limit our ability to repatriate cash earned in countries outside the United States;

•import and export requirements, tariffs, evolving interpretations and enforcement of U.S. Customs and Border Protection regulations and trade laws, trade disputes, product certification mandates, sanctions, foreign regulatory requirements, and ~~customs~~government-imposed supplier restrictions could hinder our ability to offer products or services in certain countries or obtain necessary parts and components to manufacture products, increase associated costs such as duties, taxes, and compliance expenses, or lead to shipment holds, reclassification of goods, or changes to importer-of-record requirements;

•longer payment cycles in certain countries, heightened credit risk, and higher instances of payment fraud;

•uncertainty regarding liability for our products and services, including uncertainty resulting from local laws and lack of legal precedent; and

•differing labor laws and customs, existence of workers’ councils and labor unions, and other challenges caused by distance, language, and cultural differences.

Our suite of products is export-controlled under both ~~United~~U.S. ~~States~~ and international regulatory bodies. Changes in U.S. foreign policy, foreign governmental status, and ~~evolving~~ international human rights policy objectives may impact Axon’s ability to obtain licenses for a given destination or customer.

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Trade regulations include, among other categories, environmental regulations, climate- and sustainability-related regulations, tax and statutory financial regulations, export and import controls, customs and duties regulations, internal control and disclosure rules, privacy and data protection requirements, anti-corruption laws, and other local laws prohibiting corrupt payments to governmental officials, and competition regulations.

Violations of these laws and regulations could result in fines and penalties, criminal sanctions against us, our directors, officers, or employees, as well as prohibitions on the conduct of our business and on our ability to offer our products and services in one or more countries. They could also materially adversely affect our brand, international growth efforts, ability to attract and retain employees, business, and operating results. Although we have implemented policies and procedures designed to ensure compliance with these laws and regulations, there can be no assurance that our directors, officers, employees, contractors, or agents will not violate our policies nor that enforcement actions by regulators will be consistent. Furthermore, inconsistent enforcement of local laws and regulations in some jurisdictions may increase compliance uncertainty and risk.

Our suppliers may themselves be subject to export controls or other trade restrictions on the materials and components they provide, including controls imposed by their countries of origin. In addition, increased use by the PRC of foreign “entity lists,” modeled in part on U.S. and other Western trade controls, could restrict Axon’s ability to import components or materials sourced from the PRC. Components or other items that are incorporated into our weapons or defense articles may also become subject to export controls in their originating jurisdictions based on their ultimate end use, which could further disrupt supply chains, delay production, or increase costs.

We depend on our ability to attract and retain our key management, sales and technical personnel.

Our success depends upon the continued service of our key management personnel, including Patrick Smith, our Chief Executive Officer. Although we have entered into employment agreements with our key personnel, including Mr. Smith, these agreements have no specific duration and constitute at-will employment, which means they may terminate their employment with us at any time. Additionally, we do not maintain any key person insurance on any of our officers or employees. Any changes in our senior management team, even in the ordinary course of business, may be disruptive to our business. Such changes may result in a loss of institutional knowledge and may cause disruptions to our business. Losing any member of our existing senior management team could also damage key seller relationships, lead to unanticipated replacement, recruitment and training costs, and make it more difficult to operate our business and achieve our business goals. Additionally, if our senior management team fails to work together effectively or execute our plans and strategies on a timely basis as a result of management turnover or otherwise, our business could be harmed.

Our success also depends on our ability to continue to attract, retain and motivate qualified technical employees. Our ability to compete effectively and our future success depends on our continuing to identify, hire, develop, motivate and retain highly skilled personnel. In particular, we compete with many other companies for employees with high levels of expertise in our industry, as well as for skilled engineers (including those with highly sought after experience in fields such as data science or AI), sales, and operations professionals. Job candidates may also be threatened with legal action under agreements with their existing employers if we attempt to hire them, which could impact hiring and result in a diversion of our time and resources. In addition, we are selective in our hiring process which requires significant investment of time and resources from internal stakeholders and management. At times, we have experienced, and we may continue to experience, difficulty in hiring personnel who meet the demands of our selection process and with appropriate qualifications, experience, or expertise, and we may not be able to fill positions as quickly as desired. In addition, our recruiting personnel, methodology, and approach may need to be altered to address a changing candidate pool and profile. We may not be able to identify or implement such changes in a timely manner.

Restrictive U.S. immigration policies and regulatory changes may also affect our ability to hire, mobilize or retain some of our global talent. Many of our technical personnel are foreign nationals entering the United States on work visas, primarily under the H-1B visa classification. The H-1B visa classification enables U.S. employers to hire qualified foreign nationals in positions that require an education at least equal to a bachelor’s degree. U.S. immigration laws and regulations are subject to legislative and administrative changes, as well as changes in the application of standards and enforcement. Future restrictions on the availability of work visas could restrain our ability to acquire the skilled professionals needed to meet our customers’ requirements, which could have a material adverse effect on our business. The scope and impact of these changes remain unclear, however a narrow interpretation and vigorous enforcement of existing laws and regulations could adversely affect the ability of entities with which we subcontract to utilize foreign nationals and/or renew existing foreign national consultants on assignment. There can be no assurance that we will be able to keep or replace all foreign nationals currently employed, or continue to acquire foreign national talent at the same rates as in the past.

In addition, our compensation arrangements, such as our equity incentives, may not always be successful in attracting new employees and retaining and motivating our existing employees. In particular, we may face challenges in hiring personnel, particularly for executive-level engineering talent, whether as a result of competition with other companies or other factors. We have had and expect to continue to have unique equity incentives designed to attract and retain long-term employees. We utilize these plans to align pay and performance and drive shareholder returns while reducing near-term cash expenditures. Our equity incentives and ongoing stock and option grants are subject to having sufficient shares under our stock plan and any new plans or increases in the number of shares available for grant under existing plans must be approved by our shareholders. If we are unable to obtain shareholder approval, we may be unable to attract and retain top 24

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In addition, our compensation arrangements, such as our equity incentives, may not always be successful in attracting new employees and retaining and motivating our existing employees. In particular, we may face challenges in hiring personnel, particularly for executive-level engineering talent, whether as a result of competition with other companies or other factors. We have had and expect to continue to have unique equity incentives designed to attract and retain long-term employees. We utilize these plans to align pay and performance and drive shareholder returns while reducing near-term cash expenditures. Our equity incentives and ongoing stock and option grants are subject to having sufficient shares under our stock plans and any new plans or increases in the number of shares available for grant under existing plans must be approved by our shareholders. If we are unable to obtain shareholder approval, we may be unable to attract and retain top talent, including senior executives. Our ability to attract, retain and motivate employees may also be adversely affected by common stock price volatility. The loss of the service of one or more of our key personnel could adversely impact our business prospects, operating results and financial condition.

Failure to comply with federal, state, or local regulations applicable to our firearm product, the TASER 10 CED, could result in governmental actions or litigation, potentially harming our business prospects, operating results, and financial condition.

The TASER 10 CED is primarily regulated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (the “ATF”), which regulates the manufacture, sale and import of firearms in the United States primarily under the National Firearms Act of 1934, the Gun Control Act of 1968, and the Firearms Owners’ Protection Act of 1986, ~~which~~each ~~have~~as ~~been~~ amended from time to time. 

The ATF conducts periodic audits of our facilities that hold federal firearms licenses. If we fail to comply with ATF rules and regulations, the ATF may limit our activities or growth related to the TASER 10 CED, fine us, or, ultimately, suspend our ability to produce and sell the TASER 10 CED product line. Such audits may also expose operational inefficiencies or ~~create~~cause delays ~~that~~affecting ~~affect~~ production timelines or ~~access to necessary permits~~permitting. Also, various state and local laws, regulations, and ordinances relating to firearm characteristics, features and sales govern the TASER 10 CED product line. Axon and local distributors must comply with state and local laws, regulations, and ordinances pertaining to firearm and magazine sales in the jurisdictions where the TASER 10 CED is sold. Non-compliance with such laws, regulations, or ordinances could expose us to legal liability, reputational harm, and additional costs with remedying violations. Additionally, certain TASER 10 CED components are regulated for import into the United States by the ATF and are subject to ATF import permits that limit Axon’s ability to source from some suppliers ~~leading~~and toreduces ~~a potential decrease in~~ supply chain ~~agility~~flexibility. Supply chain constraints or an inability to source TASER 10 CED components could have a material adverse effect on our ~~business prospects,~~ operating results and financial condition.

Federal and state legislatures frequently consider legislation relating to the regulation of firearms, including the amendment or repeal of existing legislation. Existing laws may also be affected by future judicial rulings and interpretations. These possible changes to existing legislation or the enactment of new legislation may seek to restrict ~~the~~firearm ~~makeup~~design ofor ~~a firearm~~features, mandate ~~the~~specific ~~use of certain~~ technologies ~~in a firearm~~, remove existing legal defenses ~~in lawsuits~~, ~~set~~impose minimum age ~~limits to purchase certain firearms~~requirements, or ~~ban~~restrict the sale ~~and,~~or ~~in some cases, the~~ ownership of ~~various~~certain ~~types of~~ firearms ~~and~~or accessories. In addition, evolving public sentiment or political pressure regarding firearm regulation could impact customer demand for TASER 10 CEDs, especially in jurisdictions with stricter firearm laws. Such restrictions or bans could have a material adverse effect on our business prospects, operating results and financial condition.

Failure to maintain effective internal control over financial reporting may adversely affect our ability to report our financial condition and operating results in a timely and accurate manner, which may cause investor confidence in our company to diminish and the value of our common stock to decline.

Preparing our consolidated financial statements involves many complex manual and automated processes, which depend on individual data input or review and require significant management judgment. The increasing complexity of our operations, including growth in international markets and expansion of product offerings, further heightens the risk of control deficiencies. Acquired businesses may have insufficient internal controls, which may have been identified or unidentifiable during diligence, that could require significant remediation efforts and create additional risks of financial misstatements during integration. One or more of these processes may result in errors that may not be, and in the past have not been, immediately detected and could result in a material misstatement or other errors in our consolidated financial statements., ~~Such~~particularly ~~errors may be more likely to occur~~ when implementing new systems, ~~and~~ processes, ~~particularly~~or ~~when implementing evolving and~~ complex accounting ~~rules~~standards. The Sarbanes-Oxley Act of 2002 requires, among other things, that as a publicly traded company we disclose whether our internal control over financial reporting and disclosure controls and procedures are effective.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. While we continually undertake steps to improve our internal control over financial reporting as our business changes, we may not be successful in making the improvements and changes necessary to be able to identify and remediate control deficiencies or material weaknesses on a timely basis. Our ability to address deficiencies may also be constrained by resource limitations, including access to skilled accounting personnel, particularly during periods of rapid growth or cost pressures. We identified a material weakness in our internal control over financial reporting 25

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asA ofmaterial ~~December~~weakness 31is a deficiency, ~~2024~~or ~~related~~combination toof adeficiencies, ~~failure~~in tointernal ~~design~~control ~~and~~over ~~maintain~~financial ~~effective~~reporting, ~~controls~~such ~~related~~that tothere ~~revenue~~is ~~recognition~~a ~~for~~reasonable possibility that a material misstatement of our ~~customer~~annual ~~contracts.~~or ~~Specifically,~~interim wefinancial ~~did~~statements will not ~~design~~be ~~and~~prevented ~~maintain~~or ~~controls~~detected on a timely basis. While we continually undertake steps to ~~update~~improve our ~~revenue~~internal ~~recognition~~control ~~policies~~over tofinancial ~~reflect~~reporting as our business changes, inwe ~~product~~may ~~offerings~~not orbe ~~terms~~successful in making the improvements and ~~conditions~~changes ofnecessary ~~arrangements~~to ~~with~~be ~~customers~~able to ~~ensure~~identify ~~revenue~~and ~~was~~remediate ~~appropriately~~control ~~recognized~~deficiencies ~~and~~or ~~disclosed~~material inweaknesses ~~accordance~~on ~~with~~a ~~U.S.~~timely ~~GAAP~~basis. We ~~are~~have ~~working~~successfully remediated the previously identified material weakness related to ~~remediate~~our convertible debt arrangement as of June 30, 2025, but we have not yet remediated the previously identified material weakness related to revenue recognition as ~~further~~of ~~discussed~~December in31, 2025. Refer to Item 9A of this Annual Report on Form 10-K for additional details. If we cannot successfully remediate identified control deficiencies, including any current or future material weaknesses in our internal control over financial reporting: the accuracy and timing of our financial reporting may be adversely affected; our liquidity, access to capital markets and perceptions of our creditworthiness may be adversely affected; we could face difficulty forecasting our financial results accurately, impacting decision-making by investors and analysts; we may be unable to maintain compliance with securities laws, stock exchange listing requirements and debt instruments’ covenants regarding the timely filing of periodic reports; we may be subject to regulatory investigations and penalties; investors may lose confidence in our financial reporting; we may suffer defaults under our debt instruments; and our common stock price may decline.

Our revision and our restatement of previously issued consolidated financial statements may adversely affect investor confidence and could result in regulatory actions and stockholder litigation.

~~The~~We ~~revision~~have ofpreviously revised certain of our previously issued financial statements to correct errors related to our historical conclusions of principal vs. agent accounting under Accounting Standards Codification, Revenue from Contracts with Customers ("“ASC 606"”). ~~may~~Furthermore, ~~have~~as ~~the~~described ~~effect of eroding investor confidence~~ in ~~the Company and~~ our ~~financial~~amended ~~reporting~~2024 ~~and~~Annual ~~accounting~~Report ~~practices~~on ~~and~~Form ~~processes~~10-K/A, ~~and~~we ~~may~~have ~~raise~~restated ~~reputational~~certain ~~issues~~of ~~for~~ our ~~business.~~previously ~~Such~~issued ~~revision~~financial ~~may~~statements ~~also~~to ~~result~~correct inan ~~stockholder~~error ~~litigation~~related ~~against us, or adverse regulatory consequences. Any such regulatory consequences, litigation, claim or dispute, whether successful or not, could subject us~~ to ~~additional~~the ~~costs,~~classification ~~divert~~of the ~~attention~~2027 ofNotes ~~our~~between ~~management,~~current orliabilities ~~impair~~and ~~our~~long-term ~~reputation~~liabilities. ~~Each~~These ofitems ~~these~~may ~~consequences~~have ~~could~~the ~~have~~effect aof ~~material~~eroding ~~adverse~~investor ~~effect~~confidence onin our ~~business~~financial ~~prospects,~~reporting ~~operating results~~ and ~~financial~~harming ~~condition~~our reputation.

Such revision or restatement may also result in stockholder litigation against us, or adverse regulatory consequences. Any such regulatory consequences, litigation, claim or dispute, whether successful or not, could subject us to additional costs, divert the attention of our management, or impair our reputation. Each of these consequences could have a material adverse effect on our business prospects, operating results and financial condition.

Financial Risks

An increasing percentage of our revenue is derived from subscription billing arrangements that may result in delayed cash collections and may increase customer credit risk on receivables and contract assets.

Our strategy includes maintaining a significant portion of our business through a subscription model, which aligns with the municipal budgeting process of our customers and allows for multiple product offerings to be combined into existing subscriptions. This approach differs from a traditional hardware sale, where the entire hardware payment is commonly invoiced upon shipment, by spreading payments over the subscription or installment period. While this model provides predictable recurring ~~revenue~~cash flows, it ~~impacts~~may adversely impact liquidity, asbecause cash is received inover ~~multiple~~time ~~installments~~ rather than upfront.

We record an estimate of expected credit losses and perform ongoing reviews of trade accounts receivables. However, if we become aware of information related to the creditworthiness of a major customer, or if future actual default rates on receivables ~~in general~~ differ from those currently anticipated, we may have to adjust our expected credit loss reserve. Such adjustments could negatively impact earnings and require additional resources for collections or restructuring customer payment terms. Furthermore, our reliance on municipal and government customers may heighten the risk of delayed payments during periods of political or economic instability, such as government shutdowns or reduced tax revenues. Any of these factors could adversely affect our business prospects, operating results and financial condition.

Our gross margin depends on many factors, including our product mix, cost structure, and acquisitions we may make, any of which could cause our gross margin to fluctuate.

Our gross margin could decline in future periods due to ~~adverse impacts from~~ various factors, including:

•changes in product mix;

•changes in shipment volume;

•increased warranty costs;

•sales discounts;

•expanding into new markets or lower-margin markets, including ~~those with distinct pricing and cost structures,~~ through acquisitions or internal development;

•higher production costs;

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•increases in materials, labor, manufacturing, or supply chain logistics costs;

•excess inventory and obsolescence charges;

•increased amortization of purchased intangible assets, ~~especially~~including from acquisitions; and

•how well we execute on our strategy and operating plans.

Any of these factors could result in significant fluctuations in our gross margin. ~~This~~Such variability ~~and unpredictability~~ could lead to our inability to meet internal expectations or those of securities analysts or investors for a particular period. Failure to meet or exceed such expectations ~~for these or any other reasons~~ may adversely affect the market price of our stock.

Revenue for our SaaS products is recognized over multi-year contract terms, which may delay the reflection of new business in our operating results.

Our SaaS revenue is generally recognized ratably over the terms of the contracts~~, which ranges from one to ten years~~. As a result, most of the SaaS revenue we report each quarter is the result of agreements entered into during previous quarters. Consequently, current trends, whether positive or negative, may not be fully reflected in our revenue results for several periods, and a decline in new or renewed SaaS contracts in any period may not be immediately reflected in our reported financial results ~~for that period~~, but could result in a decline in our revenue in future reporting periods. If any of our assumptions about revenue from our SaaS delivery model are incorrect, our actual results could differ materially from those anticipated, estimated, or projected.

Most of our end-user customers are subject to budgetary and political constraints, which may delay or prevent sales, result in cancellations, or lead to the non-renewal of contracts.

A significant portion of our end-user customers are government agencies, which typically lack direct control over their budgets. These budgets are often influenced by legislative processes and political considerations, limiting the agencies' ability to allocate funds asat ~~they~~their ~~see fit~~discretion. There can be no assurance that the economic and political pressures will not materially adversely affect sales of our products.

Additionally, government procurement processes are often subject to scheduling delays and uncertainties, which can disrupt anticipated sales. Federal agencies, in particular, are vulnerable to broader governmental challenges, such as funding and debt limit constraints, ~~which~~including ~~has previously resulted in~~ government shutdowns, ~~including~~such ~~those~~as inthe ~~2018~~latest ~~and~~shutdown ~~2019,~~in 2025 and ~~additional~~similar ~~shutdowns~~funding ~~narrowly avoided more recently~~disruptions.

While we enter into contracts for the delivery of products and services in the future, and anticipate that these contracts will be completed, if agencies fail to appropriate funds in future year budgets, terminate contracts for convenience, or if other cancellation clauses are invoked, this would prevent us from recognizing anticipated revenue and cash flow. Contracts terminated without cause generally allow us to recover only our incurred costs, committed expenses, and a portion of profits, if any, on the work completed prior to termination. We may or may not be able to recover all the costs incurred during the start-up phase of a terminated contract.

The unexpected termination of significant contracts could result in substantial revenue shortfalls. If these shortfalls are not offset by corresponding reductions in expenses, our financial performance and overall business could be adversely affected. We cannot anticipate if, when, or to what extent our customers might terminate their contracts with us.

The open bidding process introduces uncertainty in securing future contract awards.

Governmental agencies often procure products and services through an open bidding process, which typically involves publishing a list of requirements and soliciting proposals from potential vendors. To compete successfully ~~in these requests for proposals~~, we must accurately estimate our cost structure for servicing a proposed contract, the time required to establish operations for the proposed customer, and the likely terms of ~~any~~competing ~~other third-party~~ proposals submitted. However, we cannot guarantee that we will win future bids or that any winning bids will ultimately result in contracts ~~with~~on favorable terms.

Our contracts typically have fixed terms with early termination rights, with the possibility of extension at the discretion of the contracting entity. When these contracts expire, contracts may be reopened to competing bidders, and there is no guarantee that the contracts will be renewed or extended. In some cases, customers may initiate the bidding processes earlier than expected, resulting in increased competition prior to the anticipated end of contracts. Many of our contracts include termination for convenience provisions that may allow our customers to terminate the contract earlier than their term length.

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increased competition prior to the anticipated end of contracts. Additionally, many of our contracts with government agencies include termination for convenience provisions that may allow our customers to terminate the contract earlier than their term length.

Failure to secure new contracts, retain existing ones, or negotiate favorable terms through the open bidding process could adversely impact our revenues, profitability, and overall financial performance.

~~We hold the majority of our cash balances, some of which are not insured, at two depository institutions.~~27

WeTable ~~hold the majority~~ of our cash and cash equivalents accounts at two depository institutions. Our balances with these and other institutions regularly exceed Federal Deposit Insurance Corporation insurance limits for domestic deposits, as well as various foreign deposit insurance programs. For additional discussion, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.Contents

We Ifhold ~~any~~the ofmajority ~~these depository institutions were to fail (as seen with several U.S. bank failures in spring~~ of ~~2023),~~our ~~and~~cash ~~their assets were insufficient to cover deposits~~balances, orsome ifof ~~governments~~which ~~did~~are not ~~take action to support deposits exceeding existing insurance limits~~insured, weat ~~could~~three ~~incur~~depository ~~losses related to the uninsured balances~~institutions. ~~Such losses or delays in accessing funds could materially and adversely affect our liquidity, operating results and financial condition.~~

We hold the majority of our cash and cash equivalents accounts at three depository institutions. Our balances with these and other institutions regularly exceed Federal Deposit Insurance Corporation insurance limits for domestic deposits, as well as various foreign deposit insurance programs. For additional discussion, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

If any of these depository institutions were to fail, and their assets were insufficient to cover deposits, or if governments did not take action to support deposits exceeding existing insurance limits, we could incur losses related to the uninsured balances. Such losses or delays in accessing funds could materially and adversely affect our liquidity, operating results, and financial condition.

Stock transactions may have a material, unpredictable impact on our operating results and may result in dilution to existing shareholders.

We have historically granted and expect to continue to grant stock-based compensation to employees and non-employee directors as a means of attracting and retaining highly qualified personnel. All stock-based awards are required to be recognized in our financial statements based on their grant date fair values. The amount recognized for stock -compensation expense could vary depending on a number of assumptions or changes ~~that may occur~~.

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 expense and, consequently, the related amount recognized in our consolidated statements of operations and comprehensive income (loss).

As we continue to mature, the incentives to attract, retain and motivate employees provided by our equity awards or by future arrangements may not be as effective as in the past. We may also issue equity securities to pay for acquisitions and grant stock-based awards to retain the employees of acquired companies. If we issue significant equity awards to attract additional employees, or to retain our existing employees or those related to acquisitions, we could incur substantial additional stock-based compensation expense and the ownership of our existing shareholders would be further diluted, which could depress the market price of our stock.

Our financial performance is subject to risks associated with changes in the value of the U.S. dollar versus local currencies.

For international customers (whether current or potential) whose contracts are or would be denominated in U.S. dollars, the relative change in local currency values creates relative fluctuations in our product pricing. These changes in international end-user costs may result in lost orders and reduce the competitiveness of our products in certain foreign markets. Additionally, intercompany sales to our non-U.S. dollar functional currency international subsidiaries are transacted in U.S. dollars, which could increase our foreign exchange rate risk caused by foreign currency transaction gains and losses.

For non-U.S. dollar denominated sales, a weakening ofin foreign currencies relative to the U.S. dollar generally leads us to raise international pricing, potentially reducing demand for our products. Should we decide not to raise local prices to fully offset the U.S. dollar’s strengthening, the U.S. dollar value of our foreign currency denominated sales and earnings would be adversely affected. We do not currently engage in hedging activities related to fluctuations in foreign currency. Fluctuations in foreign currency ~~could~~may ~~result~~affect ~~in a change in~~ the U.S. dollar value of our foreign denominated assets and liabilities, including accounts receivable. ~~Therefore,~~As ~~the~~a ~~U.S.~~result, ~~dollar~~amounts ~~equivalent~~ collected on aforeign ~~given~~currency ~~sale~~sales ~~could~~may be less than ~~the~~anticipated, ~~amount~~reducing ~~invoiced causing the sale to be less profitable than contemplated~~profitability.

We also import selected components that are used in the manufacturing of some of our products. Although our purchase orders are generally in U.S. dollars, ~~weakness~~a inweakening of the U.S. dollar could ~~lead~~increase tocomponent ~~price increases for the components~~costs.

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Unanticipated changes in our effective tax rate and additional tax liabilities could adversely affect our operating results and financial condition.

We are subject to income taxes in the United States and various other jurisdictions. Our effective tax rate could be impacted by changes in statutory tax rates, the geographic distribution of our earnings, and the application of top-up taxes introduced under global minimum tax regulations of the Organization for Economic Co-operation and Development (“OECD”) framework. Our tax expense could also be impacted by changes in non-deductible expenses, excess tax benefits from stock option exercises and RSU vesting, adjustments to the valuation of deferred tax assets and liabilities, the applicability of withholding taxes, and changes in unrecognized tax benefits. Although we believe ~~that~~ our tax estimates are reasonable, the ultimate tax determination involves significant ~~judgments~~judgment that could become subject to audit by tax authorities in the ordinary course of business. Our estimates are based on information available to us at the time we prepare the income tax provision.

We are subject to potential tax examinations in multiple jurisdictions. While we regularly evaluate new information toand adjust our tax ~~position~~positions as appropriate, there is no guarantee that the outcome of these examinations will not adversely affect our operating results and financial condition.

Our tax provision could also be impacted by changes in U.S. federal, state, local, or international tax laws, including significant tax reforms which target corporate multinationals, and proposals by the current or future administrations.28

~~Additionally,~~Table we may be subject to additional tax liabilities due to changes in income-based taxes resulting from changes in U.S. federal, state, local, or foreign tax laws, changes in tax jurisdictions’ administrative interpretations, decisions, policies and positions, results of tax examinations, settlements or judicial decisions, changes in accounting principles, changes to our business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period.Contents

~~Furthermore,~~Our ~~recommendations~~tax ~~from~~provision ~~the~~could ~~OECD~~also ~~for~~be aimpacted ~~global~~by ~~minimum income tax and other~~ changes, ~~are being implemented or considered~~ in ~~jurisdictions where we operate~~U.S. ~~While~~federal, westate, ~~believe~~local, ~~enactment~~or ofinternational ~~the~~tax ~~recommended framework in jurisdictions where we operate will result in minimal impacts to our financial results in the near term~~laws, ~~the~~including ~~impact~~significant ~~of any new~~ tax ~~legislation~~reforms ~~may~~targeting ~~differ~~multinational ~~materially~~corporations, ~~from~~and ~~our~~proposals ~~estimates~~by ~~due~~the tocurrent ~~future regulatory guidance~~ or ~~changes~~future ~~in our interpretations or assumptions we have made~~administrations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Provision for Income Taxes” in Part II, Item 7 of this Annual Report on Form 10-K for additional information.

Additionally, we may be subject to tax liabilities due to changes in income-based taxes resulting from changes in U.S. federal, state, local, or foreign tax laws, changes in tax jurisdictions’ administrative interpretations, decisions, policies and positions, results of tax examinations, settlements or judicial decisions, changes in accounting principles, changes to our business operations, including acquisitions, as well as the evaluation of new information that results in a change to a tax position taken in a prior period.

Furthermore, recommendations from the OECD for a global minimum income tax and other changes are being implemented or considered in jurisdictions where we operate. While we believe enactment of the recommended framework in such jurisdictions will result in minimal impacts to our financial results in the near term, the impact of any new tax legislation may differ materially from our estimates due to future regulatory guidance or changes in our interpretations or assumptions.

Our revenue and operating results may fluctuate unexpectedly from quarter-to-quarter, which could impact our stock price.

Several factors, including some beyond our control, may affect our revenue and operating results, potentially causing our common stock price to fluctuate, including:

•budgetary cycles of municipal, state, and federal law enforcement and corrections agencies;

•market acceptance of our products and services;

•the timing of large domestic and international orders;

•the outcome of any existing or future litigation;

•adverse publicity surrounding our products, ~~the~~including product safety ~~of our products,~~ or ~~the~~ use ~~of our products~~;

•changes in our sales mix;

•new product introduction costs;

•~~increased~~increases in raw material ~~expenses~~costs;

•changes in our operating expenses, including stock-based compensation expense;

•changes in foreign currency exchange rates, inflation, and interest rates;

•inventory obsolescence;

•changes in warranty ~~reserve~~reserves;

31•existing or future tariffs;

~~Table~~•government ofshutdowns ~~Contents~~or lapses in federal appropriations; and

•existing or future tariffs; and

•regulatory changes that may affect the marketability of our products and services.

As a result of these and other factors, we believe that short-term period-to-period comparisons of our operating results may not provide meaningful insights, and our performance in a particular period may not be indicative of our performance in any future period. Additionally, fluctuations in our revenues and operating results could ~~lead~~adversely toaffect ~~declines in~~ the market price of our common stock.

Our profitability could suffer from declines in fair value or impairment of our investments, including our strategic investments, and could fluctuate if the fair values of our investments increase.

We invest a portion of available funds in a portfolio consisting of securities of various types. Our investments consist of ~~investments in~~ both marketable and non-marketable securities. Investments in marketable securities are measured at fair value on a recurring basis. We generally have elected to apply the measurement alternative for non-marketable securities. Under the alternative, we measure investments without readily determinable fair values at cost, less impairment, adjusted by observable price changes and we assess for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Our future investment income may fall short of expectations due to changes in interest rates, or due to certain inherent risks involved in investments in early-stage privately held companies. For example, we have recognized and may in the future recognize an unrealized loss on an investment if we determine that our carrying amount for an investment without a readily determinable fair value is not expected to be fully recovered, which would cause our earnings performance to suffer from such losses. ~~By contrast~~Contrastingly, we have recorded and may in the future record an unrealized gain on an investment if we determine the fair value exceeds the carrying amount, which would ~~benefit~~increase volatility in our earnings performance.

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Legal and Compliance Risks

We may face personal injury, wrongful death, product liability and other liability claims that could harm our reputation and adversely affect our business prospects, operating results and financial condition.

Third parties often use our CED products in aggressive confrontations that may result in serious, permanent bodily injury or death ~~to those involved~~. Our CED products may be associated with these injuries. A person, or the family members of a person, injured or killed in a confrontation or otherwise in connection with the use of our products, may bring legal action against us to recover damages on the basis of a number of theories, including wrongful death, personal injury, negligent design, defective product, product performance issues, or inadequate warnings or training. We are currently subject to a number of such lawsuits and have been and may be in the future subject to significant adverse judgments and settlements. We may also be subject to lawsuits ~~involving~~alleging ~~allegations of~~ criminal misuse of our products. We have no control over how our products are used by our customers or other end-users and cannot ensure they are used consistent with our specifications, design and warnings. While our products are designed to be non-lethal, we cannot guarantee they will be used in a manner consistent with their intended use and any misuse exposes us to litigation, reputational harm and controversy.

Although we maintain product liability insurance in amounts that we believe are reasonable, we may not be able to maintain such insurance on acceptable terms, if at all, and product liability claims could result in a potential award of monetary damages in excess of the amount of insurance coverage available to us. Because we manufacture and sell CEDs, insurance carriers may decide not to insure our products or our company in the future.

~~Similar~~We toalso ~~product liability claims, we~~ face exposure to class action lawsuits related to the design, performance, safety, pricing or advertising of our products. Such class action lawsuits could also result in substantial monetary judgments, defense costs, business distraction, reallocation of internal resources, injunctions related to the sale of products and reputational harm.

If successful, the aforementioned claims could result in adverse judgments or unfavorable settlements, significant legal expenses, athe diversion of management’s attention and resources, and reputational harm. The outcome of any litigation is inherently uncertain and there can be no assurance that our existing or any future litigation will not have a material adverse effect on our business prospects, operating results and financial condition.

Other litigation, government inquiries and regulatory actions may subject us to significant costs and judgments and divert management attention from our business.

32We have been and could in the future be involved in litigation, government inquiries and regulatory matters relating to our products, contracts, employees and business relationships, including litigation against persons or entities we believe have infringed on our intellectual property, infringement litigation filed against us, litigation against a competitor, antitrust litigation, and enforcement actions filed against us. See discussion of litigation in Note 11 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Such matters have resulted, and are expected to continue to result in, substantial costs to us, including in the form of attorneys’ fees and costs, damages, fines or other penalties, whether pursuant to an adverse judgment or settlement, and the diversion of management’s attention, which could adversely affect our business prospects, operating results and financial condition.

We have in the past and may in the future be subject to intellectual property infringement and other claims, which could incur substantial litigation costs, result in significant damages awards, inhibit our use of certain technologies and divert management attention from our business.

Many companies own intellectual property rights that are directly or indirectly related to public safety technologies. These companies periodically demand licensing agreements or engage in litigation based on allegations of infringement or other violations of their patents, trademarks, copyrights or trade secrets. Some companies may also allege that their patents protect features essential to particular technical standards. Non-practicing entities may also hold patents that are directly or indirectly related to public safety technologies. These entities may seek compensation for perceived infringement of their patents, including by filing claims against us, regardless of the merit of any such claims. As we enter new markets, expand into new product categories, and otherwise offer new products, services and technologies, additional intellectual property claims may be filed against us by these companies, entities and other third parties. Our use of AI tools may also increase the likelihood of intellectual property claims. Intellectual property claims may also be filed against us as our current products, services and technologies gain additional market share.

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WeIf ~~have~~our ~~been~~products, ~~and~~services or technologies were found to infringe a third party’s proprietary rights, we could inbe forced to discontinue use of the ~~future~~protected technology or enter into costly royalty or licensing agreements to be ~~involved~~able into ~~numerous~~sell ~~other~~our ~~litigation~~products, ~~government~~services ~~inquiries~~or technologies. Such royalty and ~~regulatory~~licensing ~~matters~~agreements ~~relating~~may not be available on terms acceptable to ~~our~~us ~~products~~or at all. We could also be required to pay substantial damages, ~~contracts~~fines or other penalties, ~~employees~~indemnify ~~and~~customers ~~business~~or ~~relationships~~distributors, ~~including~~cease ~~litigation~~the ~~against~~manufacture, ~~persons~~use or ~~entities~~sale of infringing products or processes and/or expend significant resources to develop or acquire non-infringing technologies. Our suppliers may not provide, or we ~~believe~~may ~~have~~not ~~infringed~~be onable ~~our~~to obtain, intellectual property, ~~infringement~~indemnification ~~litigation~~sufficient ~~filed~~to ~~against~~offset usall damages, ~~litigation~~fines ~~against~~or aother ~~competitor,~~penalties ~~antitrust~~resulting ~~litigation,~~from ~~and~~any ~~enforcement~~claims ~~actions~~of ~~filed~~intellectual property infringement brought against us or our customers. ~~For~~Our ~~additional~~efforts ~~discussion~~to ofidentify ~~litigation,~~relevant ~~refer~~intellectual property rights may not identify all potential rights holders. Rights holders may demand payment for past infringements and/or force us to ~~Note~~accept 13costly inlicense ~~Part~~terms ~~II,~~or ~~Item~~discontinue 8use of ~~this~~protected ~~Annual~~technology ~~Report~~and/or onworks ~~Form~~of 10authorship that may include, for example, photos, videos and software. Our development and sale of software-Kbased products, including that which is related to AI or virtual reality, further increases this risk.

Such matters have resulted, and are expected to continue to result in, substantial costs to us, including in the form of attorneys’ fees and costs, damages, fines or other penalties, whether pursuant to an adverse judgment or settlement, and diversion of our management’s attention, which could adversely affect our business prospects, operating results and financial condition.

We have in the past and may in the future be subject to intellectual property infringement and other claims, which could incur substantial litigation costs, result in significant damages awards, inhibit our use of certain technologies, and divert management attention from our business.

Many companies own intellectual property rights that are directly or indirectly related to public safety technologies. These companies periodically demand licensing agreements or engage in litigation based on allegations of infringement or other violations of their patents, trademarks, copyrights or trade secrets. These companies may also allege that their patents protect features essential to the implementation of particular technical standards. Non-practicing entities may also hold patents that are directly or indirectly related to public safety technologies. These entities may seek compensation for perceived infringement of their patents, including by filing claims against us, independent of the merit of any such claims. As we enter new markets, expand into new product categories, and otherwise offer new products, services and technologies, additional intellectual property claims may be filed against us by these companies, entities and other third parties. Additionally, our use of AI tools in our business may increase the likelihood that third parties will claim that we infringe their intellectual property rights. Intellectual property claims may also be filed against us as our current products, services and technologies gain additional market share.

If our products, services or technologies were found to infringe a third-party’s proprietary rights, we could be forced to discontinue use of the protected technology or enter into costly royalty or licensing agreements to be able to sell our products, services or technologies. Such royalty and licensing agreements may not be available on terms acceptable to us or at all. We could also be required to pay substantial damages, fines or other penalties, indemnify customers or distributors, cease the manufacture, use or sale of infringing products or processes, make proprietary source code publicly available, and/or expend significant resources to develop or acquire non-infringing technologies. Our suppliers may not provide, or we may not be able to obtain, intellectual property indemnification sufficient to offset all damages, fines or other penalties resulting from any claims of intellectual property infringement brought against us or our customers. There is no guarantee that our use of conventional technology searching and brand clearance searching will identify all potential rights holders. Rights holders may demand payment for past infringements and/or force us to accept costly license terms or discontinue use of protected technology and/or works of authorship that may include, for example, photos, videos and software. Our development and sale of software-based products, including that which is related to AI or VR, increases this risk.

If we are unable to protect our intellectual property, the value of our brands and products may decrease and we may lose our competitive market advantage.

Our future success depends upon our proprietary technology. Our protective measures for this proprietary technology include patents, trademarks, copyrights and trade secret protection. However, these protective measures, as well as our efforts to pursue such protective measures, may prove inadequate. ~~For~~In ~~example~~certain countries, the value of intellectual property protection ~~in certain countries~~ may not be apparent until after such protection can no longer be pursued. As such, our intellectual property protection may not extend to all countries in which our products are distributed or will be distributed in the future. Though we work to protect our innovations, we may not be able to obtain protection for certain innovations~~. For example~~, weincluding ~~may~~certain ~~be unable to patent some~~ software-based products. Furthermore, any use of AI tools to create content or code that may be incorporated into our products or services may also impact our ability to obtain or successfully defend certain intellectual property rights. The scope of any patent protection we have obtained, or may obtain, may not prevent others from developing and selling competing products. Despite our efforts, any intellectual property protection we obtain may be later determined to be insufficient or ineffective.

Our protective measures may prove inadequate for reasons outside of our control. Varying intellectual property laws across countries may lead to differences in protection between such countries. In certain countries in which our products are distributed, the ability to effectively enforce intellectual property rights may be limited or unavailable. Patent requirements differ by country and certain domestic or international laws may prohibit us from satisfying these requirements, creating a risk that some of our international patents may become unenforceable. Patents for older technologies, such as those first introduced in our TASER M26 CED and TASER X26 CED, have expired or will expire due to statutory limits on patent terms. Despite policies and efforts to maintain secrecy of trade secrets and other confidential information, such information could be compromised by employees, partners or other third parties.

33Once established, there is no guarantee that our intellectual property rights will remain in force. Issued patents may be challenged or re-examined and ruled invalid or unenforceable. Our registered trademarks may also be diminished or lost. For example, there is a risk that our “TASER” trademark could become synonymous with the general product category of “conducted energy devices” resulting in claims of genericness that could interfere with our enforcement efforts and create customer confusion as to product source. The right to stop others from misusing our trademarks and service marks in commerce depends, in part, on our ability to show enforcement of these rights. Our efforts to stop improper use, if ineffective, may lead to the loss of trademark and service mark rights, brand loyalty and notoriety among our customers and prospective customers.

Regardless of the outcome, the prosecution of patent and other intellectual property claims is both costly and time-consuming. Unauthorized use of our proprietary technology could divert our management’s attention from our business and could result in a material adverse effect on our business prospects, operating results and financial position.

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are distributed, the ability to effectively enforce intellectual property rights may not exist. Patent requirements differ by country and certain domestic or international laws may prohibit us from satisfying these requirements, creating a risk that some of our international patents may become unenforceable. Patents for older technologies, such as those first introduced in our TASER M26 CED and TASER X26 CED, have expired or will expire due to statutory limits on patent terms. Despite policies and efforts to maintain secrecy of trade secrets and other confidential information, such information could be compromised by employees, partners or other third parties.

Once established, there is no guarantee that our intellectual property rights will remain in force. Issued patents may be re-examined and subsequently ruled invalid or unenforceable. Our registered trademarks may also be diminished or lost. For example, there is a risk that our “TASER” trademark could become synonymous with the general product category of “conducted energy devices” resulting in claims of genericness that could interfere with our enforcement efforts and create customer confusion as to product source. The right to stop others from misusing our trademarks and service marks in commerce depends, to some extent, on our ability to show evidence of enforcement of our rights against such misuse in commerce. Our efforts to stop improper use, if ineffective, may lead to the loss of trademark and service mark rights, brand loyalty and notoriety among our customers and prospective customers.

Inability to protect our intellectual property could negatively impact our commercial efforts and competitive market advantage. Regardless of the outcome, the prosecution of patent and other intellectual property claims is both costly and time-consuming. Unauthorized use of our proprietary technology could divert our management’s attention from our business and could result in a material adverse effect on our business prospects, operating results and financial position.

We may be unable to enforce patent rights internationally, which may limit our ability to prevent our product features from being used by competitors in some foreign jurisdictions.

Our U.S. patents protect us from ~~imported~~the importation of infringing products ~~coming~~ into the United States ~~from abroad~~. We have filed applications for patents in foreign countries; however, these may be inadequate to protect markets for our products in these foreign countries. Each patent is examined and granted according to the law of the country where it was filed ~~independent~~regardless of whether a U.S. patent on similar technology was granted. Certain foreign countries have patent working requirements that require a patent owner to practice a patented invention within the respective country. A patent in a foreign country may be subject to cancellation, forfeiture, compulsory license or other penalty if the claimed invention has not been worked in that country. Meeting the requirements of working an invention differs by country and ranges from sales in the country to manufacturing in the country. U.S. export law, or the laws of some foreign countries, may prohibit us from satisfying the requirements for working the invention, creating a risk that some of our international patents may become unenforceable. In a country in which we do not have a patent or a country in which our patent in that country is unenforceable or unenforced, other companies and makers of similar products may be able to copy our products or features of our products without consequence, thus limiting our ability to capture market share or protect our technology, which could materially harm our business prospects and operating results.

The use of open-source software in our products, services and technologies may expose us to additional risks and harm our intellectual property.

Open-source software is typically freely accessible, usable and modifiable. Certain open -source software licenses require a user who ~~intends~~distributes ~~to distribute~~ the open -source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software or require the user of such software to make any derivative works of the open -source code available to others on potentially unfavorable terms or at no cost. The terms of many open-source licenses have not been interpreted by courts, and there is a risk that those licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our products, services and technologies. In that event, we could be required to seek licenses from third parties to continue offering our products, to re-develop our products, to discontinue sales of our products or to release our proprietary software code under the terms of an open-source license, any of which could harm our business. Although we aim to avoid any use of open source software in our products, services and technologies, and otherwise only use open source software available under permissive open source licenses, it is possible that other manners of use, including those that a third-party may allege to be in breach of a corresponding open source license, may have inadvertently occurred in deploying our products, services and technologies. If a third-party software provider has incorporated certain types of open-source software into software we license from such third-party for our products, services and technologies without our knowledge, we could be required to disclose the source code to our products, services and technologies. This could harm our intellectual property position as well as our business prospects, operating results and financial condition.

34Although we aim to avoid the use of open-source software in our products, services and technologies, and otherwise only use open source software available under permissive open source licenses, it is possible that other manners of use, including those that a third party may allege to be in breach of a corresponding open source license, may have inadvertently occurred in deploying our products, services and technologies. If a third party software provider has incorporated certain types of open-source software into software we license from such third party for our products, services and technologies without our knowledge, we could be required to disclose the source code to our products, services and technologies. This could harm our intellectual property position as well as our business prospects, operating results and financial condition.

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A variety of new and existing laws and/or interpretations could materially and adversely affect our business.

AsWe ~~detailed in “Item I. Business – Government Regulation” in this Annual Report on Form 10-K, we~~ are subject to a variety of laws and regulations in the United States and abroad that involve matters central to our business, including laws and regulations related to: privacy, data protection, security, retention and deletion; rights of publicity; content; intellectual property; regulation of certain of our CEDs as firearms; advertising; marketing; distribution; electronic contracts and other communications; competition; consumer protection; telecommunications; product liability; taxation; labor and employment; sustainability; economic or other trade prohibitions or sanctions; securities; and online payment services. The introduction of new products and expansion of our activities in certain jurisdictions, including through acquisitions, orand other actions that we may take, may subject us to additional laws, regulations or other government scrutiny. There are several legislative proposals in the United States, at both the federal and state level, that could impose new obligations in areas affecting our business. In addition, foreign privacy, data protection, content, competition, sustainability and other laws and regulations can impose different obligations or be more restrictive than those in the United States.

These U.S. federal and state and foreign laws and regulations, which in some cases can be enforced by private parties in addition to government entities, are constantly evolving and can be subject to significant change. As a result, the application, interpretation, and enforcement of these laws and regulations are often uncertain and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices. New laws and regulations (or new interpretations of existing laws and regulations) could materially and adversely affect our business.

The cost of compliance with these laws and regulations is high and is likely to increase in the future. Additionally, these laws and regulations, or any associated inquiries or investigations or other government actions, have in the past and may in the future delay or impede the development of new products, result in negative publicity, cause customers to delay purchases, require significant management time and attention, cause us to change our business practices, and subject us to remedies that may harm our business, including civil or criminal liability, such as fines, demands or orders that we modify or cease existing business practices. For additional details, refer to “Item I. Business – Government Regulation.”32

We are subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to ESG matters, that could expose us to numerous risks.

We are subject to changing rules and regulations promulgated by several governmental and self-regulatory organizations, including the SEC, the Nasdaq Stock Market and the Financial Accounting Standards Board (“FASB”). These rules and regulations continue to evolve in scope and complexity and many new requirements have been created in response to laws enacted by Congress, making compliance more difficult and uncertain. In addition, increasingly regulators, customers, investors, employees and other stakeholders are focusing on ESG matters and related disclosures. These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations. For example, developing and acting on initiatives within the scope of ESG, and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and time-consuming and is subject to evolving reporting standards, including the SEC’s recently adopted and stayed climate-related reporting requirements, and similar proposals by other domestic or international regulatory bodies. Foreign governments have also enacted legislation to address ESG issues, such as the UK Modern Slavery Act.

Additionally, unfavorable perception regarding our social initiatives, governance practices, diversity initiatives, the perceived or actual impacts of our products and services, environmental policies or other growing concerns of our stakeholders, could adversely affect our reputation. Any negative effect on our reputation could have an adverse effect on the size of our customer base, which could adversely affect our business and financial results. We have been, and may be in the future, subject to informal private or public inquiries and formal proxy proposals by activists urging us to take certain corporate actions related to ESG matters, which may not be aligned with our best interests. These activities may adversely affect our business in a number of ways, since responding to inquiries or proposals can be costly, time-consuming, and disruptive to our operations and could meaningfully divert our resources, including the attention of our management team and our employees.

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~~progress~~The ~~against~~cost ~~those~~of ~~goals,~~compliance ~~may~~with bethese ~~based~~laws ~~on standards for measuring progress that are still developing, internal controls~~ and ~~processes~~regulations ~~that~~is ~~continue~~high ~~to evolve,~~ and ~~assumptions~~is ~~that~~likely ~~are subject~~ to ~~change~~increase in the future. ~~In addition~~Additionally, wethese ~~could~~laws beand ~~criticized~~regulations, ~~for~~or ~~the~~any ~~scope~~associated inquiries or ~~nature~~investigations ofor ~~such~~other ~~initiatives~~government oractions, ~~goals~~have orin ~~for~~the ~~any~~past ~~revisions~~and tomay ~~these~~in ~~goals.~~the ~~Given~~future ~~the~~delay ~~dynamic~~or ~~nature~~impede the development of ~~ESG~~new ~~expectations~~products, ~~standards~~result ~~and~~in ~~regulations~~negative publicity, ~~which~~cause ~~may~~customers ~~change~~to ~~over~~delay ~~time~~purchases, werequire ~~may~~significant ~~from~~management time toand ~~time~~attention, ~~need~~cause us to ~~update~~change ~~or otherwise revise~~ our ~~current~~business practices, ~~initiatives~~ and ~~goals,~~subject ~~including~~us ~~in response~~ to ~~legislative~~remedies orthat ~~legal~~may ~~developments.~~harm If our ~~ESG-related data~~business, ~~processes~~including ~~and~~civil ~~reporting are incomplete~~ or ~~inaccurate~~criminal liability, orsuch ifas wefines, ~~fail~~demands toor ~~achieve~~orders ~~progress~~that ~~with~~we ~~respect~~modify toor ~~our~~cease ~~goals~~existing ~~within~~business ~~the~~practices. ~~scope~~For ofadditional ~~ESG~~details, onrefer ato ~~timely~~“Item ~~basis,~~1. orBusiness at– ~~all,~~Governmental weRegulation” ~~may~~in bethis ~~exposed~~Annual toReport ~~potential~~on ~~liability~~Form or10-K ~~litigation,~~for ~~and~~the ~~our~~year ~~reputation,~~ended ~~business~~December 31, ~~financial performance and growth could be adversely affected~~2025.

Uncertainties with complex U.S. federal, state and local and foreign procurement laws and regulations of governments could cause us to incur costs, which could have a material adverse effect on our business, financial position, results of operations and cash flows.

We have entered and will enter into contracts with U.S. federal, state and local governments and foreign governments. This subjects us to various statutes and regulations applicable to companies doing business with governments, including the Federal Acquisition Regulation (“FAR”). We must comply with laws and regulations relating to the formation, administration and performance of U.S. federal, state and local and foreign government contracts. These laws and regulations govern how we conduct business with government customers.

Recently issued executive orders are intended to (i) simplify and accelerate the procurement process through a review and restructuring of the FAR, and its supplements and (ii) modernize defense acquisitions by promoting commercial solutions, innovative acquisition authorities, and other existing streamlined processes. Among the actions directed is a review of major defense acquisition programs that are more than 15% behind schedule or over budget, including identifying any programs for potential cancellation. Should the U.S. government review one or more major defense programs in which we provide products and/or services, and such review leads to a full or partial cancellation of one of these programs, it could have an adverse effect on our business, financial condition, results of operations and cash flows.

We are subject to evolving corporate governance and public disclosure regulations and expectations that could expose us to numerous risks.

We are subject to changing rules and regulations promulgated by several governmental and self-regulatory organizations, including the SEC, the Nasdaq Stock Market and the FASB. These rules and regulations continue to evolve in scope and complexity with many new requirements arising from laws enacted by Congress, making compliance more difficult and uncertain. In addition, certain regulators, customers, investors, employees and other stakeholders are focusing on environmental, social and governance (“ESG”) matters and related disclosures, while other ESG-related practices have also been increasingly subject to political controversy in the United States. These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations. For example, developing and acting on initiatives within the scope of ESG, and collecting, measuring and reporting ESG-related information and metrics can be costly, difficult and time-consuming and is subject to evolving reporting standards, including the UK Modern Slavery Act and the European Union’s Corporate Sustainability Reporting Directive.

Additionally, unfavorable perception regarding our social initiatives, governance practices, diversity initiatives, the perceived or actual impacts of our products and services, environmental policies or other concerns of our stakeholders (which could conflict with the expectations of other stakeholders) could adversely affect our reputation. Any negative effect on our reputation could have an adverse effect on the size of our customer base, which could adversely affect our business and financial results. We have been, and may be in the future, subject to informal private or public inquiries and formal proxy proposals by activists urging us to take certain corporate actions related to ESG matters, which may not be aligned with our best interests. These activities may adversely affect our business in a number of ways, since responding to inquiries or proposals can be costly, time-consuming, and disruptive to our operations and could meaningfully divert our resources, including the attention of our management team and our employees.

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We may also communicate certain initiatives and goals, regarding environmental matters, diversity, responsible sourcing and social investments and other ESG-related matters, in our SEC filings or in other public disclosures. These initiatives and goals may be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy or completeness of the disclosure. Further, statements about our ESG-related initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future. In addition, we could be criticized for the scope or nature of such initiatives or goals or for any revisions to these goals. Given the dynamic nature of ESG expectations, standards and regulations, which may change over time, we may from time to time need to update or otherwise revise our current practices, initiatives and goals, including in response to legislative or legal developments. If our ESG-related data, processes and reporting attract controversy, if such data, processes or reporting are or are perceived to be incomplete or inaccurate, or if we fail to progress towards our ESG-related goals on a timely basis, or at all, we may be exposed to potential liability or litigation, and our reputation, business, financial performance and growth could be adversely affected.

Our amended and restated bylaws include exclusive forum provisions that could increase costs to bring a claim, discourage claims or limit the ability of our shareholders to bring a claim in a judicial forum viewed by shareholders as more favorable for disputes.

Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Chancery Court of the State of Delaware will be, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or shareholders; (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or of our ~~amended and restated~~ certificate of incorporation or our ~~amended and restated~~ bylaws; or (iv) any action asserting a claim against us or any of our directors or officers governed by the internal affairs doctrine. In addition, our ~~amended and restated~~ bylaws also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any claim arising under the Securities Act. The exclusive forum provision in our ~~amended and restated~~ bylaws does not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

The choice of forum provision may increase costs to bring a claim, discourage claims or limit a shareholder’s ability to bring a claim in a judicial forum ~~that~~viewed itby ~~finds~~the shareholder as more favorable for disputes with Axon or Axon’s directors, officers or other employees, which may discourage such lawsuits against Axon or Axon’s directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our ~~amended and restated~~ bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

Risks Related to our ~~Convertible Notes~~Indebtedness

Fulfilling our debt obligations requires significant cash resources, ~~and~~which we may ~~not~~exceed ~~have~~our ~~sufficient~~available cash flow ~~to pay our debt~~.

~~As of December 31, 2024, we had $690.0 million in aggregate principal amount outstanding under our 2027 Notes.~~ Our ability to meet our debt obligations, including making, ~~our~~ scheduled ~~payments of the~~ principal and interest payments or refinancing ~~our indebtedness~~obligations, depends on our future performance, ~~which is subject to economic, financial, competitive,~~ and ~~other~~external factors, ~~many of which are~~ beyond our control. If our business fails to generate sufficient cash flow from operations to meet these obligations and fund capital expenditures, we may be required to adopt ~~one~~alternatives or(for ~~more alternatives~~example, ~~such as~~ asset sales, debt restructuring, or ~~raising additional~~ equity ~~capital,~~financing) ~~which~~that ~~could~~may ~~involve~~be on unfavorable or dilutive terms. ~~Additionally~~Further, our ability to refinance our indebtedness will depend on market conditions and our financial standing at such time, which may ~~not~~ be ~~favorable~~unfavorable. ~~Failure~~If towe ~~engage~~are inunable ~~any~~to ofidentify ~~these~~or ~~activities~~pursue acceptable alternatives on ~~desirable~~commercially reasonable terms, we could ~~result~~be inunable ato ~~default~~meet on our debt obligations, which could result in a default.

The ~~conditional~~2027 ~~conversion~~Note ~~feature~~Hedge ofand ~~the~~Warrant ~~Notes,~~transactions ifmay ~~triggered,~~impact ~~may~~the ~~adversely~~value ~~affect~~of our ~~financial~~common ~~condition and operating results~~stock.

IfIn ~~the~~connection ~~conditional~~with ~~conversion~~the ~~feature~~pricing of the 2027 Notes, iswe ~~triggered,~~entered ~~holders~~into of2027 ~~Notes~~Note ~~may~~Hedge ~~choose~~transactions toand ~~convert~~Warrant ~~their~~transactions ~~Notes~~with ~~during~~the ~~specified~~option ~~periods~~counterparties. atThe ~~their~~2027 ~~discretion.~~Note IfHedge ~~one~~transactions orwere ~~more~~intended ~~holders~~to ~~elect~~reduce the potential dilution to ~~convert~~our ~~their~~common stock upon any conversion of the 2027 Notes, weand ~~would~~offset beany cash payments we are required to ~~settle~~make ~~any~~in ~~converted~~excess of the principal amount inof ~~cash,~~converted ~~which~~Notes. ~~could~~We ~~adversely~~entered ~~impact~~into agreements with the counterparties to our ~~liquidity.~~2027 ~~Moreover,~~Note ~~even~~Hedge iftransactions noin ~~holders~~March ~~elect~~2025 to ~~convert~~leave ~~their~~the 2027 Note Hedge transactions outstanding until the original maturity of the 2027 Notes, ~~applicable~~in ~~accounting~~respect ~~rules~~of ~~may~~the ~~require~~2027 ~~that~~Notes we ~~reclassify~~exchanged ~~all~~in orMarch 2025. Further, we unwound a portion of the ~~outstanding~~Note Hedge and Warrant transactions corresponding to the principal amount of the 2027 Notes tothat awe ~~current~~exchanged ~~liability~~in December 2025. ~~Such~~As ~~reclassification~~of ~~would~~the ~~materially~~date ~~reduce~~of filing this Annual Report on Form 10-K, a portion of the 2027 Note Hedge and Warrant transactions were still outstanding, notwithstanding the extinguishment of our ~~net~~2027 ~~working~~Notes. ~~capital~~As a result, ~~potentially~~the ~~affecting~~Warrant transactions could have a dilutive effect on our ~~financial~~common ~~flexibility~~stock ~~and~~to ~~stability~~the extent that the market price per share of our common stock exceeds the strike price of the Warrants.

36Additionally, the option counterparties or their affiliates may adjust their hedge positions by entering into or unwinding various derivatives linked to our common stock, or by buying or selling our common stock or other securities in secondary market transactions. Such actions could cause fluctuations in the market price of our common stock, potentially causing it to rise or fall.

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~~Conversion~~If any of the ~~Notes~~2027 ~~may~~Note ~~dilute~~Hedge ~~the~~or ~~ownership~~Warrant ~~interest~~transactions ofdo ~~our~~not ~~shareholders~~perform oras ~~could~~anticipated, ~~depress~~counterparties ~~the~~may ~~price~~unwind oftheir ~~our~~positions, ~~common~~which could adversely affect our stock price.

The ~~conversion~~effect of ~~some~~these ortransactions ~~all~~and ofrelated ~~the~~activities ~~Notes~~on ~~could dilute our shareholders’ ownership interests. Upon conversion, we have~~ the ~~option~~market toprice ~~pay or deliver cash, shares~~ of our common stock, orwill adepend combination of both. If we elect to settle the remainder, if any, of our conversion obligation exceeding the principal amount of the Notes with shares of our common stock or a mix of cash and stock, any sales in ~~the~~part ~~public~~on market ofconditions ~~our~~and ~~common~~other ~~stock~~factors ~~issuable~~beyond ~~upon such conversion could adversely affect prevailing market prices of~~ our ~~common stock. Additionally~~control, ~~the~~and ~~existence~~their ofimpact ~~the~~cannot ~~Notes~~be ~~may~~ascertained ~~encourage~~at ~~short~~this ~~selling~~time. byAny ~~market participants because the conversion~~ of ~~the~~these ~~Notes~~activities could beadversely ~~used~~affect ~~to satisfy short positions, or anticipated conversion of~~ the ~~Notes~~value ~~into shares~~ of our common stock ~~could depress the market price of our common stock~~.

Changes in the accounting treatment for the Notes could have a material effect on our reported financial results.

As of January 1, 2022, we adopted ASU 2020-06, which affects the accounting treatment of the Notes. Accordingly, we do not bifurcate the liability and equity components of the Notes on our consolidated balance sheet and use the if-converted method of calculating diluted earnings per share (“EPS”). Under this method, diluted EPS will generally be calculated assuming that all the Notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be anti-dilutive, which could adversely affect our diluted EPS. Because the principal amount of the Notes upon conversion is required to be paid in cash, and only the excess is permitted to be settled in shares, the application of the if-converted method will produce a similar result as the treasury stock method prior to the adoption of ASU 2020-06. The effect of the treasury stock method is that the shares issuable upon conversion of such Notes are not included in the calculation of diluted EPS except to the extent that the conversion value of such Notes exceeds their principal amount.

In accordance with ASU 2020-06, the Notes are reflected as a liability on our consolidated balance sheets, with the initial carrying amount equal to the principal amount of the Notes, net of issuance costs. The issuance costs have been treated as a debt discount for accounting purposes, which are and will be amortized into interest expense over the term of the Notes. As a result of this amortization, the interest expense that we recognize for the Notes for accounting purposes is greater than the cash interest payments payable on the Notes, thereby resulting in lower reported income.

Future changes made to our accounting standards related to the Notes could have a material effect on our reported financial results.

The 2027 Note Hedge and Warrant transactions may impact the value of the Notes and our common stock.

In connection with the pricing of the Notes, we have entered into 2027 Note Hedge transactions and Warrant Transactions with the option counterparties. The Note Hedge transactions are intended to reduce the potential dilution to our common stock upon any conversion of Notes and offset any cash payments we are required to make in excess of the principal amount of converted Notes. However, the Warrant transactions could have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the Warrants.

Additionally, the option counterparties or their affiliates may modify their hedge positions by entering into or unwinding various derivatives tied our common stock, or by buying or selling our common stock or other securities in secondary market transactions following the pricing of the Notes. These activities could occur prior to the maturity of the Notes, or and in connection with any conversion, redemption, or repurchase of the Notes. Such actions could cause fluctuations in the market price of our common stock, either increasing or decreasing its value.

If any of the Note Hedge and Warrant transactions fail to become effective, counterparties or their affiliates may unwind their hedge positions, which could adversely affect the value of our common stock.

The potential effect of these transactions and activities on the market price of our common stock will depend in part on market conditions and other factors beyond our control, and their impact cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock.

We are exposed to counterparty risk with respect to the 2027 Note Hedge transactions.

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The option counterparties for the 2027 Note Hedge transactions are financial institutions, and we face the risk that any or all of them might default on their obligations under these transactions. Our exposure to this credit risk is unsecure, as the option counterparties have not secured their obligations by any collateral.

If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure under the 2027 Note Hedge transactions at that time. Our exposure will depend on many factors, including an increase in the market price and volatility of our common stock. A counterparty default could also have tax consequences and could increase dilution relative to our current expectations. We cannot provide assurances as to the financial stability or solvency of the option counterparties, and any default could materially and adversely affect our financial results.

AOur ~~default~~indebtedness bycontains anrestrictive ~~option~~covenants ~~counterparty~~that could ~~lead~~limit usour tooperational ~~suffer~~flexibility ~~adverse tax consequences~~ and ~~result~~adversely inaffect ~~greater~~the ~~dilution~~value of our common stock ~~than we currently anticipate~~. ~~We cannot provide assurances as to the financial stability or solvency of the option counterparties, and any default could materially and adversely affect our financial results and shareholder value.~~

Our revolving credit facility, and the indentures governing our 2030 Notes and 2033 Notes (collectively, the “Notes”) impose certain restrictions on our ability to, among other matters, incur additional debt and liens, make distributions to our shareholders in certain circumstances, dispose of assets and enter into mergers, consolidations and transfers of all or substantially all of our assets. In addition, the revolving credit facility requires us to maintain specified financial ratios and satisfy other financial condition tests. Further, following certain change of control events, we would be required to offer to repurchase the Notes, and such events would also constitute an event of default under our revolving credit facility.

These limitations may restrict our ability to operate our business, pursue strategic transactions, or otherwise respond to changing business or economic conditions. Consequently, compliance with these covenants could adversely affect our business and the value of our common stock.

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Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Cybersecurity Risk Management and Strategy

Our business isdepends ~~highly dependent~~ on ~~our~~the ~~information~~secure ~~systems, including our ability to operate them effectively~~ and toreliable ~~successfully~~operation ~~implement~~of ~~new technologies, methods and processes, as well as adequate controls and cybersecurity incident recovery plans. We rely on~~ our information systems, towhich ~~manage~~support ~~our business~~operations, ~~data,~~ communications, supply chain, ~~ordering~~management, ~~pricing,~~ billing, ~~inventory replenishment,~~ accounting ~~functions and other processes. In addition~~, ~~we must protect the confidentiality~~ and ~~integrity of the data of our business, employees, customers and~~ other ~~third~~critical ~~parties~~functions. ~~Our~~We ~~business~~collect, ~~involves the collection~~process, ~~processing~~store, ~~storage~~ and ~~transmission~~transmit of personally identifiable ~~information~~ and other sensitive ~~and confidential~~ information. ~~This~~relating ~~data is wide ranging and relates~~ to ~~our~~ employees, customers, ~~and~~ third parties, ~~including~~and, ~~the~~in certain cases, subjects of law enforcement~~. Our compliance obligations include those prescribed under the laws and regulations that dictate whether~~, ~~how~~ and ~~under~~must ~~what~~protect ~~circumstances~~its ~~we can receive~~confidentiality, ~~process~~integrity, ~~hold~~ and~~/or~~ ~~transfer certain data that is critical to our operations, including data shared between countries or regions in which we operate and data shared among our products and services~~availability.

AsWe ~~part of our company-wide culture of security, we~~ maintain a formal cybersecurity and information security program that isincorporates ~~aligned~~recommendations ~~with~~from ~~the~~recognized ~~standards~~frameworks ~~set~~and ~~forth~~standards, byincluding ~~the International Organization for Standardization (“~~ISO”), ~~the~~SOC ~~American Institute of Certified Public Accountants in Systems and Organization Controls~~ 2, ~~the~~CJIS, ~~Criminal Justice Information Services~~FedRAMP, ~~the Federal Risk~~ and ~~Authorization Management Program and the National Institute of Standards and Technology~~NIST. ~~Our~~The Information Security ~~Team~~team ~~maintains~~oversees the program, which is designed to ~~ensure proper monitoring~~identify, ~~prevention~~prevent, ~~detection~~detect, ~~mitigation~~respond ~~and remediation of cybersecurity vulnerabilities~~to, ~~including the prompt investigation~~ and ~~management~~remediate ~~of all reported or discovered security events, including~~ cybersecurity ~~threats~~vulnerabilities and incidents~~, in our ordinary course of business~~.

~~Our~~To manage cybersecurity risk and ~~information~~support ~~security~~regulatory ~~programs~~compliance ~~are~~and ~~designed~~system toavailability, ~~comply~~we ~~with~~undertake ~~key~~activities ~~global~~including ~~financial~~monitoring ~~regulations~~evolving ~~and~~data ~~cybersecurity~~protection laws; inmaintaining ~~the~~internal ~~jurisdictions~~and incustomer-facing ~~which~~policies; weproviding ~~operate.~~regular ~~The~~employee ~~program~~training, ~~includes~~including ~~taking~~phishing ~~several~~simulations; ~~proactive~~requiring ~~steps~~employees toand ~~prepare~~service ~~for~~providers ~~attempts~~ to ~~compromise~~safeguard ~~our~~data; ~~information~~conducting ~~systems.~~risk-based Todiligence ~~provide~~and ~~for~~oversight ~~the availability~~ of ~~critical~~third-party ~~data~~vendors; ~~and~~performing ~~systems,~~periodic ~~maintain~~risk ~~regulatory compliance~~assessments, ~~manage~~vulnerability ~~our material cybersecurity risks~~scans, ~~and~~penetration ~~protect against~~testing, ~~detect~~ and ~~respond~~tabletop toexercises; ~~cybersecurity~~updating ~~threats~~security technologies; and ~~incidents,~~maintaining wecybersecurity ~~undertake~~insurance ~~the below listed activities:~~coverage.

~~•closely~~Third ~~monitor~~Party ~~emerging~~Monitoring ~~data protection laws~~ and ~~implement~~External ~~changes to our processes designed to comply;~~Reviews

~~•undertake~~We ~~regular~~engage ~~reviews~~third-party ~~(at~~technology ~~least~~providers ~~annually)~~to support the protection of our ~~consumer~~information ~~facing~~systems and networks. These services include vulnerability assessments, incident response support such as computer forensics, internal ~~policies~~and external audits for security certifications, and ~~statements~~broader ~~related~~evaluations of program maturity. Material findings, significant control weaknesses, and key recommendations arising from these activities are reported to ~~cybersecurity;~~the Enterprise Risk and Compliance Committee of the Board of Directors of the Company (“ERC Committee”).

•proactively inform our customers of substantive changes related to customer data handling;

•conduct annual information security training for all employees;

•recruit and retain highly skilled cybersecurity professionals, and provide regular training and development opportunities for our cybersecurity and information security employees;

•conduct regular phishing email simulations for all employees and all contractors with access to corporate email systems to enhance awareness and responsiveness to such possible threats;

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•through policy, practice and contract (as applicable), require employees, as well as third parties who provide services on our behalf, to treat customer information and data with care;

•perform due diligence on third-party vendors and, based on our risk assessment, put in place contractual undertakings and oversight to manage and reduce the risks associated with third-party vendors;

•run tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our technologies, methods and processes;

•conduct regular risk assessments of our information systems to identify weaknesses, and develop and implement mitigations to improve our cybersecurity and information security program;

•conduct regular security assessments, vulnerability scans, and penetration tests (including by third-party assessment firms) of products systems and internal systems to discover vulnerabilities and apply appropriate mitigations within standardized timelines;

•maintain, implement, evaluate and update our cybersecurity technologies to address threats and vulnerabilities; and

•carry information security risk insurance that provides protection against the potential losses arising from a cybersecurity incident.

Third-Party Monitoring and External Reviews

Axon utilizes the assistance of third-party technology and providers to support our objective of protecting our information, information systems and network. Services provided by third parties to assess the performance of our cybersecurity risk management systems and procedures and to identify cybersecurity risks to the Company include assessing products and internal systems for vulnerabilities, incident response services such as computer forensics, internal and external audits for security certifications globally and overall security program maturity evaluations. Axon and our service providers have also developed systems and processes that are designed to protect our and our customers’ data, to prevent data loss, and to prevent or detect cybersecurity threats and incidents.

Material findings, notable weaknesses and suggestions are presented to the Enterprise Risk and Compliance Committee of the Company’s Board of Directors (the “ERC Committee”) as discussed below.

Cybersecurity Management Team

~~Our~~The Company's cybersecurity and information security program, ~~which~~including ~~includes~~ data privacy, is ~~the~~led ~~responsibility~~by ofthe ~~our~~ Chief Information Security Officer (“CISO”), who oversees ~~our~~the Company's global information security ~~program~~function. ~~Our~~The current CISO has ~~served~~more inthan ~~various~~20 years of experience in information technology and information security, ~~roles over the past 20 years~~ including leadership roles at Netflix, Salesforce, and Facebook, and has served as the Company's CISO since February 2024. He ~~also~~holds ~~has relevant degrees and certifications, including~~ a Master of Science ~~degree~~ in Information Assurance ~~from~~and ~~Iowa~~relevant ~~State~~industry ~~University~~certifications. ~~The information security program has been built over the last 10 years under the leadership of experienced Information Security professionals.~~

~~Our~~The CISO attends quarterly meetings of ~~our~~the Disclosure Committee and ~~provides~~the ~~input~~ERC onCommittee ~~disclosures in our Quarterly Reports on Form 10-Q~~ and ~~Annual~~provides ~~Reports~~updates onregarding ~~Form 10-K, including~~ the ~~relevant~~Company’s cybersecurity risk ~~factors set forth therein. Our CISO~~profile, ~~along~~program ~~with the Information Security Team~~maturity, ~~also~~significant ~~leads our Security Incident Response Team~~developments, ~~which is responsible for investigating suspected cybersecurity threats~~ and ~~incidents.~~related Indisclosures ~~the~~included ~~event~~in ~~of a possibly material cybersecurity incident,~~ the ~~Information~~Company’s ~~Security~~filings ~~Team~~with ~~also includes~~ the following executive team members: Corporate General Counsel, Chief Legal Officer, Chief Accounting Officer, Chief Operating Officer & Chief Financial Officer and, to the extent practicable or relevant, other senior executivesSEC.

~~Board~~The CISO, together with the Information Security team, leads the Security Incident Response Team, which investigates suspected cybersecurity threats and incidents. In the event of ~~Directors~~a ~~Oversight~~potentially material cybersecurity incident, senior leadership, including the Chief Legal Officer, Chief Accounting Officer, Chief Operating Officer, Chief Financial Officer, and other appropriate members of management, participate in the response and assessment process.

~~As a part of its oversight of the key risks facing Axon, our~~ Board of Directors devotes significant time and attention to data and systems protection, including cybersecurity and information security risk. While the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) reviews any significant legal, compliance or regulatory matters that may have a material impact on our business, financial statements or compliance policies generally, it does so in consultation with our ERC Committee with respect to any such matters that involve cybersecurity, data privacy or information technology. The Chair of our ERC Committee is also a member of our Audit Committee, which facilitates close coordination between the two committees on cybersecurity, data privacy and information technology matters.Oversight

~~Our~~The ~~ERC~~Board ~~Committee~~of Directors oversees ~~our~~data ~~overall~~and ~~approach~~systems toprotection, ~~enterprise~~including cybersecurity risk. ~~management,~~The ofAudit ~~which~~Committee ~~cybersecurity~~reviews issignificant anlegal, ~~important~~compliance, ~~component.~~or ~~The~~regulatory ~~ERC~~matters ~~Committee~~that ~~and~~may ~~its~~materially ~~Chair,~~impact inthe ~~coordination~~Company and consults with the ~~Information~~ERC ~~Security~~Committee ~~Team~~on ~~and~~matters ~~CISO~~involving cybersecurity, ~~regularly~~data ~~review~~privacy, ~~the~~or ~~categories~~information oftechnology. ~~risk~~The Chair of the ~~Company~~ERC ~~faces,~~Committee ~~including~~also ~~any~~serves ~~cybersecurity~~on ~~risk~~the ~~exposures~~Audit Committee, asfacilitating ~~well~~coordination asbetween the committees.

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~~likelihood~~The ofERC ~~occurrence,~~Committee oversees the ~~potential~~Company’s ~~impact~~enterprise ofrisk ~~those risks, and the steps~~ management ~~has taken to monitor~~framework, ~~mitigate~~including ~~and~~cybersecurity ~~control such exposures~~risk. ToThe ~~facilitate these reviews, the~~ Information Security ~~Team~~team and CISO report ~~at least quarterly~~ to the ERC Committee ~~with~~at ~~respect~~least toquarterly regarding cybersecurity risks, ~~including~~emerging ~~those identified through review of our business, of rising~~ threats ~~in the industry~~, and of the ~~current~~status ~~state~~ of ~~our~~the Company’s cybersecurity ~~and information security~~ program. The ERC Committee ~~makes~~provides ~~regular~~updates ~~reports~~ to the ~~full~~ Board of Directors ~~regarding updates on cybersecurity and other risks~~.

Incident Response and Assessment Policies and Procedures

~~Axon~~The ~~has~~Company ~~implemented~~maintains ~~our~~an ~~cybersecurity and information security program and cybersecurity~~ incident response plan tothat ~~protect~~establishes ~~our~~defined ~~and~~roles ~~our customers’ data from,~~ and ~~mitigate~~responsibilities ~~the effects of, unintentional disclosure as well as cybersecurity threats~~ and ~~incidents~~includes of all severity levels. Our program and response plan outline actions to be taken after identifying a suspected cybersecurity threat or incident and the people responsible for managing those actions. We have also implemented disclosure controls and procedures for ~~determining~~assessing the materiality of a cybersecurity ~~incident to outline disclosure and communications responsibilities during cybersecurity incidents of all severity levels~~events.

In the event of a ~~possibly~~potentially material ~~cyber~~cybersecurity incident, the Security Incident Response Team, under the direction of the ~~Corporate General Counsel and/or the~~ Chief Legal Officer, ~~would~~evaluates ~~collect and document information~~ relevant toquantitative ~~materiality~~ and ~~make~~qualitative afactors, ~~threshold determination as to whether such cybersecurity incident (~~including ~~those~~incidents ~~occurring~~affecting ~~on the information systems of~~ third-party ~~parties) is potentially material~~systems. The ~~Security Incident Response~~ Team ~~would~~reports ~~meet~~its ~~with~~findings to the Chair of the ERC Committee ~~to review the preliminary findings of the Security Incident Response Team, including the possible factors in determining materiality~~. If ~~the Security Incident Response Team and the Chair of the ERC Committee determine that the cybersecurity incident warrants~~ further review ~~after~~is ~~consideration of such findings and factors~~warranted, the Audit Committee ~~would~~is be convened, ~~for~~with ~~a meeting (to which all~~ members of the ERC Committee ~~would be~~ invited), to ~~review~~determine ~~the cybersecurity incident and the findings of the Security Incident Response Team and the Chair of the ERC Committee. The Audit Committee would then make a~~ materiality ~~determination~~ consistent with SEC guidance. ~~and~~Incidents bydetermined ~~considering~~not ~~relevant~~to ~~quantitative~~be ~~and~~material ~~qualitative~~are ~~factors,~~reported ~~informed~~to ~~by any recommendations of~~ the ERC Committee ~~and/or~~at its ~~Chair~~next scheduled meeting.

~~Any~~To ~~materiality~~date, ~~assessment~~the ~~that~~Company ~~results~~has innot aidentified ~~determination~~risks ~~that~~from aknown cybersecurity ~~incident~~threats, isincluding ~~not~~prior ~~material~~incidents, ~~would~~that behave ~~reported~~materially byaffected ~~the~~its ~~Information~~operations, ~~Security~~business ~~Team~~strategy, results of operations, or ~~appropriate~~financial ~~members~~condition. ofThe ~~management~~Company faces ongoing cybersecurity risks that, toif realized, could materially affect the ~~ERC~~Company. ~~Committee~~Additional atinformation ~~its~~is ~~next~~provided ~~scheduled~~in ~~meeting~~Item 1A of Part I of this Annual Report on Form 10-K.

At this time, we have not identified any risks from known cybersecurity threats, including as a result of prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations or financial conditions. However, we face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition. For additional details, refer to Item 1A in Part I of this Annual Report on Form 10-K.37

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Item 2. Properties

Our primary corporate headquarters are spread across ~~five~~seven facilities and approximately ~~400~~900,000 square feet in the Phoenix, Arizona metropolitan area. AsWe ofhave ~~December 31, 2024, we had~~ more than 3130 leased locations ~~including~~spread ~~Phoenix~~across ~~and~~nine ~~Scottsdale,~~states ~~Arizona;~~domestically ~~East Point~~ and ~~Peachtree,~~over ~~Georgia;~~15 ~~Seattle,~~countries ~~Washington;~~internationally. ~~Boston,~~These ~~Massachusetts;~~locations ~~San~~include ~~Francisco,~~manufacturing ~~California;~~and ~~Westerville~~research space, ~~Ohio;~~as ~~Washington,~~well ~~D.C,;~~as ~~Melbourne~~sales and ~~Sydney,~~administrative ~~Australia;~~offices. ~~Brussels,~~Our ~~Belgium;~~largest ~~Daventry~~manufacturing and ~~London,~~research ~~England;~~spaces ~~Tampere,~~are ~~Finland;~~located ~~Dietzenbach~~in ~~and Kassel~~Arizona, ~~Germany;~~while ~~Delhi,~~our ~~India;~~largest ~~Amsterdam,~~sales ~~Netherlands;~~and Hoadministrative ~~Chi~~offices ~~Minh~~are ~~City~~located ~~and~~in ~~Hanoi~~Arizona, ~~Vietnam; Athens~~Washington, ~~Greece;~~and ~~Madrid,~~Massachusetts. ~~Spain;~~Because ~~Rome,~~Axon ~~Italy;~~is ~~Toronto,~~a ~~Canada;~~global ~~and~~enterprise ~~Odense,~~with ~~Denmark.~~substantial Weinter-segment ~~also~~cooperation, ~~own~~the amajority ~~parcel~~ of ~~land~~our ~~located~~locations insupport ~~Scottsdale,~~both ~~Arizona~~of our reportable segments.

We believe our existing facilities are well maintained and in good operating condition. We also believe we have adequate manufacturing capacity for our existing product lines. To the extent that we continue to grow and introduce new products in the future, we will need to acquire additional facilities to locate the associated production lines. However, we believe we can acquire or lease such facilities on reasonable terms. We continue to make investments in capital equipment as needed to meet anticipated demand for our products.

The majority of our locations support both of our reportable segments, except for our Vietnam, Finland, and Seattle, Washington locations, which primarily support our Software & Sensors segment.

Item 3. Legal Proceedings

See discussion of litigation in Note 1311 included in Part II, Item 8 of this Annual Report on Form 10-K, which discussion is incorporated by reference herein.

Item 4. Mine Safety Disclosures

None.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is quoted under the symbol “AXON” on The NASDAQ Stock Market ~~Information~~LLC. As of February 18, 2026, there were 181 holders of record of our common stock. To date, we have not declared or paid cash dividends on our common stock. We do not intend to pay cash dividends in the foreseeable future.

Our common stock is quoted under the symbol “AXON” on The NASDAQ Stock Market LLC

Holders

As of February 24, 2025, there were 203 holders of record of our common stock.

Dividends

To date, we have not declared or paid cash dividends on our common stock. We do not intend to pay cash dividends in the foreseeable future.

Issuer Purchases of Equity Securities

In February 2016, our Board of Directors authorized a stock repurchase program to acquire up to $50.0 million of our outstanding common stock subject to stock market conditions and corporate considerations. The stock repurchase program does not have a stated expiration date. ~~During the year ended December 31, 2024, no common shares were purchased under the program.~~ As of December 31, ~~2024~~2025, $16.3 million remained available under the plan for future purchases.

41During the year ended December 31, 2025, holders of our 2027 Notes converted approximately $4.6 million principal amount and we issued 13,374 shares of our common stock. In connection with these conversions, we exercised call options under our 2027 Note Hedge and received 13,207 shares of our common stock.

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Stock Performance Graph

The following stock performance graph compares the performance of our common stock to the NASDAQ Composite Index and S&P 500 Index.

The graph covers the period from December 31, ~~2019~~2020 to December 31, ~~2024~~2025. The graph assumes that the value of the investment in our stock and in each index was $100 at December 31, ~~2019~~2020, and that all dividends were reinvested. We do not pay dividends on our common stock.

	2019		2020		2021		2022		2023		2024
	2020		2021		2022		2023		2024		2025
Axon Enterprise, Inc.	$	100.00	$	~~167~~128.2113	$	~~214~~135.2540	$	~~226~~210.4178	$	~~352~~484.4486	$	~~810~~463.7327
NASDAQ Composite	100.00		~~144~~122.9218		~~177~~82.0643		119.4522		~~172~~154.7748		~~223~~187.8714
S&P 500	100.00		~~118~~128.4071		~~152~~105.3940		~~124~~133.7910		~~157~~166.5940		~~197~~196.0216

Item 6. [Reserved]

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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”) isprovides ~~designed to provide a reader of our consolidated financial statements with a narrative from~~ the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. ~~Our~~ 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, ~~including~~such ~~“Part~~as Iadjusted gross margin, ~~Item~~which 1Asupplement -our ~~Risk~~GAAP ~~Factors”~~results by providing additional insight into our financial and ~~“Part~~operational IIperformance. For definitions and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, ~~Item~~refer 8to “Non-GAAP ~~Financial~~Measures” ~~Statements~~within ~~and~~this ~~Supplementary~~Annual ~~Data~~Report on Form 10-K.” The various sections of our MD&A contain ~~a number of~~ 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. ~~The tables in the MD&A sections below are derived from exact numbers and may have immaterial rounding differences.~~

~~Our~~ MD&A discusses our results of operations for the year ended December 31, ~~2024~~2025 as compared to the year ended December 31, ~~2023~~2024. For a discussion ~~and analysis~~ of the year ended December 31, ~~2023~~2024 as compared to the year ended December 31, ~~2022~~2023, refer to ~~Management’s~~MD&A ~~Discussion and Analysis of Financial Condition and Results of Operations~~ included in Part II, Item 7 of our amended 2024 Annual Report on Form 10-K/A for the year ended December 31, ~~2023~~2024, filed with the SEC on ~~February~~May 277, ~~2024~~2025.

Overview

Axon is ~~building~~a ~~the~~technology ~~public~~company ~~safety~~that ~~operating~~provides ~~system~~integrated ~~of the future by integrating a suite of~~ hardware ~~devices~~ and ~~cloud~~ software solutions. ~~that~~Our ~~not~~products ~~only~~and ~~revolutionize~~services ~~modern~~allow ~~policing~~customers ~~but~~across ~~also~~the ~~cater~~public toand ~~federal~~private ~~agencies,~~sector ~~corrections,~~to ~~justice~~capture and ~~enterprise-level~~use ~~security~~critical ~~and~~data ~~safety~~to ~~needs.~~support ~~Axon’s~~fully-connected ~~suite~~operational ~~includes~~workflows. ~~cloud-hosted~~Our ~~digital~~trusted ~~evidence~~network ~~management~~seamlessly ~~solutions,~~integrates ~~productivity~~software and ~~real-time~~hardware ~~operations~~with ~~software,~~a ~~body~~range ~~cameras,~~of ~~in-car~~connected ~~cameras~~devices, including TASER energy devices, ~~robotic~~cameras ~~security~~ and ~~training~~sensors, ~~solutions.~~drones ~~Axon’s~~and ~~growing~~robotics, ~~global~~cloud-based ~~customer~~evidence ~~base includes first responders across international~~management, ~~federal,~~records ~~state~~management, ~~and~~real-time ~~local~~operations ~~law enforcement~~software, ~~fire,~~critical ~~corrections,~~incident and emergency ~~medical~~response ~~services~~systems, asimmersive ~~well~~training, asand ~~the~~productivity ~~justice~~tools ~~sector,~~– ~~commercial~~all ~~enterprises,~~enhanced ~~and~~by ~~consumers~~AI.

~~Our~~During ~~revenues for~~ the year ended December 31, ~~2024 were $2.1 billion~~2025, anwe ~~increase~~realigned ofour ~~$521.8~~business ~~million,~~into ortwo ~~33.4%,~~reportable ~~from the comparable period in the prior year. We had income from operations of $58.5 million~~segments, ~~compared~~Connected toDevices ~~$156.9~~and ~~million~~Software ~~for~~and ~~the~~Services ~~same period in~~ (the ~~prior~~“Segment ~~year~~Realignment”). ~~Gross~~As ~~margin dollars increased $285.9 million but decreased as~~ a ~~percentage~~result of ~~revenue to 59.6% from 61.2% compared to~~ the ~~same~~Segment ~~period~~Realignment, inwe ~~the~~have ~~prior~~recast ~~year.~~our ~~The~~segment ~~decrease was primarily driven by higher stock-based compensation expense~~ and ~~amortization~~other ofrelevant ~~acquired~~disclosures ~~intangibles. Excluding the impacts of stock-based compensation expense and intangibles amortization in costs of goods sold, adjusted gross margin increased to 63.2%~~ for the year ended December 31, 2024, ~~compared~~ to ~~61.8%~~conform ~~for the same period in the prior year, primarily due~~ to an increased mix of high-margin Axon Cloud & Services revenue and investments in TASER automation and cost-reduction initiatives. Operating expenses increased $384.2 million, reflecting an increase in salaries, benefits, and stock-based compensation expenses, as well as an increase in professional and consulting expenses related to transaction costs. For the ~~year~~new ~~ended December 31, 2024, we recorded net income of $377~~presentation.0 million which included net realized and unrealized gains on fair value adjustments of strategic investments of $162.9 million, a net unrealized gain on marketable securities of $120.3 million, and interest income, net of $36.6 million. Net income of $175.8 million for the comparable period in the prior year reflected net unrealized losses of $80.5 million related to impairment and observable price changes for our existing investments and related warrants, interest income, net of $42.1 million, and a net unrealized gain of $38.7 million on marketable securities.

~~Certain~~Our ~~prior~~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 ~~amounts~~in ~~previously~~the ~~reported~~prior onyear. ~~our~~Gross ~~consolidated~~margin ~~financial~~dollars ~~statements~~increased ~~have~~$416.7 ~~been~~million ~~revised~~and increased as a percentage of revenue to ~~correct~~59.7% from 59.6% compared to the year ended December 31, 2024. Adjusted gross margin decreased to 62.6% for ~~immaterial~~the ~~errors~~year ended December 31, as2025 ~~described~~compared into ~~Note~~63.2% 1for the year ended December 31, ~~Note~~2024. 23The decrease was primarily driven by global tariffs and ~~Note~~a 24higher 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 innet ~~Part~~realized IIand unrealized gains of $186.4 million related to our strategic investments and a $105.7 million tax benefit, ~~Item~~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 ~~this~~$377.0 ~~Annual~~million ~~Report~~for onthe ~~Form~~year ~~10-K~~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.

Additionally, in Q1 2025 we approved a plan to realign our business to better reflect our continued growth and expansion of product, software and service offerings. Previously reported within two reportable segments, TASER and Software and Sensors, we will prospectively reorganize our business in a manner that provides increased transparency and distinction between our hardware and software and services components. As a result of the reorganization, effective with the first quarter of fiscal year 2025, our financial results will be reported in two reportable segments, Connected Devices and Software & Services, which our CODM will use to regularly review information, allocate resources and assess performance. Connected Devices will include hardware products, such as CEDs, body cameras, and drones. Software & Services will include products that integrate with our suite of connected devices, such as Axon Evidence, RMS and other cloud services. 40

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We are currently assessing the impact of this change on our financial reporting and related segment disclosures. We intend to recast prior period segment information to conform to the new reporting structure, as necessary, to ensure consistency and comparability across reporting periods.

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,
	2024				2023
	2025				2024
Net sales from products	$	1,~~221~~576,~~292~~864	5856.67	%	$	~~964~~1,~~002~~221,292	6158.86	%
Net sales from services	~~861~~1,~~234~~202,672		4143.43		~~596~~861,~~697~~234		3841.24
Net sales	2,~~082~~779,~~526~~536		100.0		12,~~560~~082,~~699~~526		100.0
Cost of product sales	~~618~~809,~~136~~303		29.71		~~447~~618,~~708~~136		2829.7
Cost of service sales	~~223~~312,~~010~~108		1011.72		~~157~~223,~~538~~010		10.17
Cost of sales	~~841~~1,~~146~~121,411		40.43		~~605~~841,~~246~~146		3840.84
Gross margin	1,~~241~~658,~~380~~125		59.67		~~955~~1,~~453~~241,380		6159.26
Selling, general and administrative	741,247		35.6		494,884		31.7
Operating expenses:
Research and development	441,593		21.2		303,719		19.5
Selling, general and administrative	1,035,893		37.3		741,247		35.6
Total operating expenses	1,182,840		56.8		798,603		51.2
Research and development	684,308		24.6		441,593		21.2
Income from operations	58,540		2.8		156,850		10.0
Total operating expenses	1,720,201		61.9		1,182,840		56.8
Interest income, net	36,595		1.8		42,112		2.7
Income (loss) from operations	(62,076)		(2.2)		58,540		2.8
Other income (loss), net	286,369		13.8		(41,901)		(2.7)
Interest income	75,431		2.7		43,693		2.1
Income before provision for income taxes	381,504		18.3		157,061		10.1
Interest expense	(94,238)		(3.4)		(7,098)		(0.3)
Provision for (benefit from) income taxes	4,470		0.2		(18,722)		(1.2)
Other income, net	99,857		3.6		286,369		13.8
Net income	$	377,034	18.1	%	$	175,783	11.3	%
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,
	2024				2023
	2025				2024
United States	$	12,~~775~~305,~~194~~012	8583	%	$	1,~~335~~775,~~516~~194	8685	%
Other countries	~~307~~474,~~332~~524		1517		~~225~~307,~~183~~332		1415
Total	$	2,~~082~~779,~~526~~536	100	%	$	12,~~560~~082,~~699~~526	100	%

International revenue increased ~~as a percentage of revenue~~ compared to the prior year 2024 comparative period, primarily driven by increased sales in our Americas region (i.~~e., Central America, South America, and Canada).~~

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Net Sales

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

	Year Ended December 31,								DollarChange		~~Percent Change~~PercentChange
	2024				2023
	2025				2024
TASER segment:
Connected Devices segment:
TASER Devices (Professional)	$	453,055	21.8	%	$	333,923	21.4	%	$	119,132	35.7	%
TASER (1)	$	913,883	32.9	%	$	750,141	36.0	%	$	163,742	21.8	%
Cartridges	246,766		11.8		193,285		12.4		53,481		27.7
Personal Sensors (2)	397,035		14.2		316,938		15.2		80,097		25.3
Axon Evidence and Cloud Services	54,913		2.6		35,680		2.3		19,233		53.9
Platform Solutions (3)	265,946		9.6		154,213		7.4		111,733		72.5
Extended Warranties	37,515		1.8		31,689		2.0		5,826		18.4
Total Connected Devices segment	1,576,864		56.7		1,221,292		58.6		355,572		29.1
Other (1)	26,424		1.3		18,933		1.2		7,491		39.6
Total Software and Services segment	1,202,672		43.3		861,234		41.4		341,438		39.6
TASER segment	818,673		39.3		613,510		39.3		205,163		33.4
Total net sales	$	2,779,536	100.0	%	$	2,082,526	100.0	%	$	697,010	33.5	%
Software and Sensors segment:
Axon Evidence and Cloud Services	808,256		38.8		566,003		36.3		242,253		42.8
Axon Body Cameras and Accessories	246,855		11.9		183,023		11.7		63,832		34.9
Axon Fleet Systems	104,890		5.0		121,842		7.8		(16,952)		(13.9)
Extended Warranties	66,141		3.2		55,154		3.5		10,987		19.9
Other (2)	37,711		1.8		21,167		1.4		16,544		78.2
Software and Sensors segment	1,263,853		60.7		947,189		60.7		316,664		33.4
Total net sales	$	2,082,526	100.0	%	$	1,560,699	100.0	%	$	521,827	33.4	%

(1)'TASER' ~~segment “Other”~~ includes ~~smaller~~TASER ~~categories~~handles, ~~such~~cartridges ~~as VR hardware, weapons training revenue such as revenue associated with our Master Instructor School,~~ and ~~TASER~~related ~~consumer~~extended ~~device sales~~warranties.

(2)~~Software~~'Personal ~~and~~ Sensors' ~~segment~~primarily ~~“Other”~~ includes ~~revenue~~body ~~from~~cameras ~~items~~and ~~including Signal Sidearm~~accessories, ~~Interview~~signal ~~Room~~sidearm, ~~Axon Air, partners' contra-revenue~~ and ~~other~~related ~~sensors~~extended ~~and equipment~~warranties.

~~Net~~(3)'Platform ~~sales~~Solutions' ~~for~~primarily ~~the~~includes ~~TASER~~fleet ~~segment~~in-car ~~for the year ended December 31~~video, ~~2024~~interview ~~increased $205.2 million~~room, orfixed ~~33.4%~~cameras, asdrones ~~compared~~and tocounter-drone ~~the prior year~~equipment, ~~primarily~~virtual ~~due~~reality totraining anhardware, ~~increase of $119.1 million in TASER devices~~ and ~~an increase of $53.5 million in cartridge revenue. The increase is primarily~~ related to continued adoption of our newest device, TASER 10. The increase in revenue from Axon Evidence and cloud services of $19.2 million was driven by an increase in the number of cloud-connected TASER devices in the field and software revenue tied to our VR solution. An increase in TASER devices in the field drove the $5.8 million increase in extended warranties~~, as most of those devices are sold with extended warranties~~. ~~The $7.5 million increase in "Other" revenue is primarily driven by increased VR hardware volume.~~

Net sales for the ~~Software~~Connected ~~and~~Devices ~~Sensors~~ segment increased 29.1% for the year ended December 31, ~~2024~~2025 ~~increased $316.7 million, or 33.4%,~~ as compared to the ~~prior~~ year, asended weDecember 31, ~~continued to add users and associated devices to our network~~2024. The increase ~~in the aggregate number~~ of ~~users~~$163.7 ~~and~~million ~~growing~~in ~~adoption~~TASER ofis ~~our~~primarily ~~premium~~driven ~~add-on features~~ by ~~existing~~higher ~~customers~~TASER ~~drove~~10 ~~the~~handle ~~majority of the increase in Axon Evidence~~ and ~~cloud~~cartridge ~~services revenue of $242~~volume.3 ~~million.~~Personal ~~Axon~~Sensors ~~Body cameras and accessories revenue~~ increased $6380.81 million, ~~due~~which towas ~~higher~~primarily ~~unit~~driven ~~sales.~~by ~~Partially offsetting~~ the ~~increase~~continued ~~was~~adoption aof ~~$17.0~~our ~~million~~newest ~~decrease~~body incamera, ~~Axon~~AB4, ~~Fleet~~and ~~systems~~higher warranty revenue ~~reflecting~~from ~~lower unit volumes on~~ more ~~normalized~~devices ~~deployment timelines. An increase~~ in ~~cameras and docks in~~ the field ~~drove the $11~~.0 ~~million increase in extended warranties, as most of those devices are sold with extended warranties.~~ The $16111.57 million increase in ~~“Other”~~Platform ~~revenue~~Solutions ~~was~~is primarily driven by ~~demand~~higher volume for ~~other~~counter-drone ~~product~~equipment, ~~offerings~~virtual ~~within~~reality ~~the~~training, ~~Software~~ and ~~Sensors~~fleet ~~segment~~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 ~~TASER~~Connected Devices segment decreased to 5848.67% from 6049.64% for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. ~~The~~Adjusted ~~decrease~~gross ~~was~~margin ~~primarily~~for ~~due~~the toConnected ~~increased~~Devices ~~stock-based~~segment ~~compensation~~was ~~expense~~51.2% ~~Excluding~~for the ~~impacts~~year ofended ~~stock-based~~December 31, ~~compensation~~2025, ~~expense~~compared to 53.6% for the year ended December 31, ~~adjusted~~2024. The decrease in gross margin ~~for~~and ~~the~~adjusted ~~TASER~~gross ~~segment~~margin is primarily driven by higher mix of Platform Solutions revenue and global tariffs.

45As 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.

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62.9% for the year ended December 31, 2024, compared to 60.9% for the same period in 2023. The increase is primarily due to investments in automation and cost reduction initiatives.

As a percentage of net sales, gross margin for the Software and Sensors segment decreased to 60.2% from 61.6% for the years ended December 31, 2024 and 2023, respectively. Within the Software and Sensors segment, hardware gross margin was 37.7% for the year ended December 31, 2024, compared to 45.8% for the same period in 2023. Excluding the impacts of stock-based compensation expense and amortization of acquired intangible assets, hardware adjusted gross margin decreased to 41.4% for the year ended December 31, 2024, compared to 46.2% for the same period in 2023 primarily due to product mix and inventory reserve charges associated with legacy products. Service gross margin increased to 73.0% for the year ended December 31, 2024 compared to 72.6% for the same period in 2023. Excluding the impacts of stock-based compensation expense and intangibles amortization, service adjusted gross margin increased to 75.8% for the year ended December 31, 2024, compared to 73.6% for the same period in 2023, due to higher software revenue mix.

For the year ended December 31, 2024, we have seen an increase in stock-based compensation expense within our cost of goods sold as a result of RSUs granted in January 2024 that generally vest in five annual installments from March 2024 through March 2028. These RSUs were granted to employees whose compensation was under a specified threshold, including production-line employees. As previously disclosed in Note 15 to our consolidated financial statements included within our Annual Report on Form 10-K for the year ended December 31, 2023, Patrick W. Smith, our Chief Executive Officer, agreed to compensation in a lesser amount than the Compensation Committee of our Board of Directors was otherwise willing to provide so that we could instead provide enhanced compensation opportunities to certain of our other employees.

Selling, General and Administrative Expenses

SG&A expenses (dollars in thousands):

	Year Ended December 31,						DollarChange		PercentChange
	2024			2023
	2025			2024
Salaries, benefits and bonus	$	251,139		$	215,100		$	36,039	16.8	%
Total selling, general and administrative expenses	$	1,035,893		$	741,247		$	294,646	39.8	%
Sales and marketing	108,954			91,868			17,086		18.6
As a percentage of net sales	37.3		%	35.6		%
Stock-based compensation	190,561			58,533			132,028		225.6
Other	190,593			129,383			61,210		47.3
Total selling, general and administrative expenses	$	741,247		$	494,884		$	246,363	49.8	%
SG&A expenses as a percentage of net sales	35.6		%	31.7		%

~~Salaries,~~We ~~benefits~~incurred ~~and~~non-recurring ~~bonus~~severance ~~expense~~costs ~~increased~~during ~~$36.0~~the ~~million~~three inmonths ~~comparison~~ended toDecember 31, ~~the~~2025 ~~prior~~of ~~year~~$28.7 million, which ~~was~~consisted ~~primarily~~of ~~attributable~~stock-based tocompensation, ancash ~~increase~~payments ~~in headcount~~ and ~~higher~~employee ~~wages~~benefits.

Sales and marketing expense increased $17.1 million in comparison to the prior year, which was primarily attributable to increased commissions of $12.4 million and an increase of $4.7 million related to in-person events.42

Stock-based compensation expense increased $132.0 million in comparison to the prior year, which was primarily related to the 2024 Employee XSP and the 2024 CEO Performance Award that were approved by shareholders in the 2024 Annual Meeting of Shareholders and increased headcount.

Other SG&A expenses increased $61.2 million in comparison to the prior year, primarily driven by the following:

•Professional and consulting expenses increased $21.5 million, primarily driven by transaction costs related to business acquisitions and strategic investments for Fusus and Dedrone;

•Travel expenses increased $9.5 million, as a result of increased in-person meetings and lodging costs;

•Office and building expenses increased $7.1 million relating to building rent and property taxes;

•Supplies expenses increased $6.7 million primarily due to an increase in computer licenses.

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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,						DollarChange		PercentChange
	2024			2023
	2025			2024
Salaries, benefits and bonus	$	233,247		$	178,658		$	54,589	30.6	%
Total research and development expenses	$	684,308		$	441,593		$	242,715	55.0	%
Stock-based compensation	131,954			66,230			65,724		99.2
As a percentage of net sales	24.6		%	21.2		%
Other	76,392			58,831			17,561		29.8
Total research and development expenses	$	441,593		$	303,719		$	137,874	45.4	%
R&D expenses as a percentage of net sales	21.2		%	19.5		%

~~Salaries,~~We ~~benefits,~~incurred ~~and~~non-recurring ~~bonus~~severance ~~expense~~costs ~~increased~~during ~~$54.6~~the ~~million~~three inmonths ~~comparison~~ended toDecember 31, ~~the~~2025 ~~prior-year~~of ~~comparable~~$1.1 ~~period~~million, which ~~was~~consisted ~~primarily~~of ~~attributable~~stock-based tocompensation, ancash ~~increase~~payments ~~in headcount~~ and ~~higher~~employee ~~wages~~benefits.

Stock-based compensation expense, excluding the impact of non-recurring severance costs, increased $65106.76 million in comparison to the prior year December 31, 2024, which was primarily related to ~~the~~an ~~2024~~increase ~~Employee~~in ~~XSP~~headcount ~~that~~and ~~was~~a ~~approved~~full byyear ~~shareholders~~of expense recognized in the ~~2024~~current ~~Annual~~year ~~Meeting~~for grants of ~~Shareholders~~Employee XSP and ~~increased~~the ~~headcount~~CEO Performance Award (as defined below), compared to a partial year of expense recognized in the prior year.

~~Other~~Salaries, ~~R&D expenses increased $17.6 million~~benefits, ~~primarily related to increased professional~~ and ~~consulting~~bonus ~~expenses~~expense, ~~related~~excluding to the ~~launch~~impact of ~~new~~non-recurring ~~products~~severance ofcosts, increased $678.67 million, ~~and~~in ~~increased~~comparison ~~internal~~to ~~cloud~~the ~~storage~~prior-year ~~and~~December 31, ~~service~~2024, ~~costs~~which ~~related~~was primarily attributable to ~~software~~an ~~product~~increase ~~development~~in ofheadcount ~~$3.9~~and ~~million~~higher wages.

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

Interest ~~income,~~Income ~~net, was as follows~~ (~~in thousands~~Loss):, Net

	Year Ended December 31,
	2024		2023
Interest income	$	43,693	$	49,107
Interest expense	(7,098)		(6,995)
Total interest income, net	$	36,595	$	42,112

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

The decrease in interest income for the year ended December 31, 2024 is primarily related to lower balances of available-for-sale securities during the year. There were no material changes in interest expense for the year ended December 31, 2024 when compared against the prior comparable period.


	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

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

~~Other income~~ (~~loss~~2),Interest ~~net~~expense increased in comparison to the year ended December 31, ~~was~~2024 comparable period primarily as ~~follows~~a (result of the issuance of the Senior Notes in ~~thousands):~~March 2025, as discussed further within Note 10.

	Year Ended December 31,
	2024		2023
Realized and unrealized gain (loss) on fair value adjustments of strategic investments, net	$	162,887	$	(80,485)
Unrealized gain on marketable securities, net	120,330		38,700
Gain (loss) on foreign currency transactions, net	3,463		(504)
Other, net	(311)		388
Other income (loss), net	$	286,369	$	(41,901)

In 2024, we recorded a realized gain of $93.9 million related to acquiring the remaining outstanding equity interests of two previously held strategic investments and an unrealized gain of $75.6 million related to an observable price change for an existing strategic investment and related warrants. The increase in unrealized gain on marketable securities for the year ended December 31, 2024 is driven by fair value changes for our existing marketable securities.

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InOther ~~2023~~Income, we recorded a net unrealized impairment loss of $71.9 million for an existing strategic investment and related warrants and an unrealized loss of $8.6 million related to observable price changes for our existing investments and related warrants. 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 1(557.20)% for the year ended December 31, ~~2024~~2025, compared to ~~(11~~1.9)2% for the year ended December 31, ~~2023~~2024. The ~~increase~~change inis primarily attributable to the ~~effective~~net tax ~~rate~~benefit isrelated ~~primarily~~to ~~driven~~stock-based bycompensation ~~higher~~and ~~pre-~~R&D tax ~~income~~credits, ~~which~~partially ~~reduced~~offset ~~the~~by ~~relative~~increased ~~impact~~unrecognized ~~of favorable~~ tax ~~adjustments~~benefits. The ~~increase~~overall change in ~~current~~the ~~year~~effective tax rate isalso ~~primarily~~reflects ~~driven~~the byimpact ~~a lesser percentage~~ of ~~allowable~~lower ~~stock based compensation adjustment in comparison to~~ pre-tax book income. ~~Additionally,~~in the ~~R&D~~current ~~credit~~period, ~~was a lesser percentage of pretax income~~ which ~~was~~magnifies ~~offset by~~ the ~~reversal~~relative effect of ~~nontaxable~~permanent ~~gain on investments~~adjustments.

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

	Year Ended December 31,
	2024			2023			Change
	2025			2024			Change
Pre-tax income	$	381,504		$	157,061		$	224,443
Income before provision for income taxes	$	18,974		$	381,504		$	(362,530)
Provision for (benefit from) income taxes	4(105,~~470~~682)			~~(18~~4,~~722)~~470			23(110,~~192~~152)
Effective tax rate	1(557.20)		%	~~(11~~1.9)2		%	~~13.1~~		%

Net Income

We recorded net income of $~~377~~124.07 million for the year ended December 31, ~~2024~~2025 compared to a net income of $~~175~~377.80 million infor ~~2023~~the year ended December 31, 2024. Net income per basic share was $41.9860 and diluted net income per share was $41.8051 for ~~2024~~the year ended December 31, 2025, compared to net income per basic share of $24.3798 and diluted net income per share of $24.3380 for ~~2023~~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.

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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. ~~Beginning with our first fiscal quarter of 2024, we have added adjusted gross margin to our non-GAAP financial 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. WeOur ~~use~~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, ~~and~~ marketable securities;, ~~transaction~~ and ~~integration~~mark-to-market ~~costs~~on ~~related~~our tonon-qualified ~~strategic~~deferred ~~investments~~compensation ~~and~~liabilities; ~~acquisitions~~debt ~~including~~inducement ~~adjustments~~expense ~~related~~associated towith the ~~foreign~~early ~~currency~~repurchase ~~impact~~ of ~~acquired~~a ~~intercompany~~portion ~~balances~~of ~~that~~our ~~were~~2027 ~~unsettled~~Notes; asnon-recurring ofseverance ~~the~~costs, ~~reporting~~including ~~date~~employee ~~and~~cash ~~plan~~payments, toequity, beand ~~settled~~related ~~in the near term~~benefits; ~~inventory~~transaction ~~step-up~~and ~~amortization~~integration costs related to strategic investments and acquisitions;, ~~certain~~including ~~litigation~~the ~~costs~~change ~~and~~in ~~recoveries~~fair ~~related~~value toof ~~(1)~~contingent ~~antitrust~~consideration ~~cases~~arrangements; wepayroll ~~consider~~taxes related to beEmployee ~~non-recurring~~XSP vesting and ~~outside~~2018 ofCEO ~~our~~Performance ~~core~~Award ~~operating~~option ~~results~~exercises; ~~and~~costs (2)or ~~litigation~~subsequent ~~matters~~recoveries ~~for~~of ~~acquired~~prior ~~companies~~costs) ~~that~~related ~~were~~to ~~unresolved~~certain atlegal ~~the~~or ~~date~~regulatory matters we consider outside of ~~the~~our ~~acquisition~~core operating activities; ~~and~~losses ~~other~~incurred ~~unusual,~~as ~~non-recurring~~a ~~pre-tax~~result ~~items~~of ~~that~~the ~~are~~disposal, ~~not~~abandonment, ~~considered~~and ~~representative~~impairment of ~~our~~property, ~~underlying~~equipment ~~operating~~and ~~performance~~intangible ~~(listed~~assets; inand ~~the~~inventory ~~tables~~step-up ~~below)~~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.

48Although 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:

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Although these non-GAAP financial measures are not consistent with GAAP, we believe 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.

~~EBITDA and Adjusted EBITDA reconcile to net income as follows (in thousands):~~45

	Year Ended December 31,
	2024		2023
Net income	$	377,034	$	175,783
Depreciation and amortization	56,815		32,638
Interest expense	7,098		6,995
Investment interest income	(43,693)		(49,107)
Provision for (benefit from) income taxes	4,470		(18,722)
EBITDA	$	401,724	$	147,587
Non-GAAP adjustments:
Stock-based compensation expense	382,604		131,358
Unrealized (gain) loss on strategic investments and marketable securities, net	(192,067)		41,785
Realized gain on previously held minority interest, net	(91,150)		—
Transaction and integration costs related to strategic investments and acquisitions	15,249		4,501
Loss on disposal, abandonment, and impairment of property, equipment and intangible assets, net	—		317
Loss recoveries	—		(3,404)
Inventory step-up amortization	609		—
Litigation costs and related recoveries	1,761		241
Payroll taxes related to 2019 XSPP vesting and 2018 CEO Performance Award option exercises	2,645		9,011
Adjusted EBITDA	$	521,375	$	331,396

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~~Adjusted~~EBITDA ~~gross~~and ~~margin~~adjusted ~~reconciles~~EBITDA reconcile to ~~gross~~net ~~margin~~income as follows (in thousands):

	For the year ended December 31, 2024													For the year ended December 31, 2023
				Year Ended December 31,
	TASER					Software and Sensors					Total			TASER			Software and Sensors			Total
				2025					2024
Gross margin	480,031					761,349					1,241,380			371,533			583,920			955,453
Net income				$	124,656				$	377,034
Stock-based compensation expense	34,906					25,183					60,089			2,234			4,361			6,595
Depreciation and amortization				86,789					56,815
Amortization of acquired intangible assets	31					13,338					13,369			1			3,143			3,144
Interest expense				94,238					7,098
Inventory step-up amortization	—					609					609			—			—			—
Investment interest income				(75,431)					(43,693)
Adjusted gross margin	$	514,968				$	800,479				$	1,315,447		$	373,768		$	591,424		$	965,192
Provision for (benefit from) income taxes				(105,682)					4,470
Gross margin	58.6		%			60.2		%			59.6		%	60.6		%	61.6		%	61.2		%
EBITDA				124,570					401,724
Adjusted gross margin	62.9		%			63.3		%			63.2		%	60.9		%	62.4		%	61.8		%
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.

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Liquidity and Capital Resources

Summary

December 31,2024

December 31,2023

Dollar Change

December 31, 2025

December 31, 2024

Dollar Change

Cash and cash equivalents

~~454~~1,~~844~~201,147

~~598~~454,~~545~~844

~~(143~~746,~~701)~~303

Available-for-sale investments

~~333~~505,~~235~~417

~~644~~333,~~054~~235

~~(310~~172,~~819)~~182

Total

~~788~~1,~~079~~706,564

1788,~~242,599~~079

~~(454~~918,~~520)~~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 ~~December~~the year ended December 31, ~~2024~~2025, we had $~~454~~1.82 ~~million~~billion of cash and cash equivalents, aan ~~decrease~~increase of $~~143~~746.73 million from December 31, ~~2023~~2024. Refer below for further discussions related to the change in cash and cash equivalents. As of December 31, ~~2024~~2025, we had $~~333~~505.24 million of available-for-sale investments, aan ~~decrease~~increase of $~~310~~172.82 million from December 31, ~~2023~~2024 primarily as a result of ~~the~~investment ~~natural~~activity ~~maturity~~following the issuance of ~~short~~the ~~term~~Senior ~~investments~~Notes ~~reinvested~~in ~~into~~March ~~cash~~2025. ~~and~~Refer ~~cash~~to ~~equivalents~~Note ~~until~~10 ~~utilized~~in ~~for~~Part ~~our~~II, ~~acquisition~~Item ~~activity~~8 inof this Annual Report on Form 10-K for additional details on the ~~period~~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 $~~200~~300.0 million, $3050.0 million of which is available for the issuance of letters of credit. As of December 31, ~~2024~~2025, and ~~2023~~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, ~~2024~~2025, we had letters of credit outstanding of approximately $7.8.9 million under the facility and available borrowing of $~~192~~291.21 million. Refer to Note 1213 in Part II, Item 8 of this Annual Report on Form 10‑-K for additional details ~~related to our Credit Agreement and outstanding letters of credit~~.

WeFurthermore, ~~believe~~during wethe ~~have~~year ~~access~~ended toDecember 31, ~~additional financing. However~~2025, ~~there~~we issold noapproximately ~~assurance~~0.7 ~~that~~million ~~such~~shares ~~funding~~of ~~will~~our becommon ~~available~~stock onunder ~~terms~~our ~~acceptable to us, or at all~~ATM. We ~~believe~~generated ~~that~~approximately ~~our~~$494.7 ~~sources~~million ofin ~~funding~~aggregate ~~will~~gross beproceeds ~~sufficient~~from tosales ~~satisfy~~under ~~our~~an ~~currently~~“at-the-market” ~~anticipated~~equity ~~cash~~offering ~~requirements,~~program ~~including~~(the ~~capital~~“ATM”). ~~expenditures,~~We ~~working~~recorded ~~capital~~aggregate ~~requirements,~~net ~~potential~~proceeds ~~acquisitions~~of or$489.4 ~~investments,~~million ~~income~~in ~~and~~additional ~~payroll~~paid-in ~~tax~~capital ~~payments~~after ~~for~~deducting ~~net-settled~~related ~~stock awards~~expenses, ~~and~~including ~~other~~commissions ~~liquidity~~to ~~requirements through at least~~ the ~~next~~sales 12agent ~~months. We~~ and ~~our~~issuance ~~Board~~costs of ~~Directors~~$5.3 ~~may consider repurchases of our common stock~~million. ~~Further~~Refer ~~repurchases~~to ofNote ~~our~~14 ~~common~~in ~~stock~~Part ~~would take place on the open market~~II, ~~would~~Item be8 ~~financed~~of ~~with~~this ~~available~~Annual ~~cash~~Report ~~and~~on ~~are~~Form ~~subject~~10-K tofor ~~authorization~~additional ~~as well as market and business conditions~~details.

~~Going~~As ~~forward~~of December 31, 2025, we ~~expect~~had ~~to continue to be~~ an ~~opportunistic~~aggregate ~~issuer~~ of ~~debt~~$1.75 ~~securities~~billion ~~and~~of ~~may~~Senior ~~issue~~Notes ~~new~~outstanding. ~~debt~~None ~~securities~~of ~~from~~our ~~time~~subsidiaries toguarantee ~~time~~the toSenior ~~fund~~Notes. ~~our~~Our ~~growth~~non-guarantor orsubsidiaries ~~refinance~~accounted ~~future~~for ~~debt~~approximately ~~maturities,~~15% ~~among~~of ~~other~~our ~~things.~~total Inrevenue ~~addition,~~for ~~from~~the ~~time~~year toended ~~time~~December 31, we2025, ~~may~~and ~~acquire~~approximately ~~our~~20% ~~debt~~and ~~securities~~7% ~~(including~~of our ~~2027~~total ~~Notes)~~consolidated ~~through~~assets ~~open~~and ~~market~~liabilities ~~purchases,~~(excluding ~~redemptions,~~the ~~privately~~effect ~~negotiated~~of intercompany transactions), ~~tender offers~~respectively, ~~exchange~~as ~~offers~~of ~~or otherwise~~December 31, ~~upon~~2025. ~~such~~Refer ~~terms~~to ~~and~~Note at10 ~~such~~in ~~prices~~Part asII, weItem ~~may~~8 ~~from~~of ~~time~~this toAnnual ~~time~~Report ~~determine,~~on ~~for~~Form ~~cash~~10-K orfor ~~other~~additional ~~consideration~~details.

50In 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.

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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,				DollarChange
	2024		2023
	2025		2024
Operating activities	$	408,312	$	189,263	$	219,049
Net cash provided by operating activities	$	211,339	$	408,312	$	(196,973)
Investing activities	(490,573)		12,476		(503,049)
Net cash (used in) investing activities	(724,930)		(490,573)		(234,357)
Financing activities	(45,437)		41,314		(86,751)
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	(67,~~209)~~756		2(6,~~065~~209)		(813,~~274)~~965
Net increase (decrease) in cash and cash equivalents and restricted cash	$	~~(133~~746,~~907)~~630	$	~~245~~(133,~~118~~907)	$	~~(379~~880,~~025)~~537

Operating activities

	Year Ended December 31,				DollarChange
	2024		2023
Net income	$	377,034	$	175,783	$	201,251
Stock-based compensation	382,604		131,358		251,246
Fair value adjustments on strategic investments and marketable securities, net	(283,217)		41,785		(325,002)
Deferred income taxes	(85,096)		(72,497)		(12,599)
Inventory and accounts payable	55,126		(12,297)		67,423
Receivables and contract assets	(245,842)		(178,989)		(66,853)
Deferred revenue	155,641		146,819		8,822
Other, net	52,062		(42,699)		94,761
Net cash provided by (used in) operating activities	$	408,312	$	189,263	$	219,049

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.

~~Net~~Primary ~~cash~~drivers ~~provided~~of bythe ~~operating~~non-cash ~~activities~~items ininclude ~~2024 of~~ $~~408~~634.32 million ~~consisted~~ of ~~$377.0 million in net income, a net add~~stock-~~back~~based ofcompensation ~~non-cash~~expense ~~income~~for ~~statement~~employee ~~items~~equity ~~totaling~~programs, $~~104~~83.02 million of depreciation and aamortization and $7238.79 million ~~net~~of ~~change~~debt ininducement ~~operating~~expense ~~assets~~related ~~and~~to ~~liabilities. Included in~~ the ~~non-cash~~induced ~~items~~conversion ~~were~~for ~~$382.6~~our ~~million~~2027 inNotes, ~~stock-based~~partially ~~compensation~~offset ~~expense,~~by $~~283~~140.20 million in fair value adjustments for ~~the~~net realized and unrealized gains (and losses) on our strategic investments and marketable securities, ~~$48.4 million in depreciation~~ and ~~amortization expense and~~ $8582.17 million infor deferred income taxes. The ~~change~~realized inand ~~fair~~unrealized ~~value~~gains ~~adjustments~~ on our strategic investments and ~~marketable~~related ~~securities~~warrants ~~was~~were primarily ~~driven~~related byto ~~the realized gains on the acquisition of two previously held strategic investments,~~ an observable price change ~~for~~and ansubsequent ~~existing~~sale ~~strategic~~for ~~investment~~one ~~and~~of ~~related~~our ~~warrants,~~strategic investments and ~~fair~~a ~~value~~liquidation ~~gains~~event for ~~our~~a ~~marketable~~separate ~~securities~~strategic investment. The change in ~~receivables~~deferred ~~and~~income ~~contract~~taxes ~~assets~~ was ~~largely~~primarily ~~attributable~~driven toby ~~increased~~a ~~sales~~reduction inand ~~2024,~~realization ~~particularly~~of ~~for~~previously ~~sales~~unrealized ~~made~~investment ~~under~~gains, ~~subscription~~with ~~plans.~~additional ~~This was partly offset by the change in~~ deferred ~~revenue~~tax ~~due~~assets togenerated ~~the~~from ~~timing~~R&D ofcredit ~~billing~~carryforwards ~~events. The change in inventory~~ and ~~accounts~~net ~~payable~~operating ~~was~~losses, ~~largely~~both ~~due~~driven toby ~~advanced~~stock-based ~~raw~~compensation ~~material~~windfall ~~purchases for Axon Body 4~~ and ~~TASER~~changes 10as ~~CEDs~~a toresult ~~support~~of ~~future~~the ~~sales.~~One ~~The~~Big ~~change~~Beautiful inBill ~~deferred~~Act ~~income~~which ~~taxes~~ was ~~primarily~~signed ~~driven~~into bylaw ~~R&D~~on ~~capitalization~~July ~~and additional GAAP expense for unvested stock-based compensation~~4, ~~partially offset by non-taxable unrealized net investment gains~~2025.

~~Investing~~The ~~activities~~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.

Net cash used in investing activities was $490.6 million for the year ended December 31, 2024 compared to cash provided by investing activities of $12.5 million for the comparable period in the prior year. The net investing cash outflow is driven by $621.8 million related to acquiring two previously held strategic investments, $113.4 million for strategic investments, and $78.8 million for purchases of property and equipment, net of proceeds, partially offset by $1.0 billion of proceeds from calls, maturities and sales of available-for-sale investments, less purchases of $680.0 million. This net cash outflow is primarily driven by greater acquisition and strategic investment activities in the current period, when contrasted with the prior comparable period.48

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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 ~~used~~provided inby financing activities was $451.43 ~~million~~billion for the year ended December 31, ~~2024,~~2025 compared to cash ~~provided~~used byin financing activities of $4145.34 million for the ~~comparable~~year ~~period~~ended inDecember 31, ~~the prior year~~2024. The ~~net~~ financing cash ~~outflow~~inflow inwas ~~the~~primarily ~~current period is~~ driven by ~~the~~gross ~~payment~~proceeds of ~~income~~$1.8 ~~and~~billion ~~payroll~~from ~~taxes~~the onSenior ~~behalf~~Notes ofissuance ~~employees~~and ~~who~~ net~~-settled~~ ~~stock~~proceeds ~~awards~~of ~~during~~$489.6 ~~the~~million ~~period,~~from ~~whereas~~our ~~the~~ATM ~~net~~equity ~~financing~~offering ~~cash~~program. ~~inflow~~The inproceeds ~~the~~were ~~prior~~partially ~~comparable~~offset ~~period~~by ~~was~~$608.9 ~~primarily~~million ~~driven~~of byprincipal ~~net~~payments ~~proceeds~~related ~~from~~to ~~our~~the ~~ATM~~conversions ~~offering~~for ~~and~~our ~~cash~~2027 ~~received~~Notes, ~~from~~$27.0 ~~the~~million ~~exercise~~ of ~~stock~~transaction ~~options~~costs ~~where~~related ~~shares~~to ~~were~~the ~~sold~~induced toconversions, ~~cover~~debt ~~the~~issuance, ~~exercise~~and ~~price~~revolver modifications, ~~partially~~and ~~offset~~cash bypayments ~~the~~totaling ~~payment~~$351.0 ofmillion 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 ~~by period in which payment is expected~~, as of December 31, ~~2024~~2025 (in thousands):

	Total		ShortTerm		LongTerm
Operating lease obligations	$	69155,~~466~~541	$	1315,~~791~~094	$	55140,~~675~~447
Purchase obligations	~~909~~1,~~675~~370,239		~~504~~1,~~270~~072,995		~~405~~297,~~405~~244
Principal and interest payable on our convertible senior notes	699,996		3,383		696,613
Principal and interest payable on our 2027 Notes (1)	81,171		81,171		—
Total contractual obligations	$	1,679,137	$	521,444	$	1,157,693
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

~~Operating~~(1)The ~~lease~~2027 ~~obligations~~Notes ~~include~~are ~~operating~~contractually ~~leases~~due ~~for~~on ~~office~~a ~~space~~long-term basis. However, ~~manufacturing~~as ~~and~~of ~~logistical~~December 31, ~~functions~~2025, ~~discussed~~the ~~further~~Notes ~~within~~were ~~Note~~convertible 18at inthe ~~Part~~option IIof the holders. Furthermore, ~~Item~~subsequent 8to the year ended December 31, 2025, we redeemed and converted all of ~~this~~the ~~Annual~~outstanding ~~Report~~2027 Notes on ~~Form~~February 10-K, 2026, and February 11, 2026, respectively, and we have no 2027 Notes outstanding. WeTherefore, ~~regularly~~the ~~evaluate~~Notes were classified as current liabilities within our ~~real~~consolidated ~~estate~~balance ~~needs~~sheet toas ~~identify~~of ~~opportunities~~December 31, to2025 ~~reduce~~and ~~long~~have been presented within short-term ~~cash~~above. ~~requirements~~Refer ~~where~~to ~~practicable.~~Note 10 and Note 20 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

~~Purchase~~Operating lease obligations include ~~both~~operating ~~open~~leases ~~purchase~~for ~~orders~~office ~~and~~space, ~~other~~manufacturing ~~purchase~~and ~~commitments~~logistical functions, discussed further within Note 1316 in Part II, Item 8 of this Annual Report on Form 10-K., ~~The~~as ~~open~~well ~~purchase~~as ~~orders~~legally ~~represent~~binding ~~both~~minimum ~~cancellable~~lease ~~and~~payments ~~non-cancellable~~for ~~purchase~~leases ~~orders~~signed ~~with~~but ~~key~~not ~~vendors,~~yet ~~which~~commenced ~~are~~totaling ~~included~~$3.2 inmillion. ~~this~~We ~~table~~regularly ~~due~~evaluate our real estate needs to ~~our~~identify ~~strategic~~opportunities ~~relationships~~to ~~with~~reduce ~~these~~long-term ~~vendors~~cash requirements where practicable.

InPurchase ~~December~~obligations ~~2022,~~include weboth ~~issued~~open ~~$690.0~~purchase ~~million~~orders ~~aggregate~~and ~~principal~~other ~~amount~~purchase ofcommitments, ~~our~~discussed ~~2027~~further ~~Notes~~within ~~(the~~Note ~~"Notes")~~11 in aPart ~~private offering~~II, ~~which~~Item ~~aggregate~~8 ~~principal amount included the exercise in full~~ of ~~the~~this ~~initial~~Annual ~~purchasers’~~Report ~~option to purchase up to an additional $90.0 million principal amount of the Notes. The Notes mature~~ on ~~December~~Form ~~15, 2027 and bear interest at a fixed rate of 0~~10-K.~~50%~~ ~~per~~Open ~~annum,~~purchase ~~payable~~orders ~~semiannually~~represent inboth ~~arrears~~cancellable ~~on June 15~~ and ~~December~~non-cancellable 15purchase oforders ~~each~~with ~~year,~~key ~~beginning on June 15~~vendors, ~~2023.~~which Onare orincluded ~~after December 22, 2025, we may redeem for cash all or any portion of the notes~~ in ~~accordance~~this ~~with~~table ~~the~~due ~~optional redemption terms of the convertible debt agreement. For additional details, refer~~ to ~~Note~~our 12strategic inrelationships ~~Part~~with ~~II,~~these ~~Item 8 of this Annual Report on Form 10-K~~vendors.

~~Obligations~~Subsequent ~~related~~ to the year ended December 31, 2025, we redeemed and converted all of our ~~uncertain~~outstanding ~~tax~~2027 ~~positions~~Notes ~~have~~on ~~been~~February ~~excluded~~10, ~~from~~2026, ~~the~~and ~~table~~February ~~above~~11, ~~because~~2026, respectively, and in each case, pursuant to a notice of ~~the~~redemption ~~uncertainty~~delivered ~~surrounding~~on ~~the~~December ~~timing~~18, 2025, and ~~final~~the ~~amounts~~terms of ~~any~~the ~~settlement.~~indenture ~~For~~governing ~~additional~~the ~~details,~~2027 ~~refer~~Notes. Refer to Note 1410 and Note 20 in Part II, Item 8 of this Annual Report on Form 10-K for additional details.

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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.

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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 derive revenue from two primary sources: (1) the sale of physical products, including CEDs, Axon cameras, Axon Signal-enabled devices, corresponding hardware extended warranties, and related accessories such as Axon docks, cartridges and batteries, among others, and (2) subscriptions to our Axon Evidence digital evidence management SaaS offering (including data storage fees and other ancillary services), which includes varying levels of support. To a lesser extent, we also recognize revenue from training, professional services and other software and SaaS services. 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. ~~Revenue is recognized net of allowances for returns.~~ 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.

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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 ~~in the fourth quarter of 2024~~, 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.

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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 1412 in Part II, Item 8 of this Annual Report on Form 10-K.

~~Stock-Based Compensation~~51

We have historically utilized stock-based compensation for key employees and non-employee directors as a means of attracting and retaining talented personnel. We recognize compensation expense for our stock-based compensation program, which includes grants of service-based restricted stock units (“RSUs”), performance-based restricted stock units (“PSUs”), and performance-based stock options (“stock options”).

Vesting of performance stock units is contingent upon the achievement of certain performance criteria including, successful and timely development and market acceptance of future product introductions and ongoing market performance, among others. 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.

Our performance-based restricted stock units include eXponential stock units (“XSUs”) granted under the Axon Enterprise, Inc. 2024 Employee eXponential Stock Plan (the “2024 Employee XSP”) and the 2024 CEO Performance Award discussed further in Note 1 in Part II, Item 8 of this Annual Report. Stock-based compensation expense associated with the 2024 XSU awards 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 16 in Part II, Item 8 of this Annual Report on Form 10-K.

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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 1311 in Part II, Item 8 of this Annual Report on Form 10-K.

Strategic Investments

WeOur ~~have~~ strategic investments ~~which include equity and debt investments in a number of non-public technology driven companies. The strategic investments~~ are generally accounted for under the ASC 321 measurement alternative for equity securities without readily determinable fair values~~, as there are no quoted market prices for the equity investments~~. Accordingly, the equity investments will be carried at cost less impairment. These investments ~~will~~are be 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. ~~The debt strategic investment and the associated embedded derivatives are accounted for utilizing the fair value option and remeasured through earnings on a periodic basis.~~ For additional details relating to our valuation techniques, refer to Note 1 and Note 87 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.

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 21 in Part II, Item 8 of this Annual Report on Form 10-K.52

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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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We typically invest in a limited number of financial instruments, consisting principally of investments in money market accounts, certificates of deposit, and corporate and municipal bonds with a typical long-term debt rating of “A” or better by any nationally recognized statistical rating organization, denominated in U.S. dollars. All of our cash equivalents and investments are treated as “available-for-sale”. To quantify our interest rate risk exposure, we perform a sensitivity analysis based on hypothetical changes in interest rates. Based on investment positions as of December 31, ~~2024~~2025, a hypothetical 100 basis point increase in interest rates across all maturities would result in a $0.72 million decline in the fair market value of the portfolio. Such losses would only be realized if we sold the investments prior to maturity. ~~For additional details, refer to Note 1 in Part II, Item 8 of this Annual Report on Form 10-K.~~

Additionally, we have access to a $~~200~~300.0 million line of credit borrowing facility which bears interest at SOFR plus 1.25 to 1.75% per year determined in accordance with a pricing grid based on our net leverage ratio and consolidated interest coverage ratio. Under the terms of the line of credit, available borrowings are reduced by outstanding letters of credit, which totaled $7.8.9 million at December 31, ~~2024~~2025. AtAs of the year ended December 31, ~~2024~~2025, there was no amount outstanding under the line of credit, and the available borrowing under the line of credit was $~~192~~291.21 million. We have not borrowed any funds under the line of credit since its inception; however, should we need to do so in the future, such borrowings could be subject to adverse or favorable changes in the underlying interest rate.

There have been no other material changes in our primary risk exposures or management of risks since the prior year.

Exchange Rate Risk

Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, in each case compared to the U.S. dollar, related to transactions by our foreign subsidiaries. The majority of our sales to international customers are transacted in foreign currencies and therefore are subject to exchange rate fluctuations on these transactions. The cost of our products to our customers increases when the U.S. dollar strengthens against their local currency, and we may have more sales and expenses denominated in foreign currencies in future years which could increase our foreign exchange rate risk. Additionally, intercompany sales to our non-U.S. dollar functional currency international subsidiaries are transacted in U.S. dollars which could increase our foreign exchange rate risk caused by foreign currency transaction gains and losses.

To date, we have not engaged in any currency hedging activities. However, we may enter into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, certain firmly committed transactions, forecasted future cash flows and net investments in foreign subsidiaries. However, we may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, the prohibitive economic cost of hedging particular exposures. As such, fluctuations in currency exchange rates could harm our business in the future.

There have been no other material changes in our primary risk exposures or management of risks since the prior year.

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Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements						Page
Consolidated Balance Sheets as of December 31, 2024 and 2023						58
Consolidated Balance Sheets as of December 31, 2025 and 2024						56
Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2024, 2023, and 2022						62
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2025, 2024, and 2023						57
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, 2023, and 2022						63
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025, 2024, and 2023						58
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023, and 2022						61
Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023						59
Notes to Consolidated Financial Statements						6260
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm (PCAOB ID No. 238)						103
Report of Grant Thornton LLP, Independent Registered Public Accounting Firm (PCAOB ID No. 248)						~~105~~106

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AXON ENTERPRISE, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31,2024		December 31,2023
	December 31, 2025		December 31, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	~~454~~1,~~844~~201,147	$	~~598~~454,~~545~~844
Marketable securities	198,270		77,940
Short-term investments	505,417		333,235
Short-term investments	333,235		644,054
Marketable securities	27,213		198,270
Accounts and notes receivable, net of allowance of $3,322 and $2,392 as of December 31, 2024 and December 31, 2023, respectively	547,572		412,961
Accounts and notes receivable, net of allowance of $4,198 and $3,322 as of December 31, 2025 and December 31, 2024, respectively	777,486		547,572
Contract assets, net	~~367~~582,~~929~~630		~~287~~367,~~232~~929
Inventory	~~265~~341,~~316~~811		~~269~~265,~~855~~316
Prepaid expenses and other current assets	~~130~~277,~~315~~348		~~103~~130,~~055~~315
Total current assets	23,~~297~~713,~~481~~052		2,~~393~~297,~~642~~481
Property and equipment, net	~~247~~330,~~324~~979		~~200~~247,~~533~~324
Deferred tax assets, net	~~304~~359,~~282~~803		~~227~~304,~~784~~282
Intangible assets, net	~~175~~196,~~157~~972		19175,~~539~~157
Goodwill	~~756~~1,~~838~~370,189		57756,~~945~~838
Long-term notes receivable, net	36,~~460~~066		23,~~588~~460
Long-term contract assets, net	~~119~~178,~~876~~249		84119,~~382~~876
Strategic investments	~~332~~416,~~550~~833		~~231~~332,~~730~~550
Other long-term assets	~~237~~428,~~620~~170		~~191~~237,~~031~~620
Total assets	$	47,~~474~~000,~~588~~313	$	34,~~409~~474,~~174~~588
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	71139,~~955~~086	$	6571,~~852~~955
Accrued liabilities	~~279~~510,~~193~~538		~~193~~279,~~550~~193
Current portion of deferred revenue	~~612~~714,~~955~~708		~~470~~612,~~415~~955
Customer deposits	20,626		21,935
Current portion of notes payable, net	80,552		680,289
Other current liabilities	12,857		9,787
Customer deposits	16,156		20,626
Total current liabilities	997,586		761,539
Other current liabilities	9,107		12,857
Deferred revenue, net of current portion	360,685		270,901
Total current liabilities	1,470,147		1,677,875
Liability for unrecognized tax benefits	25,007		18,049
Deferred revenue, net of current portion	359,902		360,685
Long-term deferred compensation	15,877		11,342
Liability for unrecognized tax benefits	24,376		25,007
Long-term lease liabilities	41,383		33,550
Long-term deferred compensation	23,675		15,877
Convertible notes, net	680,289		677,113
Long-term lease liabilities	98,942		41,383
Other long-term liabilities	26,096		20,915
Long-term notes payable, net	1,730,170		—
Total liabilities	2,146,923		1,793,409
Other long-term liabilities	50,443		26,096
Commitments and contingencies (Note 13)
Total liabilities	3,757,655		2,146,923
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2024 and December 31, 2023, respectively	—		—
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively	—		—
Common stock, $0.00001 par value; 200,000,000 shares authorized, 96,839,558 shares issued and 76,619,331 shares outstanding as of December 31, 2024, and 200,000,000 shares authorized, 95,521,651 shares issued and 75,301,424 shares outstanding as of December 31, 2023	1		1
Common stock, $0.00001 par value; 200,000,000 shares authorized, 100,444,971 shares issued and 80,211,537 shares outstanding as of December 31, 2025, and 200,000,000 shares authorized, 96,839,558 shares issued and 76,619,331 shares outstanding as of December 31, 2024	1		1
Additional paid-in capital	12,~~689~~475,~~781~~035		1,~~347~~689,~~410~~781
Treasury stock at cost, 20,220,227 shares as of December 31, 2024 and December 31, 2023	(155,947)		(155,947)
Treasury stock at cost, 20,233,434 and 20,220,227 shares as of December 31, 2025 and December 31, 2024, respectively	(157,242)		(155,947)
Retained earnings	~~812~~936,~~014~~670		~~434~~812,~~980~~014
Accumulated other comprehensive loss	(1811,~~184~~806)		(1018,~~679~~184)
Total stockholders’ equity	23,~~327~~242,~~665~~658		12,~~615~~327,~~765~~665
Total liabilities and stockholders’ equity	$	47,~~474~~000,~~588~~313	$	34,~~409~~474,~~174~~588

The accompanying notes are an integral part of these consolidated financial statements.

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AXON ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME ~~(LOSS)~~

(in thousands, except per share data)

	For the Years Ended December 31,
	2024		2023		2022
	2025		2024		2023
Net sales from products	$	1,~~221~~576,~~292~~864	$	~~964~~1,~~002~~221,292	$	~~797~~964,~~177~~002
Net sales from services	~~861~~1,~~234~~202,672		~~596~~861,~~697~~234		~~389~~596,~~966~~697
Net sales	2,~~082~~779,~~526~~536		12,~~560~~082,~~699~~526		1,~~187~~560,~~143~~699
Cost of product sales	~~618~~809,~~136~~303		~~447~~618,~~708~~136		~~360~~447,~~909~~708
Cost of service sales	~~223~~312,~~010~~108		~~157~~223,~~538~~010		~~100~~157,~~121~~538
Cost of sales	~~841~~1,~~146~~121,411		~~605~~841,~~246~~146		~~461~~605,~~030~~246
Gross margin	1,~~241~~658,~~380~~125		~~955~~1,~~453~~241,380		~~726~~955,~~113~~453
Operating expenses:
Selling, general and administrative	~~741~~1,~~247~~035,893		~~494~~741,~~884~~247		~~399~~494,~~330~~884
Research and development	~~441~~684,~~593~~308		~~303~~441,~~719~~593		~~233~~303,~~810~~719
Total operating expenses	1,~~182~~720,~~840~~201		~~798~~1,~~603~~182,840		~~633~~798,~~140~~603
Income from operations	58,540		156,850		92,973
Income (loss) from operations	(62,076)		58,540		156,850
Interest income, net	36,595		42,112		4,294
Interest income	75,431		43,693		49,107
Other income (loss), net	286,369		(41,901)		98,971
Interest expense	(94,238)		(7,098)		(6,995)
Income before provision for income taxes	381,504		157,061		196,238
Other income (loss), net	99,857		286,369		(41,901)
Provision for (benefit from) income taxes	4,470		(18,722)		49,308
Income before provision for income taxes	18,974		381,504		157,061
Net income	$	377,034	$	175,783	$	146,930
Provision for (benefit from) income taxes	(105,682)		4,470		(18,722)
Net income	$	124,656	$	377,034	$	175,783
Net income per common and common equivalent shares:
Basic	$	41.9860	$	24.3798	$	2.0737
Diluted	$	41.8051	$	24.3380	$	2.0333
Weighted average number of common and common equivalent shares outstanding:
Basic	7578,~~748~~081		7475,~~195~~748		7174,~~093~~195
Diluted	7882,~~558~~370		7578,~~456~~558		7275,~~534~~456
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$	~~377~~124,~~034~~656	$	~~175~~377,~~783~~034	$	~~146~~175,~~930~~783
Foreign currency translation adjustments	(76,~~874)~~265		(47,~~352~~874)		(4,~~818~~352)
Unrealized gain (loss) on available-for-sale investments	369		852		(1,044)
Unrealized gain on available-for-sale investments	113		369		852
Comprehensive income	$	~~369~~131,~~529~~034	$	~~172~~369,~~283~~529	$	~~141~~172,~~068~~283

The accompanying notes are an integral part of these consolidated financial statements.

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AXON ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

	Common Stock			AdditionalPaid-inCapital		Treasury Stock			RetainedEarnings		~~AccumulatedOtherComprehensiveIncome (Loss)~~AccumulatedOtherComprehensiveLoss		TotalStockholders’Equity
	Shares	Amount				Shares	Amount
Balance, December 31, 2021	70,896,856	$	1	$	1,095,229	20,220,227	$	(155,947)	$	112,267	$	(1,317)	$	1,050,233
Issuance of common stock	—	—		(74)		—	—		—		—		(74)
Issuance of common stock under employee plans, net	566,780	—		(4,870)		—	—		—		—		(4,870)
Stock-based compensation	—	—		106,176		—	—		—		—		106,176
Issuance of common stock for business combination contingent consideration	10,945	—		—		—	—		—		—		—
Tax benefit related to convertible note hedge	—	—		48,858		—	—		—		—		48,858
Purchase of convertible note hedge	—	—		(194,994)		—	—		—		—		(194,994)
Issuance of warrants	—	—		124,269		—	—		—		—		124,269
Net income	—	—		—		—	—		146,930		—		146,930
Other comprehensive loss, net	—	—		—		—	—		—		(5,862)		(5,862)
Balance, December 31, 2022	71,474,581	$	1	$	1,174,594	20,220,227	$	(155,947)	$	259,197	$	(7,179)	$	1,270,666
Issuance of common stock	467,594	—		94,705		—	—		—		—		94,705
Issuance of common stock under employee plans, net	1,441,279	—		(107,894)		—	—		—		—		(107,894)
Stock options exercised	1,907,026	—		54,503		—	—		—		—		54,503
Stock-based compensation	—	—		131,358		—	—		—		—		131,358
Issuance of common stock for business combination contingent consideration and related tax effects	10,944	—		144		—	—		—		—		144
Net income	—	—		—		—	—		175,783		—		175,783
Other comprehensive loss, net	—	—		—		—	—		—		(3,500)		(3,500)
Balance, December 31, 2023	75,301,424	$	1	$	1,347,410	20,220,227	$	(155,947)	$	434,980	$	(10,679)	$	1,615,765
Issuance of common stock under employee plans, net	804,780	—		(58,178)		—	—		—		—		(58,178)
Stock options exercised	510,000	—		14,576		—	—		—		—		14,576
Stock-based compensation	—	—		382,604		—	—		—		—		382,604
Issuance of common stock for business combination contingent consideration and related tax effects	3,127	—		498		—	—		—		—		498
Issuance of replacement awards in connection with business combinations	—	—		2,871		—	—		—		—		2,871
Net income	—	—		—		—	—		377,034		—		377,034
Other comprehensive loss, net	—	—		—		—	—		—		(7,505)		(7,505)
Balance, December 31, 2024	76,619,331	$	1	$	1,689,781	20,220,227	$	(155,947)	$	812,014	$	(18,184)	$	2,327,665
Issuance of common stock	702,536	—		489,430		—	—		—		—		489,430
Issuance of common stock under employee plans, net	1,324,442	—		(351,939)		—	—		—		—		(351,939)
Stock-based compensation	—	—		634,231		—	—		—		—		634,231
Issuance of replacement awards in connection with acquisitions	—	—		5,295		—	—		—		—		5,295
Induced conversion of convertible debt	1,565,061	—		28,365		—	—		—		—		28,365
Tax effect of partial repurchase and induced conversions of convertible debt	—	—		(21,386)		—	—		—		—		(21,386)
Conversion of convertible debt and shares received from convertible note hedge, net	167	—		1,258		13,207	(1,295)		—		—		(37)
Net income	—	—		—		—	—		124,656		—		124,656
Other comprehensive income, net	—	—		—		—	—		—		6,378		6,378
Balance, December 31, 2025	80,211,537	$	1	$	2,475,035	20,233,434	$	(157,242)	$	936,670	$	(11,806)	$	3,242,658

The accompanying notes are an integral part of these consolidated financial statements.

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AXON ENTERPRISE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the Years Ended December 31,
	2024		2023		2022
	2025		2024		2023
Cash flows from operating activities:
Net income	$	~~377~~124,~~034~~656	$	~~175~~377,~~783~~034	$	~~146~~175,~~930~~783
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Stock-based compensation	~~382~~634,~~604~~231		~~131~~382,~~358~~604		~~106~~131,~~176~~358
(Gain) loss on strategic investments and marketable securities, net	(~~283~~139,~~217~~969)		41(283,~~785~~217)		~~(98~~41,~~943)~~785
Depreciation and amortization	48,425		19,315		23,116
Debt inducement expense	38,868		—		—
Provision for bad debts and inventory	20,073		5,484		701
Depreciation and amortization	83,161		48,425		19,315
Deferred income taxes	(85,096)		(72,497)		22,019
Provision for bad debts and inventory	11,348		20,073		5,484
Other noncash items	21,177		12,853		16,031
Deferred income taxes	(82,679)		(85,096)		(72,497)
Other noncash items	23,467		21,177		12,853
Change in assets and liabilities:
Receivables and contract assets	(~~245~~505,~~842~~560)		(~~178~~245,~~989~~842)		(78178,~~226~~989)
Inventory	~~607~~(81,951)		~~(77,626)~~607		(9577,~~011~~626)
Deferred revenue	~~155~~83,~~641~~476		~~146~~155,~~819~~641		~~155~~146,~~566~~819
Accounts payable, accrued and other liabilities	54286,~~519~~885		6554,~~329~~519		8065,~~978~~329
Prepaid expenses and other assets	(37264,~~613~~594)		(8037,~~351~~613)		(4380,~~976~~351)
Net cash provided by operating activities	~~408~~211,~~312~~339		~~189~~408,~~263~~312		~~235~~189,~~361~~263
Cash flows from investing activities:
Purchases of investments	(~~793~~2,~~419~~076,304)		(~~563~~793,~~680~~419)		(~~845~~563,~~179~~680)
Business combinations, net of cash acquired	(~~621~~646,~~817~~875)		(21621,~~090~~817)		(221,~~104~~090)
Proceeds from call, maturity, and sale of investments	12,~~003~~134,~~394~~556		~~657~~1,~~418~~003,394		72657,~~138~~418
Purchases of property and equipment	(78136,~~785~~258)		(5978,~~635~~785)		(5559,~~802~~635)
Other, net	54(49)		~~(537)~~54		(20537)
Net cash (used in) provided by investing activities	(490,573)		12,476		(830,967)
Net cash provided by (used in) investing activities	(724,930)		(490,573)		12,476
Cash flows from financing activities:
Net proceeds from equity offering	—489,554		~~94,705~~—		~~(74)~~94,705
Proceeds from options exercised	14,576		54,503		—
Proceeds from issuance of notes	1,750,000		—		—
Income and payroll tax payments for net-settled stock awards	(58,178)		(107,894)		(4,870)
Proceeds from options exercised	—		14,576		54,503
Net proceeds from issuance of convertible senior notes	—		—		673,769
Principal payments for conversion of convertible debt	(608,890)		—		—
Proceeds from issuance of warrants	—		—		124,269
Payments to third parties for debt issuance, amendment and repurchase activity	(26,994)		—		—
Purchase of convertible note hedge	—		—		(194,994)
Income and payroll tax payments for net-settled stock awards	(350,981)		(58,178)		(107,894)
Other, net	(~~1,835~~224)		—(1,835)		—
Net cash (used in) provided by financing activities	(45,437)		41,314		598,100
Net cash provided by (used in) financing activities	1,252,465		(45,437)		41,314
Effect of exchange rate changes on cash and cash equivalents	(67,~~209)~~756		2(6,~~065~~209)		(32,~~380)~~065
Net increase (decrease) in cash and cash equivalents	~~(133~~746,~~907)~~630		~~245~~(133,~~118~~907)		~~(886)~~245,118
Cash and cash equivalents and restricted cash, beginning of period	~~600~~466,~~670~~763		~~355~~600,~~552~~670		~~356~~355,~~438~~552
Cash and cash equivalents and restricted cash, end of period	$	~~466~~1,~~763~~213,393	$	~~600~~466,~~670~~763	$	~~355~~600,~~552~~670
Supplemental disclosures:
Cash and cash equivalents	$	~~454~~1,~~844~~201,147	$	~~598~~454,~~545~~844	$	~~353~~598,~~684~~545
Restricted cash (Note 1)	1112,~~919~~246		211,~~125~~919		12,~~868~~125
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	~~466~~1,~~763~~213,393	$	~~600~~466,~~670~~763	$	~~355~~600,~~552~~670
Cash paid for interest	$	357,~~450~~173	$	3,~~508~~450	$	—3,508
Cash paid for income taxes, net of refunds	6751,~~845~~121		6467,~~492~~845		1064,~~508~~492
Non-cash transactions
Non-cash transactions:
Property and equipment purchases in accounts payable and accrued liabilities	$	5,157	$	238	$	1,056
Leased assets obtained in exchange for new operating lease liabilities	$	62,844	$	14,292	$	5,927
Non-cash equity issuances related to business combinations	2,871		—		—
Expense for induced conversion of convertible debt, debt offering and revolver modification	43,546		—		—
Property and equipment purchases in accounts payable and accrued liabilities	7,290		5,157		238

The accompanying notes are an integral part of these consolidated financial statements.

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Note 1 - Organization and Summary of Significant Accounting Policies

Axon Enterprise, Inc. (“Axon”, the “Company”, “we” or “us”) is a ~~market-leading~~ provider of public safety technology solutions. Our mission is to protect life in service of promoting peace, justice and strong institutions.

The accompanying consolidated financial statements include the accounts of Axon Enterprise, Inc. and our subsidiaries. All intercompany accounts, transactions and profits have been eliminated.

Basis of Presentation and Use of Estimates

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain amounts in prior periods’ consolidated financial statements have been reclassified to conform to current period presentation. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions in these consolidated financial statements include:

•revenue recognition,

•stock-based compensation,

•business combinations,

•inventory valuation and related reserves,

•valuation of goodwill, intangible and long-lived assets,

•valuation of strategic investments,

•recognition, measurement and valuation of current and deferred income taxes, and

•recognition and measurement of contingencies ~~and accrued litigation expense~~.

We believe ~~that~~the estimates used in the preparation of these consolidated financial statements are reasonable; however, actual results could differ materially from those estimates.

Revision of Previously Issued Financial Statements

In preparing the condensed consolidated financial statements as of September 30, 2024, we identified errors in our previously issued financial statements related to our historical conclusions of principal vs. agent accounting of certain reseller arrangements under ASC 606. The identified errors impacted our previously issued 2021 and 2022 annual financial statements, 2023 quarterly and annual financial statements, and 2024 quarterly financial statements through June 30, 2024. We have made adjustments to correct the prior period amounts presented in these financial statements accordingly. Furthermore, we have made adjustments to correct for other previously identified immaterial errors.

We assessed the materiality of the errors on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, "Materiality," codified in ASC 250, Accounting Changes and Error Corrections. Based on this assessment, we concluded that the error correction is not material to any previously issued interim or annual financial statements on either a quantitative or qualitative basis. A summary of the revisions to the previously reported financial information is included in Note 23 and Note 24.

Out of Period Adjustment

During the 2024 year-end close process, we identified immaterial errors in our previously issued financial statements related to accounting for certain contract terms and conditions in accordance with ASC 606. We assessed the materiality of the errors in combination with the errors described above on prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” codified in ASC Topic 250, Accounting Changes and Error Corrections and concluded that the errors are not material, individually and in the aggregate, to any previously issued financial statements and that the correction of this misstatement in 2024 was also not material to the current fiscal year on either a quantitative or qualitative basis. We corrected these errors as an out of period adjustment during the year ended December 31, 2024 with a decrease to revenue of $3.3 million and a decrease to net income of $2.3 million. These errors originated in prior years and were immaterial to each respective prior period.

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Concentration of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist of accounts and notes receivable, contract assets and cash. Historically, we have experienced an immaterial level of write-offs related to uncollectible accounts.

We hold the majority of our cash and cash equivalents accounts at ~~two~~three depository institutions. As of December 31, ~~2024~~2025, the aggregate balances in such accounts were $~~376~~1.81 ~~million~~billion. Our balances with these ~~two~~and other institutions regularly exceed Federal Deposit Insurance Corporation insured limits for domestic deposits and various deposit insurance programs in ~~countries such as~~ Australia, ~~Belgium,~~ Canada, ~~Finland, France,~~ Germany, ~~Greece,~~and ~~India, Italy,~~ the ~~Netherlands, Spain, the~~ United Kingdom, ~~and~~among ~~Vietnam~~others. To manage the related credit exposure, management continually monitors the creditworthiness of the financial institutions where we have deposits.

Major Customers and Suppliers

No customer represented more than 10% of total net sales for the years ended December 31, ~~2024~~2025, ~~2023~~2024 or ~~2022~~2023. At December 31, ~~2024~~2025 and ~~2023~~2024, no customer represented more than 10% of the aggregate balance of accounts and notes receivable and contract assets. For additional details, refer to Note 2.

We currently purchase both off-the-shelf and custom components, including finished circuit boards, injection-molded plastic components, small machined parts, custom cartridge components, electronic components and sub-assemblies from suppliers located in the United States, Taiwan, Mexico, China, ~~Vietnam,~~Germany ~~Thailand~~ and ~~the Republic of Korea. We may source from other countries as well. Although we currently obtain components from single source suppliers~~Vietnam, weamong ~~own substantially all injection-molded component tooling, designs and test fixtures used in production for all custom components~~others. ~~As a result, we believe we could obtain alternative suppliers in most cases.~~ We acquire most of our components on a purchase order basis and do not currently have significant long-term purchase contracts with most component suppliers.

~~Segment Information~~60

Our operations comprise two reportable segments: the development, manufacture and sale of fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence (collectively, the ‘Software and Sensors” segment); and the manufacture and sale of CEDs, batteries, accessories, extended warranties and other products and services (collectively, the “TASER” segment). In both segments, we report sales of products and services. Service revenue in both segments includes sales related to Axon Evidence. In the Software and Sensors segment, service revenue also includes other recurring cloud-hosted software revenue and related professional services. Collectively, this revenue is sometimes referred to as “Axon Cloud revenue.”

Reportable segments are determined based on discrete financial information provided to our Chief Executive Officer who is our chief operating decision maker (“CODM”). In deciding how to allocate resources and assess performance, the CODM reviews adjusted gross margin by operating segment, consolidated financials and revenue by major geography, and product and service lines. Specifically, the CODM reviews adjusted gross margin by segment to evaluate segment profitability, identify cost trends and make operational decisions to support our segments. Consolidated financials provide a holistic view of our overall financial health to guide capital allocation and entity wide decisions. Disaggregated views of revenue by major geography and product line support the evaluation of specific market and product performance to understand customer trends. There are no operating segments that are aggregated. Furthermore, there are no inter-segment sales. Assets and other expense items, such as research and development and selling, general, and administrative expenses, are not provided to the CODM by segment, as our CODM does not evaluate our operating segments using this discrete information. As such, these items are not relevant to adjusted gross margin leveraged by the CODM to assess segment performance. As a result, they are not disclosed by segment. We perform an analysis of our reportable segments at least annually. The vast majority of our long-lived assets, including property, plant and equipment and right-of-use lease assets are located within the United States. International long-lived assets are immaterial. Additionally, the majority of our revenues are generated within the United States.

During the year ended December 31, 2024, the segment measure of profit and loss used by the CODM was changed from gross margin to adjusted gross margin, defined as gross margin before stock-based compensation expense, amortization of acquired intangible assets and inventory step-up amortization related to acquisitions. Each of the aforementioned components of our segment measure of profit and loss, adjusted gross margin, are included within other

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~~segment~~Segment items. This change in segment measure allows the CODM to better assess operating results over time and is consistent with how the CODM evaluates our businesses. Accordingly, we have updated our segment disclosure for the years ended December 31, 2023 and 2022 to conform to the new presentation. For additional details, refer to Note 20.Information

Effective January 1, 2025, we realigned our business into two reportable segments, Connected Devices and Software and Services (the “Segment Realignment”). Prior to the Segment Realignment, our two reportable segments were TASER and Software and Sensors. As a result of the Segment Realignment, we have recast our segment and other relevant disclosures for the years ended December 31, 2024 and 2023 to conform to the new presentation.

In addition, the CODM reviews consolidated financials and revenue by major geography and product and service lines. Consolidated financials provide a holistic view of our overall financial health to guide capital allocation and entity-wide decisions. Disaggregated views of revenue by major geography and product line support the evaluation of specific market and product performance to understand customer trends. There are no operating segments that are aggregated, and there are no inter-segment sales. Assets and other expense items, such as research and development and selling, general, and administrative expenses, are not provided to the CODM by segment, as our CODM does not evaluate our operating segments using this discrete information. As such, these items are not relevant to adjusted gross margin leveraged by the CODM to assess segment performance. As a result, they are not disclosed by segment. We perform an analysis of our reportable segments at least annually.

Geographic Information

~~The~~Sales ~~majority of our sales~~ to international customers are often transacted in foreign currencies and are attributed to each country based on the shipping address of the distributor or customer. For the years ended December 31, ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, no individual country outside the United States represented more than 10% of total net sales. ~~Substantially all of our assets are located in the United States.~~ For additional details, refer to Note 2.

Most of our long-lived assets, including property, plant and equipment and right-of-use lease assets are located within the United States. International long-lived assets are immaterial. Additionally, the majority of our revenues are generated within the United States.

Cash, Cash Equivalents and Investments

We have cash, as well as cash equivalents and investments, which at December 31, ~~2024~~2025 ~~comprised~~comprise ~~cash,~~ money market funds, ~~commercial paper, corporate bonds, term deposits,~~ U.S. ~~government bonds, U.S.~~ Treasury bills, ~~and~~marketable securities, agency bonds., ~~Cash~~term ~~equivalents~~deposits, ~~and~~corporate ~~investments~~bonds, atcommercial ~~December 31~~paper, ~~2023~~and ~~also~~certificates ~~included~~of Udeposit.S. ~~Treasury inflation-protected securities.~~ We place our cash and cash equivalents with high quality financial institutions. Although we deposit our cash with multiple financial institutions, our deposits regularly exceed federally insured limits. Cash and cash equivalents include funds on-hand and highly liquid investments purchased with initial maturity of three months or less. Short-term investments include securities with an expected maturity date within one year of the balance sheet date that do not meet the definition of a cash equivalent, and long-term investments are securities with an expected maturity date greater than one year and less than three years in accordance with our investment policy.

We report available-for-sale investments at fair value as of each balance sheet date and record any unrealized gains or losses within accumulated other comprehensive loss as a component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in other income (loss), net within the consolidated statements of operations. Income tax effects are released from accumulated other comprehensive loss for unrealized gains or losses when the gains or losses are realized and are taxed at the statutory rate based on jurisdiction of the underlying transaction. When the fair value is below the amortized cost of an available-for-sale investment, an estimate of expected credit losses is made. Credit losses are recognized through the use of an allowance for credit losses account in the consolidated balance sheets and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account. If we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations. We do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases. There were no credit losses recorded on our investment portfolio during the years ended December 31, 2024, 2023, and 2022.61

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We report available-for-sale debt investments at fair value as of each balance sheet date and record any unrealized gains or losses within accumulated other comprehensive loss as a component of stockholders’ equity. The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in other income (loss), net within the consolidated statements of operations and comprehensive income. Income tax effects are released from accumulated other comprehensive loss for unrealized gains or losses when the gains or losses are realized and are taxed at the statutory rate based on jurisdiction of the underlying transaction. When the fair value is below the amortized cost of an available-for-sale investment, an estimate of expected credit losses is made. Credit losses are recognized through the use of an allowance for credit losses account in the consolidated balance sheets and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account. If we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations and comprehensive income. We do not intend to sell these investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases. There were no credit losses recorded on our investment portfolio during the years ended December 31, 2025, 2024 and 2023.

We have an investment in marketable equity securities, which is reported at fair value as of each balance sheet date. Changes in fair value are recorded as unrealized gain or loss on marketable securities in other income (loss), net in the consolidated statements of operations and comprehensive income.

Restricted Cash

Restricted cash balances were $1112.92 million and $211.19 million as of December 31, ~~2024~~2025 and ~~2023~~December 31, 2024, respectively. ~~This~~The ~~increase~~restricted iscash ~~primarily~~balance ~~attributable~~at toDecember 31, 2025 includes a $9.7 million payment held in escrow related to the ~~potential~~planned construction of our headquarters building in Scottsdale, Arizona. Restricted cash also includes funds held in international bank accounts for various operating and financing activities. AsRestricted ofcash ~~December 31,~~is ~~2024, approximately $11.8 million was~~ included in prepaid expenses and other current assets on ~~our~~the consolidated balance ~~sheet, with the remainder in other long-term assets~~sheets.

Inventory

Inventories are stated at the lower of cost or 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 conditions~~ among other factors. We evaluate for abnormal costs due to excess production capacity and treat such costs as period costs.

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inventory costs for abnormal costs due to excess production capacity and treat such costs as period costs. Raw materials include an immaterial amount of work-in-process inventory.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation ~~and amortization~~. Additions and improvements are capitalized, while ordinary maintenance and repair expenditures are charged to expense as incurred. Depreciation is calculated using the straight-line method over the estimated economic life.

Software Development Costs

We expense software development costs, including costs to develop software products or the software component of products and services to be marketed to external users, before technological feasibility of such products is reached.

Software development costs also include costs to develop software programs to be used solely to meet our internal needs and applications. We capitalize development costs related to these software applications once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the intended function. Additionally, we capitalize qualifying costs incurred for upgrades and enhancements to existing software that result in additional functionality. Costs related to preliminary project planning activities, post-implementation activities, maintenance and minor modifications are expensed as incurred. Internal-use software development costs are amortized on a straight-line basis over the estimated useful life of the software.

We evaluate the useful lives of these assets on an annual basis and test for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

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Leases

We determine if a contract contains a lease at inception. At commencement, lease contracts are evaluated for classification as an operating or finance lease. Operating lease right-of-use (“ROU”) assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at the commencement date. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Additionally, we use the portfolio approach in determining the discount rate used to present value lease payments. We give consideration to our ~~2027~~notes ~~Notes~~payable, line of credit, macroeconomic factors, as well as publicly available data for instruments with similar characteristics when estimating our incremental borrowing rates. The operating lease ROU asset also includes any lease payments made and initial direct costs incurred and excludes lease incentives.

We have operating leases for office space, manufacturing and logistical functions. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. We do not have any material variable lease costs associated with our operating leases. For leases beginning on or after January 1, 2019, we account for lease components separately from non-lease components for all asset classes.

Our operating leases have remaining terms of less than one to approximately 12 years, some of which include one or more options to renew for up to ~~five~~20 years, and some of which include options to terminate the leases within one year. The exercise of lease renewal options is at our sole discretion and such options are included in ROU assets and liabilities for renewal periods that are reasonably certain of exercise. Certain of these lease agreements include stated rental payment escalations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We ~~may~~ enter into sales-type finance leases as an alternative means to realize value for our body cameras and related accessories. For sales-type finance leases where we are the lessor, we recognize our selling profit on a gross basis at lease commencement within net sales from products and cost of product sales, respectively. Interest income is recognized over the lease term within interest income~~, net~~. The current and long-term portions of our investment in sales-type leases are included in prepaid expenses and other current assets and other long-term assets, respectively. Given the immateriality of our finance lease activity as of December 31, 2025 and December 31, 2024, respectively, no further disclosure considerations related to finance leases are necessary.

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our finance lease activity as of December 31, 2024, no further disclosure considerations related to finance leases are necessary.

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 events and 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 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.

Finite-lived intangible assets and other long-lived assets are amortized using the straight-line method over the estimated useful life. 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. We test goodwill and intangible assets for impairment on an annual basis on December 31, ~~2024~~2025 and on an interim basis when certain events and circumstances exist.

During the years ended December 31, 2025, 2024 and ~~December 31,~~ 2023, long-lived asset impairment charges were immaterial. ~~During the year ended December 31, 2022, we recorded $5.3 million of impairment charges, the majority of which were related to the cease-use of a portion of our Seattle office.~~

No impairment charges were recognized related to goodwill or intangible assets during the years ended December 31, ~~2024~~2025, ~~2023,~~2024 ~~and~~or ~~2022~~2023.

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Customer Deposits

We require deposits in advance of shipment for certain customer sales orders. Additionally, customers may elect to make deposits with us related to contracts for our products and services that were not executed as of the end of a reporting period. Customer deposits are included in other current liabilities in the consolidated balance sheets.

Revenue Recognition~~, Receivables, Contract Assets, and Deferred Revenue~~

We derive revenue from two primary sources: (1) ~~the~~SaaS ~~sale~~offerings ofwhich ~~physical~~include ~~products,~~digital ~~including~~evidence ~~CEDs~~management, ~~Axon~~productivity ~~cameras~~solutions, ~~Axon~~and ~~Signal~~real-~~enabled~~time ~~devices~~operations capabilities, ~~corresponding~~and ~~hardware~~(2) ~~extended~~the ~~warranties~~sale of devices, accessories, and related ~~accessories~~extended ~~such~~warranties asacross ~~Axon~~our ~~docks~~product portfolio, ~~cartridges~~which ~~and~~includes ~~batteries~~TASER, ~~among~~personal ~~others~~sensors, and ~~(2)~~platform ~~subscriptions~~solutions. toTo ~~our~~a ~~Axon~~lesser ~~Evidence~~extent, ~~digital~~we ~~evidence~~also ~~management~~recognize ~~SaaS~~revenue ~~offering~~from ~~(including~~training, ~~data~~professional ~~storage~~services ~~fees~~ and other services ancillary ~~services),~~to ~~which~~our ~~includes~~core ~~varying~~offerings.We ~~levels~~offer ofto ~~support.~~sell Toour products and services on a ~~lesser~~standalone ~~extent~~basis, webut ~~also~~our ~~recognize~~customers ~~revenue~~often ~~from~~prefer ~~training,~~to ~~professional~~bundle ~~services~~our ~~and~~integrated ~~other~~hardware ~~software~~products and ~~SaaS~~ services together in a single transaction that allows them to make payments over a multi-year period. We apply the five-step model outlined in ASC 606. For additional discussion, refer to Note 2.

We enter into contracts that can include various combinations of products and services, each of which is generally distinct and accounted for as a separate performance obligation. 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. Performance obligations to deliver hardware products, ~~including CEDs, Axon cameras and related accessories, such as docks, cartridges and batteries,~~ are generally satisfied at the point in time we ship the product, as this is when the customer obtains control of the asset under our standard terms and conditions. In certain contracts with non-standard terms and conditions, these performance obligations may not be satisfied until delivery or formal customer acceptance occurs. Cost of product sales is recognized when control of hardware products or accessories has transferred to the customer. Performance obligations to fulfill service-type extended warranties and provide our SaaS offerings, including Axon Evidence and other cloud services, are generally satisfied over time as the customer receives and consumes the benefits of these services over the stated service period. Additionally, we offer customers the ability to purchase CED cartridges and certain services on an unlimited as-requested basis over the contractual term, which represents a stand-ready obligation satisfied over time. Payment terms and conditions vary by contract type and geography, but our standard terms are that payments are due within 30 days from the date of invoice.

WeWhen ~~determine~~partners ~~the~~or ~~term~~vendors ofare involved in providing goods and services to our ~~arrangements~~customers; ~~based~~we onapply ~~identifying~~the principal versus agent guidance in ASC 606 to determine if we are the ~~contract~~principal ~~with~~or an agent to the ~~customer~~transaction. InWhen ~~certain~~we ofcontrol ~~our~~the ~~arrangements,~~specified ~~the~~goods ~~customer~~or ~~may~~services ~~have~~before ~~termination~~they ~~rights.~~are Intransferred ~~these~~to ~~instances~~our customer, we ~~determine~~report ifrevenue ~~there~~gross, isas aprincipal. ~~substantive~~If ~~penalty.~~we ~~For~~do ~~contracts~~not ~~with~~control athe ~~substantive~~goods ~~penalty~~or services before they are transferred to our customer, ~~the~~revenue ~~accounting~~is ~~term~~reported ~~will~~net beof the ~~legal~~fees ~~contract~~paid ~~term~~to the other party, ~~inclusive~~as agent. We also consider if distributors obtain control of specified goods or services prior to passing them on to end customers. If they do, then we account for the ~~periods~~distributor as our customer for ASC 606 purposes.

66Our contracts with certain municipal government customers may also be subject to budget appropriation, other contract cancellation clauses or optional renewal periods. In contracts where the customer’s performance is subject to budget appropriation clauses, consistent with historical experience we generally consider the likelihood of non-appropriation to be remote when determining the contract term and transaction price.

Contract Assets and Liabilities

Because of the nature of our multi-year subscription programs with various product and service performance obligations and multi-year payment plans, 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.

Contract assets generally result from our subscription programs where we satisfy a hardware performance obligation upon shipment to the customer, and the right to payment of the portion of the transaction price allocated to that hardware performance obligation is conditional on our future performance of other services under the contract. Contract asset amounts that will be invoiced during the 12-month period from the balance sheet date are classified as current assets and the remaining portion is recorded within other long-term assets on our consolidated balance sheets.

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~~which~~Contract liabilities generally consist of deferred revenue on our subscription programs where we generally invoice customers at the ~~customer~~beginning ~~termination~~of ~~rights~~each ~~exist~~annual contract period and record a receivable at the time of invoicing when there is an unconditional right to consideration. InDeferred ~~these~~revenue ~~contracts~~is ~~with~~composed nomainly ~~substantive~~of ~~penalty~~unearned revenue related to our SaaS offerings, weservice-type ~~also~~extended ~~consider~~warranties, ifstand-ready ~~the~~obligations ~~option~~to ~~for~~provide CED cartridges, rights to future CED, and rights to future hardware shipments in our ~~customer~~subscription programs. Deferred revenue that is expected to ~~purchase~~be ~~additional~~recognized ~~goods~~as orrevenue ~~services~~during ~~represents~~the an12-month ~~additional~~period ~~performance~~from ~~obligation~~the inbalance sheet date is recorded as current deferred revenue and the ~~form~~remaining ofportion ais ~~material~~recorded ~~right~~as long-term deferred revenue.

~~While~~Areas our products and services may be sold on a standalone basis, we generally combine our hardware products and services together and sell them to our customers in single transactions where the customer can make payments over a multi-year period. These sales may include payments for upfront hardware and services, as well as payments for hardware and services to be provided at a future date. Additionally, we offer customers the ability to purchase CED cartridges and certain services on an unlimited basis over the contractual term. Due to the nature of these arrangements whereby we are obligated to deliver products at the customer’s request, we account for these arrangements as stand-ready obligations, and recognize revenue ratably over the contract period. Cost of product sales is recognized when control of hardware products or accessories has transferred to the customer.Judgment

WeThe ~~recognize~~contractual ~~shipping~~term ~~costs~~of asour anrevenue ~~expense~~arrangements is based on the period in ~~cost~~which ofthere ~~product~~are ~~sales~~presently ~~when~~enforceable rights and obligations, which could be shorter than the ~~control~~stated ofcontractual ~~hardware~~term ~~products~~if orour ~~accessories~~customers ~~has~~can ~~transferred~~terminate the contracts for convenience without having to pay a substantive termination penalty. In contracts with no substantive termination penalty, we also consider if the option for our customer. ~~Sales~~to ~~tax~~purchase ~~collected~~additional ongoods ~~sales~~or isservices ~~netted~~represents ~~against~~an ~~government~~additional ~~remittances~~performance ~~and,~~obligation ~~thus,~~in ~~recorded~~the onform of a ~~net~~material ~~basis~~right. ~~Payment~~Determining ~~terms~~the ~~and~~revenue ~~conditions~~recognition ~~vary~~for bythese ~~contract~~types ~~type~~of ~~and~~contracts ~~geography,~~may ~~but~~require ~~our~~significant ~~standard~~judgment ~~terms~~to ~~are~~determine ~~that~~the ~~payments~~contract ~~are~~term ~~due~~including ~~within~~the 30existence ~~days~~of ~~from~~substantive termination penalties, determining the ~~date~~transaction ofprice, ~~invoice~~and identifying performance obligations.

~~The~~At ~~timing~~times, ofcustomers ~~revenue~~may ~~recognition~~request ~~may~~changes ~~differ~~that ~~from~~either ~~the~~amend, ~~timing~~replace ofor ~~invoicing~~cancel toexisting ~~customers~~contracts. WeJudgment ~~generally~~is ~~have~~required ~~an unconditional right~~ to ~~consideration~~determine ~~when~~whether wethe ~~invoice~~specific ~~our~~facts ~~customers~~ and ~~record~~circumstances awithin ~~receivable.~~the Wecontracts ~~record~~require athe ~~contract~~changes ~~asset~~to ~~when~~be ~~revenue~~accounted isfor ~~recognized~~as ~~prior~~a toseparate ~~invoicing,~~contract or as a ~~contract~~modification. ~~liability~~Generally, ~~(deferred~~contract ~~revenue)~~modifications ~~when~~containing ~~revenue~~additional ~~will~~goods beand ~~recognized~~services ~~subsequent to invoicing. Contract asset amounts~~ that ~~will be invoiced during the subsequent 12-month period from the balance sheet date~~ are ~~classified~~determined asto ~~current~~be ~~assets~~distinct and ~~the~~sold ~~remaining~~at ~~portion~~their isSSP ~~recorded~~are ~~within~~accounted ~~other~~for ~~long-term~~as ~~assets~~a onseparate ~~our consolidated balance sheets~~contract. ~~Deferred~~For ~~revenue~~contract ~~that~~modifications iswhere ~~expected~~both tocriteria beare ~~recognized~~not ~~during~~met, the ~~subsequent~~original ~~12-month~~contract ~~period from the balance sheet date~~ is ~~recorded~~updated ~~as current deferred revenue~~ and the ~~remaining~~required ~~portion~~adjustments isto ~~recorded~~revenue asand ~~long-term~~contract ~~deferred revenue. Generally~~assets, ~~customers~~liabilities ~~are~~and ~~billed~~other inaccounts ~~annual~~are ~~installments.~~made accordingly.

~~Contract~~Our ~~assets~~contracts ~~generally~~with ~~result~~customers ~~from~~often ~~our~~include ~~subscription~~promises ~~programs~~to ~~where~~transfer wemultiple ~~satisfy~~products aand ~~hardware~~services ~~performance obligation upon shipment~~ to ~~the~~a customer,. ~~and~~Determining ~~the~~whether ~~right~~products toand ~~the~~services ~~portion~~are ofconsidered ~~the~~distinct ~~transaction~~performance ~~price~~obligations ~~allocated to~~ that ~~hardware~~should ~~performance~~be ~~obligation~~accounted isfor ~~conditional~~separately onrather ~~our~~than ~~future~~together ~~performance~~may ofrequire ~~a SaaS service obligation under the contract~~judgment. We ~~recognize~~typically aconsider ~~portion of the amount allocated to~~ hardware products ~~shipped~~such ~~to the customer~~ as ~~accounts~~CEDs, ~~receivable when invoiced to the customer~~cameras, sensors and ~~record~~related ~~the~~accessories ~~remaining allocated value as a contract asset as we have generally fulfilled our hardware performance obligation upon shipment. Unbilled accounts receivable expected~~ to be ~~invoiced~~separately ~~and~~identifiable ~~collected~~from ~~within~~each 12other ~~months~~as ~~were~~well ~~$5.6 million~~ as offrom ~~December 31,~~extended ~~2024,~~warranties ~~and~~on ~~were~~these ~~included~~products ~~in accounts~~ and ~~notes~~the ~~receivable,~~subscriptions ~~net~~to on our ~~consolidated~~SaaS ~~balance sheet~~offerings.

~~Contract~~Judgment ~~liabilities~~is ~~generally~~required ~~consist~~to ofdetermine ~~deferred~~the ~~revenue~~SSP onfor each distinct performance obligation. We analyze stand-alone sales of our ~~subscription~~products ~~programs~~and ~~where~~services weas ~~generally~~a ~~invoice~~basis ~~customers~~for atestimating the ~~beginning~~SSP of ~~each~~our ~~annual~~products ~~contract~~and ~~period~~services and ~~record~~then ause ~~receivable~~that atSSP as the ~~time~~basis offor ~~invoicing~~allocating ~~when~~the ~~there~~transaction isprice anwhen ~~unconditional~~our ~~right~~products toand ~~consideration.~~services ~~Deferred~~are ~~revenue~~sold istogether ~~composed~~in ~~mainly~~a ofcontract ~~unearned~~with ~~revenue~~multiple ~~related~~performance toobligations. ~~our~~In ~~Axon~~instances ~~Evidence~~where ~~SaaS~~the ~~platform,~~SSP ~~secure~~is ~~cloud-based~~not ~~storage,~~directly ~~service-type extended warranties~~observable, ~~stand-ready~~such ~~obligations~~as inwhen ~~our~~we ~~cartridge~~do ~~programs,~~not ~~and~~sell ~~rights~~the toproduct ~~future~~or ~~CED~~service separately, ~~Axon~~we ~~camera~~determine ~~and~~the ~~related~~SSP ~~accessories~~using ~~hardware~~information inincluding ~~our~~cost ~~subscription~~plus ~~programs. For~~margin, ~~additional~~market ~~discussion,~~comparisons ~~refer~~and toother ~~Note~~observable 2inputs.

~~Reserve~~Practical ~~for~~Expedients ~~Expected~~and ~~Credit Losses~~Elections

~~Sales are typically made on credit, and we generally do not require collateral.~~ We ~~are~~recognize ~~exposed~~shipping tocosts ~~credit~~as ~~losses~~an ~~primarily~~expense ~~through~~in ~~sales~~cost of ~~products~~product ~~and~~sales ~~services.~~when Our expected loss allowance methodology for accounts receivable, contract assets, notes receivable and off-balance-sheet exposures is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions and a review of the ~~current~~control ~~status~~ of ~~customers’~~hardware ~~trade~~products ~~accounts~~or ~~receivables.~~accessories Wehas ~~review~~transferred ~~receivables for U.S. and international customers separately~~ to ~~better reflect different published credit default rates and economic and market conditions. Additionally, specific reserve amounts are established to record~~ the ~~appropriate provision for customers that have a higher probability of default~~customer. Our monitoring activities include account reconciliation, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. Accounts and notes receivable, contract assets and off-balance-sheet exposures are presented net of a reserve for expected credit losses, which totaled $5.6 million and $4.0 million as of December 31, 2024 and 2023, respectively. This reserve represents our best estimate and application of judgment

67Sales tax collected on sales is netted against government remittances and, thus, recorded on a net basis.

In contracts where there are timing differences between when we transfer a promised good or service to the customer and when the customer pays for that good or service, we assess whether there is any implied financing within the transaction, and if so, recognize related interest income, or expense, on the transaction. We do not adjust the transaction price for the effects of a significant financing component when the period is one year or less. The amount of imputed interest is immaterial for the years ended December 31, 2025, 2024, and 2023.

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~~considering~~Reserve afor ~~number~~Expected ofCredit ~~factors, including those listed above. In the event that actual uncollectible amounts differ from our estimates, additional expense could be necessary. For additional discussion, refer to Note 4.~~Losses

Sales are typically made on credit, and we generally do not require collateral. We are exposed to credit losses primarily through sales of products and services. Our expected loss allowance methodology for accounts and notes receivable and contract assets is developed using historical collection experience, published or estimated credit default rates for entities that represent our customer base, current and future economic and market conditions and a review of the current status of customers’ trade accounts receivables. We review receivables for U.S. and international customers separately to better reflect different published credit default rates and economic and market conditions. Additionally, specific reserve amounts are established to record the appropriate provision for customers that have a higher probability of default. Our monitoring activities include account reconciliation, dispute resolution, payment confirmation, consideration of customers’ financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. This reserve represents our best estimate and application of judgment considering a number of factors, including those listed above. In the event that actual uncollectible amounts differ from our estimates, additional expense could be necessary. The expected credit losses, which totaled $7.8 million, $5.6 million and $4.0 million as of December 31, 2025, 2024 and 2023 respectively, are deducted from the amortized cost basis of accounts and notes receivable and contract assets to present the net amount expected to be collected. Reserve activity during the years ended December 31, 2025, 2024 and 2023 was immaterial.

Deferred Commissions

We recognize an asset for the incremental costs of obtaining a contract with a customer, which consist primarily of sales commissions. These costs are ascribed to or allocated to the underlying performance obligations in the contract and amortized consistent with the expected recognition timing of the revenue for the underlying performance obligations.

For contract costs related to performance obligations with an amortization period of one year or less, we apply the practical expedient to expense these sales commissions when incurred. These costs are recognized as incurred within SG&A expenses in the consolidated statements of operations and comprehensive income. For additional discussion, refer to Note 2.

Cost of Product and Service Sales

Cost of product sales represents manufacturing costs consisting of materials, labor and overhead related to finished goods and components. Shipping costs incurred related to product delivery are also included in cost of products sold. Cost of service sales includes third- party cloud services, software maintenance and support costs – including personnel costs, associated with supporting Evidence.com and other software related services.

Advertising Costs

We expense advertising costs in the period in which they are incurred. We incurred advertising costs of $4.4 million, $1.9 million and $2.3 million in the years ended December 31, 2024, 2023 and 2022, respectively. Advertising costs are included within SG&A expenses in the consolidated statements of operations.

Warranty Reserves

We warranty our conducted energy devices (“CEDs”), Axon cameras and ~~certain~~other ~~related~~hardware ~~accessories from manufacturing defects~~ on a limited basis for a period of primarily one year after purchase ~~and, thereafter, will replace any defective unit for a fee~~. We estimate and record a liability for standard warranty at the time products are sold. The estimates are based on historical experience and reflect our best estimates of costs to be incurred over the warranty period. Adjustments may be required when actual or projected costs differ. Variations in component failure rates, repair costs and the point of failure within the product life cycle are key drivers that impact our periodic re-assessment of the warranty liability.

Revenue related to separately priced extended warranties is initially recorded as deferred revenue at its allocated amount and subsequently recognized as net sales on a straight-line basis over the warranty service period. Costs related to extended warranties are charged to cost of product sales when the costs become probable and can be reasonably estimated.

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Changes in our estimated warranty reserve were as follows (in thousands):

	Year Ended December 31,
	2024		2023		2022
	2025		2024		2023
Balance, beginning of period	$	78,~~374~~284	$	~~811~~7,374	$	~~2,822~~811
Utilization of reserve	(59,~~992~~054)		(15,~~499~~992)		(21,~~209~~499)
Adjustment to reserve due to business combinations	~~1,311~~—		—1,311		—
Warranty expense	511,~~591~~628		85,~~062~~591		~~198~~8,062
Balance, end of period	$	810,~~284~~858	$	78,~~374~~284	$	~~811~~7,374

Research and Development Expenses

~~We expense as incurred~~ R&D costs that do not meet the qualifications to be capitalized are expensed as incurred. R&D costs include payroll costs and stock-based compensation for the personnel involved in R&D functions, as well as indirect manufacturing costs and supplies, consulting services and internal infrastructure costs incurred in connection with product research and development. We incurred R&D expense of $~~441~~684.63 million, $~~303~~441.76 million and $~~233~~303.87 million in ~~2024~~the years ended December 31, ~~2023~~2025, 2024 and ~~2022~~2023, respectively.

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Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement amounts of assets and liabilities and their respective tax bases, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in future years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced through the establishment of a valuation allowance if, based upon available evidence, it is determined that it is more likely than not that the deferred tax assets will not be realized. We use factors to assess the likelihood of realization of deferred tax assets such as the forecast of future taxable income and available tax planning that could be implemented to realize the deferred tax assets.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We also assess whether uncertain tax positions, as filed, could result in the recognition of a liability for possible interest and penalties. ~~Our~~We ~~policy~~recognize ~~is to include~~ interest and penalties related to unrecognized tax benefits aswithin athe ~~component~~provision of(benefit) for income tax expense line in the consolidated statements of operations and comprehensive income. For additional details, refer to Note 1412.

Fair Value Measurements and Financial Instruments

We use the fair value framework that prioritizes the inputs to valuation techniques for measuring financial assets and liabilities measured on a recurring basis and for non-financial assets and liabilities when these items are re-measured. Fair value is considered to be the exchange price in an orderly transaction between market participants, to sell an asset or transfer a liability at the measurement date. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

•Level 1 – Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.

•Level 2 – Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices from markets that are not active for assets or liabilities that are identical or similar to the assets or liabilities being measured. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.

•Level 3 – Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect our own assumptions about inputs that market participants would use in pricing an asset or liability.67

We have cash equivalents and investments, which at December 31, 2024 comprised money market funds, commercial paper, corporate bonds, term deposits, U.S. government bonds, U.S. Treasury bills, and agency bonds. For additional details regarding our cash equivalents and investments, refer to Note 3. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. We have corporate-owned life insurance policies, included in the balance of other long-term assets, which are used to fund our deferred compensation plan. The balances of these policies as of December 31, 2024 and 2023 were $8.4 million and $7.6 million, respectively. We determine the fair values of our insurance contracts by obtaining the cash surrender value of the contracts from the issuer, a Level 2 valuation technique.

We have an investment in marketable securities, for which changes in fair value are recorded in the consolidated statements of operations as unrealized gain (or loss) on marketable securities, which is included in other income (loss), net.

We have strategic equity investments in various privately held companies as of December 31, 2024 and 2023. The estimated fair value of the investments was determined based on Level 3 inputs. In determining the estimated fair value of our strategic investments in privately held companies, we utilize observable data available to us as discussed further in Note 8.

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~~The~~•Level ~~fair~~3 ~~value~~– ofValuation ~~our~~techniques ~~0.50%~~in ~~convertible~~which ~~senior~~one ~~notes~~or ~~due~~more ~~2027~~significant ~~(the~~inputs ~~"Notes"~~ or ~~"2027~~significant ~~Notes")~~value isdrivers ~~determined~~are ~~based on the closing trading price per $1,000 of the Notes as of the last day of trading for the period~~unobservable. WeUnobservable ~~consider~~inputs ~~the~~are ~~fair~~valuation ~~value~~technique ofinputs ~~the~~that ~~2027~~reflect ~~Notes~~our atown ~~December 31,~~assumptions ~~2024~~about ~~and~~inputs ~~2023,~~that tomarket beparticipants awould ~~Level~~use 2in ~~measurement~~pricing ~~based~~an onasset ~~the~~or ~~fair value hierarchy~~liability. ~~The fair value is primarily affected by the trading price of our common stock and market interest rates.~~

Changes in fair value of our investment in marketable securities are recorded in other income (loss), net in the consolidated statements of operations and comprehensive income. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. For additional details regarding our cash equivalents and investments, refer to Note 3.

We have corporate-owned life insurance policies which are used to fund our deferred compensation plan. The balances of these policies were $9.9 million and $8.4 million as of December 31, 2025 and 2024, respectively, and are included in other long-term assets in the consolidated balance sheets. We determine the fair values of our insurance contracts by obtaining the cash surrender value of the contracts from the issuer, a Level 2 valuation technique.

We have strategic equity investments in various non-public companies as of December 31, 2025 and 2024. The estimated fair value of the equity investments is determined based on Level 3 inputs, utilizing available observable data as discussed further in Note 7.

The fair value of our notes payable is determined based on the closing trading price of the respective notes payable as of the last day of trading for each period. We consider the fair value to be a Level 2 measurement, as the fair value is primarily affected by the trading price of our common stock and market interest rates. For additional details regarding our notes payable, refer to Note 10.

Our financial instruments also include accounts and notes receivable, accounts payable and accrued liabilities. Due to the short-term nature of these instruments, their fair values approximate their carrying values on the consolidated balance sheets.

Strategic Investments

Strategic investments include equity investments in various non-public technology-driven companies. We generally account for strategic equity investments under the ASC 321 measurement alternative for equity securities without readily determinable fair values. The equity investments are measured at cost less impairment, adjusted for observable price changes and are assessed for impairment whenever events or changes in circumstances indicate that the fair value may be less than its carrying value. Adjustments are recorded within other income (loss), net in the consolidated statements of operations and comprehensive income.

Certain strategic equity investments in unconsolidated investees are accounted for under the equity method of accounting if we have the ability to exercise significant influence over the operating and financial policies of the investee. These investments are initially measured at cost and are adjusted by our share of equity in the reported net income or losses of the investee.

We evaluate our investments and other significant relationships to determine whether any investee is a variable interest entity (“VIE”). If we conclude that an investee is a VIE, we evaluate our power to direct the activities of the investee, our obligation to absorb the expected losses of the investee and our right to receive the expected residual returns of the investee to determine whether we are the primary beneficiary of the investee. If we are the primary beneficiary of a VIE, we will consolidate such entity and reflect the non-controlling interest of other beneficiaries of that entity.

We determine whether we are the primary beneficiary of a VIE by performing an analysis that principally considers:

•The VIE’s purpose, design, and risks the VIE was designed to create and pass through to its variable interest holders;

•The VIE’s capital structure;

•The terms between the VIE and its variable interest holders and other parties involved with the VIE; and

•Related party affiliations.

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The primary purpose of our unconsolidated VIE investments is to create strategic partnerships with market-leading providers of public safety technology solutions. We present all variable interests in unconsolidated VIEs within strategic investments on the consolidated balance sheets. We have also provided financial support to the unconsolidated VIEs in exchange for investments in debt and equity investments. Financial support provided to the unconsolidated VIEs is used to continue to finance their operations.

Stock-Based Compensation

We ~~have~~utilize ~~historically utilized~~ stock-based compensation for key employees and non-employee directors as a means of attracting and retaining talented personnel. We recognize compensation expense for our stock-based compensation program, which includes grants of RSUs, PSUs, XSUs and stock options. Our stock-based compensation awards are classified as equity and are measured at the fair market value of the underlying common stock at the grant date. When determining the grant date fair value of stock-based awards, we consider whether an adjustment is required to the observable market price or volatility of our common stock used in the valuation as a result of material non-public information. Payments for employees’ tax obligations are reflected as a financing activity within the consolidated statements of cash flows. We record a liability for the tax withholding to be paid by us as a reduction to additional paid-in capital.

RSUs

Stock-based compensation expense for RSUs is measured based on the closing fair market value of our common stock on the date of grant. We recognize stock-based compensation expense over the award’s requisite service period using the straight-line attribution method for service-based RSUs. Service-based grants generally have a vesting period of one to ~~four~~three years and a contractual maturity of ten years. We account for forfeitures as they occur as a reduction to stock-based compensation expense and additional paid-in-capital.

PSUs - inclusive of XSUs

Stock-based compensation expense for standard PSUs is measured based on the closing fair market value of our common stock on the date of grant. We recognize stock-based compensation expense over the award's requisite service period, which is defined as the longest explicit, implicit or derived service period based on our estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date. The vesting of our PSUs is generally contingent upon the achievement of certain performance criteria related to our operating performance, as well as successful and timely development and market acceptance of future product introductions. For PSUs containing only performance conditions, compensation cost is recognized using the graded attribution model over the explicit or implicit service period. In addition, certain of the PSUs have further service requirements subsequent to achievement of the performance criteria.

~~Performance~~Our performance-based ~~grants~~restricted ~~generally~~stock ~~have~~units ~~vesting~~include ~~periods~~XSUs ~~ranging~~granted ~~from~~under ~~one~~the toEmployee ~~eight~~XSP ~~years~~ and athe ~~contractual~~CEO ~~maturity~~Performance ofAward. ~~ten~~On ~~years~~May 10, 2024, our shareholders approved the Employee XSP. WeThe ~~account~~Employee ~~for~~XSP ~~forfeitures~~includes asan ~~they~~approved ~~occur~~pool asof ashares ~~reduction~~of tocommon stock~~-based~~ ~~compensation~~reserved ~~expense~~for ~~and~~grants ~~additional~~of ~~paid-in-capital~~awards of XSUs to employees. ~~Our~~The grants of XSUs are grants of performance-based ~~restricted~~RSUs. ~~stock~~The ~~units~~program ~~include~~includes ~~XSUs~~seven ~~granted~~substantially ~~under~~equal tranches that will vest upon certification by the ~~2024~~Compensation ~~Employee~~Committee ~~XSP~~of ~~and~~the Board of Directors (the ~~2024~~“Compensation ~~CEO~~Committee”) ~~Performance~~upon ~~Award~~achievement ~~discussed~~of ~~further~~three ~~below~~independent vesting conditions: (1) stock price goals; (2) operational goals; and (3) minimum service conditions.

Additionally, on May 10, 2024, ~~Employee~~shareholders ~~XSP~~approved a grant of XSUs to our CEO, Patrick Smith (the “CEO Performance Award”). The stock price goals and ~~2024~~operational goals applicable to the CEO Performance Award are identical to those under the Employee XSP, but Mr. Smith is subject to a longer minimum required service period.

OnStock-based ~~May~~compensation ~~10,~~expense ~~2024~~associated with the XSUs is recognized over the requisite service period, ~~our~~which ~~shareholders~~is ~~approved~~considered the ~~2024~~longest ~~Employee~~explicit, ~~XSP.~~implicit ~~The~~or ~~2024~~derived ~~Employee~~service ~~XSP~~period ~~includes~~for aneach ~~approved~~respective ~~pool~~tranche. ofWe ~~shares~~utilized Monte Carlo simulations to evaluate a range of ~~common~~possible future stock ~~reserved~~price ~~for~~goals ~~grants~~over the term of the awards at each of ~~XSUs~~the torespective ~~employees~~grant dates. The ~~grants~~median of ~~XSUs~~all (iterations of the ~~“2024~~simulation ~~XSUs”)~~was ~~are~~used ~~grants~~as ofthe ~~performance-based~~basis ~~RSUs~~for the derived service period for each tranche. The ~~program~~requisite ~~includes~~service ~~seven~~period ~~substantially~~for ~~equal~~each ~~tranches~~tranche ~~that~~is ~~will~~subject ~~vest~~to ~~upon~~review ~~certification~~on bya ~~the~~quarterly ~~Compensation~~basis, ~~Committee~~and ofchanges to the ~~Board~~requisite ofservice ~~Directors~~period ~~(the~~are ~~“Compensation~~made ~~Committee”)~~if ~~upon~~it ~~achievement~~is ofprobable ~~three~~that ~~independent~~performance ~~vesting~~ conditions: ~~(1)~~will ~~stock~~be ~~price~~achieved ~~goals;~~within ~~(2)~~a ~~operational~~different ~~goals;~~time ~~and~~period. ~~(3)~~Accordingly, ~~minimum~~any unrecognized compensation cost is recognized prospectively over the remaining requisite service ~~conditions~~period.

Additionally, on May 10, 2024, shareholders approved a grant of XSUs to our CEO, Patrick W. Smith (the “2024 CEO Performance Award”). The stock price goals and operational goals applicable to the 2024 CEO Performance Award are identical to those under the 2024 Employee XSP, but Mr. Smith is subject to a longer minimum required service period. 69

Stock-based compensation expense associated with the 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

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We measured the grant ~~dates~~date fair value of each tranche using a Monte Carlo simulation with the following assumptions: risk-free interest rate of 3.6% ~~The~~– ~~median~~4.5%, expected volatility of ~~all~~41.0% ~~iterations~~– 51.8%, expected term of ~~the~~7.0 ~~simulation~~– ~~was~~8.6 ~~used~~years, asand dividend yield of 0.0%. We utilized a blended volatility assumption, equally weighting both historical volatility and implied volatility, resulting in a weighted-average expected volatility of 41.9%. An illiquidity discount is considered in our estimate of the ~~basis~~fair value of shares during post-vesting holding periods. The mandatory post-vesting holding periods for XSUs will lapse on the ~~derived~~earlier ~~service~~of ~~period~~(i) ~~for~~December ~~each~~31, 2030, or (ii) the date that a subsequent tranche vests and settles. Therefore, the illiquidity discount is dependent upon projected tranche vesting dates, determined via the Monte Carlo simulation. This simulation is based on a subjective assessment of our forward-looking financial projections, taking into consideration statistical analysis.

WeEven ~~measured~~though ~~the~~no ~~grant~~tranche ~~date~~with ~~fair~~respect ~~value~~to ofeither ~~each~~XSUs ~~tranche~~granted ~~using~~under athe ~~Monte~~Employee ~~Carlo~~XSP ~~simulation~~or ~~with~~ the ~~following~~CEO ~~assumptions:~~Performance ~~risk-free~~Award ~~interest~~vests ~~rate~~unless ofthe ~~3.6%~~applicable –stock ~~4.5%~~price goal, ~~expected~~operational ~~volatility~~goal ofand ~~41.0%~~corresponding –minimum ~~46.8%~~service condition are achieved, ~~expected~~stock-based ~~term~~compensation ofexpense ~~8.0~~is –recognized ~~8.6~~when ~~years,~~an ~~and~~operational ~~dividend~~goal ~~yield~~is considered probable of ~~0.0%.~~attainment Weregardless ~~utilized~~of athe ~~blended~~achievement ~~volatility~~of ~~assumption~~the stock price and minimum service conditions. As of December 31, ~~equally~~2025, ~~weighting~~we ~~both~~consider ~~historical~~some ~~volatility~~of the tranches probable and ~~implied~~will ~~volatility,~~recognize ~~resulting~~the inexpense aratably ~~weighted-average~~over ~~expected~~their ~~volatility~~respective ofexpected 41vesting periods.~~6%.~~ AnThis ~~illiquidity~~may ~~discount~~result isin ~~considered~~volatility inand ~~our~~higher ~~estimate~~upfront ofexpense ~~the~~recognition ~~fair~~and ~~value~~is ofsubject ~~shares~~to ~~during~~change ~~post-vesting~~based ~~holding~~on ~~periods~~periodic probability assessments. ~~The~~Tranches ~~mandatory~~1 ~~post-vesting~~and ~~holding~~2 ~~periods~~vested ~~for~~and ~~XSUs~~settled ~~will~~in ~~lapse~~June on2025 ~~the~~and ~~earlier~~December of2025, ~~(i)~~respectively. ~~December~~As of December 31, ~~2030~~2025, orfor ~~(ii)~~certain grantees, the ~~date~~shares ~~that~~acquired aupon ~~subsequent~~vesting ~~tranche~~and ~~vests~~settlement ~~and~~of ~~settles.~~Tranche ~~Therefore,~~2 ~~the~~are ~~illiquidity~~subject ~~discount~~to isa ~~dependent~~holding ~~upon~~period ~~projected~~requirement ~~tranche~~under ~~vesting~~the ~~dates~~plan, ~~determined~~which ~~via~~will expire on the ~~Monte~~earlier ~~Carlo~~of ~~simulation.~~(i) ~~This~~December ~~simulation~~31, is2030 ~~based~~and (ii) the date on awhich ~~subjective~~the ~~assessment~~subsequent oftranche ~~our~~vests ~~forward-looking~~and ~~financial~~settles. ~~projections,~~Refer ~~taking~~to ~~into~~Note ~~consideration~~14 ~~statistical~~for ~~analysis.~~further discussion.

~~Even though no tranche with respect to either XSUs granted under the 2024 Employee XSP or the 2024 CEO~~ Performance ~~Award vests unless the applicable stock price goal, operational goal and corresponding minimum service condition are achieved, stock~~-based ~~compensation~~grants ~~expense~~generally ishave ~~recognized~~vesting ~~when~~periods anranging ~~operational~~from ~~goal~~one isto ~~considered~~eight ~~probable~~years ~~of attainment regardless of the achievement of the stock price~~ and ~~minimum~~a ~~service~~contractual ~~conditions.~~maturity As of ~~December 31,~~ten ~~2024, we consider some of the tranches probable and will recognize the expense ratably over their respective expected vesting periods~~years. ~~This~~We ~~may~~account ~~result~~for inforfeitures ~~volatility~~as ~~and~~they ~~higher~~occur ~~upfront~~as ~~expense~~a ~~recognition~~reduction ~~and is subject~~ to ~~change~~ stock-based oncompensation ~~periodic~~expense ~~probability~~and ~~assessments.~~additional ~~Refer to Note 16 for further discussion~~paid-in-capital.

Stock Options

On May 24, 2018, our shareholders approved the Board of Directors’ grant of 6.4 million performance-based stock options to our CEO, Patrick W. Smith, (the “2018 CEO Performance Award”). The 2018 CEO Performance Award consisted of 12twelve substantially equal tranches with a vesting schedule based entirely on the attainment of both operational goals (performance conditions) and market capitalization goals (market conditions), assuming continued employment either as the Chief Executive Officer or as both Executive Chairman and Chief Product Officer and service through each vesting date. For performance-based stock options with a vesting schedule based entirely on the attainment of both performance and market conditions, stock-based compensation expense was recognized for each pair of performance and market conditions over the longer of the expected achievement period of the performance and market conditions, beginning at the point in time that the relevant performance condition is considered probable of achievement. The fair value of such awards was estimated on the grant date using Monte Carlo simulations. The 2018 CEO Performance Award was fully vested as of June 30, 2023.

Business Combinations

In business combinations achieved in stages, our previously held equity interests are remeasured to fair value at the respective acquisition date using Level 3 valuation techniques. Gains or losses associated with such remeasurement are recorded in other income (loss), net, in our consolidated statements of operations and comprehensive income. Transaction costs for our business combinations are expensed as incurred in our consolidated statements of operations and comprehensive income.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. The goodwill generated from our business combinations is primarily attributable to synergies that are expected to be achieved from the integration of the acquired businesses.

During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations and comprehensive income. For additional details, refer to Note 19.

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Income per Common Share

Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted income per share reflects the potential dilution from outstanding stock-based awards, our 2027 Notes, and warrants to acquire shares of our common stock (the "“Warrants"” or "“2027 Warrants"”). The effects of outstanding stock-based awards, our 2027 Notes, and our 2027 Warrants are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive. For additional information regarding our 2027 Notes and 2027 Warrants, refer to Note 10.

The calculation of the weighted average number of shares outstanding and earnings per share is as follows (in thousands except per share data):


	For the Year Ended December 31,
	2025		2024		2023
Numerator for basic and diluted earnings per share:
Net income	$	124,656	$	377,034	$	175,783

Denominator:
Weighted average shares outstanding	78,081		75,748		74,195
Dilutive effect of stock-based awards	1,826		1,435		1,261
Dilutive effect of 2027 Notes (1)	990		1,139		—
Dilutive effect of 2027 Warrants	1,473		236		—

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