Axon convertible notes are headed to market after Axon Enterprise, Inc. (Nasdaq: AXON) set the price on a $1.0 billion offering of 0% convertible senior notes that mature in 2031. The Scottsdale, Arizona company, whose public safety technology network links drones and robotics with TASER energy devices, body-worn cameras, and digital evidence tools, disclosed the pricing on September 16, 2026. Axon also handed its underwriters an option to buy up to $150.0 million more in principal amount of the notes, which may be used only to cover over-allotments.
The sale of the Axon convertible notes to the underwriters is scheduled to settle on September 18, 2026, as long as customary closing conditions are met. Once the underwriting discount and estimated offering costs are taken out, Axon expects to receive roughly $986.0 million in net proceeds. That total would rise to about $1,134.3 million if the underwriters fully use their extra purchase option, which can be exercised during an 11-day window that begins on the first day the notes are issued.
How the Axon Convertible Notes Are Structured
The Axon convertible notes are senior, unsecured obligations of the company, and they will not pay regular interest. Their principal amount will not accrete either. Unless they are converted, redeemed, or repurchased sooner, the notes come due on September 15, 2031. Holders start with a conversion rate of 1.5336 shares of Axon common stock for each $1,000 in principal, which equals an initial conversion price of roughly $652.06 per share. When a conversion happens, Axon gets to decide whether to settle it with cash, common stock, or a combination of the two.
Before the close of business on the business day just ahead of June 15, 2031, holders can convert only if certain conditions are satisfied and only during specific periods. From June 15, 2031 until the close of business on the second scheduled trading day before maturity, they may convert some or all of their notes without meeting those conditions. Holders also have the right, subject to certain conditions, to ask Axon to buy back their notes on March 20, 2031 at principal plus any accrued and unpaid special interest. If Axon goes through a qualifying “fundamental change,” holders can also require a cash repurchase at 100% of principal plus any accrued and unpaid special interest.
Redemption Rights and Capped Call Transactions
Axon holds its own redemption rights. Beginning September 20, 2029, it may redeem the notes for cash if its stock has traded at no less than 130% of the conversion price for at least 20 trading days during a 30 consecutive trading day stretch, along with other requirements. Readers following the company’s financial moves can track its announcements through the Axon investor relations site. The company may also redeem every remaining note if less than 10% of the original principal amount is still outstanding, a step the terms call a cleanup redemption.
The capped calls were negotiated privately with some of the underwriters, their affiliates, and other financial institutions. In general, they are meant to reduce possible dilution to Axon common stock when notes convert, or to offset cash payments above the principal of converted notes, subject to a cap. The starting cap price is $1,049.94, which is a 137.5% premium to Axon’s last reported sale price of $442.08 per share on The NASDAQ Stock Market LLC on September 15, 2026. Axon noted that hedging trades by the counterparties could push the market price of its stock or the notes up or down.
Use of Proceeds and Underwriters for the Offering
Axon intends to put $99.9 million of the net proceeds toward capped call transactions, or about $114.9 million if the over-allotment option is exercised in full. The remaining money is set aside for general corporate purposes. The company said that could include funding its growth and buying or investing in product lines, products, services, or technologies, which may involve acquiring or investing in other businesses. Capital raising has been a steady theme in the sector, and DroneArticles recently covered how one firm’s drone portfolio companies raised money through public offerings and private placements.
Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, J.P. Morgan Securities LLC, RBC Capital Markets, LLC and Citigroup Global Markets Inc. are the joint lead book-running managers, while Citizens JMP Securities, LLC, Needham & Company, LLC, Piper Sandler & Co. and Baird are serving as co-managers. The offering is being made under an effective shelf registration statement on file with the Securities and Exchange Commission, and only through a prospectus supplement and an accompanying prospectus. Founder-led since 1993, Axon serves customers in public safety, enterprise security, and national security with a lineup that spans TASER devices, cameras, drones, and AI-driven tools.
