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Axon's $1.75B Senior Notes Raise: Can Growth Plans Deliver Returns?
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Key Takeaways
AXON issued $1.75B in notes split between 2030 and 2033 maturities to support long-term growth.
The company retired $403M in convertible debt, trimming dilution risk and incurring a $28.7M charge.
Capital will fund AI tools, global reach and infrastructure to grow recurring revenues across sectors.
Axon Enterprise, Inc. (AXON - Free Report) is leveraging the debt markets to support its next phase of growth. In the first quarter of 2025, the company issued $1.75 billion in senior notes to bolster its long-term growth. The debt raise, split between $1.0 billion of 6.125% notes due in 2030 and $750 million of 6.250% notes due in 2033, significantly boosted its liquidity. In the first quarter, AXON reported cash and cash equivalents of $1.09 billion and short-term investments of $1.1 billion.
A portion of the proceeds was used to retire approximately $403 million of Axon’s 0.50% convertible notes due in 2027. This reduced the future dilution risk and simplified the company’s capital structure. However, AXON reported a $28.7 million debt inducement expense in the first quarter. Axon’s interest expense also rose to $7.8 million in the quarter, up approximately 329% on a year-over-year basis.
Axon plans to use the capital to develop AI-powered products, bolster its global reach and expand infrastructure projects. These initiatives are intended to drive recurring revenues and deepen customer relationships across law enforcement, corrections and enterprise sectors.
The shift in AXON’s capital structure shows its confidence in a multi-year growth strategy and offers flexibility in a volatile macro and regulatory environment. How the company manages these initiatives will shape the next stage of its growth story.
Debt Profile of AXON's Peers
Among its major peers, Kratos Defense & Security Solutions, Inc.’s (KTOS - Free Report) long-term debt at the end of the first quarter amounted to $236 million. Kratos’ current debt was nil. Hence, Kratos’ cash reserve was higher than the long-term debt as well as the current debt levels.
Teledyne Technologies Incorporated’s (TDY - Free Report) cash and cash equivalents as of March 30, 2025, amounted to $0.46 billion. Teledyne’s long-term debt, as of the same date, was $2.97 billion, which came in much higher than its cash reserve. However, Teledyne’s current debt of $0.2 million as of March 30, 2025, was almost insignificant when compared with its cash balance.
AXON’s Price Performance, Valuation and Estimates
Shares of Axon have surged 163.1% in the past year compared with the industry’s growth of 46.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, AXON is trading at a forward price-to-earnings ratio of 1,114.20X, above the industry’s average of 47.19X. Axon carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AXON’s second-quarter 2025 earnings has been on the rise over the past 60 days.
Image: Bigstock
Axon's $1.75B Senior Notes Raise: Can Growth Plans Deliver Returns?
Key Takeaways
Axon Enterprise, Inc. (AXON - Free Report) is leveraging the debt markets to support its next phase of growth. In the first quarter of 2025, the company issued $1.75 billion in senior notes to bolster its long-term growth. The debt raise, split between $1.0 billion of 6.125% notes due in 2030 and $750 million of 6.250% notes due in 2033, significantly boosted its liquidity. In the first quarter, AXON reported cash and cash equivalents of $1.09 billion and short-term investments of $1.1 billion.
A portion of the proceeds was used to retire approximately $403 million of Axon’s 0.50% convertible notes due in 2027. This reduced the future dilution risk and simplified the company’s capital structure. However, AXON reported a $28.7 million debt inducement expense in the first quarter. Axon’s interest expense also rose to $7.8 million in the quarter, up approximately 329% on a year-over-year basis.
Axon plans to use the capital to develop AI-powered products, bolster its global reach and expand infrastructure projects. These initiatives are intended to drive recurring revenues and deepen customer relationships across law enforcement, corrections and enterprise sectors.
The shift in AXON’s capital structure shows its confidence in a multi-year growth strategy and offers flexibility in a volatile macro and regulatory environment. How the company manages these initiatives will shape the next stage of its growth story.
Debt Profile of AXON's Peers
Among its major peers, Kratos Defense & Security Solutions, Inc.’s (KTOS - Free Report) long-term debt at the end of the first quarter amounted to $236 million. Kratos’ current debt was nil. Hence, Kratos’ cash reserve was higher than the long-term debt as well as the current debt levels.
Teledyne Technologies Incorporated’s (TDY - Free Report) cash and cash equivalents as of March 30, 2025, amounted to $0.46 billion. Teledyne’s long-term debt, as of the same date, was $2.97 billion, which came in much higher than its cash reserve. However, Teledyne’s current debt of $0.2 million as of March 30, 2025, was almost insignificant when compared with its cash balance.
AXON’s Price Performance, Valuation and Estimates
Shares of Axon have surged 163.1% in the past year compared with the industry’s growth of 46.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, AXON is trading at a forward price-to-earnings ratio of 1,114.20X, above the industry’s average of 47.19X. Axon carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AXON’s second-quarter 2025 earnings has been on the rise over the past 60 days.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.