Axon Enterprise shares plunged 18.2% on Friday to $313.00, their lowest in more than two years, after the Taser and body-camera maker missed third-quarter estimates and cut its full-year revenue outlook, blaming delays to federal counter-drone contracts.

The stock fell $69.56 from Thursday's close of $382.56, making it the worst performer in the S&P 500 on the day. It is now down 64% from its all-time high.

A miss blamed on timing, not demand

Third-quarter revenue rose 28% to $908.6 million, a record for the company, but fell short of the roughly $934.3 million analysts had expected. Adjusted earnings of $1.72 a share missed the roughly $1.90 consensus, although reported net income swung to $57.0 million from a $2.2 million loss a year earlier.

Management said the shortfall was a timing issue: a $30 million federal Dedrone deployment expected in the quarter was delayed. Software and services revenue jumped 43% to $437 million, and annual recurring revenue reached $1.8 billion, up 40%.

Guidance cut by about $130 million

Axon cut its 2026 revenue forecast to $3.61 billion to $3.63 billion, implying growth of about 30%, down from 32% to 34% previously. It blamed about $130 million of federal Dedrone deployments that will no longer be recognised in 2026, and guided fourth-quarter revenue of $990 million to $1.01 billion, below the roughly $1.07 billion Wall Street expected.

The company also cut its free-cash-flow guidance to $350 million to $400 million, from $450 million. It said it would invest a further $1.2 billion in drone maker Skydio, lifting its stake to 37% and becoming its exclusive public-safety distributor in the US and Canada. Piper Sandler noted products gross margin fell below 50%, and Axon flagged a 50-basis-point margin headwind from memory costs this year.