Snapshot
- Ticker: AXON (NASDAQ)
- Bucket: Power & Physical Infrastructure
- Q1 2026 position: 102,095 shares, $43.4 M, 0.87% of 13F — held since Q1 2025
- HQ: Scottsdale, Arizona
- What it does: TASER energy weapons, body cameras, and the Evidence.com / AI software stack for public safety — hardware razors feeding a SaaS blade.
Business Overview
Axon runs two segments. Connected Devices (355 M, +35%) is the moat: every device feeds Evidence.com, and annual recurring revenue reached $1.5 B (+35%) with 125% net revenue retention.
The AI layer is now the growth story. AI products — led by Draft One (generative-AI police-report drafting from body-cam audio, launched 2024) and Axon Assistant — grew over 700% YoY in Q1 2026. Q1 2026 total revenue was 169 M (21% margin) and adjusted EBITDA of 14.3 B, up 44% YoY, with 20–25% expected to convert within 12 months. Management raised full-year 2026 guidance to 30–32% revenue growth with a 25.5% adjusted EBITDA margin and ~$450 M free cash flow.
Financial Trajectory
| Period | Revenue | Growth | Notes |
|---|---|---|---|
| FY2023 | ~$1.56 B | ~31% | |
| FY2024 | ~$2.08 B | ~33% | |
| FY2025 | ~$2.8 B | ~33% | ARR exited ~$1.4 B+ |
| Q1 2026 | $807 M | +34% | Net income 202 M (25%) |
Why Atreides Owns It
Axon is the counter-example to Baker’s bearish SaaS frame. His view that software faces a “life or death decision” on sacrificing margin to ship AI agents — and that “anything you can verify, you can automate” — cuts against most application software, but Axon sits on the right side of it: it owns the sensors, the evidence data, and the legal workflow, so AI (Draft One) is a new monetized SKU rather than a margin-compressing defense. The 700% AI-revenue growth and 125% NRR are what AI-accretive software looks like in practice.
The position also bridges to the defense-tech autonomy theme it shares with AeroVironment: Axon’s counter-drone business (+300% YoY) is the civilian/public-safety face of the same physical-world-autonomy build-out. Atreides has held the name since Q1 2025 but trades around the core — trimmed into Q3 2025, then nearly tripled the share count in Q4 2025 as the stock de-rated. At 0.87% of the book it is a conviction-adjacent position, not a core holding.
Position History
| Quarter | Type | Shares/Notional | Value | % of 13F |
|---|---|---|---|---|
| Q4 2024 | — | not held | — | — |
| Q1 2025 | Common | 62,901 | $33,082,781 | 1.00% |
| Q2 2025 | Common | 52,254 | $43,263,177 | 1.20% |
| Q3 2025 | Common | 36,461 | $26,165,872 | 0.51% |
| Q4 2025 | Common | 105,469 | $59,899,009 | 0.73% |
| Q1 2026 | Common | 102,095 | $43,358,726 | 0.87% |
Entered in Q1 2025 and never fully exited, but actively traded: shares were cut ~42% from entry into Q3 2025, then rebuilt to ~2.9× the Q3 count in Q4 2025. Q1 2026 held the share count essentially flat while the position’s dollar value fell ~28% — the drawdown is the stock, not selling. The pattern reads as a long-term holding whose size flexes with valuation.
Risks
- Valuation: the stock trades at a premium software multiple on a hardware-heavy revenue base; any quarter below 30% growth breaks a nine-quarter streak the multiple depends on.
- Draft One legal exposure: AI-drafted police reports face pushback from prosecutors, defense attorneys, and civil-liberties groups; adverse court rulings or state legislation could stall the highest-growth product.
- Customer concentration in government budgets: municipal and federal procurement cycles are political; fiscal tightening hits both device refresh and software expansion.
- Competition: Motorola Solutions in command-center software and body cams; defense-tech entrants (e.g., Anduril) in counter-drone.
- Stock-based compensation: large founder/CEO performance packages create recurring GAAP/non-GAAP gaps and dilution.
- Execution risk on the $14.3 B bookings backlog: only 20–25% converts within 12 months; long-dated contracts embed delivery and renewal risk.