Axon to invest $1.2B in Skydio and become exclusive public safety distributor

Axon announced on Thursday a $1.2 billion investment in Skydio that will raise its fully diluted stake from about 15% to about 37% once all tranches close, at a $5.2 billion pre-money valuation. The agreement also makes Axon the exclusive distributor of Skydio drones to public safety agencies in the United States and Canada, and Axon calls it the largest single investment in its history.

Investment structure

Axon's SEC filing puts the mix at about 60% cash, roughly $720 million, with the rest in Axon stock. The tranche that closed Thursday was a $254.9 million purchase of 25 million new non-voting Series G preferred shares at $10.19617 each, paid half in cash and half in stock. The rest is a tender offer for up to 68.45 million more Series G shares held by existing Skydio shareholders, plus further secondary purchases, expected to close in the fourth quarter of 2026 and the first quarter of 2027.

Most of the new money does not go to Skydio. Axon is buying shares from investors. The deal lands six months after Skydio's $110 million Series F at a $4.4 billion post-money valuation. In April, CEO Adam Bry turned away most investors who wanted to put more money in, and the filing now gives existing shareholders a buyer at a $5.2 billion pre-money valuation. Axon pre-funded the purchase with $1.15 billion of zero-coupon convertible notes due 2031. CFO Brittany Bagley said the proceeds fund part of the investment. The shares are non-voting, and Bagley said Axon has neither control nor the kind of influence that would make it consolidate Skydio's results.

Exclusive public safety channel

Skydio's public safety sales in the United States and Canada now run through Axon alone. Skydio counts more than 1,500 public safety customers and expects about $1 billion in bookings this fiscal year. It says 28 million Americans live within two miles of a Drone as First Responder dock. Axon sizes the DFR market in both countries at $13 billion. At the Series F in April, Skydio put the figure at 16 million Americans within two miles of a dock.

Axon has sold Skydio drones through Axon Air since 2021 and added the docked DFR package in June 2024, so the exclusivity formalizes a channel that already existed and shuts the others. Axon president Josh Isner called the exclusivity one of the most valuable parts of the deal. Axon books the drone revenue on a net basis in its Software and Services line. Neither company has said what happens to agencies that bought Skydio directly or through another reseller. Bry's statement says only that Axon is becoming Skydio's exclusive channel for U.S. and Canadian public safety. Vancouver Police launched Canada's first docked DFR program in June with six Skydio X10 aircraft.

Financial context

Axon reported record third-quarter revenue of $909 million, up 28% but below the $934 million analysts expected, and cut its full-year outlook to $3.61 billion to $3.63 billion. Dedrone counter-drone orders worth $130 million slipped out of 2026, and the stock closed at $382.56 Thursday before trading near $314 Friday. Axon's own stock was down about 18% in Friday trading. Axon bought Dedrone in 2024. The deal also hardens three camps. Motorola Solutions backs BRINC Drones, where it led a $125 million round in July, and Flock Safety builds its own after buying Aerodome in 2024.

Sources: DroneXL · Techmeme · Yahoo Finance · Axon Press Release