Axon Enterprise prices $1 billion offering of convertible senior notes due 2031
Axon Enterprise priced $1 billion in zero-coupon convertible notes and expanded its revolving credit facility to $500 million.
Axon Enterprise, Inc. (AXON) announced Wednesday that it priced an offering of $1.0 billion aggregate principal amount of 0% convertible senior notes due 2031. The offering includes an over-allotment option where underwriters exercised their option in full to purchase an additional $150.0 million principal amount of notes, bringing the total offering size to $1,150.0 million. The notes will settle on September 18, 2026.
Key takeaways
- Axon priced $1.0 billion of 0% convertible senior notes due 2031, plus a $150 million over-allotment option.
- Net proceeds are expected to be approximately $986.0 million, or $1,134.3 million if the over-allotment is fully exercised.
- The initial conversion price is set at approximately $652.06 per share.
- Capped call transactions cost approximately $114.9 million to limit potential equity dilution.
Note terms and conversion structure
The notes will not bear regular interest, and the principal amount will not accrete. They will mature on September 15, 2031, unless earlier converted, redeemed, or repurchased. The initial conversion rate is 1.5336 shares of common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $652.06 per share. Prior to June 15, 2031, the notes are convertible at the option of holders only under specified circumstances. On or after June 15, 2031, holders may convert all or any portion of their notes at any time regardless of those conditions. Upon conversion, Axon may settle in cash, shares of common stock, or any combination thereof.
Use of proceeds and capped call transactions
Axon intends to use approximately $114.9 million of the net proceeds from the notes offering to pay the cost of privately negotiated capped call transactions entered into with financial institutions. The capped call transactions have an initial cap price of $1,049.94 per share, representing a 137.5% premium over the last reported sale price of $442.08 per share on September 15, 2026. The remaining net proceeds will be used for general corporate purposes, including providing capital to support growth and acquisitions of or investments in other businesses.
Credit agreement amendment
Concurrently with the notes offering, the company entered into an amendment to its existing credit agreement dated December 15, 2022. The amendment increased aggregate revolving commitments by $200.0 million, bringing the total revolving commitment under the amended credit facility to $500.0 million.
Why it matters
The offering raises substantial capital without immediate interest expense through zero-coupon convertible debt while using capped call transactions to mitigate potential shareholder dilution at higher stock prices. The simultaneous expansion of the revolving credit line provides additional liquidity to support the company's growth and acquisition strategy.
By the numbers
| Metric | Value | Source |
|---|---|---|
| Aggregate Principal Amount | $1,150.0 million | 8-K Filing |
| Net Proceeds (Base) | $986.0 million | Press Release |
| Net Proceeds (Full Exercise) | $1,134.3 million | Press Release |
| Initial Conversion Price | $652.06 per share | 8-K Filing |
| Capped Call Cost | $114.9 million | 8-K Filing |
| Capped Call Cap Price | $1,049.94 per share | 8-K Filing |
| Total Credit Facility Commitments | $500.0 million | Credit Agreement |
Settlement and maturity details
The notes offering officially closed on September 18, 2026, following the pricing agreement reached on September 15, 2026. The notes are general unsecured obligations of Axon and rank senior to subordinated debt, equal to existing liabilities, and junior to any secured indebtedness and subsidiary liabilities. The filing did not disclose any financial or operating covenants within the indenture governing the notes.