AXON ENTERPRISE, INC.

Previous wording

The following discussion and analysis of our financial condition as of June 30, 2026, and results of operations for the three and six months ended June 30, 2026 and 2025, should be read in conjunction with the unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes in our 2025 Annual Report on Form 10-K for the year ended December 31, 2025. The discussion includes references to non-GAAP financial measures, such as adjusted gross margin, which supplement our GAAP results by providing additional insight into our financial and operational performance. For definitions and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, refer to “Non-GAAP Measures” within this Quarterly Report on Form 10-Q. This discussion also contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in such forward-looking statements.

Current wording

The following discussion and analysis of our financial condition as of September 30, 2026, and results of operations for the three and nine months ended September 30, 2026 and 2025, should be read in conjunction with the unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes in our 2025 Annual Report on Form 10-K for the year ended December 31, 2025. The discussion includes references to non-GAAP financial measures, such as adjusted gross margin, which supplement our GAAP results by providing additional insight into our financial and operational performance. For definitions and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, refer to “Non-GAAP Measures” within this Quarterly Report on Form 10-Q. This discussion also contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in such forward-looking statements.

Previous wording

Our revenues for the three months ended June 30, 2026 were $904.4 million, an increase of $235.9 million, or 35.3%, from the three months ended June 30, 2025. We had income from operations of $46.8 million, compared to loss from operations of $1.0 million for the same period in the prior year. Gross margin dollars increased $142.7 million reflecting consistent percentage of revenue at 60.4%, when compared to the three months ended June 30, 2025. Adjusted gross margin decreased to 62.9% for the three months ended June 30, 2026 compared to 63.3% for the same period in the prior year. The decrease in gross margin and adjusted gross margin was primarily driven by a higher mix of professional services revenue and scaling new product offerings, partially offset by tariff refunds received in the quarter. Operating expenses increased by $94.9 million, primarily reflecting increased headcount and investments in AI and other initiatives to support business growth. Net income of $29.4 million included a $3.3 million tax provision, income from strategic investments, net, of $5.7 million, and a net realized and unrealized gain of $1.1 million related to our marketable securities. Net income of $36.1 million for the three months ended June 30, 2025 included a $75.0 million tax benefit, partially offset by a noncash unrealized loss of $30.9 million related to our marketable securities.

Current wording

Our revenues for the three months ended September 30, 2026 were $908.6 million, an increase of $197.9 million, or 27.8%, from the three months ended September 30, 2025. We had income from operations of $42.1 million, compared to loss from operations of $2.1 million for the same period in the prior year. Gross margin dollars increased $87.6 million and decreased as a percentage of revenue to 56.7% from 60.1% compared to the three months ended September 30, 2025. Adjusted gross margin decreased to 59.2% for the three months ended September 30, 2026 compared to 62.7% for the same period in the prior year. The decrease in gross margin and adjusted gross margin was primarily driven by an increased mix of counter-drone equipment, scaling of new product offerings and higher memory costs. Operating expenses increased by $43.4 million, primarily reflecting increased headcount and investments in AI and other initiatives to support business growth. Net income of $57.0 million included a $21.9 million tax provision, income from strategic investments, net, of $64.1 million, and an unrealized loss of $4.4 million related to our marketable securities. Net loss of $2.2 million for the three months ended September 30, 2025 included a $17.9 million tax provision, net realized and unrealized gains of $14.6 million related to our strategic investments, and a net realized and unrealized gain of $8.3 million related to our marketable securities.

Previous wording

Our revenues for the six months ended June 30, 2026 were $1.7 billion, an increase of $439.6 million, or 34.6%, from the six months ended June 30, 2025. We had income from operations of $76.0 million, compared to loss from operations of $9.8 million for the same period in the prior year. Gross margin dollars increased $254.3 million and decreased as a percentage of revenue to 59.8% from 60.5% compared to the six months ended June 30, 2025. Adjusted gross margin decreased to 62.3% for the six months ended June 30, 2026 compared to 63.4% for the same period in the prior year. The decrease in gross margin and adjusted gross margin was primarily due to a higher mix of professional services revenue and scaling new product offerings, partially offset by tariff refunds received in the quarter. Operating expenses increased by $168.4 million, primarily reflecting increased headcount and investments in AI and other initiatives to support business growth. Net income of $198.7 million included net realized and unrealized gains of $202.3 million related to our strategic investments and a $34.2 million tax provision, partially offset by a noncash unrealized loss of $4.4 million related to our marketable securities. Net income of $124.1 million for the six months ended June 30, 2025 included net realized and unrealized gains of $166.0 million related to our strategic investments and a $54.6 million tax benefit, partially offset by a noncash unrealized loss of $54.3 million related to our marketable securities and inducement expense of $28.7 million associated with the early repurchase of a portion of our 2027 Notes.

Current wording

Our revenues for the nine months ended September 30, 2026 were $2.6 billion, an increase of $637.5 million, or 32.2%, from the nine months ended September 30, 2025. We had income from operations of $118.1 million, compared to loss from operations of $12.0 million for the same period in the prior year. Gross margin dollars increased $341.9 million and decreased as a percentage of revenue to 58.7% from 60.4% compared to the nine months ended September 30, 2025. Adjusted gross margin decreased to 61.2% for the nine months ended September 30, 2026 compared to 63.2% for the same period in the prior year. The decrease in gross margin and adjusted gross margin was primarily due to a higher mix of professional services revenue, scaling of new product offerings and higher memory costs, partially offset by tariff refunds received during the nine months ended September 30, 2026. Operating expenses increased by $211.8 million, primarily reflecting increased headcount and investments in AI and other initiatives to support business growth. Net income of $255.7 million included net realized and unrealized gains of $266.4 million related to our strategic investments and a $56.1 million tax provision, partially offset by a net realized and unrealized loss of $8.8 million related to our marketable securities. Net income of $121.9 million for the nine months ended September 30, 2025 included net realized and unrealized gains of $180.6 million related to our strategic investments and a $36.7 million tax benefit, partially offset by a net realized and unrealized loss of $46.0 million related to our marketable securities and inducement expense of $28.7 million associated with the early repurchase of a portion of our 2027 Notes.

Previous wording

On February 20, 2026, the Supreme Court determined that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. During the three months ended June 30, 2026, we received $47.4 million in refunds. Of this amount, $18.1 million had been previously expensed in 2025 to cost of sales and the remaining is associated with amounts primarily classified as inventory and property and equipment, net, for which the majority would have been expensed in the current year.

Current wording

On February 20, 2026, the Supreme Court determined that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized. During the three months ended June 30, 2026, we received $47.4 million in refunds. Of this amount, $18.1 million had been previously expensed in 2025 to cost of sales and the remaining is associated with amounts primarily classified as inventory and property and equipment, net, for which the majority would have been expensed in the current year. There were no material changes related to tariff refunds during the three months ended September 30, 2026.

Previous wording

Net sales for the Connected Devices segment increased 33.8% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase of $82.4 million in TASER is primarily driven by higher TASER 10 handle and cartridge volume. Personal Sensors increased $22.9 million on continued adoption of our newest body camera, AB4, and higher warranty revenue from more devices in the field. The $136.8 million increase in Platform Solutions is primarily driven by higher volume for counter-drone equipment.

Current wording

Net sales for the Connected Devices segment increased 16.3% for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The decrease of $4.9 million in TASER is primarily driven by legacy TASER volume, partially offset by higher TASER 10 cartridge volume. Personal Sensors increased $6.9 million primarily attributable to continued adoption of our newest body camera, AB4, and higher warranty revenue from more devices in the field. The $64.2 million increase in Platform Solutions is primarily driven by higher volume for counter-drone equipment, which may be subject to increased volatility driven by the timing of large customer contracts.

Previous wording

Net sales for the Software and Services segment increased 36.2% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase in the aggregate number of users and growing adoption of our premium solutions by existing customers drove the majority of the increase of $105.7 million.

Current wording

Net sales for the Software and Services segment increased 43.2% for the three months ended September 30, 2026 compared to the three months ended September 30, 2025. The increase in the aggregate number of users and growing adoption of our premium solutions by existing customers drove the majority of the increase of $131.8 million.

Previous wording

As a percentage of net sales, gross margin for the Software and Services segment decreased to 71.8% from 75.0% for the six months ended June 30, 2026 and 2025, respectively. Adjusted gross margin for the Software and Services segment decreased to 75.4% for the six months ended June 30, 2026, compared to 78.3% for the six months ended June 30, 2025. The decrease in gross margin and adjusted gross margin was primarily driven by a higher mix of professional services revenue and scaling new product offerings.

Current wording

As a percentage of net sales, gross margin for the Software and Services segment decreased to 71.4% from 73.8% for the three months ended September 30, 2026 and 2025, respectively. Adjusted gross margin for the Software and Services segment decreased to 75.0% for the three months ended September 30, 2026, compared to 76.8% for the three months ended September 30, 2025. The decrease in gross margin and adjusted gross margin was primarily driven by the scaling of new product offerings and a higher mix of professional services revenue.

Previous wording

Sales and marketing expense increased $8.9 million in comparison to the prior year June 30, 2025 comparable period, primarily attributable to increased commissions.

Current wording

Sales and marketing expense increased $7.1 million in comparison to the prior year September 30, 2025 comparable period, primarily attributable to increased commissions.

Previous wording

Salaries, benefits and bonus expense increased $20.1 million in comparison to the prior year June 30, 2025 comparable period, which was primarily attributable to an increase in headcount.

Current wording

Salaries, benefits and bonus expense increased $6.5 million in comparison to the prior year September 30, 2025 comparable period, which was primarily attributable to an increase in headcount.

Previous wording

The effective tax rate was 10.0%, for the three months ended June 30, 2026, compared to 192.9% for the three months ended June 30, 2025. The decrease in effective tax rate for the quarter was primarily driven by a less favorable net tax benefit related to stock-based compensation, R&D tax credits and an increase in pre-tax book income, which reduced the relative impact of other permanent and discrete items.

Current wording

The effective tax rate was 27.8% for the three months ended September 30, 2026, compared to 113.9% for the three months ended September 30, 2025. The decrease in effective tax rate for the quarter was primarily driven by higher pre-tax book income which reduced the relative impact of permanent and discrete tax items, along with a greater benefit from R&D tax credits, partially offset by a lower net tax benefit from stock-based compensation.

Previous wording

Provision for (benefit from) income taxes and effective tax rates were as follows (dollars in thousands):

Current wording

Provision for income taxes and effective tax rates were as follows (dollars in thousands):

Previous wording

We recorded net income of $29.4 million for the three months ended June 30, 2026 compared to net income of $36.1 million for the three months ended June 30, 2025. Net income per basic share was $0.37 for the three months ended June 30, 2026 compared to $0.46 for the three months ended June 30, 2025. Net income per diluted share was $0.36 for the three months ended June 30, 2026 compared to $0.44 for the three months ended June 30, 2025.

Current wording

We recorded net income of $57.0 million for the three months ended September 30, 2026 compared to net loss of $2.2 million for the three months ended September 30, 2025. Net income (loss) per basic share was $0.70 for the three months ended September 30, 2026 compared to $(0.03) for the three months ended September 30, 2025. Net income (loss) per diluted share was $0.68 for the three months ended September 30, 2026 compared to $(0.03) for the three months ended September 30, 2025.

Previous wording

Net sales for the Connected Devices segment increased 34.6% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase of $45.1 million in TASER is primarily driven by higher TASER 10 handle and cartridge volume. Personal Sensors increased $2.6 million on continued adoption of our newest body camera, AB4, and higher warranty revenue from more devices in the field. The $82.5 million increase in Platform Solutions is primarily driven by higher volume for counter-drone equipment.

Current wording

Net sales for the Connected Devices segment increased 27.5% for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase of $77.5 million in TASER is primarily driven by higher TASER 10 device and cartridge volume. Personal Sensors increased $29.8 million primarily attributable to continued adoption of our newest body camera, AB4, and higher warranty revenue from more devices in the field. The $200.9 million increase in Platform Solutions is primarily driven by higher volume of counter-drone equipment, which may be subject to increased volatility driven by the timing of large customer contracts.

Previous wording

Net sales for the Software and Services segment increased 35.6% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase in the aggregate number of users and growing adoption of our premium add-on features by existing customers drove the majority of the increase of $197.4 million.

Current wording

Net sales for the Software and Services segment increased 38.3% for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The increase in the aggregate number of users and growing adoption of our premium add-on features by existing customers drove the majority of the increase of $329.2 million.

Previous wording

Sales and marketing expense increased $19.1 million in comparison to the prior year June 30, 2025 comparable period, primarily attributable to increased commissions.

Current wording

Sales and marketing expense increased $26.2 million in comparison to the prior year September 30, 2025 comparable period, primarily attributable to increased commissions.

Previous wording

Other SG&A expenses increased $27.9 million in comparison to the prior year June 30, 2025 comparable period, primarily driven by increased advisory expenses of $8.7 million, increased travel expenses of $5.4 million, and increased technology license expenses of $4.4 million as a result of the continued adoption of AI initiatives.

Current wording

Other SG&A expenses increased $55.7 million in comparison to the prior year September 30, 2025 comparable period, primarily attributable to increased advisory expenses of $18.6 million, $11.2 million of increased technology license expenses as a result of the continued adoption of AI initiatives, and increased travel expenses of $10.0 million.

Previous wording

Salaries, benefits and bonus expense increased $41.5 million in comparison to the prior year June 30, 2025 comparable period, which was primarily attributable to an increase in headcount.

Current wording

Salaries, benefits and bonus expense increased $47.9 million in comparison to the prior year September 30, 2025 comparable period, which was primarily attributable to an increase in headcount.

Previous wording

Stock-based compensation expense increased $8.6 million in comparison to the prior year June 30, 2025 comparable period, partially attributable to increased headcount.

Current wording

Stock-based compensation expense increased $15.4 million in comparison to the prior year September 30, 2025 comparable period, partially attributable to increased headcount.

Previous wording

Other R&D expenses increased $33.9 million in comparison to the prior year June 30, 2025 comparable period, primarily driven by $13.0 million of increased engineering expenses and $6.5 million of increased technology license expenses as a result of the continued adoption of AI initiatives.

Current wording

Other R&D expenses increased $36.5 million in comparison to the prior year September 30, 2025 comparable period, primarily driven by $12.4 million of increased technology license expenses as a result of the continued adoption of AI initiatives and $10.0 million of increased engineering expenses.

Previous wording

(1)Reflects the net realized and unrealized income associated with our strategic investments, during the six months ended June 30, 2026 and 2025, as discussed within Note 6.

Current wording

(1)Reflects the net realized and unrealized income associated with our strategic investments, during the nine months ended September 30, 2026 and 2025, as discussed within Note 6.

Previous wording

(2)Reflects the net realized and unrealized loss on marketable securities, during the six months ended June 30, 2026 and 2025, as discussed within Note 3.

Current wording

(2)Reflects the net realized and unrealized loss on marketable securities, during the nine months ended September 30, 2026 and 2025, as discussed within Note 3.

Previous wording

The effective tax rate was 14.7%, for the six months ended June 30, 2026, compared to (78.5)% for the six months ended June 30, 2025. The increase in effective tax rate for the six months ended June 30, 2026 was primarily driven by a less favorable net tax benefit related to stock-based compensation, R&D tax credits and an increase in pre-tax book income, which reduced the relative impact of other permanent and discrete items.

Current wording

The effective tax rate was 18.0% for the nine months ended September 30, 2026, compared to (43.1)% for the nine months ended September 30, 2025. The increase in effective tax rate for the nine months ended September 30, 2026 was primarily driven by higher pre-tax book income which reduced the relative impact of permanent and discrete items, a less favorable net tax benefit from stock-based compensation, and higher state income taxes, partially offset by more favorable R&D tax credits and the favorable impact of a gain on an investment transaction not recognized for tax purposes.

Previous wording

We recorded net income of $198.7 million for the six months ended June 30, 2026 compared to net income of $124.1 million for the six months ended June 30, 2025. Net income per basic share was $2.47 for the six months ended June 30, 2026 compared to $1.60 for the six months ended June 30, 2025. Net income per diluted share was $2.41 for the six months ended June 30, 2026 compared to $1.52 for the six months ended June 30, 2025.

Current wording

We recorded net income of $255.7 million for the nine months ended September 30, 2026 compared to net income of $121.9 million for the nine months ended September 30, 2025. Net income per basic share was $3.17 for the nine months ended September 30, 2026 compared to $1.57 for the nine months ended September 30, 2025. Net income per diluted share was $3.08 for the nine months ended September 30, 2026 compared to $1.48 for the nine months ended September 30, 2025.

Previous wording

•Adjusted EBITDA (most comparable GAAP measure: Net income) – Earnings before interest expense; investment interest income; income taxes; depreciation; amortization; all components of other income (loss), net, which is primarily comprised of fair value adjustments and income or losses related to strategic investments and marketable securities, debt inducement expense associated with the early repurchase of a portion of our 2027 Notes, foreign currency exchange gains and losses, net, and fees incurred related to our Credit Agreement; noncash stock-based compensation expense; transaction and integration costs related to strategic investments and acquisitions, including the change in fair value of contingent consideration arrangements; non-recurring severance costs, including employee cash payments, equity, and related benefits; costs (or subsequent recoveries of prior costs) related to certain legal or regulatory matters we consider outside of our core operating activities; mark-to-market adjustments on our non-qualified deferred compensation liabilities; compensation taxes related to Employee XSP vesting; and inventory step-up amortization related to acquisitions.

Current wording

•Adjusted EBITDA (most comparable GAAP measure: Net income) – Earnings before interest expense; investment interest income; income taxes; depreciation; amortization; all components of other income (loss), net, which is primarily comprised of fair value adjustments and income or losses related to strategic investments and marketable securities, debt inducement expense associated with the early repurchase of a portion of our 2027 Notes, foreign currency exchange gains and losses, net, and fees incurred related to our Credit Agreement; noncash stock-based compensation expense; transaction and integration costs related to strategic investments and acquisitions, including the change in fair value of contingent consideration arrangements and certain compensation costs directly related to employee integration activities; non-recurring severance costs, including employee cash payments, equity, and related benefits; costs (or subsequent recoveries of prior costs) related to certain legal or regulatory matters we consider outside of our core operating activities; mark-to-market adjustments on our non-qualified deferred compensation liabilities; compensation taxes related to Employee XSP vesting; losses incurred as a result of the disposal, abandonment, and impairment of property, equipment, and intangible assets, and inventory step-up amortization related to acquisitions.

Previous wording

(1)For the three and six months ended June 30, 2026, non-recurring severance costs of $0.7 million and $2.7 million, respectively, consisted of stock-based compensation, cash payments and employee benefits.

Current wording

(1)For the three and nine months ended September 30, 2026, non-recurring compensation costs were $5.5 million and $8.2 million, respectively. These costs consisted of stock-based compensation, cash payments and employee benefits, the majority of which derived from acquisition integration activities.

Previous wording

(1)For the six months ended June 30, 2026, non-recurring severance costs recorded to cost of service and product sales consisted of stock-based compensation, cash payments and employee benefits.

Current wording

(1)For the nine months ended September 30, 2026, non-recurring severance costs recorded to cost of service and product sales consisted of stock-based compensation, cash payments and employee benefits.

Previous wording

Our most significant source of liquidity typically includes funds generated by operating activities and available cash and cash equivalents and short-term investments. As of June 30, 2026, we had $0.6 billion of cash and cash equivalents, a decrease of $603.4 million from December 31, 2025. As of June 30, 2026, we had $75.7 million of available-for-sale investments, a decrease of $429.7 million from December 31, 2025, primarily due to sales and maturities of available-for-sale securities during the period. Refer to Note 3 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

Current wording

Our most significant source of liquidity typically includes funds generated by operating activities and available cash and cash equivalents and short-term investments. As of September 30, 2026, we had $1.5 billion of cash and cash equivalents, an increase of $257.7 million from December 31, 2025. As of September 30, 2026, we had $181.6 million of available-for-sale investments, a decrease of $323.8 million from December 31, 2025, primarily due to sales and maturities of available-for-sale securities during the period. Refer to Note 3 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

Previous wording

In addition, our Credit Agreement is available for additional working capital needs or investment opportunities. As of June 30, 2026, we had letters of credit outstanding of approximately $9.1 million under the facility and available borrowing of $290.9 million. Refer to Note 8 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

Current wording

In addition, our Credit Agreement is available for additional working capital needs or investment opportunities. As of September 30, 2026, we had letters of credit outstanding of approximately $9.1 million under the facility and available borrowing of $490.9 million. Refer to Note 8 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

Previous wording

As of June 30, 2026, we have an aggregate of $1.75 billion of Senior Notes outstanding. As of June 30, 2026, none of our subsidiaries guarantee the Senior Notes. Our non-guarantor subsidiaries accounted for approximately 20% of our total revenue for the six months ended June 30, 2026, and approximately 21% and 8% of our total consolidated assets and liabilities (excluding the effect of intercompany transactions), respectively, as of June 30, 2026. Refer to Note 8 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details.

Current wording

As of September 30, 2026, we have an aggregate of $1.75 billion of Senior Notes and $1.15 billion of 2031 Notes outstanding. As of September 30, 2026, none of our subsidiaries guarantee the Senior Notes or 2031 Notes. Our non-guarantor subsidiaries accounted for approximately 19% of our total revenue for the nine months ended September 30, 2026, and approximately 17% and 6% of our total consolidated assets and liabilities (excluding the effect of intercompany transactions), respectively, as of September 30, 2026. Refer to Note 8 in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional details of the 2031 Notes.

Previous wording

Primary drivers of the non-cash items include $278.7 million of stock-based compensation expense for employee equity programs and $62.8 million of depreciation and amortization, partially offset by $197.9 million in fair value adjustments for net realized and unrealized gains and losses on our strategic investments and marketable securities. The realized and unrealized gains on our strategic investments were primarily related to an observable price change for one of our investees.

Current wording

The net operating cash inflow for the nine months ended September 30, 2026 includes net income of $255.7 million, an increase of $133.8 million when compared to the same period in the prior year. Primary drivers of the non-cash adjustments to net income during the nine months ended September 30, 2026 include $435.1 million of stock-based compensation expense for employee equity programs, $96.1 million of depreciation and amortization, and $36.1 million for deferred income taxes, partially offset by $257.6 million in fair value adjustments for net realized and unrealized gains and losses on our strategic investments and marketable securities. The realized and unrealized gains on our strategic investments were primarily driven by observable price changes for one of our investees. The deferred income taxes were primarily driven by investment-related gains and the amortization of previously capitalized R&D, partially offset by unvested stock-based compensation.

Previous wording

The change in operating assets and liabilities includes $256.9 million of receivables and contract assets primarily due to increased sales, as well as the timing of invoicing and cash collections, $39.6 million of inventory and accounts payable primarily driven by advanced raw material purchases for TASER 10 CEDs and counter-drone equipment, and $35.3 million of deferred revenue.

Current wording

The change in operating assets and liabilities during the nine months ended September 30, 2026, when compared to the same period in the prior year, includes an increase in inventory purchases of $180.0 million, partially offset by $64.1 million of accounts payable, accrued and other liabilities. The increased inventory activity was primarily driven by advanced purchases of materials for TASER 10 CEDs and counter-drone equipment. Net of deferred revenue, our increase in receivables and contract assets of $19.2 million was driven by our increased sales, as well as the timing of invoicing and cash collections.

Previous wording

Net cash used in investing activities was $465.8 million for the six months ended June 30, 2026 compared to $1.1 billion for the six months ended June 30, 2025. The net investing cash outflow is primarily driven by $551.6 million for business combinations, which is substantially all related to the Carbyne acquisition, $302.8 million for investment purchases, which includes $302.1 million of strategic investments purchases, and $44.2 million for purchases of property and equipment. The cash outflow was partially offset by $434.3 million of proceeds from calls, maturities and sales of available-for-sale and marketable securities investments. The decrease in net cash outflow compared to the prior period is primarily driven by reduced investments in available-for-sale securities, partially offset by the cash paid in the current year for the acquisition of Carbyne.

Current wording

Net cash used in investing activities was $618.3 million for the nine months ended September 30, 2026 compared to $498.5 million for the nine months ended September 30, 2025. The net investing cash outflow is primarily driven by $552.0 million for business combination activity which is substantially all related to the Carbyne acquisition, $490.7 million for investment purchases which include $309.2 million of strategic investment purchases, and $82.8 million for purchases of property and equipment. The cash outflow was partially offset by $509.4 million of proceeds from calls, maturities and sales of available-for-sale and marketable securities investments. The increase in net cash outflow compared to the prior period is primarily driven by the acquisition of Carbyne, partially offset by decreased net purchases of available-for-sale and marketable securities and strategic investments.

Previous wording

Net cash used in financing activities was $122.6 million for the six months ended June 30, 2026 compared to net cash provided by financing activities of $1.3 billion for the six months ended June 30, 2025. The financing cash outflow in the current period was primarily driven by $140.2 million of income and payroll tax payments made on behalf of employees who net-settled stock awards during the period, as well as $0.3 million which remains unpaid as of the six months ended June 30, 2026. The outflow was further driven by $81.1 million of principal payments related to the redemption of our 2027 Notes. Financing cash inflow for the period includes $100.5 million of net cash proceeds from our ATM equity offering program, considering any unpaid issuance costs as of June 30, 2026. The change in financing cash flow compared to the prior period primarily reflects gross proceeds of $1.8 billion from the Senior Note issuance, partially offset by principal payments of $407.5 million related to the induced conversion of our 2027 Notes during the six months ended June 30, 2025.

Current wording

Net cash provided by financing activities was $870.5 million for the nine months ended September 30, 2026 compared to $1.5 billion for the nine months ended September 30, 2025. The financing cash inflow in the current period was primarily driven by gross proceeds from the 2031 Notes issuance of $1.15 billion and $100.3 million of net cash proceeds from our ATM equity offering program. The proceeds were partially offset by $114.9 million of capped call purchases in relation to the 2031 Notes issuance, $167.2 million of income and payroll tax payments made on behalf of employees who net-settled stock awards during the period excluding $0.1 million which was not yet remitted as of September 30, 2026, $81.1 million of principal payments related to the redemption of our 2027 Notes, and $17.3 million of transaction expenses associated with the offering and revolver modifications. Net cash provided by financing activities in the prior period primarily reflects gross proceeds of $1.8 billion from the Senior Notes issuance, partially offset by principal payments of $407.5 million related to the induced conversion of our 2027 Notes during the nine months ended September 30, 2025. The decrease in net cash inflow compared to the prior period is primarily driven by lower proceeds from debt and equity issuances and capped call premiums paid in the current period, partially offset by fewer principal payments.

Previous wording

Our critical accounting estimates are discussed in our 2025 Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no significant changes to these critical accounting estimates for the six months ended June 30, 2026.

Current wording

Our critical accounting estimates are discussed in our 2025 Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no significant changes to these critical accounting estimates for the nine months ended September 30, 2026.