Axon prices $1 billion of zero-coupon convertible notes

Axon Enterprise announced on September 16 that it priced $1 billion of 0% convertible senior notes due September 15, 2031. Underwriters received an option to purchase up to an additional $150 million of notes to cover over-allotments. Settlement is expected on September 18, subject to customary closing conditions.

Axon expects approximately $986 million in net proceeds after underwriting discounts and estimated offering expenses. The company spent $99.9 million on capped-call transactions, which leaves roughly $886.1 million for general corporate purposes, potentially including acquisitions and investments. These figures exclude any exercise of the underwriters' over-allotment option.

The notes carry an initial conversion rate of 1.5336 shares per $1,000 principal amount, which equals an initial conversion price of approximately $652.06 per share. Axon can settle conversions in cash, shares, or a combination of both. The capped-call transactions establish an initial cap price of $1,049.94 per share, subject to adjustments, designed to limit dilution or offset cash payments above principal up to that cap.

Because the notes carry a 0% coupon, the principal does not grow over time and Axon owes no regular cash interest payments. Subject to conditions, noteholders can require Axon to repurchase the debt on March 20, 2031, ahead of the September maturity date.