Axon Enterprise (NASDAQ:AXON) Issues Quarterly Earnings Results

Key Points

• Axon missed Q3 expectations: Adjusted EPS was $1.72 versus $1.89 expected, and revenue of about $909 million came in below the $934 million consensus, despite growing 27.8% year over year.
• Growth remained strong in newer businesses: Software and services revenue rose 43%, while management cited strong demand and $15.8 billion in future contracted bookings.
• Outlook and cash flow weighed on the results: Axon’s revenue guidance fell short of analyst expectations, about $130 million in federal deployments may slip beyond year-end, and its free cash flow forecast was cut to $350 million–$400 million. Shares fell 9.8% on Thursday.

Axon Enterprise (NASDAQ:AXON - Get Free Report) posted its quarterly earnings results on Thursday. The biotechnology company reported $1.72 earnings per share (EPS) for the quarter, missing the consensus estimate of $1.89 by ($0.17), FiscalAI reports. Axon Enterprise had a net margin of 6.19% and a return on equity of 2.84%. The business had revenue of $908.55 million for the quarter, compared to analysts' expectations of $934.33 million. During the same quarter in the previous year, the company earned $1.17 earnings per share. The business's quarterly revenue was up 27.8% on a year-over-year basis.

Here are the key takeaways from Axon Enterprise's conference call:

• Axon reported Q3 revenue of $909 million, up 28%, with software and services revenue growing 43%, ARR rising 40% to $1.8 billion, and year-to-date bookings up more than 20%. Management said demand remains strong across its newer offerings and its $15.8 billion of future contracted bookings.
• Delays to three large federal Dedrone deployments put about $130 million of expected revenue at risk of slipping beyond year-end, prompting Axon to exclude them from Q4 guidance. The company cited procurement and deployment timing, while emphasizing that it views demand for the projects as intact.
• Axon lowered its full-year free cash flow outlook to $350 million–$400 million, from a prior target of $450 million, as it accelerated inventory purchases—including a more than $100 million increase in Q3. Management expects inventory investment to moderate in early 2027, but said cash conversion may not return to its 60% target until 2028.
• Axon announced a $1.2 billion investment in Skydio, bringing its fully diluted ownership to 37%, alongside exclusive U.S. and Canadian public-safety distribution rights. Management sees the partnership as a way to expand its connected public-safety ecosystem and participate in Skydio’s broader drone opportunity.
• Adjusted gross margin was 59.2%, with product mix and higher component costs weighing on results; memory costs are expected to remain a headwind through 2027 and 2028. Axon estimated memory costs would pressure margins by about 50 basis points this year and said operating leverage and software growth will be important offsets.

Axon Enterprise Trading Down 9.8%

AXON stock traded down $41.62 on Thursday, reaching $382.56. The company's stock had a trading volume of 3,606,153 shares, compared to its average volume of 934,160. The firm has a market cap of $31.08 billion, a PE ratio of 158.74, a PEG ratio of 8.06 and a beta of 1.48. The business has a fifty day simple moving average of $447.49 and a two-hundred day simple moving average of $476.73. Axon Enterprise has a 12-month low of $339.01 and a 12-month high of $665.07. The company has a debt-to-equity ratio of 0.47, a quick ratio of 1.80 and a current ratio of 2.15.

More Axon Enterprise News

Here are the key news stories impacting Axon Enterprise this week:

• Positive Sentiment: Axon reported record Q3 revenue of $909 million, up 28% year over year, and returned to net income. Adjusted EBITDA rose 33% to $236 million. Axon Q3 results
• Positive Sentiment: Growth in newer offerings was strong: Drone as First Responder software and services revenue grew 43%, Platform Solutions revenue climbed 106%, and AI annual recurring revenue exceeded $100 million. Axon Q3 results
• Positive Sentiment: Axon invested an additional $1.2 billion in Skydio, raising its stake to 37% and making it Skydio’s exclusive public-safety distributor in the U.S. and Canada. The deal could strengthen Axon’s drone-response offering, though it requires substantial capital. Axon Skydio investment
• Negative Sentiment: Q3 adjusted earnings of $1.72 per share and revenue of about $909 million both missed analyst estimates, despite solid year-over-year growth. Q3 earnings and revenue miss
• Negative Sentiment: Axon’s Q4 revenue outlook of $990 million–$1.0 billion was below the roughly $1.1 billion consensus, while its full-year 2026 revenue outlook of $3.6 billion also trailed expectations of about $3.7 billion. Revenue outlook and Skydio investment
• Negative Sentiment: Zacks Research downgraded Axon from “strong buy” to “hold.” A lawsuit over the company’s AI-powered license-plate-reader network also presents potential legal uncertainty. License plate reader lawsuit

Insider Activity at Axon Enterprise

In related news, CEO Patrick W. Smith sold 10,000 shares of the business's stock in a transaction dated Tuesday, September 8th. The shares were sold at an average price of $508.99, for a total transaction of $5,089,900.00. Following the sale, the chief executive officer owned 3,118,012 shares of the company's stock, valued at $1,587,036,927.88. The trade was a 0.32% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Jeffrey C. Kunins sold 9,605 shares of the firm's stock in a transaction that occurred on Friday, August 21st. The shares were sold at an average price of $626.70, for a total value of $6,019,453.50. Following the transaction, the insider directly owned 97,761 shares of the company's stock, valued at approximately $61,266,818.70. This trade represents a 8.95% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders have sold 47,397 shares of company stock valued at $26,722,984. 4.20% of the stock is currently owned by corporate insiders.

Wall Street Analyst Weigh In

Several research analysts recently commented on AXON shares. UBS Group lifted their target price on shares of Axon Enterprise from $440.00 to $600.00 and gave the stock a "neutral" rating in a research note on Thursday, August 6th. Morgan Stanley increased their price target on shares of Axon Enterprise from $600.00 to $640.00 and gave the company an "overweight" rating in a research report on Thursday, August 6th. Zacks Research lowered shares of Axon Enterprise from a "strong-buy" rating to a "hold" rating in a report on Tuesday. Argus boosted their price objective on shares of Axon Enterprise from $460.00 to $600.00 and gave the company a "buy" rating in a research report on Thursday, September 3rd. Finally, Citigroup reaffirmed a "market outperform" rating on shares of Axon Enterprise in a research note on Monday. Fourteen research analysts have rated the stock with a Buy rating and three have assigned a Hold rating to the company. Based on data from MarketBeat.com, the stock currently has a consensus rating of "Moderate Buy" and a consensus target price of $688.38.

About Axon Enterprise

Axon Enterprise, Inc develops technology and connected products for public safety organizations. The company's portfolio includes TASER conducted-energy weapons, body-worn cameras, in-car cameras, and related hardware designed to support law enforcement, corrections, security, and other emergency-response professionals.

Axon also provides cloud-based software for managing digital evidence, records, workflows, real-time operations, investigations, and communications. Its platform is intended to connect hardware, software, and services across the public-safety ecosystem, helping agencies collect, store, analyze, and share operational information.

The company was founded in 1993 as TASER International by Rick Smith and Tom Smith and adopted the name Axon Enterprise in 2017 as it expanded beyond conducted-energy weapons into a broader technology platform.

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