Axon's Q3 Earnings Miss Estimates & Revenues Beat, 2025 View Up

Axon Enterprise, Inc. AXON reported third-quarter 2025 adjusted earnings of $1.17 per share, which missed the Zacks Consensus Estimate of $1.63. The bottom line decreased 19.3% year over year amid the rise in operating costs and expenses.Total revenues of $710.6 million surpassed the consensus estimate of $700 million and increased 31% year over year. The top line benefited from strong demand for TASER 10, Axon Body 4 and counter-drone equipment. Growing adoption of premium software solutions also augmented the top-line results.AXON’s Q3 Business Segment PerformanceEffective first-quarter 2025, AXON realigned its business segments. The company now reports results under two business segments, namely Connected Devices and Software & Services.Connected Devices: The segment’s revenues jumped 23.6% year over year to $405.4 million, driven by an increase in demand for TASER 10 devices, Axon Body 4, counter-drone products and growth in platform solutions. The adjusted gross margin decreased year over year to 52.1% from 54.5%. The Zacks Consensus Estimate for Connected Devices’ revenues was pegged at $396 million.Software & Services: The segment’s revenues rose 41.1% year over year to $305.2 million. The uptick was driven by an increase in the aggregate number of users and growing adoption of premium software offerings. The adjusted gross margin increased to 76.8% from 76.3% in the year-ago period owing to a higher software mix. The Zacks Consensus Estimate for Software & Services’ revenues was pegged at $302 million.Axon Enterprise, Inc Price, Consensus and EPS Surprise Axon Enterprise, Inc price-consensus-eps-surprise-chart | Axon Enterprise, Inc QuoteAXON’s Margin ProfileAxon’s cost of sales increased 32.7% year over year to $283.3 million. Selling, general and administrative expenses increased 31.5% year over year to $252.8 million.Total operating expenses climbed 40% year over year to $429.5 million. The adjusted gross margin decreased to 62.7% from 63.2% in the year-ago period, owing to global tariff-related impacts and a higher Platform Solutions product mix in Connected Devices.AXON’s Balance Sheet & Cash FlowAt the end of third-quarter 2025, Axon had cash and cash equivalents of $1.42 billion compared with $454.8 million at December 2024-end. Long-term lease liabilities totaled $90.2 million compared with $41.4 million at 2024-end.In the first nine months of 2025, the company used net cash of $5.9 million from operating activities against $158.1 million in cash generated in the previous year period.Adjusted free cash flow was a negative $71.4 million in the first nine months of 2025 compared with $117.5 million in the prior-year period.AXON’s Outlook for Q4For fourth-quarter 2025, Axon anticipates revenues in the band of $750-$755 million, indicating an increase of 31% at the midpoint. Adjusted EBITDA is projected to be $178-$182 million, implying an adjusted EBITDA margin of about 24%.Outlook for 2025For 2025, Axon expects revenues to be about $2.74 billion compared with $2.65-$2.73 billion anticipated earlier. The metric indicates approximately 31% year-over-year growth. Adjusted EBITDA margin is expected to be about 25%.The company expects capital expenditures to be between $170 million and $180 million. This includes investments in long-term research & development projects, continued capacity expansion, global facility build-outs and new product development. It anticipates stock-based compensation expenses to be in the range of $580-$630 million.Major DevelopmentsAxon signed a definitive deal to acquire Carbyne, a well-known provider of cloud contact center technology solutions to public safety agencies. Management expects the transaction (valued at $625 million) to be completed in first-quarter 2026, conditioned on the fulfillment of certain customary closing conditions.AXON’s Zacks Rank & Key PicksThe company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Some better-ranked companies are discussed below:Astronics Corporation ATRO currently sports a Zacks Rank of 1. ATRO outperformed the consensus estimate in each of the preceding four quarters, with an average surprise of 78.5%.  In the past 60 days, the Zacks Consensus Estimate for Astronics’s 2025 earnings has increased 3.1%.ATI Inc. ATI presently carries a Zacks Rank #2 (Buy). ATI’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 18%. In the past 60 days, the Zacks Consensus Estimate for ATI’s 2025 earnings has increased 2.6%.Kratos Defense & Security Solutions, Inc. KTOS currently carries a Zacks Rank of 2. KTOS has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average surprise being 34.4%.  In the past 60 days, the Zacks Consensus Estimate for Kratos Defense’s 2025 earnings has remained stable.Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ATI Inc. (ATI): Free Stock Analysis Report Astronics Corporation (ATRO): Free Stock Analysis Report Kratos Defense & Security Solutions, Inc. (KTOS): Free Stock Analysis Report Axon Enterprise, Inc (AXON): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks