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Why Is Axon (AXON) Down 14.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Axon Enterprise (AXON - Free Report) . Shares have lost about 14.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Axon due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Axon reported second-quarter 2025 adjusted earnings of $2.12 per share, which surpassed the Zacks Consensus Estimate of $1.54. The bottom line surged 73.8% year over year despite a rise in the cost of sales.
Total revenues of $668.5 million surpassed the consensus estimate of $643 million and increased 33% 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.
Q2 Business Segment Performance
Effective 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 28.6% year over year to $376.4 million, driven by increase in demand for TASER 10 devices and associated cartridges, and Axon Body 4 as well as growth in platform solutions. The adjusted gross margin decreased year over year to 51.1% from 53.4%.
Software & Services: The segment’s revenues rose 38.8% year over year to $292.2 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 78.9% from 76. 6% in the year-ago period due to a higher software mix.
Margin Profile
Axon’s cost of sales increased 34.4% year over year to $264.8 million. Selling, general and administrative expenses increased 41.7% year over year to $242.2 million.
Total operating expenses climbed 48.6% year over year to $404.8 million. The adjusted gross margin increased to 63.3% from 63.1% in the year-ago period.
Balance Sheet & Cash Flow
At the end of second-quarter 2025, Axon had cash and cash equivalents of $615.5 million compared with $454.8 million at December 2024-end. Long-term lease liabilities totaled $43.6 million compared with $41.4 million at 2024-end.
In the first six months of 2025, the company used net cash of $65.9 million from operating activities against $66.8 million in cash generated in the previous year period.
Adjusted free cash flow was a negative $113.7 million in the first six months of 2025 compared with $39.3 million in the prior-year period.
Outlook for 2025
For 2025, Axon expects revenues to be in the band of $2.65-$2.73 billion compared with $2.60-$2.70 billion anticipated earlier. The metric indicates approximately 29% year-over-year growth at the midpoint. Adjusted EBITDA is expected to be in the range of $665-$685 million, implying an adjusted EBITDA margin of about 25%.
The company expects capital expenditures to be between $170 million and $185 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted 25% due to these changes.
VGM Scores
At this time, Axon has a average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock has a grade of F on the value side, putting it in the lowest quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Axon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Axon is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Hexcel (HXL - Free Report) , a stock from the same industry, has gained 6.3%. The company reported its results for the quarter ended June 2025 more than a month ago.
Hexcel reported revenues of $489.9 million in the last reported quarter, representing a year-over-year change of -2.1%. EPS of $0.50 for the same period compares with $0.60 a year ago.
Hexcel is expected to post earnings of $0.41 per share for the current quarter, representing a year-over-year change of -12.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -5.7%.
Hexcel has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Why Is Axon (AXON) Down 14.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Axon Enterprise (AXON - Free Report) . Shares have lost about 14.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Axon due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
Axon Tops Q2 Earnings & Revenue Estimates, Raises 2025 Guidance
Axon reported second-quarter 2025 adjusted earnings of $2.12 per share, which surpassed the Zacks Consensus Estimate of $1.54. The bottom line surged 73.8% year over year despite a rise in the cost of sales.
Total revenues of $668.5 million surpassed the consensus estimate of $643 million and increased 33% 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.
Q2 Business Segment Performance
Effective 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 28.6% year over year to $376.4 million, driven by increase in demand for TASER 10 devices and associated cartridges, and Axon Body 4 as well as growth in platform solutions. The adjusted gross margin decreased year over year to 51.1% from 53.4%.
Software & Services: The segment’s revenues rose 38.8% year over year to $292.2 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 78.9% from 76. 6% in the year-ago period due to a higher software mix.
Margin Profile
Axon’s cost of sales increased 34.4% year over year to $264.8 million. Selling, general and administrative expenses increased 41.7% year over year to $242.2 million.
Total operating expenses climbed 48.6% year over year to $404.8 million. The adjusted gross margin increased to 63.3% from 63.1% in the year-ago period.
Balance Sheet & Cash Flow
At the end of second-quarter 2025, Axon had cash and cash equivalents of $615.5 million compared with $454.8 million at December 2024-end. Long-term lease liabilities totaled $43.6 million compared with $41.4 million at 2024-end.
In the first six months of 2025, the company used net cash of $65.9 million from operating activities against $66.8 million in cash generated in the previous year period.
Adjusted free cash flow was a negative $113.7 million in the first six months of 2025 compared with $39.3 million in the prior-year period.
Outlook for 2025
For 2025, Axon expects revenues to be in the band of $2.65-$2.73 billion compared with $2.60-$2.70 billion anticipated earlier. The metric indicates approximately 29% year-over-year growth at the midpoint. Adjusted EBITDA is expected to be in the range of $665-$685 million, implying an adjusted EBITDA margin of about 25%.
The company expects capital expenditures to be between $170 million and $185 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted 25% due to these changes.
VGM Scores
At this time, Axon has a average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock has a grade of F on the value side, putting it in the lowest quintile for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Axon has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Axon is part of the Zacks Aerospace - Defense Equipment industry. Over the past month, Hexcel (HXL - Free Report) , a stock from the same industry, has gained 6.3%. The company reported its results for the quarter ended June 2025 more than a month ago.
Hexcel reported revenues of $489.9 million in the last reported quarter, representing a year-over-year change of -2.1%. EPS of $0.50 for the same period compares with $0.60 a year ago.
Hexcel is expected to post earnings of $0.41 per share for the current quarter, representing a year-over-year change of -12.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -5.7%.
Hexcel has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.