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Can Axon Maintain EBITDA Margin Momentum Amid Cost Pressures?
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Key Takeaways
Axon's adjusted EBITDA hit $503.8M in the first nine months of 2025, up 32.6% year over year.
Gross margin rose to 60.4% on strong TASER 10, Axon Body 4 and platform solutions revenue growth.
AXON now targets $682-$686M in 2025 adjusted EBITDA, implying a roughly 25% margin for the year.
Axon Enterprise, Inc. (AXON - Free Report) achieved a solid adjusted EBITDA of $503.8 million in the first nine months of 2025, which surged 32.6% year over year. The company's adjusted EBITDA margin reached 25.4%, reflecting an increase of 20 basis points (bps). This improved margin not only reflects its strong operational efficiency but also benefits from the continued adoption of its premier products and solutions.
Despite rising operating expenses, AXON’s gross margin grew 100 basis points to 60.4%. The improvement in margins was driven by higher revenues generated from robust sales of TASER 10, Axon Body 4, personal sensors and platform solutions products. It’s worth noting that the company reported revenues of $710.6 million in third-quarter 2025, which increased 31% year over year.
Axon’s focus on effective cost management and revenue growth is expected to expand its margin performance. For 2025, AXON currently expects adjusted EBITDA in the range of $682-$686 million, higher than its previous outlook of $665-$685 million. The updated guided range implies an adjusted EBITDA margin of approximately 25%.
It's worth noting that, effective first-quarter 2025, Axon realigned its business segments. This realignment has been enhancing the company’s visibility into segment-specific performance and enabling it to effectively manage its costs. This strategic move is expected to continue supporting Axon’s margin performance and operational efficiency.
Peer’s Margin performance
While AXON is putting its best foot forward to improve margins, the road ahead for its peers, like Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) and Teledyne Technologies Incorporated (TDY - Free Report) , looks bumpy as they struggle to maintain healthy margins.
Among its major peers, Kratos Defense is facing cost pressure. In the first nine months of 2025, its cost of sales increased 22% year over year, while its SG&A expenses rose 9%. Kratos Defense’s gross margin declined 310 bps to 22.4% in the quarter.
Teledyne Technologies’ cost of sales rose 6.8% year over year in the third quarter of the year. The company’s SG&A expenses also increased 5.4% year over year. Teledyne Technologies’ adjusted operating margin declined 40 bps to 22.1% in the same quarter.
AXON’s Price Performance, Valuation and Estimates
Shares of Axon have declined 10.2% in the year-to-date period against the industry’s growth of 23.1%.
Image Source: Zacks Investment Research
From a valuation standpoint, AXON is trading at a forward price-to-earnings ratio of 69.96X, above the industry’s average of 43.80X. Axon carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AXON’s 2025 earnings has declined 8.1% over the past 60 days.
Image: Bigstock
Can Axon Maintain EBITDA Margin Momentum Amid Cost Pressures?
Key Takeaways
Axon Enterprise, Inc. (AXON - Free Report) achieved a solid adjusted EBITDA of $503.8 million in the first nine months of 2025, which surged 32.6% year over year. The company's adjusted EBITDA margin reached 25.4%, reflecting an increase of 20 basis points (bps). This improved margin not only reflects its strong operational efficiency but also benefits from the continued adoption of its premier products and solutions.
Despite rising operating expenses, AXON’s gross margin grew 100 basis points to 60.4%. The improvement in margins was driven by higher revenues generated from robust sales of TASER 10, Axon Body 4, personal sensors and platform solutions products. It’s worth noting that the company reported revenues of $710.6 million in third-quarter 2025, which increased 31% year over year.
Axon’s focus on effective cost management and revenue growth is expected to expand its margin performance. For 2025, AXON currently expects adjusted EBITDA in the range of $682-$686 million, higher than its previous outlook of $665-$685 million. The updated guided range implies an adjusted EBITDA margin of approximately 25%.
It's worth noting that, effective first-quarter 2025, Axon realigned its business segments. This realignment has been enhancing the company’s visibility into segment-specific performance and enabling it to effectively manage its costs. This strategic move is expected to continue supporting Axon’s margin performance and operational efficiency.
Peer’s Margin performance
While AXON is putting its best foot forward to improve margins, the road ahead for its peers, like Kratos Defense & Security Solutions, Inc. (KTOS - Free Report) and Teledyne Technologies Incorporated (TDY - Free Report) , looks bumpy as they struggle to maintain healthy margins.
Among its major peers, Kratos Defense is facing cost pressure. In the first nine months of 2025, its cost of sales increased 22% year over year, while its SG&A expenses rose 9%. Kratos Defense’s gross margin declined 310 bps to 22.4% in the quarter.
Teledyne Technologies’ cost of sales rose 6.8% year over year in the third quarter of the year. The company’s SG&A expenses also increased 5.4% year over year. Teledyne Technologies’ adjusted operating margin declined 40 bps to 22.1% in the same quarter.
AXON’s Price Performance, Valuation and Estimates
Shares of Axon have declined 10.2% in the year-to-date period against the industry’s growth of 23.1%.
Image Source: Zacks Investment Research
From a valuation standpoint, AXON is trading at a forward price-to-earnings ratio of 69.96X, above the industry’s average of 43.80X. Axon carries a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for AXON’s 2025 earnings has declined 8.1% over the past 60 days.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.