Axon Enterprise Plunges 20% in After Hours on Q3 Earnings Miss

"Axon Enterprise (NASDAQ: AXON) delivered a revenue beat and raised full-year guidance on Tuesday, but a steep earnings miss and collapsing operating income sent the stock lower in after-hours trading. The public safety technology company reported Q3 revenue of $711.0 million, topping the $704.8 million consensus estimate, yet posted adjusted EPS of $1.17 against expectations of $1.54. Investors are weighing strong demand for TASER and body camera hardware against heavy R&D spending and tariff pressures that crushed near-term profitability."

"The real story here is segment momentum. Software & Services revenue surged 41% year-over-year to $305 million, outpacing Connected Devices growth of 24% to $405 million. That's the clearest signal that the company's transition toward higher-margin software and AI-driven analytics is taking hold. Strong demand for TASER 10 and Axon Body 4 devices kept hardware revenue robust despite a tougher operating environment."

Axon reported Q3 revenue of $711.0 million, above consensus of $704.8 million, while adjusted EPS fell to $1.17 versus expectations of $1.54. Software & Services revenue increased 41% year-over-year to $305 million, outpacing Connected Devices growth of 24% to $405 million. Gross profit reached $427.3 million with a 60.1% margin. Cash doubled year-over-year to $1.42 billion. Recent acquisitions include Prepared and Carbyne. Operating income swung to a $2.1 million loss from a $24.4 million profit, and GAAP net income was negative $2.2 million versus $67 million prior. Operating cash flow declined 34% to $60 million. Management cited global tariffs and heavy R&D investment in AI as near-term margin headwinds, while raising full-year guidance.

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