Axon Enterprise (NASDAQ:AXON) Announces Earnings Results, Misses Estimates By $0.17 EPS

Axon Enterprise (NASDAQ:AXON) released its quarterly earnings results on Thursday. The biotechnology company reported $1.72 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $1.89 by ($0.17), FiscalAI reports. Axon Enterprise had a return on equity of 2.84% and a net margin of 6.19%. The company had revenue of $908.55 million during the quarter, compared to the consensus estimate of $934.33 million. During the same period in the previous year, the company earned $1.17 earnings per share. Axon Enterprise’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 Stock Down 9.8%

Shares of AXON traded down $41.62 on Thursday, hitting $382.56. 3,606,153 shares of the stock traded hands, compared to its average volume of 934,160. Axon Enterprise has a one year low of $339.01 and a one year high of $665.07. The company has a market capitalization of $31.08 billion, a PE ratio of 158.74, a P/E/G ratio of 8.06 and a beta of 1.48. The business has a 50 day simple moving average of $447.49 and a 200 day simple moving average of $476.73. The company has a debt-to-equity ratio of 0.47, a quick ratio of 1.80 and a current ratio of 2.15.

Analyst Upgrades and Downgrades

A number of research firms have weighed in on AXON. UBS Group upped their target price on Axon Enterprise from $440.00 to $600.00 and gave the stock a “neutral” rating in a report on Thursday, August 6th. TD Cowen decreased their target price on Axon Enterprise from $825.00 to $800.00 and set a “buy” rating for the company in a research report on Monday, October 26th. Needham & Company LLC restated a “buy” rating on shares of Axon Enterprise in a research note on Tuesday, October 27th. Morgan Stanley raised their target price on Axon Enterprise from $600.00 to $640.00 and gave the company an “overweight” rating in a research note on Thursday, August 6th. Finally, Citigroup restated a “market outperform” rating on shares of Axon Enterprise in a research report on Monday. Fourteen research analysts have rated the stock with a Buy rating and three have issued a Hold rating to the company’s stock. According to MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and an average price target of $688.38.

Key Stories Impacting Axon Enterprise

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

Insiders Place Their Bets

In other Axon Enterprise news, President Joshua Isner sold 16,775 shares of the stock in a transaction on Monday, August 31st. The stock was sold at an average price of $574.43, for a total transaction of $9,636,063.25. Following the sale, the president directly owned 296,974 shares in the company, valued at approximately $170,590,774.82. This trade represents a 5.35% decrease in their position. The sale was disclosed in a document filed with the SEC, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Patrick Smith sold 10,000 shares of the stock in a transaction on Tuesday, September 8th. The shares were sold at an average price of $508.99, for a total value of $5,089,900.00. Following the sale, the chief executive officer owned 3,118,012 shares in the company, valued at approximately $1,587,036,927.88. This represents a 0.32% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last 90 days, insiders sold 47,397 shares of company stock valued at $26,722,984. Insiders own 4.20% of the company’s stock.

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.