Axon Enterprise, Inc. 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.
AXON’s 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%. The Zacks Consensus Estimate for Connected Devices’ revenues was pegged at $366 million.
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. The Zacks Consensus Estimate for Software & Services’ revenues was pegged at $284 million.
Axon Enterprise, Inc Price, Consensus and EPS Surprise
Axon Enterprise, Inc price-consensus-eps-surprise-chart | Axon Enterprise, Inc Quote
AXON’s Margin Profile
Axon’s cost of sales increased 11.3% year over year to $264.8 million. Selling, general and administrative expenses increased 8.4% year over year to $242.2 million.
Total operating expenses climbed 8.1% year over year to $404.8 million. The adjusted gross margin increased to 63.3% from 63.1% in the year-ago period.
AXON’s 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.
AXON’s 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.
AXON’s Zacks Rank & Other Key Picks
The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked companies are discussed below:
TransDigm Group Incorporated TDG presently carries a Zacks Rank #2 (Buy). TDG’s earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 5.1%. In the past 60 days, the Zacks Consensus Estimate for Transdigm’s 2025 earnings has inched up 0.2%.
Woodward, Inc. WWD currently carries a Zacks Rank of 2. WWD has an impressive earnings surprise history, having outperformed the consensus estimate in each of the preceding four quarters, the average surprise being 15%. In the past 60 days, the Zacks Consensus Estimate for Woodward’s fiscal 2025 (ending September 2025) earnings has increased 3.4%.
HEICO Corporation HEI currently carries a Zacks Rank of 2. HEI outperformed the consensus estimate in each of the preceding four quarters, with an average surprise of 11.9%. In the past 60 days, the Zacks Consensus Estimate for HEICO’s 2025 earnings has increased 2%.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
