What's in the Cards for Axon Enterprise (AAXN) Q2 Earnings?

Axon Enterprise, Inc. AAXN is scheduled to report second-quarter 2020 results on Aug 6, after the opening bell.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter total sales is pegged at $131.9 million, suggesting growth of 17.4% from the prior-year quarter. The consensus mark for earnings per share currently stands at 16 cents, indicating an improvement of 14.3% from the year-ago reported figure. Notably, the figure has remained stable over the past 30 days.

Q1 Performance

In the last reported quarter, Axon’s earnings and revenues both improved on a year-over-year basis. The company surpassed the Zacks Consensus Estimate on both counts.

The company beat estimates in three of the trailing four quarters, while missing the same once. It has a trailing four-quarter negative earnings surprise of 30.6%, on average.

Axon Enterprise, Inc Price and EPS Surprise Axon Enterprise, Inc Price and EPS Surprise

Axon Enterprise, Inc price-eps-surprise | Axon Enterprise, Inc Quote

Factors to Note

Axon's core business remains robust and healthy, and the company has been witnessing strong growth in international revenues. This can primarily be attributed to its targeted investments in sales channel expansion. In the second quarter, Axon executed orders from countries with which the company has not conducted business previously. Hence, this widening customer base provided it with new revenue opportunities. The company has received body camera and TASER orders from Latin America, Asia, Southeast Asia, and South Asia — all representing new country markets. It has also been witnessing stronger-than-average order activity in the U.K. This development is likely to get reflected in the second-quarter results.

Last year, the company had taken actions to diversify supply chain and global manufacturing footprint. It has enhanced its inventory as a proactive approach to minimize shipping disruptions and thus, shipped critical core products without any significant interruption despite the COVID-19 pandemic. This has led to some major U.S city police departments placing bulk orders for Axon products. Further, order levels for Axon’s products have been increasing owing to reduction of sharing among officers in order to curb the spread of coronavirus. Meanwhile, a small number of agency customers have delayed their body camera programs, or postponed their subscription upgrades until unspecified later dates.

Strong demand for cloud-connect TASER 7 device, and cartridges might contributed to the TASER segment’s second-quarter top line. However, the to-be-reported quarter’s results are likely to reflect COVID-19-related costs, including hazard pay, an on-site nurse, extra cleaning, staggered shifts, and other precautionary measures that the company has taken to ensure workers’ safety.

The Software & Sensors segment’s second-quarter performance is likely to have benefited from demand for Axon Cloud software offerings and Axon Body 3 — its latest generation camera that features LTE-connectivity and location-based services.

Notably, the company has been providing customer support amid the coronavirus pandemic. Among other initiatives, the company has provided free access to Axon Citizen cloud software to enable social distancing. After this offering, it witnessed agency usage of Citizen climb by 35%.

What Our Model Unveils

Our proven model does not conclusively predict a beat for Axon this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Axon’s Earnings ESP is 0.00%.

Zacks Rank: Axon currently carries a Zacks Rank #3.

Price Performance

Shares of the company have gained 26.1% year to date, compared with the industry’s growth of 4.9%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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