Axon Tops Q2 Earnings & Revenue Estimates, Raises 2025 Guidance

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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