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

Axon Enterprise (NASDAQ:AXON) announced its quarterly earnings data 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. The company had revenue of $908.55 million for the quarter, compared to the consensus estimate of $934.33 million. Axon Enterprise had a net margin of 6.19% and a return on equity of 2.84%. The firm’s quarterly revenue was up 27.8% compared to the same quarter last year. During the same period last year, the business posted $1.17 earnings per share.

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 Trading Down 18.2%

NASDAQ AXON opened at $313.00 on Friday. The company has a quick ratio of 1.80, a current ratio of 2.15 and a debt-to-equity ratio of 0.47. The company has a market cap of $25.43 billion, a price-to-earnings ratio of 100.32, a P/E/G ratio of 8.09 and a beta of 1.48. The business has a 50 day moving average price of $441.53 and a 200-day moving average price of $475.20. Axon Enterprise has a 52 week low of $307.00 and a 52 week high of $665.07.

Insider Activity at Axon Enterprise

In related news, CEO Patrick W. Smith sold 10,000 shares of the stock in a transaction dated Tuesday, September 8th. The stock was sold at an average price of $508.99, for a total transaction of $5,089,900.00. Following the transaction, the chief executive officer owned 3,118,012 shares of the company’s stock, valued at approximately $1,587,036,927.88. This represents a 0.32% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, President Joshua Isner sold 16,775 shares of the business’s 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 owned 296,974 shares in the company, valued at $170,590,774.82. The trade was a 5.35% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 37,397 shares of company stock worth $21,234,034 over the last ninety days. Corporate insiders own 4.20% of the company’s stock.

Analysts Set New Price Targets

Several analysts recently weighed in on the stock. Weiss Ratings reiterated a “hold (c-)” rating on shares of Axon Enterprise in a report on Tuesday. Northcoast Research increased their price objective on Axon Enterprise from $650.00 to $680.00 and gave the stock a “buy” rating in a research report on Tuesday, August 11th. Morgan Stanley raised their price objective on shares of Axon Enterprise from $600.00 to $640.00 and gave the company an “overweight” rating in a research note on Thursday, August 6th. UBS Group upped their target price on Axon Enterprise from $440.00 to $600.00 and gave the company a “neutral” rating in a research note on Thursday, August 6th. Finally, Raymond James Financial set a $675.00 target price on Axon Enterprise in a research note on Thursday, October 15th. Thirteen analysts have rated the stock with a Buy rating and four have given a Hold rating to the company’s stock. According to MarketBeat, the company presently has a consensus rating of “Moderate Buy” and an average target price of $631.35.

Key Axon Enterprise News

Here are the key news stories impacting Axon Enterprise this week:

• Positive Sentiment: Q3 revenue reached a record $909 million, up 28% year over year, while software and services revenue rose 43%. Axon also reported AI annual recurring revenue above $100 million, signaling continued demand for its software and AI offerings. Axon Q3 results
• Neutral Sentiment: Axon committed an additional $1.2 billion to drone maker Skydio, bringing its stake to 37% and making it Skydio’s exclusive public-safety distributor in the U.S. and Canada. The move could expand Axon’s Drone as First Responder business, but its scale also raises investment and execution risks. Reuters: Axon invests in Skydio
• Negative Sentiment: Q3 adjusted earnings of $1.72 per share and revenue of $908.55 million fell short of analyst expectations. Axon’s 2026 revenue forecast was reduced to $3.6 billion from a consensus of about $3.7 billion; its Q4 revenue guidance also came in below estimates. The company cited delays in federal counter-drone projects, while margin pressure added to concerns. Zacks: Q3 miss and outlook
• Negative Sentiment: Several analysts lowered price targets after the results, and Craig Hallum downgraded AXON from Buy to Hold, adding to pressure on investor sentiment. Benzinga: analyst forecast changes
• Negative Sentiment: A class-action lawsuit over Axon’s license-plate surveillance practices is a potential additional legal and reputational overhang. Class-action announcement

About Axon Enterprise

Axon Enterprise develops technology and services for public safety agencies. Its products include TASER conducted-energy weapons, body-worn and in-car cameras, and related hardware designed to support law enforcement and other safety professionals.

The company also provides cloud-based software for managing digital evidence, records and operational workflows. Its Axon Evidence platform helps agencies store, organize and share video and other evidence, while its broader software offerings include tools for dispatch and records management.

Founded in 1993 as TASER International, the company adopted the name Axon Enterprise in 2017 as it expanded beyond conducted-energy weapons into connected devices and software.