Axon's Software & Services Strength in Focus: More Upside Ahead?

Axon Enterprise AXON is witnessing an increase in the aggregate number of users to the Axon network. Continued momentum in digital evidence management and increased demand for premium add-on features are driving the Software & Services segment’s growth. Revenues from the segment increased 39.6% year over year in 2025.

Adoption of premium subscription plans continues to rise as more customers recognize the value of enhanced capabilities. Existing customers are consistently returning to purchase additional services, reflecting strong customer satisfaction and engagement. This ongoing expansion supports a growing base of annual recurring revenue (ARR).

Given the rising global demand for Counter-Unmanned Aircraft Systems (CUAS), Axon is also expected to witness strong demand for its Dedrone platform from NATO’s airspace defense agencies.

Growing instances of terrorism and criminal activities, with concerns related to the ever-increasing fraudulent activities, will augur well for Axon’s products in the quarters ahead. Strong customer alignment, broader adoption across sectors and continuous product innovation led Axon to issue bullish guidance for 2026. The company expects revenues to increase approximately 27-30% year over year.

Segment Performance of AXON's Peers

Among its major peers, Teledyne Technologies Incorporated’s TDY Digital Imaging segment’s fourth-quarter 2025 revenues increased 3.4% year over year to $850.5 million. The jump was due to higher sales of commercial infrared imaging components and subsystems as well as unmanned air systems. Teledyne generated 52.8% of its total revenues from this segment in the quarter.

Its another peer, Woodward, Inc.’s WWD Industrial business segment reported net sales of $361.6 million in the first quarter of fiscal 2026, up 30% year over year. Woodward generated 36.3% of its total sales from this segment in the quarter. The increase in revenues for Woodward’s segment is primarily attributable to strength across power generation, transportation, and oil & gas markets.

AXON’s Price Performance, Valuation and Estimates

Shares of Axon have gained 14.8% in the past month against the industry’s decline of 5%.

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From a valuation standpoint, AXON is trading at a forward price-to-earnings ratio of 58.5X, above the industry’s average of 45.9X. Axon carries a Value Score of F.

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The Zacks Consensus Estimate for AXON’s 2026 earnings has increased 4.8% over the past 60 days.

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The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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