Axon Enterprise 2025 Q2 Earnings Beats Expectations, Net Income Falls 12.9%

Axon Enterprise (AXON) reported its fiscal 2025 Q2 earnings on Aug 06th, 2025. The company delivered a strong top-line performance, with revenue rising sharply and full-year guidance raised. Despite this, net income and EPS declined due to higher stock-based compensation and operating expenses.

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Revenue

Axon Enterprise's second-quarter revenue surged 32.8% year-over-year to $668.54 million, driven by robust performance across all business segments. The Connected Devices segment led the way with $376.36 million in revenue, reflecting strong demand for Axon Body 4 and TASER products. The TASER segment also posted $216.23 million in revenue, while the Personal Sensors segment brought in $92.82 million. Platform Solutions revenue grew significantly to $67.31 million, up 86% year-over-year. The Software and Services segment saw particularly strong growth, contributing $292.18 million, a 39% increase compared to the prior year. Collectively, these segments drove total revenue to $668.54 million, showcasing Axon’s transition into a high-growth SaaS model.

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Earnings/Net Income

Axon Enterprise’s earnings per share (EPS) declined 16.4% year-over-year to $0.46 in 2025 Q2, down from $0.55 in 2024 Q2. Similarly, net income fell to $36.12 million, a 12.9% drop from $41.47 million a year ago. The decline was primarily due to elevated stock-based compensation expenses and increased capital expenditures.

The EPS decline indicates a challenging earnings environment despite strong revenue growth.

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Price Action

The stock price of Axon Enterprise has shown strong momentum, climbing 6.00% during the latest trading day, surging 18.99% over the most recent full trading week, and jumping 9.01% month-to-date. This reflects positive sentiment around the company’s performance and future outlook.

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Post Earnings Price Action Review

Following its Q2 2025 earnings release, Axon’s stock experienced a strong immediate reaction, rising 4.38% post-earnings. The strategy of buying AXON after earnings beats and holding for 30 days resulted in a 29.19% return, although this underperformed the benchmark return of 70.76%. The strategy exhibited a moderate Sharpe ratio of 0.22, indicating acceptable risk-adjusted returns, with no significant drawdowns observed during the backtest period. The strong post-earnings performance was driven by the company’s comprehensive beat on revenue, EPS, and key growth metrics, as well as the raised full-year guidance.

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CEO Commentary

Rick Smith, CEO & Founder of Axon, highlighted the company’s strong Q2 2025 performance, driven by robust adoption of premium software offerings and high demand for products like TASER 10, Axon Body 4, and counter-drone equipment. He emphasized the value of customer feedback in shaping AI-driven solutions, noting that Axon’s Responsible Innovation Framework ensures ethical development and deployment. Smith acknowledged administrative challenges in law enforcement, such as staffing shortages, and underscored AI’s potential to improve efficiency and officer safety. He expressed optimism about the future, citing a growing pipeline of AI innovations and the company’s commitment to solving real problems through customer-driven development.

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Guidance

Axon Enterprise raised its full-year revenue guidance to $2.65 billion to $2.73 billion, up from $2.60 billion to $2.70 billion, reflecting stronger growth expectations. The company also increased its Adjusted EBITDA outlook to $665 million to $685 million, with a target margin of approximately 25%. Anticipating $580 million to $630 million in stock-based compensation and $170 million to $185 million in CapEx, Axon expects to recognize 20% to 25% of its $10.7 billion in future contracted bookings within the next 12 months.

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Additional News

Axon Enterprise delivered an impressive Q2 2025 performance, with revenue of $669 million, significantly beating the $553.2 million estimate and marking a 21% beat. Adjusted EPS surged to $2.12, nearly doubling the $1.10 estimate. The company also raised its full-year revenue guidance to $2.65 billion–$2.73 billion. Axon’s Annual Recurring Revenue (ARR) hit $1.2 billion, up 39% year-over-year, and its Net Revenue Retention (NRR) reached 124%. The strong performance was attributed to momentum in software and services, with SaaS gross margins rising to 78.9%, and strong international and federal demand. While free cash flow was negative at –$111 million due to heavy capital expenditures and receivables growth, the company demonstrated solid operating leverage in its cloud segment, maintaining adjusted EBITDA margins at 25.7%.