Axon Enterprise 2025 Q3 Earnings Misses Targets with 103.3% Net Income Deterioration

Axon Enterprise (AXON) reported fiscal 2025 Q3 earnings on Nov 5, 2025, with revenue rising 30.6% to $710.64 million but net income turning to a $2.19 million loss, a 103.3% decline year-over-year. The company raised full-year revenue guidance to $2.74 billion, reflecting strong demand for its connected devices and software ecosystem.

Revenue

Axon’s Q3 revenue surged 30.6% to $710.64 million, driven by robust performance across segments. The Connected Devices segment led with $405.40 million, bolstered by 24% growth in TASER products. Software and Services revenue jumped 41% to $305.24 million, underscoring the company’s shift toward recurring revenue streams. Personal Sensors and Platform Solutions contributed $106.68 million and $60.77 million, respectively, while total net sales reached $710.64 million.

Earnings/Net Income

The company swung to a net loss of $2.19 million ($0.03 per share) in Q3 2025, compared to a $67.03 million profit ($0.89 per share) in the prior-year period. This 103.4% negative change in EPS highlights margin pressures from higher R&D expenses, stock-based compensation, and U.S. import tariffs.

Post-Earnings Price Action Review

Axon’s stock experienced volatile trading following the earnings report. Shares surged 13.42% on the day of the announcement but fell 15.79% over the subsequent trading week and 11.37% month-to-date. The earnings miss, driven by weaker-than-expected margins and a non-recurring $197.6 million gain in prior periods, triggered investor skepticism. Analysts noted that while revenue growth exceeded expectations, profitability concerns overshadowed the positive momentum.

CEO Commentary

CEO Rick Smith emphasized Q3’s 31% year-over-year revenue growth, driven by 41% Software & Services expansion and 24% Connected Devices growth. Strategic investments in Vehicle Intelligence and acquisitions of Carbyne and Prepared aim to modernize 911 call handling. Smith raised full-year revenue guidance to $2.74 billion, reflecting confidence in product roadmaps and market opportunities.

Guidance

Axon expects Q4 2025 revenue of $750–$755 million (31% YoY growth) and Adjusted EBITDA of $178–$182 million. Full-year revenue is projected at $2.74 billion, with a 25% Adjusted EBITDA margin. The company excludes net income forecasts due to variability in expenses like stock-based compensation and tax impacts.

Additional News

Axon announced the $625 million acquisition of Carbyne, a cloud-based 911 dispatch platform, to expand its public safety ecosystem. The deal, expected to close in Q1 2026, follows the integration of AI startup Prepared, enhancing emergency response capabilities. CEO Rick Smith highlighted the strategic value of these acquisitions, aiming to unify emergency call handling with Axon’s field devices. Additionally, tariffs on imported hardware impacted Q3 margins, prompting CFO Brittany Bagley to note margin pressures despite record revenue growth.