Axon Enterprise 2025 Q3 Earnings Revenue Surpasses Estimates, Earnings Miss Overshadows

Axon Enterprise (AXON) reported a 31% year-over-year revenue increase to $711 million in Q3 2025, exceeding analyst estimates of $705 million. However, the company missed profit expectations, reporting a non-GAAP EPS of $1.17 versus the $1.52 forecast. Despite the revenue beat, shares dropped 20% post-earnings. The firm raised its full-year revenue guidance to $2.74 billion, up from $2.65–$2.73 billion, citing strong demand for its software and connected devices.

Revenue

Axon’s total revenue surged 30.6% year-over-year to $710.64 million in Q3 2025. The Connected Devices segment led with $405.40 million in revenue, driven by 24% growth in TASER products and 20% growth in Personal Sensors. Software and Services revenue reached $305.24 million, reflecting a 41% year-over-year increase. Platform Solutions saw the fastest growth at 71%, contributing $60.77 million. Annual Recurring Revenue (ARR) climbed 41% to $1.3 billion, underscoring the company’s shift toward subscription-based models.

Earnings/Net Income

Axon swung to a net loss of $2.19 million, or -$0.03 per share, in Q3 2025, compared to a profit of $67.03 million, or $0.89 per share, in the prior-year period. The 103.3% deterioration was attributed to elevated operating expenses, including $133 million in stock-based compensation and $253 million in SG&A costs. The earnings shortfall, despite robust revenue growth, underscored margin pressures from aggressive R&D investments and strategic acquisitions.

Post-Earnings Price Action Review

Following the earnings report, Axon’s stock price declined sharply, with shares falling 20.9% in after-hours trading to $683.31. The drop reflected investor disappointment over the earnings miss and concerns about margin compression from elevated operating expenses. While the company raised full-year revenue guidance to $2.74 billion, the market appeared to discount the long-term value of its strategic investments in AI-driven platforms and emergency response technologies. The price action highlighted a disconnect between top-line growth and profitability expectations, particularly as operating margins contracted to 24.9% in Q3.

CEO Commentary

CEO Rick Smith emphasized Axon’s “record quarter” with 31% revenue growth, attributing success to 41% growth in Software & Services and 24% growth in Connected Devices. He highlighted R&D investments in innovations like Vehicle Intelligence and Axon Body Workforce Mini, alongside acquisitions of Prepared and Carbyne to modernize 911 systems. Smith expressed confidence in the company’s $159 billion total addressable market and reiterated a “once-in-a-generation game changer” narrative for its public safety ecosystem.

Guidance

Axon raised 2025 full-year revenue guidance to $2.74 billion (31% growth), up from $2.65–$2.73 billion. Q4 revenue is projected at $750–$755 million (31% YoY growth), with adjusted EBITDA expected at $178–$182 million (24% margin). The company anticipates stock-based compensation of $580–$630 million and 2025 CapEx of $170–$180 million. Guidance excludes net income forecasts due to variable expenses like stock compensation and tax impacts.

Additional News

Axon announced a $625 million acquisition of emergency communications platform Carbyne, aiming to integrate its cloud-native 911 call management system with Axon’s AI tools to create “Axon 911.” The deal, expected to close in Q1 2026, aligns with the company’s strategy to modernize public safety workflows. Additionally, Axon finalized the acquisition of Prepared, enhancing its AI-driven emergency response capabilities. CEO Rick Smith emphasized the strategic value of these moves, stating they would “close the gap” in 911 call handling and improve first-responder coordination.

Axon’s recent strategic acquisitions and product innovations, including the Axon Body Workforce Mini and Vehicle Intelligence platform, position it to capitalize on its $159 billion total addressable market. The company’s focus on integrating hardware, software, and AI-driven solutions continues to drive growth in public safety technology.