Axon Enterprise (NasdaqGS:AXON) Q3 2025 Earnings Call November 04, 2025 05:00 PM ET Company ParticipantsJosh Isner - PresidentErik Lapinski - VP of Investor RelationsBrittany Bagley - CFORick Smith - CEOJeffrey Kunins - SVPNone - Video NarratorConference Call ParticipantsAndrew Spinola - AnalystJeremy Hamblin - AnalystAndrew Sherman - AnalystJoshua Reilly - AnalystRick SmithExecutive team today. We hope you've had a chance to read our shareholder letter released after the market closed, which you can find a ...

Financial Data and Key Metrics Changes - Third quarter revenue reached $711 million, a 31% year-over-year increase, marking the seventh consecutive quarter of 30% or greater growth [31] - Software and services revenue increased 41% year-over-year to $305 million, driven by both new and existing customers [31] - Annual recurring revenue (ARR) grew 41% to $1.3 billion, with a strong net revenue retention rate of 124% [32] - Adjusted gross margin was 62.7%, a decrease of 50 basis points year-over-year, primarily due to tariffs [33] - Adjusted EBITDA margin was 24.9%, reflecting the impact of tariffs and planned increased R&D investments [33] Business Line Data and Key Metrics Changes - Connected Devices revenue grew 24% year-over-year to $405 million, reflecting broad-based demand [32] - TASER revenue increased by 17%, led by TASER 10, while Personal Sensors grew 20% driven by Axon Body 4 [32] - Platform Solutions revenue surged 71%, driven by Counter Drone, Virtual Reality, and Fleet [32] Market Data and Key Metrics Changes - Year-to-date bookings were up over 30%, with significant contributions from corrections and international markets [28] - International deals included a notable nine-figure cloud deal in Europe, indicating a shift in some countries towards cloud products [28][67] - The company reported strong growth in the corrections segment, with year-to-date bookings up more than 2x from last year [28] Company Strategy and Development Direction - The company is focused on expanding its ecosystem, particularly through the integration of Prepared and Carbine, which are expected to enhance 911 call response capabilities [10][20] - The strategy includes leveraging AI to improve communication and response times in emergency situations, aiming to create a more efficient and connected public safety system [16][44] - The company is also investing in new product lines and acquisitions to drive long-term growth and innovation [34][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving another record year in 2026, with expectations for continued strong growth driven by AI tools and efficient decentralized ownership [29][92] - The company highlighted the importance of customer success as a key driver of its own success, emphasizing a relentless focus on customer needs [22][23] - Management acknowledged the impact of tariffs but maintained a positive outlook on gross margins as the software business continues to grow [33][108] Other Important Information - The company is excited about the upcoming launch of the Axon Body Workforce Mini, which is expected to significantly expand its enterprise opportunities [20][72] - Recent acquisitions, including Prepared and Carbine, are seen as strategic moves to enhance the company's capabilities in the 911 space and voice communications [20][46] Q&A Session Summary Question: AI's contribution to total bookings and any delays in contract decisions - Management confirmed that bookings growth is expected to remain strong, with a belief that high thirties year-over-year growth will continue into Q4 [39][40] Question: Rationale behind acquiring Prepared and Carbine - The acquisitions are aimed at enhancing the company's ecosystem, particularly in the 911 space, where there is significant room for innovation and improvement [42][46] Question: Interplay between software and services, and connected devices - Management indicated that software and services are expected to continue growing at a higher-than-average rate, driven by increasing user counts and upselling [50][54] Question: International deals and pipeline outlook - Management reported strong momentum in international markets, particularly in Europe, with expectations for continued growth [66][70] Question: Competitive landscape for body cameras and response to Motorola's new product - Management emphasized a focus on their own product development and customer satisfaction, asserting confidence in their body camera offerings [84][86] Question: Guidance for Q4 revenue acceleration and backlog - Management expressed strong visibility into Q4 bookings and confidence in achieving a significant bookings quarter [88][90]

Axon Enterprise (NasdaqGS:AXON) Q3 2025 Earnings Call November 04, 2025 05:00 PM ET Speaker6Executive team today. We hope you've had a chance to read our shareholder letter released after the market closed, which you can find at investor.axon.com. Our remarks today are meant to build upon that letter. During this call, we will discuss our business outlook and make forward-looking statements. These comments are based on our expectations as of today and are not guarantees of future performance. All forward-lo ...