A month has gone by since the last earnings report for Axon Enterprise (AXON) . Shares have lost about 15% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Axon due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.Axon's Q3 Earnings Miss Estimates & Revenues Beat, 2025 View ...

Core Viewpoint - Axon Enterprise reported strong Q2 2025 earnings and revenue, surpassing estimates, but the stock has underperformed the S&P 500 in the past month, raising questions about future performance leading up to the next earnings release [1][2][3]. Financial Performance - Adjusted earnings for Q2 2025 were $2.12 per share, exceeding the Zacks Consensus Estimate of $1.54, marking a 73.8% year-over-year increase [2]. - Total revenues reached $668.5 million, surpassing the consensus estimate of $643 million, and increased by 33% year over year, driven by strong demand for TASER 10, Axon Body 4, and counter-drone equipment [3]. Business Segment Performance - Connected Devices segment revenues increased by 28.6% year over year to $376.4 million, driven by demand for TASER 10 devices and Axon Body 4 [4]. - Software & Services segment revenues rose by 38.8% year over year to $292.2 million, supported by an increase in users and adoption of premium software offerings [5]. Margin Profile - Cost of sales increased by 34.4% year over year to $264.8 million, while total operating expenses climbed 48.6% year over year to $404.8 million [6]. - Adjusted gross margin improved slightly to 63.3% from 63.1% in the previous year [6]. Balance Sheet & Cash Flow - Cash and cash equivalents at the end of Q2 2025 were $615.5 million, up from $454.8 million at the end of 2024 [7]. - Adjusted free cash flow was negative $113.7 million in the first half of 2025, compared to negative $39.3 million in the prior-year period [8]. Outlook for 2025 - Axon expects revenues for 2025 to be between $2.65 billion and $2.73 billion, indicating approximately 29% year-over-year growth at the midpoint [9]. - Adjusted EBITDA is projected to be in the range of $665 million to $685 million, with capital expenditures expected between $170 million and $185 million [9][10]. Market Position - Estimates for Axon have trended downward over the past month, with a consensus estimate shift of 25% [11]. - Axon holds a Zacks Rank 3 (Hold), indicating an expectation of an in-line return in the coming months [13]. Industry Comparison - Axon is part of the Aerospace - Defense Equipment industry, where Hexcel (HXL) has seen a 6.3% gain over the past month, despite reporting a year-over-year revenue decline of 2.1% [14].

Core Insights - Axon Enterprise, Inc. reported strong second-quarter 2025 results with adjusted earnings of $2.12 per share, exceeding estimates by $0.58, and a year-over-year increase of 73.8% despite rising costs [2][11] - Total revenues reached $668.5 million, surpassing the consensus estimate of $643 million, marking a 33% year-over-year growth driven by demand for TASER 10, Axon Body 4, and counter-drone equipment [3][11] Business Segment Performance - **Connected Devices**: Revenues increased by 28.6% year over year to $376.4 million, driven by demand for TASER 10 devices and Axon Body 4. The adjusted gross margin decreased to 51.1% from 53.4% [5] - **Software & Services**: Revenues rose 38.8% year over year to $292.2 million, supported by an increase in users and premium software adoption. The adjusted gross margin improved to 78.9% from 76.6% [6] Margin Profile - Cost of sales increased by 11.3% year over year to $264.8 million, while total operating expenses climbed 8.1% to $404.8 million. The adjusted gross margin slightly increased to 63.3% from 63.1% [7] Balance Sheet & Cash Flow - As of the end of Q2 2025, cash and cash equivalents stood at $615.5 million, up from $454.8 million at the end of 2024. Long-term lease liabilities increased to $43.6 million [8] - The company reported a negative adjusted free cash flow of $113.7 million in the first half of 2025, compared to a positive $39.3 million in the prior-year period [9] Outlook for 2025 - Axon raised its revenue guidance for 2025 to a range of $2.65-$2.73 billion, indicating approximately 29% year-over-year growth. Adjusted EBITDA is expected to be between $665-$685 million, implying a margin of about 25% [12][11] - Capital expenditures are projected to be between $170 million and $185 million, focusing on R&D, capacity expansion, and new product development [13]