Axon Enterprise (NASDAQ:AXON) Issues Quarterly Earnings Results, Misses Expectations By $0.17 EPS

Axon Enterprise (NASDAQ:AXON) posted its quarterly earnings results on Thursday. The biotechnology company reported $1.72 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $1.89 by ($0.17), FiscalAI reports. The business had revenue of $908.55 million during the quarter, compared to the consensus estimate of $934.33 million. Axon Enterprise had a return on equity of 2.84% and a net margin of 6.19%. The company’s quarterly revenue was up 27.8% compared to the same quarter last year. During the same quarter in the previous year, the business posted $1.17 earnings per share.

Here are the key takeaways from Axon Enterprise’s conference call:

• Axon reported Q3 revenue of $909 million, up 28%, with software and services revenue growing 43%, ARR rising 40% to $1.8 billion, and year-to-date bookings up more than 20%. Management said demand remains strong across its newer offerings and its $15.8 billion of future contracted bookings.
• Delays to three large federal Dedrone deployments put about $130 million of expected revenue at risk of slipping beyond year-end, prompting Axon to exclude them from Q4 guidance. The company cited procurement and deployment timing, while emphasizing that it views demand for the projects as intact.
• Axon lowered its full-year free cash flow outlook to $350 million–$400 million, from a prior target of $450 million, as it accelerated inventory purchases—including a more than $100 million increase in Q3. Management expects inventory investment to moderate in early 2027, but said cash conversion may not return to its 60% target until 2028.
• Axon announced a $1.2 billion investment in Skydio, bringing its fully diluted ownership to 37%, alongside exclusive U.S. and Canadian public-safety distribution rights. Management sees the partnership as a way to expand its connected public-safety ecosystem and participate in Skydio’s broader drone opportunity.
• Adjusted gross margin was 59.2%, with product mix and higher component costs weighing on results; memory costs are expected to remain a headwind through 2027 and 2028. Axon estimated memory costs would pressure margins by about 50 basis points this year and said operating leverage and software growth will be important offsets.

Axon Enterprise Stock Down 18.2%

AXON opened at $313.00 on Friday. Axon Enterprise has a 12 month low of $307.00 and a 12 month high of $665.07. The stock’s 50 day moving average price is $441.53 and its 200 day moving average price is $475.20. The company has a debt-to-equity ratio of 0.47, a current ratio of 2.15 and a quick ratio of 1.80. The stock has a market cap of $25.43 billion, a P/E ratio of 100.32, a P/E/G ratio of 8.09 and a beta of 1.48.

Key Stories Impacting Axon Enterprise

Here are the key news stories impacting Axon Enterprise this week:

• Positive Sentiment: Q3 revenue reached a record $909 million, up 28% year over year, while software and services revenue rose 43%. Axon also reported AI annual recurring revenue above $100 million, signaling continued demand for its software and AI offerings. Axon Q3 results
• Neutral Sentiment: Axon committed an additional $1.2 billion to drone maker Skydio, bringing its stake to 37% and making it Skydio’s exclusive public-safety distributor in the U.S. and Canada. The move could expand Axon’s Drone as First Responder business, but its scale also raises investment and execution risks. Reuters: Axon invests in Skydio
• Negative Sentiment: Q3 adjusted earnings of $1.72 per share and revenue of $908.55 million fell short of analyst expectations. Axon’s 2026 revenue forecast was reduced to $3.6 billion from a consensus of about $3.7 billion; its Q4 revenue guidance also came in below estimates. The company cited delays in federal counter-drone projects, while margin pressure added to concerns. Zacks: Q3 miss and outlook
• Negative Sentiment: Several analysts lowered price targets after the results, and Craig Hallum downgraded AXON from Buy to Hold, adding to pressure on investor sentiment. Benzinga: analyst forecast changes
• Negative Sentiment: A class-action lawsuit over Axon’s license-plate surveillance practices is a potential additional legal and reputational overhang. Class-action announcement

Analyst Upgrades and Downgrades

Several analysts have recently issued reports on AXON shares. Needham & Company LLC decreased their price target on Axon Enterprise from $750.00 to $500.00 and set a “buy” rating for the company in a research note on Friday. UBS Group increased their price objective on Axon Enterprise from $440.00 to $600.00 and gave the stock a “neutral” rating in a research note on Thursday, August 6th. Argus boosted their price objective on Axon Enterprise from $460.00 to $600.00 and gave the company a “buy” rating in a research report on Thursday, September 3rd. Northcoast Research boosted their price objective on Axon Enterprise from $650.00 to $680.00 and gave the company a “buy” rating in a research report on Tuesday, August 11th. Finally, The Goldman Sachs Group decreased their price objective on Axon Enterprise from $715.00 to $675.00 and set a “buy” rating for the company in a report on Monday, September 21st. Thirteen research analysts have rated the stock with a Buy rating and four have given a Hold rating to the company’s stock. According to MarketBeat, Axon Enterprise currently has an average rating of “Moderate Buy” and an average price target of $631.35.

Insider Buying and Selling

In other Axon Enterprise news, President Joshua Isner sold 16,775 shares of the business’s stock in a transaction on Monday, August 31st. The shares were sold at an average price of $574.43, for a total transaction of $9,636,063.25. Following the sale, the president owned 296,974 shares of the company’s stock, valued at approximately $170,590,774.82. The trade was a 5.35% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Jeffrey C. Kunins sold 9,605 shares of the business’s stock in a transaction that occurred on Friday, August 21st. The stock was sold at an average price of $626.70, for a total value of $6,019,453.50. Following the completion of the transaction, the insider owned 97,761 shares in the company, valued at $61,266,818.70. The trade was a 8.95% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 37,397 shares of company stock valued at $21,234,034 in the last ninety days. Insiders own 4.20% of the company’s stock.

About Axon Enterprise

Axon Enterprise develops technology and services for public safety agencies. Its products include TASER conducted-energy weapons, body-worn and in-car cameras, and related hardware designed to support law enforcement and other safety professionals.

The company also provides cloud-based software for managing digital evidence, records and operational workflows. Its Axon Evidence platform helps agencies store, organize and share video and other evidence, while its broader software offerings include tools for dispatch and records management.

Founded in 1993 as TASER International, the company adopted the name Axon Enterprise in 2017 as it expanded beyond conducted-energy weapons into connected devices and software.