AXON's Software & Services Growth Picks Up: Can the Momentum Sustain?

Axon Enterprise, Inc. AXON has been benefiting from persistent strength in its Software & Services segment, supported by growth in the aggregate number of users to the Axon network. Revenues from the segment increased 39.6% year over year in the first nine months of 2025. Solid momentum in digital evidence management and increased demand for premium add-on features are driving the segment’s growth.

Adoption of premium subscription plans continues to be strong as more customers recognize the value of enhanced capabilities. Existing customers are consistently returning to purchase additional services, reflecting strong customer retention and satisfaction. This ongoing expansion supports a growing base of annual recurring revenues (ARR). In addition, solid demand for TASER devices, virtual reality training services and counter-drone equipment augurs well for the company’s growth.

Growing instances of terrorism and criminal activities, with concerns related to the ever-increasing fraudulent activities, will augur well for Axon’s products in the quarters ahead. Driven by its business strength, Axon raised its financial guidance for 2025. AXON currently expects revenues to be approximately $2.74 billion compared with $2.65-$2.73 billion expected earlier. The guidance indicates growth of approximately 31% on a year-over-year basis.

Segment Performance of AXON's Peers

Among its major peers, Teledyne Technologies Incorporated’s TDY Digital Imaging segment’s third-quarter 2025 revenues increased 2.2% year over year to $785.4 million. The jump was due to higher sales of commercial infrared imaging components and subsystems, unmanned air systems and industrial automation imaging systems. Teledyne generated 51% of its total revenues from this segment in the quarter.

Its another peer, Woodward, Inc.’s WWD Industrial business segment reported net sales of $334 million in the fourth quarter of fiscal 2025, up 10.6% year over year. Woodward generated 33.6% of its total sales from this segment in the quarter. The increase in revenues for Woodward’s segment is primarily attributable to strength across power generation and oil & gas markets.

AXON’s Price Performance, Valuation and Estimates

Shares of Axon have lost 16% in the past year against the industry’s growth of 13.9%.

From a valuation standpoint, AXON is trading at a forward price-to-earnings ratio of 70.1X, above the industry’s average of 43.4X. Axon carries a Value Score of F.

The Zacks Consensus Estimate for AXON’s 2025 earnings has decreased 8.1% over the past 30 days.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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