Axon's Q1 Earnings Top Estimates on Solid Software & Services Sales

Axon Enterprise, Inc. AXON reported first-quarter 2025 adjusted earnings of $1.41 per share, which surpassed the Zacks Consensus Estimate of $1.27. The bottom line surged 22.6% year over year despite a significant rise in the cost of sales.

Total revenues of $603.6 million surpassed the consensus estimate of $589 million and increased 31.3% year over year. The top line benefited from strong demand for TASER 10 and Axon Body 4. Growing demand for platform sensors also augmented the top-line results. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

AXON’s Q1 Business Segment Performance

Effective first-quarter 2025, AXON realigned its business segments. The company now reports results under two business segments, namely Connected Devices and Software & Services.

Connected Devices: The segment’s revenues jumped 26% year over year to $340.9 million, driven by growth in demand for TASER 10 devices and associated cartridges, and Axon Body 4 as well as growth in platform solutions. The adjusted gross margin decreased year over year to 52.8% from 54.1%.

Software & Services: The segment’s revenues rose 39% year over year to $262.7 million. The uptick was driven by an increase in the aggregate number of users and growing adoption of premium add-on features by existing customers. The adjusted gross margin increased to 77.7% from 76.1% in the year-ago period due to a higher software mix.

AXON’s Margin Profile

Axon’s cost of sales increased 18.2% year over year to $237.9 million. Selling, general and administrative expenses increased 48% year over year to $223.5 million.

Total operating expenses climbed 54.7% year over year to $374.5 million. The adjusted gross margin increased to 63.6% from 63.2% in the year-ago period.

AXON’s Balance Sheet & Cash Flow

At the end of first-quarter 2025, Axon had cash and cash equivalents of $1.09 billion compared with $454.8 million at December 2024-end. Long-term lease liabilities totaled $40 million compared with $41.4 million at 2024-end.

In the first three months of 2025, the company generated net cash of $25.8 million from operating activities against $15.9 million in cash spent in the previous year.

Adjusted free cash flow was $932 million in the first three months of 2025 compared with $32.1 million in the prior year.

AXON’s Outlook for 2025

For 2025, Axon expects revenues to be in the band of $2.60-$2.70 billion compared with $2.55-$2.65 billion anticipated earlier. The metric indicates approximately 27% year-over-year growth at the midpoint. Adjusted EBITDA is expected to be in the range of $650-$675 million, implying an adjusted EBITDA margin of about 25%.

The company expects capital expenditures to be between $160 million and $180 million. This includes investments in long-term research & development projects, continued capacity expansion, global facility build-outs and new product development. It anticipates stock-based compensation expenses to be in the range of $580-$630 million.

AXON’s Zacks Rank

The company currently carries a Zacks Rank #4 (Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

AZZ Inc. AZZ came out with quarterly earnings of $0.98 per share in the second quarter of fiscal 2025 (ended March 2025), beating the Zacks Consensus Estimate of $0.95. This compares with earnings of $0.93 per share a year ago.

AZZ reported revenues of $351.88 million, missing the consensus estimate by 3.77%. This compares with year-ago revenues of $366.5 million. 

Valmont Industries VMI reported revenues of $969.31 million in the first quarter of 2025, declining 0.9% on a year-over-year basis. Earnings per share of $4.32 for the same period compare with $4.32 a year ago.

The reported revenues compare with the Zacks Consensus Estimate of $975.6 million. The company delivered an earnings surprise of 1.89%, with the consensus estimate being $4.24 per share.

Pentair plc PNR came out with quarterly earnings of $1.11 per share in the first quarter of 2025, beating the Zacks Consensus Estimate of $1.01. This compares with earnings of $0.94 per share a year ago.

Pentair posted revenues of $1.01 billion for the quarter, surpassing the consensus estimate by 2.68%. This compares with year-ago revenues of $1.02 billion.

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

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