Should You Buy the Post-Earnings Dip in Axon Stock or Stay Far, Far Away?

Axon Enterprise's (AXON) banal cratered 9.4% connected Wednesday, marking the stock's worst single-day diminution since mid-February, aft the shaper of Tasers and instrumentality enforcement bundle severely missed nett expectations contempt posting grounds quarterly revenue. AXON banal has dropped different 8% during today's trading session.

In Q3 of 2025, Axon reported adjusted net per stock of $1.17, beneath estimates of $1.52. The net miss was attributed to tariff pressures, which squeezed margins amid rising operating expenses. However, gross roseate 31% to $711 million, supra estimates of $705 million. Notably, it was the seventh consecutive 4th wherever gross maturation exceeded 30%.

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The net miss was besides tied to borderline compression successful Axon's connected devices business, which includes Tasers and counter-drone equipment. Adjusted gross margins contracted 50 ground points to 62.7% arsenic tariffs impacted the hardware-heavy conception that generated implicit $405 cardinal successful quarterly revenue.

Additionally, Axon swung to an operating nonaccomplishment of $2.2 cardinal successful Q3, compared to a nett of $24.1 cardinal successful the year-ago period, driven by assertive hiring and stock-based compensation expenses arsenic the institution invests heavy successful aboriginal growth.

It was Axon’s 4th consecutive 4th of operating losses contempt surging top-line momentum. The institution raised its full-year gross guidance to $2.74 billion, portion the midpoint of its adjusted EBITDA guidance for Q4 stood astatine $180 million, which is beneath the statement estimation of $187 million.

The nationalist information exertion person continues to grow beyond its halfway Taser and assemblage camera offerings into a broad level spanning drones, real-time operations, and artificial quality (AI) capabilities.

The company's bundle and services concern remains the superior maturation driver, surging 41% to $305 cardinal with yearly recurring gross reaching $1.3 cardinal and a nett gross retention complaint of 124%.

Connected devices gross grew 24% to $405 million, driven by the adoption of Taser 10, assemblage camera upgrades, and level solutions, including counter-drone technology. The AI Era Plan, launched successful October 2024, has already generated implicit $200 cardinal successful bookings this year, with absorption expecting AI to lend much than 10% of U.S. authorities and section bookings for the afloat year.