Axon earnings for Q4 topped analyst estimates on Tuesday afternoon, reviving Axon stock after the Taser maker suffered two analyst downgrades and a 30% sell-off over the prior week. Axon turned the tide with the largest deal in company history, 10 deals for its new generative AI product suite and a bold reassessment of its market opportunity.
While Axon has primarily served law enforcement customers, the megadeal announced is with a global logistics company, Axon President Joshua Isner said on the earnings call. The company will use Axon body cameras and its Fusus real-time crime center platform, which provides a unified display of video from Axon bodycams and other devices to manage a developing situation.
Axon Market Opportunity
Serving enterprise customers "is going to be a major, major part of our business, maybe even the biggest part of our business long term," Isner said.
Axon announced that its total addressable market has expanded to $129 billion. That reflects a bigger opportunity to sell to international governments; expanded product offerings to serve the enterprise safety market; and $17 billion from providing artificial intelligence solutions, including Draft One.
Axon said last year that its total market opportunity had expanded to $77 billion.
AI Era Deals
Axon launched its AI Era plan, providing a suite of artificial intelligence tools, in late October, charging $199 per officer per month. The centerpiece is Draft One, which converts audio from Axon body cams into the first draft of police reports. Another provides live translation in 100 languages using cloud-connected body cameras, allowing officers to communicate with non-English speakers. Axon has said that Draft One can save officers an hour a day in desk work.
CEO Rick Smith added that Axon is contemplating a new AI service "that would literally offload more than half of what their (state and local law enforcement) staff spends their time doing that they hate doing."
Axon Earnings
Estimates: Analysts expected Axon to post Q4 earnings per share of $1.40, up 25% from a year ago, according to the FactSet consensus. Sales were seen rising 31% to $566 million.
Results: Axon earnings per share surged 49% to $1.67, with growth accelerating for a second straight quarter. Sales climbed nearly 34% to $575.145 million
Axon said that future contracted bookings rose to $10.1 billion from $8.2 billion at the end of Q3.
Outlook: Axon's 2025 revenue outlook ranged from $2.55 billion to $2.65, or 25% growth at the midpoint. Analysts were forecasting $2.556 billion.
Axon also sees adjusted EBITDA of $640 million to $670 million.
Flock Safety
Northcoast Research analyst Keith Housum's downgrade, in addition to valuation, highlighted a falling out with Flock Safety, a "partner turned competitor."
Isner said that both sides have an interest in repairing the partnership and that Axon has proposed new terms for integrating Flock Safety's industry-leading fixed automated license plate reader (ALPR) technology with its Fusus real-time crime center platform.
Flock Safety has "been receptive," he said.
DOGE Effect On Axon?
Craig-Hallum's downgrade of Axon noted that Q1 is typically slow for new contracts. But the research firm added that Axon's fast-growing business serving federal government agencies could take a breather amid hiring freezes and spending cuts.
Axon said on the Nov. 7 Q3 call that four of the top 10 domestic deals in the quarter came from federal customers, highlighting the Department of Homeland Security, Internal Revenue Service and Amtrak.
Isner said he doesn't see "any real cause for concern about what's happening with the funding cuts and DOGE" for Axon, saying that federal law enforcement is "getting the bang for their buck."
Axon Stock
Axon stock rocketed nearly 16.2% to 577 in early Wednesday stock market action. That's still below the 50-day moving average, so not all the damage from the recent sell-off has been erased.
Axon stock's Feb. 18 breakout turned into a crash the next day. Still, even at Tuesday's low, Axon held above the level where it stood when it reported Q3 earnings, before surging 28.7% the next day.
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