Axon stock vaulted past a buy point to a record high Friday after the maker of Tasers, body cameras and cloud-based evidence systems blew away Q3 forecasts late Thursday with a surprise increase.
A 400% surge in federal law enforcement bookings to $38 million in the quarter highlighted the results. That included a U.S. Customs and Border Protection order worth $13 million for body cameras and digital evidence management.
Axon Enterprise said it signed its largest-ever Taser contract, valued at $15.5 million, with the Department of Homeland Security. The company also inked its first contract with the Department of Defense for body cameras and evidence management.
Axon Earnings
Estimates: Analysts expected third-quarter EPS to slip 28.6% from a year ago to 20 cents. Revenue was seen growing 15% to $150.34 million, according to Zack's Investment Research.
Results: Axon earned 40 cents per share, up 43% from a year ago. Revenue grew 27% to $166.4 million.
Outlook: Axon expects Q4 revenue of $175 million to $185 million. Analysts were expecting $175 million. The company also 2021 revenue guidance of $720 million to $750 million. Analysts were expecting $709.5 million.
Axon said it expects adjusted EBITDA of $122 million to $127 million in 2020 and $127 million to $130 million in 2021.
AAXN Stock
On Friday, shares rocketed 13% to close at 122.59, following the Thursday afternoon earnings report. AAXN stock cleared a 113.10 buy point in a pattern resembling a high-handle on wide cup.
Friday's surge also took shares past a 5% chase zone that runs through 118.76. Buying beyond that zone creates a higher risk of failure.
AAXN stock saw its relative strength line, the blue line in IBD charts that tracks its performance vs. the S&P 500, also hit an all-time high. The prior peak came in early June, when Axon stock surged amid national protests over the May 25 death of George Floyd under the knee of a Minneapolis police officer.
Axon Police Reform Opportunity
Axon earnings could be negatively affected by stressed government budgets, if they impede purchases by police departments. However, Axon said it's not seeing any negative impact from "police defunding concerns" and noted some "acceleration of body camera buying decisions due to agencies wishing to provide transparency to their communities."
William Blair analyst Jonathan Ho wrote in an Aug. 26 note that Axon's technology can play a "vital role in public safety evolution."
In an Aug. 6 letter to shareholder, Axon CEO Rick Smith wrote, "We believe we will look back on 2020 as a time that set in motion the next wave of policing reform."
He added, "Technology is not a panacea but it can have an outsized impact on creating a world where everyone feels safer in their neighborhoods, and gets home safely at the end of the day."
The Axon Body 3 camera automatically begins capturing video when the Taser is removed from the holster. Axon also recently released an app to provide livestreaming of video. That can aid situational awareness of officers coming to provide support.
Axon is now developing software that will enable "better data collection, accountability, investigation and compliance for force events, and helps agencies to better document, analyze and report on force incidents."
