What happened
Shares of Axon Enterprise (AXON 0.65%), the maker of Taser stun guns and body cameras, were climbing last month as the tech company posted strong results in its second-quarter earnings report.
According to data from S&P Global Market Intelligence, the stock finished August up 15%.
As you can see from the chart below, nearly all of the stock's gains came when the earnings report came out on Aug. 8.
So what
Axon delivered another round of strong results as its software business continues to pick up steam.
Revenue in the quarter rose 31% to $374.6 million, well ahead of estimates of $350.5 million.
Axon Cloud & Services is now nearly the company's biggest segment as its revenue grew 62.4% to $132.6 million due to demand for its premium Officer Safety Plan-integrated bundles. Digital evidence, meanwhile, continues to be the primary driver for growth in the high-margin software business. Net revenue retention increased 122% in the quarter, meaning existing customers increased their spending on Axon Cloud by 22% over the last four quarters.
Outside of Axon Cloud, growth was also strong with revenue in the sensors and other segment up 28.1% to $87.5 million. At Taser, its largest segment, revenue increased 13.9% to $154.4 million.
Axon also delivered strong results on the bottom line with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $82 million. Adjusted earnings per share ticked up from $0.88 to $1.11, which was well ahead of the consensus at $0.62.
Even as the company executes on new products like Taser 10 and Axon Body 4, its latest body camera, it maintained strong margins.
The stock jumped 14% on the report on Aug. 9, and Wall Street cheered the numbers, with Needham adding the stock to its conviction buy list, saying that new products would lead to revenue growth topping current expectations.
Now what
The company raised its full-year revenue outlook to a range of $1.51 billion to $1.53 billion, or 27% to 29% growth, up from a previous range of $1.44 billion to $1.46 billion. The increase came from improving confidence in demand for the Taser 10 and Axon Body 4.
The company continues to expect an adjusted EBITDA margin of 20%, but margins should expand next year as its new products mature.
Axon has been a long-term outperformer and after a strong beat on the top and bottom lines and a revenue guidance raise, it's not surprising to see the stock jumping last month.
