What happened

Shares of Axon Enterprise (NASDAQ:AAXN) climbed 44.3% in November, according to data provided by S&P Global Market Intelligence, after the maker of tasers and other equipment for law enforcement reported better-than-expected third-quarter earnings. The company showed strong progress in getting customers to sign up for its subscription-based services, reinforcing investor hopes that Axon will remain a growth stock.

So what

Axon shares remained strong throughout the month, but the lion's share of the gains came on Nov. 8 after the company reported third-quarter adjusted earnings of $0.28 per share on revenue of $131 million, beating the consensus estimate of $0.26 per share in earnings on sales of $122 million. Revenue was up 35% year over year, and the company raised its full-year revenue guidance by $15 million to $500 million to $510 million.

Two police officers with body cameras talk to a civilian.

Axon body cameras in use. Image source: Axon Enterprise.

Axon is best known for its tasers, but the business that drove the growth -- and the market's reaction -- is the company's push to offer a package of body cameras, cloud storage, records management, and other subscription-based services. Cloud sales grew by 42% in the quarter, and the business generated gross margin of 75.8%.

"We continue to make substantial progress driving long-term subscriptions," CEO Rick Smith and his management team wrote in a post-earnings letter to shareholders. "Customers have been rapidly adopting our best-value plans to gain access to more of the Axon network, building upon our historical strength with taser device and body camera solution subscriptions."

Now what

The bull case for Axon for some time now has been that the company is the ideal one-stop solution for police departments facing demands for greater accountability. These latest results are evidence that the platform is gaining acceptance from law enforcement customers.

Axon appears to have a bright future and the potential to benefit long-term shareholders, but be warned that we could see some volatility in the near term. Following the November jump, Axon now trades at 58 times forward earnings expectations and 9 times sales. The next few quarters will have to be nearly perfect to avoid some of the recent momentum reversing and sending some investors for the exits.