You Should Give These 2 Wall Street Winners a Closer Look

Stocks largely took a breather on Wednesday, although that didn't stop the Nasdaq Composite (^IXIC 2.02%) from inching higher to post yet another day of gains. The S&P 500 (^GSPC 1.02%) also saw small gains, while the Dow Jones Industrial Average (^DJI 0.40%) was the sole loser among the most-followed indexes.

Data source: Yahoo! Finance.

Yet even on a quiet day, there were some outstanding results that caught investors' eyes. Axon Enterprise (AXON 0.65%) and Roblox (RBLX 1.35%) saw their shares move sharply higher after reporting solid financial results for the just-ended quarter. Those two companies have largely flown under the radar in 2023, but there are reasons to believe that their gains today could be the beginning of a longer move higher. Here's what you need to know.

Axon sees better times ahead

Shares of Axon Enterprise moved up 6% on Wednesday. The maker of Taser stun guns and a host of body cameras and similar products for law enforcement reported third-quarter financial results that encouraged shareholders to anticipate a brighter future.

Axon posted revenue of $414 million in the third quarter, up 33% year over year. Adjusted net income came in at $78 million, which worked out to earnings of $1.02 per share.

As has been the case lately, Axon's cloud software products were the primary contributors to revenue growth, as more customers subscribe for software bundles. Cloud and services revenue soared 55% from year-ago levels. New releases -- the Taser 10 and the Axon Body 4 camera -- also helped bolster results, along with new licenses for its Fleet vehicle cameras.

Investors liked the upbeat guidance that management gave, with the company boosting full-year sales projections by $20 million to $40 million to reach a new total of $1.55 billion. That would represent 30% annual growth, and Axon is confident that it will be able to sustain its upward momentum in 2024 and keep its business moving in the right direction.

Roblox builds a great business

Shares of Roblox did even better on Wednesday, closing the day up nearly 12%. The video game specialist's third-quarter financial results featured encouraging business metrics that made shareholders more confident than ever about its future.

Roblox saw revenue rise 38% year over year to $713 million, with bookings growing at a 20% annual rate. The company continued to lose money, but losses of $277 million worked out to $0.45 per share and were narrower than in the year-ago period.

Adjusted pre-tax operating earnings, however, kept growing, rising nearly 60% from the year-earlier quarter to $81 million. And free cash flow reversed year-earlier outflows, coming in at $59.5 million.

Roblox saw a 20% rise in daily active users to 70.2 million, and the number of paying customers on a monthly basis climbed 14% to 14.7 million. Hours engaged rose 20% to 16 billion. And the average bookings per paying customer rose 5% to $19.02, showing that efforts to monetize its customer base more effectively appear to be working.

Investors were pleased to hear that the company is working to expand its appeal to gamers of all ages while also incorporating new technology like artificial intelligence on its platform.

Moreover, with margins showing improvement and its Virginia-based data center largely completed, Roblox can look forward to better financial performance in the coming quarters. That's music to shareholders' ears, especially after they saw the stock fall sharply in September.