Shares of Axon Enterprise (AXON 3.51%) were surging today after the law enforcement technology company delivered a strong fourth-quarter earnings report, easily beating estimates.
The company also announced a target of $6 billion in revenue by 2028. Coming after a sharp sell-off in recent weeks over concerns about AI disruption in software, the results showed the business is as strong as ever despite the weak investor sentiment.
As of 12:08 p.m. ET, the stock was up 17.3% on the news.
Image source: Axon.
Axon delivers a blowout quarter
Axon, which makes the TASER electrical weapon, reported a 39% increase in revenue to $797 million, which was well ahead of the consensus at $755.3 million. The company credited premium software adoption, TASER 10, Axon Body 4, and counter-drone equipment for the strong results.
Growth was paced by both of its business segments as connected devices revenue rose 37.6% to $454.2 million, and software and services revenue was up 39.8% to $342.5 million.
On the bottom line, adjusted earnings before interest, depreciation, and amortization (EBITDA) rose 46% to $206 million, and adjusted earnings per share increased from $2.08 to $2.15, which was well ahead of estimates at $1.60.
CEO Rick Smith asserted the central importance of AI to the company, saying, "Here's my conviction: nobody should be more aggressive or thoughtful on AI than Axon. If we get that balance right, we won't just be a vendor, we'll be the partner our customers can't imagine operating without."
NASDAQ: AXON
Key Data Points
What's next for Axon
Axon seemed to reassure investors worried after the recent sell-off with its new goal of $6 billion in annual revenue in 2028, implying revenue growth of roughly 30% annually over the next three years, and adjusted EBITDA margins of 28%.
For 2026, it called for revenue growth of 27%-30%, and an adjusted EBITDA margin of 25.5%.
Axon continues to fire on all cylinders, and while the software stock still looks expensive even after the recent sell-off, the business has proven that it deserves a premium.
