Axon Enterprise (AXON) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $604 million, up 31% year-over-year, marking the 13th consecutive quarter of 25%+ growth, driven by both Connected Devices and Software & Services segments.

• Net income was $88 million (14.6% margin), with non-GAAP net income at $115 million and Adjusted EBITDA at $155 million (25.7% margin); net income declined year-over-year due to higher stock-based compensation and debt-related expenses.

• Major product launches included Axon Vehicle Intelligence, Axon Outpost, Axon Lightpost, Axon Assistant, and rapid adoption of TASER 10 and Draft One, expanding the public safety technology portfolio.

• Segment realignment implemented, now reporting as Connected Devices and Software & Services, with strong growth in both segments.

• Hosted Axon Week 2025 with over 2,500 participants, highlighting new product launches and expanded partner ecosystem.

Financial highlights

• Software & Services revenue grew 39% year-over-year to $263 million, with adjusted gross margin rising to 77.7%.

• Connected Devices revenue rose 26% year-over-year to $341 million, with adjusted gross margin at 52.8%.

• Gross margin improved to 60.6%, up 440 basis points year-over-year; adjusted gross margin was 63.6%.

• Adjusted EBITDA increased 42% year-over-year to $155 million, with margin at 25.7%.

• Annual recurring revenue grew 34% year-over-year to $1.1 billion; net revenue retention was 123%.

Outlook and guidance

• Full-year 2025 revenue guidance raised to $2.60–$2.70 billion (27% growth at midpoint), with adjusted EBITDA guidance increased to $650–$675 million and a target margin of approximately 25%.

• 2025 CapEx expected at $160–$180 million, focused on R&D, capacity expansion, and new product development.

• Management expects to recognize 20–25% of $7.7 billion in remaining performance obligations over the next 12 months.

• Stock-based compensation expense for 2025 projected at $580–$630 million.

• Tariffs expected to impact adjusted EBITDA margin by ~50 basis points for the year.