This Taser Maker’s Stock Falls 12% After Record Revenue. Here’s Why.

The taser maker’s revenue is growing fast. So are its costs. (Courtesy Axon)

Key Points

• Axon Enterprise declines sharply after reporting third-quarter adjusted earnings of $1.17 a share, missing analysts’ estimates of $1.52.
• Axon reports record revenue of $711 million, up 31% year over year.
• Axon records an operating loss of $2.2 million due to increased headcount and stock-based compensation.

Shares of Axon Enterprise plummeted Wednesday after the maker of tasers and software for law enforcement posted weaker-than-expected earnings even as it recorded record revenue.

Axon reported adjusted earnings of $1.17 a share for the third quarter, well below analysts’ consensus calls for $1.52. Revenue totaled $711 million, up 31% from last year and narrowly ahead of Wall Street’s call for $705 million. The figure marked a record high for Axon and a seventh consecutive quarter of revenue growth above 30%.

Axon stock was down 12% on Wednesday, putting the stock on pace for its largest single-day decline since Feb. 19.

While revenue keeps going up, so too do costs. Axon reported an operating loss of $2.2 million, down from a profit of $24.1 million last year. The loss was driven primarily by increased headcount and stock-based compensation expense, Axon said. The company has reported four straight quarters of operating losses.

Axon forecast fourth-quarter revenue of between $750 million and $755 million, representing approximately 31% year-over-year growth, which is in line with analysts’ expectations. Adjusted earnings before interest, taxes, depreciation, and amortization are expected to total $178 million to $182 million, below the $187 million Wall Street had anticipated.

The company is still making investments amid the rising costs, though. On Tuesday, Axon announced an agreement to acquire Carbyne, a privately held emergency communications platform. The deal values Carbyne at $625 million and is expected to close in the first quarter of 2026.

Write to Nate Wolf at nate.wolf@barrons.com