Key Points
- Revenue jumped 34.6% year over year, exceeding management's expectations.
- Axon’s Real-Time Operations portfolio grew more than 100% year over year.
- Management raised full-year revenue guidance on indications of growing demand for its products and services.
Axon Enterprise (AXON -2.06%), the maker of TASER devices and a provider of technology solutions for public safety, reported second-quarter earnings Tuesday with strong growth across several financial metrics.
Revenue of $504 million was up 35% year over year surpassing management's expectations. Net income jumped 230% year over year to $41 million and net income margin now sits at 8.1%, up from 3.3% in the previous year.
The strong financials encouraged Axon to update its full-year revenue guidance to $2 billion to $2.05 billion, reflecting confidence in its growth trajectory.
| Metric | Q2 2024 | Q2 2023 | Change (YOY) |
|---|---|---|---|
| Revenue | $504 million | $374.6 million | 35% |
| Net Income | $40.8 million | $12.4 million | 230% |
| Adjusted EBITDA | $123 million | $81.6 million | 51% |
| Axon Cloud & Services Revenue | $194.7 million | $132.6 million | 47% |
Source: Axon Enterprise. YOY = Year over year. EBITDA = earnings before interest, taxes, depreciation, and amortization.
Overview of Axon Enterprise
Axon Enterprise develops technology solutions for law enforcement, military, and civilians, develops advanced software solutions for multiple entities, and maintains its well-known TASER brand of devices.
Axon is focused on growing its recurring revenue from its cloud-based software offerings and expanding its market presence internationally. The company saw significant growth in its Axon Cloud & Services segment, along with increased demand for its TASER devices.
Quarterly Highlights
During the quarter, several key metrics illustrated Axon's performance:
Axon Cloud & Services revenue grew by 47% year over year, reaching $195 million. This area remains a crucial driver of growth, supported by the company's Axon Evidence software and other productivity solutions.
TASER revenue increased by 28% year over year to $197 million. The company noted that TASER 10, a recent product launch, has gained substantial market traction, with over 100,000 units in the field.
International revenue saw a 49% year-over-year growth, reflecting successful expansion into new markets.
Axon’s Real-Time Operations portfolio grew more than 100% year over year, indicating a strong demand for integrated safety solutions.
Through it all, operational efficiency drove operational leverage. Despite a slight decline in gross margins due to increased stock-based compensation and amortization of acquired intangibles, non-GAAP adjusted gross margins remained relatively stable.
The year-over-year decline in gross margin from 62% to 60.3% indicated higher operational costs. However, adjusted gross margins held at 62.5%, showcasing Axon's capability to manage costs effectively while sustaining growth. Additionally, the company saw an operating profit of $33 million, down from $40 million in Q2 2023, reflecting increased investment in growth initiatives.
Looking Ahead
Axon raised its full-year 2024 revenue outlook to $2 billion to $2.05 billion, up from the previous guidance of $1.94 billion to $1.99 billion. The updated guidance suggests an annual growth rate of approximately 29.5% at the midpoint. This optimism stems from continued strong demand for Axon’s integrated public safety solutions and international expansion.
The company’s guidance for Adjusted EBITDA rose to $460 million to $475 million, up from the previously projected $430 million to $445 million. However, Axon anticipates higher stock-based compensation expenses, now expected to range between $355 million to $370 million for the full year, reflecting new equity incentive programs.
Investors should watch for the continuation of revenue growth from Axon Cloud & Services, international market penetration, and the scaling of new products like TASER 10. Additionally, operating expense management and gross margin trends will be critical indicators of the company's ability to sustain its growth trajectory.
