01—Abstract
Summary
Summary of the 10-Q filed November 5, 2025. Cited figures are marked; the original filing is the authoritative source.
Axon Enterprise, Inc. (AXON) reported its financial results for the period ending September 30, 2025.
The company experienced a significant increase in net sales, up 30.6% year-over-year for the third quarter, reaching $710.6 milliona. This growth was driven by strong performance in both its Connected Devices segment (up 23.6%) and its Software and Services segment (up 41.1%). However, the company reported a net loss of $2.2 million for the quarter, a reversal from the $67.0 million net income in the prior year period.
This shift was influenced by increased operating expenses, particularly in Research & Development and Selling, General & Administrative, and a higher effective tax rate, partly due to the enactment of the 'One Big Beautiful Bill Act' (OBBBA) impacting R&D tax credits. Despite the quarterly net loss, the year-to-date (nine months ended September 30, 2025) performance shows a net income of $121.9 millionb, albeit lower than the $241.9 million in the same period last year.
The company's balance sheet reflects a robust increase in cash and cash equivalents to $1.4 billionc from $454.8 million, supported by strong financing activities including the issuance of $1.75 billion in Senior Notes and proceeds from an at-the-market equity offering. Management believes current liquidity sources are sufficient to meet anticipated cash requirements for at least the next 12 months.
02—Key points
Key Highlights
- Net sales grew by 30.6% to $710.6 million in Q3 2025 compared to Q3 2024, driven by strong performance in both Connected Devices and Software & Services segments.
- The company reported a net loss of $2.2 million for Q3 2025, a significant change from a net income of $67.0 million in Q3 2024, primarily due to increased operating expenses and a higher effective tax rate.
- Total assets increased to $6.66 billion from $4.47 billion year-over-year, with a substantial rise in cash and cash equivalents ($1.42 billion) and short-term investments ($952.8 million).
- Long-term debt increased significantly due to the issuance of $1.75 billion in Senior Notes in March 2025.
- Operating expenses, specifically Selling, General & Administrative and Research & Development, increased substantially year-over-year, reflecting investments in headcount and stock-based compensation.
- Remaining performance obligations (backlog) stood at approximately $8.1 billion as of September 30, 2025, indicating strong future revenue potential.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q3 FY2025, Axon Enterprise, Inc. lost $0.00.
- Revenue$710.6M100.0%
- Cost of revenue−$283.3M39.9%
- Gross profit$427.3M60.1%
- Operating costs−$429.5M60.4%
- Operating income−$2.1M0.3%
- Interest, other & tax−$57,0000.0%
- Net income−$2.2M0.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed November 5, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $710.64M$544.27M | +30.6% |
| Cost of Revenue | $283.29M$213.53M | +32.7% |
| Gross Profit | $427.35M$330.75M | +29.2% |
| R&D Expenses | $176.67M$114.48M | +54.3% |
| SG&A Expenses | $252.80M$192.19M | +31.5% |
| Operating Expenses | $429.48M$306.67M | +40.0% |
| Operating Income | -$2.13M$24.08M | −108.8% |
| Net Income | -$2.19M$67.03M | −103.3% |
| EPS (Basic) | $-0.03$0.89 | −103.4% |
| EPS (Diluted) | $-0.03$0.86 | −103.5% |
| Shares Outstanding (Basic) | 78.42M75.70M | +3.6% |
| Shares Outstanding (Diluted) | 78.42M78.08M | +0.4% |
05—Questions
Frequently Asked Questions
What is the primary driver behind the net loss in the third quarter of 2025?
The net loss of $2.2 million in the third quarter of 2025, compared to a net income in the prior year, was primarily driven by an increase in operating expenses, particularly in Selling, General & Administrative and Research & Development. Additionally, a higher effective tax rate, influenced by legislative changes affecting R&D tax credits, also contributed to the loss.
How has the company's debt structure changed recently?
Axon issued $1.0 billion in Senior Notes due 2030 and $750.0 million in Senior Notes due 2033 in March 2025, totaling $1.75 billion in new long-term debt. This significantly increased the company's long-term liabilities compared to the prior year.
What is the company's current liquidity position?
The company's liquidity has significantly improved. Cash and cash equivalents increased to $1.42 billion as of September 30, 2025, from $454.8 million at the end of 2024. This, along with short-term investments of $952.8 million, provides a strong cash position. Management expects these sources to be sufficient for at least the next 12 months.
How does the company's backlog look, and what does it imply for future revenue?
Axon reported approximately $8.1 billion in remaining performance obligations as of September 30, 2025. This substantial backlog represents contracted revenue that is expected to be recognized over the next several years, with approximately 20%-25% anticipated within the next 12 months, indicating strong visibility for future revenue.
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