Axon

Axon just posted 807 million dollars in revenue, up 34 percent and marking nine straight quarters of 30 percent plus growth. Software and services jumped 35 percent, annual recurring revenue hit 1.5 billion dollars, and existing customers spent 25 percent more than last year. Management raised full-year guidance to 30 to 32 percent growth.

AI products grew over 700 percent year over year, and counter-drone revenue tripled. New tools like Axon Vision and Axon Guardian use cameras to spot fights, medical emergencies, and threats before officers even call for help. The recently passed Safer Skies Act adds 250 million dollars in federal grants for drone defense, a market Axon already leads.

Gross margins dropped 150 basis points year over year to 59.1 percent, hit by global tariffs and heavy investment in the new Dedrone business. Operating cash flow swung to a 32 million dollar outflow this quarter from a 26 million dollar inflow last year, as Axon stockpiled inventory to keep up with drone demand.

With a 31 billion dollar market cap and just 4.5 percent net margins on a trailing basis, the stock leaves zero room for error. Stock-based compensation alone ran 135 million dollars this quarter, eating into real profits. Any slowdown in police budgets or AI adoption could trigger a sharp correction.