Here's Why You Should Hold Axon Enterprise Stock in Your Portfolio
$Axon Enterprise, Inc.(AXON)$ has been experiencing strength in its TASER segment, driven by higher orders for devices and cartridge products. Stable demand for virtual reality training services also supports the segment’s growth. In 2023, the company launched its next-generation energy device, TASER 10, shipment of which began earlier this year. The strong customer response is contributing to the growth of the TASER segment.
An increase in the aggregate number of users and average revenue per user, driven by the increased adoption of software applications, is also driving the Software & Sensors segment. In the second quarter of 2024, revenues from TASER and Software & Sensors segments increased 27.6% and 46.8%, respectively, on a year-over-year basis.
Driven by strength across its businesses, AXON provided bullish guidance for 2024. It expects to generate revenues in the range of $2.00-$2.05 billion, indicating growth of 29.5% at the midpoint on a year-over-year basis.
Management remains focused on acquiring businesses to gain access to new customers, regions and product lines. The company’s acquisition of Sky-Hero (July 2023) expanded its Axon Air portfolio, which consists of the drone software and hardware portfolio. Also, in January 2024, it acquired Fusus, a leader in real-time crime center technology. The combination of Fusus’ real-time situational awareness expertise with Axon’s public safety technology is likely to enable the latter to boost its product portfolio.
AXON Stock's Price Performance
Over the past year, the company’s shares have risen 69.5% compared with the industry’s 25.7% growth.
However, escalating costs and expenses have remained a concern for Axon over the past few quarters. In 2023, the company’s cost of sales soared 31.8% year over year. Also, in the first six months of 2024, the metric climbed 42.5%. The metric, as a percentage of sales, was 41.6%, up 240 basis points year over year. The company incurred high costs and expenses related to business integration activities, an increase in headcount and higher wages.
The increase in operating expenses has been adversely impacting the company’s margins. In the first six months of 2024, the gross margin declined 240 basis points year over year.
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