AXON Q4 FY25 Earnings Review — GauchoRico

Original print date: 2026-02-24 | Refreshed: 2026-04-28 (post Axon Week + ~33% drawdown) Verdict at print: Holy smokes!! Revenue reaccel to 39%. Best quarter in 12+ quarters. Verdict today: Thesis intact and arguably strengthened. Stock down ~33% since print (~700→ 403) on multiple compression, not bad news. This is a fat pitch for LEAPS.

The Headline (Unchanged Since Feb)

797MinQ4FY25revenue. * *38.5750-755M), strongest beat in recent memory. FY25 closed at 2, 779M(+33.595M (vs 69MQ3, endingafour − quarterdeceleration).NRRhit * *1253.0B sequentially to $14.4B** — that is the largest single-quarter contracted bookings add in Axon history.

Management dropped a credible 2028 target: **6Brevenue, 282B / 25% by 2025) was beaten on both axes ($2.8B / 25.5%). I trust them.

What's Changed Since the Print (Feb → Apr 2026)

This is the part that matters now. When I wrote my Feb 25 review I said: "I'd add on any meaningful pullback (10%+). The LEAPS opportunity would be compelling if we get a broad market dip that takes AXON back to $350-400 range."

We are there.

Event Date Detail
Axon Week 2026 Apr 7-10 Delivered the "transformative" AI roadmap I was watching for. Three product launches:
— Axon Vision Apr 7 Real-time AI on live video; ALPR / object-detection native to the Axon ecosystem. Direct counter to Flock Safety.
— Axon Assistant (expanded) Apr 7 CJIS-compliant, ecosystem-wide, BOLO and case-research workflows. ~500 customers in year one.
— Axon 911 Apr 7 Cloud-native EOC infrastructure. Carbyne integration shipping.
TD Cowen Apr 15 Reiterated **Buy, 825PT * *(current 403). Average analyst PT $758 across 16 analysts.
Stock action 90 days Down ~33% from print. Off 54% from $886 52-week high. No company-specific bad news during the window — bookings, ARR, NRR all improved over this period.
Multiple Apr-28 EV/TTM Rev ~11.7x vs 14x at print, ~21x a year ago. FY26 EV/Rev ~9x.

The 33% drawdown coincides with the broader high-multiple growth de-rate. AXON's fundamentals are better today than they were when the stock was 50% higher. That is the textbook setup I look for.

Revenue & Growth Dashboard (12-Quarter View)

Quarter Revenue ($M) YoY % QoQ % Adj GM % Adj EBITDA % FCF ($M) ARR ($M) Net New ARR ($M) NRR %
Q1 FY23 343 33.8 2.1 59.5 18.9 -60 551 48 121
Q2 FY23 375 31.2 9.2 62.0 21.8 34 590 39 122
Q3 FY23 414 32.6 10.4 61.7 22.1 53 652 62 122
Q4 FY23 432 28.6 4.5 — 21.1 116 732 80 122
Q1 FY24 461 34.3 6.6 63.2 23.6 -32 825 93 122
Q2 FY24 504 34.6 9.4 62.5 24.5 75 850 25 122
Q3 FY24 544 31.6 8.0 63.2 26.7 68 885 35 123
Q4 FY24 575 33.1 5.7 63.2 24.6 225 1,001 116 123
Q1 FY25 604 31.0 5.0 63.6 25.7 1 1,104 103 123
Q2 FY25 669 32.6 10.8 63.3 25.7 111 1,183 79 124
Q3 FY25 711 30.6 6.3 62.7 24.9 33 1,252 69 124
Q4 FY25 797 38.5 12.1 61.1 25.9 155 1,347 95 125

FCB: Q4 FY23 $7.1B → Q4 FY24 $10.1B → Q3 FY25 $11.4B → Q4 FY25 $14.4B. Annual bookings $7.4B (+46% YoY).

Six-Factor Assessment (Updated for Apr 28)

Factor Rating Detail
Growth PASS Q4 +38.5%; FY25 +33.5%. FY26 guide 27-30% ceiling — but pattern says actual ~32-33%.
Trajectory RE-ACCELERATING 31→33→31→39%. ARR net new $69M → 95Mreversal.FCB+3.0B sequential.
Gross Margins MID (61% adj) The structural concern. GAAP 57.9% (first sub-60 since FY20). Driven by tariffs + Platform Solutions mix + hardware-heavy revenue mix. S&S adj GM still 76.7%.
Dominance STRONG ~80%+ share US LE body cams. TASER virtually unchallenged. 125% NRR. Six revenue vectors expanding. Axon Vision now competes natively in ALPR.
Valuation FAIR (was RICH) EV/TTM Rev 11.7x vs 14x at print, 21x a year ago. FY26 EV/Rev ~9x. Rule of 40 = ~59. Margin of safety improved meaningfully.
Special Circumstances PRESENT (1) 2028 targets credible; (2) Axon Week launches delivered; (3) 33% drawdown without thesis break; (4) LEAPS setup.

This is now five factors firing strong with one yellow flag (gross margin). At 14x EV/Rev I called valuation "rich." At 11.7x with the same trajectory and stronger leading indicators, I call it fair.

Decision-Spec Rules That Apply

Per references/decision-spec.md:

  1. "Fat pitch" dip rule. Dominant company + intact thesis + 25%+ drawdown without fundamental change = LEAPS-eligible setup. AXON checks all three: dominant, thesis intact (Axon Week confirmed), 33% drawdown on multiple compression alone.
  2. Trajectory rule. Re-acceleration combined with leading-indicator strength (FCB, NRR, net new ARR reversal) is among the highest-quality buy signals in the framework.
  3. Concentration rule. Already at 14.6% (12.04% shares + 2.56% LEAPS). Top-tier conviction position. Adding LEAPS at this level is consistent with prior pattern (CRM 2017 dip, NVDA 2022 dip).

Prior Beliefs / Updated Beliefs

Belief Going Into Print Going Into Today Verdict
Q4 revenue beat magnitude $760-770M (5% beat pattern) $797M (+5.9% beat) Confirmed
ARR reversal sustainable Watch Q1 FY26 for $90M+ Q4 reversed to $95M; Q1 TBD May 2026 Pending
Gross margin trough Hope 61% is floor Q4 61.1% adj — wait for Q1 reading Watching
FY26 guide bias Conservative ~32-33% actual Pattern intact; raise expected Confirmed direction
Axon Week deliverables "Transformative" AI capabilities Delivered (Vision, Assistant, 911) Confirmed
Stock at fair entry $350-400 = LEAPS-compelling $403 today Triggered

What I'm Watching For Q1 FY26 (May 2026)

  1. Net new ARR ≥ $80M. Confirms the Q4 reversal wasn't seasonal. $80M+ is the bar; $90M+ is conviction-strengthening.
  2. Adj gross margin ≥ 61%. If we see 61.5%+, the tariff hit is digesting. If we drift to 60%, structural concern intensifies.
  3. FY26 guide raise. Pattern says they raise from 27-30% to 28-31% or 29-31%. Anything less is a yellow flag.
  4. Axon Vision attach data. First quarter with the product available. Even directional commentary on customer interest matters.
  5. Axon 911 first reportable revenue line. Carbyne closed Q1 FY26 — watch for ARR/customer count contribution.
  6. SBC tracking. Q4 was $209M (26.2% of revenue, incl. $24M severance). FY26 guide $590-620M = ~17% of revenue. Q1 reading is the credibility check.

Action

Strengthening to top conviction. Adding LEAPS at current levels (~$403).

I'm increasing my LEAPS allocation in the 2.5-3.5% range. The setup is exactly the pattern I look for: dominant company, intact thesis (in fact strengthened by Axon Week), and a 33% drawdown driven by multiple compression rather than fundamental deterioration. EV/TTM Rev at 11.7x for a company growing 33%+ with a credible $6B 2028 target is the kind of asymmetric setup that pays for the discipline of waiting.

Not adding to the share position yet — already 12.04% and well-sized. The LEAPS are the leveraged expression of conviction here.

Position target after add: ~17% (12% shares + ~5% LEAPS).

The FY26 guide of 27-30% is the only nuance I'd flag — it's the first time 30% is the ceiling and not the floor. The historical pattern (5-6% beats annually for three years) says actual will be 32-33%. If they deliver and Axon Vision starts attaching, we re-rate. If gross margins compress further or ARR adds slip, I trim back to the original 14.6% and the LEAPS expire worthless.

The risk-reward here is what I get paid to spot.

We will see what happens...

GR

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