Axon Enterprise, the Taser maker, released its first-quarter earnings report on Wednesday. The report revealed that earnings and sales beat Wall Street estimates, and the company increased its 2023 guidance. Despite this positive news, gross margins in the quarter declined, causing the stock to plummet.
What are Axon’s Q1 earnings?
Axon Enterprise reported first-quarter earnings of $0.35 per share, which beat the Wall Street consensus estimate of $0.27 per share. The company also reported revenue of $207.8 million, surpassing the consensus estimate of $200.3 million. These impressive numbers represent an increase of 22% in revenue compared to the first quarter of 2022.
Why did gross margins decline?
Axon’s gross margins declined from 61.1% to 56.6% in the first quarter of 2023. The company attributed this decline to the increase in component costs, specifically for its Taser products. Despite the decline, Axon CEO Rick Smith stated that the company is still on track to achieve its long-term goal of a 70% gross margin.
What is Axon’s 2023 guidance?
Axon expects its full-year 2023 revenue to be between $920 million and $940 million, which exceeds the Wall Street consensus estimate of $913.6 million. The company also expects its earnings per share to be between $1.70 and $1.80, which is higher than the consensus estimate of $1.59 per share.
What is the market’s reaction to Axon’s earnings report?
Despite beating estimates and increasing its guidance, Axon’s stock plummeted following the earnings report. The decline was caused by the lower gross margins, which investors viewed as a negative sign for the company’s future profitability. Axon’s stock price fell over 20% on Wednesday, making it the steepest decliner in the S&P 500.
Axon Enterprise’s first-quarter earnings report revealed positive news with earnings and sales beating Wall Street estimates and the company increasing its 2023 guidance. However, gross margins declined, causing the stock to plummet. The decline highlights the importance of gross margins in investors’ evaluation of a company’s profitability. Despite the setback, Axon’s CEO remains optimistic and is confident that the company will achieve its long-term goal of a 70% gross margin.