Why Axon Enterprise Stock Soared to an All-Time High Today

Shares of law enforcement technology company Axon Enterprise (NASDAQ: AXON) soared on Friday after the company delivered strong financial results for the third quarter of 2024. As of 10 a.m. ET, Axon stock was up 13% and had hit an all-time high of about $550 per share.

Axon's growth and profits are soaring

Tasers have been around for some time so one wouldn't expect Axon to be a high-growth company at this point. But by expanding into new verticals and product offerings, the company has strung together 11 consecutive quarters of greater than 25% growth, with Q3 revenue up 32% year over year to $544 million.

Axon's Q3 revenue was better than expected. And its profits were, too. Many investors were impressed by its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which was up 54% to $145 million.

With Q3 ahead of expectations, Axon's management raised its full-year guidance. Previously it guided for full-year 2024 revenue of $2 billion to $2.05 billion along with adjusted EBITDA of $460 million to $475 million. But it raised its revenue guidance to $2.07 billion and its adjusted EBITDA guidance to $510 million.

The beat-and-raise quarter is what sent Axon stock to an all-time high.

The company's long-term outlook is bright

One of the great things about Axon's business is that investors have better-than-average visibility into the future. Much of its revenue is recurring and law enforcement agencies sign long-term contracts.

Looking at these metrics paints an optimistic picture for Axon's shareholders. In Q3, its annual recurring revenue hit $885, which was up 36% year over year -- faster than Q3 revenue growth, suggesting that growth could accelerate further. Moreover, its future contracted revenue hit $7.7 billion, up 33% from the prior-year period.

I believe there could be reasons for investors to question the valuation of Axon stock here but that's a story for another time. The real story here is that Axon's business is extremely healthy and well positioned for strong future growth.

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Jon Quast has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axon Enterprise. The Motley Fool has a disclosure policy.