Why Axon Enterprise Stock Jumped Higher Today

Shares of law enforcement technology company Axon Enterprise (NASDAQ:AXON) jumped higher on Wednesday after the company reported fourth-quarter financial results full of important milestones, and after it issued rosy guidance for the coming year. As of 11:30 a.m. ET, Axon stock was up 17%.

Another record year

Axon had 2024 revenue of $2.1 billion, which was up 33% year over year. This was the third year in a row that the company had better-than 30% growth. Moreover, during Q4, it passed $1 billion in annual recurring revenue, which is another impressive milestone.

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In short, Axon is known for expanding the products and services that it offers, which is boosting its addressable market at breakneck speed. And this certainly seems to be the reason that the company has been able to sustain such stellar growth. For example, management said it just landed its biggest deal ever, but it was with an enterprise customer, not a law enforcement agency. Until recently, the company didn't even serve this customer base.

Expanding into artificial intelligence (AI) software, drones, international markets, and more, Axon doesn't think it will be hard to grow in 2025. In fact, management forecast 25% growth at the midpoint of its guidance, another reason investors are celebrating today.

The future is bright for Axon

With a market capitalization of about $45 billion, investors certainly have plenty of confidence in Axon's business long term. In other words, the business is still relatively small to be valued this highly. But it's growing fast, and management estimates its addressable market is worth $129 billion, leaving plenty of room for years of expansion ahead.

I'd argue that Axon has earned its high valuation with stellar growth in recent years. I also believe it's becoming less risky as it grows. When it used to cater exclusively to local law enforcement, it was subject to changing budgets and potential cuts to spending for local governments. But as it expands into a broader customer base, it mitigates some of this risk -- another reason to keep Axon stock on your radar.

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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.