Axon Enterprise 's stock plummeted 9% after the Taser maker missed Wall Street's third-quarter profit expectations as it grapples with tariff constraints.
Adjusted earnings totaled $1.17 per share, falling short of a $1.52 per share forecast from LSEG. Adjusted gross margins dropped 50 basis points from a year ago to 62.7%, which Axon attributed to tariff impacts.
Axon's connected devices business, which includes its Taser and counter drone equipment, felt the biggest pinch during the first full quarter with tariffs. The business segment accounted for more than $405 million in revenue, increasing 24% year over year.
"As long as tariffs stay in place, I view that as sort of a one-time adjustment," finance chief Brittany Bagley said during the earnings call. "Now that's baked into the gross margins."
Bagley expects growth in the company's software business to eventually offset margin losses long term. Software and services revenue jumped 41% from a year ago to $305 million.