Axon posts lower quarterly gross margin on higher mix of services, new product scaling

• Axon manufactures TASER energy weapons, body cameras, drones and real-time surveillance systems for law enforcement agencies. It supplies police body cameras in the U.S.
• Adjusted gross margin in Axon's software and services segment fell 3.8 percentage points to 75.1% in the second quarter from a year ago, hurt by its services business.
• Under the professional services business, the company supports implementation, configuration and ongoing workflow integration.
• The software-only segment's gross margin exceeded 80%.
• The company's gross margin fell 40 basis points to 62.9%. The impact on quarterly gross margin was partly offset by strong performance in the connected devices segment.
• Axon earned $1.88 per share on an adjusted basis for the quarter ended June 30, compared with analysts' average estimate of $1.85, according to data compiled by LSEG.
• Its quarterly revenue was $904 million, above estimates of $877 million.

Axon Enterprise posted lower second-quarter gross margin on Wednesday, weighed by a higher mix of less lucrative professional services and investments in scaling new product offerings.

Shares of the Scottsdale, Arizona-based company fell more than 6% in aftermarket trading following the results.