Axon at JPMorgan Conference: Strategic Growth and Innovation

On Wednesday, 14 May 2025, Axon Enterprise (NASDAQ:AXON) participated in the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The conference call highlighted Axon’s robust growth and strategic initiatives, focusing on product innovation and international expansion. While the tone was optimistic, challenges such as market competition were acknowledged.

Key Takeaways

• Axon is experiencing strong international growth, driven by strategic hires and cloud deployments.
• New product launches and partnerships are enhancing customer value and driving demand.
• The company’s subscription-based model is resilient, with 96-97% of sales being subscription-based.
• TASER 10 adoption is double that of its predecessor, indicating strong market demand.
• Axon Week saw significant engagement with 2,000 police decision-makers attending.

Financial Results

• Axon has maintained over 30% growth for three consecutive years and 25%+ for seven years.
• International bookings are at their highest, with projections of 3-4 times growth compared to previous years.
• Draft One has achieved over $100 million in bookings within a year.
• The company remains largely unaffected by federal budget cuts, with only a minor contract not renewed.

Operational Updates

• The Axon Week conference attracted 2,000 police decision-makers, showcasing new products.
• New launches include fixed camera ALPR and several AI software products, alongside partnerships with SafariLAN and Ubiquitiya.
• Cameron Brooks, formerly of AWS, has been hired to lead international expansion efforts.
• Axon has secured its largest enterprise deal in company history, emphasizing its strong presence in the enterprise sector.

Future Outlook

• Axon expects continued international growth, with this year projected to be the strongest yet.
• The enterprise sector, particularly retail loss prevention and worker protection, is a significant growth area.
• AI adoption is anticipated to expand in the latter half of the year, with the AI Era pipeline gaining traction.
• Virtual reality is transforming police training, improving retention and stress simulation.

Q&A Highlights

• Axon is unaffected by Doge cuts and anticipates increased funding for law enforcement.
• The international strategy focuses on video products and building in-country teams.
• Retail shrinkage and worker abuse are driving demand for body cameras.
• Axon maintains a competitive edge through substantial R&D investment and talent acquisition.
• The AI Era Bundle offers customers price certainty and continuous updates.

Readers are encouraged to refer to the full transcript for a comprehensive understanding of Axon’s strategic direction and performance.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Hey. Good afternoon, everyone. We’ll get the next session started. I’m Joe Cardoso, one of the hardware and networking analysts at JPMorgan. And for the next session today, I have the pleasure of hosting Axon’s president, Josh Eisner.

Thank you, Josh, for joining us today. It’s always a pleasure to have you here.

Josh Eisner, President, Axon: Nice to see you, Joe.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Thank you. So maybe yeah. Just wanted to start off, you know, you hosted your customer event in Arizona a couple weeks ago. You know, for everyone in the room today, could you maybe provide a quick rundown of the most notable product introductions that you had? And maybe more importantly, the customer conversations and discussions that you’re having, where’s the focus?

Where is everyone kind of looking towards in terms of the Axon portfolio, where are you seeing the most traction at least in terms of those conversations that we as investors don’t necessarily have the privilege to hear?

Josh Eisner, President, Axon: Sure. So we’re really excited with the turnout two two weeks ago at Axon Week. That’s kind of our user conference. Think Dream Dreamforce for cops is kind of the construct there. We had 2,000 police decision makers from around the country and world come join us in Scottsdale for a full week, go over all of our existing products and a lot of training sessions and so forth, but all of our new product rollouts as well.

We’re very excited to announce a number of key new products and partnerships, everything from a new fixed camera ALPR, which is Automated License Plate Recognition, that product. It should be starting trials this summer. Five or six new AI software products. New partnerships with SafariLAN, Ubiquitiya, Ring doorbells, and a couple others. And so a lot of excitement around the new product launches.

We had a high bar for what we expected. And we’re really excited to report that bar was exceeded pretty substantially with a lot of the early interest in some of these products. But it’s also a time where we really double down on making sure that our existing products are really our existing customers are really happy with the products they already have. And it’s a big part of our business model is happy customers buying more because public safety is a relatively small market. And so we’ve got to be really good at that and we tend to be very focused on that.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: That’s a great overview. Maybe just taking a step back, obviously one of the bigger concerns coming into this year has been the macro. Think as it relates to the public safety names, there’s been this big concern around Doge and how that would potentially impact your key customer vertical. So maybe can you just take a step back in those customer discussions that you’re having? How are they feeling about the macro?

How are they feeling about spending? Are you seeing any deterioration from demand intent from your end customers? Just give us a temperature read on that front.

Josh Eisner, President, Axon: Sure thing. So Doge, we’ve been relatively unaffected by. We had one relatively small contract that the fifth year, which was the final year, was not renewed. But as far as most of our federal dollars, vast, vast majority, high 90%, still intact and feeling really good about customer sentiment and customer happiness with our products. I would say federal is a place where I don’t know that over the next two or three, four years, it’s gonna make or break the business.

I think there’s a lot more opportunity than there is risk for us. We’re seeing the federal government rotate toward new defense tech names like Palantir and Andoril, and and we’ve popped up with some new opportunities in the federal civilian space as a result of this new mindset of going away from more of the more common defense contractors. But at the end of the day, do have a lot of work to do in federal still. And other markets like enterprise and international tend to be growing faster right now. So it’s one we look at and say, hey, this is one where there’s a lot of long term opportunity and doing the right things day to day is going help with that.

But certainly focused in some other places as well.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Got it. And quick clarification, there’s obviously sometimes this rhetoric that there might be a trickle down effect in kind of your core state and local. Are you seeing any of that?

Josh Eisner, President, Axon: Zero of that. And in fact, I think what we’re hearing on Capitol Hill is there’s probably gonna be some more funding for state and local law enforcement, you know, post Doge cuts that, you know, this government you know, this administration certainly supports public safety and the police in a way that should lead to more opportunity for our customers to have a little more powder in the keg to buy more technology.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: No, that’s great to hear. You obviously mentioned international front not necessarily seeing anything there. Obviously a big TAM expansion opportunity if you just think about the install base of everywhere else besides The United States.

Josh Eisner, President, Axon: You

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: recently hired Cameron Books almost a year ago. Mentioned them on your earnings call in terms of driving some of the key initiatives there. Maybe just flesh that out for us today. What’s Cameron doing there? What’s different?

What’s changed over the past year? Yeah. Kind of what he’s leading and what traction you’re seeing because of his efforts there.

Josh Eisner, President, Axon: Yeah. We’re very intentional with the growth we’ve had in the business, especially in state and local, that we felt like amongst our team we had a pretty good handle on how to keep growing there and so forth. The place we really wanted to supplement the team with some more expertise was international growth. So hiring our new Chief Revenue Officer based in Europe was a pretty big priority for us. We hired Cameron Brooks coming out of AWS.

He ran Europe, Middle East and Africa for AWS. And he’s been a great fit for us. We’ve talked a lot on the earnings calls about how it’s hard to unlock new European markets with cloud. Historically, they’re not on the front end of the adoption curve with cloud. And things like online banking are relatively new to some countries in Europe, as crazy as that sounds.

And so for us to have somebody who’s really run this playbook of deploying cloud to European governments and public safety specifically, it’s a great opportunity for us to keep growing. Cameron has been fantastic. We’ve made some major upgrades talent wise to the team, strategy wise using some more partners and resellers along the way to help kind of broaden our footprint in the sales process. But it’s all amounting to really exciting progress. We’re seeing the best Q1 we’ve ever had international bookings wise on track for our best year relative to a few years ago.

It could be three to four times the size of our bookings just a few years ago. So really excited about where the international business is headed. And as you said, there’s plenty of opportunity there relative to The US you know, winning the two major police forces in a country like Italy is is a represents about a third of the total number of police officers in The United States. And so there’s some some big some big opportunities out there, and it’s up to us to execute on them.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Yeah. No. Totally. I guess when you think about the go to market approach there, has there been any change in terms of where you’re leading into the customer with as it relates to the portfolio? I think typically or maybe the the sentiment would be more, hey, your cores and tasers, body cameras, and so that’s the lead in But I guess Cameron has the background in the cloud like you just mentioned.

So are you seeing the go to market approach in international markets like Europe? Is that changing at all in terms of where you’re trying to lead in with the portfolio?

Josh Eisner, President, Axon: To some extent. I think we are focusing more on the video products in certain markets, and it is opening some doors for us. TASER adoption remains strong in Europe, and that is always a great kind of land and expand opportunity for us. I’d say the one new wrinkle in our sales process internationally is d drone, which is a company we acquired at the end of last year. They do all the drone defense technology.

For example, the Ukrainians right now are using d drone to take Russian drones out of the sky. And they have made inroads with a lot of large international governments that historically haven’t been major customers of ours. And we identified that as a pretty big opportunity as part of the acquisition is how do we leverage some of these relationships to further our progress there with the rest of our product lines. And so I’d say that’s the one thing that’s kind of accelerated some of the business and some of the discussions we’re having. But some of these deals are long sales cycle.

It takes a lot of brick and mortar. And half the battle is just getting the right people to represent our brand in country and the right teams there to build out some of these deployments.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Yeah, sure. So maybe switching gears slightly. The other part of the TAM expansion opportunities obviously in the enterprise space. Last quarter you announced the largest deal of your history I think with the large logistics customer. Maybe just first flesh out what is this deal involved?

I get that question a lot in terms of what areas of the portfolio you guys are leveraging in terms of that relationship. And maybe even taking a step back, how did that deal evolve in terms of where were you initially kind of having the conversations with that customer and how that kind of transformed over the course of getting the deal finally across the line?

Josh Eisner, President, Axon: For sure. So I’m really bullish on our enterprise business. This is where we sell body cameras and other video technologies and drone defense outside of the public safety ecosystem. And and the deal you’re you’re you’re speaking about in q four, it was it was the largest deal in our company’s history. And we’ve been in public safety for thirty years.

We’ve been in in enterprise for three years. And and the biggest deal in company history is now an enterprise deal. So I think that speaks to a lot of the opportunity there. How it came about was we’re looking at just supplying this potential partner with body cameras. And so we had a a pretty good relationship there and we were working through some of the body camera deployment stuff.

And then FUSYS, which is a company we acquired last February, has really accelerated some of the interest we’ve seen from the international or sorry, from the enterprise customer base. FUSYS is essentially the way to consolidate all of your disparate video feeds into one pane of glass at a public safety agency’s real time crime center, at an enterprise’s kind of security operations center. And so in this particular case, was about 300,000 video streams from stores, warehouses, trucks, etcetera that we’re able to consolidate into one system for the customer, which was highly valued.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: So when you think about the pipeline in enterprise, obviously now we have this big logistics use case to kind of look forward to potentially as maybe new customers you’re able to onboard. Can you maybe provide examples of other large enterprise use cases that’s outside the realm of logistics?

Josh Eisner, President, Axon: Yeah, retail is a big one right now. We’re seeing shrinkage up from 1% to 3% in retail, which represents billions of dollars of lost inventory. And that’s creating a lot of urgency for some of these businesses to figure out how they can limit theft. And body cameras on retail workers is certainly a piece of that equation. The other thing we’re seeing is retail workers, abuse of them by customers in the workplace is rising.

Target closed nine stores in the Midwest last year over this issue. And so I do think we’re going to be solving some major problems there. And I think our pipeline and the conversations we’re having across major retailers is indicative of the fact that there’s a lot of opportunity and a lot to be excited about there.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: No. Very interesting. Okay. So maybe shifting gears and surprisingly going back to your core public safety and so your state and local law enforcement. I wanted to take a step back here.

You know, I have a lot of conversations with investors and obviously the sentiment is like, hey, today every police department has some form of evidence or records. But maybe what’s not totally appreciated is at what stage do they What technology are they leveraging to perform the or serve this application, right? So maybe can you just help flesh that out a little bit? Like what’s the current state of technology across your customers?

What are they utilizing? And maybe how does that compare to Axon’s offerings, particularly when you think about some of the next generation products that you guys are providing?

Josh Eisner, President, Axon: Sure. Like I said at the beginning, a big part of our business model is this concept of landing and expanding. And so every police department in The US has one or more of our products at this point, whether it’s tasers, body cameras, evidence management software, FUSYS, which I just mentioned, etcetera. Now where the work comes in for us is you have customers that are maybe paying you $50 or 100 a month. And at this point, the sum of our offerings is between 500 and $600 a month per officer.

And so there’s a lot of upward mobility still to take place in terms of average bookings per user or monthly bookings per user, however you want to look at it. And the name of the game for us is getting some of those customers from more basic deployments to more advanced technology deployments, adopting things like virtual reality or some of our AI tool set, FUSYS, D drone, some of the new products that we’ve come out with outside of just the TASER and the body camera. And that’s going very, very well. It’s something we pay a lot of attention to internally, how many of our customers are adopting kind of the more premium products that we offer. But like I said, there’s still a lot of room for growth in state and local.

And I think we’re executing according to that. And you mentioned an interesting point there. Like some of

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: the areas that you’re addressing is net new use cases in there around workflow efficiency and some of those other applications there that didn’t exist. So maybe flesh that out a little bit. What are officers doing today versus what you guys are trying to provide and help drive a more efficient process for them? And then maybe the second part of this is get this question a lot as the police departments or the various customers that you’re looking to service with this, obviously this is all new budget for them to allocate towards these workflow processes. Are you seeing any cannibalization as they try to adopt essentially these new digital products?

Josh Eisner, President, Axon: So generally our mindset is we’ve got to find a way to disrupt a current spend in order to get paid for something new. And so how that manifests itself will take one instance as draft one, which is our new AI add on into our ecosystem. Essentially what happens is if you’re an officer wearing a body cam, you go out there and you have a conversation, maybe it’s a traffic stop, the AI is analyzing the audio transcript of that video. And then it’s writing the first draft of the police report for the officer. And then the officer goes in and edits it and probably does the last mile, like the last 20% of the police report.

But when you add up the time savings there, you’re talking about an officer going from spending 50% of their time on police reporting to 10% to 20% of their time on police reporting. And so just in terms of efficiency and maximizing the capabilities of your workforce as a police department, that’s a big piece of it. But then the other element to your second question is, in this use case that we just mentioned, all police departments at this point have more head count approved than they do have officers working. They’ve got a high vacancy rate right now that they could go hire more cops. That’s creating some budget surplus.

And so part of our position for draft one is like, hey, if you get x percentage more efficient just due to this product and your cops are out there fighting crime more and writing reports less, then you should be able to reallocate some of that headcount overage to something like this because you’re not going to need that much headcount anymore. And that’s really resonating. So I think there’ll be a lot more to come, obviously across all industries in AI, but especially in public safety with the amount of kind of legacy outdated workflows that cops still have to participate in every day, there’s just a tremendous amount of opportunity to automate a lot of that.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Got it. And is there because draft one came out roughly a year ago,

Josh Eisner, President, Axon: I For

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: the early adopters, are you starting to see that value materialize for those customers?

Josh Eisner, President, Axon: Absolutely. Absolutely. And we’re big on when we get in competitive situations or just rolling out new products, we’re big on having our customers field trial our products. We think we show up really well in the field day to day officers and getting our products in their hands only helps in the sales process. So even in a thirty day trial, cops are starting to see those time savings really manifest themselves and certainly that’s leading to far faster adoption than we’ve seen in a lot of our legacy products.

Draft1 is our most highly adopted product we’ve ever had within the first year. It scaled over $100,000,000 in bookings in one year. And so we think that’s going be a big one. And the AI tool set as a whole playing a big part of that into the future.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: That makes sense. The other area that I wanted to touch on, and maybe this is taking a step back records and evidence and some of the other products where maybe the competitive space is a little bit more mature. When you’re going into deals and potentially displacing either a legacy offering or maybe just starting there, like a legacy offering. How often are you finding yourselves going against maybe a legacy provider who hasn’t necessarily kept up with the technology innovation versus perhaps going against maybe somebody, a peer of yours that’s more innovative and more savvy on the technology side. I guess how would you kind of think about that competitive landscape in terms of the displacement and who you’re going in and actually displacing?

Josh Eisner, President, Axon: Yeah. I think there’s a spectrum there. But typically when we’re trying to displace an incumbent, we have a major technology advantage, I would say. You know, the the adoption cycles in public safety can be ten to twenty years long for one product. So oftentimes, you’re dealing with replacing something that’s quite old and outdated.

That’s a double edged sword because it takes a while at times to have those opportunities to get to that spot. But once you’re there, we feel really good about our offerings. And it really there are legacy companies that are new companies in this space. We’re outspending them on R and D. We’re out recruiting them in terms of the talent we’re bringing into Axon.

We’re a very, very competitive group of people. We like to compete. We like to win. And so we’re very comfortable in those settings. And that brings up

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: an interesting question, right? Like when you think about this land and expand motion, where do you see the more growth coming from for Axon? Is it really because you talked about it, hey, sometimes you’re displacing something that’s been there for Right? Do you find that that go to market motion is faster in terms of translating to revenue growth? Or is it really when you finally land, they get some type of Axon product in their hands, then it’s really doing those value add and driving additional share capture perspective.

And that’s really the growth driver for you guys.

Josh Eisner, President, Axon: Yeah. It’s a great question. I think taking a step back, we’ve grown by 30 plus percent for three straight years, twenty five plus percent for seven years. And all of that growth at all points has been driven by two simple concepts. We need to be very effective at selling new products to our existing customer base.

And we need to be very effective at selling existing products to new customer bases. And so state and local US, that’s our existing customer base. There it’s about things like Draft1 and Infusys and drone and virtual reality and TASER 10. All new products that we’ve come out with in the last few years are acquired that we sell into that customer base. And at the same time, we’ve got to be really good at selling TASERs and body cams into new markets, whether it’s enterprise, international, federal.

And over time, of course, new markets become existing ones and we layer on new products to those existing customers as we find new markets to go into at the same time. But it’s really those two concepts that are going

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: to sustain our growth into the future. That makes sense. And maybe just touching on one of those products or just switching the conversation to one of those projects, TASER 10, T10, its third year. Maybe just walk us through the upgrade cycle today. How compare to T7?

And then maybe second part of this question is like, what is your visibility into customer upgrades? I get this question a lot. Like how structural is a taser replacement cycle compared to something like a consumer smartphone upgrade cycle, right, where maybe there’s less visibility whether a consumer will upgrade?

Josh Eisner, President, Axon: Yeah. So in the taser business, it’s interesting. The useful life of a taser is five years. And so unlike a smartphone where you might get a couple years out of it, you’re really you’re prolonging that upgrade process for about five years for TASER. There are a lot of inventory tailwinds that come with that.

We had some commentary about the tariffs and ability to stock up on inventory and so forth. So there’s some advantages there. One of the disadvantages is sometimes an agency might wait six or seven years to upgrade. I think what TASER ten is doing is it’s really condensing the upgrade cycle to five years or fewer for the first time on an average and relatively consistent basis. And there, you know, it’s the first time, you know, we went from two shots to 10 shots in the new TASER.

We went from 20 feet to 45 feet. There’s a lot of real life advantages to TASER 10 that cops are seeing in the field that are helping them deescalate situations that otherwise they might have to deploy a firearm. And we’re seeing a lot of lives saved as a result. And TASER 10, to answer your question directly, is being adopted at double the rate of our previous TASER. And that’s sustained for the first two years.

We expect it to sustain further and maybe through its five year useful life. And so we’re we’re very bullish on on on the future TASER 10. And frankly, everyone we build already has a home and it’ll be that way for for a while. There’s a ton of demand out there and and we’re still ramping up automation and so forth to catch up with that demand. So all good things there.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Got it. Now, T10 tracking two times the rate of T7. Like if I did the math on T7 when you guys used to do disclosures around units, I think it was at 150. So assume 300,000 units on T10. No, the math isn’t perfect.

But that would imply like 30% penetration of your historical or your legacy customer installed base. I think the problem with doing that math is obviously you’re penetrating new verticals with the T10. So is there any way if we can bifurcate the adoption? Obviously, you throw out that 30% penetration watermark, it sounds like you guys made good progress. But at the same time, it sounds like the install base is actually expanding as well in terms of what’s addressable.

So maybe help us think about the adoption rate if we’re just thinking about your legacy customer base and maybe how growth the growth opportunity or the TAM expansion opportunity is now that you’re expanding the underlying installed base as well?

Josh Eisner, President, Axon: Yes. So that assumption takes you called out one of the things which is, hey, there’s new customers coming to the table in other markets. The other thing is not every agency is upgraded to every generation of the TASER. So we still have x26 customers out there or x2 customers out there that see enough urgency now in Taser 10 to upgrade. I don’t know that I could quantify it off the top of my head.

I would still say qualitatively in our state and local customer base, there’s plenty of room to expand. And the expansion generally comes from going from mixed, like shared deployments of a TASER. Like hey, we have 100 officers. We need 30 TASERs and we can share them. To hey, we buy everything from Axon now on a per officer basis in one license fee.

And so now you get 100 TASERs instead of 30 for that same police department. And so I think qualitatively that’s expansion will continue to happen in TASER 10. And then of course markets like international and federal, there’s certainly more opportunity there as well.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: That makes sense. And I think you mentioned two important parts. It’s part of the T10 adoption in terms of maybe contracting that refresh cycle or bringing it back to kind of that average that you were talking about is kind of the upgrades, right? Pretty dramatic in terms of the improvements that you’re seeing there. But you also announced kind of the ARVR training as well.

Can you maybe talk to how that’s also kind of influencing the deployment of this? And maybe that’s also expanding instead of officers sharing, maybe now everyone can have a taser as well?

Josh Eisner, President, Axon: Yeah. So our mission is to protect life. One of the ways we’re trying to do that is to get the TASER to the point where it outperforms a firearm. I think the other way is through really revolutionizing police training. I think everyone’s probably heard the old of axiom that it takes longer to get qualified as a hairdresser than a police officer in terms of what you’re required to do in terms of weapons training in policing.

It’s very quick. Historically, you train once a year with your service weapon at at the range. You get everyone together. You know, you gotta pay people overtime to cover their shifts. You gotta pay a lot of, you know, consumables cost just to fire bullets and taser cartridges at the range.

And by the way, you’re not really getting any better at anything you’re doing because you’re just shooting at a stationary target or somebody in a Velcro suit where it’s just not the same stress that’s being simulated that you would see in the field. Virtual reality flips all of that on its head. You know, we’re seeing 40 to 50 time or 40 to 50% more retention of the teaching concepts when in VR. You’re seeing a much better simulation of stress that you would see in in real life. And by the way, you can do this on an unlimited basis.

You can put this headset on every day at roll call and go through one scenario in five or seven minutes and just do that continually and continually get better at at what you’re doing. And so we think VR is a is a major, major part of police training moving into the future. Of course augmented reality will factor into that as well. And then in terms of the financial model, it’s one of the first products that we’ve been able to sell as like an upsell to the TASER business. And to see that being adopted so commonly and with so much excitement from our customer base is really exciting for us.

Interesting.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Part of Axon and offering t 10 and and even ARVR offerings as well as there’s a lot of bundling that happens on a subscription basis, which in hardware land is typically hard to do. But you guys are obviously seeing

Josh Eisner, President, Axon: some our accountants would tell you it’s hard to do wherever you are, for sure.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: So maybe just talk about how much of your current install base is on a subscription plan today versus procuring offerings outright or on a standalone basis. And maybe just can you give us a sense of how the shift to subscription has trended over the past couple of years? And what’s been the drivers, at least from your end customer standpoint, to kind of get them over the ledge to adopt subscriptions?

Josh Eisner, President, Axon: Yeah, for sure. So essentially I think like 96% or 97% of all of our sales are subscription sales. Doesn’t matter if it’s hardware or software. If it’s hardware, it’s like you’re financing it over a five year period. If it’s software, you’re just paying as you go.

But the contract late tends to be five or ten years. So ultimately, shift to subscription for us has gone very, very well. The only time we don’t see products bought on subscription is you might see some one time international customers just buy a ton of tasers and cartridges not on a plan. And that might be because, hey, we don’t have that mechanism set up in that country or it’s through a third party distributor or we’re not comfortable extending them the credit to do the deal for five years. And so you see some of that.

And then you see some one time services as well in there. But the rest of the business is very much on subscription. This is a strategic decision we made in 2018 to start to move toward this model, among other things, to just make sure that our business is not susceptible to like, hey, if one time grants dry up or one time capital expenditures and policing dry up, historically that would have had a pretty big impact on our business. Now we feel relatively insulated from that because all of our products are bought in an operational budget from the police department. And those are just far more resilient through the ups and downs of grant funding and the economy in general.

Yep. Got it. Wanted to switch gears particularly to the

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: AI offerings that you guys are providing now. You obviously you mentioned not too long ago or earlier around the strong adoption around Draft one. I think during your earnings call you kind of provided like an all up AI view and that you kind of reached 30,000 active users. Any way though you can bifurcate the adoption of the AI era plan versus Draft one and how AI era has been tracking relative to the tracking relative to the AI or sorry, the Draft one performance, just given the era plan came out, I think it was October

Josh Eisner, President, Axon: That’s right. Time period, right? Yeah, sure. So conceptually, we launched our first true AI product in April of last year called Draft1. We talked about that.

That’s the thing that writes the police reports. And then we had like four or five more in the hopper. And we said, look, this is only going to accelerate. Know, this is the fewest number of AI products we’re ever going to offer. And to go back to governments and try to pitch them on a new product every three months in their sales and buying cycles is like impossible.

And so instead, we tried to go, or we did go, to this bundle concept for all of our AI offerings. So you can buy any one of the, you know, some of the parts as a one off. Or you could just buy this portal that includes all of our AI products over the next five years. And we think that’s really valuable to our customers because it gives them price certainty. But it also motivates us to keep performing against that to make sure that they’re renewing and so forth.

And so the AI era bundle is the it’s the AI era in policing. That’s the name of that package. And we started with draft one. Now we have a real time translator. So your body camera can translate over 100 languages.

Picture you’re a cop at the border speaking in Spanish to somebody. Or you’re in Montreal speaking in French and you speak English. Whatever the case may be, this real time translator has been a big hit for many different police departments around the world. Then on top of that we’ve got new tools around being able to consolidate all case evidence into one simple report for a prosecutor. We call that Brief One.

We have a product called Form One that essentially fills out all local custom police forms that a city or state might require on top of just the police report. So we’re really doubling down on all of these AI capabilities. In terms of adoption of the AI era plan, it’s going quite well. We announced it in October. We had some early customers buy by the end of the year, which almost never happens following a launch to see government orders coming in eight weeks later.

It’s usually about six to twelve months later. And now we’re seeing those continue to come in, but also this pipeline toward the back half of the year really build as some of the big markets like about half the country’s budgets turn over on July 1. So leading up to that is a big moment trying to get all these plans and deals in the new budget. And then we expect those orders to come in Q3. And then Florida and Texas both renew their budgets on October 1 as well as the federal government.

And so back half of the year tends to be where a lot of the rubber hits the road in the sales process.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: Definitely have a follow-up there. But let me just pause here to see if there’s any questions in the room. Anyone have a question just please raise your hand. Doesn’t look like it. Okay, so then I can just go ask my follow-up.

Obviously you disaggregated the bundles bundles in terms of you have your OSP bundle. Now you’re having an AI era bundle. You mentioned that it kind of guarantees for a customer five years that there won’t necessarily be some change and they can get all the new including the ones upcoming. As you think about probably beyond that five year horizon, are you thinking about the long term plan is something similar to what we’ve seen around OSP where or OSP in the sense that there’s going to be different tier stacks there? Or like how are you guys thinking about the evolution of offering those bundles going forward?

Josh Eisner, President, Axon: Yeah. Think that’s fair to assume. And for those listening, OSP is our officer safety plan. And that’s what includes your taser, your body camera, your software licensing, kind of all the stuff you use day to day as a police officer. The only thing it doesn’t include is all of our AI products.

And so in the officer safety plan, as Joe mentioned, is tiered. There’s kind of an entry level, a mid level, and a premium level. I could see that happening in AI. Of course, things are moving so fast that to think about what five years will look like from now is, that’s a long run ahead of us. But I think conceptually thinking about some of these AI offerings in tiers maybe relative to their compute cost is a reasonable way to think about it.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: No, makes sense. And that actually leads perfectly into my next question. Obviously you have these tiers. You mentioned earlier, I think I forgot the exact comment, so I don’t want to misquote you. But officers today are the average content per officer is something below $100 something in that range you mentioned.

When you do the math on kind of all the bundles that you can put together, it’s like close to $700 in terms of the content opportunity there. As we think about longer term, what’s and I know it’s a difficult question, but what’s the theoretical limit to that? Are you getting pushback at least in terms of the examples that you have today, where maybe an officer is at $400 5 hundred dollars where then you start to see the department like, hey, this is too expensive? Or is the appetite really strong in that you actually do see there’s more headroom to push the envelope at least in terms of pushing that higher end value or higher end content opportunity?

Josh Eisner, President, Axon: Yes, think it’s more of the latter. Ultimately for us, we’re not really big on just unilaterally raising pricing other than hardware year to year where our manufacturing costs go up because we give people raises every year and some of the component costs go up and inflation. Like that’s where we just kind of incrementally raise hardware by four or 5% a year pretty standard as a standard practice. But then our bundle pricing is all driven by what we’re putting in the bundles. And for us, it’s important every year to add more things that customers will value into those bundles and make sure the inherent discount stays the same.

So there, the sum of the parts is still going to be equally larger than the bundled price. But that’s where a lot of the customer value is derived. In terms of wallet share, we’re not seeing a lot of that right now. A lot of concerns around, hey, Axon’s taking up x amount of dollars. 90 8 percent of a police budget is still staffing and overtime.

And so that’s generally where they’re focused. And frankly, as we deliver products that make officers more efficient, like I said, that’s a huge opportunity for us because that 98% bucket, you can start to spend some money out of that to buy more and more technology. So that’s something we’re monitoring and making sure that we don’t get over our skis on that. And it’s important to have a partner strategy there where the other products that customers are buying work really well with what we’re selling. But no really inherent issues at all with the wallet share right now.

Joe Cardoso, Hardware and Networking Analyst, JPMorgan: No. That’s great. I think we’re up at time. So Josh, thanks for the time. Thank you everyone in the room.

Josh Eisner, President, Axon: Sure thing. Thanks everyone. Appreciate it.

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