Axon at William Blair Conference: Growth and Innovation Focus

On Thursday, 05 June 2025, Axon Enterprise (NASDAQ:AXON) participated in the 45th Annual William Blair Growth Stock Conference. The company outlined its strategic vision, emphasizing robust growth and innovation, while acknowledging challenges like complacency. Axon aims to become the operating system of public safety, with a focus on expanding its market presence and leveraging AI technologies.

Key Takeaways

• Axon aims to reduce deaths in policing by 50% over ten years.
• The company achieved over 25% revenue growth for five consecutive years, exceeding 30% last year.
• Axon maintains a strong financial position with 25% EBITDA margins and a Net Revenue Retention rate of 123%.
• The enterprise market is expected to become the largest in the next decade.
• Axon is investing heavily in AI and new product innovations like TASER 10 and drone technology.

Financial Results

• Revenue Growth: Over 25% annual growth for five years, with more than 30% last year.
• EBITDA Margins: Approximately 25% last year, with similar guidance for the current year.
• Net Revenue Retention: 123%, indicating strong customer loyalty.
• Annual Recurring Revenue: $1.1 billion.
• Future Contracted Bookings: Nearly $10 billion, reflecting long-term commitments.

Operational Updates

• Market Expansion: Focus on U.S. Federal, International, and Enterprise markets.
• Product Innovation: Introduction of TASER 10 with enhanced features and drone-related solutions.
• Digital Evidence Management: Handling a video library 40 times the size of Netflix.
• AI Integration: Launch of Draft1 for automated report writing, reducing time by 10%.

Future Outlook

• Market Focus: Strengthening public safety and expanding into Enterprise and International markets.
• Product Vision: Becoming the OS of public safety by integrating with other vendors.
• AI Era Plan: Significant growth expected in AI-driven products.
• Budget Opportunities: Anticipation of increased federal budget related to major events like the World Cup and Olympics.

Q&A Highlights

• Internal Risks: Focus on avoiding complacency by reinvesting in R&D.
• Budget Impact: Axon is insulated from budget contractions due to its position in police budgets.
• AI Platform: Competitive advantage through AI integration within Evidence.com.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Josh, President, Axon: Alright. Thanks very much, Jonathan, for having me today. Nice to see all of you. While this room is is full, sorry to disappoint you. This is me.

I’m Josh. I’m president of Axon. But, looking forward to answering all of your questions. We have a few slides to get started just to give you a little background on the company. Not much, just just three or four slides, and then we’ll go into Q and A.

So our safe harbor statement, Eric usually reads that one. I assume everybody knows the the gist of that, and we’ll get into our mission. So our mission globally is to protect life. We came out, two years ago and launched our moonshot goal was to and and and the moonshot goal is to cut deaths in policing by 50% over a ten year period. So these are civilians that die in police incidents and police that die in incidents looking to cut that number in half.

Right now, it hovers right around two thousand or so, and so there’s two thousand deaths per year. So there’s a lot of work to do there. We think our tools are very much capable of driving that number downward, especially some of the new tools we’ve launched over the last couple of years. And we’re very, very excited about that. We were founded in 1993 by our founder, Rick Smith.

He had two friends die in a road rage incident. Actually, it him thinking about less lethal tools as opposed to firearms and what we could do there. Started the company as a consumer product and then quickly pivoted to public safety where we’ve been serving our police customers for just over thirty years now. We’ll talk about our products in a second. We’ve got essentially an ecosystem of hardware and software products that work together to fight and solve crime, keep people safe in the field, come out with a lot of new products every single year and very much expanding into new markets.

In terms of markets themselves, we’re really active in these four markets. And what I talk about a lot is how we think about growth in our business is very much doing two things at the same time. Number one is selling new products to our existing customer base. And there, we’re talking about that first segment, U. S, state and local.

We have that’s where we have the most users and our motion there is really a land and expand play where we might be using TASERs and body cameras now, but how many more value added tools can we build? How many more software and AI features can we build that benefit that market? And then the other three markets, it’s the inverse of that motion. Instead of building new products for that market, we take our existing products and we try to break into these new markets. And so U.

S. Federal is a combination of all the federal police around The U. S. Essentially in the three letter agencies combined with the Department of Defense. International is essentially national level police forces around the world.

And then our enterprise business, which is all of our non public safety use cases. And and I was saying just in a in a breakout session a couple minutes ago, right now, US state and local is the largest market that we’re in, followed by international, followed by enterprise, followed by federal. I think ten years from now, that will look very different where enterprise is the biggest market we’re in, followed by international, followed by U. S. State and local, followed by federal.

And I think that just speaks to the pure TAM available in both enterprise and in international. And I’m going give you a quick anecdote on each. In enterprise, Walmart alone has 2,100,000 retail workers. There’s only 900,000 cops in The United States. So in terms of unlocking some of these enterprise opportunities on either body cameras or video aggregation or drone defense or drones themselves, a lot of different opportunities there to break into the enterprise market.

And in fact, we launched our or we announced our biggest deal in company history, was actually in the enterprise market in Q4. So again, I think that speaks to the TAM and opportunity there. And then internationally, the way these police forces are structured, can go to an Italy, for example, there’s 200,000 officers and their two biggest police forces in the country of Italy. That’s five times the size of the NYPD. And so it doesn’t take it’s not like we have to win everywhere at the same time for international to be a bigger and bigger part of our business.

We have to execute really well in the countries and markets we’re focused on, we could see our user growth really explode there over the next five years. So very excited about that as well. In terms of products, it really starts with our TASER product. That’s been our longest standing product. It’s an electronic weapon, two darts come out of it and connect to your skin.

They conduct an electric circuit between them. The waveform mirrors your brain waves. That’s what causes your muscles to tense up quickly and for big tree to fall hard. And that’s, you know, I think everyone’s seen videos and so forth of, of TASER deployments, and and and that’s how it operates. Our new TASER 10, now goes out to 45 feet, and you have 10 shots.

So you increase your chances of of getting a connection with the probes through heavy clothing and so forth. But you also have almost twice the, the range to cover. And that’s really important for cops because if you think about someone with an edged weapon, for example, that extra 20 feet gives you more time and, to react and and to use less lethal tools as opposed to have to go to a lethal option inside of 20 feet. Then, of course, we’ve got our connected devices and sensors. Here, we’re talking about body cameras.

We’re talking about in car video, fixed cameras, interview room, recording drones, etcetera. These are really you know, they’re they’re a valuable tool in policing. They create transparency. They they create mutual accountability in the field and so forth, but they’re also very much a means to an end. They’re the they’re the the sensors that are taking in all of this data that’s allowed us to build this library of video that’s approximately 40 times the size of the Netflix library.

So when you think about our business, we’re really sitting on this well of video data and in the age of AI, we’re able to use that to train models and to deliver more valuable more value to customers by virtue of all the data they already have. So that’s kind of the bottom left portion in Digital Evidence Management. You move on over to real time operations, all of these devices stream from the device itself. So, you can imagine, you know, high intensity incidents where command center is watching firsthand, all of those streaming tools and real time operations are really becoming a big part of policing. You see every major city starting to develop its own real time crime center with a lot of these capabilities in terms of streaming video straight from the field, from body cams, from fixed cams, from drones, from in car video, and then the AI and productivity, all the reporting that happens.

And there, we launched a product called Draft1 a year ago, essentially analyzes the body camera transcript and writes your first draft of your police report for you. And so today, cops spend about 50% of their time writing reports and doing other administrative tasks. With Draft1 that drops you about 10% of their time. So, of the big value propositions there is you don’t need to go out and hire as many police officers, because you’re getting far more productivity out of the workforce you already have. So, it’s a little bit of a tour through our product portfolio.

And we’re really proud of our results. We’ve grown by over twenty five percent five straight years. Last year was over 30%. We think we have the opportunity to do that again this year. Margin EBITDA margins were about 25 last year.

We’ve guided to that same percentage this year at 25% NRR 123%. Usually when customers renew, they end up buying a lot more from us at the time of renewal. Of course, 1,100,000,000.0 in annual recurring revenue and a big market ahead of us, so still plenty of white space to go attack and execute on. And then almost $10,000,000,000 of future contracted bookings, which we think is a better metric than RPO for us because some cities require things like a cancellation for convenience clause by charter in their city and that takes some of those contracts out of RPO when we’ve seen, in fact, almost zero churn in the history of our business. And so we came out with this metric at the end of last year to just kind of demonstrate what the opportunity actually is in terms of book contracts and what we expect to unlock moving forward.

So that’s a little bit about the business. And happy to, I guess, start with Jonathan’s questions and then answer any questions anyone else has.

Jonathan: Thanks, Josh, for that presentation. That was quite impressive. And the company has done exceptionally over the last few years. When we look broadly at Axon’s future as a technology enabler, I think you’ve done a great job of showing us where we are today and what the history of the company is. But when we look forward a decade from now, what are the challenges that you can address?

What will Axon look like in the future?

Josh, President, Axon: Yeah. I think part of it is that market view switching to we’re not switching, but continuing to support public safety while we build out other markets at the same time. But from a product standpoint, I think our North Star is we really want to be the OS of public safety, if you will, the operating system, the platform that all police agencies use to fight crime. And, you know, we won’t be able to do 100% of that ourselves. Of course, there’ll be integration with other technology vendors in the space.

But, you know, when customers are going through all of their key workflows in the field, we want to be the mechanism that they use to, to deliver, you know, safer outcomes in the field and more efficient outcomes, you know, in the police precinct than in the courtroom.

Jonathan: There’s also been a lot of talk about the impact of Doge on public safety, and Axon has been relatively immune. Part of the Doge mandate are finding initiatives to drive efficiency, in the government. Can you talk about the role that Axon could play in terms of helping drive that efficiency?

Josh, President, Axon: Yes, for sure. So, Doge has kind of carved out public safety from its what it’s reviewing. And I think ultimately even if they were in public safety and analyzing the spending there, I think we’re really proud of the fact our products are highly valued by our customers. And even when they’re not mandated to use them, they continue to use them because they really believe there’s an ROI in what they’re using from Axon. And so, in terms of making our customers more efficient, yes, we’re I say this a lot, we’re kind of at the center of this Venn diagram where we’ve got a customer base that is tremendously underserved historically by technology and thus they have a lot of manual and outdated workflows.

Then they’re also sitting on this well of data by virtue of all the video that they’ve collected and our brand is such that they really trust us. Our NPS score generally is between sixty and seventy, which we’re very, very proud of. That’s far exceeds a lot of the brands that I think consumers are used to and highly value, and such that our customers really trust us. And so as a company delivering a new tool that not everybody is sure exactly how it’s used and what they’ll get out of it, I think that’s where our brand equity with our customers really matters. So we’re kind of sitting at the center of this perfect storm of circumstances that enable us to deliver AI and productivity tools to our customer base far faster than a lot of other businesses, and we’re seeing those results really rack up pretty quickly here in a lot of excited customers.

Jonathan: You’ve recently announced a lot of product innovation and additions, including areas like fixed mount camera. Can you maybe help us understand how this fits in within your portfolio of existing fleet and body cameras and what the network effects could look like? Yeah.

Josh, President, Axon: Yeah. Sure. So fixed cameras are kind of the final piece of our product portfolio. We started with on officer cameras. We have cameras in police cars.

We have cameras mounted on drones. But having fixed cameras at intersections across cities, and so forth, you know, allows us to do two things. Certainly, license plate recognition leads to an outsized number of crimes being solved. You know, all these cameras take in data. They analyze the license plate.

They ping it against a hot list, and then they’ll let the command center know if if they’ve got if they’ve got a hit. You know, secondarily, you know, there’s all of these cameras are are built with two lenses, and the second lens just does live video streaming at all these fixed points in public. So imagine you have an accident, or a high profile police incident or a use of force, all of these cameras over time through AI will be able to AI, detect those incidents and alert a command center and get the right personnel on scene and so forth. So we think this is just another sensor kind of adding into that overall you know, mechanism we have around compiling and using digital evidence to get smarter and more efficient as a police force.

Jonathan: That makes a ton of sense. Know, drone as as first responder and your counter drone offer offerings also, represent significant opportunities. How should we think about the pace of adoption of this market and maybe what drives even faster adoption here?

Josh, President, Axon: So drone as a first responder is a really exciting market in in policing right now. And what it really means is you have somebody calling 911, the first thing that’s gonna get to that scene is no longer gonna be a police car, an ambulance, or a fire truck. It’s gonna be a drone. And as the, you know, we’ll get to the point where when you call in, all the metadata is already being sent to that real time crime center, that that dispatch center. They know what your address is.

They know where to go, and the drone will just automatically be dispatched, you know, ahead of time. And so you’ll start to get real time video before your officers arrive at the scene, which leads to better situational awareness and safer outcomes. And so, that’s that’s what folks mean by drone as a first responder. And, via our partnership with Skydio, we think we’re really well positioned, to solve this problem for public safety agencies. And then we’ve really coupled that with drone defense, which is, drone defense and awareness, making sure you know where all the drones are over your jurisdiction, your own and others in our software, through product called d drone can analyze, all of the different drones in the sky, tell you where the pilots of those drones are, tell you what the make and model of those drones are, and allow you to mitigate those drones and send them back home, back to the pilot or take them out of the sky and cause them to land, you know, to just drop out and land safely, below.

And so, unfortunately, it’s probably going to take an act, of terrorism with a drone for this to become really mainstream in The United States for folks to understand why drone defense is so important. And it is scary to think about how easy it is to opt for a consumer to operate a drone and a nefarious actor to kind of figure out how to use that to create havoc. And so we think these drone defense products are really going to be a big part of public safety going into the future. It’s the same product the Ukrainians are using right now to take Russian drones out of the sky.

Jonathan: Yeah. For those of us that have battled the traffic on 9094 here in Chicago, I think drone as first responder makes a lot of sense. Yeah. Absolutely. So, just maybe on moving on to the AI opportunity.

You know, AI Era’s looks like it’s been a product of very strong interest. Can you talk a little bit about the new capabilities like translation and real time draft reporting that you can bring to officers and maybe how customers think about the ROI or savings that come from here?

Josh, President, Axon: For sure. So, in terms of our AI era plan as a whole, what it is, it’s kind of like Amazon Prime for AI and policing. You pay a fixed dollar amount every year, and every AI product we build automatically gets deployed to the customer base. And so right now we have five or six AI products available. The sum of the parts is over $200 a month and we sell this plan for $200 a month.

So there’s an inherent discount on day one when you buy this. But all of a sudden what’s going to happen in years 02/03/1945 is we’re going to have dozens and dozens of AI products and the sum of the parts quickly becomes far, far greater than the list price. And so that’s the value proposition to our customers as to why to buy now. You’re kind of making a bet that we’ll continue to deliver more and more AI products that are useful into the future. And our hypothesis is really like in policing, there’ll be one company that drives 80% to 90% of the AI usage across the user base.

This isn’t a market typically where you go to five to 10 vendors to solve one technology problem. It’s a market where they really bet big on one vendor. And so for us, we view this as really important to be the company that supplies AI to public safety. And I mentioned DraftONE already. Another AI product we’ve launched is our real time translator where if you’re, for example, at the border and someone’s speaking Spanish, your body camera will detect it and automatically translate everything being said back to the officer, in English.

And so supports over a hundred languages. It’s certainly a very attractive product for a lot of different use cases around the world. And then we’re we’re launching a number of other AI products. A different one’s called Brief One, and this essentially for a detective or a prosecutor analyzes all of the evidence in a case and writes your index for you. Like, here’s all of your evidence.

Here’s what it says. Here’s, you know, the summary of it. Here’s where it came from. And so instead of having to do all that manually in every case, now the AI is doing that for you. So you’ll start to see more and more products like that, that maybe at times aren’t the sexiest products in terms of what they do.

But like I said, we’ve got a market that’s traditionally very underserved by technology. So there’s a ton of opportunity to just automate a lot of the workflows and make those departments, more efficient. And where the rubber hits the road on that is, policing is still not a very popular job in the last five years. You see less applicants to police forces than we’ve really ever seen before. Someone was telling me they did the Danbury, Connecticut, Police Academy.

And five years ago, there were, I think, like 400 applicants for three vacant positions. In this last cycle, there were, like, 20 applicants for three vacant positions. And so, with that, it’s a lot harder to hire cops, and it kinda highlights the idea that you need to get more out of the police force that you already have. And and one way to do that is by getting them back on the street, fighting crime, doing do you know, allowing them what they’re to do what they’re best at and a lot less of the paperwork and administrative work that comes along with that. That makes a

Jonathan: ton of sense. I mean, you referenced the single vendor AI platform. You know, what is the mode for Axon in terms of, you know, why couldn’t somebody just take a plain Jane chat GPT and plug it into the platform?

Josh, President, Axon: I think the biggest thing is just the amount of data they already have from Axon in evidence.com. So you could export some of that data into a different system and run AI on it, which our customers will do for certain use cases. But for the core, like, middle of the bell curve stuff, having that integrated in the same system you already administer your your evidence in, I think, has a lot of value and and and gives us kind of an inherent an inherent advantage in that way.

Jonathan: Excellent. Excellent. One last question for me before we open it up to the audience. I think your largest deal ever was signed with an enterprise customer. Can you help us understand how all of Axon’s solutions are used potentially by a customer and what drives the need to have these sophisticated solutions for enterprise?

Josh, President, Axon: Yeah. In in enterprise, there’s really two main things that are happening right now. Number one, you’re seeing more and more abusive retail workers. Target closed nine stores last year in the Midwest over this exact issue. And then you’re seeing that coupled with large amounts of shrinkage.

So go from 1% to 3% loss in retail that represents billions and billions of dollars of merchandise that retailers are now having to write off. And a lot of times when you talk to customer retail customers, it’s because they’re not giving, a prosecutor enough evidence to actually prosecute the case, and get an outcome out of it. It turns into a lot of he said, she said, and ultimately, it’s not worth the prosecutor’s time prosecute anymore. Not sad, but that’s kind of the reality of of where it is right now. So so video in these enterprises is the thing that changes that.

And so like you said, you know, we’ve been

Unidentified speaker: in the

Josh, President, Axon: enterprise market for about three years and to have our biggest deal in company history come from that market speaks to just the TAM and the total opportunity there. This particular customer, which we’ll hopefully be able to announce in the next few months, they use one of our products, Fusis, to consolidate 300,000 video streams that this enterprise has across their warehouses, their trucks, you know, their logistics hubs, etcetera, in their retail locations and so forth. So a lot of value there. Then, of course, body cameras on their retail workers where they have locations as well. So we think there’s a lot more where that came from in terms of opportunity in this new market.

Jonathan: Great. I’ll open it up to questions. Very fast. Anyone? Oh, we have a shy audience.

I’m surprised with, like go ahead. Yeah. I think

Unidentified speaker: have mean, I will mean, will basic job. I’m not doing that. I guess, what are sort of things I imagine that’d be more internal than external, but that could cause kind of a pause of this strength and kind of grow the path that you say?

Jonathan: Will you repeat the question? Yeah.

Josh, President, Axon: Oh, you want me to repeat Yeah. Go ahead. So, a lot of opportunity, but what are kind of the internal risks that could slow us down? I think, you know, frankly, think it’s just this classic innovator’s dilemma. Like, we’re the market leader.

If we get complacent, people over a ten to twenty year period will start to take pieces from us and then we wake up one day and kind of got our lunch eaten. So for us, the most important thing is to make sure we’re reinvesting and out investing a lot of our competitors technologies. We want to continually be the company that delivers new things every year to our customer base and continues to like at our company kickoff, I showed a video of Secretariat’s race at the Belmont and how it starts close halfway through it’s close, but then all of a sudden the gap widens over time. And that’s exactly how we’re thinking about our businesses. We’ve got a lead, but we’re gonna invest to widen that lead.

We’re not gonna rest on our laurels here. And so, you you know, the way the rubber kinda hits the road on that is you’ll probably see, you know, we’re we’re not overly focused on EBITDA expansion from here. You know, I think we’ll have a very healthy business, 25% plus EBITDA margins. But if it’s a dollar we can save versus invest back in R and D, we’re going to invest it back in R and D. SG and A, I feel differently about.

That’s where we want to get a lot of leverage over time and use internal AI tools to mitigate the need to hire more people in SG and A, maybe outside quota carrying salespeople. But that’s kind of how we think about making sure we’re investing continually in the growth here.

Unidentified speaker: Thank you. Thanks, Josh. Sure.

Unidentified speaker: It’s about public funding budgets. Yeah. Municipalities, seem to be under some constraint. Do you have such impact?

Josh, President, Axon: Sure. So the question was just around budgets and if any contraction of budgets is having an impact on Axon or any other budget implications. I’d say for us, we’re much more on the OpEx side of police budgets. So we’re a lot more in we’re a lot more insulated from grant cycles and onetime asset seizures and other things police can use to buy equipment. And thus, you know, I feel, outside of something cataclysmic that causes the tax revenues for a city to dry up, I think we’re in pretty good shape.

Grants are starting to slow down from the federal government in some areas, but oftentimes grants are used for things like helicopters, where it’s like a one time very heavy capital expenditure. And that’s not really how we do business. We’re much more of an annual subscription and operational item. So we’re actually feeling like with this new budget, going into 2025, ’20 ’20 ’6 in the federal government, there’ll be more dollars available for World Cup, for Olympics, for border security, all of places we think we’re going to be heavily involved in. So we see more opportunity than kind of headwind right now in in the budget climate.

Unfortunately, that’s all

Jonathan: the time that we have for questions. So please, join us in the breakout session. Thank you.

Josh, President, Axon: Thanks, everyone. Appreciate it.

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