Earnings call transcript: Axon Enterprise Q4 2024 beats expectations, stock surges

Axon Enterprise Inc. (NASDAQ:AXON), a $37.73 billion market cap company, reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $2.08 compared to the forecasted $1.40. The company’s revenue reached $575 million, exceeding the anticipated $566.8 million. Following these results, Axon’s stock surged by 12.96% in after-hours trading, closing at $561. According to InvestingPro analysis, the company currently appears overvalued compared to its Fair Value, despite its strong financial performance.

Key Takeaways

• Axon reported a 34% year-over-year increase in Q4 revenue.
• EPS of $2.08 significantly beat the forecast of $1.40.
• Stock price rose by nearly 13% in after-hours trading.
• Annual recurring revenue increased to $1 billion, up 37% year-over-year.
• Axon continues to expand its product portfolio with AI and drone technology.

Company Performance

Axon Enterprise demonstrated strong performance in Q4 2024, with revenue growth outpacing forecasts and marking the 12th consecutive quarter of over 25% revenue growth. The company has nearly doubled its revenue from two years ago, reflecting its successful expansion in both product offerings and market reach.

Financial Highlights

• Revenue: $575 million, up 34% YoY
• Earnings per share: $2.08, exceeding the forecast of $1.40
• Adjusted gross margin: 63.2%
• Adjusted EBITDA margin: 24.6%

Earnings vs. Forecast

Axon Enterprise’s actual EPS of $2.08 surpassed the forecasted $1.40, representing a 48.57% positive surprise. This significant beat highlights the company’s robust financial health and operational efficiency, continuing its trend of exceeding market expectations.

Market Reaction

Following the earnings announcement, Axon’s stock experienced a 12.96% increase in after-hours trading, reaching $561. This rise reflects investor confidence in the company’s strong financial performance and future growth prospects. The stock’s movement also aligns with its position between a 52-week high of $715.99 and a low of $265.32.

Outlook & Guidance

For 2025, Axon projects revenue between $2.55 billion and $2.65 billion, anticipating a 25% growth, building on its impressive five-year revenue CAGR of 30%. The company expects adjusted EBITDA to range from $640 million to $670 million. Axon plans to continue investing in research and development, particularly in AI, drones, and robotics, to maintain its competitive edge. With 13 analysts recently revising their earnings estimates upward, InvestingPro subscribers can access detailed analysis of these growth projections and their potential impact on the company’s valuation through the exclusive Pro Research Report.

Executive Commentary

"We just closed the year with revenue in excess of $2,000,000,000," said Josh Isner, President, highlighting the company’s substantial growth. CEO Rick Smith added, "We think we will be the partner who enables our customers to leverage these tools," emphasizing Axon’s commitment to innovation and customer partnership.

Risks and Challenges

• Potential supply chain disruptions could impact production.
• Market saturation in existing products may limit growth.
• Economic downturns could affect customer budgets and spending.
• Regulatory changes in drone and AI technology could pose challenges.
• Increased competition in the public safety technology sector.

Q&A

During the earnings call, analysts inquired about Axon’s federal market opportunities and the potential impact of funding cuts. The company expressed optimism about its federal market prospects and downplayed concerns over budget reductions, citing strong interest in its AI tools from law enforcement agencies.

Full transcript - Axon Enterprise Inc (AXON) Q4 2024:

Rick Smith, CEO/Founder, Axon: What an amazing company. What an amazing group of people. The people I get to work with are employees, my teammates, our customers, working on problems we care about. It’s a privilege I get to work here. All right.

Welcome to another one of our team members, our investors. And we’re here to report our fourth quarter twenty twenty four and year end. We just finished what I believe will be a pivotal year in the history of our company and we’re looking forward to another exciting year in 2025. The most rewarding part of my job is getting to spend time with our customers. And as you can see in the video, we feel like we’re on this mission together.

Understanding the challenges they face every day is our guiding light, and we have worked tirelessly to become their trusted technology partner. There’s so much we can do to make their jobs easier, their lives safer, and their days just a little bit better while helping them protect us. Over the years, we’ve introduced new tools that have advanced the way our customers operate and how they think about technology. We are at a place where the benefits of adopting newer technologies are so clear, it’s almost too impossible to imagine what the world would be like if they were never brought forward. We launched TASER 10 about two years ago.

It’s just one example of a product that is not only driving growth in our business, but it’s changing the world. I rarely go a day without one of our customers telling me how this device has changed their world, and we’re investing to make it better. We have a lot of work ahead of us to deliver on our moonshot, and I believe we have the roadmap to get us there. I’m in an international market where I just came back from one of the most inspiring days of my career and I can’t wait to share the results that will unfold over the next twenty four months as we move forward towards our moonshot. It’s bigger than just The United States and cutting gun related deaths between police and the public in The U.

S. It is a worldwide phenomenon that’s going to happen here. Stay tuned. We’re going to have better efficiency, better training and new ways to apply our technology over the horizon. Our cameras and our sensors are helping our customers capture more moments.

Our acquisition, FUSUS, helps us connect more sensors and cameras than ever before. There are countless places where the benefits of better transparency and operations with the increased application of connected technology are just undeniable. Our investments and our ability to lean in out of the foresight to invest in the things that led us here that enable connectivity and software behind not just cameras but all these sensors that are now taking flight into so many new sets of customers where we’ve never had the chance to engage previously. Our devices are connected by the most powerful purpose built public safety operating system in the world. We now have more than 1,000,000 users of our software solutions spanning evidence management, real time operations, productivity, and yes, artificial intelligence.

We understand the interconnection of advanced software and hardware and we unlock value in solutions that leverage the seamless connectivity to solve problems we care deeply about. This is where we differentiate ourselves for most with our customers. With this foundation, we see several major tech trends unfolding before our very eyes exponential advances in artificial intelligence, increasing connectivity, real time sensor fusion and growing applications for drones and robotics to name a few. These aren’t just buzzwords to us. These are our passions and we’re making them real and real businesses.

These product areas were more or less elements of our imagination a few years ago and today they account for nearly half of the overall opportunities in our pipeline. We believe we will be the partner who enables our customers to leverage these tools to make them work, to make their jobs safer, to make them better and more efficient. I continue to spend my time thinking about the big picture while ensuring that we’re on the right path to make giant leaps that challenge our conventional thinking so we can be prepared for and deliver and be the driver of the future for our customers. I’ve never felt more confident about our position or more just insanely excited and motivated by what we’re doing and frankly by the people I get to work with every day. One final note before I pass it on.

I would like to provide an update about something near and dear to me. It’s been one year since we last updated you on our intent to invest in our headquarters campus. We have a vision for a campus we’ve put in a lot of work. I personally haven’t time into that vision and we hope to keep it based here in Arizona. We love Arizona and we want to be here.

Unfortunately, Arizona has a political and legal environment that is making it challenging for businesses like us to invest here. After several years of working with our various elected administrative officials, developing plans that were responsive to our community, and we received unanimous approvals from the planning commissions and then through a vote of our elected officials, we’ve had a setback. Unlike states like Florida and Texas, Arizona allows zoning decisions to be subjected to political petitions and frankly, political gainsmanship. In our case, we faced paid petitioners who collected 93% of the signatures on a pay for signature basis with two thirds of those people coming from outside the state of California I’m sorry, outside the state of Arizona from another state who I may have just fraudulently mentioned. If we allow this to stand, this would delay our project by two years and reintroduce the risk of having to start over.

Unfortunately, this same phenomenon caused Arizona to lose our NHL Pro Sports team and it’s placing Axon and other major projects at risk. So like many things, we’re digging in to fix the problem. I’m working with our elected officials to try to fix this situation and enable Arizona to be an attractive, predictable environment for businesses. If we can fix it, it’ll keep us here and it’ll help the state attract other businesses and really grow into the tech center I believe it can be. If we can’t fix it, well, then we’re gonna have to move on.

We have several states courting us that don’t have the same risk profile. So, it’s we’re not going to leave this decision open forever. We will update you again as soon as we have fully vetted our options and come to a final decision. I intend to make that decision together with our Board in the coming weeks. So with that, I’ll pass it on to a guy again who I’m just excited to work with, who really leads the business, which gives me the time to spend a lot of time with our customers.

And Josh is going to give you the details on what our incredible team accomplished in this most recent quarter. Josh?

Josh Isner, President, Axon: Thanks a lot, Rick. I appreciate the kind words. Good afternoon, everybody. As Rick mentioned, our customers remain at the center of our universe. I believe that mindset is what has afforded us the results that we have the privilege of reporting to you today.

I’d like to share a few updates that recap the year and then some thoughts about where we’re headed next. First, we just closed the year with revenue in excess of $2,000,000,000 That’s nearly double the revenue we reported only two years ago, and it marks our third consecutive year of growing over 30%. This growth is a testament to our ability to deliver products that drive clear value for our customers and our team’s ability to connect our customers with the right solutions. It takes an entire team to deliver results like these, and everyone at Axon continues to rally behind Rick’s visionary leadership. Second, we booked over $5,000,000,000 in business last year with about half of that closing in Q4, and there was strength across the board.

Eight quarters in, TASER 10 orders continue to outpace TASER seven by 2x, and we continue to see encouraging demand from our emerging market customers. To that end, seven of our top 10 TASER 10 orders to date come from outside U. S. State and local law enforcement, including customers in international, federal, and corrections. We also had our highest ever officer safety plan bookings in Q4, nearly booking more seats in the quarter than the prior three quarters combined.

And we continue to see strong adoption of our premium plans within that mix along with adoption of our emerging products. Draft one continues to garner strong interest, and we were able to close our first ten AI Aeroplan deals in Q4. We are extremely pleased with this outcome given the fact that the plan launched at IACP in late October. New product pipeline generally takes three to six months to materialize, and we view that accelerated adoption of this plan as a positive indicator of the things to come. We updated our TAM.

And as Rick mentioned, we believe our investments around AI, real time operations and drones and robotics roughly doubles our overall opportunity set. We’re seeing early signs in our product bookings to support that outlook. Third, I want to talk about two growing customer groups that I’m particularly excited about right now, international and enterprise. Our international bookings grew nearly 50% sequentially in Q4, and that’s on top of 40% sequential growth that we saw in Q3. In enterprise, our bookings roughly tripled year over year.

I’m happy to report that in Q4, our enterprise team booked the largest deal in company history with a global logistics provider. Congrats to Mike Shore, Billy Corbett and the dozens of Axon employees who supported this deal. This development continues to give us confidence that given the large TAM and growing product market fit, the enterprise segment represents one of Axon’s largest opportunities into the future along with federal and international. As we expand and grow, these three customer groups account for over $100,000,000,000 of opportunity. Turning to what’s next, we have a lot of runway ahead.

We ended the year with total future contracted bookings of over $10,000,000,000 and our pipeline is the healthiest it has ever been, even in comparison to this time last year. We expect another record bookings year in 2025 with line of sight into several years of exciting growth ahead. Our team is focused on executing on the many opportunities in front of us, and we are putting in the work to achieve our goals and deliver on our mission of protecting life. I know I say this a lot, but we run our team with a next play mindset. What excites me most about our results is what they signal for the years ahead.

That’s why I love the beginning of the year. While it affords the opportunity for others to hypothesize and speculate on varying expectations, that’s the same energy that fuels us to win more often in more places and deliver bigger and bigger societal outcomes. And that’s exactly what we plan to do in 2025 and beyond. Over to you, Britney.

Britney Forsyth, CFO, Axon: Thank you, Josh. As Rick and Josh mentioned, it’s wonderful to come back to you with another great quarter and to report results that exceeded our expectations once again. Q4 revenue of $575,000,000 increased 34% year over year for our twelfth consecutive quarter of over 25% revenue growth. I’m particularly excited that we saw double digit year over year growth in all of our business areas with TASER up 37%, sensors up 18% and software and services up 41%. Our software remains a driver of our overall growth and contributed 40% of our total revenue in Q4.

ARR increased to $1,000,000,000 up 37% year over year and net revenue retention remains strong at 123% reinforcing the visibility and predictability in our business. Adjusted gross margin was 63.2% and has been very stable across the year at an overall company level. Adjusted EBITDA margin was 24.6% and we continue to invest in our business to ensure we are positioned to grow with new customers and markets while driving innovation in our technology. On a full year basis, we delivered over 33% top line growth driven by continuing to deliver more to our customers with strong product performance across the board. We also delivered strong bookings, taking our total future bookings above $10,000,000,000 and providing support for years to come.

We made significant strides in profitability, expanding adjusted EBITDA margins almost 400 basis points this year. As a result, we achieved a 25% adjusted EBITDA margin for the full year, a milestone we initially set for 2025. With this result, we reached both our three year revenue and adjusted EBITDA margin targets a full year ahead of schedule. As we exit the year, our product teams are working on new technology that will support our growth outlook for many years ahead. We are quite excited about our newer product areas and continue to invest in R and D to support our growth.

We are entering the new year in the strongest and cleanest inventory position we’ve been in for the last three years. We did all that with strong free cash flow generation above 60%. We continue to drive strong customer satisfaction, which is our North Star. It’s humbling to think about where we are and I thank our teams across the company for the work they put in during this incredibly busy and exciting year. Now I’ll turn to our 2025 guidance.

We expect 2025 revenue in a range of $2,550,000,000 to $2,650,000,000 or approximately 25% annual growth at the midpoint. This would mark our seventh consecutive year of 25% or greater annual growth. Similar to past years, we looked at the strong execution across all segments, momentum in future contracted bookings and our pipeline entering the year to develop this guidance. We expect 2025 adjusted EBITDA in a range of $640,000,000 to $670,000,000 representing approximately 25% margins. We believe this margin level puts us at the right balance to invest in in the future growth opportunities we see while still delivering strong profitability and cash flow.

As a management team, we are focused on delivering year after year over the long term. That requires continued innovation, product risk taking and investment and we’re lucky to have Rick who is such a visionary in this space. I hope you can tell we’re excited about the opportunities in front of us. It is this type of product innovation that has allowed us to deliver our consistent impressive top line growth numbers. Beyond R and D, we’re also investing in our sales functions to support new customers and market opportunities as well as continuing to scale the business.

For some context, we are now at four years of hitting 50, well above the rule of 40. We’re pleased our guidance implies another year of hitting that type of number. We also expect CapEx in the range of $140,000,000 to $180,000,000 up year over year on a dollar basis but only up two points as a percent of revenue. This is driven both by Morteaser ten capacity to keep up with our continued strong demand as well as investment in both R and D and manufacturing for our many exciting new product areas. We’re proud of all we accomplished in 2024 and are looking forward to another dynamic and innovative 2025 that delivers for our customers and our shareholders.

Now we will turn it over to take your question.

Eric, Moderator/Operator, Axon: Thanks, Britney. Let’s pull everyone into gallery view. All right. We’re going to take our first question from Jeremy Hamblin at Craig Hallum.

Jeremy Hamblin, Analyst, Craig Hallum: Thanks and congrats on the very strong results and guidance. I wanted to start with, I figured, a topical question and, you know, just get a sense for, you know, what portion of your total revenues are coming from federal contracts, with the US government, whether or not, you know, some of the things that are happening in terms of hiring freezes, you expect to have any potential change in the timeline of deployments, you know, anything you might be able to share on that to provide us a little bit better sense. We’ve certainly got a lot of questions around the potential risk around this area.

Josh Isner, President, Axon: Yeah. I really appreciate it, Jeremy. Thanks. A couple thoughts on this one. Number one, I I certainly don’t think, in terms of Axon’s case in our future, there’s any real cause for concern about what’s happening with the funding cuts and DOGE and so forth.

Actually, I think there’s a world where we could come out of this with more opportunity as they start to look at, hey. Where where are, you know, federal law enforcement getting their bang for their buck in technology? And I I think they point back to Axon. And, I think we’ll have the opportunity to continue to support, the federal government across both federal civilian and DOD, hopefully in bigger ways than DOD moving forward. And we’re excited to compete for more business there.

So I personally think there’s more opportunity than risk right now for us in the federal space.

Jeremy Hamblin, Analyst, Craig Hallum: Great. And then potentially related question. So other topical news is it looks like we may be coming towards an end hopefully in in in the war in Ukraine. I know that DEDROEN has certainly been impactful in terms of operational support, in those efforts. I also know that, you know, the recent kind of government, changes in terms of funding outlined that drones would not be impacted by any hiring.

I wanted to understand, the potential mix of change related to if we get, an end to, you know, kind of Ukraine or in the next month or two, and then vis a vis, you know, what you expect from a border patrol support, and opportunities that, that are coming from, you know, or or were there for D Drone related to those efforts.

Rick Smith, CEO/Founder, Axon: Got it. Let let me maybe take this one. So, yes, I mean, D Drone has sold a lot of stuff into Ukraine, but the far bigger picture is what happened in Ukraine has put drones on everybody’s roadmap. Every military in the world is thinking about how do you detect these small drones that traditional military systems are not designed to detect, how do you defend against them. We acquired the world leader in drone detection.

We acquired the at least one of the world leaders in indoor tactical drones with Skydio. We’ve partnered with the leading U. S. Maker of long range autonomous AI driven drones in the moment where basically DJI is largely being made illegal in The United States. So we think we are in an amazing position for drones and robotics.

It’s an area we’re investing heavily. We’re currently either the leader or partnered with the leader in the key market segments. And when you think about things like patrolling borders, protecting stadiums, and I mean, Ukraine has shown what anybody could do with a drone you can buy for less than $500 And everybody in the world is thinking about how to defend against those. And we think we are, if not the best positioned, among the best positioned for helping our customers globally solve that problem. So from a human perspective, I certainly hope that all the violence we’re seeing in the world comes to an end, but in a way that is persistent and sort of long term puts these issues to rest.

And we look forward to playing a role in helping use technology to protect people from killer drones. You know, we’re not going to get into the lethal drone business ourselves, but we’re going to absolutely be a leader in helping defend against those kinds of threats and then using drones to be able to go out, act more intelligently, save lives and stop threats without using lethal force. And we think those opportunities have all gotten bigger, just given the quick evolution of space that’s been caused by what’s been happening in The Middle East and in Ukraine.

Josh Isner, President, Axon: And Rick, I might just add one more thing there, which is just to the first part of your question, Jeremy, just to address any ambiguity. None of our forward looking guidance assumes any incremental revenue from Ukraine.

Jeremy Hamblin, Analyst, Craig Hallum: Understood. Thanks so much for the color, and best wishes on continued success.

Josh Isner, President, Axon: Thanks.

Eric, Moderator/Operator, Axon: Thanks, Jeremy. Up next, we have Mita Marshall at Morgan Stanley (NYSE:MS).

Mita Marshall, Analyst, Morgan Stanley: Great. Thanks, and congrats on the quarter. Maybe to start with, you know, great traction on kind of noting the hundred thousand incident reports kind of already, completed kind of with the AI tools. Just what are you seeing in terms of kind of, AI adoption either in what type of bundles they’re opting for or just kind of pipeline there? And then maybe as a second question, you know, noted kind of the the large enterprise win, you know, just what was kind of, the entry point there?

Was it FUSUS? Was it kind of body cameras? Just any contact there would be helpful. Thanks.

Rick Smith, CEO/Founder, Axon: Let me take the first part and I’ll have Josh talk about the second part. So in terms of AI, like, without a doubt, these are the fastest growing adoption products we’ve ever had, and it’s not by a small margin. So we’re seeing these products, these services really resonate with our customers. And they’re it’s unbelievable the AI Era plan that we are closing deals within eight or nine weeks of launch. That’s like I don’t think we’ve ever seen things move that fast.

Maybe a little bit with like with a TASER, but that’s where like somebody had an existing TASER line item, we introduced a new TASER and they like went from TASER seven to TASER 10. So yes, that has happened, but a new product category going from zero to deals in that shorter timeframe is super encouraging.

Josh Isner, President, Axon: Awesome. And on the second part of that question on enterprise, I think the really exciting news is there are multiple entry points into some of these large opportunities. I think FUSUS is certainly relevant. Body cameras are certainly relevant. D drone is relevant.

Drones are relevant. Obviously, evidence.com, I think there’s, we’re starting to see, like I said, just better and better product market fit to address this group of customers. And and really the most encouraging thing of that is it’s still along the lines of our mission and use cases that we really want to support and that they lead to better, safer outcomes in these enterprise environments. And so it really is exciting. I believe this is going to be a major, major part of our business, maybe even the biggest part of our business long term.

And, I think we’re we’re on the right track there for sure.

Mita Marshall, Analyst, Morgan Stanley: Great. Thanks. I’ll pass it on.

Eric, Moderator/Operator, Axon: Thanks, Nida. Up next, we have Josh Riley at Needham.

Josh Riley, Analyst, Needham: Alright. Thanks for taking my questions. Just wanted to hit on the news with the Flock Safety Partnership. Maybe what happens in terms of the technology licensing, for Fleet three ALPR technology now that the partnership, is maybe ended? And then how are you thinking about more broadly your relationship with the company moving forward and your strategy around fixed LPR?

Josh Isner, President, Axon: Yeah. Thanks a lot, Josh. Look, a lot’s been made of this, obviously, in the last week. And frankly, I think it’s somewhat overblown. We did exit a partnership with Flock.

However, I think both sides have an interest in getting back to that partnership. We propose new terms. I think what we’re asking for is just a more fair flow of information into FUSIS just like we support in Deflok OS and Deflok’s credit. They’ve been receptive to our feedback there, and we hope to be able to resume it. And so I’m not going to speculate on what happens if that doesn’t come into fruition.

Of course, we’d have to look at how we how we support those customer use cases. But, right now, our focus is just on making sure that that we can arrive at at a new partnership that, that really in the end benefits our customer and the use of their own data.

Josh Riley, Analyst, Needham: Understood. And then maybe just back on the federal business, have you heard any feedback thus far from customers with regards to their ability to expand and take down more body cameras or tasers under the existing contract structures, which to my understanding were, often open ended with their ability to add more products since the election has happened?

Josh Isner, President, Axon: Yeah. Thanks for the question. So on on some of these customers in federal, as you probably saw in the news, you know, one of the first executive orders addressed body cameras for for federal law enforcement, and yet our customers are are still wearing our body cameras. They’re seeing a lot of great outcomes as a result of wearing them, and we do believe these programs will continue to expand into federal. So, again, I I don’t think the world has changed much, if at all, for us in the federal space.

I think that’s the benefit and reward for having products that drive true outcomes in the field. And I think our customers see that, and we get a lot of support from them on this. So we’re proud of the partnership and certainly think it’s going to be a bright future there.

Rick Smith, CEO/Founder, Axon: And, Jeff, let me ask you then as well. When we first introduced body cameras in law enforcement, most cops didn’t want to wear them. And there was one of the statewide union leaders sort of famously told me no cop wants to wear a body camera until they’ve worn one for thirty days, and then they’ll refuse to go on patrol about it because they realize in today’s world, it protects them from all the crazy allegations somebody could make. And that’s also true of our federal customers. I meet with them all the time.

And so, like, early on, I think it was kind of helpful to get a political push from the top to get these agencies to try it. But once they start using it, we see the same phenomenon. Like, you know, if you’re whatever federal agency you work for, you just realize, like, your job places you not only at physical risk, but at risk of being accused of just about anything. And having a video that shows you’re a professional doing the job the right way is something that gives them great comfort to go do their jobs with confidence that, you know, they’re not going to get hung out to dry by somebody making something up about what they did.

Josh Riley, Analyst, Needham: Understood. Thank you, guys.

Rick Smith, CEO/Founder, Axon: And by the way, the other thing I’ll add is these new tools like Draft1, customers absolutely love it. I mean, cops are over the moon about this, the idea that, god, I don’t have to spend four hours a shift doing reports. I’m, like, cutting that in half. And I was just demonstrating our new real time translator. I’m outside of The US right now.

Like, we did a demo in Icelandic yesterday, and the guy said was thinking there’s no way it was gonna work, and his jaw hit the floor, before we did Arabic, Norwegian and a couple other, you know, not exactly in the set of, like, the most heavily used languages in the world. We think the real time translator is going to be another real hit. So the body camera is evolving and our customers are seeing it. It’s not just a recording that can help me. It’s now the edge of the AI Internet on my chest.

I’ve got a real time AI assistant that’ll help me translate, that’ll help me write my reports, will help me look up things I need to know, help me ask policy questions, or I don’t have to call a lawyer at 2AM in the morning about how to deal with some obscure legal situation. I can just immediately cross reference my reports. And all those capabilities are included in the new Era Plan, which is why, you know, we saw it go from zero to revenue so quickly.

Jeff, Unnamed Executive, Axon: I think one of the things you continually hear in the industry right now is a lot of theory and not a lot of practice and application with the power of these new AI tools. And what we are all about is the applied practice directly in service of real problems for our real customers, and that’s what they love about what we’re building.

Josh Riley, Analyst, Needham: Thank you.

Eric, Moderator/Operator, Axon: Thanks, everyone. Up next, we have Mike Ng at Goldman Sachs.

Mike Ng, Analyst, Goldman Sachs: Hey. Good afternoon. Thanks for the question. I just have two, one on bookings and one on cloud. First, just on bookings, it’s a it’s a two parter.

You know, you guys had bookings of over $5,000,000,000 this year. I think this is at least the the third year of bookings growing a billion dollars year on year. So when you look at your pipeline going into 2025, in your base case or in your bold case, like, are you assuming bookings grow a billion dollars again to 6,000,000,000? Any thoughts qualitative or quantitative would be helpful.

Josh Isner, President, Axon: Sure thing. Like I said, Mike, in my prepared remarks, the pipeline is extremely healthy right now, even healthier as a relative to where it was at this time last year. And look, our goal is that our bookings growth rate looks similar to our revenue growth rate. And that just, you know, at back of the napkin, it it kinda pencils out to, hey, we can just keep this this high growth rate going well into the future. So it’s not necessarily about growing a billion every year or less or more.

It’s more about, hey, can we can we have our bookings growth rate somewhat mirror our revenue growth rate? And and if we do that every year, the business will be very, very healthy for a long time.

Mike Ng, Analyst, Goldman Sachs: Great. Thank you. And then just on cloud, you know, Axon, Evidence and cloud services revenue within software and sensors, that saw a solid step up q on q. I think it was up $35,000,000 sequentially, I think the largest on record. Could you talk a little bit about some of the key things that drove that strength?

Was there anything unusual that made that sequential growth particularly good this quarter? Or are you thinking that, hey, the the structural, you know, run rate of sequential increases may have stepped up? Thank you.

Britney Forsyth, CFO, Axon: Okay. I’ll take that one. I think it’s very much what we talk about from a seasonality standpoint as we go through the year, which is that our step up from a software standpoint often lags how we’re doing on bookings by a quarter. Now it’s not always perfect right because there’s timing inside of the quarter but as you think about it our strongest bookings quarters tend to be Q3 and Q4 and then Q1 is our seasonally softest and it does, you know, it goes through the year that way and so if this step is lagging by a quarter what you see typically is Q4 and Q1 have the bigger steps up from a software standpoint. I think, you know, you’re just seeing the strength in the software business come through, we’re seeing more user adoption and we’re seeing more products, more software products get sold into those users.

You also, Dedron is not material to our business but they do have some software revenue and so you are seeing a small bit of GEDron come into the software step for the first time this quarter.

Mike Ng, Analyst, Goldman Sachs: Great. Thank you, Britney. Thank you, Josh.

Eric, Moderator/Operator, Axon: Thanks, Mike. Up next, we have Jonathan Ho at William Blair.

Jonathan Ho, Analyst, William Blair: Hi. Good afternoon. And let me echo my congratulations as well on the strong quarter. With your international bookings, can you talk a little bit about the strength here and maybe what’s changed in the decision to expand, you know, sort of the TAM?

Britney Forsyth, CFO, Axon: Yeah. So I think a lot Josh might cover the strength on international, but I think a lot of what you’re seeing in the TAM is we refresh the TAM every two years. We did a little bit of an interim update when we did our FUSIS and our D drone acquisitions, but that was really an interim process. And so, as we came back to look at our TAM this year, we really looked out over the next two years and what’s changed a lot from two years ago is really the number of products we have. And so that applies to international as well.

As you look at the international market, we now have a lot more products that we can go ahead and sell into the international market like Buses, like D drone, like AI. And so you’re seeing that strength come through. We’re also continuing to see some nice traction outside of some of our commonwealth markets. And so that gives us increasing confidence in that higher international TAM.

Josh Isner, President, Axon: Yes. And I’d just add, Jonathan, on the international bookings piece. I think it’s just a story about execution. I think we have plenty of product market fit to be very successful internationally. I think the team is this has been somewhat of a transformative year for our international business in terms of the team, bringing on Cameron Brooks as our CRO out in Europe, and he’s made a couple key hires in Europe.

And our our Latin America and Canada function is is going very, very well under, Vishal Dier. And we just we’ve we’ve got, more of the team in place that’s just executing on a higher level. And so we’re, we’re pretty pretty bullish on international moving into the future here, as Pritney was saying. I think now as we’re landing in more places, there’s going to be the opportunity to expand with more and more products.

Jonathan Ho, Analyst, William Blair: Excellent. And just as a follow-up, a big picture question for Rick. We’ve clearly seen a strong value proposition here from generative AI tools. How do you imagine what you can do with Agentic AI, which seems to be sort of all the rage on the tech side and potentially is even more impactful than generative AI? Thank you.

Rick Smith, CEO/Founder, Axon: Yes. I mean, I think it just sort of builds. For us, it’s all about like where do the workflows matter that will enable our customers to do the things they need to do like, in their jobs. So I think a lot of it right now is like, okay, take this transcript, run it through and create a report for me, or like, hey, take this and translate it. I think Agentic AI allows you to start to do things like, hey, go search across this giant dataset and help me solve, like, some problem that currently I have teams of people working on.

And we think we’re in a unique position given our customer trust, given that we’re housing, you know, so much of their data for them and managing their sensors, that we’ll just kinda keep going down the list of their problems. And then for us, there’s also a risk reward trade off. Like, we intentionally started with report writing rather than, for example, facial recognition, where there’s various privacy and and related concerns where report writing was like, hey. You know, we we can ensure there’s human oversight if the AI gets it wrong. Like, it’s actually not a catastrophic failure.

You’ve always got the underlying evidence. We can put in speed bumps to make the officer do it. I mean, we are starting to look at more uses of of AI that will help with some more core law enforcement functions. We’re gonna do it in a way that we will always be proud of, that that respects and balances, you know, privacy, and we wanna build the world of Gene Roddenberry, not George Orwell. And, you know, these agentic workflows will just allow us to start handling higher levels of complexity.

But for us, it it starts with I go out, I meet with customers, I hear what their problems are, and then I get to come back to the company looking like a genius with all these great ideas. I’m like a bee carrying pollen back to the hive. And then Jeff’s got to make sense of it all, segment it, work with our thousand plus engineers and product people to take these great customer ideas and put them together. And then Josh and Britney are gonna, like, then staff and and execute the business to run it, and I get to go out, you know, on the road again. So the team works really well together.

And, you know, I just I love my job getting to go just sort of imagine talk to customers about their problems and try to match it on, okay, what tech is gonna work in it. To be honest, Jeff really holds me accountable. A lot of our conversations, Jeff uses the word actually a lot about, like, okay, Rick. Like, this is great stuff. What can actually work right now in a way that customers will actually use it?

It won’t disappoint them, and it’s not gonna be bugging. And, and so, you know, agentic work goes, we’re gonna approach it kind of the same way. Okay. You know, where are we at, and what will work well for our customers? And it’s a lot of it’s just getting the sequencing down.

Eric, Moderator/Operator, Axon: Thanks, Jonathan. Up next, we have Andrew Sherman. Andrew, welcome to the call.

Josh Isner, President, Axon0: Great. Thanks, Eric. Good to be on the call. Congrats on the quarter. Brittany, one for you on the revenue growth guide of 25% very strong.

Maybe just walk us through your assumptions embedded there for NRR. Any color on the AI error contribution, the sustainability of the strong 123% NRR and any change to your guidance philosophy versus the past couple of years?

Britney Forsyth, CFO, Axon: Yes. Thank you. So as I talked about no actual change in our guidance philosophy, what we do is we’ve got our future contracted bookings, we know approximately how much of that will convert in the next year. So we know how much of a go get we have. And then we can look at our pipeline and see how our pipeline stacks up and how we feel about that go get.

So that’s pretty much how we do it. And that’s how we continue to do it this year. You know, in terms of assumptions going forward, I mean, we have really low churn. Our NRR has really only continued to be very stable to positive. So no major changes in assumptions going forward.

Josh Isner, President, Axon0: Great. Thanks. And for also for Britney and Josh, maybe just touch on where the supply demand imbalance for TASER X, great to see that it’s still tracking at 2x T7. But where do we stand today, supply demand imbalance? I think, Brittney, your CapEx comments would imply more supply coming on.

So what is that signal for growth this year?

Britney Forsyth, CFO, Axon: You got it. We are still outpacing our supply with our demand. So still in a great place. We are investing next year to try and bring more supply online. So, we’ll see where demand goes.

I think we imagine that sometime next year we’ve got that supply demand imbalance. But what you’re really seeing right now is we are basically selling as much T10 as we can make, and so we’ve got to keep investing behind our capacity.

Josh Isner, President, Axon: Great. And Andrew, thanks a lot. We’re particularly excited about T10 just because of what it means for our mission in Moonshot as well. The more customers deploying it, we are seeing videos of better and better outcomes in the field. And I think that’s kind of continuing through a network effect across the entire market.

And so we’re very excited about what the future holds for TASER 10. I don’t think there’s any slowdown in sight here. It’s our highest demand CEW ever, and I think that will continue.

Rick Smith, CEO/Founder, Axon: Yes. I just met with some new European customers who have not had t 10 for very long, and two of them told me they’ve already averted at least one shooting, saved at least a life in in the early, you know, few months of them deploying it in the field. And these are countries, obviously, that don’t have the frequency of shootings that we do in The US. So it was pretty significant to hear that from them.

Jeff, Unnamed Executive, Axon: And while, you know, all of our products work so well together and, you know, as an ecosystem, there are, you know, pairs here and there that are, you know, doubly so peanut butter and chocolate and and drive each other forward. And so with t ten, the story with VR is such a great one because t ten is not only so transformational in its capability, but it is new and different in a way that really motivates the sale and adoption of our VR training that goes along with it. And it’s the catalyst for getting the best possible outcomes with t ten, and a similar story for like DFR and robotics with FUSIS and RTCC. So you see all these pairings that go so well together combined with the leverage of them adopting more and more of our whole ecosystem.

Josh Isner, President, Axon0: Great. Thank you all.

Eric, Moderator/Operator, Axon: Thanks, Andrew. Up next, we have Will Power at Baird.

Josh Isner, President, Axon1: Great. Thanks. I guess I got a couple. Well, I guess first, Rick, I’m sure the lone star state would love to have you. You know, question maybe first question for for for Josh or Rick who wants to take it.

Look at it sounds like really strong early success with the AI Europe plan. I think you noted, you know, 10 deals, in q four. I just wanna understand the confidence and visibility there as we move forward because it’s a big lift in OS in OSB pricing. Right? I mean, going from $3.50 at the high end to five fifty.

What’s the conviction, confidence, visibility, and agencies having enough budget to be able to adopt this at a rapid pace from here?

Josh Isner, President, Axon: Yeah. It’s it’s interesting. Well, it’s it’s a great question, and and, it’s nice to see you again. The What I would say about the the AI error plan and and about our AI products in general is, they are driving such an ROI that can be measured in in staffing and officer time that our customers are saving money as as a result of of deploying this for, you know, $200 a person. Like, the, you could just do the math on draft one alone.

And, essentially, what it is allowing you to do if if you’re a police chief is have 20% more capacity day to day of of your police officers. And, you know, this is an environment where police departments are still very understaffed. They’ve got dozens, in a lot of cases, hundreds of open roles that are unfilled. And so when they can allocate some of those dollars over to these tools that that might, you know, mitigate the the need to have more officers at the department to begin with, that’s highly valued. And so we’re very, very encouraged, and it’s mostly because we know what type of financial outcomes some of these AI products are driving for our customers.

Rick Smith, CEO/Founder, Axon: Yeah. Let me jump in on that. I met with a large customer in a relatively new segment for us, so it’s not state and local law enforcement, big agency. And meeting I spent a day with the customer going through their operations, learning how things work. It was a lot of fun for me.

And there is a new AI service we could do that would literally offload more than half of what their entire staff spends their time doing that they hate doing, that’s administrative in nature. It’s got a lot of the similar characteristics to Draft1 to where this customer is like, oh my god. This would this would be game changing for my budget. It would free up my people to do, like, more training, and and I wouldn’t need as many, you know, people, so I could grow a little slower and my morale would go up dramatically. And so that’s when I came back to Jeff and we’re like, okay, let’s put a team on how to figure out how to do this.

And with the new AI tools, like, it’s it’s gonna be very doable. And so, again, that’s just another example where AI is allowing us to rapidly bring the promise of, like, AI tech doing sort of repetitive jobs. And because our customers one of the things that’s sort of great is it’s not like they’re firing people or this is taking people’s jobs. It’s taking the crappy, low value, time consuming, bureaucratic suck of their job away. And that’s like a win win, and they’re just excited.

But, yeah, I I can get to go do stuff I enjoy doing that gets me excited to go to work. And then for the chief, it’s like, yeah, I’m getting more out of my people. So, it’s pain for itself.

Josh Isner, President, Axon1: Yeah. That was great to hear. It sounds like Jeff’s got job security as he works on those projects. I just I mean, just just a quick second one. Probably for Josh, just the enterprise deal.

You know, the largest deal, I think, in history. Maybe I missed this, but need a color as to exactly what they’re utilizing. Are they are they use utilizing body worn cameras? Is it FUSIS? Is it both?

Is it, I don’t know, even DEDRO for facilities? What what what’s kind of getting used there?

Josh Isner, President, Axon: Yeah. I think in this particular deal, Will, it’s it’s body cameras and FUSIS with, of course, Evidence.com licensing as well. But but the same customer has a lot of interest in Ddrone and and and other products as well. So I think what you’re gonna see throughout this year in the enterprise segment is, you know, we’ll be landing in a lot of cases with FUSIS and and body worn cameras. But, just like I was saying about international, I think the same holds true where a bigger and bigger part of our product portfolio will be applicable to the enterprise segment, and we’re very excited about that.

Josh Isner, President, Axon1: Thank you.

Eric, Moderator/Operator, Axon: Thanks, Will. Up next, we have Trevor Walsh at JMP.

Josh Isner, President, Axon2: Great. Thanks, team, for taking the questions. Josh, maybe for you, but Rick, feel free to jump in. I want to ask the federal question maybe a different way. So I understand it’s more opportunity versus risk on the federal opportunity itself, but one of your peers kind of in the state and local technology, centered, kind of sales motion gave some statistics on their call a few weeks back about kind of how federal funding flows down in the state and or local budgets.

Just curious, it sounds like from that kind of just general commentary that state budgets can be a little bit more impacted or kind of do draw a lot more from federal funds. So just curious if you’re hearing concerns or for that state level, you know, state police, whatever it might be types of orgs having maybe worries or concerns around kind of what the federal fund kind of flow will be for them, less so, obviously, like, county and local level, if that makes sense.

Josh Isner, President, Axon: Yeah. Thanks a lot. You know, personally, I’m not sure I agree with that commentary. It is true that some grants and other programs have dried up. A lot of those, you know, were not particularly impactful to Axon, maybe to some other companies.

But, I still think there’s a universe where police in in in federal military are better funded by the federal government. State and local police and federal military are better funded by the federal federal government in this next year than, I think people are assuming. And so, personally, I I don’t I don’t necessarily see any headwinds in that way that would have any, material impact on our business.

Rick Smith, CEO/Founder, Axon: And if you hear the types of projects that are getting paraded in front of the cameras as, like, examples of waste, none of them are, like, critical public safety equipment and technology. It’s stuff that people are like, oh, wow, that’s weird they’re spending my money on that. And like, we just don’t think we’re like our products make a ton of sense for customers that bipartisan are pretty universally, you know, both Republicans and Democrats in the last election cycle, I think were going out of their way to make sure that they knew that they were pro public safety, pro law enforcement. So again, I don’t want to be arrogant about it and say we’re bulletproof, but I would say, you know, we think net, we haven’t seen the political wins really affect us that much as long as we’re delivering things that actually help our customers do their job. Then whether it’s in a blue city, a red city, a Trump administration, a Biden administration, like the product carries the day.

Josh Isner, President, Axon2: Great. Thanks both for the color. Maybe maybe just one quick follow-up for Britney. Appreciate the new future contracted bookings metric. Always love adding a new metric to keep tabs on.

Can you it sounds like it’s RPO basically plus, additional contracts that have t for c or other clauses that kind of obviously don’t put them into RPO. Is that kind of new metric a function of that more of those termination clauses or doing more contracts that have more of those types of things and so it kind of helps to give more visibility there? Where I guess, where are those contracts falling? Are those federal customers just generally have that written in or are there other places where you’re seeing that kind of more and more generally from a contract perspective? Thanks.

Britney Forsyth, CFO, Axon: Yeah. I mean, you nailed it. That’s exactly what it is. And and so we’re gonna move to talking about, you know, our new, you know, total future bookings number because it’s really more indicative of what the business is doing and the bookings commentary and color we give. We have been going through and we changed accountants this year so we’ve really been scrubbing RPO and there’s just a lot that ASC six zero six doesn’t allow us to put in from a GAAP standpoint.

So you will still find our GAAP RPO number in the like 10 ks. We have to report that. You’ll see that. But just more and more, it’s diverging from how we actually measure our business. And, you know, we don’t go back and look at our historical contracts.

Like even when we have term for convenience, our customers don’t actually leave us. Like, they don’t utilize that. We really don’t have churn so it’s just not indicative. In terms of where we’re seeing it, honestly, it’s across the board. Like, more and more customers just want term for convenience as a best practice, and so we’re seeing it in a lot of places and so we’re we’re just gonna move to this sort of non GAAP version of the metric, which we think is a better reflection.

Josh Isner, President, Axon2: Great. Thanks, all. Great finish of the year.

Britney Forsyth, CFO, Axon: Thank you. Thank you.

Eric, Moderator/Operator, Axon: Up next, we have Jordan Linus of Bank of America.

Josh Isner, President, Axon3: Hey. Thanks for taking the question. Could you guys talk about how you’re approaching your go to market with Skydio and the SkySkySwap program and how that’s been going so far?

Josh Isner, President, Axon: Yeah. And certainly, I’ll I’ll start, but I think others should chime in on this one. Look, we’re we’re really excited to have Skydio as a partner. We think they’re the most talented team in drone technology. They’re a phenomenal cultural fit with us in terms of our go to market motions.

The product is fantastic. Like Rick was saying, DJI has fallen out of favor in in in U. S. Public safety, and Skydio is the obvious choice behind them. And so, we’re we’re really excited to be able to kind of augment our ecosystem with Skydio hardware and really give our customers more situational awareness and more opportunities for really integrated DFR, drone as a first responder experience.

So, I think that’s something that we’re very, very excited about and very encouraged about what the results have been so far in that partnership.

Rick Smith, CEO/Founder, Axon: Yes. Let me jump in and actually say, you know, it’s not even I wouldn’t say Skydio is behind DJI. You know, DJI, like, got to market first with with scale, but Skydio is actually the world leader in autonomy. Like many things, the the Chinese companies had really inexpensive hardware, and they did a great job with the user experience. Skydio has a big team in Silicon Valley who’s been very much focused on leveraging AI and sensors so that the drones can launch and fly themselves autonomously.

Now, look, we bought a drone company two years ago ish with Sky Hero. That was for a different use case. That’s for indoor, like, tactical drones. And as we did an assessment on the make, build, buy, you know, what Skydio is doing is just a different level of complexity. Like if a tactical drone falls out of the sky, it falls to the floor from six feet, it doesn’t fall on somebody, it doesn’t have to fly itself.

You build it to be more resilient to bump into things and you don’t need in fact, all the autonomy can get confused in an indoor environment. And there’s other applications for the long term that we felt Sky Hero would be transformative for us to own and work on. With Skydio, this was just our assessment was, wow, it took a team of like 600 people working for the better part of a decade with pretty massive investments to do this and they’ve got a huge head start. And as we got to know each other, it was one of those, like Jeff would say, chocolate and peanut butter moments. It was really a great fit.

I’ve developed a great personal relationship with the team and Adam up there, and it really fits nicely like, you know, like a lock and a key with each other’s portfolios. And so we’re going to market, you know, hard to think with the partnership, and we’re getting tremendous customer feedback. In fact, it actually costs you a lot less to deploy an American Skydio drone than a DJI drone for this reason. With DJI, you put it in the trunk of the car and then you’ve basically generally turned your police officer into an Uber (NYSE:UBER) driver for drones. He drives to the scene, then he stands on scene flying the drone, which, you know, basically costs you $200 per year to get that drone driven around the city.

With the Skydio dock, yes, the hardware is a bit more, and the software, but, you know, for $50,000 you can have that drone autonomously that does not consume an officer. It can be autonomously flown. It flies to a site without any need for, like, human oversight, and you pair that with our D drone sensors, now that is an amazing pairing. You can now see the airspace to see where everything is. You can the drone can fly autonomously, connecting those two systems together.

And then whoever needs to see the feed just magically sees a camera in the sky where they want it, looking at what they want to see with zero human oversight. So it’s actually about a quarter of the price when you consider the human labor elements. And we think this is both an interesting political moment in that the U. S. Government policy and the rift with China is accelerating that transition, but it’s just matching this wonderful moment in time where AI is now making the autonomous flight possible.

Skydio is in the process of releasing from beta to production their dock that unlocks this, like, complete autonomy. So it’s just a really exciting part of the business. And we always look to, you know, look for and just make the best decisions where we should make, what we should build ourselves, where we should partner. In this case, it was a we found a great partner and we’re confident that, you know, it’s got the right relationship fit and long term dynamics.

Josh Isner, President, Axon3: And for your customers, if you’re DEA or Border Patrol, can they just go through you to buy the Skydio drone and you guys will put on your kit so it’s all connected or do you need both of you?

Josh Isner, President, Axon: We could we could do those deals on what we call axon paper or on Skydio paper.

Josh Isner, President, Axon3: Got it.

Mike Ng, Analyst, Goldman Sachs: Thank you.

Jeff, Unnamed Executive, Axon: And more and more and more, as customers get excited about this space for all the reasons Rick just went through, Again, they think of the evolution of the real time crime center space and that opportunity as hand in glove with DFR and drones as first responder. And so the combination of FUSUS with Skydio with the rest of the Axon suite is just hands down unmatched in terms of bringing the capability that customers want and need in giving them the situation awareness and autonomous response that they’re looking for.

Rick Smith, CEO/Founder, Axon: Yeah. One example as well, like an officer with their body camera, in in the near future, they will say, hey. I need a drone. And we deploy deploy the drone to the body camera. And as it flies in, Skydio has done a great job integrating.

You’ll see a blue augmented reality pillar growing to the sky that tells you right where your officer is, so there’s no searching around to find them. It’s, you know, a seamless mesh of our body cameras, our Fusus, you know, and Skydio’s autonomy and their flight software. But to the customer, it doesn’t matter. It’s one experience, like, oh, that officer needs a drone, there it is. And there’s my officer, and I can see him, and I can pass that video feed to whoever I need to pass it to.

Josh Isner, President, Axon3: Got it. Thank you all.

Eric, Moderator/Operator, Axon: Thanks, Jordan. Up next, we have Joe Cardoso at JPMorgan.

Josh Isner, President, Axon4: Hey. Good afternoon, everyone. Thanks for the question. Maybe just wanted to follow-up on the drone question, but from a different point of view and maybe a bigger picture point of view, like how are you guys thinking about the timing of that opportunity materializing in a more material way for Axon relative to a year or two ago? Because it sounds like anecdotally, it’s ramping much faster than maybe the conversations we were having last year.

And just kinda curious, like, when we’re thinking about the size of this potential business for Axon a year out, two years out, like, can we think about this as being material volumes, or is that just getting a little bit ahead of our skis as you guys are doing more kind of pilots and programs with some of your end customers? Or or are we actually starting to see some more bigger moves here from your end customers in terms of adoption?

Rick Smith, CEO/Founder, Axon: They typically prevent me from throwing numbers out because I get too enthusiastic. But I would say qualitatively, we’re at a tipping point.

Josh Isner, President, Axon4: Okay. So you’re starting to see more of an sorry, go ahead, Britney.

Britney Forsyth, CFO, Axon: I was going to say, we’ve got the TAM at about $20,000,000,000 for this and we are in such early innings. So we took that up because I think we see the opportunity much more clearly in front of us. Now like just from a logistics and a timing thing, right, we do long term bookings, they go into bookings. That’s what’s giving us excitement about momentum. You know, it takes a little bit of time to start seeing that all flow through the P and L.

Josh Isner, President, Axon4: Got it. And then maybe a quick question for Britney. Like, obviously, you talked about it hit the 25% EBITDA target a year ahead of plans, still guiding for 2025. Appreciate that you talked about the investments in your prepared remarks. Maybe just flesh out a bit more in terms of where those investments are exactly targeting.

Like, is there any particular areas that you guys are kind of putting those dollars to spend in in different parts of the portfolio or engineers, etcetera? Just curious, you know, where those dollars are kind of being spent. And then anything that we should be interpreting in terms of implications around gross margin expansion for the year from those comments? Or is it really just largely taking those dollars and investing it in top X?

Britney Forsyth, CFO, Axon: Yes. I’d say it’s largely taking those dollars and investing them back into R and D. And it’s all the areas we’ve talked about, right? It’s drones, it’s robotics, it’s fuses, it’s all of these new markets that we’re so excited about.

Josh Isner, President, Axon: Got it. And I’d also add, Britney, just it’s also our enterprise go to market function as well. That’s a big investment for us this year as we’re seeing these early results. Now it’s about, hey, how do we really cover the market well from a sales and sales support and customer success perspective. So that’s a large investment center this year for us and one that we have high conviction will pay off nicely in the years to come.

Josh Isner, President, Axon4: Got it. Appreciate the color, you guys, and congrats on the results.

Britney Forsyth, CFO, Axon: Thank you.

Eric, Moderator/Operator, Axon: Thanks, Joe. And, finally, we’re going to Keith Halsam at North Coast.

Josh Isner, President, Axon5: Good morning, guy. Oh, sorry, guys. Good afternoon here. Thanks. I appreciate it, guys.

In terms of the enterprise opportunity, obviously, it sounds like we’re having a lot of traction here. Britney, maybe can you talk about the the pricing there? I know it’s still nascent, but in the public safety space, you guys have that nice matrix that you guys provided investors over the past several years. How do you think about pricing for the enterprise market? Is it in a similar vein or is there different pricing schemes that you’re going through?

Britney Forsyth, CFO, Axon: Yeah. I mean, I would say it’s in a similar vein. I wouldn’t think about it as being materially different. Obviously, you know, there are some nuances to the enterprise market, of course, but they’re still buying, you know, GEMS licenses. They’re thinking about fuses.

They’re thinking about body cameras. So, you know, there’s there’s certainly nuances, but nothing large I would call out for you on on being, you know, highly different at this point.

Josh Isner, President, Axon5: Okay. I appreciate that. And I apologize if I missed this perhaps earlier in the call. But obviously, tariffs are top of mind for a lot of people these days, both on a a cost perspective for, you know, the companies as well as perhaps deal demand issues for geopolitical issues. How are you guys thinking about, tariffs from, both aspects?

Britney Forsyth, CFO, Axon: Yeah. We’ve tried to stay really flexible in our supply chain. Obviously, you know, at this point, we’ve been dealing with, you know, tariffs of some kind for a number of years. And so, we really have found that just being flexible and diversified is key. Now it’s hard to exactly predict what is going to happen going forward.

So, you know, without certainty on what the tariffs are gonna be, it’s it’s hard to give a perfect answer. But based on what, you know, the the talk is, at least right now in terms of some of the proposed tariffs, there’s nothing that I see that would really impact our guidance in any way. We think we’ve, you know, pretty well baked in, you know, what is knowable today. Great.

Josh Isner, President, Axon5: Thanks, guys. Good luck.

Britney Forsyth, CFO, Axon: Thank you.

Eric, Moderator/Operator, Axon: Thanks, everyone. I’ll kick it to Rick to close us out.

Rick Smith, CEO/Founder, Axon: Awesome. Alright. Well, obviously, we’re delighted to have delivered another great year. You know, team’s just doing a great job. I am insanely motivated by our customer feedback.

One of the things I’d mentioned is I think ultimately TDEN has the opportunity to become a primary weapons system and that could drive growth in the international markets even more than in The US where they will carry a gun and a TASER frequently on every officer. And my confidence in that future is growing. So, here’s to a great 2025. We look forward to seeing you all on our next earnings call, and thanks for being part of the team.

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