Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Axon Enterprise Inc (AXON, Financial) reported revenue exceeding $2 billion, nearly doubling from two years ago, marking the third consecutive year of over 30% growth.
• The company booked over $5 billion in business last year, with strong demand for TASER 10, which continues to outpace its predecessor by 2x.
• International bookings grew nearly 50% sequentially in Q4, and enterprise bookings tripled year-over-year, highlighting strong global and enterprise market penetration.
• Axon Enterprise Inc (AXON) achieved a 25% adjusted EBITDA margin for the full year, a milestone initially set for 2025, indicating strong profitability.
• The company is investing heavily in AI, drones, and robotics, with AI products showing the fastest-growing adoption rates, contributing significantly to the pipeline.

Negative Points

• Axon Enterprise Inc (AXON) faces challenges with its headquarters expansion in Arizona due to political and legal hurdles, potentially delaying projects by two years.
• The company is experiencing a supply-demand imbalance for TASER 10, indicating that demand is outpacing supply, which may limit growth potential.
• There are concerns about the impact of federal funding cuts on state and local law enforcement budgets, which could affect future revenue streams.
• The partnership with Flock Safety ended, raising questions about technology licensing for fleet ALPR technology and future collaborations.
• Tariffs and geopolitical issues pose potential risks to the supply chain and demand, although the company has tried to remain flexible and diversified.

Q & A Highlights

Q: What portion of Axon's total revenues are coming from federal contracts with the U.S. government, and do you expect any changes due to hiring freezes? A: Joshua Isner, President: We don't see any real cause for concern regarding federal funding cuts. In fact, there might be more opportunities as federal law enforcement looks for effective technology, which could benefit Axon. We expect to continue supporting the federal government, potentially in bigger ways, especially with the Department of Defense.

Q: How is the potential end of the war in Ukraine affecting Axon's operations, particularly regarding Dedrone's involvement? A: Patrick Smith, CEO: While Dedrone has been active in Ukraine, the broader impact is that drones are now on every military's radar. We are well-positioned in drone detection and robotics, partnering with leaders in the field. The situation in Ukraine has accelerated interest in drone defense globally, and we are poised to help customers address these challenges.

Q: Can you provide insights into the adoption of AI tools and the recent large enterprise win? A: Patrick Smith, CEO: AI products are seeing the fastest adoption rates we've ever experienced. The AI Aeroplan, for instance, closed deals within weeks of launch. Joshua Isner, President: The large enterprise win involved multiple entry points, including body cameras and Dedrone, indicating a strong product-market fit and potential for significant growth in the enterprise segment.

Q: What is the status of the supply-demand balance for TASER 10, and what does it signal for growth this year? A: Brittany Bagley, CFO & COO: Demand for TASER 10 continues to outpace supply, and we are investing to increase capacity. Joshua Isner, President: TASER 10 is our highest-demand conducted weapon ever, and we expect this strong demand to continue, driven by its positive impact on field outcomes.

Q: How are you approaching the Skydio partnership and the Sky Swap program? A: Joshua Isner, President: We are excited about the Skydio partnership, which enhances our ecosystem with advanced drone technology. Skydio's autonomy and integration with our systems provide unmatched situational awareness and autonomous response capabilities, offering significant value to our customers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.