Axon Enterprise, Inc. (NASDAQ:AXON) William Blair 45th Annual Growth Stock Conference June 5, 2025 9:40 AM ET Company Participants Joshua M. Isner - President Conference Call Participants Jonathan Frank Ho - William Blair & Company L.L.C., Research Division Jonathan Frank Ho Hello, everyone, and thank you for joining us for our Growth Stock Conference in today's presentation with Axon. My name is Jonathan Ho, and I'm the research analyst for William Blair & Company. Our speaker today is Josh Isner, who is t ...

Axon Enterprise (AXON) FY Conference Summary Company Overview - **Company**: Axon Enterprise - **Founded**: 1993 - **Mission**: To protect life and reduce deaths in policing by 50% over ten years, targeting approximately 2,000 deaths annually [2][3] Core Business and Market Segments - **Product Ecosystem**: Axon offers a range of hardware and software products aimed at public safety, including TASERs, body cameras, and AI-driven tools [4][12] - **Market Segments**: - **U.S. State and Local**: Largest market currently, focusing on expanding product offerings to existing customers [8] - **International**: National police forces worldwide, with significant growth potential [8][12] - **Enterprise**: Non-public safety applications, expected to become the largest market in the next decade [8][9] - **U.S. Federal**: Includes federal police and Department of Defense [8] Growth Strategy - **Land and Expand**: Focus on selling new products to existing customers while entering new markets with existing products [5][6] - **Total Addressable Market (TAM)**: Significant opportunities in enterprise and international markets, with examples like Walmart's 2.1 million retail workers compared to 900,000 police officers in the U.S. [9][10] Product Innovations - **TASER 10**: Enhanced range and effectiveness for law enforcement [13] - **Digital Evidence Management**: A vast library of video data, enabling AI applications for improved policing [15][16] - **AI Tools**: Products like Draft1 for report writing and real-time translation capabilities for officers [17][32][36] - **Fixed Cameras**: New addition to the product line, enhancing data collection and incident response [27][28] - **Drone Technology**: Drones as first responders and drone defense systems to enhance public safety [29][30][31] Financial Performance - **Growth Rate**: Over 25% growth for five consecutive years, with last year's growth exceeding 30% [18] - **Annual Recurring Revenue**: $1.1 billion with a net revenue retention rate of 123% [19] - **Future Contracted Bookings**: Nearly $10 billion, indicating strong future revenue potential [19] Challenges and Risks - **Market Leadership**: The need to continuously innovate to maintain market leadership and avoid complacency [46][48] - **Budget Constraints**: While some federal grants are slowing, Axon is more insulated due to its operational expenditure model [51][52] Conclusion - **Future Outlook**: Axon aims to be the operating system for public safety, integrating various technologies to enhance efficiency and effectiveness in policing [22][23]

Core Viewpoint - Axon Enterprise faces increasing competition from Motorola Solutions, which has announced a $4.4 billion acquisition of Silvus Technologies, a company specializing in Mission-Critical Mobile Ad-hoc Network (MANET) technology, potentially impacting Axon's growth and expansion plans [1][2][10]. Company Overview - Axon Enterprise's stock is currently priced at $743.63, with a P/E ratio of 192.15 and a price target of $652.73, indicating a moderate buy rating among analysts [1][7]. - The company has seen its revenues more than double from 2021 to 2024, reaching nearly $2.1 billion in total revenue for 2024 [2][5]. Competitive Landscape - Motorola Solutions, which generates approximately 70% of its revenue from public safety customers, is a significant competitor to Axon, particularly in the body camera and AI-powered analytics technology space [4][5]. - The acquisition of Silvus Technologies is expected to enhance Motorola's capabilities in high-bandwidth secure mobile data and video, which could provide a competitive edge over Axon [6][8]. Market Dynamics - Axon's Axon Respond technology allows for live video streaming through body cameras, but it relies on LTE or Wi-Fi connectivity, which may limit its effectiveness in areas with poor infrastructure compared to Motorola's MANET technology [8][9]. - While the immediate impact of Motorola's acquisition on Axon may be limited, it could restrict Axon's growth potential in the broader $129 billion total addressable market [10]. Future Outlook - Analysts project a 12-month stock price forecast for Axon at $652.73, suggesting a potential downside of 12.22% from the current price [7]. - The company primarily serves U.S. state and local law enforcement agencies, which may have better access to fixed communication infrastructure, potentially mitigating the impact of Motorola's new technology [9].

Financial Data and Key Metrics Changes - The meeting confirmed that as of March 31, 2025, there were approximately 77 billion shares outstanding, with nearly 90% represented at the meeting, indicating strong shareholder engagement [5][6][10] Business Line Data and Key Metrics Changes - No specific data on business lines or key metrics was provided in the meeting content Market Data and Key Metrics Changes - No specific market data or key metrics were discussed during the meeting Company Strategy and Development Direction and Industry Competition - The company emphasized its commitment to delivering real-world impact and maintaining integrity in product design, indicating a focus on long-term value creation [18][19] - The management expressed excitement about future opportunities and challenges, suggesting a proactive approach to industry competition [19] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of staying grounded in values and tackling harder problems to create real value, reflecting a positive outlook on future growth [19] - The CEO expressed optimism about the company's direction and the trust placed in them by shareholders [19][20] Other Important Information - The meeting included a formal voting process for director nominations and management proposals, all of which were approved [10][11] Q&A Session All Questions and Answers - There were no questions submitted during the Q&A session, indicating a lack of immediate inquiries from shareholders [17]

Group 1 - Axon Enterprise, Inc. has experienced a strong start to the year with better bookings compared to the previous year, indicating positive sales performance [4] - The improvement in bookings is attributed to two main factors: a previous slow start in Q1 of the prior year and a shift in the sales team's approach to incentivization and budget awareness [4][5] - The company president, Josh Isner, has been with Axon for 16 years and has served as president for two years, highlighting his extensive experience within the organization [2][3] Group 2 - The first quarter of the year is characterized by a lack of budget expirations, which can lead to a slower sales environment compared to other quarters when budgets are refreshed [4][5] - The company noted that certain regions, such as Florida, Texas, and the U.S. Federal government, have specific budget cycles that impact sales dynamics [4]

I wrote about Axon (NASDAQ: AXON ) as early as mid-2024. It was expensive then, and it is expensive now. However, going through the latest information, it's clear that the company continues to earn its premium valuation. Its management has demonstratedNine to 5 by day. Hobbyist stock trader by night. I got an MBA and a CFA ... so that should count for something. I only care about my own greedy interests and I love feeding trolls. Not your financial advisor. Information for entertainment purposes only. Diamo ...

Core Viewpoint - Axon Enterprise's Q1 earnings significantly exceeded expectations, leading to a notable increase in share price and positive market sentiment towards the company [1][2][4]. Financial Performance - Axon reported a 31% increase in sales, reaching nearly $604 million, surpassing the expected 27% growth [4]. - Adjusted earnings per share (EPS) rose by nearly 23% to $1.41, exceeding the anticipated 10% growth [4]. - The company raised its revenue guidance midpoint to $2.65 billion for the full year, slightly above Wall Street's expectations [4]. Market Reaction - Following the earnings report, Axon shares rose over 14%, contributing to a total increase of approximately 22% in 2025 as of May 13 [2][3]. - Analysts have raised their price targets for Axon, with an average target of around $742, indicating a potential upside of about 3% from the May 13 closing price [3]. Growth Opportunities - Axon achieved record bookings among international customers in Q1, highlighting a significant growth opportunity in a total addressable market estimated at $58 billion [5]. - The Draft One product, which aids in report writing for police officers, has over 30,000 active users and can reduce report writing time by 67% [6][7]. Government Spending and Defense - The U.S. Congress has increased defense spending, which could benefit Axon, particularly through its relationship with the Department of Homeland Security (DHS) [8]. - Proposed increases in DHS spending could amount to around $42 billion, with a focus on border security, an area where Axon has existing contracts [9][10]. Long-term Outlook - Despite a high forward price-to-earnings ratio of 116, the long-term prospects for Axon remain strong due to ongoing product innovation and potential growth in government and international relationships [12][13].

Core Insights - Axon Enterprise hosted a significant user conference, Axon Week, attracting 2,000 police decision-makers from across the globe, indicating strong engagement and interest in their product offerings [4]. Product Introductions and Customer Focus - The company introduced several key new products and partnerships, including a new fixed camera and automated license plate recognition (ALPR) technology, showcasing innovation in their product portfolio [5]. - Customer conversations during the conference highlighted the focus areas and traction within the Axon portfolio, providing insights into market demands and future directions [3].

Summary of Axon's Conference Call Company Overview - **Company**: Axon - **Industry**: Public Safety Technology Key Points and Arguments Product Introductions and Customer Engagement - Axon hosted a user conference, Axon Week, with 2,000 police decision-makers attending, showcasing existing products and new launches [4][5] - New product rollouts include a fixed camera for Automated License Plate Recognition (ALPR) and five to six AI software products, generating significant early interest [5][6] - Emphasis on customer satisfaction with existing products to drive repeat purchases, as public safety is a relatively small market [6] Macro Environment and Customer Sentiment - Axon has been largely unaffected by macroeconomic concerns, with over 90% of federal contracts intact [8] - There is optimism regarding potential increases in funding for state and local law enforcement, which could enhance customer purchasing power [11] International Expansion - Axon is focusing on international growth, hiring a Chief Revenue Officer with experience in deploying cloud solutions to European governments [14][16] - The company is seeing significant growth in international bookings, with potential for expansion in markets like Italy [17] Enterprise Market Opportunities - Axon announced its largest deal in history with a logistics customer, highlighting the potential in the enterprise sector [22][23] - Retail is identified as a significant opportunity due to rising shrinkage rates and the need for enhanced security measures [27][28] Technology Adoption and Upgrades - Axon aims to transition customers from basic to advanced technology deployments, with a focus on increasing average bookings per user [31][32] - The introduction of Draft1, an AI tool that significantly reduces time spent on police reporting, has seen rapid adoption, generating over $100 million in bookings within its first year [38] Competitive Landscape - Axon competes against both legacy providers and newer companies, often with a significant technology advantage [41][42] - The company is focused on a "land and expand" strategy, effectively selling new products to existing customers and existing products to new markets [45][46] Subscription Model and Financial Resilience - Approximately 96-97% of Axon's sales are subscription-based, providing financial stability against fluctuations in grant funding [66][67] - The shift to subscription has insulated the company from economic downturns, as products are purchased from operational budgets rather than capital expenditures [67] AI Product Offerings - Axon launched an AI bundle, including Draft1 and other tools, which has seen strong early adoption [72][74] - The company is focused on providing value through bundled offerings, ensuring customers receive new products over time [71][80] Future Growth Potential - Axon sees significant room for growth in both the public safety and enterprise sectors, with ongoing efforts to enhance product offerings and customer engagement [56][85] Additional Important Insights - The TASER 10 is being adopted at double the rate of its predecessor, indicating strong demand and a potential shift in upgrade cycles [50][51] - Virtual reality training is expected to revolutionize police training, enhancing retention and effectiveness [61][62] - The company is monitoring wallet share closely, ensuring that technology investments do not exceed budgetary constraints for police departments [85]

Group 1 - The article discusses the positions held by Travis Hoium in Axon Enterprise and mentions that The Motley Fool also has positions in and recommends Axon Enterprise [1] - It highlights that Travis Hoium is an affiliate of The Motley Fool and may receive compensation for promoting its services [1] - The opinions expressed in the article are stated to be independent and unaffected by The Motley Fool's interests [1]