INVESTOR PRESENTATION VIEW REPORT FEBRUARY 2025 INVESTOR DECK Q4 2024 OVERVIEW OUR ECOSYSTEM MARKET OPPORTUNITY FINANCIALS APPENDIX 2 SAFE-HARBOR STATEMENT Forward-looking statements in this letter include, without limitation, statements regarding: proposed products and services and related development efforts and activities; expectations about the market for our current and future products and services, including statements related to our user base and customer profiles; the impact of pending litigation; s ...

Revenue Growth - Axon reported a 33% increase in annual revenue to $2.1 billion, marking the third consecutive year of over 30% growth[1]. - Q4 2024 revenue reached a record $575 million, up 34% year over year, with TASER revenue growing 37% to $221 million[2]. - Axon Cloud & Services revenue grew 41% year over year to $230 million, accounting for 40% of total revenue[2]. - The company expects 2025 annual revenue between $2.55 billion and $2.65 billion, reflecting approximately 25% growth[3]. - Axon surpassed $1 billion in annual recurring revenue and achieved total future contracted bookings of $10.1 billion[6]. - Future contracted bookings rose to $10.1 billion, reflecting a 42% year-over-year increase, with expectations to recognize 20% to 25% of this balance over the next 12 months[36]. - Axon anticipates full year 2025 revenue between $2.55 billion and $2.65 billion, representing approximately 25% annual growth at the midpoint[37]. Profitability and Margins - Adjusted EBITDA for 2025 is projected to be between $640 million and $670 million, with an expected margin of approximately 25%[37]. - Axon Cloud & Services gross margin decreased to 73.7% from 74.7% year-over-year, while adjusted gross margin improved to 77.2% from 75.7%[32]. - Sensors & Other gross margin decreased to 32.8% from 46.9% year-over-year, impacted by product mix and inventory reserve charges[32]. - Gross margin for the twelve months ended December 31, 2024, was $1.241 billion, up from $955.453 million for the same period in 2023, indicating a year-over-year growth of 30%[55]. - Adjusted gross margin for the twelve months ended December 31, 2024, was 63.2%, compared to 61.8% for the previous year[56]. - Gross margin for Q4 2024 was 60.1%, slightly down from 60.8% in Q3 2024 but consistent with 61.3% in Q4 2023[62]. - Adjusted gross margin for Q4 2024 was 63.2%, unchanged from Q3 2024 and an increase from 62.0% in Q4 2023[62]. Operating Performance - Operating cash flow increased 79% year over year to $250 million, supporting free cash flow of $225 million[24]. - Net income for Q4 2024 was $135.184 million, compared to $67.025 million in Q3 2024 and $57.061 million in Q4 2023, representing a significant increase of 101.5% year-over-year[55]. - Basic net income per share for Q4 2024 was $1.77, compared to $0.89 in Q3 2024 and $0.76 in Q4 2023, reflecting a year-over-year increase of 132.9%[55]. - Total operating expenses for the twelve months ended December 31, 2024, were $1.183 billion, up from $798.603 million in 2023, marking a 48.3% increase[55]. - Non-GAAP net income for Q4 2024 was $168.284 million, an increase from $113.452 million in Q3 2024 and $85.864 million in Q4 2023[61]. Investments and Expenditures - Capital expenditures for 2025 are projected to be between $140 million and $180 million, focusing on R&D investments and capacity expansion[37]. - Research and development expenses for Q4 2024 were $134.585 million, an increase of 17.6% from $114.477 million in Q3 2024 and a 60.3% increase from $83.972 million in Q4 2023[55]. - The company reported a net cash used in investing activities of $490,573 thousand for the twelve months ended December 31, 2024, compared to a net cash provided of $12,476 thousand in the previous year[67]. - Purchases of property and equipment for the three months ended December 31, 2024, were $24,801 thousand, slightly lower than $24,011 thousand in the same period of 2023[68]. Market Position and Strategy - The total addressable market (TAM) is estimated at $129 billion, with less than 2% penetration in annual revenue[12][14]. - Axon introduced AI-powered solutions, saving officers 2.2 million minutes through AI-driven incident reporting[4]. - The acquisition of Fusus enhances real-time crime center technology, supporting millions of livestreams across over 2,000 agencies[7]. - The company plans to realign its business segments to better reflect growth, transitioning to Connected Devices and Software & Services[26]. - Axon plans to continue focusing on product innovation and market expansion despite the identified risks and uncertainties[51]. Financial Position - Total current assets decreased to $2.3 billion as of December 31, 2024, from $2.4 billion a year earlier[66]. - Total liabilities increased to $2.1 billion as of December 31, 2024, compared to $1.8 billion in the previous year[66]. - Cash and cash equivalents decreased to $454.8 million as of December 31, 2024, from $598.5 million a year earlier[66]. - The company’s total assets increased to $4.5 billion as of December 31, 2024, from $3.4 billion a year earlier[66]. - Deferred revenue increased to $155,641 thousand for the twelve months ended December 31, 2024, compared to $146,819 thousand for the same period in 2023, showing a growth of 6%[67].

Core Insights - Axon reported a strong performance in 2024, achieving a record quarterly revenue of $575 million in Q4, representing a 34% year-over-year growth, marking the 12th consecutive quarter of over 25% growth [2][18] - The company expects annual revenue for 2025 to be between $2.55 billion and $2.65 billion, reflecting approximately 25% annual growth [3][41] - Axon's total addressable market (TAM) is estimated to be $129 billion, indicating significant growth potential as the company continues to innovate and expand its product offerings [12][13] Financial Performance - Axon achieved a full-year net income margin of 18.1% and an Adjusted EBITDA margin of 25.0% [1][11] - Annual recurring revenue grew by 37% to $1.0 billion, driven by new customer adoption and upgrades to premium offerings [32] - The company reported a net income of $135 million for Q4 2024, with a net income margin of 23.5% [21] Product Innovations - Axon introduced a suite of AI-powered solutions aimed at enhancing public safety, which contributed to significant time savings for law enforcement [4] - The acquisition of Fusus strengthened Axon's Real-Time Operations platform, enabling real-time access to integrated data from various sources [5] - The Axon Drone as First Responder solution allows for rapid assessment and intervention, improving operational efficiency in emergency situations [6] Market Expansion - Axon's TAM penetration within U.S. state and local law enforcement is estimated to be below 15%, highlighting a robust growth opportunity [13] - The company identified new opportunities in international governments, expanding its market potential by $32 billion [23] - The enterprise market opportunity has grown by $23 billion, reflecting the increasing demand for integrated public and enterprise safety solutions [23] Operational Metrics - Future contracted bookings increased to $10.1 billion, up 42% year-over-year, indicating strong demand for Axon's products and services [32] - The company surpassed 1 million total software users and shipped over 200,000 TASER devices and 300,000 body cameras [11] - Operating cash flow increased by 79% year-over-year to $250 million, supporting a free cash flow of $225 million [22]

Core Viewpoint - The industrials sector has shown strong performance in 2025, outperforming the benchmark, driven by factors such as reshoring, technological advancements, and market rotation towards cyclical industries [1][2][4]. Group 1: Sector Performance - The industrials sector, represented by the Industrial Select Sector SPDR ETF (XLI), has gained 5.2% in 2025, compared to the benchmark's 4.3% [1]. - The sector's current technical setup indicates potential for further upside, as it has consolidated for nearly a month and is nearing a breakout [1]. - Strong inflows into the sector and a bullish market setup contribute to its outperformance [2]. Group 2: Key Drivers - Reshoring trends are a significant driver, with manufacturing returning to domestic markets due to geopolitical stability concerns and favorable government policies [2]. - Technological advancements in automation, electric vehicles, and renewable energy infrastructure are increasing demand for industrial products [3]. - Government investments in infrastructure and defense spending are providing strong support for the sector [3]. Group 3: Notable Companies - Axon Enterprise has surged 19.4% YTD, significantly outperforming both the sector and the broader market, with a strong upcoming earnings report expected [6][8]. - General Electric (GE) has gained nearly 26% YTD and 80% over the past year, driven by its leadership in aviation systems and impressive earnings performance [9][10]. - RTX has gained nearly 7% YTD, outpacing the industrial sector and broader market, with solid earnings performance and potential for long-term growth [11][12]. Group 4: Market Dynamics - There has been a market rotation from high-growth technology stocks to cyclical industries like industrials, enhancing the attractiveness of the XLI ETF [4]. - The XLI ETF features a low expense ratio of 0.09% and a dividend yield of 1.16%, which further attract capital inflows [4]. - Despite sensitivity to economic cycles and global trade dynamics, the sector is supported by technological innovation and policy support [5].

Core Viewpoint - Axon Enterprise, Inc. is set to release its fourth-quarter 2024 results on February 25, with earnings expected to show significant year-over-year growth in both earnings per share and revenues [1][2][3]. Financial Performance - The Zacks Consensus Estimate for Q4 earnings is $1.51 per share, reflecting a 34.8% increase from the previous year, while revenues are projected at $567.6 million, indicating a 31.3% year-over-year growth [1][2]. - For the full year 2024, revenue estimates stand at $2.08 billion, representing a 32.8% increase year-over-year, and earnings per share are expected to reach $5.29, up 27.8% from the prior year [3]. Segment Performance - The TASER segment is anticipated to generate revenues of $217 million in Q4, marking a 34.8% increase year-over-year, driven by strong demand for TASER devices and virtual reality training services [6]. - The Software & Sensors segment is expected to report revenues of $221.9 million, reflecting a 35% increase from the prior-year quarter, supported by the growing user base and adoption of software applications [8]. - Investments in AI products, drones, and robotics are likely to enhance market share, with strategic partnerships, such as the one with Skydio, expected to bolster product offerings in public safety [9][10]. Cost and Margin Challenges - Axon faces challenges from rising costs related to business integration, increased headcount, and stock-based compensation, which have negatively impacted margins, with a gross margin decline of 180 basis points year-over-year in the first nine months of 2024 [11]. - Supply chain constraints, particularly for electronic components, are expected to inflate costs and delay product deliveries, while foreign currency fluctuations may also affect profitability [12]. Stock Performance and Valuation - AXON shares have increased by 45.4% over the past six months, outperforming both the Zacks Aerospace - Defense Equipment industry and the S&P 500 [13][14]. - The stock is currently trading at a forward P/E ratio of 80.93X, significantly higher than the industry average of 36.35X, raising concerns about potential overvaluation [16]. Investment Outlook - Axon is well-positioned with a diversified product portfolio and strong growth prospects in safety, drones, and robotics markets, supported by strategic collaborations and investments [17]. - However, near-term challenges related to operating costs and supply chain issues may impact margin performance [18].

Core Viewpoint - Axon Enterprise, Inc. is experiencing a downtrend in its stock price, which began after a downgrade, and is currently testing support levels that may break, leading to a potential rapid decline in stock price [1][5]. Group 1: Stock Performance - The stock is trading lower, continuing a downtrend that started on Wednesday after a downgrade [1]. - Axon shares opened at $540 on November 8 and closed above $600, indicating a significant price movement [4]. - The stock may gap down from previous levels, specifically from $540 to $465.50, if support breaks [6]. Group 2: Market Psychology - Support levels in the market often form due to psychological factors, particularly seller's remorse, where sellers regret their decision to sell as the stock price increases [2]. - Many sellers who sold at lower prices are placing buy orders at those same prices, contributing to the formation of support [5]. - The concentration of buy orders from regretful sellers can create a floor under the stock price, but if this support is broken, the stock may fall quickly [5].

Core Viewpoint - Axon Enterprise (AXON) is expected to report strong quarterly earnings and revenue growth, with analysts predicting earnings of $1.51 per share and revenues of $567.56 million, reflecting year-over-year increases of 34.8% and 31.3% respectively [1] Earnings Projections - The consensus EPS estimate for the quarter has remained unchanged over the past 30 days, indicating a stable outlook from analysts [1] - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [2] Revenue Estimates - Analysts forecast 'Net Sales- Software and Sensors' to reach $350.43 million, representing a year-over-year increase of 29.4% [3] - The consensus estimate for 'Revenue- TASER' is $217.30 million, indicating a 34.7% increase year over year [4] - 'Net Sales- Services- Software and Sensors' is expected to be $222.21 million, reflecting a 35.8% year-over-year change [4] - 'Net Sales- Products- Software and Sensors' is projected to reach $129.70 million, showing a 21% increase from the prior-year quarter [4] Product Sales Estimates - 'Net Sales- Products- TASER' is anticipated to be $201.48 million, indicating a 33.2% increase year over year [5] - The estimate for 'Net Sales- Services- TASER' stands at $14.33 million, reflecting a 41.8% year-over-year change [5] - 'Net Sales- Products' is expected to total $332.80 million, showing a 28.8% increase from the previous year [5] Additional Sales Metrics - 'Net Sales- Services' is projected to reach $233.19 million, indicating a 34.2% increase from the year-ago quarter [6] - 'Net Sales- Products- TASER- Extended warranties' is estimated at $9.71 million, reflecting an 18% increase year over year [6] - 'Net Sales- Products- TASER- Other' is expected to be $6.71 million, indicating a significant 50.1% increase from the prior-year quarter [6] Segment Performance - 'Net sales by Product- Software and Sensors segment- Axon Body' is expected to be $74.74 million, reflecting a 26.8% increase from the prior-year quarter [7] - 'Annual recurring revenue' is projected to reach $940.51 million, up from $697 million reported in the same quarter last year [7] Stock Performance - Shares of Axon have decreased by 2.3% over the past month, contrasting with a 2.6% increase in the Zacks S&P 500 composite [8] - With a Zacks Rank 3 (Hold), AXON is expected to perform in line with the overall market in the near future [8]

Core Points - Axon will report its fourth quarter 2024 financial results on February 25, 2025, after market close [1] - A live Zoom webinar will be held at 5 p.m. ET on the same day to discuss the financial results [1][2] - An archived replay of the webinar will be available after the call [2] Upcoming Events - Axon will participate in the Morgan Stanley Technology, Media & Telecom Conference on March 3, 2025 [3] Company Overview - Axon is a leader in global public safety technology, aiming to reduce gun-related deaths between police and the public by 50% by 2033 [4] - The company is developing a comprehensive public safety operating system that includes hardware devices and cloud software solutions [4] - Axon's product suite includes TASER devices, body cameras, in-car cameras, digital evidence management solutions, and productivity software [4] - The company serves a diverse customer base, including law enforcement, fire services, corrections, emergency medical services, and the justice sector [4]

Company Performance - Axon Enterprise (AXON) closed at $665.08, reflecting a -0.62% change from the previous session, underperforming the S&P 500's daily loss of 0.27% [1] - Over the past month, shares of Axon have increased by 15.43%, outperforming the Aerospace sector's gain of 4.52% and the S&P 500's gain of 4.27% [2] Upcoming Earnings - The company is expected to report an EPS of $1.51, representing a 34.82% increase from the prior-year quarter, with a consensus revenue estimate of $567.56 million, indicating a 31.34% increase from the same quarter last year [3] Analyst Projections - Recent shifts in analyst projections for Axon Enterprise should be monitored, as upward revisions indicate analysts' positive outlook on the company's business operations and profit generation capabilities [4] Valuation Metrics - Axon Enterprise has a Forward P/E ratio of 103.03, significantly higher than the industry average of 30.7, and a PEG ratio of 3.46 compared to the industry average of 2.47 [7] Industry Context - The Aerospace - Defense Equipment industry, which includes Axon, has a Zacks Industry Rank of 138, placing it in the bottom 46% of over 250 industries, suggesting that the industry is underperforming compared to the top half [8]

Group 1 - Axon Enterprise is part of the Aerospace group, which consists of 51 companies and is currently ranked 6 in the Zacks Sector Rank [2] - The Zacks Rank system indicates that Axon Enterprise has a Zacks Rank of 2 (Buy), suggesting a favorable outlook for the stock [3] - Over the past 90 days, the Zacks Consensus Estimate for Axon's full-year earnings has increased by 2.2%, indicating improved analyst sentiment [4] Group 2 - Year-to-date, Axon Enterprise has returned approximately 9.7%, significantly outperforming the average return of 2.9% for Aerospace companies [4] - In comparison, RTX has achieved a year-to-date return of 11.4% and also holds a Zacks Rank of 2 (Buy) [5] - Axon Enterprise belongs to the Aerospace - Defense Equipment industry, which includes 26 companies and has an average gain of 1.1% this year, further highlighting Axon's strong performance [6] Group 3 - Investors should monitor both Axon Enterprise and RTX for potential continued strong performance in the Aerospace sector [7]