Axon - The slow and steady winner

AXON Enterprises

Recommendation: (for more details, see video below)

For long term - buy it close to the 50 and 100 day moving average (currently between $205 to $215).

For a trade - wait for $240 to swing back to $250. It is currently at $255

Founding & Growth:

Axon's story began in 1993 as TASER International, focusing on self-defense devices. Patrick Smith, the current CEO, joined in 2003, leading the acquisition of body camera company Vievu in 2009. This marked a turning point. TASER rebranded as Axon in 2014, reflecting its expanding ecosystem of evidence management tools.

Today, Axon boasts a global presence with headquarters in Scottsdale, Arizona, and regional offices across the globe. Its annual revenue is nearly $1.5 Billion, with over 400,000 users across 48,000 agencies in 180 countries.

Products & Services:

Axon's offerings go beyond the Taser. Its product suite includes:

• Body cameras: Axon Body 3 and Body 2 capture video and audio, with features like live streaming and automatic activation.

• Evidence management software: Evidence.com platform allows secure storage, review, and sharing of body camera footage, audio, and other digital evidence.

• Redaction software: Redact helps anonymize sensitive information in videos and documents.

• Data analytics: Axon Signal identifies trends and patterns in data to inform risk assessment and resource allocation.

• Training and consultation: Axon Academy provides training programs on officer safety, de-escalation techniques, and body camera usage.

Customers:

Axon's customer base primarily consists of law enforcement agencies across the globe, covering federal, state, and local levels. Correctional facilities, security teams, and private enterprises also use Axon's technology.

3-Year Financial Performance:

Axon has experienced consistent growth:

• 2021 Revenue: $863 million

• 2022 Revenue: $1.19B million

• 2023 (estimated): ~$1.5 billion

The company has maintained profitability with gross margins exceeding 60%. However, rising operating expenses remain a concern.

Key Issues for 2024:

While Axon dominates the body camera market, it faces several challenges:

• Privacy and data security concerns: Balancing transparency with individual privacy remains a constant struggle. Axon's cloud-based evidence management system raises concerns about data breaches and misuse.

• Police reform and public pressure: Continued scrutiny on police practices puts pressure on Axon to ensure its technology is used ethically and effectively.

• Competition: Emerging players in the body camera market and alternative evidence management solutions could threaten Axon's market share.

• Financial sustainability: While profitable, Axon's high operating expenses and reliance on government contracts create vulnerability to budget cuts or policy changes.

Looking Ahead:

Axon's future depends on its ability to address these challenges:

• Investing in privacy-enhancing technologies: Implementing strong encryption, anonymization tools, and robust user access controls can bolster trust.

• Promoting transparency and accountability: Collaborating with communities and stakeholders to develop ethical guidelines for evidence use and data security.

• Diversifying its offerings: Expanding beyond law enforcement to serve other markets like security and private investigations can mitigate financial risks.

• Optimizing operations: Streamlining internal processes and controlling expenses can improve financial stability.

By strategically navigating these issues, Axon can maintain its position as a leader in the rapidly evolving field of evidence management and public safety technology.