Axon Enterprise, Inc.
CEO : Mr. Patrick W. Smith
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 31.2% YoY | 88.0% | -76.4% | 2023-08-08 |
Patrick Smith says,
New Product Reception
- Customers have responded well to their new products TASER 10 and Axon Body 4.
- Police chiefs have praised TASER 10, stating that officers will not go out in the field without it.
- Axon Body 4 has received a great response since it began shipping in June.
Promotions and Expanded Roles
- Brittany has been promoted to Chief Operating Officer and Chief Financial Officer, overseeing the margin profile for profitable growth.
- Josh Isner has been promoted to President, continuing to oversee daily operations and taking on an expanded role within the executive team and the Board.
Acquisition of Sky-Hero
- The acquisition of Sky-Hero enhances their robotic security strategy and complements their existing Axon Air strategy.
- Sky-Hero provides a leading indoor tactical drone solution and has received positive feedback from U.S. federal government customers and SWAT teams in the U.S. and Europe.
Focus on Generative AI
- Axon has been investing in generative AI and large language models to create game-changing products for law enforcement customers.
- Their strategy has anticipated the future of generative AI and they invest early to be ready when the technology matures.
- They have built an ecosystem of wearable cameras and sensors and a cloud platform to securely collect, share, and analyze data for AI applications.
- Axon aims to bring advanced AI with thoughtful and ethical controls to public safety at scale.
Brittany Bagley says,
Financial Performance
- Q2 top line growth of 31% YoY
- EBITDA margins of 22%
- Second quarter gross margin of 62%, improved sequentially
- Axon Cloud and services revenue made up 35% of total revenue
Gross Margin Outlook
- Expect full year gross margin to remain flat or improve modestly from Q1 2023 levels
- Continued professional services related to Fleet 3 and ramp of Axon Body 4 and TASER 10
- Expect opportunities to improve margin profile through automation and scale efficiencies
- Anticipate mix benefits from software growth
Operating Expenses
- Leverage out of both R&D and SG&A
- Investing absolute dollars in product roadmap and business scaling
- Guidance for adjusted EBITDA margin of 20% for the year
- Focus on leveraging OpEx, especially in SG&A, over the longer term
Guidance Update
- Full year revenue outlook increased to $1.51 billion to $1.53 billion, representing 27% to 29% growth
- Targeting full year adjusted EBITDA margin of 20%, implying $302 million to $306 million of adjusted EBITDA
- Confidence in increasing forecast due to successful hardware product launches and robust customer response
- Expect most of the increase to occur in Q4 due to typical seasonality
Q & A sessions,
International Expansion
- International market currently represents about 1/5 of the company’s business.
- Rest of the world market is at least 5x larger than the U.S. market.
- TASER 10 can become the primary defensive weapon in countries where the public doesn’t have firearms.
- Opportunity to expand growth and become a truly global company.
Software Strength
- Software teams have developed strong products that can stand on their own.
- Records software can unlock valuable data from audio and video records.
- Generative AI technology is a game changer.
- Positive feedback on unreleased products.
Focus on Future and Strategic Leadership
- Founder CEO focuses on predicting customer needs and matching them with technologies.
- Company’s success is driven by being ahead of the curve and disruptive.
- Founder-led companies outperform due to strategic focus.
- Strong team allows CEO to focus on strategic aspects and engage with customers.
Long-Term Value over Profit Optimization
- Company prioritizes long-term value creation rather than profit optimization.
- Made bets on LTE connectivity in cameras despite customers not asking for it initially.
- Real-time capabilities and live streaming are game-changing for agencies.
- Believe push-to-talk walkie talkies will no longer be the primary means of communication in the future.
Guidance and Revenue Sources
- Good customer reception to AB4 and TASER 10 products.
- Confidence in delivering ramped-up volume of products in the second half of the year.
- Cloud and services revenue provide reliable recurring software business.
- Expectations of delivering on guidance for the second half of the year.
Gross Margin Challenges
- Headwinds on gross margin due to TASER 10 preparation.
- Other factors impacting gross margin include supply chain issues and product mix.
- Working to address these challenges and improve gross margin.
No bad stock 