Yanni Samoilis

Yanni Samoilis inquired about the progress of Dedrone and DFR (Drone as First Responder) conversations at the state and local level, particularly customer reception post-IACP, and the growing traction of Axon's broader drone portfolio in military or defense applications. He also asked about the gross margin outlook and the specific impact of tariffs on connected devices gross margins.

Answer

CEO Rick Smith highlighted acute customer awareness of drone threats and building momentum in Congress for state and local drone mitigation, positioning Dedrone well. He noted Skydio as Axon's DFR partner, with robotic docks scaling rapidly and generating significant interest. President Josh Isner emphasized the synergy between DFR and 911 investments, accelerating DFR adoption. CPO and CTO Jeff Kunins added that every conversation involves the triangle of 911, DFR, and real-time crime centers with Fusus. CFO Brittany Bagley explained that tariffs primarily impacted connected devices gross margins in Q3, marking the first full quarter of impact. She views this as a one-time adjustment, expecting future gross margin tailwinds from software growth and scaling new businesses.

Yanni Samoilis, on behalf of William Power at Baird, questioned the impact of the recent price increase for the monthly Pro SKU, asking if revenue expectations have changed and what customer feedback or behavioral changes, like churn, have been observed.

Answer

CFO Michelle Chang confirmed that the initial forecast of a $10 to $15 million incremental revenue impact remains on track. She noted that online business churn remains at continued lows of 2.9% and that there was minimal customer pushback, attributing this to the strong value proposition, which includes added AI features and increased storage limits.