Q3 2024 Summary
Published Feb 7, 2025, 7:58 PM UTC- Axon expects Q4 bookings to exceed last quarter, aiming for a record bookings quarter, driven by strong execution across all four segments: state and local, enterprise, federal, and international.
- Significant interest in new AI products, such as Draft One, with the pipeline growth after IACP and customers considering it "the most we've seen out of any year 1 product," indicating robust future revenue potential.
- Strong international and federal growth opportunities, with international bookings up 40% sequentially from Q2, and Axon leveraging their FedRAMP High status to win federal deals, leading to double-digit growth in the federal segment.
- Margins are expected to decline sequentially in Q4 due to increased expenses, including Dedrone acquisition and integration costs, and catch-up on expenses that were delayed, which may indicate that recent margin expansion is not sustainable.
- There is an observed deceleration in software Annual Recurring Revenue (ARR) growth from the prior trend line, potentially indicating slowing momentum in the high-margin software segment.
- Potential tariffs imposed by a new administration could increase component costs, affecting the supply chain and impacting margins, posing a risk to future profitability.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +31% (to $544M) | The increase was driven by robust demand across hardware (TASER 10) and advanced cloud services. This momentum built on strong adoption in prior quarters, where revenue was propelled by premium software bundles including Officer Safety Plans. Forward-looking implications suggest continued diversification in emerging verticals could further support revenue growth. |
TASER Segment | +36% (to $222M) | Growth accelerated from previous periods due to the successful ramp-up of TASER 10 shipments, which outpaced legacy device demand. The company’s focus on automation in manufacturing also helped manage costs. Going forward, sustained demand for TASER 10 and international expansion are potential tailwinds despite increasing production expenses. |
• TASER Devices | +51% (to $131M) | This surge reflects higher unit volumes for TASER 10, as well as additional demand driven by larger agencies transitioning from older devices. Compared to past quarters, the faster adoption cycle of TASER 10 contributed to a steeper revenue climb. Management expects continued traction from ongoing refresh cycles. |
• Cartridges | +11% (to $60M) | Cartridges revenue rebounded from prior fluctuations that were influenced by bulk international orders. The higher attachment rate from TASER 10 improved recurring cartridge demand. Future performance could hinge on sustaining these bulk purchases and subscription-based models. |
Axon Evidence & Cloud Services | +35% (to $203M) | Growth was fueled by increased user adoption and premium add-ons, building on Q2 2023 gains in cloud-connected devices. This momentum is a result of prior-quarter successes in expanding AI and real-time operations offerings, which continue to drive higher revenue per user. Future expansion into new markets and product domains (e.g., productivity software, robotics) may further support this segment. |
Software & Sensors Segment | +29% (to $323M) | Sales of Axon Body 4 and related accessories drove the bulk of this growth, echoing strong demand patterns from prior quarters. The company’s investments in integrated software solutions (e.g., digital evidence management) continue to lift revenue per user. Looking ahead, further camera product refreshes and product bundling could sustain segment momentum. |
United States Revenue | +41% (to $483M) | The acceleration reflects high domestic adoption of TASER 10 and premium software bundles, surpassing prior periods’ already-strong growth. Continued traction in state and local agencies, as well as federal markets, signals a stable outlook for U.S. revenues. |
Other Countries Revenue | -14% (to $62M) | Despite prior gains in certain global regions, revenue declined largely due to shortfalls in APAC and timing of large international orders not recurring from previous periods. However, the EMEA region partially offset losses, suggesting a potential rebound if diversified international deals materialize more consistently. |
Net Income | +14% (to $68M) | While strong top-line results supported profitability, the YoY comparison is partly tempered by fluctuations in non-cash gains and losses recognized in prior quarters. The current quarter benefited from higher operational leverage, though stock-based compensation costs increased. Future earnings may hinge on controlling these expenses while maintaining revenue growth. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | FY 2024 | $2.0B to $2.05B → ~29.5% growth | ~$2.07B → ~32% growth | raised |
Adjusted EBITDA | FY 2024 | $460M to $475M → ~23.1% margin | ~$510M → ~24.6% margin | raised |
Revenue | Q4 2024 | no prior guidance | $560M to $570M → ~30% growth | no prior guidance |
Adjusted EBITDA | Q4 2024 | no prior guidance | $130M to $135M → ~23.5% margin | no prior guidance |
Long-term Margin | FY 2025 | no prior guidance | 25% target | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q3 2024 | $2.0 billion to $2.05 billion for FY 2024 | $544.27 million | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
AI-driven solutions (Draft One) | Prominent driver of growth since Q1 2024, consistently highlighted for report automation and AI innovation. No mention in Q4 2023. | Focus remains on pipeline growth and bundling strategies, with strong optimism about long-term prospects. | Continues as a major growth driver, with expanding customer interest and steady momentum |
Margin pressures and sustainability | Recurrent theme in Q4 2023 and Q1-Q2 2024: focus on TASER automation, software mix, and timing impacts. | Emphasized short-term pressures from delayed spending and integration costs; reiterated 25% margin goal for 2025. | Remains ongoing concern, but long-term outlook stays positive |
TASER 10 demand | Highlighted in Q4 2023 to Q2 2024 as fastest-selling TASER, exceeding TASER 7 by 2x–4x. | No direct mention in Q3 2024. | Temporarily absent from recent commentary; previously a major contributor to growth |
Software ARR deceleration | No explicit deceleration commentary in Q1 or Q2 2024, or Q4 2023. | Addressed as mostly timing-driven, not structural; growth remains consistent over a multi-quarter view. | Acknowledged slowdown in quarterly results but seen as timing effect rather than a true drop in momentum |
International expansion | Stressed in all prior calls (Q4 2023–Q2 2024) for high bookings growth and long-term opportunity. | Called a significant growth driver, but recognized as lumpy due to revenue timing (e.g., large batch orders). | Continues as a key focus with high variability in revenue recognition |
Drones and counter-drone (Dedrone) | Discussed in Q1–Q2 2024 but less prominently; tied to DFR programs and partnerships with Skydio. Mentioned in Q4 2023 in context of indoor and outdoor drones. | New emphasis on drone-as-first-responder use cases and counter-drone capabilities; viewed as future market opportunity. | Emerging as a major strategic area, with legislative tailwinds expected |
Potential tariffs | Not previously mentioned in Q4 2023 or Q1–Q2 2024. | Cited as a new supply chain risk, but Axon confident in flexible sourcing and U.S.-based TASER production. | Recently introduced risk factor; monitoring potential impact |
Fusus | Featured through Q2 2024 as a core real-time ops solution with strong adoption. | No mention in Q3 2024. | Faded from recent commentary, was once emphasized for situational awareness |
Sky-Hero | Discussed in Q4 2023 as part of tactical drones, with regulatory hurdles but long-term promise. | No mention in Q3 2024. | No recent updates; previously part of indoor drones strategy |
-
Q4 Bookings Outlook
Q: Is Q4 2024 expected to be a record bookings quarter? What gives you confidence in achieving this?
A: Yes, we are very confident that Q4 bookings will exceed last quarter and be comparable to what we did in the full year last year. This confidence is based on tremendous execution across all four segments—state and local, enterprise, federal, and international—with meaningful deals in each. We're seeing the results of pipeline building throughout the year, and we're excited to discuss our Q4 bookings in more detail in February. -
Sustainability of TASER Growth
Q: Can TASER sustain its current level of growth? What gives you confidence in continued strong performance?
A: Absolutely, the TASER business can sustain its growth. We're in year two of a five-year upgrade cycle and continue to see exceptionally strong demand—literally double what it was with T7. There's significant runway ahead, and we believe we're still scratching the surface of what the TASER business is capable of, especially with opportunities in international markets. -
Draft One Revenue Impact
Q: Was there any revenue recognition tied to Draft One in the September quarter? Any significant contributions to ARR?
A: Yes, we did receive some orders in Q3 from early customers, so there was some impact on revenue from Draft One. However, we're still in the "top of the first inning" on what that's going to look like moving forward. We're very bullish on Draft One and all our AI products' contributions to both revenue and profitability over time, but we're not yet seeing a major impact on quarter-to-quarter results due to SaaS accounting. -
Update on Draft One Pipeline
Q: Is there an update on the $100 million pipeline for Draft One mentioned last quarter?
A: The pipeline continues to grow, especially after IACP. We're converting some of that pipeline into the new AI era bundle launching next year, with Draft One being the central driver of interest along with other AI features we're developing. The interest is the most we've seen for any year-one product. -
Draft One and AI Aero Bundle Pricing
Q: What is the pricing plan for Draft One and the AI Aero bundle?
A: Currently, Draft One alone is priced at $65 per month, and it requires transcription on top of that for another $20, totaling $85 per month. We're looking at the AI Aero bundle price of $199, with the sum of the parts expected to be around $250 to $350. This offers good economics for buying features as a bundle instead of individually, and that's the price going into next year. -
Drone Monetization and Adoption
Q: How should we think about monetizing drones as first responders and achieving broader adoption?
A: We see drones as a huge opportunity. The Dedrone acquisition is key because, before you can start flying drones without expert humans monitoring them, you need to be able to see your airspace. Dedrone helps with that. Legislation changes may allow state and local law enforcement to interdict drones, expanding the market. Partnerships with companies like Skydio enhance our capabilities. We're excited about integrating drones into real-time crime centers and dispatching drones automatically to assist officers. -
Impact of FedRAMP Status on Federal Opportunities
Q: How is your FedRAMP status helping you win U.S. federal opportunities?
A: Our FedRAMP High status is a differentiator, but even if everyone had FedRAMP, we'd still win the majority of deals due to the quality of our products and the federal team's phenomenal execution in sales and support. The team has done a nice job this year with exciting double-digit growth from federal, and we're confident we're on the right path. -
TASER Cartridge Revenue Growth
Q: Why was TASER cartridge revenue growth slower this quarter?
A: Cartridge revenue can be particularly lumpy quarter-to-quarter. Last quarter, we had some big international customers place cartridge orders that didn't repeat this quarter. Looking at a longer trend line, cartridge growth remains strong. -
Services Revenue Growth
Q: Why was services revenue growth lower this quarter compared to previous quarters?
A: The services revenue reflects timing and a quarterly lag—what we booked in Q3 shows up in Q4. Additionally, there's a reduction in professional services associated with fleet deployments, which was atypical. Normally, PSO and software both grow, but since fleet came down this quarter, you're seeing that dynamic. -
International Growth Drivers
Q: What's driving improved traction in international markets?
A: It's really broad-based. We've upped our game internationally with new leadership and team improvements. We're building relationships with the right customers and better demonstrating the value our products bring. The tremendous execution across all regions is contributing to international growth.