Adjustments for Non-Cash Items [USD, Thousands]

Stock-Based Compensation [USD, Thousands]

Changes in Working Capital [USD, Thousands]

Capital Expenditures (CapEx) [USD, Thousands]

Proceeds from / Repayments of Debt [USD, Thousands]

Share Repurchases [USD, Thousands]

Dividend Payments [USD, Thousands]

Net Change in Cash [USD, Thousands]

671b0b345b09ca6650889be3717c2f3075b7d74d65930ff47eb57894a791b85c

9605023dcca0bf9bd611ba177cdbe6bfd75b174c78bdb24ad8fe72aab18b0957

247680b86c4fc5b50aba6a57a1719a8edb509aa61be43c1f83724d9312adfb48

Axon Enterprise, Inc. is a leading provider of law enforcement technology solutions, focusing on enhancing public safety through integrated hardware and cloud-based software solutions. The company operates primarily in two segments: TASER and Software and Sensors, offering products such as conducted energy devices and digital evidence management solutions **[0001069183-24-000006_axon-20231231x10k.htm:5]** **[0001069183-24-000006_axon-20231231x10k.htm:70]** **[0001069183-24-000032_axon-20240331x10q.htm:8]**. Axon's revenue is derived from both product sales and services, with a significant portion coming from recurring revenue streams like subscriptions to their software **[AXON_3401521_13]** **[0001069183-24-000047_axon-20240806xex99d1.htm:0]**. In 2023, the company reported strong growth across its segments, driven by increased demand for its cloud and services offerings **[0001558370-24-004374_axon-20240510xdef14a.htm:2]** **[0001069183-24-000018_axon-20240510xpre14a.htm:2]**.

1. **Software and Sensors** - Encompasses body-worn cameras, in-car cameras, and cloud-hosted digital evidence management solutions like Axon Evidence. Includes productivity and real-time operations software designed to enhance law enforcement efficiency and transparency.
   - **Axon Cloud and Services** - Provides cloud-based solutions and services, contributing significantly to the company's growth.
2. **TASER** - Develops, manufactures, and sells conducted energy devices (CEDs) such as TASER devices, used by law enforcement to de-escalate situations and minimize the use of force. Includes related accessories and extended warranties.

91329a41694a2da0a1522f560578401ae4a57cfaf89e6d9d1c8b6b67c55d3fc0

| Metric [Unit: $ Thousand] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|---------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **TASER Segment**         |         |         |         |         |         |         |         |         |
| TASER Devices (Professional) | 128,900  **[0001069183-23-000004_axon-20230228xex99d1.htm:15]**  | 67,472  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 84,975  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 86,718  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | 151,200  **[0001069183-24-000003_axon-20240226xex99d1.htm:18]**  | 98,676  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 104,624  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 130,500  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| Cartridges                | N/A     | 46,800  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 48,425  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 54,279  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | N/A     | 56,198  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 65,415  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 60,200  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| Axon Evidence and Cloud Services | 7,900  **[0001069183-23-000004_axon-20230228xex99d1.htm:15]**  | 7,201  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 8,494  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 8,975  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | 10,100  **[0001069183-24-000003_axon-20240226xex99d1.htm:18]**  | 12,221  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 14,215  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 13,900  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| Extended Warranties       | N/A     | 7,670  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 7,715  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 8,078  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | N/A     | 8,526  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 8,908  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 9,700  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| Other                     | N/A     | 5,139  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 4,801  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 4,520  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | N/A     | 3,127  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 3,796  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 7,500  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| **Total TASER Segment Revenue** | 136,700  **[0001069183-23-000004_axon-20230228xex99d1.htm:15]**  | 134,282  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 154,410  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 162,570  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | 161,300  **[0001069183-24-000003_axon-20240226xex99d1.htm:18]**  | 178,748  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 196,958  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 221,700  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| **Software and Sensors Segment** |         |         |         |         |         |         |         |         |
| Axon Body Cameras and Accessories | 85,900  **[0001069183-23-000004_axon-20230228xex99d1.htm:15]**  | 38,797  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 32,781  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 52,488  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | 107,200  **[0001069183-24-000003_axon-20240226xex99d1.htm:18]**  | 51,205  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 59,024  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 70,400  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| Axon Fleet Systems        | N/A     | 32,972  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 35,960  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 26,716  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | N/A     | 28,387  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 26,601  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 23,200  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| Axon Evidence and Cloud Services | 113,500  **[0001069183-23-000004_axon-20230228xex99d1.htm:15]**  | 118,314  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 132,102  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 150,563  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | 163,600  **[0001069183-24-000003_axon-20240226xex99d1.htm:18]**  | 175,458  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 192,735  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 203,500  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| Extended Warranties       | N/A     | 14,085  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 15,166  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 16,054  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | N/A     | 18,474  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 18,310  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 17,300  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| Other                     | N/A     | 4,593  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 4,186  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 5,210  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | N/A     | 8,464  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 10,471  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 8,200  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| **Total Software and Sensors Segment Revenue** | 199,400  **[0001069183-23-000004_axon-20230228xex99d1.htm:15]**  | 208,761  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 220,195  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 251,031  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | 270,800  **[0001069183-24-000003_axon-20240226xex99d1.htm:18]**  | 281,988  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 307,141  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 322,500  **[0001069183-24-000061_axon-20240930.htm:48]**  |
| **Total Net Sales**       | 336,100  **[0001069183-23-000004_axon-20230228xex99d1.htm:15]**  | 343,043  **[0001069183-23-000030_axon-20230331x10q.htm:35]**  | 374,605  **[0001558370-23-013981_axon-20230630x10q.htm:34]**  | 413,601  **[0001558370-23-018023_axon-20230930x10q.htm:36]**  | 432,100  **[0001069183-24-000003_axon-20240226xex99d1.htm:18]**  | 460,736  **[0001069183-24-000032_axon-20240331x10q.htm:35]**  | 504,099  **[0001069183-24-000047_axon-20240806xex99d1.htm:16]**  | 544,300  **[0001069183-24-000061_axon-20240930.htm:48]**  |

5790db195454c33523dc8775cffeb9b88a5b660a5bd03f883729d7e365c26988

93fca55fb609b902f56863d924669e1b5e5d8f253868154475edef340821c5e6

1. **Q4 implies lower adjusted EBITDA margins than achieved in Q3 due to timing of expenses and Dedrone integration costs**  **[AXON_3407345_3]** ; how confident are you in achieving your **25% margin target for 2025**  **[AXON_3407345_3]** , and what measures are you implementing to mitigate further integration costs or unexpected expenses?

2. With **TASER hitting revenue records for six consecutive quarters**  **[AXON_3407345_9]** , but concerns about the sustainability of this growth emerging  **[AXON_3407345_7]** , what specific strategies do you have to ensure **TASER remains a major growth driver**, and how do you plan to address potential market saturation or increased competition?

3. Regarding the **Dedrone acquisition** and its role in your **Drone as a First Responder (DFR) program**  **[AXON_3407345_17]** , how do you plan to expand this opportunity internationally, given the differing use cases and regulations, and what challenges do you anticipate in scaling this business outside the U.S.?

4. Considering you're on track to deliver your initial **$2 billion revenue target for 2025 a full year early**  **[AXON_3407345_3]** , are there risks of overextending resources or facing capacity constraints, and how are you ensuring operational scalability to maintain service quality and customer satisfaction?

5. With the **importance of FedRAMP high status in winning U.S. federal contracts**  **[AXON_3407345_15]** , how are you leveraging this advantage to significantly grow your federal business, and are there challenges or limitations in this sector compared to state and local markets that might impact your growth expectations?

9db1f5f4c995fdceeeaddbbddb8090ed2139845f194063a89b88b4fbbe9274e0

- Axis Communications AB - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Digital Ally Inc. - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Getac Technology Corporation - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Halo Body Cameras - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- i-PRO - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- LensLock Inc. - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Motorola Solutions - Competitor in the body-worn camera and in-car video/automatic license plate readers industry and in software solutions for public safety agency workflows  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Reveal Media - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Safe Fleet - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Utility Associates - Competitor in the body-worn camera and in-car video/automatic license plate readers industry and in software solutions for public safety agency workflows  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Versaterm Inc. - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Wolfcom Enterprises - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Wrap Technologies Inc. - Competitor in the body-worn camera and in-car video/automatic license plate readers industry and in VR de-escalation training  **[0001069183-24-000006_axon-20231231x10k.htm:10]** **[0001069183-24-000006_axon-20231231x10k.htm:11]** .
- Zepcam B.V. - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Applied Concepts Inc. - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Genetec Inc. - Competitor in the body-worn camera and in-car video/automatic license plate readers industry and in software solutions for public safety agency workflows  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- Insight LPR - Competitor in the body-worn camera and in-car video/automatic license plate readers industry  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- FileOnQ - Competitor in software solutions for public safety agency workflows  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- FotoWare - Competitor in software solutions for public safety agency workflows  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- IBM - Competitor in software solutions for public safety agency workflows  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
- NICE - Competitor in software solutions for public safety agency workflows  **[0001069183-24-000006_axon-20231231x10k.htm:10]** .
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b7af44c430c53e088fbaaea8d3e54498d5831250f9656d31ced4c94ef746b27a

Q4 2022

Q1 2023

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 2024

Q3 2024

3cdfc68a2fc74632fc363e2f86b8f9b0e9ebe6e4e592b3932e81ecc26d97c59e

**Quarterly guidance for Q4 2024:**
- **Revenue**: $560 million to $570 million, representing more than 30% growth at the midpoint  **[AXON_3407345_2]**  (no prior guidance)  
- **Adjusted EBITDA**: $130 million to $135 million, or approximately 23.5% margin  **[AXON_3407345_2]**  (no prior guidance)

**Annual guidance for FY 2024:**
- **Revenue**: Approximately $2.07 billion, or greater than 32% annual growth  **[AXON_3407345_2]**  (raised from $2.00–2.05 billion, or 29.5% growth  **[AXON_3396701_4]** )  
- **Adjusted EBITDA**: Approximately $510 million, or 24.6% margin  **[AXON_3407345_2]**  (raised from $460–475 million, or 23.1% margin  **[AXON_3396701_4]** )

0e9c8e80a9a02b715d0c58212d9cdb7533d588f568b5e37d7df51e481c2e4986

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Q4 2024 and FY 2024
- **Guidance**:
  - **Q4 Revenue Guidance**: $560 million to $570 million, representing more than 30% growth at the midpoint  **[AXON_3407345_2]** .
  - **Full Year Revenue Guidance**: Approximately $2.07 billion, or greater than 32% annual growth, up from prior guidance of $2 billion to $2.05 billion or 29.5% growth  **[AXON_3407345_2]** .
  - **Q4 Adjusted EBITDA Guidance**: $130 million to $135 million, or approximately 23.5% adjusted EBITDA margin  **[AXON_3407345_2]** .
  - **Full Year Adjusted EBITDA Guidance**: Approximately $510 million or 24.6% margin  **[AXON_3407345_2]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Full Year 2024 Revenue Guidance**: $2 billion to $2.05 billion, representing 29.5% annual growth at the midpoint, up from prior guidance of $1.94 billion to $1.99 billion, which represented approximately 26% annual growth  **[AXON_3396701_4]** .
  - **Full Year 2024 Adjusted EBITDA**: $460 million to $475 million, implying an adjusted EBITDA margin of 23.1% at the midpoint, up from prior guidance of $430 million to $445 million, expanding the expected margin by 80 basis points  **[AXON_3396701_4]** .
  - **Impact from Planned Acquisition of Dedrone**: Incorporates an immaterial amount of revenue and adjusted EBITDA margin impact from the planned acquisition of Dedrone, expected to close in the current year  **[AXON_3396701_4]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Revenue**: $1.94 billion to $1.99 billion, representing approximately 26% annual growth at the midpoint, above the prior high end of their guidance range of 20% to 24%  **[AXON_3386645_4]** .
  - **Adjusted EBITDA**: $430 million to $445 million, implying an adjusted EBITDA margin of approximately 22%, up year-over-year and approximately in line with prior guidance on margin  **[AXON_3386645_4]** .
  - **Capital Expenditures (CapEx)**: $80 million to $95 million for the year, as they continue to ramp capacity investments to meet strong demand for TASER 10  **[AXON_3386645_4]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  - **Revenue Growth**: 20% to 24% total revenue growth, translating to a revenue range of $1.88 billion to $1.94 billion for 2024  **[AXON_3375730_6]** .
  - **Adjusted EBITDA**: $410 million to $430 million, implying an adjusted EBITDA margin of approximately 22%, an increase of 100 basis points from the previous year  **[AXON_3375730_6]** .
  - **Long-term Targets**: Targeting a 20% annual revenue CAGR and a 25% adjusted EBITDA margin for 2025 and beyond  **[AXON_3375730_6]** .
  - **Free Cash Flow Conversion**: Targeting 60% free cash flow conversion on adjusted EBITDA for 2025 and beyond  **[AXON_3375730_7]** .
  - **Stock Compensation Expense**: Expects approximately 3% annual dilution from stock compensation expense for 2025 and beyond  **[AXON_3375730_7]** .

cf2cd07565b67940786def3e3d18aa912c2858892120cb72fa657974133cd5af

fe8685a8dac5d73eb206a904fa6cbaaf351de22777af9ad0f5cd3b76cfa59ff6

| Name             | Position                                           | Start Date         | Short Bio                                                                                                                                                                                                 |
|------------------|----------------------------------------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Patrick W. Smith | Chief Executive Officer                            | 1993               | Patrick W. Smith is the **Founder and Chief Executive Officer** of Axon Enterprise, Inc. He co-founded the company in **1993** with his brother, Thomas P. Smith. He holds a bachelor's degree from Harvard University and an MBA from the University of Chicago. Mr. Smith is an inventor listed on **45 U.S. patents**  **[0001069183-23-000019_axon-20230531xdef14a.htm:16]** **[0001069183-23-000014_axon-20230531xpre14a.htm:16]** . |
| Brittany Bagley  | Chief Operating Officer and Chief Financial Officer| September 2022     | Brittany Bagley joined Axon in **September 2022**. Prior to Axon, she was the Chief Financial Officer at Sonos, Inc. and served on its board of directors. She holds a B.A. in Economics from Brown University  **[0001558370-24-004374_axon-20240510xdef14a.htm:32]** **[0001069183-24-000018_axon-20240510xpre14a.htm:32]** .                           |
| Joshua M. Isner  | President                                          | 2009               | Joshua M. Isner joined Axon in **2009** and has held various roles, including Chief Revenue Officer and EVP of Global Sales. He holds a B.S. in Government & Political Science from Harvard University  **[0001558370-24-004374_axon-20240510xdef14a.htm:32]** **[0001069183-24-000018_axon-20240510xpre14a.htm:32]** .                                    |
| Jeffrey C. Kunins| Chief Product Officer and Chief Technology Officer | September 2019     | Jeffrey C. Kunins joined Axon in **September 2019**. He previously served as Vice President of Alexa Entertainment at Amazon and has held various positions at Microsoft and Tellme Networks, Inc. He holds a B.S. from Carnegie Mellon University  **[0001069183-24-000018_axon-20240510xpre14a.htm:33]** **[0001558370-24-004374_axon-20240510xdef14a.htm:33]** **[0001069183-23-000019_axon-20230531xdef14a.htm:27]** **[0001069183-23-000014_axon-20230531xpre14a.htm:27]** . |
| Cameron Brooks   | Chief Revenue Officer                              | April 1, 2024      | Cameron Brooks serves as the **Chief Revenue Officer** at Axon Enterprise, Inc. He was appointed to this position and began his role on **April 1, 2024**  **[0001415889-24-009888_xslF345X02/form3-04032024_010418.xml:0]** **[AXON_3407345_13]** .                                                                              |
| Isaiah Fields    | Chief Legal Officer and Corporate Secretary        | N/A                | Isaiah Fields is responsible for overseeing legal matters and corporate governance at Axon. He is mentioned in various filings from 2023 and 2024, indicating his active involvement during this period  **[0001069183-24-000045_tmb-20240610xs8.htm:0]** **[0001069183-23-000055_axon-20230628x8ka.htm:1]** **[0001069183-24-000012_tmb-20240229xs3asr.htm:0]** **[0001069183-24-000025_tmb-20240419xposasr.htm:0]** .                        |

85855849978b1a96c52b7faceeec42a0c5892a2e1e6f8eb4d97a82984a8fb9d1

| Program Details           | Program 1       |
|---------------------------|-----------------|
| Approval Date             | February 2016  **[0001069183-24-000006_axon-20231231x10k.htm:68]** **[0001558370-23-002413_axon-20221231x10k.htm:51]** **[0001558370-23-018023_axon-20230930x10q.htm:28]** **[0001558370-23-013981_axon-20230630x10q.htm:27]**  |
| End Date/Duration         | No expiration date  **[0001069183-24-000006_axon-20231231x10k.htm:68]** **[0001558370-23-002413_axon-20221231x10k.htm:51]** **[0001558370-23-018023_axon-20230930x10q.htm:28]** **[0001558370-23-013981_axon-20230630x10q.htm:27]**  |
| Total additional amount   | **$50.0 million**  **[0001069183-24-000006_axon-20231231x10k.htm:68]** **[0001558370-23-002413_axon-20221231x10k.htm:51]** **[0001558370-23-018023_axon-20230930x10q.htm:28]** **[0001558370-23-013981_axon-20230630x10q.htm:27]**  |
| Remaining authorization   | **$16.3 million**  **[0001069183-24-000006_axon-20231231x10k.htm:68]** **[0001558370-23-002413_axon-20221231x10k.htm:51]** **[0001558370-23-018023_axon-20230930x10q.htm:28]** **[0001558370-23-013981_axon-20230630x10q.htm:27]**  |
| Details                   | Subject to stock market conditions and corporate considerations. Future purchases are discretionary.  **[0001069183-24-000006_axon-20231231x10k.htm:68]** **[0001558370-23-002413_axon-20221231x10k.htm:51]** **[0001558370-23-018023_axon-20230930x10q.htm:28]** **[0001558370-23-013981_axon-20230630x10q.htm:27]**  |

44e13dbae6ae4c316d9738385dbff76689ddb1bd4152c13270c5879f9216a56e

United States

Other Countries

Total Revenue

87dc32aebc24854566b11929915867391991fd47ef8a6a4a2d1d3a7b5a10aa4d

| Name                        | Start Date             | End Date       | Reason for Change                                                                                     |
|-----------------------------|------------------------|----------------|-------------------------------------------------------------------------------------------------------|
| PricewaterhouseCoopers LLP | Following the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2023  **[0001069183-24-000003_axon-20240226x8k.htm:2]**  | Present        | Current auditor.                                                                                     |
| Grant Thornton LLP          | N/A                   | Effective immediately following the completion of their engagement for the year ended December 31, 2023  **[0001069183-24-000003_axon-20240226x8k.htm:2]**  | The Audit Committee approved the dismissal as part of a process to appoint a new independent registered public accounting firm. There were no disagreements or reportable events, except for a material weakness in internal controls related to revenue recognition.  **[0001069183-24-000003_axon-20240226x8k.htm:2]**  |

551cae3cdd090a34ff192d3b8f3dac823ef1b9923be2c37dc7f38a4e61007d73

1f17c2c0d79b1f5ab50d92d61cde9d4e0054486249dc4868fd70dd9dd6641b29

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $544 million (+31% YoY)  **[0001558370-23-018023_axon-20230930x10q.htm:32]** **[0001069183-24-000061_axon-20240930.htm:16]**   
- TASER Segment: $222 million (+36% YoY)  **[0001558370-23-018023_axon-20230930x10q.htm:32]** **[0001069183-24-000061_axon-20240930.htm:16]**   
  • TASER Devices: **$131 million (+51% YoY)**  **[0001069183-24-000061_axon-20240930.htm:16]** **[0001558370-23-018023_axon-20230930x10q.htm:40]**   
  • Cartridges: $60 million (+11% YoY)  **[0001069183-24-000061_axon-20240930.htm:16]** **[0001558370-23-018023_axon-20230930x10q.htm:40]**   
- Axon Evidence & Cloud Services: $203 million (+35% YoY)  **[0001069183-24-000061_axon-20240930.htm:16]** **[0001558370-23-018023_axon-20230930x10q.htm:40]**   
- Software & Sensors Segment: $323 million (+29% YoY)  **[0001558370-23-018023_axon-20230930x10q.htm:32]** **[0001069183-24-000061_axon-20240930.htm:16]**   
- United States Revenue: **$483 million (+41% YoY)**  **[0001069183-24-000061_axon-20240930.htm:16]** **[0001558370-23-018023_axon-20230930x10q.htm:35]**   
- Other Countries Revenue: $62 million (-14% YoY)  **[0001069183-24-000061_axon-20240930.htm:16]** **[0001558370-23-018023_axon-20230930x10q.htm:35]**   
- Net Income: $68 million (+14% YoY)  **[0001558370-23-018023_axon-20230930x10q.htm:4]** **[0001069183-24-000061_axon-20240930.htm:5]**   

11d864bc75422ae685b957d2cd29dfce308ccb38d7accb0ab5e14cbf54fab32a

- **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.**  **[AXON_3407345_12]**
- **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.**  **[AXON_3407345_20]**
- **Potential tariffs imposed by a new administration could increase component costs, affecting the supply chain and impacting margins, posing a risk to future profitability.**  **[AXON_3407345_14]**

30f17d4d468afb1e5297227af8d52bc5a6e04c263a5eea14d3c75dabc7824991

Total company future contracted revenue (USD billions)

611bfa30c8f1b2dffc31e9248e13cabe813c7e9108cee298ea415958188dd726

| Year | Amount Due (Millions) | Debt Type         | Interest Rate (%) | % of Total Debt                     |
|------|------------------------|-------------------|-------------------|-------------------------------------|
| 2027 | 690.0 **[0001069183-24-000061_axon-20240930.htm:26]**         | Convertible Notes | 0.50 **[0001069183-24-000061_axon-20240930.htm:26]**     | 100.0% = (690.0 / 690.0) * 100 **[0001069183-24-000061_axon-20240930.htm:26]** |

dfe6c294d84c8d5f11b1201c32fb567d29fe5d03fa900a2f1a92d9fc165cb430

7def87a171b04183992cc0c0ab0fd23db1e835b40996b27ce46499839cae5970

- **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.  **[AXON_3407345_8]**
- **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.  **[AXON_3407345_4]**
- **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.  **[AXON_3407345_13]** **[AXON_3407345_15]**

efc76a53a5e27183223802098bea1aca21a0b595a57860a71b191755f3228ff5

1. **TASER 10 Demand and Capacity Investments**  
   **Q:** How is TASER 10 demand affecting capacity and margins?  
   **A:** Management reports that **TASER 10 demand is outpacing expectations**, doubling the demand of TASER 7 and making it their most popular device ever.  **[AXON_3386645_11]**  To meet this demand, they are **investing in ramping up capacity**, purchasing specialized equipment with long lead times.  **[AXON_3386645_17]**  This increased investment is causing **near-term pressure on gross margins** as they balance ramping capacity with cost reductions.  **[AXON_3386645_6]** **[AXON_3386645_7]**  They anticipate gradually increasing capacity to avoid backlogs in 2025.  **[AXON_3386645_17]** 

2. **Revenue Growth and Outlook**  
   **Q:** Why does the full-year guidance imply deceleration despite strong Q1 growth?  
   **A:** While Q1 showed **strong mid-30% revenue growth**, management prefers to see more of the year materialize before adjusting full-year guidance.  **[AXON_3386645_6]**  They note that **Q1 is the easiest comp of the year**, and they are lapping a very strong prior year.  **[AXON_3386645_6]**  The pipeline remains very strong, and they are optimistic about continued growth.  **[AXON_3386645_6]** 

3. **Impact of Acquisitions (Dedrone, Fusus)**  
   **Q:** How do the acquisitions of Dedrone and Fusus impact revenue and EBITDA?  
   **A:** Both Dedrone and Fusus are **small and growing fast**, but currently **immaterial to the top line and overall growth rate**.  **[AXON_3386645_5]**  Their impact is included in the guidance, with more noticeable effects on EBITDA due to integration costs.  **[AXON_3386645_5]**  Management expects Dedrone to become a significant contributor in the long term as they **invest heavily in robotic security**.  **[AXON_3386645_12]** 

4. **Bookings Decline and Seasonality**  
   **Q:** Why did bookings decline in Q1, and what's the outlook?  
   **A:** Q1 bookings are **seasonally the lowest**, similar to the prior year.  **[AXON_3386645_8]**  This is due to adding salespeople, region changes, and lack of urgency from customers, as major fiscal budgets don't end in Q1.  **[AXON_3386645_8]**  Management sees **no red flags** and reports the **best pipeline they've ever had**, expecting strong bookings for the rest of the year.  **[AXON_3386645_17]** 

5. **Federal Business Outlook**  
   **Q:** How is the federal business contributing to revenue growth?  
   **A:** Large federal bookings are **phased over multiple years**, with revenue recognized upon deployment or shipment.  **[AXON_3386645_9]**  Despite timing variability, management feels great about the federal business, with a **healthy pipeline and large opportunities in upcoming quarters**, expecting another strong year.  **[AXON_3386645_9]** 

6. **Draft One Product and Competitive Edge**  
   **Q:** How is Draft One adoption progressing, and what's your competitive advantage?  
   **A:** **Draft One is receiving unprecedented enthusiasm**, with low friction to adoption and positive feedback from officers and district attorneys.  **[AXON_3386645_5]**  The **ecosystem provides a natural fit**, combining video evidence and written records, offering a competitive edge.  **[AXON_3386645_13]**  They've invested in responsible AI to deliver high payoff with minimal risk.  **[AXON_3386645_13]** 

7. **Gross Margins and Mix Shift**  
   **Q:** What's impacting gross margins, and how will they evolve?  
   **A:** Gross margins are affected by the **balance between ramping TASER 10 capacity and cost reductions**.  **[AXON_3386645_6]** **[AXON_3386645_7]**  In Q1, devices were lighter while software was strong; they expect device revenue to increase, balancing gross margins.  **[AXON_3386645_7]**  They anticipate that gross margins for the rest of the year will **not surpass Q1 levels** due to these factors.  **[AXON_3386645_7]** 

8. **CapEx Increase and Timing**  
   **Q:** What drives the confidence to accelerate capacity investments now?  
   **A:** Confidence stems from the **best pipeline they've ever had exiting Q1**, with strong TASER 10 demand.  **[AXON_3386645_17]**  Investments are made now to meet future demand and **avoid backlogs in 2025**, given long equipment lead times.  **[AXON_3386645_17]**  Delaying would push back capacity increases, so they are acting proactively.  **[AXON_3386645_17]** 

9. **Cloud Services Growth and Recognition**  
   **Q:** How should we think about sequential growth in Axon Cloud Services?  
   **A:** The quarter-over-quarter increase was **almost $13 million**, considered a healthy step.  **[AXON_3386645_18]**  Growth is somewhat lumpy due to revenue recognition from records coming online.  **[AXON_3386645_18]**  A large Q4 led to a smaller sequential step-up in Q1, but the underlying growth remains strong.  **[AXON_3386645_18]** 

10. **International Wins and Competitive Positioning**  
    **Q:** What's driving international wins, and how do you compete on product versus cost?  
    **A:** The company focuses on the **value of their products**, not aiming to be the low-cost vendor.  **[AXON_3386645_19]**  Customers initially attracted to lower-priced options often recognize the higher ROI of Axon's offerings after testing.  **[AXON_3386645_19]**  This approach is leading to increased success in international markets, as demonstrated by recent wins.  **[AXON_3386645_19]** 

6c39361ffa567951dfa6671366623006651a532599b6ced1aaafcee149b168b6

- **Record-breaking future contracted revenue and bookings:** In Q4, Axon achieved its first quarter of over **$1 billion in bookings**, leading to a **$1.3 billion sequential increase in future contracted revenue**, which is the biggest on record. This strong performance indicates robust demand and provides high revenue visibility.  **[AXON_3375730_15]**
- **Significant growth opportunities in productivity software:** Axon's productivity software is expected to be the major growth driver in 2024. The company believes it has found product-market fit, with customers expressing high satisfaction and readiness for broader deployment, indicating substantial revenue growth potential in this segment.  **[AXON_3375730_4]**
- **Strategic acquisitions enhancing long-term growth prospects:** The acquisitions of **Fusus** and **Sky-Hero** are highly strategic, expanding Axon's product offerings and market opportunities. Fusus integrates various sensors and cameras, enhancing the utility of Axon's ecosystem for customers, while Sky-Hero positions Axon in the tactical drone market, which has significant long-term revenue and societal impact potential.  **[AXON_3375730_11]**

e37ba792ee5d13e729ba922b3f7fff4aad722836131f39cd1431f05efbf914ee

1. **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.  **[AXON_3407345_8]** 

2. **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.  **[AXON_3407345_7]** 

3. **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.  **[AXON_3407345_4]** 

4. **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.  **[AXON_3407345_4]** 

5. **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.  **[AXON_3407345_5]** 

6. **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.  **[AXON_3407345_6]** 

7. **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.  **[AXON_3407345_15]** 

8. **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.  **[AXON_3407345_18]** 

9. **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.  **[AXON_3407345_19]** 

10. **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.  **[AXON_3407345_13]** 

07bdb37066ed72b6b71818dd7783f61b417260b1e6f62bad7e31dab3703e1b1d

- **International bookings up 100% year-to-date**, driven by strong demand for **TASER 10** and cloud adoption, indicating significant global expansion opportunity.  **[AXON_3396701_7]**
- **Strong growth in Axon Cloud & Services segment, with a $19 million sequential increase**, boosted by software growth and contributions from acquisitions like **Fusus**.  **[AXON_3396701_16]**
- **Rapid adoption of new AI products like Draft One, generating over $100 million in pipeline within three months of launch**, suggesting significant future growth potential.  **[AXON_3396701_6]**

e41ab613996334a05809e55bb4e7b437f3e38c12120fc18c103b750372b95799

- **The company's guidance implies revenue growth deceleration despite strong Q1 results, raising concerns about sustaining growth momentum.**  **[AXON_3386645_6]**
- **Bookings declined sequentially in Q1, and the company acknowledges that Q1 is seasonally low, which may indicate challenges in maintaining booking momentum.**  **[AXON_3386645_8]**
- **New products like Draft One and recent acquisitions may face lengthy approval processes and integration challenges, potentially delaying revenue contributions and return on investment.**  **[AXON_3386645_12]** **[AXON_3386645_5]**

2c88430b9d92890ba1c97c9e5404acdbb1fad374d36f86f1f7687f66c4e83805

1. **Software Adoption and AI Impact**  
   **Q:** How is software adoption, and what excites you going forward?  
   **A:** Software growth continues strong, with **terrific growth from Evidence.com** and increasing contributions from other software products like productivity and AI tools. The AI-powered product **Draft One** is generating excitement, with over **$100 million in pipeline**.  **[AXON_3396701_6]**  While Draft One isn't yet contributing to revenue, it's expected to be a significant driver going forward.  **[AXON_3396701_6]**  AI advancements are accelerating product development priorities, leading to nimble responses to customer needs.  **[AXON_3396701_6]** 

2. **International Growth Opportunities**  
   **Q:** Why is international growth gaining speed, and what could accelerate it?  
   **A:** International bookings are up **100%** this quarter  **[AXON_3396701_7]** , driven by a stronger team, the launch of **TASER 10**, and increasing cloud adoption.  **[AXON_3396701_7]**  The international team is the strongest it's been, with new leadership and country managers.  **[AXON_3396701_7]**  AI services like Draft One are generating strong interest internationally, especially in Europe, potentially accelerating cloud adoption where resistance was previously higher.  **[AXON_3396701_7]** 

3. **TASER 10 Adoption Outside Local LE**  
   **Q:** What's driving TASER 10 adoption beyond local law enforcement?  
   **A:** The largest TASER 10 deals are now outside state and local law enforcement, particularly in corrections, federal agencies, and international markets.  **[AXON_3396701_18]**  These customers are often **2, 3, or 4 times** the size of major local agencies like NYPD.  **[AXON_3396701_18]**  This expansion results from efforts over the past five years to grow beyond state and local markets, opening opportunities to sell additional products like body cameras and software solutions.  **[AXON_3396701_18]** 

4. **Fusus Integration and Growth**  
   **Q:** Can you provide an update on Fusus integration and growth?  
   **A:** Fusus shows strong demand, and we're pivoting our dispatch strategy to be **Fusus-centric**.  **[AXON_3396701_13]**  Fusus excels at bringing together data into a unified map interface, integrating third-party cameras, and enhancing real-time operations.  **[AXON_3396701_13]**  This shift allows us to focus on areas where we can drive innovation and scale.  **[AXON_3396701_13]**  Fusus is contributing to over **100% growth** in the real-time operations group.  **[AXON_3396701_13]** 

5. **Drone as First Responder and TAM**  
   **Q:** What's the outlook for drones as first responders and total addressable market?  
   **A:** Interest in **Drone as First Responder (DFR)** is growing rapidly, with a **10x increase** in agencies adopting DFR in a 12-month period.  **[AXON_3396701_14]**  Our partnership with Skydio and Dedrone positions us well in this space.  **[AXON_3396701_14]**  While it will take time to become a material revenue contributor, we believe that in the next **10 years**, there will be a one-to-one relationship between drones and police cars.  **[AXON_3396701_14]** 

6. **Axon Cloud Growth and Revenue per Seat Potential**  
   **Q:** Is Axon Cloud's strong growth sustainable, and how much can revenue per seat grow?  
   **A:** Axon Cloud & Services saw a sequential revenue increase of **$19 million**, the highest on record.  **[AXON_3396701_15]**  While quarterly growth may vary, the overall growth remains healthy.  **[AXON_3396701_15]**  With just over **20%** of customers on our OSP plans, there's significant room for revenue per seat to grow by moving customers to higher-tier plans and adding additional features.  **[AXON_3396701_15]** 

7. **Opportunity Pipeline Strength**  
   **Q:** What's driving your confidence in the strong opportunity pipeline?  
   **A:** The pipeline is the strongest it's been, with conviction in its accuracy.  **[AXON_3396701_10]**  Our sales team is the best in the industry, and we expect a massive second half in terms of bookings.  **[AXON_3396701_10]**  The pipeline includes strong names across the business, fueling our optimism for future results.  **[AXON_3396701_10]** 

8. **TASER Gross Margin Outlook**  
   **Q:** How should we think about TASER gross margin trajectory?  
   **A:** TASER gross margins are starting to stabilize around current levels.  **[AXON_3396701_9]**  Benefits from automation coming online are contributing positively.  **[AXON_3396701_9]**  While product mix can cause variations, we expect margins to remain steady, with ongoing improvements from operational efficiencies.  **[AXON_3396701_9]** 

9. **ARR Growth Timing**  
   **Q:** Is the slower ARR growth this quarter a matter of timing?  
   **A:** Yes, it's a timing issue.  **[AXON_3396701_8]**  Sequential ARR growth was down compared to last year's Q2 due to when new revenue started in the quarter and lighter bookings in Q1.  **[AXON_3396701_8]**  However, we're pleased with the **40%+ year-over-year** ARR growth.  **[AXON_3396701_8]** 

10. **Macro Impact Resilience**  
    **Q:** How might a potential recession impact your business?  
    **A:** Historically, economic swings haven't significantly impacted us.  **[AXON_3396701_18]**  Our products are essential services that save lives and money.  **[AXON_3396701_18]**  Customers recognize the value, and moving away from our products would cost them more.  **[AXON_3396701_18]**  While no one is immune to macroeconomic factors, we typically see resilience due to the critical nature of our offerings.  **[AXON_3396701_18]** 

c0b60bc6a790fde3a46dcea7d2764e0079d8e29826f2a198a09833e50143402c

- **Axon's new AI-driven product, Draft 1, is receiving unprecedented enthusiasm from customers and is expected to contribute meaningfully to revenue starting in the second half of the year, with low adoption friction and high margins.**  **[AXON_3386645_5]**
- **The TASER 10 is experiencing extraordinary demand, with sales outpacing the TASER 7 by double, indicating strong product acceptance and significant contribution to revenue growth.** Axon is accelerating investments in capacity to meet this demand.  **[AXON_3386645_11]** ,  **[AXON_3386645_17]**
- **Axon has the strongest sales pipeline it has ever had** and, despite seasonally lower bookings in Q1, expects strong bookings growth in the remainder of the year, driven by continued strength in federal and international markets and new product offerings.  **[AXON_3386645_6]** ,  **[AXON_3386645_8]** ,  **[AXON_3386645_9]**

4d933c659874a99461e350b9956764a3ab586174369f91de265da037e476c98f

- **Axon experienced a slowdown in sequential growth of Annual Recurring Revenue (ARR) in Q2 compared to the previous year's Q2**, adding less ARR than expected, which could indicate a potential deceleration in growth momentum.  **[AXON_3396701_8]**
- **The company faced challenges with its own dispatch console software**, finding it difficult to scale due to fragmented customer requirements, leading them to pivot their strategy towards Fusus. This shift suggests potential difficulties in their product development and execution.  **[AXON_3396701_14]**
- **Adoption of Axon's cloud services in international markets, especially in Europe, has been slower than anticipated due to resistance to cloud solutions**. While AI offerings like Draft One might improve adoption, this outcome is still uncertain.  **[AXON_3396701_7]**

1030a34531053bb4ed3166a00ab64fe88bec3a8762012d202e39ce25e3f10c75

1. **TASER 10 Margins Outlook**  
   **Q:** How will TASER 10 margins trend in 2024?  
   **A:** TASER gross margins are expected to improve in 2024 as the one-time impact from a manufacturing issue affecting Q4 margins by **420 basis points** comes out. They are investing in automation and cost-down initiatives that will benefit margins, with improvements starting to roll in throughout the year and becoming more cumulative in the back half as these initiatives are executed.  **[AXON_3375730_9]** **[AXON_3375730_10]** 

2. **Future Revenue Visibility**  
   **Q:** Has the duration of contracts extended, impacting revenue recognition?  
   **A:** While they've seen a trend toward more **10-year contracts**, the 15%-25% of future contracted revenue expected to convert in the next 12 months hasn't changed significantly. Longer contracts are a factor, but they haven't massively altered how future contracted revenue converts for the next year, providing strong visibility into 2024 revenue guidance.  **[AXON_3375730_16]** 

3. **Software Growth Drivers**  
   **Q:** How will software components contribute to growth in 2024?  
   **A:** Productivity software stands out as a huge opportunity, having found product-market fit with customers very satisfied. They're aiming to deploy faster across more customers. Digital Evidence Management is on track, and the Respond product (live streaming) will also contribute to growth.  **[AXON_3375730_21]** 

4. **TASER 10 Demand and VR Training**  
   **Q:** Is TASER 10 demand from upgrades or new markets?  
   **A:** Both. Existing customers are upgrading, some expressing interest in early upgrades, and TASER 10 is expected to open new markets internationally, including private security and federal use cases. VR training is progressing and is seen as integral to TASER 10 adoption, enhancing safety outcomes, and is being rolled out internationally and to federal markets.  **[AXON_3375730_13]** **[AXON_3375730_14]** 

5. **Acquisitions of Fusus and Sky-Hero**  
   **Q:** What synergies do you see with Fusus and Sky-Hero acquisitions?  
   **A:** The acquisitions are focused on long-term market opportunities rather than immediate synergies. Fusus enhances situational awareness by integrating with various sensors and CCTV cameras, serving as the "Switzerland of cameras." Sky-Hero provides tactical drones used by special forces and SWAT teams, with long-term potential in using drones and robotics to improve safety and reduce reliance on sending personnel into dangerous situations.  **[AXON_3375730_11]** 

6. **International Growth Trends**  
   **Q:** How did international bookings and revenue trend?  
   **A:** International had a record quarter in bookings, with teams driving significant momentum. Revenue recognition may fluctuate due to factors like country-by-country approvals and longer implementation lead times for national deployments, leading to quarterly lumpiness. However, strong bookings are expected to drive future revenue growth.  **[AXON_3375730_18]** 

7. **Corrections Market Strategy**  
   **Q:** What's your strategy for growth in the corrections market?  
   **A:** They are building on foundational products like TASERs and body cameras and investing in solutions like Fusus, drones, and VR training tailored for corrections. There's significant opportunity in domestic, federal, and international corrections markets, with positive feedback from early engagements on new products.  **[AXON_3375730_19]** 

8. **Drone Business and Sky-Hero Integration**  
   **Q:** What are hurdles to greater drone adoption and Sky-Hero integration?  
   **A:** Regulatory challenges, such as FAA permissions for beyond visual line-of-sight flights, are hurdles for drone adoption. For Sky-Hero, they've temporarily paused sales to secure FCC approval for certain RF transmission bands. Despite short-term challenges, they anticipate long-term opportunities in both outdoor and indoor drones, with innovations expected over the next few years.  **[AXON_3375730_20]** 

9. **Future Contracted Revenue Conversion Rate**  
   **Q:** What variables move future revenue conversion between 15%-25%?  
   **A:** The conversion rate depends on the average contract length and the number of TASER Assurance Plan (TAP) upgrades scheduled in the year. An increased number of upgrades can boost current-year revenue recognition, affecting where the conversion rate falls within the 15%-25% range.  **[AXON_3375730_22]** 

10. **TASER Automation Impact on Margins**  
    **Q:** What is the impact of TASER automation on margins?  
    **A:** Automation and cost-improvement initiatives are expected to enhance TASER 10 margins, aiming for stable gross margins over time rather than previous fluctuations. While these efforts contribute to confidence in moderate gross margin improvement for 2024, specific long-term margin targets for TASER are not provided.  **[AXON_3375730_23]** **[AXON_3375730_24]** 

11. **European Market Penetration**  
    **Q:** How is European adoption compared to Commonwealth countries?  
    **A:** For TASER products, Continental Europe is beginning to outpace Commonwealth countries, evidenced by large orders last quarter. While cloud adoption has been slower in Europe, they are focusing on key markets where they're starting to gain traction with trials and pilots, which could accelerate adoption in other regions over the next few years.  **[AXON_3375730_25]** 

12. **Fusus Product Readiness**  
    **Q:** Will Fusus need investment to drive adoption?  
    **A:** Fusus is ready to deploy immediately, offering a turnkey solution for state and local agencies in the U.S. and starting internationally. It provides significant advancements in situational awareness by integrating with various cameras and sensors, and it's experiencing rapid growth without requiring additional investment for adoption.  **[AXON_3375730_17]** 

13. **Cloud Product Growth**  
    **Q:** Will cloud products' growth contributions differ in 2024?  
    **A:** Productivity software is expected to see significant growth due to strong product-market fit and high customer satisfaction. They plan to accelerate deployment across more customers. Digital Evidence Management continues to expand into new markets, and real-time operations products like Respond (live streaming) will also drive growth.  **[AXON_3375730_21]** 

14. **TASER 10 Improvement Timing**  
    **Q:** Will TASER 10 margin improvements be linear or back-end loaded?  
    **A:** Margin improvements will begin rolling in throughout the year as automation and cost-down initiatives are implemented. While not entirely back-end weighted, the cumulative impact will be more pronounced in the second half of the year as all initiatives are fully executed.  **[AXON_3375730_10]** 

be817e2c89c1e10ff07636a961ced320ae6e329a12a18c7e5a1a3f7667aa2254

Axon Enterprise Inc (AXON)

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