Axon Enterprise, Inc. · NASDAQ:AXON
Axon Enterprise — Q3 2024 Earnings Presentation
31 slides from Axon Enterprise's earnings presentation, Nov 7, 2024
Slide 1: Investor Presentation
INVESTOR PRESENTATION AXON ENTERPRISE | NOVEMBER 2024
Slide 2: Safe-harbor statement
Safe-harbor statement Forward-looking statements in this letter include, without limitation, statements regarding: proposed products and services and related development efforts and activities; expectations about the market for our current and future products and services, including statements relat
Slide 3: Founder-led management team with track record of scaling new product categories
Founder-led management team with track record of scaling new product categories Rick Smith Josh Isner Brittany Bagley Jeff Kunins Cameron Brooks Chief Executive Officer President Chief Operating Officer Chief Product Officer Chief Revenue Officer & Founder & Chief Financial Officer & Chief Technolog
Slide 4: Cut gun-related deaths between police and public by 50%
Cut gun-related deaths between police and public by 50% in 10 years W h a t i s A x o n ' s r o l e ? We a r e i n v e s t i n g i n : Te c h n o l o g y Tra i n i n g Tr u st Today Advancing Axon’s De-escalating with Never miss a moment, R&D pipeline confidence body cameras Driving technology Virtu
Slide 5: Differentiated value proposition
Differentiated value proposition Technology platform revolutionizing public safety Mission driven to protect life, capture truth, and accelerate justice Market leader in cloud-powered integrated hardware and software for public safety Strong market tailwinds — public safety spending is resilient and
Slide 6: Table of Contents
Table of Contents BUSINESS MARKET FINANCIAL OVERVIEW OPPORTUNITY OVERVIEW 01 02 03 6
Slide 7: Protect Life, Capture Truth, Accelerate Justice
01 PROTECT LIFE CAPTURE TRUTH ACCELERATE JUSTICE 7
Slide 8: Axon at a glance
01 Axon at a glance TASER AXON CLOUD SENSORS + OTHER TASER devices are the leading less-lethal Best-in-class, cloud-powered software Market leadership in body cameras, in-car option, at the forefront of de-escalation, suite for digital evidence management, cameras, and sensors, that are mission and
Slide 9: #1 cloud software suite for public safety
01 #1 cloud software suite for public safety DIGITAL EVIDENCE REAL-TIME PRODUCTIVITY MANAGEMENT OPERATIONS Software hub for digital evidence Real-time situational awareness Streamlining administration and report- workflows – review, analyze, share, redact, leads to faster responses and writing to sa
Slide 10: Mission critical solutions from capture to courtroom
01 Mission critical solutions from capture to courtroom Time Write and Community- 911, Signal Officer on scene Officer leaves file incident Justice system captured alerts and More efficient report Shorten time evidence Dispatch Axon enables Axon Dispatch and In an event where use of Axon Body camera
Slide 11: Powerful flywheel effects
01 Powerful flywheel effects + PRODUCTS Build products and integrated bundles that & INTEGRATED improve our customers’ effectiveness to BUNDLES ensure everyone gets home safely. This creates more users (aka people) and nodes (aka devices) on the Axon network + CUSTOMER that then creates more data th
Slide 12: Strong customer franchise with compelling net revenue retention
01 Strong customer franchise with compelling net revenue retention U.S. STATE & LOCAL U.S. FEDERAL INTERNATIONAL ENTERPRISE = Growth 17k+ public safety 123% net 5+ year Markets agencies globally revenue retention customer contracts Net revenue retention is as of most recent update and is defined as
Slide 13: Table of Contents
Table of Contents BUSINESS MARKET FINANCIAL OVERVIEW OPPORTUNITY OVERVIEW 01 02 03 13
Slide 14: Massive market opportunity
02 Massive market opportunity $30B $26B $77 $25B $19B $20B $18B $17B $17B $16B BILLION $15B $13B $10B $10B TAM $7B $5B $5B $3B $5B $0B Digital Real-time Axon Air Camera AR/VR TASER Personal U.S. State and U.S. Federal International Commercial Consumer Evidence Operations Hardware Training (professio
Slide 15: Axon enjoys early TAM penetration & global expansion opportunity
02 Axon enjoys early TAM penetration & global expansion opportunity U S C O M M O N W E A L T H E U R O P E L A T I N A M E R I C A A S I A User adoption of TASER devices is still early outside of US state and local law T A S E R 35% 22% 3% 1% 0% enforcement. US federal penetration remains early. Bo
Slide 16: Diversified growth opportunities along several vectors
02 Diversified growth opportunities along several vectors CROSS-SELL & UP-SELL EMERGING PRODUCTS EMERGING VERTICALS & USER PROFILES GLOBAL EXPANSION Enterprise Federal TASER Software Axon Air Axon Respond Justice Devices + Sensors VR Training Fire & EMS Corrections M&A PARTNERSHIPS/INVESTMENTS 16
Slide 17: U.S. public safety spending is resilient & growing
02 U.S. public safety spending is resilient & growing 400% Cumulative Increase in Direct Expenditure and GDP Compared to Baseline Year 1977 (1978-2020,%) State & Local Corrections 300% ’08-’09: Even when GDP dips, public safety spending remains stable or State & Local increases Public Safety Aggrega
Slide 18: Table of Contents
Table of Contents BUSINESS MARKET FINANCIAL OVERVIEW OPPORTUNITY OVERVIEW 01 02 03 18
Slide 19: Q4 and Full-Year 2024 Guidance
03 Q4 and Full-Year 2024 Guidance As reported November 7, 2024 Q4 2024 Revenue $560 million to $570 million Midpoint Revenue Growth >30% Q4 2024 Adjusted EBTIDA $130 million to $135 million As reported November 7, 2024 As reported August 6, 2024 Full-Year Revenue Approx. $2.07 billion $2.00 billion
Slide 20: High financial visibility driven by strong ARR growth and recurring subscription bundles
03 High financial visibility driven by strong ARR growth and recurring subscription bundles ANNUAL RECURRING REVENUE % TOTAL REVENUE FROM CUSTOMERS TIED TO ($ MILLIONS) SUBSCRIPTIONS $885 $652 $432 95% 88% 92% $313 73% 76% Q3 21 Q3 22 Q3 23 Q3 24 2019 2020 2021 2022 2023 Annual recurring revenue is
Slide 21: Strong, consistent growth with attractive gross margin profile
03 Strong, consistent growth with attractive gross margin profile ‘21–’23 ‘23 Revenue ($ millions) Revenue Gross CAGR Margin Axon Cloud & Services $1,938 Sensors & Other 34% 61% TASER $1,561 $740 $1,187 $561 50% 73% $866 $370 $439 47% 46% $386 $249 $286 $180 $759 19% 61% $531 $614 $437 2021 2022 202
Slide 22: Healthy margins and increasing free cash flow
03 Healthy margins and increasing free cash flow $500 ADJ. EBITDA ($ IN MILLIONS) $471 $450 $400 $350 $331 $300 $250 $232 $200 $183 $150 $100 $50 2021 2022 2023 TTM Adj. EBITDA Margin % 21% 20% 21% ‘Rule of 40’1 48 57 52 Adj. FCF2 $79 $197 $148 1. Rule of 40 is defined as revenue growth plus Adjuste
Slide 23: Appendix
APPENDIX Bx AXON
Slide 24: Axon's Board of Directors
Axon’s Board of Directors Michael Julie Anne Graham Caitlin Dr. Matthew R. Garnreiter Cullivan Smith Kalinowski McBrady Chairman of the Board Director Director Director Director* Adriane Hadi Chief Jeri Erika Rick Brown Partovi Williams Ayers Badan Smith Director Director Director Director*, CEO & D
Slide 25: Axon's Ethics & Equity Advisory Council
Axon’s Ethics & Equity Advisory Council When we build for the future, we engage with our valued EEAC, who routinely provides feedback throughout the product design process, helping us ensure that we are investing to build a future that we all want to live in ... ... we also work with governments, ci
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Slide 27: Right-sized & custom bundles
TASER WEAPON BUNDLES CAMERA BUNDLES Software Bundles WEAPON + CAMERA + SOFTWARE BUNDLES Unlimited Taser 7 Taser 7 Cert Taser 10 Taser 10 Cert Unlimited Fleet 3 Fleet 3 Basic Pro Pro+ Justice OSP 7 OSP 10+ Body OSP 7 OSP 7+ OSP 10 OSP 10+ Basic + VR Basic + VR Body Camera Basic Advanced Licensing Lic
Slide 28: Officer Safety Plan 10+ Premium Integrated Bundle
Officer Safety Plan 10+ Premium Integrated Bundle Illustrative revenue recognition and cash flow schedule on a public safety contract for 100 officers Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Axon Cloud software (Annual Recurring Revenue) Hardware warranty revenue TASER
Slide 29: Segment Revenue & ARR CAGR
Segment Revenue & ARR CAGR FY21-FY2023 $ IN THOUSANDS FY2021 FY2022 FY2023 TTM REVENUE CAGR Revenue $865,638 $1,187,143 $1,560,699 $1,937,757 34% Axon Cloud & Services 249,065 369,979 560,797 739,829 50% Sensors & Other 180,028 286,120 386,392 439,145 47% TASER 436,545 531,044 613,510 758,783 19% Q3
Slide 30: Non-GAAP Reconciliation: Adjusted EBITDA
Non-GAAP Reconciliation: Adjusted EBITDA THREE MONTHS ENDED TWELVE MONTHS ENDED $ IN THOUSANDS 30-SEP-2024 30-SEP-2023 31-DEC-2023 31-DEC-2022 31-DEC-2021 Net income (loss) $ 67,025 $ 61,309 $175,783 $ 146,930 $ (56,339) Depreciation and amortization 14,762 8,418 32,638 24,381 18,694 Interest expens
Slide 31: Non-GAAP Reconciliation: Adjusted Free Cash Flow
Non-GAAP Reconciliation: Adjusted Free Cash Flow THREE MONTHS ENDED $ IN THOUSANDS 30-SEP-2024 30-SEP-2023 Net cash provided by operating activities $91,321 $62,892 Purchases of property and equipment (26,472) (13,974) Purchases of intangible assets – (392) Free cash flow, a non-GAAP measure (1) 64,