Axon Enterprise, Inc. · NASDAQ:AXON
Axon Enterprise — Q4 2023 Earnings Presentation
31 slides from Axon Enterprise's earnings presentation, Feb 27, 2024
Slide 1: Investor Presentation
INVESTOR PRESENTATION AXON ENTERPRISE | February 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 Chief Executive Officer President Chief Operating Officer Chief Product Officer & Founder & Chief Financial Officer & Chief Technology Officer 3
Slide 4: Technology, Training, Trust: cut gun-related deaths 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 122% 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 $20.0 $19B $35 Billion $18B Software TAM $63 $16B $16.0 $15B $15B $12.0 BILLION $10B $10B $8B $8.0 TAM $7B $5B $5B $4.0 $— (Billions) Our Total Addressable Market (TAM) methodology estimates annual potential spending on Axon products by considering total possible users
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 increases State & Local Public Safety Aggrega
Slide 18: Table of Contents
Table of Contents BUSINESS MARKET FINANCIAL OVERVIEW OPPORTUNITY OVERVIEW 01 02 03 18
Slide 19: FY 2024 Guidance
03 FY 2024 Guidance As reported Feb. 27, 2024 $1.88 billion to $1.94 billion Full year revenue (2024) (20% to 24% annual growth) Full year Adjusted EBITDA $410 million to $430 million Capital Expenditures $60 million to $75 million The following forward-looking statements reflect Axon's expectations
Slide 20: High financial visibility driven by strong ARR growth and recurring subscription bundles
03 High financial visibility driven by strong ARR growth and recurring subscription bundles SAAS ANNUAL RECURRING REVENUE % TOTAL REVENUE FROM CUSTOMERS TIED TO ($ MILLIONS) SUBSCRIPTIONS $697 $473 $327 92% 95% 88% 73% 76% $221 $161 Q4 19 Q4 20 Q4 21 Q4 22 Q4 23 2019 2020 2021 2022 2023 20 Annual re
Slide 21: Strong, consistent growth with attractive gross margin profile
03 Strong, consistent growth with attractive gross margin profile ‘20–’23 ‘23 Revenue ($ millions) Revenue Gross CAGR Margin Axon Cloud & Services $1,563 32% 61% Sensors & Other $1,190 TASER $863 $561 47% 73% $681 $368 42% 46% $390 $245 $290 $177 $181 $137 $532 $613 19% 61% $367 $437 2020 2021 2022
Slide 22: Healthy margins and increasing free cash flow
03 Healthy margins and increasing free cash flow $350 $329 ADJ. EBITDA ($ IN MILLIONS) $300 $250 $232 $200 $178 $156 $150 $100 $88 $61 $50 $0 2018 2019 2020 2021 2022 2023 Adj. EBITDA Margin % 15% 17% 23% 21% 20% 21% ‘Rule of 40’1 37 43 51 48 58 52 Adj. FCF2 $52 $48 $16 $79 $197 $148 1. Rule of 40 i
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. Adriane Garnreiter Cullivan Smith Kalinowski McBrady Brown Chairman of the Board Director Director Director Director* Director Hadi Chief Jeri Mark W. Erika Rick Partovi Williams Kroll, PH.D Ayers Badan Smith Director Directo
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
Slide 26: How the Axon ecosystem appears to the customer
How the Axon ecosystem appears to the customer: 26
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: Non-GAAP Reconciliation: Adj. EBITDA
Non-GAAP Reconciliation: Adj. EBITDA TWELVE MONTHS ENDED $ IN THOUSANDS 31-DEC-2023 31-DEC-2022 31-DEC-2021 31-DEC-2020 31-DEC-2019 EBITDA and Adjusted EBITDA Net income $174,227 $ 147,139 $ (60,018) $ (1,724) $ 882 Depreciation and amortization 32,638 24,381 18,694 12,475 11,361 Interest expense 6,
Slide 30: Non-GAAP Reconciliation: Revenue & ARR CAGR
Non-GAAP Reconciliation: Revenue & ARR CAGR ’19 – ’23 $ IN THOUSANDS 2019 2020 2021 2022 2023 REVENUE CAGR Revenue $530,860 $681,003 $863,381 $1,189,935 $1,563,391 31% Axon Cloud & Services 130,279 176,850 244,845 367,991 560,686 44% Sensors & Other 118,920 137,601 181,609 290,378 390,101 35% TASER
Slide 31: Non-GAAP Reconciliation: Adj. Free Cash Flow
Non-GAAP Reconciliation: Adj. Free Cash Flow TWELVE MONTHS ENDED $ IN THOUSANDS 31-DEC-2023 31-DEC-2022 31-DEC-2021 31-DEC-2020 Free cash flow Net cash provided by (used in) operating activities $189,263 $235,361 $124,494 $38,481 Purchases of property and equipment (59,635) (55,802) (49,886) (72,629