Axon Enterprise, Inc. · NASDAQ:AXON
Axon Enterprise — Q1 2023 Earnings Presentation
31 slides from Axon Enterprise's earnings presentation, May 9, 2023
Slide 1: Investor Presentation
INVESTOR PRESENTATION AXON ENTERPRISE | May 2023
Slide 2: Safe-harbor statement
Safe-harbor statement Forward-looking statements in this letter include, without limitation, statements regarding: proposed products and services andrelated development efforts and activities; expectations about the market for our current and future products and services; strategies and trends 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 Chief Operating Officer Chief Financial Officer & Chief Product Officer & Founder Chief Business Officer & Chief Technology Officer 3
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 is A x o n ' s r o le? We a r e in v es t in g in : Te ch n o l o g y Trai n i n g Tr u s t Today Advancing Axon’s De-escalating with Never miss a moment, R&D pipeline confidence body cameras Driving technology Virtual reali
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 effi cient report Shorten time evidence Dispatch Axon enables Axon Dispatch and In an event where use of Axon Body camer
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 COMMERCIAL ENTERPRISE NYPD LAPD DHS DOD LONDON MET. ITALY STATE POLICE MIAMI PD DOJ TORONTO PD = Growth Markets 17k+ public safety 121% net 5+ year agencies globally revenue retention cus
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 $12.0 $22 Billion SaaS TAM $11.0 $10.5 $9.7 $50 $10.0 $8.0 $7.1 $6.7 $6.0 $4.6 BILLION TAM $4.0 $2.0 $– (Billions) Digital evidence Real-time Camera hardware Axon Air + AR/VR TASER Personal protection management Operations, Training (professional) Productivity & added s
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 EAL TH EU R O P E L ATIN AM ER IC A AS IA Us er a doption of TASER devi ces is s till ea rl y outside of US state and local law TAS ER 35% 22% 3% 1% 0% enforcement. US federal penetration rema ins early. Body ca me
Slide 16: Diversified growth opportunities along several vectors
02 Diversified growth opportunities along several vectors CROSS-SELL & UP-SELL NEW PRODUCTS NEW MARKETS & 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: 2023 Guidance
2023 Guidance New Previous As reported May. 9, 2023 As reported Feb. 28, 2023 $1.44 billion to $1.46 billion Full year revenue (2023) (~22% growth at the midpoint) Growth of ~20%, or revenue of about $1.43 billion Margin of 20% Margin of 20% Full year Adjusted EBITDA (Implies $288 million to $292 mi
Slide 20: High financial visibility driven by recurring subscription bundles
03 High financial visibility driven by recurring subscription bundles SAAS ANNUAL RECURRING REV ENUE % TOTAL REV ENUE TIED TO ( $ MI LLI ON S) SUBSCRIPTION BUNDLES (Non-subscription revenue tied to consumer, new & emerging markets) $520 $348 $242 90% 80% $174 71% 73% $122 55% Q1 19 Q1 20 Q1 21 Q1 22
Slide 21: Strong, consistent growth with attractive gross margin profile
3 Strong, consistent growth with attractive gross margin profile ‘20–’22 ‘22 Revenue ($ millions) Revenue Gross CAGR Margin Axon Cloud $1,277 32% 61% Sensors & Other $1,190 TASER $407 $863 $368 44% 73% $681 $245 $290 $318 45% 42% $177 $181 $137 $437 $532 $551 20% 63% $367 2020 2021 2022 TTM Revenue
Slide 22: Healthy margins and increasing free cash flow
03 Healthy margins and increasing free cash flow $350 A DJ . EBI TDA ( $ I N MI LLI ON S) $300 $249 $250 $232 $200 $178 $156 $150 $100 $88 $61 $50 $0 2018 2019 2020 2021 2022 TTM Adj. EBITDA Margin % 15% 17% 23% 21% 20% ‘Rule of 40’1 37 43 51 48 58 Adj. FCF2 $52 $48 $16 $79 $197 1. Rule of 40 is def
Slide 23: Appendix
APPENDIX x AXON
Slide 24: Axon's Board of Directors
Axon’s Board of Directors Michael Garnreiter Julie Anne Graham Caitlin Kalinowski Dr. Matthew R. Adriane Brown Cullivan Smith McBrady Chairman of the Board Director Director Director Director* Director Hadi Chief Jeri Mark W. Kroll, PH.D Erika Rick Partovi Williams Ayers Smith Director Director Dire
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: 01 26
Slide 27: Right-sized & custom bundles for any agency
Right-sized & custom bundles for any agency Based on 5-year pricing. Price increase over 5 years includes a 4% annual inflation adjustment. TASER hardware revenue recurs every 5 years. Camera and VR hardware revenue occurs approximately every 2.5 years. >90% of cas h flows are reoccurring.
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 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Axon Cloud s
Slide 29: Non-GAAP Reconciliation: Adj. EBITDA
Non-GAAP Reconciliation: Adj. EBITDA THREE MONTHS ENDED TWELVE MONTHS ENDED $ IN THOUSANDS 31-MAR-2023 31-MAR-2022 31-DEC-2022 31-DEC-2021 31-DEC-2020 31-DEC-2019 31-DEC-2018 EBITDA and Adjusted EBITDA Net income (loss) $ 45,139 $ 54,871 $ 147,139 $ (60,018) $ (1,724) $ 882 $29,205 Depreciation and
Slide 30: Non-GAAP Reconciliation: Revenue & ARR CAGR
Non-GAAP Reconciliation: Revenue & ARR CAGR Q1’19 – Q1’23 $ IN THOUSANDS Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 REVENUE CAGR Revenue $115,810 $147,162 $195,019 $256,426 $343,043 31% Axon Cloud 27,631 39,154 52,436 77,016 116,453 43% Sensor & Other 22,788 32,113 43,584 65,050 92,308 42% TASER 65,391
Slide 31: Non-GAAP Reconciliation: Adj. Free Cash Flow
Non-GAAP Reconciliation: Adj. Free Cash Flow THREE MONTHS ENDED $ IN THOUSANDS 31-MAR-2020 31-MAR-2021 31-MAR-2022 31-MAR-2023 Free cash flow Net cash provided by operating activities $13,415 $60,939 $43,964 $(56,323) Purchases of property and equipment (2,209) (10,521) (17,098) (8,513) Purchases of