What happened
Shares of Axon Enterprise (AXON 0.65%) are racing 13.1% higher this week compared to where they closed last Friday, according to data from S&P Global Market Intelligence, after the maker of Tasers for law enforcement reported fourth-quarter earnings that handily outstripped Wall Street forecasts.
Axon said it generated $0.70 per share in profits for the period on $336 million in revenue, which was far better than analyst estimates of $0.51 per share in earnings on $305.9 million in sales. Guidance was also well ahead of expectations.
A police officer using Axon software in a patrol car. Image source: Axon Enterprise.
So what
With nearly 1,100 fatal civilian encounters with police during 2022, the need and demand for less-than-lethal weapons has never been greater. Axon has determined there's a $50 billion total addressable market for its suite of products primarily with state and local governments in the U.S.
While Axon's main revenue source continues to be its Taser brand of stun guns, it also sells body cameras and software to manage evidence data bases, all of which can be purchased individually or as a package with a subscription. Sales of Axon products and services continue to rise. In the process, it's become a hybrid software-as-a-service stock.
Fourth-quarter revenue jumped 54% from last year to $336 million, with Taser sales rising 32% to almost $137 million, cloud sales rising 65% to $113.5 million, and sensor sales (including body cams and in-car cameras) nearly doubling to $86 million.
Axon is looking for revenue to run another 20% higher in 2023 with total revenue of at least $1.43 billion, and it's targeting $286 million in adjusted earnings before interest, taxes, depreciation, and amortization. That's well ahead of Wall Street's expectation of $1.38 billion in revenue for the year.
Now what
While Axon Enterprise sees massive opportunity at all levels of government to grow sales over the next few years, it has significantly narrowed its view of expectations for the consumer personal-protection market from $18 billion down to $5 billion. That's because it sees the law enforcement market as so rich that it intends to focus most of its energy on it, without being so distracted by the consumer side.
Axon just released its newest Taser device, the Taser 10, which it says "represents a giant leap in innovation." Users can deploy 10 probes instead of four, individually target the probes, and extend the range up to 45 feet from 25 feet, for greater safety.
