The Future Looks Bright for TASER International

Tasers have long been TASER International's top product, but that could soon change. Image source: TASER International.

It's hard to argue with the proposition that law-enforcement body cameras are good for everyone involved. A recent University of South Florida study showed that officers who wore body cameras were 53% less likely to use force, and other studies have yielded similar results. From a law-enforcement perspective, having video evidence is a critical tool for prosecutors.

That dynamic creates an incredible opportunity for TASER International (AXON 2.37%) -- not only to sell body cameras to law enforcement around the world, but also to imbed itself as a critical law-enforcement tool long-term.

The full suite of solutions
TASER International has spent most of the last year investing in a new line of camera products and a suite of solutions at its Evidence.com site to accompany them. The Axon Body 2 camera and in-car Axon Fleet product are the flagships of that product overhaul. 

In addition to the new camera products, TASER International introduced pricing for video storage for agencies on Evidence.com. That's really where the long-term opportunity lies.

Data source: TASER International.

A single camera can generate $948 million in revenue. And there's immense upside considering Axon hardware revenue was just $3.2 million in the third quarter, and recurring revenues from products like Evidence.com were just $3.3 million.

This body camera could soon be commonplace in law enforcement. Image source: TASER International.

An incredible opportunity
According to the FBI's latest data, from 2011, there are just over 1 million full-time law enforcement employees in the U.S. alone. If just 20% of those officers had body cameras, the revenue opportunity would be $79.8 million. The ongoing service revenue could be $189.6 million for those same cameras.

And that's just considering the body cameras. Axon Fleet adds even more potential ongoing revenue, depending on adoption rate.

Adoption rates could also be much higher than 20%. Motorola Solutions Inc (MSI 0.66%) is the only major competitor to offer a full suite of law-enforcement solutions, and it's just now entering the business. It's unclear if Motorola will be able to gain traction and a significant share in the market; so far, it hasn't announced any major contracts, and TASER is embedded in 26 major cities around the country.

In the numbers above, I'm also just looking at the U.S. TASER International's management thinks the total addressable market for the Axon business is $3.0 billion annually, so the upside for the company is tremendous.

Invest now for payoff later
TASER International's shares sold off earlier this month after the company reported a big decline in profit. But the company is investing in growth opportunities that dwarf what it can now make in a single quarter. That's the kind of long-term vision Foolish investors should love.

Long story short, the future looks bright for this company on the cutting edge of law enforcement needs.