A funny thing happened to TASER International (NASDAQ:AXON) stock last week: nothing.

In Great Britain, Big Brother is always watching you -- now more than ever. Image source: Getty Images.

This was strange because, on Thursday, TASER reported a big contract win in the United Kingdom, an order for 1,600 Axon Body 2 cameras, along with a multiyear contract to provide Evidence.com data storage services for said cameras. Instead of TASER stock leaping higher, however -- which happened when TASER reported an Axon sale, of 1/32 the size, to Canadian police forces last month -- TASER stock actually lost a few pennies worth of market cap.


Third time's no charm for TASER

As TASER detailed in its press release, Britain's West Midlands Police ordered its new Axons following a 12-month trial pitting TASER's body cameras for police against an unnamed rival device. Summarizing its finding, West Midlands Police described TASER's Axon as "cost effective, flexible, secure" and said it "provides an opportunity for us to present better evidence in the courtroom."

That all sounds good, and adds to the drumbeat of support TASER has been accumulating in the U.K., which began with a big Axon buy by the London Metropolitan Police last year (22,000 Axons) and a smaller purchase by the Greater Manchester Police (3,148 units).

It does, however, also paint TASER's West Midlands Police contract in a somewhat dimmer light, as the smallest of the three U.K. contracts won over the past six months.

How much is it worth?

As the cameras are priced at $399 each, the sale of 1,600 Axon Body 2 cameras is likely to bring in less than $640,000 in incremental revenue for TASER -- just 0.3% of the company's annual sales. As such, you wouldn't expect this sale to move TASER's stock price much (although TASER investors have been known to overreact to similarly small news items in the past).

In the longer term, it's the Evidence.com contracts, which are attached to the Axons TASER sells, that are the real driving force behind TASER's growth. As we outlined last year, TASER offers six levels of Evidence.com service for customers purchasing its Axons:

  • a "Basic" plan costing $15 per user, per month
  • a "Standard" plan costing $25
  • a "Pro" plan at $39
  • "Ultimate" level starting at $55 (includes camera upgrades every 2.5 years)
  • "Ultimate" plus unlimited storage for $79
  • and $99 for all the above, plus upgrades to actual TASER Tasers -- the stun guns that were the company's initial claim to fame

The 1,600 Axons being purchased by West Midlands Police therefore have the potential to generate anywhere from $288,000 to as much as $1.9 million  in annual Evidence.com revenue -- or up to three times the value of the underlying sales contract. And this is revenue that would likely recur year after year after year.

What it means for investors

Granted, even $1.9 million is less than 1% of TASER's annual revenue stream. But at least it's something, and it's certainly something positive. TASER's stock should have gone up last week, not down.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.