Axon Enterprise (NASDAQ:AXON) makes some of the most indispensable products in law enforcement, providing Tasers and body cameras around the world. The company has nearly tripled revenue in the last five years as body cameras have been adopted more widely, and cloud services from its have driven future contracted revenue to $494.2 million. 

But the growth hasn't translated to a rising stock price, largely because profit growth hasn't kept pace. Here's why 2018 could change that narrative. 

The exterior of Axon Enterprise's headquarters in Arizona.

Image source: Axon Enterprise.

Profits, profits, profits

Axon's management has been investing heavily in new products and sales and marketing in the last few years, so revenue growth hasn't translated to increased profitability, as you can see below. They say that will change in 2018. 

AAXN Revenue (TTM) Chart

AAXN Revenue (TTM) data by YCharts.

Management is putting in place incentives for staff to be measured on profitability, not just growth, and we'll likely see scale in new products like body cameras play a role in increasing operating margins. 

How the company makes its way to profitability will be key to Axon's stock performance next year. If revenue growth suffers or margins don't expand quickly, investors could be disappointed in the long-term profit growth potential for Axon. That's why the bottom line will be paramount. 

New products are crucial

A couple of new products in 2018 could help Axon both grow revenue and increase profitability. One is a new records management system that is aimed at making law enforcement officers' jobs easier by reducing paperwork and increasing reliability. The second is Signal Sidearm, a holster sensor that turns a body camera on when a weapon is pulled from  the holster. Aimed at alleviating the need for an officer to turn a body camera on, Signal Sidearm could be an incremental revenue booster for the business. 

Axon is striving to create new products that are as indispensable to law enforcement as its current ones, and to generate recurring revenue. If body cameras and holsters can combine with services like and records management, the company could be on its way to expanding the strategy. Investors should watch for customers increasing the number of Axon products they use, which will show that the business model of expanding into new product lines is working. 2018 could start to show some progress on that front. 

Is artificial intelligence in Axon's future?

One thing I'm watching in 2018 is Axon's artificial intelligence (AI) capabilities. The company bought Dextro and Fossil Group's computer vision group early in 2017 in an effort to bring AI to the company's products. AI could allow Axon to find relevant videos for law enforcement more easily, sorting through thousands of hours of video. 

So far, Axon AI has only been used in small applications or pilot projects, but in 2018 it could enter wider adoption. Look for this software to be a product that can help drive sales and margin growth if it's as successful as management hopes. 

Where is Axon Enterprise going in 2018? 

I expect Axon to continue its growth trend next year, and I think profits will finally begin to grow as well. If new products (like records management and Signal Sidearm) are adopted on a widespread basis, Axon could even embed itself further in the law enforcement community. That will drive long-term profitability, which is why I'm bullish on the company's stock and will keep my thumbs-up CAPScall.

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.