Axon Enterprise's (AXON 13.76%) stock has risen 71.4% over the past year as the company's products have become increasingly popular with law enforcement. 89,808 new Axon body cameras were deployed in 2017, along with 26,025 Axon Flex cameras, a jump from 66,154 and 14,173, respectively, in 2016. Tasers were also big sellers, with 70,381 X26P units sold and 76,106 X2s.

But the opportunity for Axon Enterprise has just begun. There are about 1.1 million law enforcement officers in the U.S., and around 10 million globally (global statistics aren't standardized), an amazing opportunity to grow products deployed. And with the suite of products being offered the opportunity is getting bigger

Police officer with a body camera on.

Image source: Axon Enterprise.

Axon's existing untapped markets

I mentioned that Axon has sold nearly 300,000 tasers and nearly 200,000 body cameras in the past two years into a potential market of about 10 million customers. If we assume that a product's useful life is about two years, then Axon could grow from its current revenue base to multiples of its own size just by fully tapping the U.S. market. If it gained market share globally it could sell 10x the units it sells today. 

Management said that its current line of products has a $2.9 billion total addressable market, so even a 30% market share would be about $1 billion in sales. But the total addressable market given Axon's long-term product pipeline could be $6.5 billion. 

Growth from the existing customer base

What Axon Enterprise will do in 2018 is expand its product offerings into new products, like a fleet product for officers' cars, Signal Sidearm (which turns a body camera on when a weapon is drawn), and a new records management system. The goal is to increase revenue per customer by a significant amount. 

Today, list price for the Axon 2 camera is $399, with unlimited HD storage of video in for $79 per month. A single customer could be worth $1,347 per year. The X2 taser, the most popular from Axon, could add about $1,100 in additional revenue.

Axon Fleet pricing isn't out, but the previous model cost $499 plus any cloud costs. Sidearm and the records management system pricing are also not available, but based on existing products the ballpark cost of all three products plus cloud storage would likely be $1,000 to $1,500 annually. 

Just by adding more products to the lineup Axon could significantly increase the revenue it generates per customer. And by introducing products like records management that could become part of an officer's everyday work process, the company becomes engrained in the daily routine. That's how the company plans to grow into its $6.5 billion total addressable market.  

Sights set on more growth

When Axon's management released 2018 guidance they said revenue should grow 16% to 18% this year, a mark that I think is on the very low end of what the company can produce. Axon grew revenue 28% in 2017 without a major product launch and will be selling existing and new products in 2018, which should improve sales. Axon has only begun to tap into its market potential, and it has the opportunity to grow revenue per customer 50% or more as it launches new products that augment the existing Axon user experience. 

I think this is a company that could grow by leaps and bounds for many years to come. That's why I'm happily keeping my outperform call on my MyCAPS page, which you can follow here