Axon Enterprise (NASDAQ:AXON) supplies tools that are critical to the functioning of modern law enforcement agencies. But if it hopes to occupy a central role in officers' everyday work, it will need the upcoming Axon Records launch to go off flawlessly. That product will tie the company's video capture technology into the operational processes officers and prosecutors already use to do their jobs. The result will be that it adds value by reducing the amount of time police have to spend on record-keeping, and increasing the amount of time they can be out on the streets.
The company had planned to launch Axon Records in 2018, but it pushed the date back. However, if it lives up to its potential, it could be transformative for Axon Enterprise, and lock in customers for many years to come.
Axon Records tie it all together
The videos taken on Axon cameras are valuable to law enforcement, but to be most useful, they need to be analyzed, pulled into police reports, and communicated to other parts of the justice system. The Axon Records system removes some of the administrative burdens around those tasks by doing things like making video searchable and automating report transcripts. For example, officers can record witness statements using an Axon 3 camera, and the software will transcribe them into a report, without a person ever having to set pen to paper (or fingers to keyboard). The time savings could be tremendous, as Axon saying officers currently spend one-third of their working hours entering data.
Axon Records will be a collaboration tool as well, rapidly communicating the information police gather to prosecutors. And since a lot of the information shared comes in the form of videos, there's little chance of miscommunicating what was said in the field.
The company's investments in artificial intelligence will also begin bearing fruit with the new product. If it works well, officers will be able to redact private information, accelerate review, and automate some reporting.
Records are key to the next step
How well Axon Records is received will have significant impact, as it will be a key component within the company's portfolio. The next major product it has on its agenda is computer-aided dispatch software, which it expects to launch in mid-2020. Axon Dispatch will "enable an officer to arrive on scene knowing the most relevant and critical information." The information flow from dispatch to the field today can be disjointed, particularly when information is coming from multiple sources. Axon aims to bring all of that information together, further expanding the reach of the company's platform, and its value to law enforcement.
The financial impact of these products could be incredible to Axon Enterprise. Not only will Axon Records tie hardware and software together, when combined with the future Dispatch offering, it's estimated that it will have a $2.5 billion total addressable market -- the largest of any segment in Axon's $8.4 billion total addressable markets. For example, tasers are only estimated to be a $1.8 billion addressable market, and today tasers account for most of Axon's revenue and profits.
The size of its market opportunity makes Axon Enterprise a high-potential stock, but its share price has been lagging because the company has been investing in new products, which has hurt short-term profitability. Once these products start generating revenue, they should push profits higher, which is why the Axon Records' launch will be so significant for the company in 2019.