If Axon Enterprise (NASDAQ:AXON) is going to ingrain itself more deeply into the law enforcement community, its newly released Axon Records will be the product that does it. Records pulls information from Axon's cameras and combines it efficiently with the information input by officers. Its streamlined report-writing process is designed to save officers time, and could eventually replace the reports management systems now being used by law enforcement agencies.
This week, the company announced that the Fresno (California) Police Department had switched to Axon Records -- making it the first department to do so -- and trained 800 officers and staff on the system. So far, the rollout is going well; if reviews remain positive, the product could be a long-term growth driver for the company and provide a huge boost for the stock.
What is Axon Records?
Axon Records is meant to be more than a data dump for law enforcement the way that Evidence.com is. It sorts and organizes case data to create reports that police can use efficiently.
The product works in combination with the Axon Body 2 camera (or later) and Signal Sidearm units -- holsters that automatically turn on all nearby police body cameras whenever one of them draws their weapon. The video those cameras capture of an incident can then be organized into a comprehensive police report that includes transcripts from witnesses, community video data, and manually input data.
At the end of the day, Axon Records is designed to replace text-heavy reports with reports that are built around video, using artificial intelligence to help officers compile them faster. Less time writing reports means more time on the street.
What Fresno is saying
The Fresno Police Department deployment will be an important test case for Axon. And the hopes for the product are lofty even within the department.
"Now that we are deploying Axon Records, we're confident the system will incorporate everything we need for what is essentially the backbone of our agency," said Police Chief Andrew Hall. The word "backbone" in that statement stands out -- because that's exactly what Axon Enterprise wants to be. This new offering is just the latest move in its evolution from a simple hardware provider to an integrated platform that sits at the center of law enforcement agency operations. That's a big shift, and one that puts the company in a strong position.
The upside for investors
Axon Records is more than just a new product for Axon Enterprise -- it's a cornerstone of the company's changing business model. Records is sold as a subscription service, packaged with a camera, taser, holster, and more in officer bundles that range from $149 per month to $199 per month for 5-year contracts. With that recurring-revenue model, Axon predicts that gross margins will be well in excess of 70% for these products.
The lock-in is what investors should be most excited about with these bundles. These are mission-critical devices and services for law enforcement, and once the combined ecosystem truly becomes the backbone for a law enforcement agency, that department will find it tough to replace Axon as a provider. That's ultimately what will allow Axon to grow its market while increasing prices and margins, which will eventually result in huge improvements on the bottom line.