The law enforcement industry has changed rapidly over the past decade as the use of tasers has increased and body cameras have made their way to hundreds of thousands of officers around the world. Axon (NASDAQ:AAXN) has been the most innovative product provider in law enforcement, and it now has a dominant market share in both tasers and body cameras. 

If we look at Axon's product pipeline, it seems possible that the company's growth has just begun, and that should be a boon to growth stock investors

A person holding and aiming an Axon Taser 7

Image source: Axon.

New Axon products are coming in 2020

Axon's business is built on taser sales leading to body camera sales, which ultimately leads to subscriptions to Axon's full suite of hardware and software. To put the company's scale in context, 428,600 Axon software seats have been booked as of the end of Q3 2019, far and away the largest base of body camera customers. 

The value of new products beyond basic tasers and body cameras is that it moves customers up the revenue curve. Axon's OSP Standard subscription includes the Taser X2, Body 3, and Evidence.com, which are the core products Axon offers for $109 per month, per officer. But new products require higher-cost -- and higher-margin -- subscriptions. 

OSP 7 includes Taser 7, Body 3, an unlimited Evidence.com license, and Axon Records for $149 per month. The Axon Records Platform is slowly rolling out to the market now and aims to make officers' jobs in the field easier, reducing paperwork and increasing accuracy of data. If it's as valuable as advertised, the Axon Records product could pull customers into higher price subscriptions. 

OSP 7+ adds Axon Performance, Axon Citizen, Redaction Assistant, and Signal Sidearm in a $199 per month package. Redaction Assistant and Axon Performance take the Axon Records platform to another level, introducing automated tools in the records and review process. As new products like this are rolled out, it'll be attractive for more officers to use the high-cost and high-margin subscriptions because they save time in the field. 

Lock-in

Axon's move to subscriptions as these new products are rolled out isn't an accident. As customers use more of Axon's services, they get locked into the company's products. Evidence.com and its cloud storage offering are the first step, and by the time a customer has added Axon Records, Axon Citizen, and Axon Performance, the services extend from officer to management to prosecutors. Switching to a different system would be extremely difficult even if better products come along. 

Price increases are coming next

With lock-in comes the opportunity to raise prices. You can see the early phases of price increases above with subscription plans increasing as features are added. 

Axon may also be able to increase prices on lower-end subscriptions as customers get locked into the platform. That'll help net margins that have struggled as Axon has put most of its money back into growing the business. 

AAXN Revenue (TTM) Chart

AAXN Revenue (TTM) data by YCharts.

If you add a growing customer base to a growing product lineup and increasing prices, you have a formula for growth in this law-enforcement stock. Axon shows no signs of slowing down, and investors should expect the top-line growth to start translating to growth on the bottom line in the next few years.