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Where Will Axon Enterprise Be in 10 Years?

By Travis Hoium - Mar 16, 2021 at 9:20AM

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Axon has plans to add a lot more services in the next decade and turn itself into a platform for law enforcement.

Axon Enterprise (AXON 1.43%) has spent the last decade expanding from a small Taser-producing company into arguably one of the most influential companies in law enforcement. But the groundwork is being laid for an even bigger expansion. 

Body cameras produced by Axon give law enforcement the ability to capture video evidence for later analysis. They are part of a broader long-term goal of being a data gathering, data storage, and analytics software provider for first responders and law enforcement. The various initiatives underway will make the company more of a technology platform for its customers and they will drive the company's growth and development over the next decade

Axon body camera.

Image source: Axon.

The first responder platform

Axon Evidence was the start of Axon's move from being a hardware business to a platform business. The product allowed customers to store video evidence on the cloud and enable access for prosecutors of cases. And that was wildly successful with $1.73 billion in future contracted revenue booked as of the end of 2020.

But Axon Evidence is just the start of the product lineup. Body cameras are starting to include wireless connections, so live-streaming video can be seen in a command center. And Axon is building communication tools that allow the command center to communicate with people and devices in the field. That makes Axon more than a backward-looking evidence tool, it's now becoming a real-time coordination and data collection product.

Axon Respond takes that real-time system to a new level, enabling a command center to see where people are located and manage communications. New hardware and software features like drones, cameras in cars, citizen evidence capture, and Axon Evidence make both the live and recorded ecosystem extremely valuable. And that's how Axon will drive future growth. 

Axon's ever-expanding business

All of this strategic positioning really hits the road with Axon's finances. The company can grow in two ways given its current platform model: It can increase the number of customers it serves or increase the revenue it generates per customer. 

Adding to the customer base is simple enough to understand, but growing the product offering may be harder to picture. As law enforcement agencies and first responders begin to see the value of recorded video, they could be more likely to add to their Axon services. Or that's what the bullish case for the stock is. 

For example, an Evidence.com subscription starts at $15 per month while an officer safety plan (OSP) starts at $99 per month and includes Evidence.com, a Taser, and a body camera. The OSP 7+ plan includes a Taser, a body camera, a holster that activates the camera, Axon Performance, and much more for $199 per month. That moves customers up the revenue curve and adds incrementally to Axon's margin per customer. As more and more features and hardware are added we could see that revenue per customer go up as well.

Where will Axon be in 10 years? 

A lot has changed in the last 10 years at Axon and you can see some of that change in the chart below. I think the rapid rate of change will continue over the next decade and we'll see more growth of Axon's platform business. 

AXON Revenue (TTM) Chart

AXON Revenue (TTM) data by YCharts

We know the video evidence management and first responder tools are the foundation of the platform and both hardware and services will grow in that area. Axon is now bringing drones to market and we'll see improvements in the size and clarity of video products. But I think artificial intelligence is where we'll see the biggest advances.

Once customers have thousands of hours of video data in Axon's cloud system, AI can search for evidence that will make law enforcement and prosecutors' jobs easier. We're in the early stages of these capabilities being built out and as they are Axon's value to customers should increase. We could see the price it can charge for products go up because of the time it saves people. 

Axon continues to be a great growth stock with a bright future and is a stock potential investors should look to hold for at least the next 10 years to extract the most potential gains. 

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