What: Last month, Taser and body camera maker TASER International (NASDAQ:AXON) finally showed some signs of recovering from a terrible past year on the stock market, climbing 25.9%. And the momentum may just be beginning for the company.
So what: The biggest driver of the move were fourth-quarter earnings, which were reported on the final day of the month. Net income didn't grow, but sales were up 19.7% to $56.0 million and investors started to see investments in new weapons and body cameras pay off.
Weapon sales were up 15.4% to $46.7 million in the quarter, but the real key were body cameras. Axon segment revenue was up 47% to $9.4 million and future contracted revenue jumped to a whopping $159 million.
When TASER International sells a law enforcement agency body cameras, it's now also offering a subscription to Evidence.com, its cloud-based database. This is where the contracted revenue comes from and will keep revenue flowing in long after an initial sale is made. If executed correctly, Evidence.com could also keep agencies locked into the company's services, creating many years of value.
Now what: Over the past year, TASER has seen fairly disappointing financial results because management was investing heavily in new products and people to sell them. Axon 2 is starting to pay off, and with citizens around the world demanding more transparency, there should be even greater momentum for the Axon line of cameras and cloud offerings going forward. This is a stock that I think has a lot of potential for growth over the next few years, and investors are just starting to appreciate the operational momentum that's taking hold.