About Axon Enterprise

Axon Enterprise, Inc. (Axon) is a market-leading provider of law enforcement technology solutions with an intention to protect life in service of promoting peace, justice and strong institutions. Axon is building the public safety operating system of the future by integrating a suite of hardware devices and cloud software solutions that not only revolutionize modern policing but also cater to federal agencies, corrections, justice and enterprise-level security needs. Axon's suite includes cloud-hosted digital evidence management, productivity and real-time operations software, body-worn cameras, in-car cameras, TASER energy devices, robotic security and training solutions. The company's largest customer segment is the U.S. state and local law enforcement. Axon has a customer relationship with a substantial number of state and local law enforcement agencies in the United States. Axon's operations comprise two reportable segments: TASER: Axon is the market leader in the development, manufacture and sale of CEDs, which the company sells under its brand name, TASER. Software and Sensors: The company develops, manufactures and sells fully integrated hardware and cloud-based software solutions that enable law enforcement to capture, securely store, manage, share and analyze video and other digital evidence. The company's software offerings also support productivity and real-time operations. Key Product Category Revenue Drivers Axon products are generally cloud-connected, designed to drive better outcomes and customer experiences, and sold via mutually reinforcing integrated bundles. The company's key revenue drivers belong to three broad product categories: Software: Axon is building a suite of cloud-based, SaaS solutions that integrate with the company's sensors and TASER devices to benefit customers and drive annual recurring revenue. The company has many SaaS solutions, which can best be trisected into three categories: digital evidence management, productivity and real-time operations solutions. Axon Evidence is the world's largest cloud-hosted public safety data repository of public safety video data and other types of digital evidence. The company's productivity suite, which includes Axon Records, is designed to save officers time spent writing reports and doing paperwork. The company's real-time operations capabilities, which include Axon Respond, integrates location data, signal alerts and video feeds to provide a complete picture of evolving situations. Sensors: Axon devices address many needs, including transparency, real-time situational awareness, and accurate capture and integration of evidence with software workflows. Product categories within sensors include Axon Body cameras, Axon Fleet in-car systems, and other devices that work with the company's software. The company's software solutions also support an open ecosystem of connected devices produced by other vendors. TASER: The company develops smart devices, tools and services that support public safety officers in de-escalating situations, avoiding or minimizing use of force and aiding consumer personal protection. These tools include TASER devices, virtual reality ('VR') training services and consumer devices. Research has shown that TASER devices are the most effective less-than-lethal force option, with the lowest likelihood of injury to officers and assailants. TASER devices have been adopted by a majority of the U.S. state and local law enforcement and are used daily to help keep communities safe. Global adoption of TASER devices remains early and the company is expanding into new geographies. Axon VR solutions make public safety training more accessible, relevant and affordable - with the goal of using new immersive VR technologies to better prepare officers for real-life situations in the field. Sales and Distribution The company thinks of its core customers as falling into roughly four categories of funding sources: the U.S. state and local governments, the U.S. federal government, international government customers, and commercial enterprises. Additionally, the types of customers who find value in the company's product offerings are expanding beyond law enforcement to include attorneys, corrections, fire and emergency medical services personnel and the U.S. military. Axon's sales force and strong customer relationships represent key strategic advantages. The majority of the company's revenues are generated via direct sales, including the company's online store, although the company does leverage distribution partners and third-party resellers. The company is diversifying into new markets by adding new types of customer profiles, or users, and by adding to the company's core customer base. Governmental agencies generally have the ability to terminate the company's contracts, in whole or in part, for reasons, including non-appropriation of funds. The company continue to monitor developments in federal government funding. Intellectual Property As of December 31, 2023, the company held over 300 U.S. patents, over 125 U.S. registered trademarks, over 240 international patents, and over 450 international registered trademarks, as well as numerous patent and trademark applications pending. The company has the exclusive rights to many Internet domain names, primarily including 'Axon.com,' 'Evidence.com' and 'TASER.com.' Competition Sensors - Connected Cameras and Digital Evidence Management Software The company's competition includes Axis Communications AB, Digital Ally Inc., Getac Technology Corporation, Halo Body Cameras, i-PRO, LensLock Inc., Motorola Solutions, Reveal Media, Safe Fleet, Utility Associates, Versaterm Inc., Wolfcom Enterprises, Wrap Technologies Inc. and Zepcam B.V., Applied Concepts Inc., Genetec Inc., and Insight LPR. The company's competition includes FileOnQ, FotoWare, Genetec Inc., IBM, i-PRO, Motorola Solutions, NICE, OpenText Corporation, Oracle, QueTel Corporation, Revir Technologies, Utility Associates and Vidizmo, LLC, among others. Productivity and Real-Time Operations Software - Records Management System ('RMS') and Computer Aided Dispatch ('CAD') The company's Axon Respond offering competes both with real-time operations platforms that ingest body camera video feeds, like Genetec's Citigraf, Motorola's CommandCentral Aware, and Utility Associates' Titan, as well as platforms that ingest video feeds exclusively from surveillance cameras, like Hexagon's Connect, Live Earth and Spatialitics's GeoShield among others. TASER for Professional Users The company's CEDs compete with a variety of less-lethal alternatives to firearms, including rubber bullets or rubber baton rounds, such as those made by Combined Systems, Inc.; pepper spray, pepper spray projectiles, such as those made by Byrna Technologies Inc. (dba Fox Labs), SABRE Corporation and Mace Security International, Inc.; traditional stun guns, such as those made by UZI and Jolt; hand-held remote restraint devices involving a tether, such as the one made by Wrap Technologies Inc.; laser dazzlers that cause temporary blindness, such as the one made by B.E. Meyers & Co., Inc.; stun grenades, such as those made by Combined Systems, Inc.; long-range acoustic devices, such as the one made by Genasys Inc.; and police batons and night sticks, such as those made by Monadnock and by Armament Systems and Procedures, Inc. VR De-Escalation Training for Law Enforcement, Corrections and Private Security The company's VR Training platform competes with several other companies in the space who offer simulation scenarios, including simulated training on the use of both lethal and less-lethal alternatives. The company's competition in this space includes Adaptive VR Ltd., Apex Officer, Hologate GmbH, InVeris Training Solutions Inc., Laser Shot Inc., MILO, Street Smarts VR, Ti Training Corp, V-Armed, VirTra Inc. and Wrap Technologies. Axon Air The company's end-to-end drone management software platform competes with a select set of companies in the space who offer drone programs and flight management software solutions. The company's competition in this space includes Aerodome Inc., Auterion Ltd., Motorola Solutions' CAPE, Paladin Drones' Watchtower and Votix, LLC, among a few others. The company's indoor tactical drone hardware platform, Sky-Hero, competes with a few other companies in the space, including Brinc, Indoor Robotics and XTEND. Seasonality The company has historically experienced higher net sales in its fourth quarter (year ended December 2023) compared to other quarters in the company's fiscal year due primarily to municipal budget cycles. Governmental Regulation Axon body-worn cameras, docks, Axon Fleet vehicle cameras and Axon Signal devices are subject to the FCC's rules and regulations in the United States, as well as rules and regulations as applicable outside of the United States. These regulations affect CEDs with Axon Signal technology, including the TASER 7, Signal Performance Power Magazine ('SPPM'), TASER 10, and future CEDs implementing wireless technology. For the company's TASER products, the company relies on the opinions of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives ('ATF'), including the determination that a device that does not expel projectiles by the action of an explosive is not classified as a firearm. The majority of the company's offered CEDs are not classified as firearms regulated by the ATF. However, the ATF regulates TASER 10 as a firearm under the Gun Control Act of 1968 ('GCA') due to a technological advancement specific to the propulsion design of TASER 10 cartridges. The company's CED products are also subject to testing, safety and other standards by organizations, such as the American National Standards Institute, the International Electrotechnical Commission, the National Institute of Standards and Technology and Underwriters Laboratories. These regulations also affect CEDs with Axon Signal technology, including SPPM technology, and TASER 7 and TASER 10 battery packs. The company's CEDs are considered a 'crime control' product by the U.S. Department of Commerce ('DOC') for export directly from the United States, which requires the company to obtain an export license from the DOC for the export of the company's CED devices from the United States to any country other than Canada. The company's CED development and production is also considered controlled 'technology' by the DOC and is categorized as a 'deemed export' for any foreign national employees exposed to the technology within the United States. The company is also subject to the U.S. laws and regulations, including the California Privacy Rights Act ('CPRA'), which provides for enhanced consumer protections for California residents, a private right of action for data breaches and statutory fines and damages for data breaches or other California Consumer Privacy Act ('CCPA') violations, as well as a requirement of 'reasonable' cybersecurity. Research and Development (R&D) Expenses The company incurred R&D expense of $303.7 million in 2023. History The company was founded in 1993. It was incorporated in Arizona in September 1993. The company was formerly known as ICER Corporation and changed its name to AIR TASER, Inc. in December 1993 and then to TASER International, Incorporated in 1998. In 2001, the company was reincorporated in Delaware as TASER International, Inc. The company changed its name to Axon Enterprise, Inc. in 2017.