Axon Enterprise (AXON) 9 Nov 222022 Q3 Earnings call transcript

Company Profile

Participants

Andrea James	Investor Relations
Rick Smith	Chief Executive Officer
Josh Isner	Chief Operating Officer
Brittany Bagley	Chief Financial Officer & Chief Business Officer
Josh Reilley	Needham
Jonathan Ho	William Blair
Erik Lapinski	Morgan Stanley
Keith Housum	Northcoast
Sami Badri	Credit Suisse
Paul Chung	JPMorgan
Will Power	Baird
Jeremy Hamblin	Craig-Hallum
Erik Suppiger	JMP
Logan Hennen	Northland Securities

Call transcript

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Operator

Hello, everyone. Welcome to our Q3 2022 earnings. Thank you so much for joining us and our executive team today. We hope that you've had a chance to read our shareholder letter at investor.axon.com.

Our prepared remarks today are meant to build on the information in that robust letter. .

the results will forward-looking business pursuant are Reform to statements within of not before meaning we forward-looking and to Act call, of of today over predictions the materially, SEC could future subject statements to Any Presentation] do provision and will guarantees forward-looking comments statements. that made our risks Rick, of on investor are of to discuss and this XXXX. cause we we discuss Securities video. are outlook All actual differ and our in make call and these the [Audio/Video uncertainties These During Private and harbor based Litigation performance. we our our safe turn today risks as are the And filings. expectations

Rick Smith

you, Angel. and Thank Andrea

exciting are X growth Our months. pretty XX% first year-to-date with in the revenue results of

the provide level, in Josh letter. driving products secret for you at this our So the that's solve real-world also that them provide growth we highest the on and color But revenue sauce outline what's will we shareholder Brenda problems. and details,

-- work them and our public customers we happy, safe we benefits. keep make the solutions Our

that our we will innovating also the shareholders questions our keep So make invest It we deepens spending on broader of the about do. a lot about difference. answers areas the we a and that with I've benefit and us customers path Moonshot why paves areas in because relationships to for in benefit. dream helping us to with been goal time our communities and the public

major on each police, shares groups you heartened of the include fraternal other. really organization is don't American the we have well, by normally the national America, are yet. county of seen to I've executives but the great, getting bringing this Moonshot, together alongside to specific Black been that moonshine how African National this? Association, the name order have answers of These the Mayors reaction see all the common you the buy-in Policing We been don't a Look, about all few. Enforcement just A our sounds Institute and going Law just do we've

the one, Just on Using believe not help goal. interest a moon, as entrenched that on lot training, a We're to double in been nation we good the technology XX% VR idea customers. subscription have the put three, Kennedy deeply sensors why has to the human under hit on challenged is of next yet. a our Number tech Jack like which moment. really founded working of over to seeing front global to our and penetrated TASER we're the us. TAM. We're all some our And platform. move majority TASER of to never continue we're in can in Axon and technology sell in But two, challenges company a of needle. why exciting we still the our when existed reality. years XX and adoption miss Number successful solve a invest down I here on to enormously such today. nonlethal of will tools, terms like We remains cameras number investment the virtual things our where Aon

we'll safety-grade deserves effectively. their #X, their to human can believe to limit use as to public real-time to me help going public devices, which operations ability Over communications tools next-generation safety response keep that easy exposure are respond Also, will consumer danger. They improve our decision-making and us our deserve a you're technology. as better few awareness and that see it remote and and to years, between we situational the next sector and tie remote introduce response. them body real-time cameras, The brings them

thinking why to leads Axon this investing safer that for outcomes Air. harm's in Our everyone. is we're And way from we're moving officer is the

Our for essentially don't with collection a resistance anonymously in includes data community Moonshot. drone Data or Number completed collected and to engagement is tuck-in other rank reporting. a solutions use just believe as talk such impact, more the six, hungry better comprehensive today trust and in helping in especially the which year is leadership. feedback they reach and well last This can counter And either Number data, meet We exist need. investing police tools. way we're need that don't traditional to departments useful. This a And the not their we involving MyXX, incidents already that's very this allows response investing and feedback we a our believe is file as on public this we in tools we're actionable data police each and first communities. is well deepen public drone five, company acquisition support. to technology. to de-escalation data. both officers deliver responder course, we very tool of of as with or

Gold but have we the Now like also that companies not sector private we be unique know play. to know Axon role easy, a the and will Moonshot

Britney some of that team, high great and stakeholders, returns. they'll driving shareholder solves our to our prudently most invest problems degree leaders that creation, includes business we facing impressive As accountability of I creates society. like to of the modern confident all ensure delivers and challenging value look I'm at continue the a with which Josh model

So with to over it I'm to that, going turn Josh.

Josh Isner

Thanks a lot, Rick.

is attention. we our that mentioned focus quarter's the where last thing During call, control primary can collectively we I

address long term, margin set continued will Britney which will growth, which top line expansion I sights cover. and over remain on the Our

can we both do that parallel. in confident increasingly are We well

Britney moment very take revenue will revenue lines. outlook axes. X healthy unpack for product percent for year, On the But we come. strengthening the to pleased and demand upon XX-plus sustain a you will across rates are having growth We're we XX% to XX% for a of midpoint. top believe are shortly. what we line, our quarter and QX the growth the growth of quarterly of We're seeing all at with like along years in growing touch I'd the a to strong

is that as for suite system solutions our strengthened for see of road for that about a work Rick the together saturated, experience the it by where customer Axon. strategy believe continued super and believe together, state of customers product at nowhere local see public the leading talked We existing compelling law don't a focusing to to the that first and outside proposition letter of years, product and to is Both we customers. map expanding clear business premium Axon next want the we we our and our enforcement wide operating safety, which near current point shareholder value emerge We The state the well continue deliver make long a in X for them. growth. runway cobbling you and is on industry not solutions can will

is deferred new or users types into adding buying second our markets adding customer new both by and base. of core to The axis by customer profiles

enterprises. types falling expanding federal we platforms and the U.S. categories state the our of beyond law can think of government, customers local U.S. You as of commercial funding and adding is governments, users are Simultaneously, the into enforcement. X government to sources, roughly international core customers our

funding those into personnel, in of rolls generally X to attorneys, corrections fire U.S. for the update and and mentioned. adding military EMS types are sources of users I'd the you X. on We I X like the up those

international growth. with federal and second, government progress the U.S. upon touch our First,

booked federal ago. contracts millions U.S. up our XXXX, about excited the $XX several has X to rate to government tens very an $XX years. our $XXX are years exceeding million run grown first revenue million, the of quarters We government business. few Annual next the federal extend from a deliverables over has approximate now of and In just million the

a is Our sales in progress with intentional and our investments of channel both the direct result federal product. government

have to been toward be breadth trusted all our to necessarily them and entire and expansion. and We in our are of interest now finding turning while continues excite with us. product depth we relationship those commitment in federal helping And name line global the missions successful. the And agencies customers, products value our of now that building government's can't

see growth. strategy. We even things continue the international international go-to-market to drivers as and accelerators the to X being We refine our

The has room power, defense innovate in base TASER continuing on international continue become grow to we to to potentially believe markets. think opportunity the we to is of our weapon installed Xx primary more stopping first total TASER over develop that in have than matches platform. as terms by We we several the a pistol the technology And time.

successfully in This domestic software, we around evangelized resistance is million is we The very state European ran helping recurring the averse on at And U.S. in build local starting are in cloud customers second $XXX revenue. customers to to thing playbook a we tops the solutions. to overcome their were cloud XXXX. business a cloud-hosted historical and annual first that now and focusing

European We this EU, adopt are other SaaS well believe acceptance starting we away bodes see and to starting governments cloud, cloud international we services chip for in and to at commercial the business. for our that

evidence that management overcome adoption strong the Just of once like U.S., will version, initial follow. in we

am to Axon last that you building XX for quarter, X Finally, working I years. the I on next that told team needs the

public that wealth We mental She we toughness to and thrilled over those mindset, but CFO, bright. company and deliver segment. versatility, strategic I Chief financial on excitement Britney and attract functions Brittany a and also future with investor brings Axon. is and a Financial board are who outcomes very say a executive Based to a Officer the very, introduce a to last of of that capability brings Britney not of seasoned We with Officer. Bagley, working days, can XX confidence member sought are technology core strong excited as the experience the to our outside in Axon's all Chief qualities and an only NexPlay Business as brings

Now hand Brittany. over I'll to it

Brittany Bagley

I'm with Jim a job joined and such I share the about and CFO time quarters. everyone. little official Hi, role. in to for to why doing Josh. earnings interim where team the on Axon have company. a see joined exciting an start be nice to making put you such a great want coming to thrilled the I me you, incredible thank over you'll like a Zito focus I'd It's such Thank my to big my an call. it for to first quarter

of I that growth high both position with relatively and has solutions profitable, a creates think is I provides the company flywheel rare ecosystem been software the the the like to which innovative While to building model. that one, and a along leadership combination technology hardware company strong the last the in there ones join, powerful to world. especially, protect reasons main the include business mission team, is inspiring many On would were compelling X highlight that life

Additionally, Axon's dependable. products public who delivering on customers to contracts long-term purchase recurring safety and mission-critical both makes revenue

us, As point, be continue discussed, the lot we in focus trajectory. of strong forward mission continue our Josh To years. growth supporting execute deliver a to team and to over look I the and on of results that a have of and next profitable growth helping to areas my will front several

flow. improve As means a cash business both the potential automation, further of help take software we're fixed spending I manufacturing and I the Business on Near Axon's to and other as to how and right better promise. view Driving the the we strategic key margin Chief in get gross improving margin lever longer Officer, about, financial and move understanding opportunities margin over term, and a term. investing on our cost see also decisions that the our including towards can making to to is metrics needle CFO scale. mission we driving deliver ensure We time, profitability long-term and gross efficiency gross mix absorption care by revenue overall holistic

while by discipline growth. OpEx expansion also development research and investing in to still are sales controlling on support future and We focusing channel enhancing financial

leading ecosystem technology areas deliver in addition in truly partnerships, to leaning safety. focused to vision, on to investments its upon operational In hub Axon strategic become for the business, also public of M&A, leveraging on helping the I am

Turning now to quarter. the

driven growth QX domestic and Sensors Axon Our This XX%, along and XX% at segment and growth, continues also make to at was XX% XX%. came growth strength year-over-year Software than grew the in of Sensors which segment XX% our board, great Cloud across more XX% TASER growth of at with supporting business revenue. by up strong

demand of for we're One of great things strong the bundles. our and is versions domestically seeing premium the products

strength which of delivered our excited growth, a Beyond the of our business, cloud points due including we QX of seeing represented We core gross contract Cloud Axon QX which to quarter. areas more in had the primarily business traction international overall XX% The Azure. and margin margin in long-term increase product was strength Cloud new our Axon and we're continue basis software on other and from QX. XXX about the to growth the revenue, with the be Microsoft sequential improvement. mix our than in XX%, in benefited gross of strong

While will software these and services we a business, can That which variations continue, plus to of quarterly exceeding on view long-term contracts this low our costs expect quarter-to-quarter. XX% benefit we do no have setup change but the doesn't the for the result. professional target margin change also supports mix of the as

EBITDA adjusted to margin. $XX margin good improvement, the and operating sequential to achieve or strong addition gross allowed million In in revenue the XX.X% quarter in the us resulted leverage of line top

our on touch outlook. to wanted I Finally,

quarter, annual This $X.XX growth reflects billion growth at midpoint. a which about at annual of guidance strong XX% XX% we our revenue implies revenue QX range of the midpoint. raising billion, $X.XX the to the Given annual are to also

Turning to our adjusted EBITDA.

We our from performance are range on $XXX million, raising demonstrates $XXX million $XXX million to profitability. of which to strong believe we outlook a

from adjusted midpoint $XX an less margin to EBITDA be XX% for sequentially leverage to overall Implied million. margins range with QX remained almost in the the QX but down implied Our and million $XX strong the mix are at of OpEx on year. expected EBITDA product is slightly

going and up to of back like I of against is objective business We we strong With we that to QX are of overall execute Josh strength as setting forward. for it questions building. would the delivering performance our another which a ourselves bigger about, to well to and CAGR they that, and open Andrea. and to and We forward the the outlook, top look are XXXX picture our talked proud delivering financial profitably line XX%-plus Rick up speak

Andrea James

you Thank and you, have we the queue. in all

you So you Josh so the from take in got if first Thank queue. you're We'll assume we've question Needham. at on the our call, much. Reilley

Joshua Reilly

maybe programs had are results All beat now that government to the that budgets? like starting guess off, from a impressive Very How to is and see something ARPA beginning hit by right. XXXX, is during a of those by of budgets funds in obviously. haven't much I here, tailwind you revenue you that from beat been more budgets? in stimulus impact Or quarter. QX the pretty impacted seeing date significant an more driven you

Josh Isner

between Yes. see results necessarily Josh, for nice products. subsidy recurring I or the don't I appreciate of a government -- onetime and there's in of question think to don't and momentum correlation you again. any ton our kind I

think buy levels customers ROI business more a continue and our ultimately, see high I strong to but very them, very our of on only licenses. a building not there's where products more and premium more that we're and buy and

our major and time in of some very nice implication they And building that those any think on consistent have we're very for factors, we're confident are independent so a don't those I growth, continued strong of business. moment customers, while types tailwinds and

Joshua Reilly

there super would it. wanted. specific you the And sequentially gross helpful. was margin as quarter evaluating I brought for anything focus Or color margin now in be that there. That's sequentially? that's below and down was any a remains . TASER the Got where Britney know down probably you're helpful. guys cost But the there then

Brittany Bagley

in related well TASER. I say chain have we Yes. investing manufacturing the capacity would everything that supply been for as as our to

year-to-date. a And little seen impact that the and this so you margin quarter gross have bit

look scale it think we as sure focus those big margins areas is ross get on to scale time. will gross can margin over and making into be the we improve costs really leverage of of we I X as

Joshua Reilly

Congrats it. Got again.

Andrea James

Jonathan William Ho question Blair. Next from at

Jonathan Ho

bundles of as Let whether want to expect behavior me understand behaviors it well. to commentary echo of higher-end wanted you maybe my with I leading out bundle this to selection seeing around or congratulations purchase your higher-end more and just sort I to start customer you're that the sort not? of are why that and

Josh Isner

Yes. Certainly, Jonathan.

demand, a really more we're thing and of lot idea in we're ahead bundles, especially a is first state in those adding I'd those of us the though white more adoption and even driven by is driven the by of bundles the think seeing in add-ons. local, of it's there's adoption I that value-added terms those on say and space bundles,

the example a then Jeff's is so I And those understanding what accidental that's some bundles. back great about of things Safety version which customers that and of driving fantastic wanting customers -- premium team transcription. Plan, of our of highly of of is job VR, are An doing lot valuable. more our in products another is team a and And toward Officer that understanding example a sorry doing is both those in The contact future exist going releases the Jeff's think that. job building are and

strategy And products with valued on customer so of buying potential bundles iterate sure that the highly time all about in and at make and most that we'll the that the license. core way continue appear make are excited a things in items of X our these to tandem the features and X and that

Rick Smith

it gone very what more seeing solutions with it in agile just of by a that's hearing them difficult very it they with a the Josh, gone in been -- from long, They're -- would with what technology. customers they're put their up direction, they to flywheel they make want procurement sort What doing. struggle like hamstrung that can't really Axon. I'm is value use rules of where of the they be and effect from that complex for to add think the more customer stuff to customers, I down well. I as more I the premium I'm haven't bundle us, other and to see

And so we've us day. on think keep every and earning to incumbent trust it's earned I it really their

pretty to up It's And don't of break working the Jeff well. it's off, something that that So goes and team. but me they're the seem paying does moving lot ladder this dynamic, consistently integrates a each execution the that we launch product with to we again, stuff. other it time just awesome

Jonathan Ho

things -- just most government a break with has market? target terms a opportunity, mean, in been follow-up, impactful helping you of level do for seems And number of U.S. sort opportunity into this into U.S. it's U.S. have provide education get or I but what of the like further what kind excellent. you the to function years, of been initiatives what it Fed perspective. Excellent, step a from improved . a as debt obviously, to federal opportunity of

Rick Smith

maybe back Josh. So I'll then over hand start and to

I we're a obviously agencies then a expensive. to we and then bet It system the think, a certified And this years And think I was it, out relationships. towards of I the fantastic was space a standardization tremendous body a day, great that few the that system is that did some ramp really, use building just obviously job Collin, or cameras. accreditation us things done building with only gives we've accredited ramp that Richard think advantage. team federal is Fed seen cloud, a like was in understands want these moving administration still really It to get to the ago, we Eves.com the and who right? hired And bit difficult all investing for It early. when that. invest to federal

Josh Isner

the especially that, last point. Rick, to on Yes. I'd just add

seen subject growing talented cracked problem was as full unlocked still Richard we when along And we this our us, bookings on For that a and expertise literal though point year this more can brought at last and XXx in to code a even had well how of phenomenal just quite business has to we team years, bringing a go in very do we our product really to we long just with into execute. and instincts run few across how the on of in, the with in focus there do way starts we place the trust haven't strong to think we've with have the and build X opportunity side we're amazing that. experts the every a that to matter years and full and a maximize very federal more team have as own on opportunity much a and him him business, team, believe federal, field we but

Andrea James

And Erik Morgan question, Next Erik. from Go ahead, Lapinski. Stanley.

Erik Lapinski

Veteran to other a just I the know previously. the that Affairs all side them. product a agencies, on curious federal comprehensive pretty but maybe guess want be spectrum maybe in I of products the the portfolio, whereas more you're federal up federal deal least would with do of newer not seen some follow across see maybe looks that, moving the because on as bit the for of at agencies, I like it little across was with included opportunity I you're deal just like you fleet kind haven't into upfront? sizable X

it there to that. So that good of the if are seeing of you having of just are more customers federal understand some vision and be would kind kind

Rick Smith

of Let really know can we to too. me to kind first, would or is is fluff, We about talk of a this business. lot advantage. where the like mission-focused times, then I being sound Josh want it And but say start and puffery going is true. see this, a that talk I to

make to to make bucks productive contracts sell to don't on where we're move we that our right. problems about We And few solve of as a a to keeping also is with business and every rigorous that and and passionate course, customers so about. pays we the I'm where have lot to it's are a give running off our in finance But of got has infusing think of problems safe latitude this team and where come and financial business they've And we're these to things we from want we and next we all just going sense. the make the that to models the happy, run the teams employee, attitude solve really just impressed one.

where end sort bureaucratic get make really the not the in I product process customer we the you RFP and on similar, to their relationships these ecosystem. people references with bid checking customers cross we so their part see even they're great things delivering early of the us getting a technology focusing a agency to that on, phenomenal investments builds other of are relatively winning give and confidence type of the where user, they're And large think,

I delight So confidence the is more give the build it the over do underlying the on business and the to to really passion to go maybe our customers things that's think focus protect little turn that thing team of to really around that a federal I'll the But to give that. specifically. Josh color customers

Josh Isner

Jeff . was first, think to chime in I Rick. going

Jeff Kunins

products think dedicated then even those those leverage parts you'll us might is segments, top already focused these first on federal customers products small unlock expansion to for on building then there our all many to we're And engineering competing existing after sure. of And then out that who that thing customers but federal The dams or for we've is we we expansion. by with overlay scale decade cameras in totally to in more And that earned deliver as for other flywheel and in, already everything core spent margins purpose right us we've products of our you heard lot, But and talk markets had. and combined this keeps surgical that, of like large that all same as said. whether our fit and the can what aspects bespoke places products time, on Yes, can even are TASER. common products in federal. our what need leverage our tailor it's internally, we sockets situated, have segments of build way products market echo as federal you've with at our well team of over for a very time. over to I even then a these see inherit do Rick we way longer point, more where the true about be in getting and because well that loyalty those the and invent and the a

Josh Isner

And to add, or for is finally, the federal, think I And I'd the other customers X lack X in think, have we products fleet will offer of Eric, from more off to in we'll term be terms fits expand specifically, for upfront. a the just the that are I across and nice extensive value board of better there. bat question see your there customer in contract then what about want that engage and a

we'll it. agency still up over see is the on the that great an very term, way, the I phenomenon other example of of And that belief products. which full longer think we And place, some either ends Axon's time. maintain in same suite with customer VA same trust in of is cases, that happy all X a the us day to deliver

Erik Lapinski

if of this agencies in helpful. could release, XX at I Awesome. included But It doing kind records. a more have XX point, And a looks and really sneak you That's full like in follow-up. replacement. on the just focused maybe you

obviously, potentially about, relied build makes full intensive lines I we very maybe understand And moving software simplified, do replacement with How fully some as the are much guess, for on of just workload. XX. over kind of type to records and around more it seeing a streamline you see to you it you're being those work? time of a think that Just opportunity that or to in that time

Jeff Kunins

that. take I'll Sure,

to will just you big both we think a growing heard nothing segment. there's this deployment to where systems remain and to big, we're work amount those complex in ever you anyone said, that direction. like continuing deployment and But industry, we bespoke on change one the as number And records a in continue and you full simultaneously in and big the when are and ERP and and the ability steadily like for of to those think -- a fundamental do, like systems our things are we because of humble we're see are going and -- their we So trajectory time. the like the are but and I confident disciplined leadership these our of us work adopting talk we in agencies overall deployments remain that that, our to scale in and position we're way, successive we long-term right at extraordinarily physics up up are the each -- it right complex both that optimistic approaching deployment, working to go have complex they -- those share per

so and see and it. over accelerating we continued And but before I Chess BX get you'll are momentum earned steady to we've not going think skis our there, also

Erik Lapinski

Awesome. Congrats quarter. good on the

Andrea James

Northcoast. Housum Keith at

Keith Housum

Sure quarter. that of as on if there. X the portfolio? I is perhaps a saying Could perhaps the year phenomenal the as in results, prior mute guess, well. core sales you some those to do Guys, bit I individual Axon again, were the from else as stuff some of little we as had sites of XX% the down materials your the even of well did look color items here. Fleet provide better? But at my assuming I'm some Acanos during of not everybody down access you some wanted guess other

Josh Isner

that rebound items the including ever could variety increased we're we for is think of build Yes. X for or our substantially, future from line. fleet want have to our shipments shipments. quarter our And it X continue to in well there. to the quarter the fleet did fleet into fleet QX bright unit don't of continues reasons, an see the power what -- But that good see minor We future that demand you'll specifically with lead expect to the in indicator supplier, of on market we hubs I We're where really of strong is I but best QX, into and demand Certainly, Keith. speculate our excited the that looks shipment news product been. run necessarily proud very a in and And on landed.

Keith Housum

as the and maybe, for seat you on I time. Great. And your my just follow-up hot put first Brittany, here

existing guess, fit goal, Moonshot R&D the budget that and As into how I we does financial talk the profile? Axon's about

Brittany Bagley

we growth Yes. that that mean really towards bottom And profitably about the is a that I healthy line it as think really both I Moonshot. top and part we of achieve can business. have head philosophically do the and think nice line way

for will your we forward. up in investing to new to with to going products. of stop with great balance go We're stop so a not We're we're And R&D. course, our us be stop going to that But growth, coming as not point, not going innovating.

financial profile we that but focused think And is right of a the on for inside so helping mission, will achieve just it's profile that the lot those company. long-term the that all be

Keith Housum

large hear I as this have it guess of our significant see I in So increase a result expense way, goal? R&D for don't to you a

Brittany Bagley

in been calling nothing in we that specifically There's we're that. invest profile will consistent continue No. out on saying to a this R&D, we're do think necessarily calling and that, but way out I we've on change wouldn't today.

Andrea James

Badri Credit at Sami Suisse.

Sami Badri

you you're hoping could was an get reduced just subscriptions, puts of the annualized some XX% through how are by Could question seeing us first target you growth. my maybe and on give to I My us like function question increases growth that that go we subscriptions as please? right. the an then price was And It XX% new of existing there, a -- of new is on the CapEx. features your looks guidance that, on takes second could composition for idea on kind either give of year. kind going on idea All the was

Josh Isner

revenue start CapEx Brittany it to growth I'll question. for the question with then the over hand Sure. and

there's not is specific business -- and can and there's X Sami, a -- we business different ways exciting it's achieve of of our model growth lot the think, thing. of one beauties I

very -- cause are things to at to want continue of really really customers good doing international, the especially, premium over the products we're newer meaning existing building higher in much like of introduce one and is base, we base parallel, more in new well them of to things markets think mentioned both believe -- some customer you opens in and are there and we'll job to that And better of second I think next up by into existing those growth specific I kind those doing new bundles. And so, we're But and course, state products is more local customers tiers federal even do year. time. -- products we do and how our X do applying parallel a play. opportunity buy that really enterprise. new delight that it down boils products going for pricing We'll invest things. bought to to One of And in U.S., on axes.

over for leave hand . that and it So I'll for probably Brittany CapEx the question. at it now to

Brittany Bagley

the and I only mean, the Thanks, opportunity. I it's Josh. amount would levers grow. of in where having many I thing an can it add how how think enormous I is exciting I There's of business terms think see

So is have right them executing to there. focus make going now and after ones, the and against opportunity sure you the you're but

really timing we CapEx think year, I It's some CapEx this strategy. are are in a and in next year. just highlighted those more than a what standpoint, we pushed some investments change piece from is getting a of of a making fundamental out to

Sami Badri

I and have until a those inventory. the of up working Do question, foresee all it. all perhaps components and function one more and capital are levels? end it's stepping inventory way the levels consistently increasing just inventory from other XXXX, maybe chains on of factors mainly just just essentially that Got you and supply now

Brittany Bagley

One that is, inventory challenges. are investments. X supply there now driving chain we not are are say of our I'd out still things right

we then continue inventory products, of inventory would across products I the like types we have supply still and we with need to top get that to position. back some are And a growth in So to growth. think, just to line too, in invest stock to that support of constrained we're that get seeing our better on

think do I that So you'll continue to area investment. just a strategic see be of

the flow. a time, job is with of the sure one cash free we really our good I I think talked doing making are about same things at

to we'll as 'XX, balancing need making top appropriately sure we have to to we make generation we so support with have that inventory work we're sure the And line. get strong flow to free cash

Andrea James

Paul JPMorgan. Chung with

Paul Chung

Yes.

Okay.

So just flow. the follow-up free on cash another

seen record surge free conversion So of well. cash you're have as and flow putting numbers up kind here

driven Is this conversion? kind So has sustainable here. higher firm talk about of the how the

Brittany Bagley

nice I a focus. been and doing of what big team done standpoint from collection a job think specifically paying area a been receivable. it's they've accounts stepping more our The up has attention to

of a so gets And lot us. that's what

be as course, free our I we But it's rest place sure in we making in a balance with we business need from just targets. right think that standpoint, invest that the characteristics we're should in the CapEx to -- and through making business. from I of where investments on. again, inventory some the go cash the investing can year sure And standpoint, good flow free cash continue of to flow think there focus we're need to to we the our

Paul Chung

then And a Great. Okay. just follow-up.

the On lot investments we that a at pursuing, the you're saw of show.

seeing we're momentum over what investment material more investments on the some what become and across can So do there? excited get your really about time, you

Brittany Bagley

a hardware each in ecosystem there the in bit, the excited has a I start really little places. but to where other. I'll that couple Well, get jump the and company software this a Yes. incredible then benefit I'll let and of have flywheel One, Jeff is created maybe

buying of about You heard premium are parts talking the us customers business. more how our

the And out so software. that's really proving

is. in to do but front these powerful more how us the what's a hat, in the in. together, we're that the more with you time, with unique disciplined think pull to And going drive lever that have and to be is great can things be my as some that we bundle really about excited of continue continue think And I opportunity where a get we invest we're products so make of each one can partnerships I going CFO that I same we investments to to and At thoughtful ecosystem.

just And a Jeff, time should of it's you spend we so the I investments. products great thinking make ecosystem there. through lot But and opportunity a where know and

if So anything. add you want to

Jeff Kunins

the light like to to my additional for and steadily of crime absolutely. areas. to Josh that X The what I fact feels growing they And an people giving that similarly Thanks, very it, free belay down, at already similarly, sort is deal is said the Again, then already roots Brittany. of I thanks alluded models. a I power of things customers up. like of benefits great know question. One, not access a in to use. the price done want subset a and of Amazon course, or for as for own they they benefits Yes, set even core situated once that bundles, think fair power Rick of product think that and Sure, the just they've that, our earlier think other they of in them have stepping

to than who performance company a realize and it, bundle just our by weren't already and today, was another excited team was who's product In of one had ever. at then they that more major IACP, I and talking had performance, bundles, now level they're help we fact, about with X our city my started they they for remember example, access at of been particular stand-alone with and boom, the approached and of using in members them a they instantly but using customers

talk the deployed. our software services and and own now up excited our in me has video, in our but a or once products, becoming buy paper, yes, have product, in they heard just second then and the from or piece products demo weren't they're and leverage us those and hardware, to is ecosystem, one first-party you've Block all and Andrew third more that about that is of light own are more Axon examples greatest real. both And it's a real the actual moments X -- the not more and connections products story ways of ago, were great about a that can gets or customers long our tangibly that more as already is think and products but Respond. vision adding DroneSense Fūsus on sometimes And magical value hardware as whether that these the the idea themselves partners' more been too narrative idea that's or our use own [D-Drone], our more across just of of more not our I or of and network the the even

to are have paid which Fleet the world's with agencies world's butter both the those to system, ALPR the but add-on respond, in-car and them and connected best now absolute our combination our peanut that of system. many of and And price that being best thousands licenses both ethically those access respond features design so hands-down body real-time X. ALPR-as-a-software and point that connected great finding customers cameras chocolate value hundreds stand-alone And having is the many, are of democratized paid camera cloud-powered many, a connected ABX and using connection

us connections, those our super exciting first-party inside it's partners' both our products and and me. That's across So products. for

Andrea James

Power Will head, up. at are Baird. you Go Will,

Will Power

of guess questions. a couple I

X+ of for First revenue to get the is that drivers probably of what's attorneys acceleration maybe guess but software I in the acceleration is tied leading Jeff, of and last I'd seen you've love key quarters? when to in to quarter. color X much OSP that the the few Josh, that. nice How mean any dams. I kind around other adoption,

Josh Isner

you see again. Yes, certainly, Will, nice to

mentioned -- of local, few things you others user attorneys, driving big of international users our Evidence.com state it's to even combination expanding then add a realm we continue in we just within software-only more state use one, outside our really a to core more premium also see adoption just cases more and base across every as users kind well. local, there think overall that's enterprise are of and and and licenses, same that some along a to and that increased I and certainly and federal quarter, of

and seeing So there on as markets we're well. new a and more existing places to of that's in goes really opening course, then results. X And parallel, work up more some to the there's markets do our selling of focusing into lot the of back

Will Power

second maybe Britney. for then just question, And Okay.

at it, going QX, we look we guess you to color down in least be be get obviously, would But guess, the any relative few from margins, I most of as there. I look 'XX, thought Just revenue can previously, next that your are the helped to revenue were frameworks there? EBITDA like touched then, you to on broader tandem with what like us outperformance help there's by Any going does at seasonal EBITDA margins think sounds expansion issues there it I higher margins as know dip it expect great additional process you on EBITDA than forward, on move the margin comp with obviously just years modeling helped that into side. kind 'XX? in kind over QX to of that, I other

Brittany Bagley

Yes.

about QX of in the we think I the into -- having to on things continue invest as going year. OpEx talked leverage we of in So on do head slightly are a less couple our fourth quarter we OpEx

We have a the for also talked very little overall about bit year. positive a still margin how it's

look margins. of that's of impacting really year, to you almost year But was what to this was and down came last you what saw EBITDA So we'll our sort year-over-year. a get if year-over-year, lot EBITDA margins I think gross XX% at margins

So you some OpEx have get at some to those we actually look if of leverage numbers. managed

main call, EBITDA in and provide color. the we that about to gross digging have gross there is reasons QX margins get targets. start we terms with as X And able in bottom of what our can and forward and for on all starting more We'll margins. so some earnings where it's out That to of then to 'XX I'm really more future, to really like support line the come thinking but that into and when to looking continued going we look in the some leverage we of you through digging be that get what can being by flow in longer-term

Andrea James

at Hamblin Jeremy Craig-Hallum.

Jeremy Hamblin

want I Brittany, Congrats. up on point, actually. follow that to last

with to the the on had gross that and is go-forward sense XX basis of you've like there's on where of opportunities So a But with tone so in a forth. was the key a of solid getting tied opportunity lot that, company pretty may change and now be terms focus and that a I there performance margin gross notable especially still revenue obviously familiar opportunity. upside that And cameras.

of there maybe much a -- hard? to it you're is low-hanging XX happen to is much So is timing get but you you on to throwing -- because slot? the wanted gains could five I XXX A, again, well, the work sense points, to out what you -- and much going So timing I if much a a do XX easy do you're the get you gain think is or And for think of how also something that wanted year going have how next just six of sense of basis if of then how versus how how there overall? in opportunity think to the think there much I'm fruit

Brittany Bagley

that Yes. the has No, mean well I I been I appreciate think run. the business would I question. say

-- I glaring in any fruit, And low-hanging chain a that's wouldn't come through but many I business supply so it's many the say say ongoing well, would there's also still supply challenges. the of of

to the saw we some us. scale get growth some chain, more software, you company think, been about automation as that continue have talked we in supply on things, investments, to in as of I been continue the get has margin to normalized having all and manufacturing hopefully benefits forward paying but as we to those -- start which higher a going invest see and So PPV capacity and grow, should is to for

forward. important going mix So very that product is

to things do gross those need of to all the are improvement. think to I going we're that things drive margin

Jeremy Hamblin

terms be Okay. not -- also also been growth sends of rollout product mature it's over not start investment a that the in last last sense a that that little the but a of of foundation few to read bit business of been the -- to some your the a years. iterating the invest, or the -- obviously, X a similar OpEx does of opportunities that what lower it from and And that realize than X, years lot scale. going see I still lot there. do vein, in a in and correct you're now in And might those growth there's to it little get in to your rate be new it's OpEx you're maybe lay then years. that few that But taken might Is continue was maybe

Brittany Bagley

we're But we're the that also to to -- get I looking leave think impression grow. you I to to that. is I mean good us opportunity I as we don't not all so after going because should in some just in want to invest going of want behind continue the front leverage to us their that investing you with OpEx continue certainly enormous be growth

that so And where from dollars, thoughtful and opportunities continue those channel see I of you're make but we're investment both federal. are return we do and really in getting and starting then be a that R&D think off some we're pay going good on new to these to about an standpoint sure to big

on good really getting for we so top to good return that keep dollars focus And like that profitably making there line and and we're that a and there's the sure just a investing. keep driving would doing growth, doing balance

Andrea James

We’ll go a couple at Erik of over. JMP. ahead. Suppiger minutes Go

Erik Suppiger

that about the little a can your sure but On the a opportunity line the you time going international can bit I'm Xx about of you develop near-term you not associated how little a there's you're talk to front, kind kind the international strategy? products there, talk of envision bit lead markets? with and if

Josh Isner

Sure.

to video really focus, evidence bet side, CEW product, numbers whether digital our along interview it's and grow to to adoption is in-car management we'll with X that also of any I products, and ourselves on volume grow and there we'll think video, of the way. and Eric, the land generally continue on volume side, speaking, products but other the the the adoption the of X product, room,

So markets the all body to where in in grow being products. also and Australia markets, see the focused additional TASER, it's a a on adoption supplement large national pipeline forces TASER cams remain Tier year We've but police just in to and next U.K. only of across we and tremendous before, everything lot we working now, participated our other and fit going interesting we after, we international with Canada across but product really still from into also our haven't these can And and their finding X doing of right year not this seen year think cloud. but well. I X

the land really very strategy of it's excited about and expand that the that we earlier talked we're in about So prospects call. international, and about

Rick Smith

last to doesn't every -- Moonshot, to the how And from well, and the TASER How one. Let a we of, tie we better the making particular, where than to have I look or that, version, primary become to weapon just defensive me specialized TASER jump When fail? return the what is that item officers the incrementally we're help okay, in will back need a to a few absolute but team to as how a marginally do bullet? and think, and to in in particular, the X the that can commute going is that we officer trying ourselves I at that do may product that the move specialist do we do this say, think right? One not we're do push going company?

that stopping in the devices. to XX% in time. reliability of unique performance and where can that's vest-in, approximating Now where where approach see device we -- of a States, happen those international because I maybe energy a Germany, quite and think Spain we United a some Police will think and if United of on shift to see country, broadly in them something the the carry wearing don't can countries force most become if In for the X I But States be cop officers suddenly gun power carry [indiscernible] think start XXX%. a both power, where stopping a gun we'll United about routinely in When TASER a a with police the need other. or not American to think the markets, similar you potentially give will to handguns, has nominative both primary dynamic pistol international challenges from hip changer weapon, on certainly game are go a more culture States, even we I carry their weapon the a X% approach TASER we France, to that to

to going moments thinking for And out break the other the really is So I space. us, think Cloud. in the that international piece pay of sort in particularly growth is of off then

saw spots and bright cloud the signs cloud And but objections dam the ago. decade We is start We're thought in we to are X same some we the we'll get particular, X hammering to the safe, to Europe, the if of than light. and to seeing in well. leading would way. It's there taken in longer over I I a break U.S. acceptance the as think get crack prove or customers see it

international TASER excited overall. by led I'm So opportunities particularly about the

Erik Suppiger

-- where TASER you X? those do TASER it You take until time? or starts reaching think to Moonshot obsolete and getting the lead would talked be about that that starts the the what bullet. the had between Does and that product level Does to point how imply dams the sensors

Rick Smith

to the more continue product. its Josh. lead up I us, will defense markets, we specialist proposition. Well, think reliable unique make to its from want capability already system. think, to But if TASER of that value I'd a to a tool move a to don't is bring highly accelerate any step personal as additional say many I because know in I commentary, into you tends capture markets It

Josh Isner

it, that covers I think Rick.

Andrea James

more one this from Logan Rick will Northland questions close and out. take Securities. list Hennen from We'll then

Logan Hennen

Congrats again quarter. great another

and fiscal and expect of with do hoping guys a that come you question, what to is federal that -- our percentage sales currently change how guys little around you government shed year 'XX the could first So coming from we were 'XX?. light

Josh Isner

federal going detail Yes. appreciate with that right know is total contract in level and that now. value, the that a flows growing I we're Logan, I remain bookings say of thanks our question, lot. this I'd the moment, the But into don't with point, as way to to continues focus to we'll the on federal line go we're and but time. to it. over top reassess expectation stick are only out reporting revenue we're But later. revenue. at at we're maybe and break signed, the prepared contracts not not upfront those And

Logan Hennen

Understandable. Yes.

kind highest year? question have noticed you of Do So any guys fourth bookings? for anticipate far? is, our next What so you be quarter what should the this we expect in to quarter that

Josh Isner

of be on QX maybe bookings We highest for even expect our a do year quarter depending to sure and the ever there. few factors

So about that excited we'll that's which elaborate the but to we're now. right it, certainly on extent

Andrea James

Rick right. All out. going you, and Logan, close have We're to thank you, us everyone. Thank

Rick Smith

who the team tell Brittany, with bring over credit deliver our grow you, amazing of watched having it Josh and guys, continuing pride Thanks, in product, Isner, feeling just Andrea. her builder amazing team. recruit is and magic in built like but gets you And tell for of team. course, we're has team is to can is and amazing call we're find that us he he to talent. great shareholders. amazing and It Jeff I him just the thanks able already I first he's lot is a this to that with she's This his of you, career for an And an -- and the helping adding course, got results to in

better at going there. We promise vision that clear be without Moonshot. pretty a of how blindly to make there's didn't get the to never So some or Axon been we're time

working the to tech, a awesome Saturn and expect the to really get couple you of next the of lot to years. on and Eagle over the see we're move, So can Lander V

where we're So to in that, us. following with the future. the season. I'm with a to been -- see making Thank We're company for investments today's a and you sticking investments going off, holiday you wish pay you will in the happy of long delighted your Many we're excited patience show time. off past for and to all pay the tomorrow

all, your the So look if in enjoy you talking I don't year. forward see you to we new holidays, and to

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