Axon Enterprise NASDAQ: AXON President Josh Isner said the company is seeing growing demand across counter-drone technology, artificial intelligence products, international markets and enterprise security, during a TD Cowen discussion with software analyst Andrew Sherman.
Sherman opened by pointing to Axon’s first-quarter performance and said Dedrone, Axon’s counter-drone business, posted 300% revenue growth, with bookings growth even higher. Isner attributed the momentum to heightened awareness of drone-related security threats amid global conflicts and public safety concerns.
Dedrone Demand Expands Across Government and Enterprise Markets
Isner said governments are increasingly recognizing drone threats and exploring ways to mitigate them. Axon acquired Dedrone about 18 months ago, and Isner said the company has already booked more on that product line than the acquisition price.
He said Dedrone has relevance across federal, enterprise, U.S. state and local, and international markets. Sherman noted the World Cup as one driver of demand, and Isner said Dedrone is securing 11 sites for the event. However, he added that major events occur frequently worldwide and that Axon sees the opportunity as durable rather than tied to a single event.
Use cases discussed included campuses, executive residences, warehouses, stadiums and data centers. Isner said Axon is “excited to participate” as data center construction accelerates.
In the U.S., Isner said public safety agencies are currently limited in their ability to mitigate drones, because only the federal government can take drones out of the sky. Cities can deploy tracking technology but would need to call in the FAA for mitigation. He said the World Cup marks the first time cities have been given waivers to mitigate drones, and he expects broader permissions could come “as soon as this year or into next year.”
AI Products Gain Traction With Public Safety Agencies
Isner described Axon’s AI Era Plan as the company’s “fastest selling product ever,” saying Axon sold almost $1 billion of AI products to police in its first year. He said AI product bookings grew 140% year over year in the first quarter.
A key product is Draft One, which helps generate police reports. Isner said police officers spend about 50% of their time writing reports, and Draft One can reduce that to about 20%, giving officers about a day and a half back each week.
He said the product can help agencies address staffing vacancies and reduce overtime costs by allowing departments to redeploy budget toward efficiency tools. Sherman noted that personnel can account for a large portion of police budgets, and Isner said products that save money from personnel-related budgets are especially valuable to customers.
Bookings, International Growth and Cloud Adoption
Asked about bookings growth, Isner said Axon sees a “similar opportunity for growth” this year, though he cautioned that larger deals can make quarterly results less predictable. He said U.S. state and local sales offer strong visibility because purchases often go through city council processes, while federal and international sales can be harder to predict.
Isner said Axon surpassed $1 billion in international bookings last year, compared with about $30 million in international sales when he took over that business in 2016. He said AI is helping drive more cloud adoption internationally, as governments recognize that running AI tools on-premise is not scalable.
He also cited go-to-market investments, better work with systems integrators and acquisitions such as Dedrone and Carbyne as factors helping Axon expand internationally. Isner said Axon has historically been strongest in Commonwealth markets such as the U.K., Canada and Australia, but is now seeing major business in South America, Europe and the Middle East, with activity in Asia and Africa as well.
Enterprise Push Focuses on Body Cameras, Video Aggregation and Counter-Drone
Isner said Axon’s enterprise market includes businesses, retailers and logistics companies, rather than public safety agencies. He identified three main enterprise opportunities:
- Body cameras for retail workers: Axon Body Mini is scheduled to launch in July, and Isner said the company is already running field trials with some of the largest retailers in the world.
- Fusus video aggregation: Fusus allows companies to bring disparate video streams from different camera systems into a centralized operations center.
- Counter-drone security: Axon sees demand for protecting data centers, warehouses, logistics facilities and other valuable assets.
Isner said the retail body camera opportunity is tied to reducing shrink and workplace violence. He described a field trial in which a cashier told an aggressive customer that a body camera was being turned on, after which the customer’s behavior changed. He said Axon saw a similar deterrent effect when body cameras were introduced in policing.
He also said body camera footage can support prosecution of theft cases by providing clear evidence. Isner stated that organized crime accounts for much of retail shrink and that body cameras can help deter shoplifters tied to those networks.
Hospitals were also discussed as an enterprise use case. Isner said hospital security forces use Axon products, and that body cameras for nurses in emergency rooms can serve as a deterrent when nurses face abuse or safety concerns.
New Products Include 911, License Plate Readers and Future Hardware
Isner discussed Axon’s 911 strategy following the acquisitions of Prepared and Carbyne. He said Prepared operates as a layer on top of existing call-handling systems and offers AI features including transcription, language localization, GPS-based drone dispatch and non-emergency call routing. Carbyne, he said, is a cloud-native call-handling platform that is beginning to win business in major cities.
On automated license plate recognition, Isner said Axon entered a market that already included Motorola’s Vigilant and Flock. He said Axon sees opportunity because of its position as a trusted provider for data and sensitive information, and said the company’s pipeline for the product line is up more than $100 million this year.
Isner also pointed to future hardware opportunities, including next-generation TASER devices, next-generation body cameras, VR sensors, counter-drone products and technology related to police vehicles. He said Axon continues to explore putting TASER technology on drones for SWAT scenarios and, eventually, for responding to mass shootings, though he said significant work remains before such a product could come to market.
Asked what investors may underappreciate, Isner said Axon is sometimes grouped broadly with software companies. He argued that Axon combines software, hardware, regulatory barriers, information security requirements and an established sales channel, positioning the company as a potential winner in AI for public safety.
About Axon Enterprise NASDAQ: AXON
Axon Enterprise, Inc develops technology and weapons systems for public safety and law enforcement agencies, combining hardware, software and cloud services. The company's hardware portfolio includes conducted energy weapons (commonly known as TASER devices), body-worn cameras and in-car camera systems. Axon pairs these devices with a suite of connected products and accessories designed to capture, store and manage field evidence.
Beyond hardware, Axon operates a subscription-based software platform for digital evidence management, evidence review and records management.
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