The paragraph provides an introduction to Axon's earnings call, where Erik Lapinski welcomes participants and refers them to the company's Shareholder Letter for additional information. He emphasizes that the call will include forward-looking statements, governed by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and acknowledges associated risks and uncertainties. The discussion involves both GAAP and non-GAAP financial measures, with relevant information available in the Shareholder Letter and Investor Relations website. Following a video presentation of recent announcements, Rick Smith expresses enthusiasm for the Annual User Conference and underscores the company's mission to protect life, beyond just technology or results.

The paragraph describes Axon's efforts to enhance community safety through advanced technology and tools. It highlights products like TASER 10, which help deescalate conflicts non-lethally, as well as AI-driven systems like Axon Assistant and Draft One that reduce administrative workloads for officers. Axon's integration of AI and camera systems aims to improve real-time situational awareness and intelligence through tools like Fusus and Axon Vehicle Intelligence. Partnerships with platforms like Ring and Citizen enable collaboration between public safety and communities, emphasizing privacy and choice. The overarching goal is to create a safer society by equipping frontline individuals with better tech and connectivity.

The paragraph discusses Axon's progress towards establishing a new headquarters in Arizona, highlighting the successful passage of Arizona Senate Bill 1543 as a significant achievement despite political opposition. The company's team has actively engaged with state lawmakers to support this project. Although not all hurdles have been cleared, there is a strong sense of optimism and pride in the team's efforts. The CEO hands over to the President, Josh, who emphasizes the company's ongoing commitment to its vision and the strength of its partnerships, as well as ramping up efforts in sales and product development for continued growth.

The paragraph highlights the company's strong performance and promising outlook following their User Conference in April. Despite Q1 typically being the slowest quarter, the sales team exceeded expectations, leading to a robust outcome and an exciting pipeline for 2025. They anticipate another record for annual bookings, driven by strong demand across customer segments, especially from US state and local customers upgrading to OSP10 premium plans and Draft One. International demand is also strong, with significant contributions from Australia, Latin America, Canada, Asia, the UK, and Europe. The TASER 10 and Draft One products are experiencing rapid adoption, contributing to the record Q1 booking results and a growing global pipeline.

The paragraph highlights the company's strong demand and growth in emerging verticals, particularly in corrections, justice, and enterprise sectors. It mentions a record deal in Q4, emphasizing a robust pipeline in key industries like US Federal, which remains a long-term opportunity despite uncertainties. The company has proactively diversified its supply chain to mitigate tariff-related risks and ensure product availability. The paragraph concludes by noting the company's successful financial performance, with first-quarter revenue of $604 million, a 31% year-over-year increase, and a segment reporting update to better reflect product diversification.

In the shareholder letter, certain margin information will no longer be disclosed, but updates will be provided during earnings calls. Software and services revenue increased by 39% year-over-year, reaching $263 million, largely due to digital evidence management and premium add-ons. Approximately 70% of domestic users still use basic plans, but many are upgrading to premium plans, contributing to an NRR of 123% and annual recurring revenue of $1.1 billion, a 34% increase. Connected devices revenue rose 26%, driven by TASER 10 devices and other products. The adjusted gross margin improved to 63.6%, and adjusted operating expenses were $236 million, resulting in an adjusted EBITDA margin of 25.7%. The company plans to continue investing, especially in R&D, despite potential tariff impacts. The team is prepared to adapt to changes, and Q1 was minimally affected.

The company has partially offset tariff impacts with cost measures and expects a 50 basis point net effect on their adjusted EBITDA margin for the full year. They are not planning customer price increases currently but will evaluate pricing annually. For 2025, they have raised their revenue guidance to $2.6 billion to $2.7 billion, up from $2.55 billion to $2.65 billion, driven by strong Q1 bookings and a future bookings pipeline of $9.9 billion. Adjusted EBITDA margin remains targeted at 25%, with guidance increased to $650 million to $675 million. Despite tariffs and R&D investments, they maintain confidence in their margin target, backed by strong Q1 results and a positive outlook for 2025. They reaffirm commitment to long-term business investment for shareholder and customer value. The paragraph concludes by transitioning to a Q&A session, with Andrew Sherman from TD Cowen commending strong cloud numbers and ARR growth while inquiring about factors contributing to Q1 strength and the mention of two top deals involving Draft One.

The paragraph discusses the positive outcomes for a company in Q1, attributing success to groundwork laid the previous year, which improved predictability and shifted activity that was previously delayed. They emphasize the development of a strong pipeline for future quarters, specifically Q2 and beyond, driven by initiatives like the AI Era Plan and Draft One. The expectation is that more key opportunities will convert in the latter half of the year, particularly in Q3 and Q4. The commentary also highlights a notable growth in Annual Recurring Revenue (ARR), which reflects strong Q4 bookings, driven by new users and premium subscription additions.

The paragraph discusses Axon's international growth, highlighting a significant focus on expanding beyond the U.S. With Cameron Brooks as the Chief Revenue Officer, there has been improved support for international business, leading to better execution in product focus, go-to-market strategies, and services. Products like TASERS, bodycams, and cloud solutions are seeing increased adoption internationally. The strategy is to initially succeed with one product and expand further based on providing great customer experiences and value. Josh Isner reports strong international momentum and acknowledges concerns about the macroeconomic backdrop, despite a positive outlook on demand and pipeline.

In the conversation, Josh Isner discusses the current market conditions and their impact on deals, specifically differentiating between the traditional state and local law enforcement market and other verticals. He mentions that there are no significant macroeconomic headwinds affecting U.S. state, local, and international markets, though there are minor challenges. The federal market is currently uncertain due to pending budget approvals, affecting the volume of opportunities. However, this has minimal impact on overall bookings, and the company is focusing on existing deals. Joseph Cardoso asks for more information about recent product introductions, particularly the new fixed mobile hardware products.

Rick Smith discusses the strategic expansion into the fixed mobile market by building on existing technologies like body and fleet cameras, specifically focusing on fixed Automatic License Plate Recognition (ALPR) cameras as a natural extension due to their team's expertise in imaging. This expansion aligns with their goal of integrating various camera feeds into a cohesive ecosystem, building on their partnership with Fusus. Smith emphasizes that their approach considers privacy concerns and highlights collaboration with leading partners in various segments.

The paragraph discusses the need for a balanced approach to public safety, emphasizing the importance of deterring crime without creating a surveillance state. It critiques the current state of criminal justice in the U.S., where high incarceration rates have not effectively deterred crime. The author highlights the negative impact of decriminalizing retail crimes, citing increased criminal activity and the flight of retailers from urban centers. The partnership with Auror is mentioned as a strategy to reinforce societal safety and enforce rules. The paragraph argues that organized criminal activities, rather than petty theft by individuals in need, are the primary concern in retail crimes.

The paragraph discusses the company's strategic focus on expanding partnerships and enhancing capabilities, specifically mentioning Fusus and the integration of AI in enhancing vehicle intelligence and crime-solving technologies. Josh Isner emphasizes the importance of responsible AI innovation, highlighting the ethical considerations that guided the development of ALPR technology in Fleet Three. He mentions their careful selection of partners, such as Auror, who share these values. The conversation then transitions to Alyssa Shreves from Barclays, who inquires about the AI Era Plan's penetration compared to the early days of OSP, particularly seeking clarification on differences highlighted in Draft One.

The paragraph discusses the progress and strategic direction of two initiatives, Draft One and the AI Era Plan. Josh Isner explains that Draft One had a head start, leading to its greater current adoption, but anticipates growing interest and integration of the AI Era Plan. Larger deals, such as police department deployments, are expected in upcoming quarters. Alyssa Shreves inquires about the impact of these plans on EBITDA targets. Brittany Bagley responds that while software has positively influenced the company’s margins, the introduction of new hardware products may balance this effect. Overall, the company's growth prospects remain promising with mixed factors to consider.

The paragraph discusses the company's current focus on software and AI functionalities, noting the absence of a long-term target beyond the current year but expressing satisfaction with recent results. Erik Lapinski introduces Jamie Reynolds from Morgan Stanley, who asks about challenges related to AI functionalities and adoption, particularly regarding prosecutor concerns. Josh Isner responds by highlighting the strong interest in features like real-time translation, which significantly enhances communication for officers without much critique. However, adopting more advanced features like vehicle intelligence could face greater opposition from police skeptics. The company emphasizes the importance of ethical considerations and expects varying adoption rates based on jurisdictions' support for police.

The paragraph discusses the current status and future potential of AI and related technologies. Brittany Bagley mentions that while some AI features, like real-time translation, are still in beta testing, the anticipation and enthusiasm among customers for AI adoption is high. She argues that the extensive range of AI products available enhances customer interest and adoption. Rick Smith agrees, highlighting the benefit of having a comprehensive, long-term plan that offers a variety of options for different agencies, ensuring value for all customers. The conversation shifts to Jamie Reynolds asking about recent FAA improvements to the waiver process for drones and what more is needed from a regulatory perspective for broader adoption. Rick Smith defers to Jeff for more detailed insights.

The paragraph discusses the mainstream adoption of drone flight rules (DFR) and the role of Skydio, a drone company, in this process. Skydio is enhancing the production of its drone docks and excelling at obtaining waivers for flying drones below 200 feet, thanks to their strong autonomy and collision avoidance technology. For flying within the 200 to 400-foot range, Dedrone's technology is beneficial. The paragraph highlights the progress with FAA regulations that expedite waiver processes, allowing for greater autonomy and capability in diverse flying situations. The company aims to offer a comprehensive range of options in line with evolving regulatory frameworks. The paragraph ends by introducing Jordan Lyonnais from Bank of America as the next speaker.

The paragraph discusses the increased federal budget for the Department of Homeland Security (DHS) and how Axon plans to contribute to border security by focusing on drones, counter-drone technologies, and real-time video capabilities. Josh Isner highlights previous collaborations with federal agencies in developing body cameras and live streaming, aiming to enhance video and drone solutions tailored for U.S. government needs. Rick Smith adds the importance of real-time translation technologies to assist border patrol in dealing with language barriers efficiently, sharing an instance where an early prototype successfully handled Icelandic language translation.

The paragraph discusses the progress of Fusus in obtaining FedRAMP certification, emphasizing that it has passed the submission stage and is ready for certification, pending final approval. It highlights the importance of language translation, mentioning Icelandic, and contemplates existing contracts and opportunities in federal procurement, such as bodycams. The speakers convey cautious optimism about federal opportunities accelerating, indicating potential positive impacts if processes move faster than anticipated.

In the paragraph, Erik Lapinski introduces William Power from Baird, who congratulates the company on a successful quarter and asks about their enterprise expansion, particularly referencing a recent win with a large logistics company. Brittany Bagley responds, confirming that the logistics company's rollout is on track and highlights the win as a positive example for attracting other enterprise clients. The conversation includes Rick Smith mentioning participation in a retail security conference (RILA), where he received positive feedback about enterprise efforts. They acknowledge that larger deals take more time but express confidence in the growing importance of the enterprise sector to their business.

The paragraph features a discussion between William Power, Josh Isner, and Rick Smith regarding the opportunities and sales strategy for a fixed ALPR (Automatic License Plate Recognition) product. Josh Isner highlights the competitive nature of the market and expresses excitement about customer reactions at an event called Exxon Week. He mentions that agencies are requesting large deployments of this product, which complements their existing offerings and is competitively priced. Isner explains they have a dedicated sales team for the product, but key account leaders will also play a significant role. Rick Smith adds that the positive reception of Ubicquia was an unexpected but pleasant surprise.

The paragraph discusses the challenges of permitting and logistics for installing equipment on streetlights, highlighting Ubicquia's advantage due to their established relationships and access to millions of streetlights globally. This allows them to perform quick installations without additional permitting. It mentions that there are around 450 million streetlights worldwide with a universal plug. A conversation follows about ramping up production of camera units, with no major revenue impact expected this year as the focus is on trials, high-quality installations, and preparing for revenue conversion next year. Their experience in building various camera form factors accelerates their market readiness.

The paragraph discusses a conversation between several individuals about their company's operations and future plans. Joshua Reilly inquires about customer feedback on the urgency of closing leader pricing deals for a plan named "Draft One in the AI Era," set to close by June 30th, but possibly extending into the second half of the year. Josh Isner responds, highlighting efforts to ensure deal closures by Q2, despite possible delays. Jeremy Hamblin then shifts the discussion to the company's cloud services business, noting that 40% of revenue came from over a million platform users at the end of last year. He asks about the expected revenue growth of 27% for 2025 and whether it will stem from user base expansion or increased average selling prices per user. Brittany Bagley explains that recent growth has been evenly split between user growth and premium adoption, a trend expected to continue.

The paragraph discusses the significance of Dedrone, a company focused on drone defense systems, amid increasing geopolitical tensions and conflicts. Rick Smith expresses enthusiasm about the acquisition of Dedrone, emphasizing its relevance in protecting military and political leaders, enterprises, and private residences. He highlights the unique threat posed by drones and the necessity for security businesses to address this challenge. Although unable to disclose specific military programs, he notes substantial interest from various sectors and references the potential development of a multi-layered drone defense system in the U.S., akin to the Iron Dome.

The paragraph discusses the business prospects of Dedrone, particularly its hardware and software components. The software component will be included in software and services, while the hardware will appear in platform solutions. Dedrone's segments won't be separately identified for now, but breaking down segments provides better visibility into drivers like fleet VR and counter-drone technologies. Additionally, Trevor Walsh asks about Rick's plans for the Apollo cartridge and mentions its relevance for thicker clothing and cold weather regions, emphasizing its potential in both international and U.S. markets.

The paragraph discusses the development and future of a new TASER cartridge, the Apollo Dart, which aims to transition the TASER from a less-lethal capture device to a self-defense weapon. Rick Smith mentions that scaled automated production is about a year away. The new cartridge is particularly effective in close-quarter combat, potentially making it a preferred option over guns in certain situations. In the U.S., the product may generate some revenue and be part of an upgrade package due to its sophistication and higher cost. The broader goal is to shift law enforcement's default choice for confronting threats from guns to TASERs, particularly in scenarios involving edged weapons, thereby reducing the reliance on lethal force.

The paragraph discusses the potential for increased usage of TASER devices, particularly the T10 model, in international markets where they are not yet standard issue for law enforcement agencies, as well as in enterprise sectors with armed private guards. This expansion is expected to be more financially impactful globally compared to the U.S., where TASERs are already more commonly used. The text also highlights the liability reduction and financial incentives for businesses to avoid shootings by adopting TASER technology. Additionally, Trevor Walsh briefly addresses Brittany about the impact of tariffs on the company's adjusted EBITDA, seeking clarification on whether current adaptations to supply chain issues represent a worst-case scenario.

In the paragraph, Brittany Bagley discusses their current realistic expectations regarding impacts, considering known factors and potential offsets, while acknowledging the situation as dynamic. Erik Lapinski then introduces a question from Keith Housum about the growing importance of Exxon (presumably Axon) in their clients' ecosystems, expressing concern about potential over-dependence on the company. Rick Smith responds by mentioning that such concerns were more common five or six years ago, and now customers are more interested in Axon handling more technology solutions due to their reliability and strong support, indicating that the concern has diminished over time.

The paragraph discusses how Axon has become an integral part of its clients' operations, making it inefficient for clients to switch even if Axon were to face disruptions. Axon is committed to creating an open ecosystem that integrates well with clients' existing systems and partner technologies, rather than confining them to a closed ecosystem. Jeff Kunins highlights that Axon's AI Era Plan aims to offer fixed pricing and continually enhance offerings without additional charges, reducing clients' risk and exceeding expectations. Keith Housum confirms that Axon maintains a strong retention rate and hasn't lost significant vendors or agencies to competitors, especially regarding their body cameras.

The paragraph is part of a discussion during a conference call involving Jeff Kunins, Erik Lapinski, Josh Isner, and others about the TASER 10 product's growth and market potential. Jonathan Ho from William Blair asks about the risks of hitting a growth ceiling with TASER 10 due to rapid adoption rates, but Josh Isner expresses confidence that there is still significant growth potential as many customers are upgrading from older models like the X26P and X2. Isner notes the accelerated upgrade cycle and emphasizes international expansion as a key growth opportunity. Michael Ng from Goldman Sachs then inquires about potential margin differences with AI services compared to evidence.com due to computational costs and asks about expectations for the state and local government budget spending typical in the second and fourth quarters.

In the paragraph, Josh Isner and Brittany Bagley discuss their company's expectations and current performance, focusing on software business margins and the AI Era Plan. Bagley mentions they expect the software business to maintain gross margins above 80% and that the AI Era Plan aligns with those expectations, though the full product lineup is still unfolding. Isner notes that while other companies face challenges with drying up grants for upfront purchases, their company's activities rely more on operational expenditures. Consequently, they do not see significant changes in funding from state and local budgets, remaining optimistic about future investment opportunities with these customers. Erik Lapinski and Rick Smith are also briefly mentioned, with Smith accidentally muting himself before speaking.

The paragraph describes the excitement and achievement of a tech company in successfully launching a wide range of products and delivering excellent customer support. It highlights the team's effort in navigating challenges, especially selling into public safety and handling government data. The speaker expresses gratitude to shareholders and analysts for their support and insightful questions, which contribute to the company's success. The paragraph concludes by looking forward to upcoming meetings and earnings calls.

This summary was generated with AI and may contain some inaccuracies.