Axon, the supplier of Tasers, body cameras and cloud-based software to law enforcement, trounced Q4 earnings estimates after Tuesday's close and offered upbeat guidance. Axon stock, after rallying into earnings, shot higher following the report and conference call.
In late January, Axon unveiled its next-generation Taser touted as a "giant leap" ahead for the weapon that gives law enforcement a less-lethal alternative to bullets. The Q4 earnings report began to fill in some details.
Axon said the Taser 10 will hit the market in March. The Taser 10 platform, including cartridges and more, will be gross margin neutral when production reaches scale in the second half of 2023, then expand profit margins over time.
In the conference call, Axon CEO Rick Smith said he's "never seen demand this strong in a new Taser launch." Law enforcement agencies with Tesla 7 subscription plans are making "a lot of inquiries" about early upgrades to the Taser 10.
Smith recounted conversations with a major county sheriff and big city police chief who said the Taser 10, with its enhanced capabilities, could have alleviated most of the situations they've faced this year in which police fired their weapons.
Axon Earnings
Estimates: Analysts expected Axon earnings to grow 11% to 51 cents a share, according to FactSet. Revenue was seen rising 41% to $305.9 million.
Results: Axon earnings per share jumped 52% to 70 cents. Revenue grew 54.5% to $336.1 million, the second straight quarter of accelerating growth.
Outlook: The company expects revenue of at least $1.43 billion, or 20% growth, in 2023. Analysts had been forecasting $1.38 billion. Axon said it's targeting a gross margin of 20% vs. 19.5% in 2022. Capital spending will range from $50 million to $65 million, including Taser 10 automation and capacity expansion.
Axon also offered longer-term guidance, saying it is aiming for revenue of at least $2 billion in 2025 and adjusted EBITDA margins of 25%.
AXON Stock
Axon stock jumped 4.6% to 209.52 in early Wednesday stock market action. That followed Axon stock's 2.8% rise on Tuesday.
Axon blew past its Feb. 2 52-week high of 204.99. The four-week consolidation since then is a bit short to count as an official base. Still, investors might use 201.07 or 205.09 as alternate entries.
From a longer perspective, Axon stock has made multiple runs that have stalled right around the 200 level dating back to February 2021. It looks like that ceiling may finally give way.
Axon's relative strength line, the blue line in IBD charts that tracks its progress vs. the S&P 500, had already hit a 52-week high ahead of earnings, confirming its market leadership.
Axon stock is part of the flagship IBD 50 list of leading stocks.
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Taser 10 Advances
The new Taser released in late January nearly doubles the range of prior weapons to 45 feet. It carries up to 10 probes vs. 4 for the Taser 7. The Taser 10 fires one probe at a time. The Taser 10, with its individually targeted probes, "drastically improves accuracy and effectiveness, expanding the scenarios in which it can be used," Axon said in a news release.
Meanwhile, its Taser 7 fires two probes at a time, meaning an officer has just two tries to succeed. With both devices, two probes are needed to land on their target to deliver a charge that creates neuromuscular incapacitation.
Axon's new Taser also builds in features to de-escalate confrontations. These include a 1,000-lumen pulsing light and loud alerts to warn a subject to comply.
Long-term, Axon sees a massive opportunity in selling Tasers not just to law enforcement and security personnel, but also to consumers. The company is working to make the Taser the defensive weapon of choice, obsoleting the bullet.
