axon (WKN: A2DPZU)? Of course: these are the ones with body cameras and tasers! This is definitely not wrong. The success of the American company today depends on the administration’s design for such security measures. Thus, the task of making the firearm unnecessary. Saving lives is a very worthy goal if you ask me.
But Axon Enterprise is also undergoing a transformation. Cloud services and software are playing an increasingly important role. What is the American company actually? Or to put it another way: Does success still depend on the hardware?
Axon Enterprise: Hardware Store…?!
If you’re hoping Axon Enterprise will revolutionize today’s big software, we have to at least stop you. A look at the most recent quarter also shows that the Taser segment, with $144 million in sales, still accounted for nearly half of revenue. But: cloud and sensors to $166.8 million. So this area is bigger. Unfortunately, the sensors, i.e. body cameras and other cameras, are devices we still have to discount $71.1 million. However: the cloud footprint is already very large at over 95.7 million USD.
Accordingly, Axon Enterprise is undergoing a transformation. In the cloud space, the US company saw the highest revenue growth at more than 51% year-over-year. Sensors and body cameras get close to here by about 50%. However, it makes sense that this would happen. After all, new customers who rely on Evidence.com or other digital case management solutions also need the necessary hardware.
For comparison, the Taser segment grew 19.3% year over year. So we see a very clear trend for the US company to evolve from a pure hardware company to a digital software company. Tasers will likely remain a feature of the growth story, also in terms of the task of making the handgun bullet obsolete. However, it is the lucrative market and the market with repeat sales that hides behind the cloud area, body cameras, and the like.
Focus on new digital solutions
Axon Enterprise is also strategically moving in the direction of Software and Cloud. With My90, Respond and many other software solutions, the department has developed suitable formats that can help digitize security authorities. In large parts, this is likely a business model that management wants to expand on.
In addition, this line of business means high margins, repeat sales, and lots of growth potential. This makes stocks interesting to me. But we know that we are in the midst of a transformation. Perhaps this is just part of a long-term opportunity.
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Vincent owns shares in Axon Enterprise. The Motley Fool owns and recommends stock in Axon Enterprise.
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