Kind of surprised no one has brought up this sudden and sharp downfall. I know, it’s still up nearly 100% the last year, but I’m wondering what people think about the analyst downgrade that started the collapse based on Axon cutting ties with Flock Safety who license plate ID tech was built into the Axon suite. I know the market was looking for any excuse to chill Axon’s ascent, but I cannot see how this impacts their ER next week. I also think those guys are smart enough to have a patch for this if they were going to end their partnership with Flock.
Stock has gone from 715 to 515 in a matter of days. Their products are in one of the most essential and fast growing tech segments and I can’t believe this will damage their momentum very much.
When it’s red everywhere in the market, I’d not read too much about a single stock’s drop. AXON is a great company but was overvalued. I was expecting a correction for a long time. When the panic in the market surges like in the past couple days, a correction to highly valued stocks can make a lot of sense.
I am with you. I think the move down is overdone (days like these always make you wonder how much you don’t know versus what you do know).
The bear case has Axon cancelling a partnership (over pricing apparently) they’ve had since 2020 with Flock Security that does ALPR (fixed camera license plate readers) for 5000+ communities in 42 states. Adding to the bear case is the rhetoric around defense spending cuts that have hammered defense contractors (including Palantir). 2 Analysts went to Hold from Buy on these 2 points.
The Bull case is that Axon said Fusus (purchased 13 months ago) was immaterial to 2024 earnings (they paid $240MM). For them to cancel the Flock partnership, their version of ALPR attached to the Fusus Command Center is competitive with Flock (one analyst doing channel checks thinks the Fusus platform is superior). Fusus and DeDrone acquisitions have raised TAM to $77B from $50B (according to Axon). 2 Analysts reiterated Buy and ~$700 price target.
It seems as if there is a bit of love for Axon in this thread. Nothing wrong with that as long as love doesn’t blind.
I cut my Axon position down to under 10% of my portfolio a few days ago, at the beginning of the recent slide. I’ve always had a close eye on this investment as they are richly priced…meaning that they are sensative to large price movements on market fears. I’m less concerenced about the quarter they will report next week and a bit more concerened about the forecast for the next couple/few quarters.
I believe that the federal spending cuts are not just rhetoric, but an actual risk. This is not just the DOD either. The Q3 report from November had Axon listing the top 10 domestic deals including DHS, IRS and Amtrak…all federally funded departments/programs. Also, the “partner turned competitor” situtation will likely have some impact on revenue. These are known unknowns that look to be real potential issues for Axon and not just some short blog spouting nonsense. Maybe there are a nothing burger, but it is likely they will have some negative impact on revenue growth for a period of time.
Throw on top of the Axon specific concerns the fact that the market appears pretty jittery again. Bigger price swings are happening in the common portfolio companies tracked on this board. Many price swings downard.
I’m sticking with Axon as one of my larger positons for now and waiting on the quarterly update next week. My hope is that management has real information to offset these new concerns, but as hope is not a strategy and I work hard not to fall in love with any company I invest in I’m willing to pull the trigger on selling Axon if the news isn’t good. Admittedly, being up well over 100% on my current investment makes me less nervous…even though that is not rational.
Axon up 10% plus after hours. Cut and paste (sorry) from their earnings report
Axon Cloud & Services revenue grows 44% to $806 million
Annual recurring revenue grows 37% to $1.0 billion
Annual net income of $377 million supports non-GAAP net income of $466 million
Company establishes fiscal year 2025 revenue guidance of $2.55 billion to $2.65 billion, representing approximately 25% annual growth at the midpoint
Surpassed $2 billion in annual revenue and $1 billion in annual recurring revenue
Annual bookings over $5 billion drove total future contracted bookings to $10.1 billion
Awarded largest deal in company history, coming from an enterprise customer
Full-year net income margin of 18.1% drove 25.0% Adjusted EBITDA margin with 60%+ free cash flow conversion
Surpassed 1 million total software users
Shipped more than 200,000 TASER devices, 300,000 body cameras and over 9 million cartridges
Closed 2024 with record quarterly revenue of $575 million in Q4, up 34% year over year, 12th consecutive quarter of 25%+ annual growth. TASER revenue of $221 million grew 37% year over year, fueled by the continued scaling of TASER 10 and growing adoption of VR training solutions. Sensors & Other revenue of $124 million grew 18% year over year, supported by continued strong demand for Axon Body 4 and Axon Fleet 3. Axon Cloud & Services accounted for 40% of our total revenue, growing 41% year over year to $230 million as adoption of our premium subscription offerings continued to build.
+$32 billion in international governments: We reevaluated our opportunity with international governments, which now extends beyond our initial areas of success within commonwealth nations to a set of more than 100 countries across the globe.
+$23 billion in enterprise: Our expanded product offerings and improved enterprise product-market fit are evidence of a rapidly emerging opportunity to connect public and enterprise safety.
+$17 billion from AI solutions: The introduction of our AI Era Plan enables us to evaluate the total potential for our growing set of AI solutions to help our existing customer base, including with local and international governments.
In aggregate, Axon’s $2 billion in annual revenue in 2024 represents less than 2% TAM penetration. Our revenue concentration and TAM penetration is highest within law enforcement functions for U.S. state & local governments. Within this area, we estimate U.S. state & local law enforcement TAM penetration below 15%, reinforcing our continued robust growth opportunity with our existing customers driven by innovation and strong product-market fit.