Axon reported fantastic earnings yesterday.
First the numbers.
Revenue growth accelerated to 35% yoy from 34% in Q1 and 31% a year ago:
| Rev $m | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2023 | 343.0 | 374.6 | 413.6 | 432.1 |
| 2024 | 461 | 504 |
Cloud revenue growth was 47% on a very tough compare a year ago when it was up 62%, clocking in at the biggest sequential $ amount added in their history, and contributing a record 38.6% of total revenue:
| Cloud $m | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2023 | 116.5 | 132.6 | 148.0 | 163.6 |
| 2024 | 176.4 | 194.7 |
Sensor revenue accelerated from a 14% yoy growth in Q1 to 28% yoy in Q2 and 28% a year ago:
| Sensor $m | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2023 | 92.3 | 87.6 | 103.1 | 107.2 |
| 2024 | 105.5 | 112.4 |
While Taser revenue remained steady, driven by record demand for taser 10, growing by 28% tot vs 34% in Q1 and 14% a year ago:
| Taser $m | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2023 | 134.3 | 154.4 | 162.6 | 161.3 |
| 2024 | 178.8 | 197 |
Gross and adjusted EBITDA margins remained steady from Q1 and were both up from a year ago, and fcf margin swung positive again, while NRR stayed steady at a remarkable 122%
| GP % | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2023 | 59.5% | 62.0% | 61.7% | 61.1% |
| 2024 | 63.2% | 62.5% |
| EBITDA % | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2023 | 19% | 22% | 22% | 21% |
| 2024 | 24% | 24% |
| FCF % | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2023 | -18% | 9% | 13% | 28% |
| 2024 | -6% | 15% |
Their backlog/RPO grew by 5% sequentially and 41% yoy to $7.4bn.
The commentary on the call could not have been more upbeat. The CEO ended the call with this snippet, which summed up the management team’s tone quite well:
You got to knock on wood when you have results like this.
There were a ton of positives in the call: they are having incredible success with the ramp-up of their AI product Draft One, which booked $100m in pipeline very quickly, Taser 10 is seeing record demand, international sales are ramping etc. I would encourage you to listen to the call.
In terms of the remainder of the year, the team is extremely upbeat. I’ll just quote one answer from the team - Josh Isner - in response to an analyst question about pipeline:
Ultimately, the pipeline is very strong. Of course, that’s something we track as a company and as a sales team. And it all comes down to just the conviction that we have and how accurate it is. And look, like, we have the best sales team in this industry. The sales team is one of our strongest teams in the company, and I would bet on them all day. And so, I think we are going to have a massive back half in terms of bookings. We see the pipeline everywhere across the business, but more importantly, the names next to the pipeline are names that I have a ton of conviction and belief in, and I think everyone’s going to be really pleased to see what the team is – puts up in Q3 and Q4 here.
I’m very bullish on this stock and these results certainly supported that view imo.
-wsm
(Long Axon).