How High Will Axon Stock Go?

Axon Enterprise, Inc. (NASDAQ:AXON) has enjoyed solid growth in recent years as tasers and body cameras have spread. This growth can be attributed to the introduction of products such as the TASER 10 and the Axon Body 4 which quickly captured a large market share.

The company’s innovation in product offerings has been a key growth driver. In addition, to serving law enforcement agencies Axon has diversified into federal, global, justice, corrections and corporate sectors. For example, it has set up Axon Records with the U.S. Department of Veterans Affairs and partnered with the Government of Scotland for digital evidence management.

The company has also grown through acquisition. With the purchase of Sky-Hero in 2023, it extended its range of robotic securities, and in 2024 acquired Fusus, which provides real-time control solutions to public safety operations. These transactions have expanded Axon’s total addressable market from $50 billion to more than $63 billion​. 

So how does all this translate to the share price and where it is likely to go?

Fast Growth Attracting Investors

The 2022 conference of the International Association of Chiefs of Police was the platform where Axon publicly unveiled its Moonshot idea of cutting the number of gun-related deaths by 50% within a decade between police and the public.

As Axon’s reach has expanded, it has reported ever more impressive results with revenues reaching $1.6 billion, reflecting a 31.4% increase from the year prior. This positive trend continued into the first quarter of 2024 where Axon saw 34% growth in revenue, marking its ninth consecutive quarter exceeding 25% growth.

In Q1 2024 a 50% increase in annual recurring revenue of $825 million was reported compared to the previous year. Moreover there was a boost in the company’s margin, which rose by $226.7 million to reach $955.4 million in 2023.

Although there was a decrease in the margin percentage from 61.2% in 2022 to 61.1% in 2023 this shift was mainly attributed to lower margins in the TASER segment, which were somewhat offset by higher margins in the Software and Sensors segment.

Net income for Axon also saw an increase to $174.2 million in 2023 compared to $147.1 million in 2022 illustrating the company’s ability to drive profitability alongside revenue growth.

How Axon Grew Beyond Tasers

Besides its TASER devices, Axon has launched new products to align with its broader vision. For example, new hardware components and cloud-based software solutions are used to revamp modern law enforcement and satisfactorily address the security needs of federal agencies, corrections, justice, and business enterprises.

Axon is much more than simple hardware, but rather offers hardware and software solutions that include cloud-hosted digital evidence management systems, productivity and real-time operations software, body-worn and in-car cameras, and robotic training and security tools.

The core focus on cloud-connected products facilitate better customer experiences. These cloud-based SaaS tools pair synchronously with its sensors and TASER devices.

Offerings of SaaS include digital evidence management, productivity tools, and real-time operations. Notably, the largest cloud-hosted repository of public safety data on the globe is Axon Evidence, which is used for digital evidence and video storage and management.

Meanwhile, Axon’s productivity suit, which includes Axon Records, supports officers’ writing reports and is intended to help them streamline paperwork tasks. In addition, Axon Respond aggregates location data, signaling alerts, and video feeds to provide situational awareness.

The product spectrum incorporates various sensor units that perform different tasks, including transparency, real-time situation awareness, and software task integration. This covers the Axon Body cameras, Axon Fleet in-car systems, and complimentary tools, all of which are compatible with Axon’s software solutions. What’s more, it is built on an open ecosystem model that makes it possible to interoperate with devices from other vendors.

The TASER segment focuses on the development of smart devices, tools, and services to help public safety officers in de-escalation, reduce the use of force, and increase officers’ survivability and safety. Products include TASER gadgets, VR training solutions, and other consumer-oriented offerings.

How is Axon Doing Financially?

The company generated $1.6 billion in revenues for the year ending December 31 2023, a 31.4% increase from the year prior.

The gross margin rose to $955.4 million for the year ending December 31 2023. Gross margin as a percentage of sales slightly decreased to 61.1% in 2023 from 61.2% in 2022 mainly due to margins in the TASER segment and partly offset by higher margins in the Software and Sensors segment. 

Axon started this year strong with performance by reporting revenue growth of 34% in the first quarter, marking its ninth consecutive quarter with growth surpassing 25%. Furthermore Axon improved its profitability with an income margin of 28.9% and an adjusted EBITDA margin of 23.6% in the quarter.

This performance sets a tone for future quarters and underscores the company’s commitment to innovation and progress.

Annual recurring revenue saw an increase of 49.7% year-over-year to reach $825 million for the quarter.

The expected revenue for the year 2024 ranges from $1.94 billion to $1.99 billion indicating 26% annual growth at the midpoint. This also marks an increase from the revenue estimate of $1.88 billion to $1.94 billion.

How High Will Axon Stock Go?

Axon stock has the potential to rise to as high as $357 per share if the forecasts of the 12 analysts covering it are realized. 

Investing in Axon Enterprise has the hallmarks of being a smart move due to its financial performance consistent revenue streams, unique products, acquisitions strategy and potential for global growth.

While the stock may be priced higher than others this premium reflects its growth and dominant position in the public safety tech market.

For those looking for growth over time investing in Axon stock presents an opportunity based on strong foundations and forward thinking strategies.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.