Q4 2021 Axon Enterprise Inc Earnings Call
Your what.
Youre aware.
Yes.
Where am I supposed to get at.
Okay.
Yes.
Well I knew he would eventually figure it out and welcome to the meta versus now that we're all here positive video and check out our forward looking statements disclaimer.
We're opening in virtual reality, because VR is an exciting new category for us.
Or is the fastest growing new product in axon history, and its first gear VR grew from practically zero to over $20 million in bookings and more than 1100 public safety agencies have deployed in spring 2022, our teaser N V. Our teams will launch a new training that features a real taser seven N V. R. This allows frontline offer.
To get more practice, but the actual device and that supports the entire mission more deescalation means more people saved in real life Axon makes officer training more effective affordable and find which is why in November at our user conference. We launched a teaser versus zombie game. It's a huge it wouldn't you say central one.
Not today is obvious.
That's come back to him.
In all seriousness, we know that the investing landscape has changed since our November update from falling tech stocks to new concerns about inflation.
Axons confidence has not changed and our outlook has strengthened axons growth is horrible thanks to our growing global presence and expanding product suite get them.
In 2021 about a quarter of our bookings came from new types of customers, including international customers. The federal government corrections fire and emergency medical services and commercial enterprises.
This was a record and highlights how we are successfully expanding beyond our core.
Let's hear again from our CFO , we're coming off a strong 2021.
Yes.
Sorry, guys.
Coming off a strong 2021 was showcased impressive growth and with highly probably 2022 is again off to a strong start and we expect this momentum to continue.
Like every company, we're monitoring inflation our software solutions are pretty important you have long term contracts for our cloud business and the rest of the business. We have mitigation levers for example, we continuously engineer costs out of our hardware materials continue to automate our manufacturing.
Not only that as we grow the economies of scale help drive fixed cost leverage the durability of our growth includes every business line axon is less than 2% penetrated on a $52 billion total addressable market. We believe the professional taser market can continue to grow for decades, what drives that growth global.
Continuous innovation and use cases beyond law enforcement.
The adoption continued to proliferate around the world in 2021.
Recent examples of major Taser deployments include the Dutch National Police and three new police forces in Italy. Meanwhile, the consumer market for Taser remains mostly untapped, it's still very early days.
What do we have enough to start in January we began taking orders from distributors for a new consumer taser device the bulk to by nature of being the CFO two idled one of the first to get one of our newest consumer Taser device offers a different form factor for those born in personal protection any more accessible design is designed to establish a 15 feet of safety 30 seconds.
Boardwalk upon an attacker our investments to consumer teaser fall alongside our other growth investments including software.
All of these investments are subject to the same financial discipline that allows us to deliver meaningful profitability. While also growing the top line at 20% or higher.
We're really excited about what's in store for our consumer business, but you can expect us to maintain a responsible long term focused because we invest for growth.
Sounds good okay into what else 2021 was a banner year for software adoption and Youll see that reflected in our reported results. Among recent highlights British Columbia is connecting all of its justice sector partners and stakeholders with axon evidence transforming the way digital evidence is managed throughout the province remember that new Justice category, we talked about in our <unk>.
Denver update with the $1 billion total addressable market. The prices here, we've launched attorney Premier. The first digital evidence management system designed specifically for attorney Here's an excerpt from our December product launch with Brent Berkeley Director of Axon Justice solutions as it is right now there is.
Nothing that is custom built and specifically built to manage large complex digital files, we're going to fix all of those problems for you in one centralized secure location with the first specifically built digital evidence management system to completely revolutionized criminal discovery.
Exxon's Justice team has a robust development roadmap for 2022 to improve functionality and add new features we're excited about this new category. In June 2021, we began shipping axon fleet three with L. P. R demand has been spectacular and has exceeded our expectations customers loved the fleet three dash Cam system. It is.
To us it has high video quality that is powered by artificial intelligence that allows the system to scan license plates backlog continues to grow and we are delivering as fast as we can.
Meanwhile, axon body cameras are also proliferating globally recording hundreds of millions of hours of video annually. The 2022 product roadmap includes capabilities that will allow the axon body three camera to serve customers in new market verticals and new regions.
Could go on but we'd like to get back to the real World. Please do checkout, our strong financial results and the details on our strengthening outlook in our shareholder letter at Investor Axon Dot com to wobble close us out.
We recently concluded our first ever virtual ESG Roadshow, where we got feedback from our largest institutional shareholders coming out of that we've proposed some shareholder friendly governance changes, we're proud to be leaders in the area of corporate governance shareholder outreach and leading a mission driven business.
Our diverse shareholder base also includes individuals' retail investors, who support our mission to protect life.
This shareholder diversity is a big part of why we do these videos to foster transparency and make ourselves accessible to a wide audience. It's.
<unk> for us to deliver shareholder value and also be the type of company that you are proud to own.
Thanks for joining us on our mission and on our growth journey.
See you next quarter.
So how do we get out of here unclear.
Okay.
Okay.
Hum.
Okay.
Thank you Brett go ahead, all right. Thank you Andrew and I was just waiting for the.
I love watching those videos, we've got the most creative and his team in the business and as you can see from that video we've been looking forward to sharing results from the best year in <unk> history.
But we're heavy harder to do this on a day when democracy is under attack in awards breaking out in Europe .
But we don't get to choose whether the times, we live in and will include geopolitical instability or global Pandemics.
You can't use of our principles and how we respond.
We stand for transparency truth and protecting one.
Our products are designed to strengthen trust in the rule of law and they support the United Nations' 16th sustainable development goal to foster peace Justice and strong institutions.
Our thoughts are especially with the UK, Ukraine National police, who are our customer as well as our axon teammates in Ukraine.
As we kick off 2022, I'm confident axons best days are ahead of US we are prioritizing our people and giving them a platform to further excel at what they do.
Last month, Dr. Richard Carmona announced he will be retiring from axon board. After 15 years of service. Dr. Carmona. He has been a tremendous contributor to axon, helping us shape strategy and positioning Exxon as we evolved from a single product company notice Taser to where we are today. He is simply a wonderful human being we're incredibly grateful.
Tim not only for his 15 years of service, but also for the way forward he helped us to define.
As I reflect on what is driving our strength is a powerful combination of solving real challenges for our customers, creating a better user experience and attracting passionate talent.
It's really our emphasis on building software at the core it creates a great user experience historically, our competitors built software to fit rfps, which check a lot of boxes, but ultimately does not function well in the hands of user we.
We have been religious about understanding our customers' needs and building software and products that delight them when they use.
When customers test axon solutions, we stand apart as we consider the competitive landscape one of the most important factors that sets us apart.
<unk> truly has a highly integrated suite of high performance ecosystem that seamlessly connect hardware software and our community of users to achieve our mission of delivering a safer world.
When competitors talk about winning market share, it's mostly focused on lower margin hardware buyers, who don't yet value great software it usually aren't ready to advance to the cloud.
We look forward to welcoming those customers down the road just like the many agencies here in the U S that are upgrading from continuing platforms to the axon ecosystem.
Perhaps even more important than the technology. We built is the mission mindset of our employees that sets us apart.
I regularly hear from chiefs raving about their positive experience with our employees because they are so passionate about helping our customers succeed.
I recently got a call from a state police hurdle asking me to come to their headquarters for surprised award ceremony, where they recognize axon Rockstar project manager Gen issue for seamlessly upgrading them from a competing platform onto axon great work Jenny So proud to have you on our team.
Great tack in Pratt and <unk>.
And people is just a magical combination.
And it works.
Our momentum in fleet three has allowed us to continue to capture share with major cities County, Sheriffs and state patrols here in the domestic market.
We've converted several major agencies in the last year from competing platforms onto our network joining our community the whole ecosystem ties together, our body cameras <unk> cameras, Taser weapons drones, and third party sensors with a growing suite of software capabilities and I'm glad to see it's delighting our customers.
We are laser focused on pursuing our mission and driving growth.
And it's clear that our people are our best asset.
As you've heard from Luke over these years, we have been fortunate to attract people who are among the best in the world what they do.
I'm incredibly grateful and thankful to have these people on our team contributing to our success.
Now over to Luke to take you through some of our 2021 highlights in more detail.
Thanks, Ric in 2021 excellent focus on our commitment to our mission our customers and our employees. We continue to be in a period of rapid scale last year, we hired more than 900, new axon teammates and we set new company records by filing more than 100 patent apps.
Occasions, we also supported our customers through a period of turbulence.
Our initiatives included the creation and launch of family of free and confidential mental health resource in training package for the families of law enforcement and other.
They're fantastic initiative, we launched last year with the axon Roadshow, we hosted 200 events over the course of six months, where we visited customer agencies and Gabe demos of our products. We also grew our international markets with Sao Paulo military police adopting a large body camera deployment and the <unk>.
So police undergoing a large taser deployment on the product front last year, we launched sleek III and LPR and demand has exceeded our expectations as a result suite bookings for 2021 far surpassed our projections and customers have raved in serving this incredible references and our first one.
Attorney Premier in December opens up an entire new software category for us in the justice sector.
And while we're quick to highlight key women's in new market segments. Our entire business has been able to achieve record results due to the stellar work that continues to be done by our state and local teams operationally last quarter. We told you about industry wide chip shortages that impacted our taser seven platform. We told you.
We have line of sight to clearing the backlog in the first half of 2022 and that remains the case, we continue to manage through challenges, including delivery delays at our supply chain team is navigating extremely well. We also called out in today's shareholder letter that approximately $15 million of AED three revenue is also.
Shifting into 2022 as a result of an elongated supply chain.
I want to note that we have been intentional over our preparedness investing in manufacturing capacity and flexibility, thereby improving our ability to meet customer demand, we feel great about our pipeline and bookings and in what continues to be a very dynamic environment.
As Rick noted you often hear me most about our teams and in comparable talent. We have at axon recruiting is a major focus for us as we grow we recently announced that we are opening an R&D hub in London, which will be our fifth after Scottsdale, Seattle temporary Finland Ho Chi Minh City Vietnam.
And finally, if you know someone fantastic wants to make an impact we want the best people in the world to come to axon. So please refer them to us now with that I'll turn the call over to our Chief financial Officer to Autozone.
Okay.
Thanks Luke.
I'd like to start by recapping some of our financial highlights over the past few years. This is our third year in a row of 25% plus revenue growth.
Our annual recurring revenue has tripled over those same past three years to $327 million and looking back over five years. Our revenue has grown at a CAGR of 26% from 2016 to 2021.
And over the same period, our adjusted EBITDA has grown at a CAGR of 32%.
We've delivered both exciting top line growth and strong operating leverage all while making investments that will not only continue these trends for years to come but more importantly help us achieve our mission to protect life.
As we look ahead to 2022 and beyond we intend to use this momentum to our advantage and stay on offense.
What is that going to look like we're introducing today a third pillar of our financial strategy. In addition to topline growth and bottom line leverage.
On that third pillar is cash generation.
We're laser focused on building an enterprise that will deliver 20% plus revenue growth for years to come and return increasing amounts of profitability to our shareholders as we grow.
And build a free cash flow generating machine that will make our business sustainable for the long term and keep us nimble and flexible.
This flexibility will be built on a stable foundation of a subscription based business model that generates highly recurring cash flows.
We've recently talked about investing for growth in terms of R&D, we're still making those investments, but we also know that our continued growth at this pace will depend on more than just R&D.
We will need new sites and new offices around the world as our global footprint expense will be new facilities with new capabilities. Both in terms of automation and streamlined manufacturing as well as showcase spaces for our technology, where we can collaborate with and gathered feedback from our increasingly diverse customer and partner base.
And finally, we will also need the ability to move quickly when the right inorganic opportunity presents itself.
It's for these reasons that we gave you more color than usual in our shareholder letter about our cash flow and capex expectations, including formal guidance for 2022.
Transparency is a paramount important to us and you can expect to hear more from us on this topic.
We're incredibly proud of how we've positioned the business to be cash generative for years to come.
To recap the three pillars in terms of what you can expect from us going forward. It's number one continued strong performance on the topline.
Number two continued discipline in our operations, which will be evidenced by outperforming the rule of 40 and number three a strong ramp in operating cash flow that will after the investments that we've laid out lead to a strong ramp in free cash flow.
Looking ahead. We're also very excited by the next wave of new products and technologies that are going to become an important part of our growth story in their own right.
Before we move to questions I want to Echo Rick's comments about the geopolitical crisis, we're all facing as global citizens. Our thoughts are very much with the citizens of Ukraine today.
And we had axon have never been more proud of our mission to protect life.
And with that Andrea let's move to your questions.
Thanks, so much guys.
Can you bring everyone up into gallery to you, let me know when that Maryland Gallery.
You mean gallery view, Okay awesome, Okay, great well take our first question from Jonathan Ho at William Blair Go ahead Jonathan.
Hi, good afternoon, I wanted to start outlets.
Yeah, maybe what was different between your supply chain expectations around backlog and what ended up materializing around the quarter and what sort of giving you the confidence that you'll be able to et cetera.
The backlog by the second quarter.
Jonathan Thanks for that question, Yes, we had system.
Material delays that impacted some of our original thinking.
We still feel really strong about the total year outlook.
And our supply chain team has just done a phenomenal job ensuring that we have line of sight to key revenue drivers if.
If I had to summarize that I would say, we may see some quarter to quarter mix based on some of those material delays, but we still feel very strong for the year your guidance that we published.
Got it and then just as a follow up when you referenced 45% of our bookings coming from new types of customers that I just wanted to get a sense for how much those customers can continue to contribute going forward.
If you look at stuff like that and crystal ratio, where can that get to over time. Thank you.
Thanks, Jonathan Nice to see you again, I'd say for international specifically.
Our role is to have international outperformed the United States and bookings long term. So I think we're just scratching the surface.
Now in that segment and the federal government.
While I acknowledge our entire federal team.
Just two years ago.
Kind of a 15% to $20 million bookings business every year.
Last year, we were just short of $100 million segment and again, we think we're closer to the beginning than the end of that growth and so we have a lot of confidence, especially in those two segments and then.
The justice segments, the correction segment enterprise.
We're starting to see some encouraging momentum as well.
And one of the things that makes it challenging at times as our in our domestic segment still grows pretty substantially.
But.
Certainly, we hope and expect those new new segments to outpace domestic and become a bigger and bigger part of that mix over time.
Yeah.
Thank you.
Yeah. Thanks, Jonathan next question from Josh Reilly at Needham Go ahead, Josh.
Hey, there thanks for taking my questions and nice job on the corner of year.
So I think.
Given the Ukraine here over the last week.
Curious how this maybe impacts from European opportunity.
The pipeline there in that region and I know, it's early but do.
Do you anticipate any potential business disruption as a result of what's going on.
We've spent years and years building up a really strong team and pipeline in Europe and last year.
The team really.
Performed well against our goals.
And in terms of normalized five year bookings are up about 35% in terms of 10 year bookings were up close to 60% International. So these are deals that take a lot of time and energy.
To move through the sales cycle and so the ones that we expect to close this year largely we've been working on already for quite some time. So I think we're in a place now where.
We feel like they're insulated from from some of the uncertainty, but having said that no one can predict.
The future in terms of how this will play out longer term. So of course, there's a little bit more risk there today than there was last week, but we still feel really confident in our international and EMEA business.
Throughout 2022.
Got it and then if you look at the increase in guidance.
And adjust for the $15 million.
The revenue that's pushed to 2000 <unk>, how much of that $40 million increase is related to increase assumptions around teaser versus other products.
Yes, I think it's a healthy mix I think we believe the Taser business is going to grow this year.
Across both domestic and our newer segments and then video shipments and some other products both on the software and hardware side will contribute there.
The team did a really nice job of not only closing out a strong Q4, but continuing to develop a pipeline for this year and in Q1, we expect really significant bookings growth over Q1 of last year.
We're pushing really hard to make that trend continue throughout the year. So we think it will it'll be a mix of factors that drive that revenue in <unk>.
And bookings result up.
Got it thanks guys.
Alright. Thank you will power of Baird go ahead well.
Alright, great. Thanks.
Rick maybe starting with you I mean, you all have rolled out a.
A bunch of new exciting products, whether it's VR bolt too.
Late <unk> on in all of our digital digital evidence management for Justice.
The next five years and what are these new product categories that you're most excited in what could be the what presents the biggest opportunity I guess both for the company.
Sorry, I had myself muted there.
Patent could move.
That's kind of like asking me again, like which of my children I Love the most.
Yes.
Actually.
It's hard to peg over on the Taser side of the business. We have got some crazy awesome, New technology coming over the next 10 years, we are going to outperform a nine millimeter pistol by 2030, I am highly confident over on the other side of the business.
Solving problems for three years with criminal Justice system, that's high margin software.
<unk> is scaling rapidly quickly and we're confident in our team over there are talks about the opportunity to really impact fairness and efficiency in the justice system by having tools that enable public.
Public defenders, who may only have literally minutes with their clients have to work out the deals to make them able to efficiently be able to process. The video analytics, we find what they need so across our whole business pretty much everything we do.
Impacts People's lives in an important way because we are public safety.
Really important foundational work to a modern society so.
Im excited across the board I mean consumer I started this business a focus on the consumer space. After a private citizen killed two of my friends Rooney neurologic spending his life in jail, we need to give people something better than a bullet, it's 2022 and <unk>.
Across the board, whether it's improving the efficiency of the justice system or saving large are just putting medieval technology on the shelf because we've given the world something better.
We're just excited across the board so forgive my enthusiasm, but I actually wanted my job I just got back from the two and a half day Roadshow saw 12 major agencies and I always come back to your Super pumps.
What do we got here about five minutes before the call.
It's just that they're awesome business to be in and then I'll just sorry, if I also I'm watching what's happening in Europe .
Can you help us think.
The World is looking at this quite differently.
What does this capricious use of war.
It doesn't feel like it fits the modern world.
I think we all were hoping it was gone.
But.
The global revolves here now you can feel it.
I'm, hoping that we're turning a corner here and.
We're seeing even in military circles, the acceptance of killing people is is not what it was 100 years ago.
Hopefully, we can get rid of it being accepted at all in the next century.
Okay. Thank you that all makes sense, but maybe if I can just ask a second one.
For you or political whoever wants to take it yes, it's been a challenging hiring environment, especially for our <unk> technology. I know you are opening a new hub in London, which.
Presumably help so maybe just talk about what youre seeing in terms of employee retention.
Difficulty hiring how does that factor into our plans and outlook there.
Im going to take that first and then Luke I'll have you take take the ball.
Part of what we're doing in London as well, it's really important and we're beginning to continue to expand our global footprint.
We've got a lot of customers in the UK in Scotland and across Europe .
And we really feel it's incumbent on us to really have a global footprint.
We're sourcing talent around the world and putting that talent closer to our customers. So this both helps with our sourcing talent, but also we think from a customer intimacy perspective, let's give it help there as well.
We will take the rest on retention.
Yes, great Great question as we look like in the last.
Two years, we've seen this acceleration of remote work and that's given every employee in the world a lot of opportunities I think a lot of companies are kind of scratching their heads going are we possibly going to retain people in this environment.
Super excited about is that axon, because I think we're going to be the beneficiary of that because we built an amazing company. So when we go out and talk to candidates. We talk about the purpose and the mission that we have we talk about the great team that we built and the talent that we've attracted I think one really exciting part of the business is the future growth that.
We see ahead of us and so that's not only for <unk>.
Prospective.
Employees, it's for existing employees as well and so I feel really confident about the team that we built in.
It's definitely a challenging hiring environment, but we think it's going to be one where we're going to thrive because we built such a great business stay tuned at the end of the call. We've got one more video for you that the team put together.
It really is.
Showcase is a bit of who we are and we're getting rave reviews from people seeing it online and if you don't even know what we do who want to come work for us.
I have a place that not only works on big problems, but really has a good time doing it recognizes and celebrates the humanity of our people.
We're all in this together working on problems we care about.
Is resonating with our current employees and with folks who are trying to recruit in.
The Florida.
Yes. Thanks, we're really excited to share that with you at the end.
You stick around Okay meta Marshall at Morgan Stanley Youre at now.
Great. Thanks.
Listed a number of kind of international agencies that you guys were having success with in the quarter just wanted to get a sense of whether.
Where are you seeing the most traction either tasers or body camera and just whether they are more likely to kind of bundle upfront or if theres different needs with the software.
For those customers that maybe taking that on the international side and what traction you're seeing there and then maybe second it sounded like you guys were.
Able to kind of work around then find alternatives for a lot of the products, but just getting a sense of if you think there's any price increases that will need to be passed onto customers.
Yes, thanks very much for the question. So on international I think are our focus is customer acquisition.
Regardless of product. So I think some customers are better suited at the moment for tasers are more interested in tasers.
Others are pursuing body cameras or in car video or even an interview them and for US. Our strategy has always been to make sure. We can delight our customers with one of those products and then over time expand.
The ecosystem within each agency and we really believe that's become a competitive differentiator for us in the United States over time, and it will internationally as well I'd say, it's a little less common to see bundling of tasers and body cams.
Most markets the Commonwealth countries might be a little more.
It might be a little more common there but.
It's still in a lot of these markets how can we how can we get in there with any of our prospects and <unk>.
Customers.
Bill really strong productive trusting relationships.
So thats really the focus internationally and then in terms of pricing I think we feel really good about where we stand right now we address pricing every year and meet as a team and decide kind of.
How best to go out to market and be fair in terms of the value that we're providing and we don't at this point anticipate passing any of the.
Our passing any pricing increases.
Along to our customers, we announced our new pricing in January we feel great about it we have many of our supplier contracts locked in our 10 year deals do contain escalator starting in year six to account for inflation and new products and new capabilities and so forth and we continue to feel good about that.
Great.
Add on here one thing we are working on them and that's why we laid it out.
For you in our cash estimates as our investment in automation streamlining manufacturing Les.
Labour reduction right, that's a big investment, we're making from a capex standpoint to help of taxes from the cost side.
Perfect. Thanks for the context.
Okay. Thanks me that keeps us in the North coast Youre next.
Thanks, guys I appreciate it.
I was hoping perhaps a crystal ball you could perhaps give us a little bit of a highlight in terms of what we expected for this year in terms of new product Rollouts are updating existing ones now 80 threes be resolved teaser rates being in process, perhaps can give some update of where you guys are out with some of the new product.
And the improvements there.
Got it.
Changing or are bringing online.
Well.
I've got to contain my excitement here, you're going to that Keith.
The products are we have some products that are getting to the end of their expected life cycle, where we start to expect to see some new ones coming along.
So I can't give you any specifics, but we do get on a cadence of approximately two and after three years on body cameras in every five years on theaters.
Just lastly, three.
There's a lot going on but.
Unfortunately, I can't give you more than that other than.
Sure My Smile with you very much you know we've got good stuff coming out of the way I'll say.
Axon body three was made 2018, correct 2019 and mass.
For that one no comment for you guys necessarily my.
Assumptions on that one.
The next question Martin for July .
You guys noted that you guys.
Increased freight cost in the fourth quarter I'm, assuming you've got other costs and supply chain issues can you, perhaps give some context about what the impact was in the fourth quarter, how we should think about that in 2022.
Yes, the impact was fairly muted.
Our margins when you saw gross margin compression was largely actually due to when we talked about the supply chain shortages that we had unable to fulfill demand and so we had some fixed costs that were unable to be allocated over inventory and that caused a little bit of margin compression.
But overall not a.
Not a big disruption. This is again pointing back to the investments, we're making in our in our manufacturing processes and automation to really get out ahead of that we're seeing results we've been making those investments for a couple of years they've been on a bit of a smaller scale and now we're ramping those up because we're seeing such great benefits from those and Thats something that we expect to continue to pay.
Debit dividends in the short term and over the next few years and as we.
Again try to drive towards that long term margin target of 30%.
Okay.
To recap what you said you don't expect any significant compression in 2022, because neither of those issues.
Okay.
Thanks, guys I appreciate it.
Thank you Keith next step it looks like Eric has jumped up so we'll go to Paul Chung at Jpmorgan go ahead pump hey, thanks for taking my questions.
Wanted to talk about the kind of push out in.
<unk> revenues, some kind of impact on.
On the shape of <unk>.
Cheeser contribution in 'twenty two.
Then as your visibility on the weapons side, and then given the higher subscription bundles to expect less volatility between quarters.
Yes, I think it's a good question.
The teams worked really really hard to get.
Yet as much line of sight into tasers.
Taser supply chain as we can.
I deserve a lot of credit for that I think we feel.
Very much that the.
The outlook on supply chain does support our new revenue guidance and so.
As you remember in Q4, we did guide to.
Around $204 million, I think and surpass that.
So the fact that the team really did a good job pulling in every.
Every every component that they could to be able to beat that guidance.
We think we've got a.
Promising path forward in that regard in terms of quarter to quarter.
Flux all last year.
It became fairly consistent between Q2 and Q4, there was less kind of.
Swing in the revenue results overall.
I do think that is because of the team is getting better and better at that building.
More substantial pipeline across segments and that allows us to have a little less execution risk.
For the quarter. So certainly every quarter, we start with how can we how can we maximize the percentage of the pipeline that we close in and Thats going to continue to be a focus and I really believe the team is primed for another really strong year in that regard.
And then Paul on your visibility question, we've got visibility to little over half about half over half is booked.
And it's one of the reasons, we like to highlight our bookings number because it's a really strong indicator of our future revenue growth.
And then on cash flow very strong so despite some of the component shortages here talking about the <unk>.
Working cap dynamics.
Do you expect over the year and then added benefits of the larger subscription base and then <unk>.
With cash flows as we move through the year that'd be helpful. Thanks. Yeah. This is one we're really excited about I'm personally extremely excited about it we built a business that is going to be hugely cash generative for years to come. This is something that we've been building the foundation for for many years and it's really starting to manifest itself in our cash flow statements last year, we had a bit of a use of working cap.
<unk>.
And we expect that that's going to work itself out in the first half of the year.
<unk>.
We obviously laid out the investment in the new campus.
The automation manufacturing initiatives, we have new sites and facilities were opening around the world and so that's one of the reasons that we've given more visibility into our capital expenditure.
And we've broken that out versus just sort of like recurring business.
Ongoing excluding the one time items, we are going to give you visibility to those onetime items over the next couple of years and we expect that once we're through the next couple of years with those investments that we're really going to be throwing off pretty significant amounts of cash.
Thanks, Paul.
Frank we have ashtrays, Wang who has joined US from Raymond James don't mean to put you on the spot because youre videos up but do you have a question and answer it.
Okay, I'm going to assume not well give you. Another second is there anybody else who has a follow up you can kind of come off mute.
John I'll jump out of Atlanta.
Oh willpower Hasnt seen that go ahead.
I'll ask a follow up I was intrigued but.
Corrections market it looked like a nice win in Ohio.
I believe so I'd love to get further color as to what the pipeline of opportunities looks like it seems like thats been a kind of a budding opportunity for a while are we finally at the cusp of.
More significant wins, how do we think about that opportunity moving forward.
Absolutely.
Deploying a body camera and every correctional facility in Ohio was a huge win for the corrections team and one that took.
Multiple years to deliver there is a big market here.
We often talk about internally.
For example, the.
The California Department of Corrections is about the size of NYPD and officer talent. So there is a big market out there to go get.
We've reworked some of the offerings.
And packaging and bundling to better suit, our corrections customers and we've continued to build out that team over the last year and a half here. So we're really excited about the progress there is still a lot of work to do and.
Different sale for sure than a lot of our own.
For conventional law enforcement customers, but.
We expect that to be not only a part of our state and local growth moving forward, but also a part of our federal growth moving forward.
Okay.
Thanks, well Jonathan has been a follow up go ahead Jonathan.
Hi, there just given when we started the call it will be our I thought it'd be appropriate to just ask.
Just given the success that you saw there.
Or funding or programs.
If I can maybe guide even faster adoption and that we are.
Based on preliminary reminder.
How much of a step up in the ASP as you can see from.
Typically our adoption. Thank you.
Yeah, absolutely so right now if you buy a V R R.
Our VR offering with Taser seven thats about a seven.
$17 a month uplift from the Taser seven and we have a smaller car packages as well I'd say like all of our products.
Early on we're far more focused on adoption than ASP right now we believe that this is a.
Streamline emerging and disruptive technology that is going to further our mission to obsolete. The bullet of course, we can do that through building, a better and better Taser and we will but the other side of that is making sure that we're able to simulate the type of stress that officers experience in the field and so we really really believe this is kind of our <unk>.
Next big product category, and we're really focused on becoming the market leader in this space and like we said this product X outperformed both our body cameras and X 26 and year one of sales, which is a great indicator and the teams really focused on driving this.
Business segment up past $100 million in bookings as fast as we can here.
Thank you.
Yeah.
Thank you Ross, so youre going to close this out go ahead.
Yeah.
Maybe you wanted to double check and just make sure that I'm off mute here.
Well, Hey, we're obviously.
Just.
Just thrilled with the performance of the teams been able to pull together over these past two years.
Despite the dynamic in social unrest and now these new geopolitical challenges.
But you know what.
At the great fortunate to work with just some really awesome people, who get out of bed, regardless of what's happening in the world just to get after our mission. So I want to conclude by sharing with you.
Special project our team shocked some drone footage of our current headquarters this week and we'd love to take you through our Scottsdale office, R&D and manufacturing facility, it's pretty cool I'll check it out.
Hi, Brett.
Good luck.
Alright.
Yes.
[music].
Sure.
Yes.
Got it.
Yes.
Welcome to <unk>.
Okay.
Last question.
<unk>.
Okay.
Okay.
Sure.
Okay.
Yes.
Sure.
Yes.
Yes.
Yes.
[music].
Good morning.
Okay.
Okay.
Sure.
Yes.
Thanks.
Okay.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
Sure.
Yes.
Yes.
Great.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
That's correct.
Sure.
Yes.
Okay.
Okay.
Good.
Okay.
Okay.
Great.
Sure.
Okay.
Okay.
Okay.
Yes.
[music].
Yes.
Yes.
No.
Sure.
Yes.
Okay.
Okay.
<unk>.
Sure.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Thank you.
Okay.
Thank you.
Got it.
Okay.
Thanks.
Sure.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.