Q1 2025 Axon Enterprise Inc Earnings Call
to read our shareholder.
Police after the mark they closed, which you can find at investor.xon.com. Our prepared remarks today are meant to build upon the information in that letter.
These comments are based on our predictions and expectations as of today and are not guarantees of future performance. All forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially. We discussed these risks in our SEC filings. We will also discuss certain non-GAAP financial measures a description of each non-GAAP measure and a.
A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our shareholder letter as well as on our Investor Relations Web site.
Now turning to our quarterly update first we're going to show you a quick video recapping some of our recent announcements from axon week in April.
The mission is really simple.
And finally get matters because it does.
This is not just another LPR camera, it's two cameras in one it doesn't just capture Blake and.
This vehicle make color visible damage and evening bumper stickers of roof racks were turning Gordon every street lights.
Extraordinary tools for public safety.
Speaker Change: Our goal here is to build an ecosystem with many partners, bringing together millions of cameras from any provider to solve crimes.
Speaker Change: This is one of the most ambitious things we've ever done at axon because of the massive scale.
Speaker Change: And with that I am excited to announce the axon assistance.
Speaker Change: Our companion just sits right on your chest with a camera.
Speaker Change: Already.
Speaker Change: The axon assistant launches with groundbreaking capability real time translation.
Speaker Change: Okay and then.
Speaker Change: Gosh that particular trend axon assistant.
Speaker Change: Good morning, I am excited to present to you the capabilities of <unk>.
Speaker Change: And.
Speaker Change: The axon assistant and all the new AI features I just shared are part of what we call. The AI era plant, which gives you a predictable pricing and guaranteed access to all of these new AI solutions, maybe youre catching a theme here public safety is an ecosystem.
Speaker Change: And that ecosystem is stronger when we come together with industry leaders. Please welcome to the inventor of the doorbell camera.
Speaker Change: Founder of rings CEO of citizens Safari land.
Speaker Change: I'm proud to announce that rig will be integrating with axon CNA request service. The first of hopefully many partners to do so the retail crime hospitality you go to for engaging with retailers announcing citizens partnership with axon instant access to millions of public cameras technology is what we built.
Speaker Change: But relationships are why we build them and so today I want to thank you.
Speaker Change: For our relationship.
Speaker Change: Alright, Thanks, Erik I always enjoy watching those highlight reels and welcome everyone to our first quarter 2025 earnings call. We kicked off another exciting year at <unk> just a couple of weeks ago as we hosted our annual user conference, which is one of my favorite.
Speaker Change: Events of the year as we dedicate a full week is spending time with our customers and as you can see from that video we got to show them. The many exciting things we've been working on.
Speaker Change: I believe our work is about far more than technology or results. It's about our mission to protect life, it's about giving those who stand on the front lines of our communities the tools the tech they need to be safer faster smarter and better connected.
Speaker Change: We envision a society, where violence and crime rarely occur because it is simply so unappealing, so well determined.
Speaker Change: I am so proud of the products, we've developed and brought to market over the past few years, because I think we are creating the power of that deterrence to create a safer society.
Speaker Change: Each quarter, we are putting takes their time in the hands of more people, helping them safely deescalate conflict without escalating.
Speaker Change: Lethal force, we're giving them better training tools alongside while investing to improve.
Speaker Change: Because see in more and more situations.
Speaker Change: At the same time, our camera and sensor systems are becoming increasingly connected and exponentially more intelligent with the power of AI dropped one is helping officers cutback on administrative workloads. So he can focus their attention in the field where it matters in.
Speaker Change: In the field axon assistant insurers, they're no longer alone. They haven't always available voice driven AI assistant delivering critical information exactly when and where it is needed through hardware that they already have.
Speaker Change: With users. We also have the support of hundreds of thousands of public and private cameras to provide them another layer of real time visibility.
Speaker Change: And now with axon vehicle intelligence and light post an outpost our tools are delivering actionable insights through license plate recognition and real time alerts available through innovative flexible form factors.
Speaker Change: Through our newly launched integrations ring and citizen. We're also helping public safety in the community to work together to help keep their neighborhood shape building a critical bridge, all while protecting privacy and the right to choose whether or not you want to participate.
Speaker Change: As you know I spend my time thinking about where axon is going and part of that is thinking about how we grow our new headquarters project is a focus of mine and I am excited this year do we recently cleared another hurdle with the passing of Arizona Senate Bill $50 43 recently signed by the Governor.
Speaker Change: This gets us one step closer to moving forward and one step closer to keeping axon in Arizona.
Speaker Change: Our efforts around this new legislation are another example of what our unstoppable team can do I cannot be more proud.
Speaker Change: Challenging divisive political opposition and obstacles have stood in front of our project for nearly five years, but our team found a way.
Speaker Change: And the leadership of Arizona found a way to step up and help us stay here.
Speaker Change: We don't have everything finalized yet there is still a few other hurdles to clear, but I wanted to thank our team for everything they've done for this effort, including hundreds of employees, who showed up with the Arizona State capital building and personally met with and wrote letters to our elected officials to help them see just why we went to lay the foundation for decades or fewer.
Speaker Change: <unk> growth at axon right here, where we started.
Speaker Change: We will come back to you with more details when we have them and we look forward to updating you on our continued progress and with that I'd like to hand over to our president Josh to share more about what the team accomplished in the first quarter over to you Josh.
Josh: Thanks, a lot Rick.
Josh: Good afternoon, everybody as I'm sure you can gather from Rick's comments, we're really proud of everything going on here at axon, we're ramping our investments to deliver on our vision and our team's ability to execute quarter. After quarter has allowed us to do so at an incredible rate for our customers.
Josh: The start of the year is a great opportunity for our sales and product teams to do just that to plan and work through customer priorities and see where we can help I'm proud to say our partnership has never been stronger this was especially evident coming out of axon week, our user conference in April and continues to be evident as we look ahead.
Josh: Q1 bookings are a great indicator of our momentum although seasonally seasonally the most modest bookings quarter of the year, we're off to a fantastic start a year ago at the end of Q1 I felt like we could have come out of the gate faster and we talked a lot about that throughout 2024, I'm thrilled to say our sales team responded to that message emulating.
Josh: The sense of urgency and mission orientation that our customers deserve.
Josh: As a result, we emerged from Q1 with a far stronger outcome and an even more exciting pipeline for the remainder of 2025, we expect another record for annual bookings with a growth rate in the range of what we saw last year.
Josh: I'm proud of our mentally tough sales team, who embraces the fact that pressure is a privilege.
Josh: More specifically our pipeline is strong across customer segments, especially with U S state and local or upgrading to our OSP 10 premium plans and beginning to deploy dropped one in fact five of our top 10-Q, one domestic deals included OSP 10 premium and two included dropped one.
Josh: Along the same lines through the first two years Taser 10 orders continue to pace at two <unk> the rate of adoption of Taser seven.
Josh: Is our fastest new taser adoption by a wide margin and through one year dropped one remains our fastest adopted software product with nearly 30000 active users across dropped one and our AI aeroplan to date more than two X any other product we've launched one year in.
Josh: Turning to our other customer verticals international bookings are off to a strong start we're seeing demand in Australia, Latin America, Canada Asia, The U K and Europe, all of which contributed to our top 10 international deals in the quarter. The team delivered a record Q1 booking results.
Josh: And we have more and more conviction in the growing global pipeline. Additionally, we are seeing strong demand across our emerging verticals, including triple digit growth in corrections and in Justice and an enterprise, we're coming off a record deal in Q4 and building a strong pipeline in several key industries U S. Federal as we mentioned in Q4.
Josh: <unk> represents a strong long term opportunity while theres a lot of uncertainty within the federal agencies are solutions are mission critical and the value. We deliver is clear while Congress discusses reconciliations in a final budget for next year, we will continue to focus on converting the existing large deals in our federal pipeline.
Speaker Change: Finally, I'll conclude with a quick note about the current tariff situation, which Britney can expand upon in more detail.
Speaker Change: A couple of years ago, our team flagged tariffs and the uncertainty in the South China Sea as reasons to diversify our supply chain and make large but low risk investments in inventory I am proud of Brittany, Josh Goldman and Eric Hertz, and our entire operations team for seeing around corners, and ensuring we are ready for climate like this.
Speaker Change: This of course puts us in a better position to serve our amazing customers. That's always the priority and we're confident in our ability to do that given the quality of our team with that or under the next place will kick it over to Brittany.
Brittany: Thank you Josh.
Brittany: As Josh mentioned, we're extremely proud of our results and performance as we deliver for our customers and invest in the future.
Brittany: First quarter revenue of $604 million increased 31% year over year, our 13th consecutive quarter over 25% and we delivered a 25, 7% adjusted EBITDA margin with $1 1 billion and IRR.
Brittany: Before I go into the details you'll notice we updated our segments from teaser in software and sensors to connected devices and software and services.
Brittany: As we mentioned last quarter, we made this change to better align our segment reporting given our increasing product diversification.
Brittany: Some previously disclosed margin information will no longer be included in our shareholder letter as a result, but we'll continue to give periodic updates on our earnings calls.
Brittany: Software and services increased 39% year over year to $263 million driven by continued strength across digital evidence management and premium add ons, each contributing about half of our overall software growth.
Brittany: We continue to see growing adoption of our premium plans.
Brittany: Approximately 70% of our domestic user base is still on our basic plans and our offerings continue to get better over time convincing more customers to upgrade.
Brittany: R&R are also a measure of our existing customers coming back and buying more remained at 123% and supported annual recurring revenue of $1 1 billion, an increase of 34% year over year.
Brittany: Connected devices revenue of 341 million grew 26% year over year. This was driven by growth across teaser 10 devices and cartridges and <unk>, which are now included in personal sensors and fleet counter drone and VR, which are now included in platform solution.
Brittany: Adjusted gross margin of 63, 6% was up 40 basis points year over year, largely based on mix shift to software.
Brittany: Adjusted operating expenses of $236 million were up 3% sequentially and down 140 basis points year over year.
Brittany: As a result, adjusted EBITDA margin came in ahead of expectations at 25, 7%.
Brittany: Part of this leverage was driven by timing of our hiring ramp and we do expect to continue to ramp investment through the year, especially in our R&D organization.
Brittany: We also expect some impact to the rest of the year from tariffs as many of you know we already manufacture our teams our devices in Arizona, but we do have an impact on the supply chain.
Brittany: The team has done a great job, ensuring we can be flexible and nimble and we think we are well positioned to manage through the shifting environment.
Brittany: Based on timing Q1 had a minimal impact for the full year, we have offset some of the tariff impact through other cost measures and overall, we expect a net impact to our adjusted EBITDA margin guidance of approximately 50 basis points for the full year.
Brittany: This is based on where tariffs stand today.
Brittany: We're not planning any price increases to our customers at this point, we review pricing annually and we will assess the mean heading into next year.
Brittany: Turning to guidance for 2025, we expect revenue in a range of two six to $2 7 billion or 27% annual growth at the midpoint.
Brittany: This is up from $2 55 to $2 65 billion or 25% growth.
Brittany: Our comfort in raising guidance is based on the strong Q1 bookings performance as well as the pipeline, we see for the year and the future contracted bookings of $9 9 billion.
Brittany: On adjusted EBITDA, we continue to target margin of approximately 25% for the year, which raises our guidance to $650 to $675 million from our previous outlook of $640 to $670 million.
Brittany: Tariffs and exciting R&D investments are factored into this guidance and we're very pleased to be able to maintain the 25% margin target.
Brittany: Overall, we're delivering another strong quarter in Q1 as well as a healthy outlook for the rest of 2025.
Brittany: This is based on our momentum across a wide range of product categories and end markets.
Brittany: We continue to be long term focused on and are investing in the business to deliver for our shareholders and for our customers well into the future.
Brittany: With that I'll turn it over for questions.
Britney: Thanks, Britney, let's pull everyone up and the gallery view.
Speaker Change: Alright, well take our first question from Andrew Sherman at TD Cowen.
Speaker Change: Oh, great. Thanks, good to see everyone great to see the strong cloud numbers.
Speaker Change: <unk> growth was very strong, especially for Q1 talking about anything that drove that strength in the quarter, specifically and on draft <unk> great to hear it was two of the top 10 deals to 30000 sees it was great to hear at axon week talking about what pipeline any kind of a pipeline up.
Speaker Change: <unk> for draft, one would be great and how youre thinking about this in guidance.
Speaker Change: Sure thing Andrew good to see again and nice to see at Axon week, a couple of weeks ago in terms of pipeline I think the result in Q1 was really just a better like a result of of all the work that went into last year, not only converting an existing pipeline in 2024, but making sure that we had.
Speaker Change: Far more.
Speaker Change: Predictable Q1, and driving a lot more activity into Q1 that last year kind of got delayed until Q2 and Q3 and so the team really took it took it upon themselves to.
Speaker Change: To up our game, there and I'm really happy about the way. They responded in doing so we built a lot of pipeline for Q2 and beyond as well then as you mentioned part of that is the AI era plan and dropped one in terms of expectation setting I think the first half of this year is still about making sure that.
Speaker Change: We have identified all of the key opportunities and dropped to one in the AI era plan and we think in the back half of the year, we'll start to see a lot of a lot more of those convert.
Speaker Change: That's not to say.
Speaker Change: Dropped one in AI aeroplan haven't been well adopted so far but relative to what we saw at the end of last year I think we're in for a far stronger result, this year and are really in Q3 and Q4, you should start to kind of assume metal that'll show up in our future contracted bookings.
Speaker Change: Great. Thanks.
Speaker Change: Andrew to give you a little color on <unk>.
Speaker Change: Thank you for calling that out it wasn't really nice number this quarter.
Speaker Change: It's usually about a quarter off from our bookings so what you're really seeing come through in IRR was was the strong bookings results. We had in Q4, so that's driving some of the growth.
Speaker Change: And then as I mentioned, it's really coming both from new users as well as people, adding on some of the more premium subscription pieces. So it's really it's nice healthy growth that we're seeing driving that number.
Speaker Change: Great.
Speaker Change: One more for you Josh the international commentary was greater a lot of countries and regions in there and you said they had a record Q1, so great to see it kind of two quarters of really strong momentum there.
Speaker Change: What are kind of the most adopted products or is there a trigger point or is it go to market improvements or what's kind of causing that continued inflection up internationally.
Speaker Change: I think it starts with just a little more focus from all of our teams at axon I think historically.
Camera Brooks: We've been a very U S focused company and with the hire of camera Brooks.
Camera Brooks: A year ago as our Chief revenue officer, there's just been far better sponsorship for our international business and Thats trickling down into our product focus to our go to market focus our services focus and so forth. So the level of execution as <unk>.
Camera Brooks: Really the strongest it's been in.
Camera Brooks: International and on top of that I think the product adoption is ranging from tasers to body cam to more and more cloud openness and so I think our plan is always the same we've got a win with one product and then earn the right to sell more to the customer through a great customer experience and a lot of value provide.
Camera Brooks: Through our products and services and that's kind of the playbook, we're running internationally and we're starting to see the fruits of that.
Camera Brooks: Perfect. Thank you.
Andrew: Thanks, Andrew of next we have Joe Cardoso with J P. Morgan.
Speaker Change: Yeah. Thanks, Thanks for the questions guys.
Joe Cardoso: Maybe I just wanted to start off and maybe this is more of a clarification for you Josh based on your prepared remarks, youre sounding pretty bullish on demand pipeline et cetera. However, obviously, there's this persistent concern on the macro just given kind of the current backdrop. So maybe you can just clarify or touch on are you seeing any signs in the convert.
Joe Cardoso: <unk> that youre, having with customers that these prevailing concerns is that showing up in any of the deals that you guys are seeing and then maybe if you could bifurcate that in conversations with your traditional core base of state and local law enforcement versus kind of the other verticals that you guys are obviously gaining traction with.
Joe Cardoso: Yeah, sure I would say virtually no headwinds.
Joe Cardoso: In terms of anything macro.
Joe Cardoso: U S state and local enterprise or international I think there are little challenges along the way, but I think our team is preparing we've built a great team to be able to handle challenges like we're seeing in the macro environment right. Now so I don't I don't necessarily have a lot of concern in those markets and in federal It just is one where right now it kind of is what it is we.
Joe Cardoso: Know that until a new budget is passed and theres more clarity on where the federal civilian customers as well as the D. O D will be spending money. Our best strategy is just to focus on the deals that we know are right in front of us and that's what the team is doing in some of those deals are very large and very exciting.
Joe Cardoso: But there I would say the volume of opportunity is a little bit at a standstill until some of the budgeting and reconciliation stuff gets worked out but in terms of that impact on our overall bookings it's minimal.
Joe Cardoso: And we're really excited about that.
Joe Cardoso: The rapid growth that we're still seeing in the U S and in international and in enterprise.
Joe Cardoso: Got it clear thanks for the color and then maybe just a follow up I wanted to touch on some of the recent product introductions, maybe on the hardware side.
Joe Cardoso: Obviously, you disclosed the two new fixed mobile.
Joe Cardoso: Hardware products that you guys kind of put out there and I guess the crux of my question is just really around obviously you had few system that was kind of giving you an entry point in kind of a fixed mobile market. There what was the main drivers and then kind of owning the hardware stack. There was it more of a customer push did you not see that.
Joe Cardoso: We're getting enough traction on deals you know any way you can flesh that out in terms of what drove the kind of the entry there.
Joe Cardoso: And I guess the second part of that question is like is this kind of more of a testing the waters and then you can.
Joe Cardoso: Expand that product set there in terms of addressing other applications or I guess, how you're thinking about the opportunity. There. Yes, let me let me start with that one so it looks like we started with body cameras and then we added fleet cameras to expand our ecosystem deeper the fleet camera is already a real time camera in car that does LPR live streaming video.
Joe Cardoso: So this was a natural extension, where one of our advantages like we just got just an awesome imaging team and we felt we can provide really best in class for fixed LCR, which has been a growing category.
Joe Cardoso: And especially in the context of users.
Joe Cardoso: Making sure that we had a really great overall experienced this we identified this is a very interesting fast growing expansion opportunity for us I wonder if it very naturally with all the things we were already doing in mobile so why not.
Joe Cardoso: Take the same technology repackage, it and have the best in class fixed cameras, and then you layer that on top of that also this whole works with axon workflow, where how do we go identify all the different sources of different camera feeds and then find a way to connect them into our ecosystem and Youll notice I started our our keynote very much focused on the pre.
Joe Cardoso: <unk> issues.
Joe Cardoso: We certainly get it what we're building is really powerful tech.
Joe Cardoso: And we want to be really thoughtful about it as do our partners I mean, each of the partners. We brought on stage of the market leaders in their segment.
Joe Cardoso: I think bringing us together to do it the right way again with this idea what we don't want to do is create a surveillance state where we're being tracked everywhere. We go we do have to create as a state where people who need help or people that are dangerous.
Joe Cardoso: Or vehicles that are London for some reason can be quickly identified primarily so we can get help where it's needed.
Joe Cardoso: <unk> criminal activity.
Joe Cardoso: I think right now the U S has sort of.
Joe Cardoso: Got the the balance is completely wrong.
Joe Cardoso: You are incorporating a ton of people, but youre determines isn't high enough to stop crime. That's like the worst outcome like the best outcome, you deter crime by having a very high probability you're going to get caught.
Joe Cardoso: Such that it just doesn't make sense for people to start to engage and I think we're seeing a real swing back from.
Joe Cardoso: Post the early pandemic and George would we saw the pendulum swing very hard against public safety and there was the decriminalisation of <unk>.
Joe Cardoso: <unk> lifting in retail crimes with catastrophic consequences right. We've seen just city urban centers hollowed out as retailers had to move out of town, we've seen they've got to lock up the shampoo and the toothpaste and Thats, where our partnership with <unk> I think comes in here really well as well as people realize you have to have fundamental stability and safety and <unk>.
Joe Cardoso: Those that are enforced in society or the little things escalate and I was shocked to learn as I got to know or that.
Speaker Change: The significant majority of retail crime is associated with people, who are either part of a criminal network or and or involved in violent crimes as well. So there is sort of the scene from Les miserables.
Speaker Change: Women trying to steal bread for her children is not.
Speaker Change: I don't think Thats, what anybody is talking about.
Speaker Change: Gangs of people rush into a best buy grab Tvs and run out in a mob.
Speaker Change: That is organized criminal activity so we.
Speaker Change: We really looked at this to expand where we can do partner as well and where we want to be first party. So that we make sure that we've got best in class capabilities.
Speaker Change: And two just really quick things to add on that.
Speaker Change: You mentioned a few says yes. This is this is all about.
Speaker Change: Doubling down and going even further above and beyond with the momentum that is starting with fuze as you've heard both Rick and myself talk before about wrapped this unique moment in time, where the intersection of real time crime Center, TFR and vehicle intelligence broadly because of the crucial role that would be a good vehicle intelligence play.
Speaker Change: As in solving so many crimes the intersection of all of those three and the power that new AI capabilities brings to making them be able to be more powerful and effective than ever is really at the heart of this and making sure that we bring our best foot forward on all three legs of that stool, both with what we do ourselves and with what we partner with and then the second part.
Speaker Change: On responsible AI innovation as Rick said, you know that's always been a cornerstone.
Speaker Change: How we build and what we build from if you go back to the beginning when we first laid out and ship fleet. Three we were extraordinarily careful in extraordinarily clear in how our view and why we felt compelled to bring LPR technology ourselves in the first place was to deliver better results for customers with better ethical and responsible.
Speaker Change: Design built in from the ground up and we choose partners like <unk>.
Speaker Change: And others that embody that same approach and you'll see that continuing to play out as we go forward.
Speaker Change: Got it thanks for the insight guys.
Speaker Change: Thanks for having me.
Joe Cardoso: Thanks, Joe.
Speaker Change: Next we havent lesser shreves.
Speaker Change: Barclays.
Hi, everyone.
Speaker Change: Just a quick few ones on trust, one and AI aeroplan.
Speaker Change: I saw the successful drop one but is there any kind of difference in with the AI era planned penetration versus the early days of OSP I heard the call outs on draft, one, but it seems like AI era might be a little bit different and then I just had a follow up on that sure.
Speaker Change: Sure thing Elisa. Thanks for the question I'd say dropped to one launched a full year before the AI era plan. So in terms of just pipeline conversion.
Speaker Change: Dropped one we just started from a bigger foundation that we're already in the AST counsels and working through budgets I think over the last quarter and then.
Speaker Change: And certainly into Q2 as well after we converted some of those early deals we're still seeing them come in but some of the larger ones. Like this is the time, where we're getting them integrated into our quotes with our customers for the back half of the year some of the larger police departments will be sponsoring.
Speaker Change: Large deployments.
Speaker Change: To their communities.
Speaker Change: And and putting those on city Council agenda as in Q3 and Q4. So I think it's just a matter of draft alone had faster headstart and thus.
Speaker Change: It's a little more well adopted right now, but we're starting to see more and more dropped one conversations become AI era planned conversations and a lot more excitement, especially after we announced all of the new inclusions in the AI era plan. After axon week. So I think the future is very very bright for the AI era plant.
Speaker Change: Then we'll start to see that really convert in a much bigger way to bookings in the back half of this year.
Speaker Change: Okay, and then just a quick one on that how are you guys got longer term kind of thinking about EBITDA target with.
Speaker Change: This kind of growth in draft, one AI era, given it's kind of all SaaS.
Speaker Change: Yeah, I mean, I think it's been really nice that.
Speaker Change: Software in general has been a great tailwind to our margins.
Speaker Change: From a gross margin basis, and then I would say at the same time you know we are bringing on new hardware products as well, which are also really exciting, but those will sort of balance out. So I think you've seen over the last year or so you know we've had a little bit of a tailwind from <unk>.
Speaker Change: Software, but but we really do have mixed factors that you have to consider we don't have a specific long term target out there. After this year, but obviously it helped in software helped in this quarter and in general we're really happy we're continuing to blend out at that 25% even with tariffs.
Speaker Change: We'll probably think about longer term margins as we come up at the end of this year and really think about refreshing what that long term model looks like for everyone.
Speaker Change: Great. Thank you.
Speaker Change: Thanks.
Speaker Change: So listen up next we have Jamie rentals at Morgan Stanley.
Speaker Change: Great. Thanks, guys and congrats on the strong results maybe just following up on that I mean, as you've layered in some of this newer AI functionality kind of beyond dropped one.
Speaker Change: Are you seeing sort of increased hurdles from like an adoption standpoint or greater concerns from some of those prosecutor type.
Speaker Change: Constituents or now that <unk> been in the market for a year or is that conversation kind of getting easier and then I have a follow up let me. Let me start on this one I would say like things like the real Timeframes later.
Speaker Change: Enormous interest and I haven't really heard any critique of that leak. It's just so powerful for an officer to be able to communicate clearly with somebody in front of them. So we are leading with the productivity enhancements and things that sort of have extremely high benefits with.
Speaker Change: Sort of the smallest risk footprint.
Speaker Change: And as we get into things like vehicle intelligence now youre, starting to find vehicles et cetera.
Speaker Change: Face a little more.
Speaker Change: Opposition from some of the police skeptics Theyre in there we just think it's important to.
Speaker Change: To make sure that we're really feel good that we're winning right that we're doing this the right way we've got our ethics framework. We spent a lot of time developing so there will be I think.
Speaker Change: Some jurisdictions will be slower to adopt that tend to be a little more skeptical police and the ones that are more supportive will probably be faster to adopt.
Speaker Change: But the other thing I would say is the AI era stuff like a lot of those features like the real time translator.
Speaker Change: I don't think its.
Speaker Change: Fully shift we're in like beta with customers now so it's really just preparing to rollout. So of course, there's also the need to get the stuff out in the hands of customers. They typically want to get some some cycles in before they've made a large purchasing commitment.
Speaker Change: I think that that's tied to that too though is like it also gives people more reasons to be excited about AI and to get excited about adopting AI and so.
Speaker Change: I think we just havent seen higher enthusiasm from our customers about the whole suite of the AI products me hard and that really encourages them to push to adopt and get over those hurdles. So I actually.
Speaker Change: Totally agree, but also I would call out for you like.
Speaker Change: Broader the product suite, we have the more the return for them that they see on using it and so I think that just gives them a lot of momentum to do look at that whole product suite.
Speaker Change: Once again, it's just like Josh was talking about with.
Speaker Change: The aeroplan and the brightness there.
Speaker Change: The beauty of having a plan that includes everything that we do not just right now but over the next five years is it gives any individual agency a pallet of choices. So even if in that particular agency, one particular thing might not yet be for them.
Speaker Change: There's many different ways to stack up the points on the board within the plan for the plan to be a fantastic value for any given customer.
Speaker Change: Got it and then maybe just on the drone side I think a couple of weeks ago. The FAA might've made some improvements to the waiver process specific maybe to <unk>. So I guess, how has that changed conversations and then what do you think we still need to see from a regulatory standpoint to see like you know broader based adoption.
Speaker Change: So I don't know, Jeff do you want to talk at all about the board detailed portion of I can tell you that we're definitely seeing VFR go mainstream.
Speaker Change: And the timing is just really phenomenal you know our partners at <unk> are really just now scaling the manufacturing of their DOCSIS I'd say the <unk> limitation.
Speaker Change: As.
Speaker Change: Probably somewhat production constrained right now, but in the back half of the year, we really expect that to grow strongly.
Speaker Change: Scott, who has really become a pretty well oiled machine or getting waivers, particularly if youre going to float below fly below 200 feet, where I think Scotty I was really the only viable solution in that space because they have such solid autonomy and collision avoidance and then if you want to come up a little higher into the two to 400.
Foot range.
Speaker Change: Really then pairing it with D drone.
Speaker Change: Helps there they're the FAA wants to see more aerospace awareness, you're more likely to need visual observers or things like zoom cameras in radar.
Speaker Change: Whereas down below 200 feet.
Speaker Change: There is just less concern about.
Speaker Change: Drones being involved in air traffic issues.
Jeff: So Jeff I think you're going to add.
Speaker Change: That's pretty good I think the key is really meaningful step forward with the FAA stuff, obviously, if not all the way done, but the changes that really expedited path to getting these waivers was it was a very meaningful step forward for the industry and then as Rick said the key to having the best solution is to arming customers with.
Speaker Change: The full palette of the ability to have what you need to do to fly and low and with a lot of autonomy and a lot of capability in a diverse range of situations close to the ground and equally to have access to that fly high and again, that's why we're investing in the way that we are and think were bringing by far the broadest and most comprehensive range of options.
Speaker Change: That are moving in lockstep as the regulatory framework keeps unveiling.
Speaker Change: Awesome. Thank you so much and congrats again.
Jami: Thanks, Jami up next we have Jordan Linus at Bank of America.
Jordan Linus: And thank you for taking the question.
Speaker Change: On the federal side the FY.
Speaker Change: Slide 26, skinny budget called out $44 billion increase for DHS.
Speaker Change: How are you guys thinking about that across the verticals because it also said they need advanced border security technologies, they need to prep for the World Cup and the Olympics. So where were you guys. Most excited about that axon can help.
Speaker Change: Yeah for sure I think.
Speaker Change: On the border Bill there is there are you know on the border focus there's a lot of focus on drones and counter drone, which I think we are excited to participate in as well as real time video, which is kind of.
Speaker Change: What we do at this point and so I think all the work we've done in the last few years with some of the federal agencies to make make body cameras, evidenced dot com and live streaming available to them as kind of a precursor to fill in some of the existing blanks around.
Speaker Change: Better video and more places better counter drone.
Speaker Change: Solutions and of course more drilling solutions.
Speaker Change: Better that our USA made in fit for purpose for the U S government and so.
Speaker Change: That's where our focus will start of course, we're working on a number of deals across the fed civil agencies in a number of use cases, but specifically for kind of new money coming into the federal government I think those are really the focal points along the border.
Yes.
Speaker Change: I would add the real time translation is can be hugely beneficial IATA a regional commander for border patrol a year ago come to me asking for exactly that capability because they are constantly dealing with people coming across the border and they have no idea what language youre going to run into and today, It's a very manual process.
<unk> got a call get an operator.
Speaker Change: That operator to service provider, then has to figure out even what the languages and how your backs would be through.
Speaker Change: I think I may have mentioned, but I was in I was in Norway, showing an early prototype and one of the instructors from Iceland wanted to see if it could work with icelandair and it was pretty flawless.
Speaker Change: And Icelandic because one of those languages, you don't run into very often so I'm not as close as Josh.
Speaker Change: Actual pipeline with the federal government, but I can tell you the.
Speaker Change: The fundamental underlying demand I think the translators can be a huge interest for border.
Speaker Change: Got it and then is there anything else that has to get done on the federal side.
Speaker Change: So things can move quicker I don't know if excuses was fed ramp certified yet or if you guys are starting to see existing dealer owned contracts where agencies are jumping into those that might not have been initially thought that it would be for that okay. We can procure body came for and dropped to one now.
Speaker Change: That is a great question, particularly on futures.
Speaker Change: Jeff you want to give a I want to make sure we give an accurate we're making progress with fuses under what we can say publicly about where we're at yes, I think we can.
Speaker Change: The process for all the fed rubbing stuff as you go through.
Speaker Change: Submit sort of every six months or whatever our updates to our things be official assessors.
Speaker Change: Their official recommendation that says yes. This is ready for extension and then just takes another couple of months for the formal.
Speaker Change: You know kind of paper approval in the backend and with fuses we passed.
Speaker Change: That submission stage very very recently so we are in the chute. So few says is absolutely fed ramp ready and has been officially recommended by the auditors and now it just needs to finish the last little bit of certifications. So we're very excited about that.
Speaker Change: Awesome. Thank you I would just you and I understand that like.
Speaker Change: Love that you're highlighting some of these opportunities just from a guidance standpoint as you can imagine we've been pretty conservative on what we've assumed for the year on.
Speaker Change: Federal since some of these things would be upside and tailwind if they started to happen faster.
Speaker Change: Got it thank you.
Speaker Change: Thanks, Jordan up next week will power of Baird.
Speaker Change: Awesome alright, congratulations on another great quarter.
Speaker Change: Wanted to start with a question on enterprise.
Speaker Change: For all of you. This is a significant Tam expander I think last quarter you talked about.
Speaker Change: Logistics company, which I think is how was frankly I'd be curious just kind of how thats going.
Speaker Change: And then B just any other color you could share on what the pipeline looks like there and how do you get these deals converted whether it's retail or other verticals you are targeting there.
Speaker Change: Yeah. So we set we set a large logistics provider last quarter I think everything is going nicely with that and everything is on track. There just from a pipeline standpoint, I think getting a big customer like that isn't really great signal to the market in a really great blueprint for us to go.
Speaker Change: Other customers.
Speaker Change: How we can roll those out and how we can get traction. So again, we're sort of rebuilding the pipeline for the year and in Q1, but we continue to be really excited about enterprise as a category and a long term market I was invited to keynote at <unk>, which is like the retail secure.
Speaker Change: Security I can't remember.
Speaker Change: Enemies floor, but it's basically all of the retail security retail industry leaders Association.
Speaker Change: Thank you for the phone a friend helped there.
Speaker Change: And I can tell you the.
Speaker Change: I was talking to our head of enterprise it is.
Speaker Change: This feedback was Rick it's happening like this is really coming together now again these deals the bigger the agency or the bigger the company the longer the time it is and we sort of baked all that into our guidance for the year, but we think enterprise is going to become a more and more meaningful contributor.
Speaker Change: Okay and then my second question.
Speaker Change: Whether you.
Speaker Change: You are taking there Josh whoever wants to take it just looking at the <unk> opportunity.
Speaker Change: How do we maybe help us kind of size the opportunity I guess I'd also just be curious and early feedback is getting it will take some time obviously.
Speaker Change: Build the.
Speaker Change: Bookings, there and the opportunity, but any help just kind of sizing the opportunity early conversations and then just the sales process.
Speaker Change: Can you use your existing forces or other distinction if youre going to need to make as you deal with missile governments et cetera, getting access how does that work.
Rick: Sure maybe Rick I'll start and then you can fill in any blanks.
Speaker Change: Ultimately will.
Speaker Change: This is a very very competitive space right now and we're excited to be a part of that competition. So I'm going to keep the kind of commentary at a very high level here.
Speaker Change: But ultimately we were really thrilled with the customer reaction during axon week agencies that took US 10, 15 years to wind on body cameras and digital evidence management are asking us for very large deployments out of the gate of this product I think are real we're excited to be in this market because.
Speaker Change: Ultimately this capability is very complementary to the to the other products that we build and we can offer it at a far more reasonable price than some of our competitors.
Speaker Change: And give them the opportunity to have other options out in the market and so for US we're going to answer your question about the sales team. We have a dedicated sales team to this product of course, our key account leaders that manage the relationships with our large agencies will be a big part of that as well but.
Speaker Change: Gearing up and we expect to win in this market.
Speaker Change: Yes, I would add the other thing that was really.
Speaker Change: Pleasant surprise was how well ubiquitous was received.
Speaker Change: Just doing the permitting and all the logistics behind that is a real sort of issue and challenge for our customers and ubiquity of brings with them.
Speaker Change: <unk> access to tens of millions if not hundreds of millions of street lights I can't remember the number is huge.
Speaker Change: They already have relationships, where they're putting equipment on these light poles and have relationships with the utilities that run them that ubiquity showed on stage. They can do an installation in like a minute.
Speaker Change: Now of course, you've got to get out there with a truck and all that but the fact, they don't have to go through permitting because it's all free shot. The poles are already there. These are sturdy poles with power and Universal adapter plug I think I am told me there was like $450 million.
Speaker Change: <unk> worldwide that I'll share that same plug in.
Speaker Change: So we think that could also be a real accelerator.
Speaker Change: Okay. Thank you.
Josh Reilly: Thanks, well up next we have Josh Reilly at Needham.
Josh Reilly: Oh, great. Thanks for taking my questions kind of following up on Will's question. There. How do you how are you thinking about it ramping up production of the camera units for the outflows in the light post.
Speaker Change: Obviously, you've done some different things.
Speaker Change: In terms of manufacturing for the K there versus the body camera just wanted to get a sense. So we level set expectations.
Speaker Change: I assume you'll be supply constrained for a while just wanted to get a sense that you have planned on no major revenue impact this year as we go through trials and then maybe some early shipments at the end of the year, but this year is about getting trials out there are getting really good at the installations delivering a very very high quality.
Speaker Change: And and really converting those opportunities to revenue next year.
Speaker Change: But the fact that we built cameras every day and a lot of different form factors, but a lot of the same underlying technology has has accelerated our path to market here and we're really excited to kick off trials. This summer.
Speaker Change: Got it that's helpful. And then what's the feedback from customers in terms of their sense of urgency of closing some of the liter pricing deals for draft. One in the AI era plan I believe correct me if I'm wrong. It was June 30, because you mentioned that some of those deals might actually be closing in the second half now so I just wanted to get a send out a price sensitivity there yes.
Speaker Change: Question Josh.
Speaker Change: We're working through that right now so I think you know whenever we quote something sometimes theres a reality that some of those deals could slip quarter after quarter. The leaders pricing is to potentially you know ensure that there is a sense of urgency from the from the customer as well and so if anything changes there, we'll certainly let everybody know, but at this point, we're still focused on.
Speaker Change: Making sure we convert everything in the pipeline in Q2 here.
Speaker Change: Awesome. Thanks, guys.
Josh Reilly: Thanks, Michelle weeks ago, Josh I appreciate it.
Speaker Change: Next we have Jeremy Hamblin with Craig Hallum.
Josh Reilly: Thanks, and congrats on another really strong quarter.
Speaker Change: I wanted to come back to kind of your traditional cloud services business. So I think thats about 40% of revs you crossed over to having 1 million.
Josh Reilly: Platform users.
At the end of last year.
Josh Reilly: We look into 'twenty, five and think about the growth that you're expecting 27% total revenue growth.
Josh Reilly: As we think about the cloud services do you expect more of that growth to come from growing your user base.
Speaker Change: Versus kind of that ASP per user per month.
As we're kind of looking about that and then maybe contrast that to what we've seen here over the last couple of years.
Speaker Change: Yes.
Speaker Change: [laughter].
Speaker Change: Okay.
Speaker Change: So those couple of quarters, we've called out that it's been split about 50 50 between our user growth and our premium adoptions, though not perfectly but I would say that's a really good rule of thumb to use at least as we go through the rest of this year.
Speaker Change: And then with things like AI and draft, one that will really ramp even more next year, we'll see if that mix changes at all.
Speaker Change: Got it Okay that was the second part follow up there on how it looks in 2006 and beyond.
Speaker Change: Okay, and then I wanted to shift gears and ask about the drone.
Speaker Change: There's a lot that's kind of going on in the space. There is a lot on a geopolitical sense.
Speaker Change: Lots of speculation about the opportunities.
Speaker Change: With the current administration and how capabilities.
Speaker Change: Capabilities might be utilized both.
Speaker Change: Domestically close relations, but then also.
Speaker Change: We are seeing.
Speaker Change: An uptick unfortunately and geopolitical activity.
Speaker Change: But just wanted to get a sense for what you were.
Speaker Change: The kind of sensing out there in the market.
Speaker Change: Now that kind of these overseas wars are not fading away, but seem to be increasing in terms of magnitude and presence.
Speaker Change: Yeah, well I would say we continue to believe that we're really excited about the acquisition because we got into one of the most important spaces in the world right now whether it's a military whether it's political.
Speaker Change: Political leaders, we have interest from enterprise executive protection there.
Speaker Change: We're seeing <unk> systems use there to protect headquarters and to protect People's homes. I think people are rapidly realising, if you're an actor who's out to do something to add.
Speaker Change: <unk> is a unique threat vector.
Speaker Change: That.
Speaker Change: Everybody is in the security business is got to think about and deal with.
Speaker Change: And so we're.
Speaker Change: Now some of these feel like starting from our military customers and other some of those are longer programs and ones, where we're really not at liberty to talk about what's going on there, but there are certainly theres a ton president Trump has talked about this the American equivalent of the iron dome in terms of ballistic missile defense and we believe theres going to be that will be a multi layer.
Speaker Change: System to include.
Speaker Change: Close closed quarter air support from things like first person view in consumer drones.
Speaker Change: And so we think it's going to be a really exciting business long term.
Speaker Change: So we're glad we're in it and we are really excited and the team with your drone or a pretty fantastic do doing great work.
Speaker Change: Just as a quick follow up maybe for Brittany in terms of thinking about that.
Speaker Change: A business.
Speaker Change: Going forward is it going to be a reportable segment I know it may not quite be material, just yet, but hopefully it will become material and then.
Speaker Change: If it's not a reportable segment with that just fall under your software and services.
Speaker Change: Yeah. So do you don't have two components. It has a hardware component and a software component the software piece Youll see show up in our software and services and the.
Speaker Change: Hardware component Youll see show up in our platform solutions I think it's unlikely to get broken out separately at least for a while but one of the reasons. We are really happy to do the break apart of our segments. As you can see inside of our connected devices that platform solutions segment and inside of there is a big.
Speaker Change: Drivers of that wont really be sweet VR and some of the counter drone pieces.
Speaker Change: And so it gives us a little bit more visibility into some of those drivers to share it with all of you.
Speaker Change: Yeah.
Speaker Change: Great. Thanks for taking the questions best wishes. Thank you thanks, Jeremy <unk>.
Unidentified Moderator: Up next we have Trevor Walsh at citizens.
Trevor Walsh: Great. Thanks, Eric Thanks for taking the questions.
Speaker Change: For you if I can call to hear about the Apollo cartridge plan I know its been.
Speaker Change: Maybe the last piece on the <unk> kind of getting to the take or pieces of clothing, and I think you talked to talk about that in the past more on the international opportunity in this kind of cold weather areas, but we're obviously have our fair share of cold weather environments here in the U S. Domestic market. So can you just talk about kind of where that is and.
Speaker Change: And then what type of opportunities get market there is domestic.
Speaker Change: And that's if you will markets more again internationally, focusing kind of as a primary with any of those.
Speaker Change: Thanks for that so.
Speaker Change: We're about a year out from scaled automated production. We wanted to get ahead of it like this is such a fundamental shift it takes the taser from sort of this less lethal capture device to a self defense weapon.
Speaker Change: And as you heard probably from Aspen, our friend from Norway, He's coming to conclude intellectually. He has already concluded that if youre a close quarter combat.
Speaker Change: T <unk> plus this new Apollo Dart is a better more effective safer option for you to use them in gun you even have to be careful saying that we were a little nervous about putting him on stage because that's the.
Speaker Change: Such a high bar, it's almost a bit of a lightning rod.
Speaker Change: Now where this is going to make a difference in the U S.
Speaker Change: There'll be some marginal revenue from it will probably have some kind of upgrade tactical package that includes that cartridges is obviously looking at it as a bit more sophisticated it can be a little higher price points than our traditional cartridges Ben but.
But I think really the impact in the U S is can be on the moon shot.
Speaker Change: Our goal today on officer their weapon of last resort as their gun, but their weapon of first resort is also their gun. So the thing in their hand, if they don't know whats behind the door is a gun and we've all seen the catastrophic consequences. When you go through and you have to make an immediate decision.
Speaker Change: I think over time, we're going to see the T can be first choice now look if you know youre going into a gunfight theyre going to go to their firearm, but we think especially around <unk> weapons and others. This is the piece that really gives us a shot at displacing lethal force and our estimates are about 40% of Citi.
Speaker Change: Situations, where people shot and killed yesterday, so here I would say, it's probably more about the moonshot.
Speaker Change: Internationally and the reason I say that is most agencies in the U S are already buying tasers, so, yes, theres going to be a little bit of upgrade opportunity there, but in the U S is going to drive the mission more than a pure revenue driver internationally, though I think thats, where tasers are not standard issue in most countries. They are shared among specialty tea.
Speaker Change: But when do we get to the point, where it's like Hey, we're going to use this as our primary defensive weapon now you go from.
Speaker Change: 10% of the agency using it to potentially a 100% of control and.
Speaker Change: And then.
Speaker Change: That should begin to pull through with it much of the rest of our ecosystem. So I think from a pure financial.
Speaker Change: <unk> business sense, I think <unk> is going to be much more impactful in global markets and then frankly in enterprise and other places where.
Speaker Change: Whether you are.
Speaker Change: Somebody like luminous who's in the business of moving cash around or casino guards or anywhere you see armed private guards.
Speaker Change: Thank you.
Speaker Change: Apollo is going to begin to be much more widely deployed there because and maybe there'll still carry their gun. They may start to look more like a comp where they have two weapons, but we think all of the.
Speaker Change: Business operators pay a ton of attention to the liability issue and if they can avoid a shooting.
Speaker Change: Yes.
Speaker Change: There's a lot of financial incentive in addition to the moral imperative. So I'd say this is going to its biggest impact will be opening new markets for taser.
Speaker Change: Super helpful. Maybe one just quick follow up for Britney I appreciate the color around tariffs and the 50 base.
Speaker Change: At this point impact to the adjusted EBITDA for the year would you call that kind of your.
Speaker Change: Worst case, where all of the.
Speaker Change: Adjustments and adaptability that you've built in around supply chain.
Speaker Change: Not exactly or is that just give us I guess, a sense of like kind of where that falls in terms of your high side low side sort of expectations around the impacts.
Speaker Change: No I think that's our best guess of being realistic.
Speaker Change: And that's obviously like with what we know today I like it's always hard to caveat that.
Speaker Change: This has been dynamic and it doesn't assume like new retaliatory tariffs or anything like that.
Speaker Change: But just based on what we know today, what we're able to offset I would say it's realistic of course, we're going to try and do more if we can do more and continue to work those supply chain muffled, but I think it's a fair bet, knowing what we know right now.
Speaker Change: Got it awesome, thanks for taking the questions.
Speaker Change: Thanks Trevor.
Keith: Keith House them at Northcoast.
Speaker Change: Thanks, guys I appreciate it.
Speaker Change: Rick.
Speaker Change: We saw axon week, the axon ecosystem is growing and becoming more and more important to your agencies that you serve.
Speaker Change: Is there a point where your customers becomes concerned that you are too big a part of the ecosystem.
Speaker Change: Two important too levered to U.
Speaker Change: And how do you address that and is that a risk to your growth going forward in the next year five years 10 years down the road.
Speaker Change: Actually say, we started hearing that maybe five years ago six years ago that was coming up as a concern I've been hearing is Alas recently, what we've been hearing from our customers more is like Hey, we've got all this technology that doesn't play, particularly well together.
Speaker Change: Can you take on more.
Speaker Change: Last year, when we exited the CAD business doing the dispatch software.
Speaker Change: I think we heard from a lot of our customers will say Oh gosh, we really wanted to do to take out over too because when Exxon when axon does it we know it just works and we know that we're going to get a great response, if you have an issue and it is going to be supported so I'd say.
Speaker Change: It feels to me like it's less of a concern than it was a few years ago I think we've sort of crossed this rubicon, where we're where such an integral part of their already kind of all in with us.
And so kind of it even including more stuff.
Speaker Change: I think it doesn't really increase their risk.
Speaker Change: If exxon went out of business or some catastrophic event it'll be major leaders roughly of already and I think what we continue to <unk>.
Speaker Change: Things just work better from where they work with us and that's why also this year, we really wanted to lean into the partnerships.
Speaker Change: We're both signaling and living up to our commitment to our customers.
Speaker Change: Hey.
Speaker Change: We know we can't be everything.
Speaker Change: We're going to identify a best in class partners and bring them to you and have an open ecosystem. So that you can feel more comfortable working with us and we're not going to try to box you into a walled garden.
Speaker Change: And that ultimately you'll be able to use the parts of our ecosystem you want in the parts that you don't want to use.
Speaker Change: You can use other tech solutions and we'll keep things open so you can integrate with us.
Speaker Change: Alright, one more thing Keith there is just I think some of that is some of that thinking is important in how we've gone to market with our AI Aeroplan, where some of these software heavy offerings I think it's better to you know to offer customers a fixed price with certainty and continue to delight them with more and more features in there that they don't have to pay additional dollars.
Speaker Change: For so I think in a lot of the new disruptive technologies that we're entering its far more about derisking the proposition for them by.
Speaker Change: Making sure that we're very fair and predictable on pricing and we over deliver on the expectations in terms of features and service. Okay got you and just a quick follow up.
Speaker Change: You, obviously, you guys got a great net retention rate.
Speaker Change: I'm, assuming you guys still not loss a significant vendor as soon as the agency to a competitor yet correct when it comes to.
Speaker Change: Axon body camera.
Speaker Change: Correct Yep. Thanks.
Speaker Change: Thanks, guys. Good luck. Thanks.
Speaker Change: Thanks.
Speaker Change: Thanks, Keith up next we have Jonathan Ho at William Blair.
Jonathan Ho: Hi, good afternoon, and thanks for sneaking me in.
Speaker Change: Just in terms of.
Speaker Change: The Taser 10 growth I think you've called out.
Speaker Change: Just some pretty phenomenal growth here, what gives you the confidence that with this rapid rate of adoption.
Speaker Change: Kind of run into the risk of hitting the wall at some point, we're seeing that adoption rate as fastest as sort of getting the way of growth in future quarters.
Speaker Change: Yes, Jonathan it's a fair question I personally don't see a lot of that given that.
Speaker Change: There are still customers that are using the X 2006, P and customers that are using the X two in and a lot of what Taser 10 has done is accelerated the upgrade cycle. So I think that we're that would be much more of a concern if all customers predictably upgraded every five years eventually we'd hit a rate problem there, but in reality historically taser tenants.
Speaker Change: The first one where customers are feeling like hey, we must upgrade as soon as we possibly can even if it's inside of five years. So I do think there is still plenty of opportunity and in the next three or four years in terms of Taser 10 and of course, you know the name of the game there is not only filling out deployments in upgrading deployments in our state.
Speaker Change: Local customer base, but extending T tend to to our international customers and a ton of white space, there and we're seeing a lot of excitement as Rick highlighted.
Speaker Change: In Europe and in other and in other geographies as well.
Speaker Change: Great I'll keep it to one thank you. Thank.
Speaker Change: Thanks, Jonathan Thanks, Jonathan We've got one left with making at Goldman Sachs Great.
Speaker Change: Thanks for the question, except two quick ones.
Speaker Change: First just on.
Speaker Change: The AI era plan and AI services are there any meaningful margin differences relative to evidence dot com just because you have to pay the cost of compute.
Speaker Change: And then secondly, I just wanted to ask about.
Speaker Change: The state and local budget flush outlook, which I think typically happens in <unk> and <unk>.
Speaker Change: Just wondering if you had any early expectations on what you are what you can expect there just given what youre seeing in the pipeline. Thank you.
Speaker Change: Sure Brittany do you want to cover the first one no Kirby can take the margin one yeah, I mean, nothing that I would sort of factor in as a meaningful driver we talk about our software business continuing to be above 80% gross margins in the <unk>.
Speaker Change: Aeroplan would certainly fit in that now the interesting thing about the AI era plan is like we don't actually know every products, we're going to go put into the.
Speaker Change: Plan, because theres still more to come.
Speaker Change: But based on what we are releasing right now and what we're seeing.
Speaker Change: Pretty happy that it falls in that range of what we would expect for our software business.
Speaker Change: And then on the state and local budget items, Michael I don't know that we're seeing a lot different there as it relates to US now other companies are seeing at times that these grants that were out there are starting to dry up but a lot of those grants were helpful. In paying for like one time upfront purchases most of our activity as we've talked about.
Speaker Change: In the past is highly related to operational expenditures as opposed to capital ones and so for US I think as we worked through budgetary quotes like for example, some some large states their budget ends on September 30th and starts again on October 1st and we're working through pay here's here's budgetary quote.
Speaker Change: That you can kind of bank on for Q4, we're not seeing much difference in how we've handled those in the past years, if any at all so certainly something that we'll continue to monitor but at this point, we feel really good about what we're seeing in terms of availability of.
Speaker Change: Both funds and opportunity with opportunity to invest some of our state and local customers.
Speaker Change: Great. Thanks, Scott Thanks Brittany.
Speaker Change: Thanks last month.
Speaker Change: Alright, well kick it to Rick to close this out.
Speaker Change: Okay.
Speaker Change: Sorry, I had myself on mute there.
Speaker Change: Hi, everybody again.
Speaker Change: I hate to sound like a broken record because we keep breaking records, but it's exciting.
Speaker Change: Josh if Britney and Jeff and the entire team just the sheer breadth of the products that we've been bringing to market the intensity of our sales and customer support teams to both get it to customers, but make sure. It's working to deliver a world class experience and just everything it takes to run this business.
Speaker Change: It is pretty mind blowing I don't know that I can think of another tech company that has so much breadth across so many different areas.
Speaker Change: And then coupling that with due to the challenges of.
Speaker Change: Selling into public safety and the regulatory environment around managing government data, whether it's with fed ramp to see just.
Speaker Change: And I'm just delighted that we're able to continue turning in these results and it's a privilege to work for all of our shareholders that are on today and to work with all the analysts you guys ask great questions to help us even.
Speaker Change: Took a hard look at different aspects of our own business and together, we're doing great things. So excited to see you all again, maybe at our shareholder meeting in May and if not certainly at the next earnings call in August.
Speaker Change: Thanks, everybody.