Q2 2025 Axon Enterprise Inc Earnings Call
Last week all the AI from June until I ACP. We were able we built 8 features in that time frame like which is just mind-blowing think about how we could do AI to build features for Real Time crime centers. We started this endeavor called juices back in 2019 and I never thought I'd be standing in front of a group of professionals who are actually utilizing and now enhancing the technology. So this is uh as exciting for me. As hopefully you find it exciting for you today. The Partnerships that we have with axon and other great Public Safety, technology companies, allow us to reduce that footprint of officers in the field and allow us to do our job. We're officially quicker. That way, we don't have to worry about getting other officers out in the field. This is only as good as the number of cameras and sensors that you can connect. And most of those you don't own, right? They're out in the community and you have a lot of hurdles to get there. Each of you have 1 story and that is a 100 stories that we can produce and put out into the world and have sort of all boats rise when it comes to trying to get communities. And
Please call.
I love hosting those Summits. It's all about connecting the dots with our customers so that we can build the tools. They need to make their jobs just a little bit easier.
We are of course, proud to come back to you with another fantastic quarter, but what we're really proud of are the relationships and Partnerships. We've built with our customers. I spend most of my time with them and the more I do, the more excited I am for what's ahead. In fact, there are several Trends I'm seeing right now. That are feeling that excitement.
First demand for new technology from our customers is accelerating and it's outpacing. Even my most optimistic expectations
Artificial intelligence, drones, and robotics real-time operations cameras, along with our newest taser devices and virtual reality, are all resonating across our customer base. There's no one breakout product driving conversations; it's everything.
In the past, it could take a few years for our newest products to start seeing meaningful adoption often. At least the first year,
Took it to finetune the application work through the approval processes and get everything right today and we're watching customers. Adopt new Solutions as a standard faster and in real time
Draft 1 remains our fastest adopted software solution. Taser, 10 our fastest adopted taser weapon, axon body 4. Our fastest adopted camera.
Deed run fusus and the AI Aeroplan are also being deployed faster than we've seen with prior new technologies, while laying the groundwork for future Innovations, coming over the horizon.
Another observation I want to share is that I believe 1 critical Factor. Enabling this movement is the trust. We've built with our customers.
It is something I am extremely grateful for. We have a history of being bold, it's only after Decades of tireless, work, thought, leadership, and responsible careful, balanced approach, that we've earned the privilege to partner this deeply
They're able to move faster today because they trust we'll be there with them on the journey from here to tomorrow, doing things the right way.
The final observation I'll make is that collaboration and Public. Safety isn't just critical anymore.
It is absolutely essential.
Roles responsibilities and jurisdictions may have fine lines but effective Public. Safety happens through close collaboration across the landscape from sworn officers to public officials, Federal governments and Enterprises and even consumers.
To support this, we need to think broader than ever before, ensuring our products enable these different stakeholders to work together.
Josh Isner: Makes every layer of connectivity incrementally more valuable for every user. This summer, we spent time with our product teams working through our future product investments, and we have the broadest, yet most cohesive and synchronized pipeline of products and development we've ever had. It's truly an inspiring time, and we remain committed now more than ever to investing behind our vision and the mission that drives it. With that, I'd like to turn it over to Josh.
Every layer of connectivity.
Incrementally more valuable for every user.
This summer, we spent time with our product teams working through our future product Investments and we have the broadest yet most cohesive and synchronized pipeline of products and development. We've ever had
It's truly an inspiring time and we remain committed now more than ever to investing behind our vision and the mission that drives it.
With that. I'd like to turn it over to Josh.
Rick Smith: Thanks, Rick, and good afternoon, everybody. Before we get into our results, I want to say we're thinking about the NYPD and the victims of last week's horrible tragedy. We are reminded of why we come to work every day, and we'll all continue to pursue AXON's mission of protecting life with vigor. As we reflect on our Q2 results, the theme continues to be customer obsession. We consider it the honor of a lifetime to work with the men and women of public safety, and our continued emphasis on the customer experience is central to how we run the business. I tend to be the curmudgeon on the team that reminds everyone that no matter how much success we have, we can always be better.
Thanks, Rick, and good afternoon, everybody.
Thinking about the NYPD and the victims of last week's horrible tragedy. We are reminded of why we come to work every day. We'll all continue to pursue axons mission of protecting life with vigor.
Rick Smith: I'm not sure that'll ever change, but I'd like to take a reprieve from that for a few minutes, as I'm truly awestruck at what our team is accomplishing. And the most exciting part is we continue to accelerate. This is not a team that slows down. Maybe the best example of this is our state and local team under the leadership of Jessica Duncan. This team took back the record for the largest deal in AXON company history by a wide margin. This contract with a major city police department also marked the largest contract we've seen in terms of new product bookings, encompassing everything from drones to our AI products. Similarly, our corrections team, led by Zach Austin, also closed their largest deal in team history and contributed two of the top 10 deals in the quarter.
As we reflect on our Q2 results, the theme continues to be customer Obsession. We consider it, the honor of the lifetime, the work with the men and women of Public Safety. And our continued emphasis on the customer experience is Central to how we run the business. I tend to be the chromogen on the team that reminds everyone that no matter how much success we have, we can always be better. I'm not sure that will ever change, but I like to take a reprieve from that for a few minutes, as I'm truly ostra at what our team is accomplishing. And the most exciting part, is we continue to accelerate. This is not a team that slows down
Maybe the best example of this is our state and local team under the leadership of Jessica Duncan. This team took back the record for the largest deal in Axon company history by a wide margin. This contract with a major city police department also marked the largest contract we've seen in terms of new product bookings, encompassing everything from drones to our AI products.
Rick Smith: Corrections has been an important area for us to grow our presence because the value our products offer to keep correctional institutions safer is so clear. What's exciting here is that the deals we are seeing in the vertical now include products from across our ecosystem: Taser 10, body cameras, VR, evidence management, and thesis. Next, our wins in international and enterprise continue to validate our investments in these areas. Our international team added a new Taser customer in Africa, becoming the largest in the region. And in enterprise, we signed a contract opening up a major opportunity in the gaming space. It was our first win in that vertical to include our AI products and a clear indicator to me that we're on the right path. Zooming out a bit, every quarter that goes by indicates more and more of a contribution from new products.
Similarly, our Corrections team led by Zach, Austin also closed their largest deal in team history and contributed to the top 10 deals in the quarter.
Corrections has been an important area for us to grow our presence because the value our products offered to keep Correctional institutions. Safer is so clear. What's exciting? Here is that the deals we are seeing in the vertical. Now include products from across our ecosystem taser, 10 body cameras VR, evidence management and uses
Next, our wins in international and enterprise continue to validate our investments in these areas.
Our international team added a new customer in Africa, becoming the largest in the region and an enterprise. We signed a contract opening up a major opportunity in the gaming space. It was our first win in that vertical to include our AI products, which is a clear indicator to me that we're on the right path.
Rick Smith: We closed almost $150 million of bookings for our AI aeroplane in Q2 alone, and over 30% of bookings this quarter came from new product categories. We've talked in the past about an opportunity to grow our presence with officers as our product portfolio expands. Just a few years ago, the maximum an agency could spend with us on a per officer basis was less than $300. Today, that sits over $600 due to new products, and we saw the per officer bookings in our largest deals push up against that level. These are just a few examples of the activity we saw in another strong quarter. As I said in Q1, the team came out of the gate with speed this year, and that momentum is accelerating.
Zooming out a bit, every quarter that goes by indicates more and more of a contribution from new products. We closed almost $150 million of bookings for our AI Era plan in Q2 alone, and over 30% of bookings this quarter came from new product categories. We've talked in the past about an opportunity to grow our presence with officers as our product portfolio expands. Just a few years ago, the maximum an agency could spend with us on a per-officer basis was less than $300; today, that sits over $600 due to new products, and we saw the per-officer bookings in our largest deals push up against that level.
Rick Smith: Coming off a strong one H with a growing pipeline, we now have line of sight to deliver year-over-year bookings growth in the high 30% range, which would once again put our second half in line with the prior year's entire campaign. At AXON, we're an explain shop. We don't fall in love with what we just did or what we did last year or the year before that. But as I said, I am so proud of our sales and product teams. To see bookings accelerating at this stage in our business speaks to the level of execution and innovation going on at AXON. As I digested these results, I was brimming with excitement about what the future holds and the impact that we can have.
These are just a few examples of the activity. We saw in another strong quarter, as I said in q1, the team came out of the gate with speed this year and that momentum is accelerating coming off a strong 1H with a growing pipeline. We now have line of sight to deliver year-over-year. Bookings growth in the high 30% range, which would once again, put our second half in line with the prior Year's entire campaign.
Rick Smith: You are truly seeing a world-class team that is capable, or you are truly seeing what a world-class team is capable of doing when everybody is on the same mission. And with that, let's kick it over to Brittany.
Add axon. We're next, play shop. We don't fall in love with what we just did or what we did last year or the year before that. But as I said, I am so proud of our sales and product teams to see bookings accelerating at this stage in our business speaks to the level of execution and Innovation going on that axon as I digested, these results, I was brimming with excitement about what the future holds and the impact that we can have. You are truly seeing a world-class team that is capable or you are truly seeing what a world-class team is capable of doing when everybody is on the same mission.
With that, let's take it over to Brittany.
Brittany Bagley: Thank you, Josh. As Josh and Rick mentioned, we're extremely proud of our second quarter results as we continue to deliver for our customers while investing for the long term. Second quarter revenue of $669 million increased 33% year over year, marking our 14th consecutive quarter of over 25% revenue growth. Josh shared some great color on our bookings and why we're so excited for the future. In terms of translating that into revenue today, the top line growth continues to be driven by software and services, which grew 39% year over year to $292 million. Our ability to win new users and to drive adoption of our newest products underpins this continued growth. Net revenue retention increased to 124% and has been near or above 120% for 20 consecutive quarters, demonstrating the results of our ongoing investment in our products and customers.
Thank you, Josh.
As Josh. And Rick mentioned, we're extremely proud of our second quarter results as we continue to deliver for our customers while investing for the long term.
Increased, 33% year-over-year marking our 14th consecutive quarter of over 25% Revenue growth.
Josh shared some great color on our bookings. And why we're so excited for the future?
In terms of Translating that into Revenue today, the Topline growth continues to be driven by software and services which grew 39% year-over-year to 292 million.
Our ability to win new users and to drive adoption of our newest products. Underpins this continued growth.
Net revenue retention increased to 124% and has been near or above. 120% for 20 consecutive quarters demonstrating the results of our ongoing investment in our products and customers
Brittany Bagley: Turning to connected devices, revenue increased 29% year over year to $376 million. This growth was driven by strength across categories, including Taser, which grew 19% driven by Taser 10. Personal sensors grew 24% driven by AXON Body 4, and platform solutions grew 86% driven by CounterDrone and Virtual Reality. Adjusted gross margin was 63.3%, up 20 basis points year over year, driven by product mixed to software and services, partially offset by lower devices margin due to the strong growth in our newer hardware products in newer markets. We expect this balance to continue in the second half as we mix across new investment areas and our software business growth. Adjusted EBITDA margin of 25.7% came in ahead of expectations due to higher revenue and operating leverage, as well as benefiting from the timing of tariffs, which will now impact us more in the second half of the year.
Turning to Connected devices Revenue, increased 29% year-over-year to 376 million.
This growth was driven by strength across categories, including Taser, which grew 19%, driven by Taser 10.
Personal sensors grew 24%, driven by Axon Body 4, and platform solutions grew 86%, driven by counter drone and virtual reality.
Adjusted gross margin was 63.3% up. 20 basis points year-over-year driven by product mixed to software and services partially offset by lower devices margin due to the strong growth in our newer, Hardware products and newer markets.
We expect this balance to continue in the second half as we mix across new investment areas and our software business growth.
Brittany Bagley: Turning to our outlook, we are raising 2025 revenue guidance to a range of $2.65 to $2.73 billion, representing approximately 29% annual growth at the midpoint. This reflects our performance in Q2 and our confidence in the pipeline for the second half. We are raising our adjusted EBITDA guidance to a range of $665 to $685 million, up from $650 to $675 million. This maintains our 25% margin target for the year and incorporates our planned investments and tariff-related expenses in the second half. We continue to expect increased hiring over the remainder of the year, particularly in R&D, as we prioritize investing behind the incredible product roadmap we talked about, as well as in our exciting new markets. These investments will continue to set us up well for 2026 and beyond. In summary, Q2 reflects another quarter of strong execution and healthy performance across the business.
Adjusted, even down margin of 25.7%, came in ahead of expectations due to higher revenue and operating leverage, as well as benefiting from the timing of tariffs, which will now impact us more in the second half of the year.
Turning to our Outlook. We are raising 2025 Revenue. Guidance to a range of 2.65 to 2.73 billion representing approximately 29% annual growth at the midpoint.
This reflects our performance in Q2 and our confidence in the pipeline for the second half.
We are raising our adjusted ebit. Dot guidance to arrange, a 665 to 685 million up from 650 to 675 million.
This maintains our 25% margin target for the year and incorporates our planned investments and tariff-related expenses in the second half.
We continue to expect to increase hiring over the remainder of the Year, particularly in R&D, as we prioritize investing behind the incredible product roadmap. We talked about, as well as in our exciting New Markets.
These investments will continue to set us up well for 2026 and Beyond.
Brittany Bagley: We remain focused on delivering sustainable growth while investing strategically to serve our customers and drive value creation over the long term. We're also incredibly excited to deliver on the second half of the year for everyone. With that, we'll turn it over for questions.
In summary, Q2 reflects another quarter of strong execution and healthy performance across the business.
We remain focused on delivering sustainable growth while investing strategically to serve our customers and drive value creation over the long term.
We're also incredibly excited to deliver on the second half of the year for everyone.
With that, I'll turn it over for questions.
Eric Lapinski: Thanks, Brittany. We'll move up into gallery view. All right, for today, I think we'll try to keep it to one question and a brief follow-up if we can, just because we've got a full call, and I want to make sure we can get to everyone. So up first, we have Keith Housem at North Coast.
Thanks Brittany. Uh, we'll move up into gallery view.
Keith Housum: Great. Hey, thank you, guys. Thanks, and congratulations on a great quarter. Perhaps you guys can spend a little bit of time on the enterprise addressable market and perhaps some of the success that you guys have had with some of the pilots so far. Is there a certain product or two in the portfolio that is getting more traction than others as you guys are entering into the, I guess, expanded market than enterprise?
All right for today, I think we'll try to keep it to 1, question and a brief follow-up if we can just because we've got a full call and I want to make sure we can get to everyone. So up first, we have Keith's house in at North Coast.
Rick Smith: Sure, I'll take that one. Enterprise certainly is going very well. We're excited about the breadth of product interest there between not only our body cams and evidence.com and thesis and drones, CounterDrone, and frankly, across all these opportunities, we're seeing more and more interest in the full suite of products there. But Keith, I got to be honest, I'm shocked that after predicting bookings were flat, you weren't wondering why you're up 50%.
Great. Hey thanks guys. Thanks and congratulations on a great quarter. Um perhaps you guys can spend a little bit of time on the Enterprise addressable market and perhaps some of the success that you guys have with the pilot so far. Is it, is there a certain p uh, product or 2 in the portfolio? That is getting more traction than others. As you guys are entering into the, I guess expanded Market within Enterprise
Keith Housum: Next question.
Rick Smith: Yeah, that's a good idea. Let's go to the next question.
Sure, I'll take that 1. Um, Enterprise certainly is, uh, is, is going very well. Uh, we're excited about the breadth of product, uh, interest there between, not only our body cams and evidence.com and fuses and drones, uh, counter drone, um, and, and frankly across all these opportunities, we're seeing more and more interested in the full Suite of products there. But Keith I got, I got to be honest, um, I'm shocked that after predicting. Bookings were flat, you weren't wondering why 50% next question.
Keith Housum: No, no, no, that was my next question, though. In terms of bookings, can you perhaps parse out where that success was?
Rick Smith: Yeah, I mean, you had said bookings would be flat at a billion dollars. That was up by 50%. You had said new, you know, we didn't have any large deals in the quarter. We booked our largest deal in the company's history, including our largest deal in corrections. You had said the bookings growth rate was slowing down, and in fact, it's picking up, and it's all a result of really, really good execution from our product team and our sales team.
Yeah that's that's a good idea. Let's go to the next question. No no, no. That was my experience though in terms of bookings. Can you perhaps parse out, you know, where was the success was?
Yeah, I mean you you you had said bookings would be flat at a billion dollars. I was off by 50%, you'd said
Keith Housum: Great, thanks.
In fact it's picking up and it's all a result of really really good execution from our product team and our sales team.
Eric Lapinski: All right, up next, we have Andrew Sherman at TD Cowan.
Great, thanks.
Andrew Sherman: Oh, great, thanks. Good to see everyone. Congrats. Josh, impressive $150 million of bookings from AI era in Q2 alone. Could you just talk about the mix of demand for draft one and is the demand for draft one itself accelerating, but also the newer products? Some of the data you have in the press release is interesting with the time savings that the other newer segments are driving. Just talk about the demand for the whole bundle and if that's kind of accelerating here, which it sounds like it is.
All right, up next, we have Andrew Sherman at TV count.
Rick Smith: Yeah, Andrew, thanks for the question. Good to see you again. Absolutely, it's accelerating. Yeah, we're excited about the results. We had talked about this a lot in the Q1 call that the first half, you know, we'd see some incremental growth, and we certainly did. But the pipeline in the back half of this year for the AI aeroplane is loaded, and we certainly expect to continue to go fast in terms of the AI aeroplane. It's something that's very well received from our customers. I think it's a good indication of not only, you know, the time savings that customers are seeing with these products, but it's also the fact that there's more and more products that are making a difference day to day in this plan that customers are getting along the way. So they're super pleased with draft one.
Oh, great, thanks. Uh, good to see everyone, congrats, uh, Josh impressive, um, 150 million of bookings from AI era and Q2 alone. Could you just talk about the mix of demand for draft 1? And is is the demand for draft 1 itself accelerating. But also the newer products to the sum of the data you have in the press release is interesting. With the time savings that the other newer segments are driving, just talk about the demand for the whole bundle and if that's kind of accelerating here, which it sounds like it is. Yeah, Andrew, thanks for the question. Uh, good to see you again. Absolutely, it's accelerating. Yeah, we're we're excited about the results. Uh, we had talked about this a lot in the q1 call, uh, that the first half, you know, we'd see some incremental growth and and, and we certainly did. But uh, the pipeline in the back half of this year, for the, for the AI era plan is loaded and, uh, we certainly expect to continue to go fast in terms of the uh, the AI era plan. That's something that's very well received from our
Rick Smith: We continue to see more and more momentum there, but now with the AI assistant and the real-time translator as part of that and products like Form One and Brief One getting going, there is a lot of customer excitement around this plan. And a huge shout out to Rick a year ago, a year plus ago now, for calling out the need to invest heavily, you know, in the AI world and in product line. And then, of course, Jeff and his team for implementing these products in a way that makes a real, real difference for our customers. It's just very, very cool to see right now.
Andrew Sherman: Great to hear them. I'll pass it on. And Rick, I love your new podcast.
Customers, I think it's a good indication of not only, uh, you know, the time savings that customers are seeing with these products. But it's also the fact, uh, that there's more and more, uh, products that are making a difference day to day in this, in this plan, that customers are getting along the way. So they're super pleased with draft 1. Uh, we continue to see more and more momentum there. But now, with the AI assistant and the real-time translator as part of that and products, like Form 1 and brief, 1 getting going. Uh, there there is a lot of customer excitement around this plan and a huge shout out for, you know, to Rick a year ago, a year plus ago now, for, for, for calling out the need to invest heavily, uh, you know, in the, in the AI, uh, world and, and, and, and, and product line. And then, of course, Jeff and his team for implementing these products in a way, that makes a real real difference for our customers. It's just very, very cool to see right now,
Great to hear him. I'll pass it on and Rick. I love your new podcast.
Rick Smith: Thanks, I'm having a ball doing it. Thanks, Andrew.
Thanks, man, for the ball. Doing it.
Eric Lapinski: Thanks, Andrew. Up next, we have Will Power at Baird.
Thanks Andrew.
Will Power: Okay, great, thanks. And yeah, congratulations on the results. I want to start on platform solutions. You obviously have really nice acceleration. I recognize smaller numbers, but I think, you know, strategically, you know, very important longer term. So I'd love if you could help us just, you know, understand kind of what really underpinned the, you know, the CounterDrone success. Maybe any kind of breakdown or color you can share, you know, across law enforcement versus enterprise. And if I take that a step further, if I stick with drones, it'd be great to get any perspective as to what you're seeing in terms of pipeline build bookings within DFR and whether the executive orders have started to spur any further activity there.
Thanks Andrew up next. We have willpower at beard.
Okay, great. Thanks. And uh, yeah, congratulations. Uh, all all the results. I, I want to start on platform Solutions. Um,
Yeah, obviously a really nice acceleration. I recognize smaller numbers, but I think, you know a strategically, you know, very important longer term. So I'd love if you could help us
Rick Smith: Let me maybe jump on initially, Josh, and talk about CounterDrone. I mean, basically, I'm sure you all saw Operation Spider Web. You know, we've seen drones becoming more and more prominent in the war in Ukraine and in the Middle East. But, you know, just the ability for Ukraine to take out a sizable percentage of Russia's strategic bomber fleet with, you know, $1,000 FPV drones, and then similar things to be done by Israel deep in the heart of Iran, I think has got everybody's attention. Whether you run a stadium or a nuclear reactor or a power station or are responsible for protecting an executive's home, the world is suddenly keenly aware that these small drones are the biggest threat vector at scale because anyone can do it.
In a counter drone success, maybe any kind of breakdown or color, you can share, you know, across law enforcement versus Enterprise. And if I take that a step further, I if I stick with droves be great to get any perspective. As to what you're seeing in terms of pipeline build bookings, within dfr. And whether the executive orders have started to Spur any further activity there,
Rick Smith: And none of the traditional defense mechanisms, none of our air defense systems are designed, excuse me, around that threat. And our acquisition of DDRON and AD and his team have been just phenomenal to have identified this early. And I think we're in a really strong position to, you know, I'd say we are certainly a market leader. And, you know, we're seeing just a ton of demand across the spectrum for people realizing they need solutions here. And so I'm spending a lot of my time going deep on, you know, how do we maintain that leadership and grow it and deal with these new threats like, you know, these fiber optic drones that we're now seeing deployed widely in Russia and Ukraine, where those are unjammable because they're flying with a physical connection.
Let Me Maybe jump on initially Josh in talk about counter drone. I mean basically I'm sure you all saw operation spiderweb. Uh, you know we've seen drones becoming more and more prominent in the war in Ukraine and in the Middle East. But, you know, just the ability for Ukraine to take out a sizable percentage of uh Russia's strategic bomber Fleet with you know thousand dollar fpv drones uh and then similar things to be done by Israel. Deep in the heart of Iran, I think it's got everybody's attention whether you run a stadium, or a nuclear reactor, or a power station or a responsible for protecting the executive's home. Um, the the world is is is suddenly keenly aware that these small drones are the biggest Threat Vector at scale because anyone can do it and none of the traditional defense mechanisms, none of our
Our air defense systems are designed, excuse me, around that threat uh and our acquisition of drone and add and his team have been just phenomenal uh to have identified this early and I think we're in a really strong position.
To, uh, you know, I'd say we are, uh.
Rick Smith: And so we're digging deep on, okay, how do we extend our solution set to cover? This thing is iterating at incredible speed. So, and with that, Josh, I don't know if you want to add anything on any of the other near-.
Certainly a market leader. Um, and you know, we're seeing just a ton of demand across the Spectrum for people. Realizing they need Solutions here. It's always been a lot of my time going deep on, you know, how do we maintain that leadership and grow it? And, and deal with these new threats? Like, you know, these fiber optic drones, uh, that we're now seeing deployed widely in Russia and Ukraine um where those are on jamm because they're flying with a physical connection. Uh and so we're we're digging deep on. Okay. How do we extend our solution set? Uh to cover? This thing is iterating it. Incredible speed.
Josh Isner: No, maybe just the fact that one of the reasons, and we had mentioned this when the acquisition closed, is we really believe we can lead with DDRON in some international markets. And I think, you know, in certain places, that's not only very relevant to today, but a nice difference where, you know, some of the new products that we're acquiring, we can get in the door, so to speak, with those and with a lot of interest from a customer. And then when a customer is ready to move to body cameras or less lethal or video aggregation or AI, you know, we're better positioned to participate in some of those opportunities.
Brittany Bagley: And, well, I'll just jump in. Just so you know, on that segment, you can hear the enthusiasm around CounterDrone. That also has fleet in it. It has VR in it. And so I think part of what you're seeing is every category in that segment is growing really nicely. We're obviously thrilled to add in the CounterDrone. But I would also just say, you know, because of the size of that, you should expect some lumpiness in that segment going forward as, you know, CounterDrone can win a big deal, you know, at one time. And then I would just, you know, we're just, we're happy with all the products in that segment. So keep in mind they're all doing well.
And with that Josh, I don't know if you want to add anything on, uh, any of the other, like, maybe just maybe just the fact that I 1 of the reasons and we, we had mentioned this, when the acquisition closed is we really believe we can lead with drone in some International markets. And I think, you know, in, in certain places. That's, that's not only very relevant to today. But but a, a nice difference, where, you know, some of the new products that we're acquiring we can we can get in the door so to speak with, with those. And with the, you know, a lot of interest from a customer. And then when a customer is ready to move to body cameras or less lethal or video aggregation or AI, you know, we're better positioned to participate in some of those opportunities.
Andrew Sherman: Okay, and then anything you can add just with respect to the DFR, you know, side of the equation in terms of how that pipeline's building and kind of level of activity? Because that seems like another really nice longer-term opportunity as well.
And well, I'll just jump, just jump in. Just so, you know, on that segment, you can hear the enthusiasm around counter drone that also has sweet in it. It has VR in it. And so, I think part of what you're seeing is every category in that segment is growing really nicely. We're obviously thrilled to add in the the counter drone. Um but I would also just say you know because of the size of that you should expect some lumpiness in that segment going forward. As as you know counter drone can win a big deal, you know, at 1 time. Um and then I would just, you know, we're just we're happy with all the products in that segment so keep keep in mind, they're all doing well.
Rick Smith: Sure thing, Will. I would definitely say we're excited about DFR. And one of the things kind of taking shape in DFR, or drones as a first responder, is that while we don't manufacture the hardware for outdoor DFR, there are opportunities popping up around the hardware that, you know, create a lot of value for the customer. Things like live streaming, having the evidence in evidence.com, and so forth. And then even figuring out how we get drones in the sky faster through software even before 911 calls in. So I think there's a lot of exciting work around DFR. And then, you know, frankly, the biggest relevance, you know, at AXON on our product portfolio right now is DDRON, which makes sure the skies are safe for drones to fly.
Okay then, is there anything you can add with respect to the DFR side of the equation in terms of how that pipeline is building and the level of activity? Does that seem like another really nice longer-term opportunity as well?
Rick Smith: So, you know, a lot of people, you know, associate DDRON with the CounterDrone and tracking, you know, nefarious drones and taking them out of the sky. But another big benefit there is, you know, a police department using DDRON can see the entire map throughout their city of where their own drones are. So we think we'll be relevant in the DFR space for a long time. Skydio, you know, and us, we have a great partnership. We would say it's going very, very well, and we're excited about what the future holds there.
Sure thing will, um, I, uh, I would definitely say we're, we're excited about dfr and 1 of the things, kind of taking shape in dfr or drones as a first responder, uh, is that, uh, while we don't manufacture the hardware for outdoor dfr, there are opportunities popping up around the hardware, uh, that, that, you know, uh, create a lot of value for the customer things, like, live streaming, having the evidence, and evidence.com, and so forth. And then, even figuring out how we get drones in the sky faster through the software, even before 9111 calls in. So I think there's a lot of exciting work around dfr and then, you know, uh, frankly the biggest relevance, you know, at apps on our product portfolio right now is dedrone which makes sure the skies are safe for drones to fly. Uh, so, you know, a lot of people, you know, associate deed drone with counter drone and tracking, you know, uh, nefarious drones, and taking them out of the sky. But another big benefit there is, you know, a police department using D drunk, can see the entire map throughout their city of where the
Where their own drones are. So uh we think we'll be relevant in the dfr space for a long time, uh skydio, uh, you know and us, uh we have a great partnership. We would say it's going very, very well and we're excited about what the future holds there.
Eric Lapinski: Great, thank you all.
Rick Smith: Thanks, Will.
Eric Lapinski: Thanks, Will. Up next, we have Mike Ng at ColtonTechs.
Okay, great. Thank you all. Thanks, Will.
Josh Reilly: Great, good afternoon. Thanks for the question. I just have one on the high 30% bookings growth guidance. You know, I think it implies about $7 billion, which would be about $2 billion of bookings growth year over year. Could you just talk a little bit about, you know, what's driving that, you know, doubling of annual bookings growth that you've, you know, had historically, I think relatively consistently? Is it, you know, just the AI aeroplane and some of the momentum there, or are the length of the deals changing at all? Anything you could just talk a little about in terms of kind of, you know, pipeline giving you that confidence or, you know, deals closed to date would be helpful. Thank you.
Thanks will up next. We have Mike Ang at Goldman Sachs.
Great, good afternoon. Uh, thanks for the question. I I just have 1 on the high 30%. Bookings growth guidance. Um, you know, I think it implies about 7 billion dollars which would be, um, about 2 billion dollars of bookings growth year-over-year. Um, could you just talk a little bit about, you know, what's, what's driving that, you know, doubling of annual bookings growth that you've, you know, have had historically? I think relatively consistently, um, is it, you know, just the AI era plan and some of the momentum there or are the length of the deals changing at all. Um, anything you can just talk a little about, in terms of kind of, um,
Rick Smith: Sure thing, Mike. Good to hear from you again. And on your question, I'd say, you know, we've said for a long time, and Jeff brought, you know, this framework to AXON when he first joined, which was, hey, we want to be really, really good at selling new products to existing customers. So that's our US customer base. And there we're talking about, you know, drones, AI, virtual reality, thesis, DDRON, all of our, you know, software add-ons that we continue to build, you know, and as well as iterating on the Taser and body camera. And then you combine that with selling existing products to new markets.
You know, pipeline giving you that confidence or, you know, deals closed to date. Uh would be helpful. Thank you, sure thing, Mike. Good to hear from you again and, and on your question I'd say, you know, we've said for a long time and Jeff brought, you know, this framework to axon when he first joined, uh, which was hey, we want to be really, really good at selling, uh, new products to existing customers. So that's our Us customer base and their we're talking about, you know, drones AI virtual reality, fuses, D drone,
Rick Smith: And there we're talking about international enterprise and federal, where we can take the things that are very successful in state and local, and all of a sudden, you know, customers in those other segments are starting to see really, really good product market fit there. So it's not one thing, and that's one of the things we're most excited about, is we feel like we're very diversified. We have a lot of ways to win the game, so to speak, and we're going to keep investing in all of them because we see a ton of opportunity ahead.
Josh Reilly: Great. Can I just maybe get a quick follow-up on international? I mean, I think, you know, accelerating growth, I think the best year over year in quarter-on-quarter growth there, you know, maybe some of the key markets where you're getting the most traction. You know, I heard the mention about, you know, Taser in Africa, but would love some detail there. Thank you.
Uh, all of our, you know, software add-ons that we continue to build, you know, and and as well as iterating on the taser and body camera and then you combine that with selling existing products to New Markets uh and and their we're talking about International Enterprise and federal where we can take the things that are very successful in state and local and all of a sudden, you know, customers and those other segments are starting to see really, really good product Market fit there. So it's not 1 thing, and that's 1 of the things we're most excited about is we feel like we're very Diversified, we have a lot of ways to win the game so to speak. And uh, and and we're going to keep investing in all of them because uh, we see a ton of opportunity at
Rick Smith: Yeah, I appreciate the question. We tend to be a little less specific about where we're going internationally, only because, you know, as a competitive group, we don't want to tip anything off here. But we do see opportunity across LatAm, certainly the UK and Europe, and then certain segments within Asia as well. So very much feeling like, hey, you know, over the next few years, international should continue to be really, really exciting. I mentioned Cameron, our CRO, had come in, and he just, as of Q2, celebrated his one-year anniversary. And we're certainly seeing the investments of having a CRO in Europe with the team over there starting to pay off as well. So yeah, much more to come on that.
Josh Reilly: Great. Thank you, Josh.
In quarter on quarter growth there, um, you know, maybe some of the key markets where you're getting the most traction, you know, I heard the the mention about, you know, taser in Africa but um, would love some detail there. Thank you. Yeah, I appreciate the question, we, we tend to be a little less specific about where we're where we're going internationally, only because, uh, you know, as as a competitive group we don't, we don't want to tip anything off here. But, uh, we do see opportunity across, uh, latam, uh, certainly the UK and Europe, and then, uh, certain segments within Asia as well. So, uh, very much, uh, feeling like, hey, you know, over the next few years International should continue to be really, really exciting, uh, mentioned Cameron. Our, our C or C had come in. Uh, and he just uh, as of Q2 celebrated his 1 year anniversary and and we're certain seeing the Investments of having a cro in Europe with the team over there starting to pay off as well. So um yeah much more to come on that.
Brittany Bagley: I just, and going, you know, one of the things about some of our international deals is they tend to be pretty big deals. So you can see, you know, a little bit in quarters where you have a big international deal come in. I think in Q2, you saw us do a couple of really big international deals, incredibly exciting. I think a huge amount of momentum there. I don't know, because there's also so much momentum in state and local and other parts of our business. I don't know that you'll see it maintain at that sort of 20% level that we hit this quarter, but you know, tons of momentum behind some of those international bookings and the rest of the business.
Great. Thank you Josh. I just I'm going, you know, 1 of the things about some of our International deals is they tend to be pretty big deals. So you can see, you know, a little bit in quarters where you have a big International deal. Come in. I think, in Q2 you saw us do a couple of really big International deals. Incredibly exciting. I think huge amount of momentum there. I don't know because there's also so much momentum and state and local and other parts of our business. I don't know that, you'll see it maintained at that sort of 20% level that we hit this quarter but um,
Josh Reilly: Great. Thank you, Brittany.
You know, there's tons of momentum behind some of those international bookings and the rest of the business.
Great. Thank you. Brittany.
Eric Lapinski: Thanks, Mike. Up next, we have Mina Marshall at Morgan Stanley.
Jordan Lyonnais: Great, thanks, and congrats on the quarter. You know, just as the AI bookings have picked up, just what kind of lessons have you guys learned about kind of getting through some of the hurdles from state and local? Is it, you know, having reference customers, you know, just getting what kind of oil has been put in the gears to kind of move those along? And then maybe just as a second follow-up question, just obviously a lot of immigration dollars, enforcement dollars, and OBVB, you know, just where you guys kind of see opportunity there. Thanks.
Thanks, Mike. Up next, we have Mina Marshall at Morgan Stanley.
Rick Smith: Sure. On the AI bookings question, Mina, I think really it's the same thing that we kind of, you know, really believe in across all our products, which, you know, is when you put products in the hands of users and let the users give you feedback and experience them and see the value themselves, there is no amount of sales or marketing or packaging or anything else that compares to that. So, you know, when customers start to use a product like Draft One for 60 days and they say, man, I'm spending a full day more every week on the road fighting crime as opposed to sitting behind a computer, those are the kinds of stories that just build.
Great, thanks. And congrats on the quarter. Um, you know, just as the AI bookings have picked up. Just what kind of lessons have you guys learned about kind of getting through some of the hurdles from state and local? Is it, you know, having reference customers, you know, just getting what kind of oil has been put in the gears to kind of move those along? And then maybe just as a second, follow-up question just, um, obviously a lot of immigration dollars, enforcement dollars and obb, you know, just where you guys kind of see opportunity uh there. Thanks sure. Um, on the AI, uh, uh, bookings question. Uh, media. I think really, it's, it's the same thing that that we kind of uh, you know, really believe in across all our products, which, you know, is when you put products in the hands of users and like the users uh, give you feedback and experience them and and see the value themselves. There is no amount of sales or marketing or packaging or anything else that compares to that. So,
Rick Smith: Or, you know, with our AI assistant in the real-time translator, you know, you have customers at the border or in Canada and Quebec or whatever the case may be, saying like, man, this is really relevant and practical for what I need to do my job. And that's kind of our bar for these AI products, is this isn't like hand-wavy stuff. This is the stuff that keeps police safe, communities safe, and allows police to be in the communities fighting crime as opposed to behind a computer. So, you know, and the best part is we're still on like our own five-yard line of the football field. We got a long way to go and a lot of great ideas about how to deliver more and more cutting-edge AI products to public safety. And then your second question, do you mind reminding me what that was?
You know, when customers start to use a product like draft 1 for 60 days and they say, man, I'm I'm spending a full day more. Every week on the road fighting crime, as opposed to sitting behind a computer, those are the kinds of stories that just build or, you know, with our AI assist in the real time translator, you know, you have customers at the border, or in, in, in Canada, and Quebec, or whatever the case may be saying, like, man, this is, this is really relevant and practical for what I need to do my job. And, and that's kind of our bar, for these AI products is this isn't like hand wavy stuff. This is the stuff that keeps police, uh, safe communities, safe and allows police, uh, to be in the communities, uh, fighting crime as opposed to behind a computer. So, uh, you know, uh, and and the best part is we're still on like our own 5 yard line of the football field. We got a long way to go and a lot of great ideas about how to deliver more and more Cutting Edge AI products to Public Safety.
Eric Lapinski: Just immigration enforcement dollars, that opportunity.
Rick Smith: Sure thing. So, yeah, the government, you know, the federal government, we believe between, you know, Q1 of their calendar year, which is, or their fiscal year, which is Q4 of our calendar year, we'll start to see more and more solicitations, whether they're RFIs or RFPs for products that they're looking into with this, you know, with this money coming out of this bill. And so for us, that's really around CounterDrone, certainly, you know, the video products like Thesis, drone technology, and beyond, maybe some Taser as well. So we're, you know, right now, you know, as a team, even earlier today, started to sit down and say, you know, map out the customers and figure out, you know, what we expect the opportunity to be in each, you know, each of those customers and see how we can help.
And then your second question. Do you mind reminding me? Um, what that was? Oh, uh, the immigration enforcement dollars that opportunity? Yeah, sure thing. So, uh, a more. Yeah, the the government, uh, you know, the federal government We Believe between, uh, you know, q1 of their calendar year, which is, uh, or their fiscal year, which is Q4 of our calendar year. We'll start to see more and more uh, solicitations whether they're rfis or rfps for products that they're looking into, uh, with this, uh, you know, with this money, uh, coming out of this bill. And so, for us, that's really
Rick Smith: And frankly, you know, with some of these federal agencies being among our largest customers in the US, we believe we're well positioned to be able to demonstrate how much we can help right now.
Eric Lapinski: Great, thanks. Thanks, Mina. Up next, we have Joe Cardoso at JP Morgan.
Around counter drone, uh, certainly, you know, the video products, uh, like fuses, uh, drone technology, um, and, and Beyond maybe some taser as well. So we're, we're, you know, we're right now, you know, as the team even earlier today started to sit down and say, you know, map out the customers and figure out, you know what, we expect the opportunity to be in each each, you know, each of those customers and, and see how we can, uh, uh, help. And, and frankly, you know, with, uh, with some of these federal agencies being among our largest customers in the US, we we're, we believe, we're well positioned to be able to demonstrate how much we can help right now.
Great, thanks.
Joseph Cardoso: Hey, guys, congrats on the results and thanks for the question. Maybe a follow-up to the last question, but in a different context. You know, you guys talked about the big beautiful bill and the opportunity there, I think, fairly well in terms of the different avenues you guys can participate in it. Maybe can you just touch on the programs that are ongoing in Europe and in a similar manner in terms of, like, are opportunities there? You know, where is AXON well positioned? Is there anything different in terms of the different programs in the US? And then as we think about both the US programs and the European programs, can you just help us think about the timing of these opportunities and then maybe just hitting it on the nose, is any of this baked into the back half outlook in terms of bookings?
Joseph Cardoso: Is like, are you guys already seeing any of this goodness? Thanks for the question.
Eric Lapinski: So, Rick, why don't you start since you've been over in Europe for the better part of the summer and meeting with customers here?
Rick Smith: Yeah, I would tell you the visibility is certainly rising. I had my first ever meeting with a prime minister of a NATO nation. Last week, I met with several ministers of the interior level folks. There is a ton of, you know, just a ton of need. I mean, the social displacement that has been happening in Europe, the amount of, they're dealing with their own immigration problems as well, but you know, with the best intentions, Europe sort of took in a lot of folks and is now realizing that they weren't set up to integrate all those people and they're seeing surging social problems. I was getting questions regarded, related to border security where they're seeing, frankly, hybrid warfare from the Russians, like pushing sort of an encouraging mass migration across the borders is a destabilizing function.
Hey guys, congrats on the results, and thanks for the question. Um, maybe a follow-up to the last question, but in a different context, you know, you guys talked about the big, beautiful bill, and the opportunity there, I think fairly well in terms of the different Avenues, you guys can participate in it. Maybe can you just touch on the programs that are ongoing in Europe and in the similar manner, in terms of like our opportunities theirs. You know where is axon? Well, positioned, is there anything different in terms of the different programs in the US? And then as we think about both the US programs and the European programs, can you just help us think and think about the timing of these opportunities and then maybe just hitting it on the. Nose is any of this baked into the back? Half Outlook in terms of bookings, is like, are you guys already seeing any of this? Goodness, thanks for the question. So Rick, why don't you start since you've been over in Europe for the better part of the summer meeting with customers here? Yeah, um I would tell you the visibility is is certainly Rising. Um the I had my first ever meeting with a a prime
Minister uh a NATO Nation. Uh in the last week I met with uh several Ministers of the Interior level folks, um there is
A ton of, uh, you know, just a ton of need. I mean, the social, uh, displacement that has been happening in Europe. Uh,
The amount of they're dealing with their own immigration problems as well. But, you know, with the best of intentions, Europe sort of took in a lot of folks and is now realizing that.
They're they were set up to integrate all those people and they're, they're seeing surging social problems. Um, I was getting questions regarding related to, uh, border security where um, they're seeing frankly, hybrid Warfare from the Russians uh, like pushing sort of an encouraging Mass uh,
Rick Smith: And, you know, one example, I had border guards asking if we could tune the Taser 10. Right now, the Taser 10 can handle up to three people that you would hit with it. And we generally discourage thinking about using a Taser 10 on multiple people because in the United States, we're very focused on civil rights. And like if you hit the first person, the second person, and then the first person complies, but the second doesn't, you know, you might have a problem legally if you activate and hit both of them. Like when I bring that up as a concern to these European border agencies, they're like, that is not our concern. We're getting overwhelmed and we're literally going to be shooting and killing people en masse here at the rate things are going.
Migration across the borders is a destabilizing function. Uh, and you know, 1 1
At border guards asking if we could tune the Taser 10 right now, the Taser 10 can handle up to 3 people that you would hit with it. And we generally discourage thinking about using a Taser 10 on multiple people. Because in the United States, we’re very focused on civil rights. And like, if you hit the first person, the second person, and then the first person complies, but the second doesn’t, you know, you might have a problem legally if you activate and hit both of them. Like, when I bring that up as a concern to these European border agencies,
Rick Smith: And there's an opportunity, you know, for Taser to become really a primary defensive weapon. And I think the need for that is rising in Europe. On the other side of things are real-time translation. We actually had to shift our priorities so that we could get it translating into a non-English language as its primary language in order to meet an Eastern European country's immediate need. And that went extremely well. So I think the real-time translator as well is being seen as just like a have-to-have capability. And that is opening up. I'm personally involved in two countries that, in full disclosure, I probably couldn't have picked out exactly. I could point out generally where they were on the map.
They were like that is not our concern. We're getting overwhelmed and we're literally going to be shooting and killing people and mass here at the rate things are going. Um and there's an opportunity, you know, for taser to become uh really a primary defensive weapon and I think the need for that is rising in Europe. The uh on the other side of things are real-time translation. We we actually had to shift our priorities so that
Rick Smith: I couldn't have told you which ones they were that are now, you know, talking to us about very large deals, like larger than deals we'd ever signed as of a few years ago and up with some of the larger ones we're signing now. So, you know, I don't want to get too far ahead of my skis that, you know, that this is all going to happen quickly. But the overall level of interest across the board is really very high.
Uh, we could get it translating into a non-english language as its primary language, uh, in order to to meet an Eastern European countries, immediate need, uh, and that went extremely well. So I think the real-time translator as well is, uh, uh, is being seen as just like a have to have capability and that is opening up. Uh, I'm I'm personally involved in 2, uh, 2 countries that in full disclosure. I probably couldn't have picked out exactly. I could point it generally where they were on the map. I couldn't have told you which ones they were, um, that that are now, you know, talking to us about very large deals, like, larger than deals. We'd ever signed as of a few years ago and, and up with some of the larger ones we're signing now. So, uh, you know, I don't want to get too far ahead of my my skis that, uh,
Josh Isner: And Joe, your question also included kind of bookings of some of that baked in, you know, already or in the back half. We do expect Q3 and Q4 to be very exciting quarters for our international business. Now look, we've got to go execute and prove it, but certainly pipeline-wise, we're pleased with what we're seeing there.
You know that this is all going to happen quickly, but the overall level of interest across the board is really very high.
Keith Housum: No, I appreciate the color, guys. I'll drop out. Thanks.
Um, uh, Joe your question also included kind of bookings as some of that baked in, you know, uh, already or in the back half, we do expect Q3 and Q4 to be very exciting, uh, quarters for our international business. Now, look, there's we've got to go execute and prove it but certainly pipeline wise. Uh, we're we're, we're pleased with what we're seeing there.
Eric Lapinski: Thanks, Joe. Up next, we have Jonathan Howe at William Barrett.
No, appreciate the color, guys. I'll drop out. Thanks.
Thanks Joe up next. We have Jonathan. Ho at William Blair.
Jonathan Ho: I apologize, Frank, I'm going to wait. I'm going to wait for you to maybe help us understand how your second half bookings are potentially shaping up, just given your commentary that it could be as large as last year. And what underpins that confidence here? Is your visibility perhaps even better than what we saw last year?
Yeah, the podcast.
Way for you to make help us understand how your uh second half bookings are potentially shaping up. Just giving your comments area that it could be as large as last the air. And you know, what's the underpins that confidence here is your visibility? Perhaps even better than what we saw last year.
Rick Smith: Yeah, Jonathan, I mean, I think our sales leaders would tell you this isn't a hobby at this point. Like this is what they're good at and this is, you know, what our pipeline indicates. And, you know, we've given a lot of bookings commentary over the last three or four years. And I think as you've seen, we've been able to deliver on what we've said and we feel no differently right now. We have a ton of confidence and fidelity in our pipeline. And we're even, you know, frankly, halfway through Q3, we're already, you know, at a very productive July. And so the things are that, you know, we've got very, very, very strong sales professionals that believe in our mission and that believe in our customers. And it just shows quarter after quarter.
Rick Smith: And I'm really, really proud of the team and have a feeling I'll continue to be saying that or, you know, I'll continue to say that for a long time. So we're very confident we're going to have a big second half bookings-wise.
A lot of bookings commentary over the last 3 or 4 years. And I think, as you've seen, we've been able to deliver on on, on what we've said and we feel no differently right now, we have a ton of, uh, confidence in, in Fidelity in our Pipeline and, uh, we're even, you know, frankly halfway through Q3 we're we're already, you know, we had a very productive July and so, uh, the things are that, that, you know, we we've got very, very, very strong sales professionals, uh, that that believe in our our, our mission and that believe in our customers. And it just shows quarter after quarter and, um, a really, really proud of the team and, and uh, have a feeling. I'll I'll continue to be saying that or, you know, continue to say that for a long time. So um, we're we're, we're very confident. We're going to have a big second half booking slice.
Jonathan Ho: So quick follow-up, you know, within your premium software offering, is there a way to maybe unpack for us, you know, what is the most common upgrade path? You know, what is maybe contributing the most to growth and how much runway do you see to sort of sustain that growth from here? Thank you.
Rick Smith: Sure. And just across the ecosystem in terms of upgrades? Jonathan?
Just a quick follow-up. You know, within your premium software offering, is there a way to maybe unpack for us? You know, what is the most common upgrade path? You know, what is maybe contributing the most to growth and how much do you see this sort of sustaining that growth from here? Thank you.
Sure. And and just a cross, the ecosystem uh, in terms of upgrades.
Uh, Jonathan.
Jonathan Ho: Yes, just in terms of the, yeah, the yeah, across the ecosystem, you know, what's driving the premium software offering to see the type of growth that it is?
Rick Smith: Sure. You know, I think generally speaking, customers tend to buy, they're most price-focused in their first contract, whenever that may be. And so you see, you know, maybe you definitely, you know, don't see OSP as commonly as you do with existing customers or Office of Safety Plan. You tend to see a customer buying maybe some Tasers and some body cameras and kind of the core feature set of evidence.com. But then, you know, a lot of our products have been built as a result of customers expressing where they want to go next in their program. So inevitably, you know, customers that are newer are going to hit those same points along the way and say, hey, it would be nice if I could add this, this, and this. And then that becomes an Office of Safety Plan conversation.
Rick Smith: And, you know, with AI now, you know, on top of the Office of Safety Program or Office of Safety Plan, again, that's just, you know, for those customers that have been on OSP for a while, they start to see the value of these AI features, you know, on top of what they're already doing. So I think it's a really nice path that our customers take, you know, to adopting more and more. And, you know, frankly, we're very disciplined about, you know, measuring how customers use new products and making sure that they're very pleased with what they're seeing in new products. And then years later, that kind of manifests itself in terms of adoption. So, yeah, that's a little bit about how we get from A to B there.
Yes. Uh just in terms of the yeah, the yeah, across the ecosystem. You know what? What's driving the premium software offering to uh, see the the type of growth that is sure. You know, I I think generally speaking, uh, customers tend to buy, uh, their their most price focused in their first contract, whenever that may be. And so you see, you know, maybe you definitely, you know, don't see OSP as as commonly as you do with existing customers or offices or safety plan, you tend to see a customer buying, maybe some tasers, and some body cameras, and kind of the core feature set of evidence.com. But then, you know, a lot of our products have been built as a result of customers expressing where they want to go next in their programs. So inevitably, you know, customers that are, that are newer are going to hit those same points along the way and say, hey, it would be nice if I could add this, this and this. And then that becomes an officer safety plan conversation. And you know, with AI now, you know, on top of the officer safety program,
Or officer safety plan. Again, that's that's just you know for those customers that have been on OSP for a while, they start to see the value of these AI features, you know, on top of what they're already doing. So I think it's a really nice path, uh, that our customers take, you know, to to adopting more and more. Uh, and and, you know, frankly we're, we're very disciplined about, you know, measuring how customers use new
Brittany Bagley: I think the only thing I would add to that, Jonathan, is remember that because of the pace of our product innovation, many of the products that are available now might not have been available when the customer was originally signing up. And so as they come back and we naturally have more software features, functionality, capability, it's just a different conversation that we can have with them in terms of what's even in some of these more premium bundles. And I think that's a lot of what continues to drive that. And AI only helps that conversation.
Products and making sure that they're very pleased with what they're seeing in new products, and then years later, that kind of manifests itself in terms of adoption. So, um, yeah, that's a little bit about how we get from A to B there.
I think the only thing I would add to that Jonathan is is remember that because of the pace of our product Innovation, many of the products that are available now might not have been available when the customer was originally signing up and so as they come back, and we naturally have more software features functionality capability. It's just a different conversation that we can have with them in terms of what's even in some of these more premium bundles. And I think that's a lot of, a lot of what continues to drive that and AI only helps that conversation.
Rick Smith: Thank you.
Thank you.
Eric Lapinski: Thanks, Jonathan. Up next, we have George Nodder at Wolf Research. Welcome back, George.
Rick Smith: Hey, thanks, George. I think Eric's got a pre-established list here in terms of how we go through the questions. So sorry, we're not intentionally ignoring your handoff. We're just going through the list ahead of time.
Jeremy Hamblin: Thanks a lot. All right, I appreciate that. I guess kind of tacking on to the last question, you guys threw out a $600 price point, I think, for some deals this quarter in terms of per officer metric. I guess I'm just curious, and you know what you said, Josh, a few moments ago, I think makes sense just in terms of, you know, customers kind of layering in more pieces of the AXON solution into the bundle. But are there comparisons you can give us for a year ago, two years ago, three years ago to help us understand sort of the path to, you know, $600 per officer? What metrics can you share?
Thanks Jonathan up. Next, we have George nodder at Wolfe research. Welcome back George. Hey, thanks for the Eric's. Got a pre-established list to your um, in terms of how we go through the questions. So sorry, we're not intentionally ignoring your hand up. We're just going through the list ahead of time.
Thanks a lot. All right, I appreciate that. I, I guess kind of tacking on to the last question. You guys threw out a 600 dollar price point, I think for, uh, some deals this quarter terms of per officer metric. Um, I guess I'm just curious. And you know what you said? Josh a few moments ago, I think it makes sense. Just terms of, you know, customers kind of layering in,
More pieces of the Axon solution into the bundle. But
Rick Smith: Yeah, certainly directionally, for sure. Two or three years ago, you know, maybe call it three years ago, the top offering in OSP, our Office of Safety Plan, might have been in the mid-200s. And then we started adding drones and DDRON and thesis as additional value. We never just simply inflate the price of Office of Safety Plan. If the price changes, it means there's more added to the bundle. And that's kind of what's happened, you know, from year to year. So now we're in the mid-300s just on Office of Safety Plan alone. And then you combine the AI aeroplane, which, you know, lists price of $199 a month. And then you add, you know, in-car video, for example. You add DDRON across your enterprise. You own, you add thesis, all things, you know, that you build out more and more.
Are there comparisons you can give us for a year ago, two years ago, three years ago, to help us understand sort of the path to, you know, $100 per officer? What metrics can you share?
Yeah, certainly directionally, for sure. Um,
Rick Smith: And that's where we're seeing some of these numbers in, you know, in the right around the 600s in terms of, you know, monthly value per user. And so certainly, you know, look, like it's great to see some customers doing that, but our job is to communicate the value to every customer so that they appreciate, you know, still the incredible ROI they get even at those numbers. And so that's really what we're focused on right now.
Jeremy Hamblin: And was that typical, that number, was that a typical number for deals that you closed this quarter, or is that sort of the high end?
Rick Smith: No, that's the high end. That's definitely, you know, that drove our largest, you know, deal in US history and company history now. And, you know, we do think that's a promising side of things to come, but certainly wouldn't, you know, set the expectation that, you know, even the majority of the customers are available right now.
Just on officer, safety plan alone and then you combine the AI era plan which you know, list price, 199, uh a month and then you add, you know, inkaar video. For example, you add D drone across your Enterprise, you own, you, you add fuses, uh, all things, you know that you build out more and more. And that's where we're seeing some of these numbers, uh, in, you know, in the, in the right around the 600, in terms of, uh, you know, uh, monthly value per user. And so, um, certainly, you know, look like it's great to see some customers doing that, but our job is, is to to, uh, communicate the value to every customer so that they appreciate, you know, uh, still the incredible Roi, they get even at those numbers. And so, that's really what we're focused on right now and with that. Typical that number was that a typical number for deals that you close this quarter or is that sort of the high end know, that's the high end that, that, that that's definitely, you know, that that drove our largest, you know, deal in in US.
Jeremy Hamblin: Sure. And then at one point, you guys gave us a mix of business coming from Office of Safety Plan. Is there an updated number there? I seem to remember a 20% number. Is that still the right ballpark, or is it higher now?
History and Company history. Now uh and you know we we do think that's a promising side of things to come but certainly wouldn't, you know, set the expectation that you know, even even the majority of the customers are there for sure. Sure. And then at 1 point, you guys gave us a mix of, uh, business coming from officer. Safety plan is there, is there an updated number there? I, I seem to remember a 20% number is that, is that still the right ballpark or is it higher now?
Brittany Bagley: No, we don't have an updated number on that. What we said a quarter or two ago was that about 70% of our customers, I think we said it last quarter, about 70% of our customers were still on one of our basic plans. And so lots and lots of room to upgrade. So to Josh's point, like we don't give an actual ARPU number. It could be as high as 600, but we still have so many customers that are not coming in and buying our whole suite of products. And so when we talk every quarter about our amazing software growth, like some of it is the natural like rotation that you see as our customers come back in and as they do upgrade and as they move up their price point.
Uh, no. We don't have an updated number on that. What we said a quarter or two ago was that about 70% of our customers— I think we said it last for about 70% of our customers— um, we're still on one of our basic plans.
Jeremy Hamblin: Super. Thank you.
Eric Lapinski: Thanks, George. Up next, we have Melissa at Park Place.
And so, lots and lots of room to upgrade. So, to Josh's Point like we don't, we don't give an actual arpu number. It could be as high as 600, but we still have so many customers that are not coming in and buying our whole Suite of products. And so when we talk every quarter about our amazing software growth, like some of it is the natural like rotation that you see, as our customers come back in. And as they do upgrade, and as they move up their price point. Yeah. Super thank you. Thanks George up. Next, we have Alissa at Park Place.
Brittany Bagley: Hey, guys, just a quick follow-up on that. You know, the 70% still on basic plans with that upsell motion going, are you kind of seeing that number decelerate in terms of basic plans pretty quickly, or is this kind of a slow expansion? And then I just had a quick follow-up on the US international. Given the outperformance this quarter, should we kind of continue seeing, even with the strength of US, international now becoming a larger piece in the mix? Thanks.
Hey guys. Just
Rick Smith: Sure thing. Thanks for the question, Melissa. Maybe the second one first. The hard part about, I do think international is going to keep growing in a very exciting fashion. The hard part about talking about the mix is the US is growing very fast as well. So it's hard to, you know, really for it to take over a bigger and bigger part of the mix, that would mean the US is slowing down and it's the opposite right now. And so we think both that, you know, the total bookings rate will grow excitingly, but also that, you know, the international one, you know, will, you know, as a standalone. I just can't guarantee the mix is going to change all that much so long as the US keeps going on the path that it is right now, if that makes sense.
A quick follow-up on that. Um, you know, and the 70% still on basic plans with that, upsell motion going, um, are are you kind of seeing that, um, that number decelerate in terms of basic plans uh, pretty quickly? Or is this kind of a slow um, expansion. And then I just had a quick follow-up on the US International, um, given the outperformance this quarter. Should we kind of continue seeing, even with the strength of us. Um, International now, becoming the larger piece in the mix, thanks.
Rick Smith: And I did forget your first question and answering the second one first.
Sure thing. Uh, thanks for the question, Alyssa. Um, maybe the second 1 first, um, the hard part about the I do think International is going to keep growing in in a very exciting fashion, the hard part about talking about the mix is the US is growing very fast as well. So it's hard to, you know, really for for to take over a bigger and bigger part of the mix. That that would mean. The US is slowing down and and it's the opposite right now. And so, um, so we we think both that, you know, uh the total bookings rate will will grow excitingly. Uh but also that you know, the international 1, you know will you know as a standalone I just can't guarantee the mix is going to change all that much. So long as the US keeps uh going on the path that it is right now if that makes sense.
Brittany Bagley: I have that one, Josh. Alyssa, I think you can go back. We've sort of given that metric, you know, at points in time. I think we gave it when it was like 80% and then 75% and then 70%. So we are working our customers up. It's not like it turns all on in one quarter, right? It's like we are over time moving the customers up to those, you know, more premium plans. But the other point I would make is that what's in the premium plan, to Josh's comment, like we keep adding new things in it. And so how premium the plan is or how much they could pay as we get new products in over time, that also keeps moving up. So we have those two drivers, right?
Um and I I did forget your first question and answering the second 1 first, would you mind? Yeah, that was Josh Alyssa. I think you can go back. We've sort of given that metric, you know, at points in time, I think we gave it when it was like 80% and then 75% and then 70%. Um, so we are working our customers up. It's, it's not like it turns all on in 1 quarter, right? It's, it's like, we are overtime. Moving the customers up to those, you know, more premium plans. But the other point I would make is that the what's in the Premium plan to Josh's comment, like we keep adding new things in it. And so how premium the plan is or how much they could pay as we get new products. And over time, that also
Brittany Bagley: We have the driver of moving customers further up the plan and then actually just having more product offerings that they could come by.
Rick Smith: And the AI aeroplane being yet another new plan on top of that plan that they can do.
Keeps moving up. So we have those two drivers, right? We have the driver of moving customers further up the plan and then actually just having more product offerings that they could come by.
And then the AI era plan being yet another new plan on top of that plan that they can do.
Brittany Bagley: Thank you.
Eric Lapinski: Thanks, Melissa. Up next, we have Jeremy Hamblin at Kirk Allen.
Jeremy Hamblin: Thanks and congrats on the momentum in the business. So I wanted to come back and see if I could clarify something here in the platform solutions performance, exceptional growth, a lot of talk about, you know, DDRON. And I just wanted to see if I could kind of pointedly ask it, is DDRON the biggest driver of that growth in terms of kind of percentage or contribution to that year-over-year growth rate?
Thank you. Thanks, Alyssa. Up next, we have Jeremy Hamlin at Craig-Hallum.
Rick Smith: No, it's, I don't, Brittany, correct me if I'm wrong, but it's actually toward right now one of the smaller ones. And frankly, you know, growing every quarter, but certainly not the biggest driver of new product bookings growth.
Performance exceptional growth. A lot of talk about, um, you know, Deron. And I I just wanted to see if I could kind of pointedly asked. It is, is, is dedrone the biggest driver of that growth in terms of kind of percentage or contribution to that year-over-year growth rate know. It's I I don't Brittany. Correct me if I'm wrong. But it's actually toward right now 1 of the smaller ones um and and frankly you know growing every quarter but but certainly not the biggest driver of of of new product book. Bookings growth.
Brittany Bagley: Yeah, for sure. So if you're looking just inside of our platform sensors business, it was a big driver of the growth this quarter inside of platform sensors. But if you look at the overall business, it's just not a material driver of our overall growth. And again, that it'll be a little lumpy inside of that platform segment.
Inside of our platform sensors business.
Rick Smith: And therein lies the opportunity for, you know, ultimately we think there's a very relevant product. So we got a lot of white space in front of us and we're gearing up to execute well there. Yeah, a lot of, you hear me waxing during the call. It's rarely about the stuff that's selling well this quarter. It's stuff that I'm looking a year out.
It was a big driver of the growth, this quarter inside of platform sensors. But if you look at the overall business, um it's just not a material driver of our overall growth. Um, and again that it'll, it'll be a little lumpy inside of that platform segment. I hope they're they're in lies the opportunity for, you know, ultimately we think there's a very relevant product. So we got a lot of white space in front of us and we're gearing up to execute well there. Yeah, a lot of times when you hear me waxing, and during the call you you, it's rarely about the stuff that's selling. Well, this quarter, it's stuff that I'm looking a year out.
Jeremy Hamblin: No, I understood. I was clarifying just within that small segment of the business. I just wanted to understand. Okay, and then just in terms of there are a lot of moving parts in the business. There's a lot of different verticals that you're attacking. And, you know, I wanted to get a sense for from an investment in the team perspective. You know, as you're looking at product, as you're looking at maybe your sales and marketing teams, where do you need, I mean, my sense is there's just a shift in what you're looking at from where you were a year ago. Right? And not that there's a lot of the regular business. I mean, Taser grew 19% in the quarter. So there's a lot of the core business that's still doing incredibly well.
Jeremy Hamblin: But, you know, Jeff or Rick, Josh, where do you think you need to invest the most from an infrastructure perspective to really get the business where it needs to be over the next two, three, five years?
No, I understood I I was clarifying just within that small snake uh segment of the business. Um, I just wanted to understand. Okay? And and then just in terms of there are a lot of moving Parts in the business. There's a lot of, uh, different verticals that you're attacking. And, you know, I wanted to get a sense for from an investment in the team perspective. You know, as you're looking at product, as you're looking at, maybe your sales and marketing teams, where do you need? Um, I mean it my sense is, there's just a shift in uh, what you're looking at from where you were a year ago. Um, right. And not that there's a lot of of the regular business. I mean, taser, grew 19% in the quarter. So there's a lot of the Core Business. Um, that's still doing incredibly well. But you know, Jeff or, or or Rick? Josh, where do you think you need to invest the most from an infrastructure perspective to really get
Josh Isner: Maybe I'll start there and I'll kick it over to Rick and Jeff. But Jeremy, I think it's the same formula every year that the numbers might change, but it's really, we start with, we are going to relentlessly invest in R&D every year. Like that's core to who we are as a company. You know, this is an innovative company with an innovative founder, and we are going to continue to invest in every opportunity we can to pursue our mission, and especially when we're seeing such incredible buying signals from our customers. We do that at times, you know, at the expense of getting, you know, we try to fund that by getting leverage out of SG&A, so, or really G&A.
The business where it needs to be over the next 2, 3, and 5 years. Maybe I'll start there and I'll kick it over to Rick and Jeff. But Jeremy, I think it's the same formula every year, that the numbers might change. But it's really we start with, we are going to relentlessly invest in R&D every year. Like that's core to who we are as a company. You know, this is an innovative company with an innovative founder, and we are going to continue to invest in every opportunity we can to pursue our mission.
Josh Isner: Salespeople, you know, we look at, you know, where the opportunities are, and those are generally the easiest ones to say yes to, because, you know, when you're hiring a salesperson for X dollars and their quota might be $5 to $10 million a year, you get a very clear return on that. But we are very disciplined, you know, in the rest of, you know, the G&A segment around, hey, how do we use AI internally, just like our customers are using AI externally? How do we use AI to make sure that we don't need our team to balloon as our business grows? And so a lot of discipline in G&A, of course, a lot of investment in sales, and then relentless investment where we see opportunity in product.
And especially when we're seeing such incredible, buying signals from our customers. Uh, we do that at times uh, at, you know, at the expense of getting, you know, we try to fund that by getting leveraged out of sgna. So, uh, or really GNA, uh, salespeople. You know, we look at, you know, where the opportunities are. And those are generally the easiest ones to say yes to because, you know, when you're hiring a salesperson for X dollars and they're quota might be 5 to 10 million dollars a year. You get a very clear return on that, but but we are very disciplined. Uh, you know, in the rest of, uh, you know, the GNA segment around. Hey, how do we use AI internally just like our customers that are using AI externally? How do we use AI to make sure that that we don't need to our team to balloon as our business grows? And so a lot of discipline and GNA, of course, a lot of investment in sales and then Relentless investment where we see opportunity and product,
Rick Smith: Got it.
Eric Lapinski: If I could speak, go ahead. I think we're going to, we might move, Jeremy, because you had two, and we have 10 minutes left to get the five more. So we're going to try to do one question each.
Rick Smith: All good, thanks.
Got it. If I could speak. Go ahead. I think we're going to move Jeremy because you had 2, and we have 10 minutes left to get to 5 more. So we might try to do 1 question each.
Eric Lapinski: Yeah, thank you. So Josh Riley at Needham, you're up next.
Josh Reilly: Oh, yeah. Any update on the light posts and outpost camera opportunities in terms of the manufacturing ramp and the pipeline build? And then I just had a quick follow-up on drones after that.
Um, okay. Thanks. Yeah, thank you. So, Josh, Riley at NEM, you're up next.
Josh Isner: Sure. Very exciting to be, you know, live with a few customers already in trials. That's, you know, for a product that, you know, we announced in May and, you know, have really invested in a lot in the first half of the year to see, you know, poles in the ground and cameras working at certain large customers right now. That's obviously a great first signal. I also, you know, don't want to get out of our skis there. There are certainly things that we're learning and things that we need to do better as part of that. But that's, you know, that's just the cycle all of our hardware goes through. And we really believe we're on the right track. We think we're going to be very, very competitive in this market. And we're excited about the opportunity.
Oh, yeah. Uh, any update on the, uh, light posts and outpost camera opportunities in terms of the manufacturing ramp and the pipeline build? And then I just had a quick follow-up on drones after that.
Josh Reilly: Got it. And then just a quick question on the monetization of drones. When you're looking at the revenue that you're actually getting from drones, is it really just software revenue on the DFR programs, or is part of the hardware from the DFR programs recognized in your income statement and then passed along to Skydio? Maybe you could just help us understand how that dynamic's going to work.
Sure, very exciting to, to be, uh, you know, live with a few customers already in Trials. That's, you know, for a product that, you know, we announced in May and, and, uh, you know, have have really invested in a lot in the first half of the year to see, you know, pulls in the ground and cameras working at certain, uh, large customers. Right now. That's all a great first signal. I also, you know, don't want to get out of our ski there. There are certain things that we're learning and things that we need to do better as part of that. But that's, you know, that's just the cycle. All of our Hardware goes through and, and we really believe we're on the right track. We think we're going to be very, very competitive in this market. Uh, and and, and we're excited about the opportunity.
Eric Lapinski: Brittany, why don't you take that one if that's all right?
Brittany Bagley: Sure. So when we're talking about drones and things like platform sensors and all of that, what you're really hearing us talk about is the hardware piece of DDRON. And then the software piece of DDRON would be showing up in our software business. That's by far the bulk of it. We do partner with Skydio, and our partnership with Skydio is basically, you know, a referral fee that comes through. I would not think about them, you know, today as being a big part of that business, other than, you know, what else we can enable when we do partner with Skydio from a software standpoint, from an experience standpoint for our customers. So don't think about that as a big chunk of our revenue. Think about it as DDRON, everything DDRON can enable through DFR. But that's what you're seeing in the numbers.
Some drones. Um, when you're looking at the revenue that you're actually getting from drones, is it really just software revenue on the DFR programs, or does part of the hardware from the DFR programs recognize in your income statement and then pass along to Skydio? You could just help us understand how that dynamic is going to work. Brittany, why don't you take that one, if that's all right? Oh sure. Um, so when we're...
Josh Reilly: Very helpful. Thank you.
Talking about drones and and things like platform, uh, sensors. And all of that. What you're you're really hearing us talk about is the hardware piece of, um, the Drone. And then the software piece of drone would be showing up in our software business. Um, that's by far the the bulk of it. Uh, we, we do partner with skydio and our partnership with skydio is basically, you know, a referral fee that comes through. I would not think about them, you know, today as being a big part of that business other than, you know, what else we can enable when we do partner with skydio from a software standpoint from an experience standpoint for our customers. So um, don't don't think about that. As as a big chunk of our Revenue, think about it as deep drone. Everything deed drone can enable through dfr. Um but that's that's what you're seeing in the numbers.
Eric Lapinski: Thanks, Josh. Up next, we have Jordan at Bank of America.
Very helpful. Thank you.
Thanks Josh.
Jordan Lyonnais: Hey, thank you for taking the question. Could you guys just give an update on Thesis's FedRAMP status? And then for DDRON, what is your strategy to start playing a more meaningful role in DOD counter-drone programs that are getting funded like Replicator 2?
Up next, we have Jordan at Bank of America.
Hey, thank you for taking the question. Could you give us an update on FUSE's FedRAMP status? And then for Drone?
Rick Smith: Yeah, so Jordan, on the strategy one, again, like we don't necessarily want to tip off our hand on how we're thinking about the opportunity, but we'll be in the game when the lights come on and we're ready to prove what we can do for sure. Jeff, why don't you take that first question if that's okay?
What is what is your strategy uh to start playing a more meaningful role in DOD counter drone programs? Uh, that are getting funded like replicator 2.
Jordan Lyonnais: Yeah, sure. Just like with everything we do, you know, we submit things in as we have new things in our envelope, and we sort of go through the official certification testing. And then ultimately, the second part is the FedRAMP body itself going through their final little checkboxes. And so exactly on plan, we submitted and completed all the work to make Thesis FedRAMP compliant, submitted it as part of our last package. So you can think of it as we are FedRAMP compliant at the moment. And the only thing waiting is the natural course of the committee sort of officially giving that last check mark. But we're operating in the market with customers knowing that we've met all those requirements.
Yeah, so Jordan, I'll on the on the strategy 1 again, like we we don't necessarily want to tip off our hand on on how we're thinking about the opportunity, but, but will be in the game when when the lights come on and we're ready to prove what we can do for sure. Jeff, why don't you take that first question if that's okay. Yeah, sure. Just like with everything we do, you know, we get that we submit things in, as we have new new things in our envelope and we sort of go through the official Certification testing and then ultimately the second part is the Fed ramp body itself. Uh, going through their final little check boxes. And so exactly on plan we submitted and completed. All the work to make, uh, fuses fed ramp compliant, submitted as part of our last package. So you can think of it as we are, uh, fed ramp compliant at the moment. And the only thing uh, waiting is the natural course of the of the committee sort of officially giving that last check mark or we're operating in the market with customers knowing that we've met
Rick Smith: Thank you.
Requirements.
Eric Lapinski: Thanks, Jordan. Up next, we have Trevor Walsh at Citizens.
Thank you.
Josh Reilly: Great. Hey, Keen, thanks for taking the questions. You had an interesting stat in the shareholder data around the survey that you ran towards the beginning of last year. About 14% of departments are essentially not at full staffing levels. Not necessarily surprised, headcount and hiring of the officers has been a struggle for a while now. And it's pretty clear that AI is going to help in that a little bit to make the officers just more productive. But do you guys see any trends around just more broadly than that of departments knowing that they might not be able to get the headcount that they want, just shifting that spend to other kind of areas within the department's needs, whether that's technology and is that generally helping you guys, or do you see that as a possibility kind of down the road, if not right now?
Thanks, Jordan. Up next, we have Trevor Walsh at Citizens.
Josh Reilly: And then quick follow-up for Brittany, can you just elaborate on the tariff piece for the kind of second half of the year and if that's related to kind of the newer things that we're hearing around tariffs, or is that just more baked in from the April kind of announcements that we've heard? Thanks.
Rick Smith: Let me take the first part. We are absolutely having those conversations. You know, Draft One is the baseline of, hey, if I can spend less time doing administrative work and more time doing police work, we're hearing across the board, you know, things that we can do with technology. Even, you know, DFR is one of those, right? Hey, if there's calls that we can clear without having to send officers, that means we can focus our manpower on the calls that make more sense. The same thing is true of inbound call handling. Like our customers are interested on, hey, are there things we could use with technology to be able to, you know, handle non-critical calls? Maybe we don't send an officer at all. Maybe we port them to an AI agent.
Great 18, thank you for taking the questions. Um, you had an interesting stat in the shareholder that are around the survey that you ran towards the beginning of last year about 14% of departments are, um, essentially not at full Staffing levels, not necessarily surprise headcount and get hiring of the officers is, you know, been a struggle for a while now, and it's pretty clear that AI is going to help in that a little bit to make officers, more productive. Um, but do you guys see any Trends around just more broadly than that of departments, knowing that they might not be able to get the headcount that they want. Just shifting that spend to other kind of areas within the Department's needs whether that's technology and is that generally um, helping you guys or do you see that as a a possibility kind of down, um, down the road if not right now and then quick follow up for Brittany, can you just elaborate on the Tariff, uh, piece for the kind of second half of the year and if that's, um, related to kind of the the newer things that we're hearing around tariffs or is that just more baked in from the April um, kind of announcements that we've heard? Thanks, let me take the first part. Um,
We are absolutely having those conversations. Draft 1 is the baseline of, "Hey, if I can spend less time doing administrative work and more time doing police work," we're hearing across the board, you know, things that we can do with technology. Even, you know, DFR is one of those, right? Hey, if there are calls that we can clear without having to send officers, that means we...
Rick Smith: Translation, you know, historically, there's like multi-minute waits to be able to get a translator when you're in either the middle of a critical incident or an inbound call. And, you know, those are the sorts of things that across our stack or through our partners, you know, we can begin to turn those things into real-time. Right now, it doesn't need a person at all. It's technology aiding the person, or in some cases, we can hand the whole thing over to tech. And we think it's a combination of AI and robotics over the coming years that's going to enable us to take on a greater and greater portion of that workload, allowing the human beings to focus on, you know, the sort of top end of those incidents that really require, you know, a human engagement.
In some cases, we can handle the whole thing over to Tech. We think it's a combination of AI and robotics over the coming years that is going to enable us to take on a greater and greater portion of that workload, allowing.
Rick Smith: And I'd say there's probably at least 50% of the workload of a police department that's automatable. And we are seeing that they're open to thinking their budgets that way. I can think of a few conversations we've had where agencies have said, hey, I'm understaffed by this many folks. I'm just going to take part of that budget and push it over here and maybe not hire a couple of those.
The the human beings to to focus on, you know, the the sort of top end of those incidents that really require, you know, a a human engagement. And and I think there's probably at least 50% of the workload of a police department that's automatable and uh and and we are seeing that. They're open to thinking their budgets that way. Uh I can think of a few conversation we've had where agencies, who said, hey I'm under staffed by this many folks. I'm just going to take part of that budget and push it over here and and maybe not hire a couple of those.
Brittany Bagley: Okay, so on tariffs, yeah, so on tariffs, we factor in everything we know as of like 24 hours before this call. So we're as up to speed as we can be on, you know, how we think about guidance for the second half of the year. And then we just bake it into the guidance we give you for the second half. I would say, you know, it continues to move around, obviously, but you know, I think more is certainly known now, even than it was a quarter ago. And so I think that allows us to do things like come up with good plans to mitigate as much as we can and manage through as much as we can, which we're obviously trying to do. But our current view is just baked into the guidance. Thank you.
Okay, so I'm terrible.
Yeah. So, um, on tariffs, we factor in everything we know as of like 24 hours before this call. Um, so whereas up to speed is as we can be on, you know, how we think about guidance for the second half of the year, and then we just bake it into the guidance we give you for the second half. Um, I would say, you know, it continues to move around obviously, but.
You know, I think more is certainly known now, even though it was a quarter ago. And so, um, I think that allows us to do things like come up with good plans to mitigate as much as we can and manage through as much as we can, which we're obviously trying to do. Um, but our current view is just baked into the guidance.
Eric Lapinski: Thanks, Trevor. Up next, we have Mike Latimore at Northland.
Thank you.
Jordan Lyonnais: Great, thanks. Yeah, excellent results. In terms of the enterprise segment, you know, I guess prior to this quarter, the biggest deal was in enterprise. How's that deployment going? How's the pipeline for enterprise? You know, which products seem to be of most interest? And then on Taser 10, is maybe just elaborate a little bit on manufacturing capacity there. You know, are you ramping that through your end?
Thanks, Trevor. Up next, we have Mike Laden. We're at Northland.
Great, thanks. Yeah, excellent results. Um, in terms of the Enterprise segment, you know, I guess prior to this quarter, the biggest deal was in Enterprise. How is that deployment going? How's the pipeline for Enterprise? You know, which products seem to be the most interesting? And then on Taser 10, is, uh, maybe just elaborate a little bit on manufacturing capacity there, you know, are you ramping that through year-end?
Brittany Bagley: Yeah, so I'll maybe go in reverse order and then Josh can jump in on enterprise too. But we are continuing to ramp Taser 10 capacity. I would say we are sort of continuing to ramp Taser 10 capacity as much as we can because we continue to see just great demand for that. So we're ramping it this year. You saw us take our CapEx guidance up a bit. That's us continuing to ramp it into next year so that we continue to meet that demand. From an enterprise standpoint, and I know Josh will jump in, but we continue to be really excited about the pipeline that we're seeing. I think a lot of our products are really relevant to the enterprise segment. But I will say Thesis has been particularly exciting as we've brought them in.
Go in reverse order. And then, then Josh can jump in on Enterprise too. But, uh, we are continuing to ramp taser, 10 capacity. I would say, we are sort of continuing to ramp taser 10 capacity as as much as we can, because we continue to see just great demand for that. So, uh, we're ramping at this year, you saw us take our capex guidance up a bit. Um, that's us continuing to ramp it into next year so that, uh, we continue to meet that demand. Um, from an Enterprise standpoint and and I know Josh will jump in, but we continue to be really excited about the pipeline that we're seeing. I think a lot of our products are really relevant to the Enterprise segment. Um but I will say fusus has been particularly
Brittany Bagley: That's just really resonating well with our enterprise customers and opening a lot of doors and a lot of really great conversations. Again, I think, you know, obviously our cameras, you know, as we talk about retail and frontline workers, you could see counter drone, you could see a whole lot of our portfolio being relevant, but it's a huge market. And so we'll continue to update over time, but there's a lot as we start to bite that off.
Rick Smith: Yeah, the only thing that, the only other thing I'd add is, you know, the enterprise deployments are hard by nature. We're talking about, you know, aggregating hundreds of thousands of video screens to one pane of glass. That's hard work. And I'd say we're learning the deployment is going well. And what we learn here will absolutely make us better in the next three, four, five of these that we do. And so, you know, the team's doing great work and, you know, some new variables when you have enterprise customers relative to government. And we're working through those and feeling good about where we're going to land.
Li exciting as we've brought uh, brought them in, that's just really resonating well with our Enterprise customers and opening a lot of doors and a lot of really great conversations. Again, I think, you know, obviously our our cameras, you know, as we talk about retail and Frontline workers, you could see counter drone, you could see a whole lot of our portfolio being being relevant, but it's a huge Market. Um, and so we'll, we'll continue to update over time. But uh, there's, there's a lot as we start to fight that off.
Jordan Lyonnais: Awesome, thanks.
Yeah, the only thing that the only other thing I'd add is, you know, the Enterprise deployments are are hard by Nature. We're talking about, you know, aggregating hundreds of thousands of video screens to 1 pane of glass. That's hard work and I'd say we're learning the deployment is going well, um, and what we learn here will absolutely make us better in the next 3 4 5 of these that we do. And so, um, you know, it's uh, the team's doing great work and and uh, you know, some some new variables when you have Enterprise customers, uh, relative to government, and we're working through those and, uh, and feeling good about where we're going to land.
Eric Lapinski: Thanks, Mike. And up next, we have a new face to our call, Andrew Spinola at UBS. Welcome.
Awesome. Thanks.
Thanks, Mike. Up next, we have a new face on our call, Andrew Spaniola at UBS. Welcome.
Andrew Spinola: Thank you, Eric. Hey, just following up or continuing on the enterprise space, would you be able to, willing to elaborate on the gaming contract that you guys announced? What are you doing there? Do you see a centric or are there a few of your other product lines in the mix?
Thank you, Eric. Hey, just following up on our continuing discussion about the enterprise space. Would you be able to elaborate on the gaming contract that you guys announced? What are you doing there? Do you see Centric, or is there a mix of a few of your other product lines?
Rick Smith: Let's leave it at video for now. There probably are opportunities in gaming for less lethal as well in terms of security, but video between body cameras and thesis and certainly, you know, a lot of applicability given the amount of money on the line, you know, at each one of those sites. And so, and Andrew, thanks for the patience.
Andrew Spinola: No problem.
Rick Smith: Appreciate it.
Andrew Spinola: Appreciate it. Thanks for having me.
Rick Smith: Thanks.
In terms of security but video between body cameras and fuses and uh, certainly you know, a lot of applicability given the amount of money on the line, you know, at at each 1 of those sites and so uh, and Andrew. Thanks for the patience. Uh, appreciate it. Appreciate it. Thanks for that. Thanks.
Eric Lapinski: Thanks. All right, we'll kick it to Rick to close this out.
Thanks. All right. We'll kick it to Rick to close us out.
Rick Smith: Oh man, we're done already? I was ready for a couple more. Hey, I just got to say I'm so proud of the team. And we're just hitting on all cylinders. And it's also really great, you know, you'll see I'm answering less and less of the questions, you know, during the call about the operations of the business. And candidly, that's because I've got just such a great team. I've been traveling like a banshee out with customers, having a ball, have identified a couple more fantastic, you know, things that are going to be expanding our product portfolio probably a couple of years out.
Oh man, we're done already. I was waiting for a couple more.
Hey, uh,
I, I
We're just heading on all cylinders, um, and it's also really great, you know, I you'll see I'm answering less and less of the questions, uh, you know, during the call about the operations of the business. And and candidly, that's because I, I've got just such a great team. Uh, I've been traveling like a banshee, um, out with customers, having a ball, have identified a couple more fantastic.
Rick Smith: And it's really great to have a team that, you know, you can just rely on that we're all, you know, we're all running our lanes and the business just runs like a machine, like a very, like a Ferrari, well, no, Ferrari, maybe don't, not as the most reliable machine, but a very reliable Ferrari. I mean, this thing's just running. And of course, you know, having you guys as sort of helping the investment community understand our business, this is a complex business to understand. We're everything from a, you know, a media creation house in VR for creating content and managing training content. We do pure software plays like our records business. You know, we do electrical weapons and drones and, you know, now counter drone systems. And it's a lot of fun for us to run the business.
You know things that are going to be expanding our product portfolio, probably a couple years out, uh, and it's really great to have a team that, you know, you can just rely on that. We're all, you know, we're all running our lanes in the business, just runs like a machine, uh, like a very, like, a Ferrari on the Ferrari. Uh, maybe don't not as most reliable machine, but a very reliable Ferrari. I mean, this thing's on just running, uh, and of course, you know, having you guys, as, as sort of a
Rick Smith: And we know you keep you pretty busy trying to understand how it all fits together. But I can tell you one thing that just keeps me excited now from a business perspective is we have so many horses that can run here that, you know, we're not dependent on any one part of the business. You know, we just got this truly diversified portfolio, but it all works together so seamlessly. And now we're expanding to anybody who needs to interact with law enforcement, right? If you're a business, your security team needs to interact with law enforcement. Frankly, if you're a military, you need to interact with your law enforcement as well now, these sorts of hybrid threats that we're now seeing in society.
Helping the investment Community understand uh, our business. It it this is a complex business to understand. We're, we're everything from a, you know, a media, a media creation house in VR for creating content and managing training content. Do we do pure software plays like our records business. You know, we do electrical weapons and drones and all, you know, now counter drone systems. Uh, and uh, it's a lot of fun for us to run the business and we know you keep you pretty busy trying to understand how it all fits together. Um, but I can tell you what they just keeps me excited. Now, from a business perspective is we have so many horses that can run here.
Rick Smith: And we're able to start from this kernel of a business we've built around public safety and begin to move out into these next layers. It's just a really exciting strategic time to be at the helm. And so with that, I want to thank you, Josh. You were leaning forward. Did you have anything to add there before we wrap today? Nope, you said it well, Rick. Thank you. All right, thanks everybody. And we'll see you for, well, I'm not going to jinx it by predicting. We hope to be back with another good quarter. So we'll see you guys in a few months. Thanks.
Um, that you know, we're we're not dependent on any 1 part of the business. Uh you know, we just got this truly Diversified portfolio but it all works together so seamlessly and now we're expanding to anybody who needs to interact with law enforcement, right? If you're a business, your security team needs to interact law enforcement. Frankly, if you're a military, you need to interact with your law enforcement as well. Now the, the sort of hybrid threats that we're now seeing in society, and we're able to start from this kernel of a, of a business. We built around Public Safety and begin to move out into these next layers. It's just a really exciting strategic time to be at the helm. And so with that, I want to thank you Josh. You were leaning forward. Did you have anything to add there before we wrap today? Nope. You said it. Well, Rick, thank you. All right, thanks everybody. And we'll see you for uh well, I'm not going to jinx it by predicting. We hope to be back with another good quarter so we'll see you guys in a few months.
Thanks.