Axon Enterprise (AXON) 9 May 192019 Q1 Earnings call transcript

Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to Axon Reports Q1 2019 Financial Results. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. now Axon. call will Larson, to I of President Instructions] turn over the Luke [Operator

begin conference. may You your

Thanks, Mike. quarter Good the call. President afternoon to everyone. Axon. to I’m Welcome Axon’s first XXXX conference of earnings Luke Larson,

we will the Relations Before of statement. read started, our Safe Andrea VP get Investor Harbor James,

Hello, everyone.

call Here San Luke who of being Isner, our and Investor is Rick in Smith CFO; Francisco. Revenue Jawad is have room the website. in Chief Josh we Ahsan joining the Officer; from us is This the Scottsdale, and on online Larson, and our Enterprise broadcast Axon CEO; available section Relations

development. include growth, forward-looking You information our Private regarding that our to Safe statements, expectations, Harbor products find projections we’ve provided be and shareholder Act for XXXX. forward-looking investor.axon.com including beliefs, and our quarterly Reform future and including strategies subject the intentions We letter, on will which also revenue current filed can statements SEC. is forward-looking results Litigation available the at reported based statements of the intend is by with or expectations. profitability, all and information Securities call Axon’s Today’s

our actual that are detail differ XX-K call on greater today’s the XX-Q the performance uncertainties Our Form speak caption, statements to are subject could only are to results made and Risk cause uncertainties as These that are are of and assumptions discussed and All guarantees our on and risks risks materially. in in estimates statements are which predict. Factors. they of made, under that forward-looking involve certain and and not future date risks to difficult

searching investor.axon.com sec.gov well ticker, filings, other as these right, SEC go by filings find or at the our Rick. All AAXN. may Axon ahead as at under You

our marginal thanks margin it that program. The quarter for base TASER TASER is our investors and of cost on to recognizing so drive software X revenue where as zero. the joining rounds for high because first it is And This low this Axon is subscription we symbolic the are we revenue move through a revenue us will grow installed the quarter to Thanks, quarter and contracts. today. that Andrea,

pretty now feels recurring than up software XX% $XXX That's build a businesses, that our why revenue So you more good. from year ago. is million,

Axon a shareholder Our our major accomplished February robust day a pretty product because including and to closer deploying with risk team lot X significantly update, letter quarter on Axon our zero is records. this launch Body retiring moving agency city since

book Killing. bit trained project writing written is and new I developed believe you are complicated. of all from board because we're because bring TASER, want year which to means our been Axon's TASER I and trained extensive a that of to of to around the pivot, but a month, and into trick my Axon have that products have QX people. of for Axon needs own. to slight favorites are of the to so champion a teams problems, In are them I'm later happens now making me. XX, authorized dent really subject just it it not in three until product great a I and I a let kill. the about to glad deliver on Police up these for finished. who X, game attended we've The I'm help the result with is given in It's using them decade best coming shoot question barely will We is did it's Luke and the with Last of competing the were next That's a actually to in energy days trained to the it Axon camera at personal Law I new Our listening announcing result about impressive Records that I'm that early any closer and we've know And lethal FedRAMP It's the I Assistant that confident guess product of they we off no projectiles a failure I drive years. spectacular it launches, we customers. threat what TASER involves threat one market timeframe. with oldest on, tools our lesson been with seek to country or work before about bullets box not from numbered. We're to technology today on discussions we’re spectrum days it And time X. a under Every We called to big X especially demand of efficiency to of ultimately that I black our Making by much sold a my time I've I you lot working solve still market would to stop kill. and – I and customers one The standards products of is to getting problem, it. unveil and what setting are bullets. stop that early on Federal customers. to internal in hearing changers result Performance is top because Reduction Enforcement Axon Records. think X, kinetic book shoot of less get develop of industry for commercial technology are behalf in and them. of and we'll you been that was of all vacuum. the for surpass failures. we the incapacitation want that lethal market. it for X publicly shoot these believe while love up giving a stealth Salute we're certification. body closer and the and I've federal learned Axon TASER Axon threat, a to same our of using it's a federal and I this a announced, a a to as to I software Securing TASER of are this AI audiences on is accomplishments products and to the and market the month, of killing its too was us. humanity's solve timelines End successes excited FedRAMP to That's programs. on, managing Axon The could acts it TASER that performance within work only Body nor a talks permission a spend idea with thing police developing scenarios the confident the Hill personal of the proud been LTE we've ask life's increasingly police was this handgun model know to hear want challenged later opens one are Capitol handgun just Killing customers dollars a an entry hard for a well-positioned when we're this And that this in even connectivity be believe develop millions outperforms lot kicking we've the weapon, TASER weapons a to measured spent to is continue formerly a initiative could teams a three-shot push within to force Any it's Body quarter the weapon

the a let bit turn me Luke a call Speaking X. of to dive do TASER on of booting over TASER, deep up to

out you nearly the We Thanks, can from X,XXX everyone world. X,XXX representing Rick U.S. as forces law attendees thank well in it and Axon enforcement last police to around who as week. top attendees to the had the Accelerate largely agencies make

Accelerate the attendance to Our very Axon there. was customers right get intentional

and investors great they We was it as got that also to analysts well. the see invited several excitement and

of we've $XX,XXX at and tell fan have One we key swag to canines, easier for rabid goals to base branded a and T-shirts event our here worth of you year of sold over our out is animals create to sold swag. stuffed the the I'm Axon

on with never customer but out stuff building the be really blew our complacent will relationships We selling away. me

IECP, Of contract we not generated course, is to with Accelerate generated the conference of over than a conference sell purpose XX,XXX also the at pipeline we T-shirts, at more people.

I to IECP launching success conference the leading preeminent safety. on you I important main In still the is to X these that are building focused me a laser Axon told Body X Now we're this market ensuring to tech the Axon launch, public Records. February us, great very three a items that execution conference in indicator and but year TASER was bringing of numbers

Let’s drill we the main We will in years, by speak. and feel scrap gross first TASER X confident rates gross and will improving for a margins revenue were down our next price be improve over major several driver TASER over on factors pressured and as time both QX profit that selling the business one. even segment ASP, two we're average

We credit us are incentivize to customers their this sooner strategic On devices the their of ASP buying we early many delivers offer total agencies who which than decision for TASER trading age to waited prorated to we're beyond with making a life. and major if customer adopt a TASER a TASERs value the year lifetime to as side to from offer X ago. greater useful existing credits we're - new

field expected will where out means new So upgrade ASP related then age got a existing the we're this positive. it early. in actually compression seeing but devices these great actually an our as response to time to weapon extreme was And it some view over paid credits we've near want customers to as term this and

devices part TASER situations. because not to launches. than more we process previous does This validation we're par models. validation X production process. ramping of in more so TASER requires scrap the used years for invested it light we're all touch X to the experience and refine to to the for of every our perform want checks TASER historically Taser demand tracking With customer. If are the heavily introduce Anytime we scrap to before quickly ship production analyst seeing and yields of device in And the us benefit specifically new has are in there a plan we out TASER ramp our which for a capability. devices. unit software manufacturing building focused XX I production we've TASER a I and that especially and the is Now sharing manufacturing high want on it in improve course on Axon this manufacturing process pass TASER We our here checks investors the weapon tactical any rates than is

For volume of example, yields our clear also feel year I on QX to by par the entire demand line in have introduced XX unit steady production X improving customer we is end TASER shipping of with XXXX. for a the meeting sight confident which state XXXX. we that while with of very first the TASER

Regarding the other those. execution items, already touched on Rick,

excited about We are first customer. our with more talk to live major records Axon is very city once it

Now, turning call the Jawad. to over

the Thanks, believe Luke, made to how past anniversary also call I'm with all our changing two we're Axon. and from name model I month strengthened and the anniversary joining two really and today. of you pleased getting to months execution and year the the XX coincided we’ve with TASER the over thanks started. with our just April of business company for year

that half. million that guidance done. is our EBITDA thrilled line. driving proving you we can while we're much told can for higher you will revenue growth vary confident my We've And the revenue back be look growth design. before, done full that product guidance the in levels. in much on do midpoint. I'm line by on we to a drive margin grown our budget leverage ourselves As we've million EBITDA This spent can to adjusted In first the The a adjusted more while exactly year QX our the to see is $XX earn With notice top demonstrating as we're outlook through in strong also as I've like looking it that of we by strong that. deliver million ensuring R&D investments EBITDA our day $XX that with both and while holding were depending and made R&D. versus Axon adjusted margins SaaS accelerate the at line, very QX revenue investors reported said, business and to adjusted with our from EBITDA, commitment of know to is but up day half many strong that the XX% lot a $X QX also team raising in you'll revenue we for set we to way is top

us total reflects our of investment, corporate is strategy $X.X evidence areas including strategic have primarily Dispatch. we Axon and TAM. market our Today, Records addressable to Another or important focus of four for Axon TASER, management, which digital area grow TAM, cameras ways billion and an

As we we growth scope. look outside see existing out our to deal Axon’s of longer term, great a of extend potential

successful incredibly revenue develop technology well-positioned to us a business Our leaves both products transition to SaaS in new streams.

Axon applications capabilities. for the expand. same has products and enforcement right of the users from law feature have developed customer unique relationships balance law want find the enforcement sheet, for the who we've technology to set to We similar and right enterprise which foundation and right opportunity products a take

We’re and shareholder we'll leadership go ensure best our our continually Thank we with Q&A. you to thinking and And value. way way to everyone. to about a exploit steward disciplined drive the that capital that, in market do

[Operator Ho from Instructions] from Blair. comes first William question Jonathan Your

as that quantify with works and the a over us and as bit maybe on through I the timeframe? maybe for the works you Can TASER longer couple a impacts a how out that to how credits guess results. of the afternoon, us I wanted quarters understand are from well good help strong next that congratulations little I offered. just being maybe Hi, X question start guess on

Yeah.

or have and life year XX we'll and under were now useful relationships value sure usually give to fantastic we’ve that used make to credits We upgrade positive buy in calculation we are this a to that smooth major useful X trading So ago actually customers good that prorated of when a X X ago we back life TASER I is and customers the that launched customer strong of a in practice it's to credit. the is TASER say weapons we historical you two to we're you TASER the trading we some users view actually this want weapon. seeing the city again three to upgrade that that kind because as out years such let's offer years and for of TASER that where five a want if you have

at little Got capabilities highlight year. But of in can be well. about not before half bit the records the back done then can point Axon it. customer they noted integrating camera towards is And since talking that a system the some you do you're with your launch you just could initial this getting maybe particularly pretty as the of close what what versus

one. that take I'll Yeah.

of the country with the the board demonstrations accelerate across a and So doing various ton I of first talking we've have moments axon interest customer was just ago head we and I been prospects very would getting just out feedback. some positive with of say the and came records a few our and we conference across

the way we heart records Axon will have record. video is Probably the the so with of product ability unique the at most the a it’s couple our integrate think of seamlessly digital unique Axon So your evidence call record to in very to and about launch feature it the features.

text won't video you really tend messages along So capability human have in record We very much communicate your evenemojis, whereas is our using even elements. if you don't with text separate video system have to a to send way think it documents it audio very the clunkier about now beings just a have a it totally having into we experience emoji, text system only integrated will the correct communicate or video, much. pictures, log

doing And sort to that can work has you're think got hitting The so So dynamic there's from outset. team it for entry way basic not data experience, duplicate a of forms that out that's several data vehicle, that and duplicate some you're ends assault and if we of type really that other a nice felony that’s on up foundational being of report one and might of the of in three the input sort out at different been job. different all be just reports then that the the only inputting filling entry. historically a require grow, filled you're data stolen based necessary thing incident

sort from to over that's the of center. use extract audio But will is So the really evolving AI what foundation. that we data video us the were differentiate of time

for this So having, software is both is we're advantage and unique hardware us.

asks be we a and a accurately that's microphone include it begin time is we the is Axon officer report. and have the more lot to statement in, models turn able time your the that can with the and next pre-populate extract able of to multiple to last tuning name, name voice to coming that how spend to X, So will and learn when array we AI over to data Body so and optimize information name handle what likely describe first be it

wrap. just I’ll So

I a bit talked about think at conference, how. we our

about it planning as writing. difficult several problem driving think driving, evolve this stages. not we're as in autonomous actually, autonomous a you If report it's But will is. autonomous And

right when so of we're basic data basic about the all now, some stage all now extraction getting our to which sensors smart the So getting one those begin which live data using stage is as well. AI data we can to sort about all structure X summer this of all zero right that structure to a go right X the optimize

begin to AI-driven X other Axon into records is Body Body moving X complement optimized that its in center Axon each of launch future. of really So a on this

you. Thank

from Mark next comes from Your JPMorgan. question Strouse

for taking Thanks questions. afternoon. good Hey, our

that's can't you adopting as yet like that are of kind city sounds much about picking it certain are entire the a today to solution say or competitive able cherry Records, modules? then you adopting but too Axon divulge displacement? And it was major they your information So they stands

I'll take that one.

So this on options development partner. a the but did system primarily was that’s them. customer been Records focused there heavily Records space, the look developing available in a been They at the we've with

you developing can a system. economic not of a standalone with This that focused part a them really it package. big on think of Records – as So the is is bigger

of of congrats of data some guess the certain this to Okay. just kind out And mean Maybe I customers of of think run the it minutes about are process the talk competitors so the kind I you've on of other can you for seeing? Assistant guys tool getting now that throwing on and out multiple prior the in to efficiency gains based are minutes kind you you see past trials then Redaction for that I Redaction. hours can compare that the your Redaction down thereafter. of the is video. that door.

Yeah.

question. great So,

launched. just we So,

spending and launch redaction assistant on budget deployed the that to on prosecutor lead more redactions. was spending to actually city to be assistant, budgeted. need a the in before we’re the was to They redaction video of meticulously that the to for going reported compared was the were the how per wouldn't partners city redaction afterwards, One that less to do people they once they XX% time able they change and a attorney time tracking redaction

having pretty enlightening. bunch the But mind. game that of in early first XX% So of a that's was comes little terms agencies. a at be the in that We're back one to

to redaction times at was XX%. Our reduce least by target

looking for We’re that. graph performing

Go ahead.

TASER that if when I of upgrade then down credits just X dwindle to they for just and Can Josh. quick of your guess each or end kind And do can over time quarter? more one Jawad you the remind Okay. secondary us kind one I

QX go quarter They over absolutely. it had Yes, of will offer then after and to that. – and Mark. we an down so start QX is They do time. QX in and in as went flat declining last it’s every year QX Hi, down it been to

upgrade done that's customers to cycles. So, around be some fair to to draw but urgency essentially also

see you'll offering this trading compared of lower So we're July Xst quarter. as in what credit to

or say XXXX? the does does it the to drag end completely into end Are that though on by you of able XXXX

planning year. of at assess are to We end the that decision the

through give year So I they end will think an of December. and it I really continue to can’t there answer other in we assess this will the decline than

much. Okay. Thank very you

question Lizzul next from Stanley. Morgan comes Your James from

much. but what – least puts magnitude be of may don't and to little you for just the on understand Jawad. very Can the guide you just look through sure it's is guide Thank upside as looks as is the may make full I that want quarter. takes upside of wanted a isn’t walk I versus full for Great. deal I the kind as one was year ask think the big a you us when thing for to a much of at bit the - be I I your year why in first the see

Yeah.

there we're as making to to decision what than budget we things had our So XXXX came wanted budget the oversubscribed or a that reinvest we're we actively into the in for. were conscious at we doing do folks revenue from more When you business. put the upside were process together

so reinvest said revenue that was on as throughout business. the take we're the And year we into let we it we feed basically to as and progress going that what

We've our on but raised revenue we've what year And so doing. EBITDA. guidance the for it we're that's on held

it. Got it. Got

response, it your about it’s think further Thank that's whomever within you. and How response as happen that what expand and whether I’ll to deal. clear. different into the adapt offices you're court broadly to police then just software but out emergency to prosecutors beyond more systems, start it's forces within or we up open we're do to that even even beyond long it et emergency the needs thinking opportunity as And the guess term cetera. out about to Okay, products just capability rolling I rolling

adjacent seen same Yeah, units and we've will so markets. demand oftentimes, interesting very responder from the these actually platforms, first use these technology some inbound

making looking addition approach, well spaces strong competitive public pretty as space safety push we're are definitely the tight We being exact say as a at the on to as federal markets reasons in our would well. international for into adjacent I lipped

you. That's great. Thank

this Yeah, Rick. is

is services, together like I even think markets will we happening room medical we'll believe I far iterate one will where Let for think help safety connected -- thing extremely But scene will using emergency One and types for whole appealing stream, that camera is both emergency once services a markets valuable that there, the additional that really more be detail. me more are for with bunch body real of will of make use cameras can in understand able a a additional just live opens is add this they think be law to traditional yet. I that you our other of don't to think from I time and the up some then the live work from just has in what's enforcement and camera able regulations information different law stream positions Being made customers. being a the so to system which recorded of see imagine types as live available. out evolve others these hours and event dock Once has cases video an then things you opens information be that becomes and stream and enforcement up that out can the in able we one later, that public whole that to [indiscernible] host of field.

open the markets will up could it’s where be available think one So live that really just example that we interested. connectivity of

Thanks. Absolutely. Great.

from Scott Needham. Your next from Berg question comes

the that thanks on taking quarter to TASERS, my sold FedRAMP start side be opportunity Congrats going questions. I the Help Hi, software? we and understand take into maybe for good what products drones, what area? the are going guess or question, to with how cameras, Rick Luke that wants on should like? be everyone. think Is us to looks of we'll

Basically above. Yes. all the of

they've we options our TASERS have cloud been market, using Our but federal selling services. not been historically now

opens we or the the using FedRAMP covers above well. space agencies managing an there their Moderate, body federal for systems up for FedRAMP cameras, to as of most drones So to TASER for fleet, could in-car and for cases now weapons interesting all which of up start be certainly use the Evidence.com platform think entire

think contract then Got on is guess sensors Helpful. than future little bit less up And But should bookings those How some a sales software the your is My year-over-year. and pushed it. is ready. there off on value are to in the the nicely metric? about ABX of second in guess is that XX% given half we being Jawad some a of new expectations and movement there's I down. camera

Yeah.

we’re add The things to that with I’d first that you out I'd international the say to strip booking here of to like first in year thing us about but color? and one millions, way love Josh the is today Josh large a last frame in we large is a that up very note actually $XX QX year-over-year if had then would you

Yeah.

this at results QX the in seasonality. video are bookings point think purely I

is quarter the of softest of our QX kind think I year.

a in like anything sign about. of last a was this actually booking. the a strong it is next in very not rebound have QX. a think of have we're But to worry of large terms quarters few year lot I there case is Sometimes going of confidence in to certainly that the I one-time Axon kind

new have people So QX regions, new people quotas. get

We have optimistic the of there's the think slowest meeting kind of of a of so be to that the naturally year sales I bounces dead our first week it’s back. again just of lot And year. is number of reason quarter kind week,

the was your ICP addressed streaming. [indiscernible] And correct. re-emphasized October all at ABX live ABX then that the I with on think and We ware would announced of add, just some Rick in and I of your comment – – the capability

And end we QX, end so think QX. the shipping high that to we And will of of drive expect we that of that QX, to at start demand. beginning will think

all Thanks the in jump again. That’s have. I Great. I’ll queue.

Will from from [Operator next Instructions] Baird. Power question Your comes

pipeline expect first Great, excited part year. or the maybe to that thanks your what I and Luke. do what to similar of that guess that. color conversations the back of Yeah. in for see ABX one margins most that love the how on we questions. for the we with X half might you're perspective accelerate a follow-up X credits and What a Yeah, about perhaps about as thinking bit mean potential around perhaps AB for get or customers tradings are that of should respect how qualitatively we gross taking about just to to your Rick in with and product, TASER something will think But

yeah. Got it so

our on was them begin plus our that our hardware in a services to new would live extend this customers connected and an program the was while lot a would connectivity. in was really once on was whole something to make that sell calibrating One it our we that it do have one to a to we to to I could ago in was and our would the thing host because customers and concern the connected at talking actually was say customers about them. when services the and a they camera so the hardware those questions we of upgrade this year. and was of right enough real go for basically would with really effectively it upgrade with a cost felt do value time just iPod to do we there I actually giving year services obligations. we put want say thing could that started of we that's as generation services of of Accelerate decided to We're universally that hardware a that super really next the pay support bit the we can think not to upgrade almost done But AB I body the enables to easy year decision powerful program. dicey we not clear And this chosen make are how basically a right ourselves the they are where iPhone camera first could that little rest customers all there largely X surprises believe customers whether Live interest was nicest met on about all optimization focused on we much use have financial and

are what think of I job really has our a example. give one you the customer cases I'll understanding team done and use good

found your see seen about absolutely his to be So worry police hey, of is is their going sort be an But a customer to. product we in was other with the into real team making think trying include the not micromanage maybe in the that a react would talked were scene it watch make sometimes starting this – they unknown. move some year when rally to act remotely you and would was activate home uncomfortable the to cell connected customers that before officer and the support union the as downsides your management where because that you're and a I and that starting understand, fellows I starting going uneasy somebody… and it to some very done live micromanaging an of relationship and every calls of phone to them calls the have us begin somewhat in a sense – overstatement, walking happening ability to run rest say tool the Chief that result, share starting officer the design, I they're LTE to and thing you less real interested one their help help see be an if team stream the and if if to right, on for every the great And with give people to well for going other gives you're to ask customer into just back of services, of positioning to go that see real-time but situation to the and them maybe as going are as sometimes know it is is downhill, them customers could a actually a where a might able things to comfort what's them intuition products lot of interested, is work might

just how out? of team rolls on to just segment half in And sensor color guess, any as margins anyone the the [indiscernible] Okay. gross the really year the second I Great. think Yeah. from, broader were on about

Yeah.

it talk and that the credit we’re expect about managing we're is really about is that on half. margin that to will – to to we like going So when going what no – body we’re we camera those trading there any it XX% not margins not that and see – segment into expect we continue second

Thank Okay. you. Great.

from Hallum Capital. question next Your Dyer Steve Craig from comes

as Quick Hey, Ryan guidance. Dyer. question guys. relates it on for to Sigdahl Steve

implies of like expect growth you in in second XX% of based QX significantly higher year. XX% in growth second press QX the the to to half on rates XXXX. it XX% release something So XX% the of But half the actual,

brackets So expectations. there? am missing What that basically I QX

are anything. you I don't think missing

we're to going for We second QX really look is half. up expect ramping to and strong similar a very QX that

significantly there the the just in on rates of that year, the comment. some higher growth color half So second maybe

well. and in be QX should shipping into and product with on TASER records production We'll Sure. shipping going X full as our be

sounds XXXX on Based All on just Thanks. received those what TASER trading in orders that, upgrades new were quarter, orders the conservatism then percentage versus X the the of right. It credits? TASER users. like a of percentage bit secondly that done in what of X little And guidance. what

Yeah.

question you every correctly, I So, previous is this kind it’s at as – using we what just the credits know a if The view the trading customer. point. customer understand are of percentage being question TASER what percentage

deals some the would the credit. I have of maturity think trading

have the one who never definition by never Yeah, wants deployed TASERs that that to before. only

so the life five that anyone has are once clarify warranty. that to that useful goods just year to under not it’s So TASER credit just

by old weapon life than a how ones the year and the the one but that cycle the was scale one tradings within are older and to five Correct scales of ones so the years just least weapon. far are are valuable to are most valuable the that need it's it throughout

I'll guys, there. from it luck. over Thanks Good Great. turn

C.L. from from comes Your next George question King. Godfrey

is now an basis on point annual Thank basis margin improvement point basis you. to Two XXX XXX questions. the Jawad, off the table.

beginning Yeah. is still what three million that XXXX our managing the of business year XX said to going period driving George to over EBITDA. leverage we dollars to in million we're and guidance. deliver in adjusted specifically for we changed we the at the We're $XX the year

is rate Now want where that revenue to don't depending reason guide that business given comes difficult revenue And specifically that's really guide is you. the going into margin we to we in. rate the additional margin on going be for the any to are reinvesting to vary us the to committed to

that million million than is to to in guiding $XX guide EBITDA. we're $XX So to the rather

Okay.

to so So we that want three make clear saying But to no. out understand just on that. still any type or table given to sure that is one in will you’re want I that improvement the could average have that range of year. accumulative just year I

we for XXXX put and for budgeting together our When XXXX.

much we and together make the [ph] we we're the to same budget And the range but set it's we specific that Our going to at driving XXX turns consistently both really drive not to a really expectation is of a to as want be while basis is when again not our driving when basis margin points continue investments stay wanted so range, XXXX is $XX target. the we're much. same leverage. that invest million $XX we're capture are time put to but to us again budget, what if very for margins R&D on would right But ahead in business want we EBITDA at example, out is focused we to what XXX up. it our for that in points be of the prioritizing this in to those, do more million looking What well, leverage for within we year-over-year opportunity

days, level this is was quarter ago going years Okay. expect two we forward? should And then looking at that the new that the days, QX XX XXX balance sheet, DSO

No, transition customers to contracts. recurring and for that's different longer-term a is we're we expected this that we're working making working what what's seeing in it's are as subscription, make there paid was or following of them these we did we many anomaly. – these to offering these a our advance, shift with to with them And as sure we're and And right annually an helping are transition them invoices greater sorry, that doing our model.

And that so in of to we're anomaly we expect an bit that’s experiencing don’t that but continue. that something a transition

could that's answers. question. the you CapEx? Thank of my the final you give And And very estimate an for much

for anticipating in range to are $XX So the $XX of we million million the year.

Jeremy Hamblin Dougherty Company. & from next from Your comes question

on of the a but for they're X,XXX taking the the going out in versus first sell you've TASER and about we thinking how trading we that Congress in segment good legacy weapon of kind do the expect the second, forth quarter, back the nice the so see of the over guys. saw we traction in that that units XX,XXX to the and segment you from about what units you that play in the of of remainder total of far terms growth had had units the given X X? TASER credits and terms and XXXX about TASER X Wanted thus some how in might Thanks, the XXXX to on the results. to come

are in quarter. percentage total the larger think starting handles I expectation Yeah, of each to things is becomes a sold

it's rolled scales QX it for forth, to or was there the out going as to time And that T&E we point. to and TASER and some I units QX. X is international in UK so think take orders

there. So X only choose legal lesson the

and expectations So go the sold some over driving selling led the more we’re of is to those weapons TX commonly smart making we year. most our toward and becomes But as what throughout sure time, dynamics handle TX. that

total at say get into unit specific, XX% we let's of QX/QX, least to more sold? the would you be be yes TX expect To

the if give can specific is rely on I'm one-time large international not certainly temporarily we or of there's trend and of larger becomes like again skew a that of expect big throughout the XXX total it PRXX it’s a TX sure there year. does the process numbers. But if I be units number other deals a because with percentage sold handle larger in kind order to

the and technology to original road transitioning And X. execution to at the to expect very we TASER from our a and to how and the I show the be illustrative would TASER XXXP from as we effective the shows the we've have new to the XX transition been we and Yeah. XXXP XX XXX same TASER very think that chart our

other And XXXX? and you from – were we down how fall on basis where in then Axon basis remainder one your play out sequentially XXX that question points on service gross a the points a of margins of year me what's and ago. give almost terms you XX you in down revenue, that that, Okay. just saw sense driving would Can the expect change, to cloud

but really There's we're be all right. high margin. flat, still driven much is cyclicality, the that of Sequentially, impact, there's some seeing professional pure it’s software margin a – very component pure, lower always our an services. the not of could by mix of It

something that cyclicality. of that's but again that's part the wind that So, to tends up,

Okay. Good Thanks, guys. luck.

[Operator next from from Instructions] Northcoast question comes Research. is Keith open. Housum line The Housum, Keith your

the the more perhaps that color on how TAM the -- out that, you’re about how many uses there? first-off in numbers as perhaps opportunity, production $X.X the included in Sorry just provide billion third you little a around is ramp and can

Yeah.

to grow on as be our federal like look and get to overtime -- very have opportunity army a big into the forces we see to penetration we into our units. deeper would being but federal real that more operating forces the ultimate larger today, TAM So police the penetrations focused is actual goal largely also

$X.X now of right the [ph] not ramp opportunity? is that number your fed including billion So

No, it’s not.

provide the Okay. during last – rest some year? little quarter a you of on then can just I international comparing efforts as for Got to the in the guess, you. and were bit are and looking RFPs how they And how year question, of color follow-up a the the

the update looking you are on for weapons? international Sorry, an

country? International the overall sensors body inside weapons and the

of that’s consolidating and Certainly back tier in tier to good are I’d indicators, – of good markets our some with continue our that signs sorry, QX X most we're focused markets along my so been our is lot even Yeah. forth, see attention well, last contracts X of I starting tier expect to X year see the upgrades, think some momentum seeing I think in we're where weapons, video and really performing into year. a this upgrading TX markets the

working certainly towards So expectation we're the is…

you. Great. Thank

And back will at there to the are further this over no the presenters. turn call I time. questions

we call. you Great. good Well, the on thank and you to talk earnings Thank everyone will next for QX, a you.

today’s concludes conference This call.

may You now disconnect.