Madhu of Left Brain Investment Research analyzes Axon Enterprises, which supplies non-lethal weapons, body cameras, and software to law enforcement. Recurring revenue jumped from 34% in 2016 to 71% in 2019, improving earnings visibility. Higher-margin software and cloud offerings are expected to drive above-average growth over the next five years.
Hello everyone and welcome to Left Brain Investment Research. I'm Madhu, investment analyst here at Left Brain Investment Research, and I just finished my work on Axon. An investment in Axon is a play on the increased use of non-lethal weapons and technology in law enforcement agencies globally. Axon is a leading provider of non-lethal weapons, body cams, as well as software solutions to law enforcement agencies. The company's success going forward depends on its ability to continually innovate, expand its suite of services, as well as increase its revenue per client. Axon is a leading provider of both hardware and software solutions to law enforcement agencies. Here's what we like about Axon. Over the last few years, the company has significantly expanded its addressable market by updating and expanding its portfolio to include next-generation non-lethal weapons, body cams, as well as several software solutions. The company has increased its revenue from subscription bundles from 34% of revenue in 2016 to 71% of revenue in 2019. Higher subscription revenue increases visibility and reduces lumpiness in revenue trends. Lastly, the company is expected to see above-average growth in revenue and margins over the next 5 years as the company grows its software and cloud offerings that come with higher margins than its traditional hardware business. These are qualities and metrics we look for when evaluating businesses for inclusion in our monthly chosen lists. Here's what concerns us. Given the superior execution and strong growth, the company's valuation has run up significantly over the last few years. Having said that, we believe the stock still offers upside to long-term oriented investors. In conclusion, keep an eye on Axon as the company maintains a strong market position and is on an above average growth path, at least for the next couple of years. For LBIR, this is Madhu inviting you to join our community of left brainers Learn more at leftbrainir.com and like, share, and subscribe.
