-=Axon (AAXN) reported earnings on Thur 7 May 20 (a/h)

Axon beats by $0.23, beats on revs; withdraws FY EBITDA and revs outlook 
Reports Q1 (Mar) earnings of $0.40 per share, excluding non-recurring items, $0.23 better than the S&P Capital IQ Consensus of $0.17; revenues rose 27.1% year/year to $147.16 mln vs the $131.92 mln S&P Capital IQ Consensus.

• Software & Sensors product segment, which grew 41% year over year due to demand for Axon Cloud software offerings and Axon Body 3
• Adjusted EBITDA of $30 million more than doubled year over year, representing a 20% margin on revenue, and delivering a 51% incremental contribution margin on revenue when compared with Q1 2019.

Despite some uncertainty in the outlook, Axon Enterprise convinced Wall Street that it combines a recession-resistant business model with great execution and a huge opportunity for growth.

One number that Axon provided for the first time particularly stood out: 120% net revenue retention for its cloud-based software, which lets customers manage law-enforcement video footage and monitor real-time incidents remotely.

"The metric captures two key factors," CFO Jawad Ahsan said on the Axon earnings call. "First, our annual churn is almost nil, as our customers typically sign five- to 10-year contracts."


Second, "customers are upgrading their contracts to take advantage of all of the new software tools we have to offer."

Axon Outlook
Axon withdrew its guidance of $100 million to $105 million in adjusted EBITDA on revenue of $615 million to $625 million, though not because of current trends.

The hit to municipal budgets and their impact on procurement by law-enforcement agencies "could materially alter our pipeline," Axon said.

Some customers have delayed body-camera programs or subscription upgrades. Yet the coronavirus threat has led others to make Axon devices standard issue to individual officers, rather than shared.

"Even though our business has been very resilient today and our best estimates have not changed, the level of uncertainty has increased" too much to offer guidance, Axon CEO Rick Smith said.

International sales grew 38% in the quarter, as Axon closed its first sales in a number of countries. Axon Records is now being used or tested at more than a dozen agencies. This is Axon's entry into a $4 billion market for managing law-enforcement incident reports and other data, which complements its digital video systems. Axon's first records-management deployment to the Fresno Police Department came in September.

Axon said the city of Maricopa, Ariz., recently became the first to go live with its computer-aided dispatch system in a $2 billion market. "The goal here is to shorten the time from hello to hello," Axon President Luke Larson said. "That's what the industry calls the time between when somebody first calls 911 to the time an officer arrives."