INVESTOR PRESENTATION | A X O N E N T E R P R I S E | J u n e 2 0 2 0
Safe-harbor statement This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to risks and uncertainties. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. Examples of forward-looking statements include, without limitation, statements regarding: the impact of the COVID-19 pandemic; proposed products and services and related development efforts and activities; expectations about the market for our current and future products and services; our outlook for 2020 with respect to revenue; trends relating to subscription plan programs and revenues; expected trends, including the benefits of, research and development investments; the sufficiency of our liquidity and financial resources; expectations about customer behavior; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; and statements of management’s strategies, goals and objectives and other similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Such forward-looking statements included in this presentation are based on information available to us as of the date hereof and our current expectations about future events, which are inherently subject to change and involve risks and uncertainties. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, as well as under the heading “Risk Factors” in the prospectus supplement related to the proposed common stock offering. We do not undertake any obligation to update any forward-looking statements included in this presentation, whether as a result of new information, future events or otherwise, except as required by law. All such forward-looking statements should be read as of the time the statements were made and with the recognition that these forward-looking statements may not be complete or accurate at a later date. 2
PROTECT LIFE CAPTURE TRUTH ACCELERATE JUSTICE 3
to stun. Axon is building the future envisioned by Gene Roddenberry of Star Trek fame, where technology helps elevate humanity. The TASER was directly inspired by Captain Kirk’s Phaser. 4
Our mission 1. OBSOLETE THE ~200,000 LIVES SAVED FROM BULLET DEATH OR SERIOUS INJURY 1 2. REDUCE SOCIAL COMPLAINTS DOWN 88% 2 CONFLICT USE OF FORCE DOWN 42% 2 3. ENABLE A FAIR & GUILTY PLEAS UP 20% 3 EFFECTIVE JUSTICE OFFICER COURT TIME SYSTEM REDUCED BY 70% 4 5 1 M.W. Kroll Study (2009) 2 Mesa On-Officer Body Camera Field Study (2014) 3 Newport News Case Study (2015) 4 Queensland Police Domestic Violence Case Study (2017)
Axon’s Independent AI and Policing Technology Ethics Board Cyber Civil Rights Initiative Police Reform Racial Equity DOJ Civil Rights EFF USC, Researches debasing, Texas Appleseed Professor at Boston University Community Leader Division Google deep fakes and digital forensics Social Justice Non-Profit NYU National Police AI Ethicist: Oxford’s Privacy Expert Seattle Chief of Police The Policing Project Foundation (Retired) Future of Humanity Institute Stanford / Microsoft Chief Inspector of Irish National Police & OpenAI Police Chief (Retired) Boston Police Commissioner 6
Axon leadership has resulted in an attractive financial profile 2016 – 19 Revenue ($ million) 71% 700K+ CAGR $ 531 26% Revenue from recurring TASER devices in place today globally bundles 63% $ 420 $130 $ 344 $92 49% $119 120% $174mm $ 268 $58 $75 $51 $29 $36 Net dollar retention Annual recurring software 12% revenue $282 $253 $235 $203 75% 17% 2016 2017 2018 2019 2019 cloud gross margin 2019 Adjusted EBITDA margin Axon Cloud Sensors & Other TASER 7 Note: TASER devices in place today globally represents total number of units sold in the last 5 years. Annual recurring revenue is as of Axon’s latest quarterly report . Refer to appendix for Non-GAAP reconciliations
25+ years of transforming public safety with technology 8
Evolving public safety ecosystem AXON 2.0 AXON 3.0 AXON 1.0 2010-2019 2020 & beyond Pre-2010 Smart Devices + Workflow + Intelligence Devices Smart Devices + Workflow TASER TASER EVIDENCE.COM BODY-WORN CAMERAS AXON FLEET AXON CLOUD TASER AXON DISPATCH EVIDENCE.COM BODY-WORN AXON FLEET AXON RECORDS CAMERAS ACCELERATE JUSTICE CAPTURE TRUTH CAPTURE TRUTH PROTECT LIFE PROTECT LIFE PROTECT LIFE 9
Large TAM through value-added new products and markets TAM by product TAM by market Axon Air $1B Records Federal $27B $2B 6% Consumer 7% Law AR / VR Enforcement $2B 54% Enterprise BWC / DEMS 8% Consumer $11B Self-defense TAM $2B Dispatch $2B Fleet Corrections, Fire, $3B and Other 24% TASER $5B AR / VR – augmented reality / virtual reality BWC – body worn cameras DEMS – digital evidence management system 10
Cloud-driven strategic growth drivers Cameras De-escalation Communications Productivity 11
The role of Axon’s four strategic growth areas during a public safety incident Time Write Citizen- 911 Call and and file captured Officer on scene Officer leaves Justice system Dispatch incident Shorten More efficient evidence report Axon software A TASER device may Axon’s dispatch Axon body cameras and Incident data and post- Axon Records makes it easy to or may not be solution enables Fleet cameras capture arrest interview video are incorporates video capture digital deployed when officers to arrive on video evidence, which is used and viewed by into the incident log evidence, responding to an knowing the most safely stored in prosecutors, defense and uses AI to save including CCTV incident. If deployed, relevant and critical Evidence.com. Live- attorneys, media, the officers’ time video and citizen all use of force data information streaming provides real- community and the public mobile evidence is logged in time situational Evidence.com awareness 12
Cloud-driven strategic growth drivers Cameras De-escalation Communications Productivity 13
De-escalation has become eminent in our society TASER product Expansion beyond Expansion into new AR / VR leadership public safety geographies AR / VR empathy Numerous agencies training delivered via Recent wins include US UK, Canada, Australia, etc. adopted cloud- Axon Cloud Forestry, DoJ and connected TASER 7 Corrections 14
Axon trains for unbiased and empathetic public safety 15
Cameras = transparency and trust SIGNAL FLEX APPS SIDEARM Axon Body 3 with LTE-live streaming BODY began shipping Sep. 2019 FLEET Body camera programs address a transparency and accountability problem. They create a giant data management and storage problem Axon’s camera + software solution solves all 16
Productivity solutions to unlock efficiencies in public safety Legacy Citizen reporting stolen vehicle Fragmented point solutions Cloud-based integrated software platform Bloated and expensive Efficient and cost effective Complex and stale UI Simple and consumer-grade UI Slow, manual and reactive AI-driven proactive public safety 17 Note: Image on right is illustrative and represents Axon’s vision
Transforming communications beyond the radio Synchronized video Integrated public safety suite for recording for all optimal visibility and control officers on-site Real-time view of officer presence and devices GPS enabled heatmaps LTE live streaming for real-time situational awareness 18
FINANCIAL OVERVIEW 19
Powerful long-term growth engine 1 Strong growth with scaling profitability 2 High visibility with significant revenue from recurring bundles 3 Strategic R&D driving to 70%+ target gross margins and robust operating leverage Strong 4 liquidity, no debt, and abundant operating flexibility 20
Strong growth with scaling profitability Revenue Adjusted EBITDA ($ millions) ($ millions) 18% 17% 28% 26% 28% 15% 22% 12% $562 % growth y/y $531 $104 % margin $88 $420 $61 $344 $40 2017 2018 2019 LTM 40% 37% 43% 46% Rule of 40 1 2017 2018 2019 LTM Note: Refer to appendix for non-GAAP reconciliations 21 1 Rule of 40 defined as revenue growth plus adjusted EBITDA margin
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