Q1 Investor Relations Presentation PROTECT LIFE. PROTECT TRUTH.

Transcription

1 Q1 Investor Relations Presentation PROTECT LIFE. PROTECT TRUTH.

2 SAFE HARBOR STATEMENT This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act ), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act ), including statements, without limitation, regarding our expectations, beliefs, intentions or strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of The forward-looking information is based upon current information and expectations regarding TASER International, Inc. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict. Such forward-looking statements relate to: expected revenue and earnings growth; estimations regarding the size of our target markets; successful penetration of the law enforcement market; expansion of product sales to the private security, military and consumer self-defense markets; growth expectations for new and existing products and accounts; expansion of production capability; new product introductions; product safety and our business model. We caution that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements herein. 2

3 TASER BUSINESS HIGHLIGHTS Founded in 1993; IPO in ,900% return since IPO 15 years ago in Employees Sales in nearly 75 different countries $136M in stock repurchases executed Over 17,000 domestic agencies deploying solutions 6 Offices in 4 countries Over 97 different patents globally $114M net cash & investments 3

4 MISSION PROTECT LIFE Reduce Carnage from Violence PROTECT TRUTH Increase Transparency Reduce Frequency of Violence 164,886 Estimated Lives Saved from Potential Death or Serious Injury Using a TASER Weapon EMPOWER HEROES Improve Efficiency & Capability of Public Safety 4

5 2016 STRATEGIC FOCUS Smart Weapons: Standard Issue, Profitable TASER Weapons Growth, Service Plans Axon: Capture Market Share, Drive Usage, Expand Platform Capabilities International: Build the Team, Get Beachheads, Build Advocacy 5

6 TASER SMART WEAPONS

7 DNA OF A SMART WEAPON Features and characteristics SAFETY Charge metering Smart cartridges ACCOUNTABILITY Engineering & event logs APPM (Performance Power Magazine) X26P CONNECTED Sync usage reports to Evidence.com Share & attach to case files PERFORMANCE Diagnostics & firmware updates Axon Signal (wireless activation) X2 7

8 THE TASER WEAPONS OPPORTUNITY Domestic Officer Mix Domestic Handle Penetration Domestic Agency Penetration 1, , , , ,000 17,000 Patrol Officers Other Officers Handles in Field Total White Space Agencies w/ TASER Remaining Agencies 8

9 TASER WEAPON RECURRING REVENUE Recurring Cartridge, Warranty & Battery Revenue ~30% of TASER Weapons segment revenue comes from recurring revenue streams ~3 cartridges per year used per TASER Weapon ~2 cartridges per year for training and ~1 used in the field $25 average selling price in Weapons Segment Recurring Revenue Battery $5.1M ~35% TASER Weapon warranty attachment rate $270 X26P warranty MSRP $300 X2 warranty MSRP Warranty revenue recognized monthly over 5 years ~2.0 year average battery life Warranty $7.4M Cartridge $41.7M 9

10 TOTAL ADDRESSABLE MARKET - DOMESTIC White space supplemented by continuous upgrade opportunity Market: 800k sworn officers of which ~600k are patrol officers Penetration: 400k estimated weapons in the field Upgrade Opportunity: 7-9 year old weapons in the field Upsell: Increase warranty attachment rate & eliminate distributors $50M: Offer incremental service feature tiers $250M $200M $150M $100M $50M ~$120M $250M $50M $200M $0M 2015 Domestic Weapons Rev Full Deployment Shorten Upgrade Cycle Upsell Target Domestic Weapons Rev Bureau of Justice Statistics Census of State & Local Law Enforcement Agencies 10

11 TOTAL ADDRESSABLE MARKET INT L $2.7 billion greenfield opportunity Note: Reflects total opportunity rather than annual TAM Patrol Officers by Tier: Tier 1: ~350k Tier 2: ~815k ROW: ~10M of which 10% of 1M is addressable Historical 19% Int l revenue CAGR $1.3B $2.7B $1.0B $0.4B Current Tier 1 Tier 2 Tier 3 / ROW Total Int'l Opp 11

12 AXON PLATFORM

13 BUILDING THE AXON BUSINESS 1. Build the Network Get Customers onto the Axon Platform 2. Drive Utilization High Usage = High Retention 3. Integrate Into Workflow Create Long Term Value & Network Effects 4. Advanced Analytics & High Value Features Create Additional Value Streams 13

14 AXON CAMERA HARDWARE Axon Body 2 Retina HD Video Wi-Fi Video Offload RapidLock Mounts Full work shift battery Extended Pre-Event Buffer Agency Optional Mute Axon Flex Point of View perspective Multiple mounting options Full work shift battery 14

15 SIMPLE, POWERFUL & SECURE SOLUTION Dock & Go Cloud Based Secure Download videos Recharge camera Update firmware Manage users, devices & data Share information across stakeholders Integrate across systems Compliance certifications Encryption Security & monitoring 15

16 KEY ASPECTS OF OUR PLATFORM Transform Workflows Own the Channel Massive Unique Data Generation Strong Brand Network Effects Leverage Training & Development 16

17 COMPELLING CASE FOR BODY WORN CAMERAS 20% increase in guilty pleas In Newport News, Virginia recording DUI stops boosted the rate of guilty pleas in these cases from 70% to 90% - saving the city time and expenses 4x return on Axon purchase The city of Rialto, CA is estimated to have saved $4 in hard costs for every $1 spend on body cameras & Evidence.com 17

18 EVIDENCE.COM STATS * Includes weapons data logs 18

19 AXON CAMERA COMPETITIVE ADVANTAGE Proven ability to support large & small agencies COMPETITIVE PRODUCTS AXON CAMERAS SOLUTION Isolated and costly product workflows Comprehensive capture suite with workflow efficiency PURPOSE BUILT Poor battery life and first generation hardware Intuitive and built for law enforcement SMART AND CONNECTED Disconnected and hard to manage Advanced field connectivity and robust device management and monitoring WEARABLE Heavy and limited mounting options Unmatched durability and comprehensive mounting options 19

20 EVIDENCE.COM COMPETITIVE ADVANTAGE Only robust, scalable end-to-end solution ENTERPRISE CLOUD COMPETITIVE PRODUCTS Requires complex customization EVIDENCE.COM Built for the cloud with scale and integration for the enterprise or small agency in mind SIMPLE AND FAST Complex and poor performing user experience Designed with purpose, built for the future POWERFUL NETWORK EFFECTS TRUSTED AND SECURE Disconnected point solution Limited product and operational security experience, lagging on compliance. Connecting people from field to court Industry leading compliance program and robust technical controls to ensure data is safe 20

21 SUCCESSFUL EXECUTION Over 80% of Major Cities with Body Cameras on the Axon Platform Quarterly Axon & Evidence.com Bookings $52.1M Cumulative Evidence.com Licenses Booked 74,794 Annual Recurring Service Revenue $16.7M $18.1M $22.9M $30.6M $36.9M $44.7M 26,987 36,442 45,801 59,016 $7.8M $9.8M $12.0M Q1 '15 Q2 '15 Q3 '15 Q4'15 Q1'16 Q1 '15 Q2 '15 Q3 '15 Q4-15 Q1'16 Q1 '15 Q2 '15 Q3 '15 Q4'15 Q1'16 21

22 A BILLION $ DOMESTIC OPPORTUNITY Domestic Axon Segment Annual Total Address Market $1.0B $700M $300M Body Camera Hardware Body Camera Service Fleet Hardware Fleet Service Interview Rm. Service / Software Hardware 22

23 WE RE JUST GETTING STARTED ~1.0M potential licenses domestically Tier 1 & 2 International markets have another ~1.0M patrol officers 75,000 licenses booked as of 3/31/16 2,000,000+ Patrol Officers & Vehicles 600,000 Patrol Officers in the US 75,000 E.com Licenses 23

24 INTERNATIONAL EXPANSION

25 ACCOMPLISHMENTS TO DATE Offices in Amsterdam, Daventry (UK), London & Sydney Over 50 staff members outside the U.S. Beachhead accounts established in all Tier 1 markets Annual International Revenue ($, 000s) $36,089 $32,320 $21,326 $22,157 $17,

26 2016: FOCUS ON BEACH HEADS International policing models can be very different from the U.S. Thus, gaining early reference accounts is a critical step. Goal: Major customer in each region Expectation: Larger concessions for early adopters 26

27 INTERNATIONAL STRATEGY SUMMARY Focus on execution in Tier 1 markets Identify the next wave of movers Leverage direct channel Establish compelling reference accounts 27

28 FINANCIAL DISCUSSION

29 PROVEN REVENUE GROWTH EXECUTION $ In thousands Annual Consolidated Revenue $197,892 $197,892 $36,089 CAGR +19% $137,831 $164,525 $35, % $90,028 $114,753 $90,028 $17,767 $3,353 $126, % $68, Domestic Weapons Axon Segment International 29

30 RECURRING REVENUE TASER WEAPONS Warranties, Cartridges, Batteries Cartridge, warranty & battery ~3 cartridges per year per hand in the field 35% warranty attachment rate Moving to subscription through Officer Safety Plan and TASER-as-aservice 2015 TASER Weapons Segment Revenue Evolution Battery 3% Warranty 4% Cartridge 26% Straight Purchase 67% GOAL Battery Warranty Cartridge Straight Purchase TASER as Service 30

31 RECURRING REVENUE AXON Software, storage, hardware Optional future hardware upgrade Includes future hardware upgrade Advanced Features + $24/mo Future Hardware Upgrade + $16/mo Unlimited Data Storage $24/mo $15/mo $39/mo $55/mo $79/mo 31

32 ANNUAL RECURRING REVENUE Recurring revenue is exclusive of deferred hardware revenue Annual Recurring Revenue $16.7M $18.1M Axon Deferred Revenue of $28.4M Composition (3/31/16) $12.0M $7.8M $9.8M Axon Hardware 36% Axon Services 47% Q1 '15 Q2 '15 Q3 '15 Q4'15 Q1'16 Warranty 17% Recurring hardware billing excluded from ARR 32

33 FUTURE CONTRACTED REVENUE* Growing balance of revenue to be recognized over the life of contracts Average contract length is ~4.0 years $202M $159M $122M $54M $71M $95M Q Q Q Q Q Q * Cumulative bookings for Axon and Evidence.com minus cumulative recognized revenue related solely to Axon and Evidence.com 33

34 BOOKING BREAKDOWN Axon Body Unlimited Booking Revenue Allocation w/dock Initial Hardware 10% Illustrative Revenue Recognition of a $1.0M Axon Body Unlimited Booking $ In thousands $232 $249 $253 $100 $116 $120 License & Storage 59% Future Contracted Hardware 24% $133 $133 $15 $15 $15 $15 $15 $118 $118 $118 $118 $118 Warranty 7% Year 1 Year 2 Year 3 Year 4 Year 5 License & Storage Warranty Initial Hardware Future Contracted Hardware Included in Annual Recurring Revenue 34

35 VIDEO HARDWARE MARGINS EXPECTED TO GRADUALLY INCREASE TO OVER 50% 1. 80%+ licenses booked with future contracted hardware 2. Future contracted hardware will typically be recognized at a higher average selling price at years 2.5 & 5 of contract because of revenue allocation As of 3/31/2016 we have not recognized any future contracted hardware revenue Replacement camera & dock replacements will begin in 2016 for 2013/2014 bookings and continue to grow 3. Improved production efficiency through in-sourcing of production 35

36 LONG-TERM MODEL - AXON Projected 20% Axon Segment Operating Margin at scale This model estimates ~350,000 paid licenses of E.com As of 3/31/16, we have booked ~75,000 paid licenses and are recognizing revenue on ~46, Q GAAP Long Term Model Gross Margin % 42% 53% 60% SG&A as % of Revenue 62% 99% 25% R&D as % of Revenue 54% 60% 15% Operating Margin % (74%) (105%) 20% 36

37 LONG-TERM MODEL WEAPONS Projected 40%+ normalized Weapons Segment Margins 2015 Q GAAP Long Term Model Gross Margin % 70% 69% 72% SG&A as % of Revenue 29% 33% 27% R&D as % of Revenue 3% 2% 5% Operating Margin % 38% 34% 40% 37

38 HISTORY OF STOCK REPURCHASES 16.5M shares repurchased for $136M at an average price of $ % of shares repurchased effectively raising EPS by 35% Purchased through 6 share repurchase plans authorized since 2008 As of 5/9/16, we are $28.4M through a $50M share repurchase plan Repurchase History $50.0M $21.6M $20.0M $20.0M $25.0M $22.5M $28.4M $12.4M $7.5M

39 CONTACT Erin Curtis Investor Relations Dan Behrendt CFO PROTECT LIFE. PROTECT TRUTH.