Q3 Investor Relations Presentation PROTECT LIFE. PROTECT TRUTH.

Transcription

1 Q3 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 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 3

4 TASER SMART WEAPONS

5 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 5

6 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 6

7 AXON PLATFORM

8 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 8

9 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 2 Point of View perspective Unmatched durability Best-in-class image quality Optimum wearability Full shift battery 9

10 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 10

11 KEY ASPECTS OF OUR PLATFORM Transform Workflows Own the Channel Massive Unique Data Generation Strong Brand Network Effects Leverage Training & Development 11

12 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 12

13 EVIDENCE.COM STATS * Includes weapons data logs 4.6+ PETABYTES OF DATA 13

14 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 14

15 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 15

16 SUCCESSFUL EXECUTION Over 80% of Major Cities with Body Cameras on the Axon Platform Quarterly Axon & Evidence.com Bookings Cumulative Evidence.com Licenses Booked Annual Recurring Service Revenue $72.0M 95, ,600 $32.0M $52.1M $44.7M $36.9M $30.6M $57.5M 36,400 45,800 59,000 74,800 $9.8M $12.0M $16.7M $18.1M $21.1M Q2 '15 Q3 '15 Q4'15 Q1'16 Q2'16 Q3'16 Q Q Q Q Q Q Q2 '15 Q3 '15 Q4'15 Q1'16 Q2'16 Q3'16 16

17 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 17

18 WE RE JUST GETTING STARTED ~1.0M potential licenses domestically Tier 1 & 2 International markets have another ~1.0M patrol officers 110,600 licenses booked as of 9/30/16 2,000,000+ Patrol Officers & Vehicles 600,000 Patrol Officers in the US 110,000 E.com Licenses 18

19 INTERNATIONAL EXPANSION

20 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 $32,320 $36,089 $43,019 $17,767 $22,326 $22, LTM 20

21 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 21

22 INTERNATIONAL STRATEGY SUMMARY Focus on execution in Tier 1 markets Identify the next wave of movers Leverage direct channel Establish compelling reference accounts 22

23 FINANCIAL DISCUSSION

24 ANNUAL RECURRING REVENUE Recurring revenue is exclusive of deferred hardware revenue Annual Recurring Revenue $32.0M Axon Deferred Revenue of $46.6M Composition (9/30/16) $16.7M $18.1M $21.1M Axon Hardware 45% Axon Services 43% $7.8M $9.8M $12.0M Warranty 12% Q1 '15 Q2 '15 Q3 '15 Q4'15 Q1'16 Q2'16 Q3'16 Recurring hardware billing excluded from ARR 24

25 FUTURE CONTRACTED REVENUE* Growing balance of revenue to be recognized over the life of contracts Average contract length is ~4.0 years $262M $301M $202M $71M $95M $122M $159M Q Q Q Q Q Q Q * Cumulative bookings for Axon and Evidence.com minus cumulative recognized revenue related solely to Axon and Evidence.com 25

26 LONG-TERM MODEL - AXON Projected 20% Axon Segment Operating Margin at scale This model estimates ~350,000 paid licenses of E.com As of 9/30/16, we have booked ~110,000 paid licenses 2015 Q GAAP Long Term Model Gross Margin % 42% 45% 60% SG&A as % of Revenue 62% 62% 25% R&D as % of Revenue 54% 31% 15% Operating Margin % (74%) (48%) 20% 26

27 LONG-TERM MODEL WEAPONS Projected 40%+ normalized Weapons Segment Margins 2015 Q GAAP Long Term Model Gross Margin % 70% 72% 72% SG&A as % of Revenue 29% 31% 27% R&D as % of Revenue 3% 3% 5% Operating Margin % 38% 38% 40% 27

28 HISTORY OF STOCK REPURCHASES 16.5M shares repurchased for $141M at an average price of $ % of shares repurchased effectively raising EPS by 36% Purchased through 6 share repurchase plans authorized since 2008 As of 9/30/16, we are $33.8M through a $50M share repurchase plan Repurchase History $50.0M $16.2M $20.0M $20.0M $25.0M $22.5M $33.8M $12.4M $7.5M

29 CONTACT Dan Behrendt CFO PROTECT LIFE. PROTECT TRUTH.

30 APPENDIX

31 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 31

32 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 32