Welcome, everybody. Me and Brittany decided to coordinate for St. Patrick's Day upcoming, apparently. For any risk disclosures, please see morganstanley.com/risk disclosures. Pleasure, everybody. I'm Meta Marshall, covering Networking here at Morgan Stanley. We're delighted to have Brittany Bagley, COO and CFO of Axon, here with us today. Great to have you back, Brittany. The 2024 marked another substantial transformation and momentum year for you guys in the business, growing 30% for the third consecutive year. For those newer to the story, just can you start with some of the contributors to the momentum you've been seeing and how they carry into 2025? Yeah. Well, first, thank you for having me. It's wonderful to be here. 2024 was certainly a big year for us and a busy year for us. And what allowed us to do that was really the business being successful across all of our product segments. So we saw really healthy growth in our TASER business, our sensor business, which is our body camera and fleet camera business, and then really incredible growth across our software business that just continues to outperform, driving us up to almost a billion, actually over $1 billion of ARR in that software business. So firing on all cylinders, really nice performance across all of our end markets, state and local is still really our juggernaut. But just every piece really doing its part to contribute. All right. So you just mentioned kind of state and local being the juggernaut. You guys have started talking about a number of kind of additional TAMs, whether just areas you're starting to see traction in, whether that's federal or international or most recently enterprise. Just where do you kind of see the momentum coming from in those categories? And just how should we think about those categories contributing to growth? Yeah. Of those three, I would say international is our other biggest market. It was about 15% of our revenue in 2024. So international is performing really well. And we talked about how that had 50% growth in bookings sequentially on top of 40% growth in bookings the quarter before. So really nice acceleration in international and big enough that we break it out for you. We've got some stats. It's sizable from a revenue standpoint, and it has a huge opportunity in front of us. International is obviously not monolithic. That makes up a lot of different countries with a lot of different dynamics going into all of those. And so there are always some puts and takes in terms of how those are performing. But we've seen really nice performance from our Commonwealth countries, which are really the backbone of that international business. We're seeing really good traction in Latin America. And then Western Europe, we're continuing to really hope that we start to see some cloud adoption there, which allows us to move in with our digital evidence management platforms and some of our software offerings. So very excited there. We spend a lot of time on that business. Rick and I were with international customers last week. So really, really big investments on the international side. And then federal and enterprise are both exciting. We had our largest company deal ever in our enterprise segment in this past quarter. And just think there's a huge opportunity in front of us in enterprise. And an exciting opportunity in federal as well. Obviously, a bit of uncertainty in federal right now, just given what's going on. But I think for us, if you look long-term instead of just at the next couple of quarters, our product, our mission, our value proposition, that all really continues to resonate very well with where federal dollars are going. So puts and takes in any given quarter. Some of these segments are going to be stronger quarter to quarter than others, but really nice momentum across all of them. Got it. You mentioned kind of enterprise being your largest deal ever. That's a new market for you guys. Just in terms of, I wouldn't think that necessarily TASERs are your entry point kind of into the enterprise market. Just kind of what makes you so excited about that opportunity and what tends to kind of be that entry point? Yeah. So we have a more traditional historical enterprise business where you can think private security and hospital security, and those customers do look a lot like our LE customers, our law enforcement customers, but really the momentum that we're seeing and why this is starting to take off is because we're starting to see dynamics in enterprise customers that really align more closely with our software and sensors part of the business, and so what that really means is there's just more and more categories where enterprise customers value the transparency that comes from having a body camera or the frontline worker who's wearing a body camera values having that interaction be recorded. There are studies that show that just having a camera on can de-escalate a situation. And so as some of these workplaces become more fraught, more violent, there's just an expectation too that things are on video and that there is evidence. So that's a big driver. I think the other big driver is we acquired a company called Fusus just a little over a year ago. And that does a single pane of glass where you can feed in all of your sensor data, all of your camera data. And so for customers who have some kind of function where they've got security or operations that really wants to know what's going on in the front of the house or in a delivery truck or something like that, this product is a really eye-opening capability for them to have that real-time situational awareness. It's really the real-time element, not that there aren't existing video management solutions out there, but Fusus offers some really interesting real-time capabilities. So you can combine that as a software product offering with the desire to have body cameras, to have video, and maybe really easily be able to share that video with their law enforcement partners when something bad does happen in a store. You do that through our digital evidence management platform. We might call it something else for the enterprise customer, but you do it through that platform. And you've got a pretty nice system to manage that evidence and share that data. And so that's what's resonating. We didn't name the largest customer. We said they're a large logistics provider. But there's other segments inside of enterprise, whether or not it's retail or nurses or gaming that could be really ripe for this kind of product and technology. You're so well-known, kind of, within law enforcement. So just can you leverage that with the enterprise? Or kind of what is that process of kind of getting the enterprise to even know who you are? Yeah. Yeah. It's funny because we're very well-known in law enforcement and maybe not as well-known other places. And so then you tell people about us and all of a sudden you see our logo on the video camera feed everywhere. But I do think it's everything from law enforcement customers that they talk to, talking about how valuable sharing that information and that data is. We've got a dedicated sales team that has been spending their time and paying their dues in this space for a number of years. And you're just starting to see that really pay off for them. And then as it pays off, we're investing more and more behind them to allow them to go continue to capitalize on these opportunities. Perfect. So in the second half, just on the international side, you mentioned kind of the 50% kind of sequential growth into Q4. Just what is kind of changing in the international market? Is it go-to-market? Is it the product? Is it the ability to kind of accept software? Just what transformation are you seeing on the international side that's giving you dividends now? It's a little bit of all of that. One, for some of our existing markets that are maturing, we're seeing some of the same dynamics that we're seeing in the U.S., where as we have more products, more capabilities, more software features and functionality, that's appealing to those customers. And so they're buying more from us and they're partnering more with us. And then some of those things are getting new customers excited to partner with us in some of our newer markets. So I mentioned Latin America has been a really nice target market for us. We've been investing there. We're having some of the right conversations, and the product offerings are really starting to be appealing. I think as we add capabilities like AI, now AI is really starting in our domestic LE market. But as we add those capabilities, those are really universally appealing to law enforcement customers. And so that type of innovation and that type of product roadmap gets them very excited to partner with us long-term. Okay. So state and local [is] kind of your biggest market today. But you've noted you still think it's only 15% kind of penetrated in terms of your TAM. So where do you see the opportunity to kind of drive that penetration higher? Yeah. A lot of it really is in the new product offering, so the way we do our business is we do pretty much everything on a subscription. 96% of our revenue now is tied to a subscription across all products, and then those contracts are usually for five to 10 years. What that means is as you're coming up for renewal, let's say you did a contract five years ago, well, now you're coming up for renewal, and we have so many more products to offer you, things that we couldn't have sold you five years ago because we didn't have them, and so as customers come back in and they see these new capabilities that we've added, and we're really customer-focused, so we're not just trying to sell them a big pile of stuff. We're trying to sell them things that really add value and make a difference to them as a customer. That's resonating, and so they come back in and they buy more with us. That's why we have 123% net revenue retention on the software side because we just have more things that we didn't have before. And so that's really the opportunity in state and local, which is just to continue to provide them more tools, more solutions, more products, both on the software side, but now we have a counter-drone product to offer them, so we're just continuing to expand that product portfolio. Do you ever get any pushback in terms of kind of wallet share that they can give you in terms of kind of state and local customers, and how do you kind of get over that hurdle? Yeah. I mean, we don't get it a lot because for all that we're selling them and how excited we are, we're still a relatively small percentage of their budget. Call it 1%-3% depending on the customer. Their dollars are really much more on things like personnel and training, and so when we have solutions that make them more efficient on personnel or training, right, we have a VR product to help make training less expensive. When we have those solutions that are driving efficiency, it makes it relatively easy for them to find budget dollars and to make those types of trade-offs. Okay. So you called out a pretty meaningful pickup in OSP bookings in Q4. Just, is there any trends between kind of smaller customers, larger customers where you're kind of seeing that traction? No. Honestly, some of our—I think—people tend to think like, "Oh, it's your biggest customers who are buying everything." Actually, some of our smaller customers are really technology leaders and innovators. So it's just very much depending department by department. Now, some of the larger departments maybe have more need and more budget for things like counter-drone or drone as a first responder. They may have larger real-time crime center operations for Fusus. But in terms of the Officer Safety Plan, the TASERs, the DEMS, the cameras, that really can be—we can see small departments really being leading edge on that. Okay. So we made it 15 minutes in before I mentioned AI. But now the time has come. I didn't get that far. Yes, exactly. So some of the AI tools you've rolled out have had very strong reception. I was at IACP, saw customers very excited about it. Just what are the hurdles of what seems like a naturally very value-added product? What are the hurdles for customers adopting it? Yeah. I think some of the hurdles are really just the overall receptiveness to AI. So I think when you walk them through what the product does, Draft One is our best example for what's out there. And that's basically where it takes the video off of the body camera and helps auto-populate a report for them. Officers see that and they get really excited generally because it's going to save them time. Sitting behind a desk and writing reports is really no one's favorite. But then you get into things like, "Well, how does the DA's office feel about getting a report that's written from AI?" And so we have a lot of education to do on that front. There's still just a lot that's new about AI. And so some departments are like, "Great. Please, anything you can do to increase productivity, send it my way," and some departments are like, "We're not going to adopt AI yet. We need to see how that plays out," but we have a lot of different departments, so that's okay. It's okay if some of them take a couple of years to see what it looks like. I guess one of the exciting parts for me is what other pieces of the portfolio does it pull in? So once you can see that AI can blend all of these different sensors and cameras and different data, does it pull in additional kind of pieces of the Axon portfolio? Yeah. Yeah, it does. I mean, it's not necessarily dependent on the rest of the Axon portfolio, but I think our view is that our open ecosystem works better together, so yes, we're open. You can just use our AI products in general. You need to have some of our transcription capabilities. But it does work better together, and so maybe you want to consider being on our records platform because that integrates more seamlessly, so we do have that advantage of making it all work together. Okay. You mentioned federal upfront supply chain has kind of been another area of concern with investors. Just to what extent do you see either of these as being headwinds for Axon this year? I mean, I think they certainly create a bit of uncertainty and volatility. It's hard to give a perfect answer when you don't know exactly what's going to happen. But neither of them are things that we're calling out as big headwinds for us. The tariff issue has been around for a long time at this point. We have worked really hard over the last eight-plus years to have a nimble and diversified supply chain. I should say that we manufacture all of our TASER devices ourselves in the U.S., and our cameras, we use contract manufacturers, but our contract manufacturers are diversified in terms of where they manufacture the products, so we've gotten nimble and flexible. We obviously get components from different countries. There's some of that you can't avoid. But there's nothing so big that we're calling it out as impacting us for the year ahead. I'd say similarly on federal, we're watching it very closely, but we're not calling it out as a big impact for us in the year. In general, maybe there's some timing volatility from a booking standpoint, but we're pretty comfortable that long-term, what we do, our product capabilities, that that's well aligned and supported for where dollars are going. Another area that you guys have made investments in and that Rick is constantly talking about being excited about is kind of the drone opportunity. But there's a lot of maybe even more regulatory kind of oversight potential over drones. And so just where are you or where is the regulatory environment in terms of kind of acceptance of drones or drones as first responders? Yeah. I mean, I think it gets better and better all the time. I think that it's something that police departments are really looking for and looking to be able to deploy, and so you're starting to see some waivers come in. You're starting to see them figure out how this could work, how this could work with FAA guidance. So I think it's coming along. I think police departments are really looking for it and really driving it, and then I think the other thing I would note is we also invested in a counter-drone company. We think that as go the prevalence of drones, as goes the need for counter-drone capabilities and the need to recognize where those drones are and what is going on, and so we view those hand in hand together, and we're helping our partners and our customers think through that. Okay. Turning to the model, you drove ARR above a billion in 2024, up 37% year-over-year. Just how much of this growth was attributed to kind of continued momentum in kind of digital evidence management relative to kind of some of the other software solutions like records, Fusus, Draft One? Yeah. Really, it's still largely being driven by our digital evidence management platform because that's all on actual revenue. And what happens for us is as we do some of these bookings, even AI, we released that in the middle of October. So even as it comes into bookings, it doesn't have the ability really to hit that ARR yet. Revenue gets recognized ratably over the life of the contract. So you can think of most of that growth really being on the back of DEMS and some of these new areas that we're talking about. There's small contributions from something like Fusus or Dedrone that we bought and have software. But really, these new categories are going to be what's driving ARR for us far into the future. Got it. Maybe turning to TASER for a second. TASER 10 has been in the market for two years. Just can you comment on the adoption trends you're seeing with both kind of the existing customer base and new customers around TASER 10? Yeah. I mean, I think TASER 10 is getting a great reception for us really across the board. It is opening up new customers. I think we've talked about how some of our largest wins in TASER over the last couple of quarters have actually been coming from corrections or international. So it is opening up new markets for us. And I think at the same time, we've talked about how the pace of adoption of TASER 10 is about two times as fast as that of TASER 7. And so we're also seeing really nice adoption come from our existing customers. All that to say, we also get the question of like, "Well, are you through all of the adoption of TASER 10?" And we're really not because our TASERs have a five-year upgrade cycle. We're continuing to sell TASER 7. Three years ago, we had our biggest TASER 7 year ever. And customers really do tend to come through on those five-year cycles. So we've got a lot in front of us still. Got it. I mean, from a profitability front, you hit your 25% adjusted EBITDA margin target one year ahead of schedule last year, with 2025 initial guidance last week, I think. Time is slipping together. But you contemplated kind of similar margin performance kind of early on in the year. Can you just have a lot of new markets, a lot of new products. Just what are some of those investment priorities for the year? Yeah. Yeah. We're really excited by the performance in 2024. And also, we're really excited about some of the new investment opportunities we have. So I think by far, the bulk of it is focused on product and R&D. We're so early in AI. We're incredibly excited not just for the AI products that we've promised to deliver in 2025, but also what we could do with that long term. We're investing behind Dedrone and our counter-drone and drone capabilities. We're investing behind Fusus. And then we're investing behind our new markets, right? So I talked about what gets us excited about enterprise. Well, we're going to go invest behind enterprise because we're seeing the traction there. We're going to go invest behind international so we can keep up some of those numbers from bookings we were talking about. And to do all of it, it's both potentially new products that we haven't talked about, but it's also just investing behind a lot of those existing products, including making them ready for international markets, new features, new capabilities. There's just so much to do. So we're really excited about the investments we get to make this year. How do you balance or what is it that you're looking for kind of on an ROI of those? Is there a certain timeline you want to see? Just how do you think about? You clearly have endless amounts of TAM and so endless amounts of people probably telling you, "I need dollars for this." So just what are kind of the metrics that you guys are looking for just in terms of when you want to see evidence of that investment? Yeah. We look at three things. One, we really listen to our customers. A lot of our new product ideas, we run by our customers first. We see if they resonate. When they don't resonate, they drop off the list. And when they do resonate, that's a pretty good indicator for us that we are going to have an opportunity to sell them into our existing customer base. And so you can think about how that's a built-in customer for us that we can deeply understand. So that's one. Does it resonate with our existing customers and how excited are they for it? I think two is, does it help with our moonshot? So we are really focused on this ability to reduce deaths between the police and the public by 50%. We have some products that we invest in that maybe they don't have a huge TAM, but they're incredibly critical to that moonshot. I think the example that I share on that is our indoor tactical drones, probably a smaller market opportunity, really focused on SWAT teams, but could be incredibly impactful to our mission. And we do deeply care about our mission. We care about our mission and our customers. And then beyond that, we are really focused long term. A lot of our ideas are going to be things that hit us multiple years out. We're talking about AI. We're talking about enterprise. These are all long-term investments for us. So we're really a long-term focused team. We're not just thinking about how we drive growth next year. We're thinking about how we keep up this awesome growth trajectory we've been able to share for five-plus years. That's really how the management team thinks. Again, we've got five-to-ten-year contracts. We better be delivering for our customers when they come up for renewal in five-plus years. Okay. In the past, you've outlined kind of a 3% annual dilution target. Understanding dilution SBC over the last couple of years was driven by kind of substantial growth in the business as well as M&A. But just how are you kind of thinking about dilution or stock-based compensation going forward? Yeah, so we came out with our performance-based stock plan last year, and when we came out with that plan, we had put out a 3% target from stock-based comp, and that plan was a seven-year plan, so it lasts through 2030. It's got milestones. Even if we hit the operational metrics, we have to hit the time milestones in terms of when it can vest, and so that is what backs up and underpins that 3% from stock-based comp dilution. Okay. I have a couple more questions. But any questions from the audience? All right. Perfect. So Eric, did you want to ask one? No. All right. Okay. So there's a step up in your CapEx this year. Most of that is kind of headquarters build, but just. No, actually. It's not? It's not. Okay. So what is? Yeah, so that is investment in manufacturing capacity. We are still making fewer T10 than we have demand for. So we are stepping up our T10 manufacturing capacity, and it is for R&D projects. Headquarters is explicitly not included in that CapEx because, as you've heard from Rick, we don't actually know what's happening. Okay. Well, then perfect. Glad I asked that question, and then just kind of a final question for everybody we're asking this conference season, and maybe particularly applicable for you guys, is just you're selling a lot of AI products. How are you using kind of AI internally to help with efficiency of the business? Yeah. Well, Rick is an AI evangelist, as you can probably tell. And so he asks all of us on a very regular basis what we're actually using AI for. So we're using it pretty deeply across the business, everything from helping it do coding to helping us look at some of our contracts to how are people writing their emails and doing their presentations. And I would say Rick goes around and does a lot of presentations to teams. And if you get the pleasure of seeing one of his presentations, like half of his content in there, he has generated with AI. So he's got amazing videos of officers using our products that are all AI-generated. And so it's become pretty deeply embedded into how we are creating and doing content. We find new use cases for it all the time as people just play with it and experiment with it and figure out what it means for them. Maybe a last question. Just in terms of you guys have been relatively acquisitive in the past, but relatively small acquisitions. Just how do you think of that kind of build versus buy, particularly as you go into new markets? Yeah. I mean, I think that we really like to buy when the company is doing something either better or different than we could have done ourselves. So I think Fusus is a great example where we thought about building that product ourselves, and actually they were doing it better. And our customers were telling us that they liked Fusus' product. And so first we partnered with them. We got to know them. And then we ended up acquiring it. And I think Dedrone, something similar. That's not something that was organically on our roadmap because it was an adjacent category, but it really fits in well to how we're seeing drones evolve. And so I think you'll see us continue to evaluate and look. I mean, we're very pleased with both those acquisitions. We know not every M&A deal works out perfectly, but those have been really nice ones for us. And so we'll continue to invest, I think, organically and inorganically. I mean, the other thing is there's only so much you can do organically, right? So we have to balance making sure we're being really thoughtful about where our dollars go versus where we're looking outside. Just because we have a couple of minutes, you reiterated it on, or I think you stated it well on the call, just kind of the current status of kind of what's going on with Flock, but just since it had caused some kind of disruption over the past couple of weeks, can you maybe just kind of state what's going on with that partnership and what was maybe misunderstood kind of over the past couple of weeks? Yeah. I mean, it really got a lot made of it. I think that Flock was one of those companies that we have a lot of respect for them. We were a go-to-market partner with them. We spent a lot of time introducing them to customers, and then businesses evolve over time, and now they are more of an integration partner for us. So they will integrate into Fusus, but it's a more traditional arm's length type relationship, so I think that transition is what became a bit of a big deal. But I think ultimately, long term, it's really not a big deal. We do API integrations with a lot of other companies out there, and it makes a lot of sense to do that, and they've got their business, and we've got ours, and you just sort of drive on. All right. So much to do about nothing. Well, Brittany, a lot of opportunity, clearly an exciting time for you guys. And thanks so much for being here.