Great. Good morning, everybody. Welcome to the Axon Fireside Chat at the Goldman Sachs Communacopia and Technology Conference. I have the privilege of introducing Brittany Bagley, who is the Chief Financial Officer and Chief Operating Officer at Axon. My name is Michael Ng, and I cover Axon here at the firm. We have about 35 minutes for today's presentation. First and foremost, thank you so much for being here, Brittany. Thank you for having me. I always like coming here. I am thrilled about that. To kick things off, I wanted to ask about Axon's portfolio and key growth drivers. Axon is the market leader in U.S. public safety technology. Historically, Axon has done very well in TASER, body camera, evidence management software. Today, about a third of the software comes from non-evidence software, like 911, Fusus, and the AI Era Plan. How are you thinking about the key growth drivers from here, and what the strategic priority is for the management team? Yeah. No, it is a great question. It is really nice to be able to share some of those stats with all of you, because these are businesses that we have been talking about and investing behind in the last couple of years. It is great to actually be able to share some of those growth numbers. I think the really important thing to remember about our products, as we have evolved the product portfolio, is that it really is an ecosystem and everything works together. Everything gets better together. As we look towards the future, we are not prioritizing any one product category over another. We continue to be incredibly pleased with how TASER and body cameras are anchoring the portfolio, but then we have added on counter-drone through our Dedrone products. We have added on 911. We're adding on these other software pieces, and they all just reinforce each other. As we look at our priorities, it's really just to make these products continue to get better, continue to solve problems for our customers, fill in gaps in their ecosystem where we see them, continue to evolve our AI products, because we're only at the very beginning of what AI can do. That's a big area of investment for us. But what we do is we tell you about things well before they actually become meaningful to our P&L. The things that we talk about are things that are the drivers for the next couple of years. Then we start telling you when they become meaningful to our P&L, like some of these software products. But that's the goal is just keep evolving that ecosystem. Great. Let's talk a little bit about business momentum, bookings, which was a new metric that you complemented in terms of a five-year bookings metric starting last quarter. That number grew over 30% in the second quarter of 2026. Gross bookings grew a little bit more slowly, but could you just talk a little bit about the differences between gross bookings, the new five-year normalized metric? How do you think investors should evaluate this new normalized growth metric alongside your contracted backlog? Yeah. So we gave the new five-year normalized because we were getting a lot of questions about what role duration of our contracts was playing in bookings. How much of our bookings growth was because we were getting really long-term contracts? We wanted to provide this metric as a way to help all of you look at our five-year normalized bookings. What that really means is that when we look at five-year deals, we take out any of the years that are six and beyond. So you're really just getting a number for five years. Now, if we do a deal that is shorter than five years, we don't gross it up. This is the total bookings that will happen in the next five years. We thought that would be a helpful metric, both to get to the duration piece, but also as we go forward to help give some comparisons for as we grow our enterprise business. Not all of those deals are going to be five-year deals. Some of our international deals aren't five years. So give everyone a way to look at it. We did it in a quarter where, or a year where it shouldn't make a particularly large difference. We're not expecting there to be a dramatic difference as we look at the year between our normalized bookings and our gross bookings. You could see normalized being higher sometimes. You could see gross being higher sometimes. In Q2, normalized was higher. Gross was lower at 20%. Gross was also comping a 50% growth in bookings from the prior year, so you have to balance some of those things out. As we look at the year, we really look at both gross and normalized bookings, but we do look a lot at normalized bookings, and we look at our future contracted bookings. We had given the color that we expected our normalized bookings to grow 30%+. We expect our future contracted bookings to grow well above that. You can back into what that means for gross bookings, but it shouldn't have a material difference for the year between gross and normalized. Great. One common question that I often get from investors is just about Axon's TAM and how penetrated Axon is within its TAM. A couple things that we could tease out here, but maybe just start out, how much does Axon make of a state and local police budget today, and is there opportunity to grow that percentage just in terms of, you know... Yes, absolutely. I think depending on the department, we're somewhere between 1%-5% of the police budget today. So pick 3% in the middle if you want. I think at some of our largest customers who are buying everything, you get up to that 5%. And those aren't necessarily our numbers. One of the great things about our customers is they publish a lot of this information, so you can go find customers who lay out their budgets and how much Axon is a part of that. So not a huge part of their budget today. Lots of room to continue growing inside of the budget. Police budgets have continued to grow, but we have grown much faster than that, and that is really because we're increasing our share of wallet. We increase our share of wallet by coming up with products that solve real problems for our customers that they need, that they want to use. Depending on the product, some of them are really mission critical, some of them are life-saving, some of them are about transparency, and as we look at AI, some of them are even more about ROI and actually generating efficiency for the department. So there's different reasons that we're able to do that across our products. But I think we estimate we're about 15% penetrated in our state and local TAM today. And then our overall TAM is about $159 billion-$160 billion from a TAM standpoint. Lots of detail that we can get into all of you on how we get to that TAM. We try to be pretty conservative. We try to really have it look at only products that we sell today in countries or markets that we can actually apply it. I know there's lots of ways to do TAM. We try and be pretty conservative and think that it just shows that there's a huge opportunity in front of us. Great. I would've thought that Axon was relatively fully penetrated in TASER, yet last quarter you had your largest individual TASER order in company history. Could you talk a little bit about what's driving this TASER momentum? Is it the TASER 10 refresh? Is it expanded number of seats, if you will? Yeah. It's different depending on market. The U.S. deal that we were excited to call out last quarter, like our largest ever TASER deal, still happening three-plus years into our refresh cycle. That was an upgrade to TASER 10. So great to see that we still continue to have customers moving to TASER 10. Still a lot of opportunity to do that. We also called out international deals having TASER in them. International has had some real reception to TASER 10. TASER 10 has higher efficacy and more use cases, and so that's really appealing to some of our international customers, and so that's where you're seeing us get into markets that we were not in before. Perfect. I wanted to ask about enterprise. Enterprise bookings tripled year-over-year last quarter, and you're currently conducting trial programs for newly launched Axon Body, the Workforce Mini in retail and healthcare organizations. First, could you talk a little bit about the feedback that you're getting from your enterprise customers? How do you map the timeline from trials to full-scale deployments and what are the main enterprise use cases that you guys are most excited about? Yeah. Great question. There is a couple ways in. It usually really is with a trial. Some of our customers trialed our older Axon Body Workforce camera, which was a little bit larger than our new ABW Mini. ABW Mini really launched at the beginning of Q3 for us, so nothing in our Q2 numbers from an ABW Mini standpoint. We see customers either trialing the Axon Body Workforce and thinking about upgrading to ABW Mini, or they were waiting to get their hands on ABW Mini, and they will trial ABW Mini. What do they like about it? They like the transparency. They are seeing that it helps them understand situations, improve efficiency. There is training opportunities off of that. There is also de-escalation capabilities coming off of it. Sometimes if you just see someone wearing a camera and you know you are getting recorded, you behave a little bit better. That is also something that they are seeing. So, depending on the customer, they are seeing different use cases. It is all sort of in that training efficiency, interaction with customers or patients. That is where we are seeing the benefit. I would imagine how long trials depends on the customer. I would say some large customers will even have phased rollout, so they will not do all of their locations at one time. That is typically what we see. It goes from trial to phased rollout. So can be fast in terms of what they see, but they usually want to collect data and then make that transition. Perfect. You talked about some of the momentum in international with TASER 10. Overall international bookings have been on a tear, 3xing year-over-year last quarter. Maybe expand a little bit about the drivers behind the international momentum. How are you adapting your go to market in these regions? Anything else you would highlight in terms of whether it is T10 momentum or something else. Yeah. I think back to where we started, it is the whole portfolio and the whole ecosystem working together. T10 definitely has momentum internationally. Our counter-drone products are very interesting internationally. I would say our AI products are really interesting internationally, so we called out that some of our international customers were some of our largest AI deals in Q2. We are seeing that adoption. Now with our AI products, we have to do things like localize for forms and language in those countries, so we have a little bit of work to do when a country decides to come on to those AI products. Again, I would say we have more things than ever that are resonating with our customers, and so that is what is allowing us to get into international, not just with TASER, with TASER and with our other products. Great. On the topic of counter-drone, some of the U.S. federal agencies have intents to acquire counter-drone products and sensors and Axon, I think, was named as a participant in one of the Department of Homeland Security programs. Could you maybe just talk a little bit about that and the opportunity there? Yeah. It's a pretty nascent market, so there's an enormous opportunity. I think as drones become more and more visible and more and more used, you can imagine that counter-drone goes along with that. I think for every major event, whether or not that's something like the World Cup and it's a sporting event, or parades, or really anything you can think of where there's a large gathering, you're going to start to see counter-drone be a requirement to have there just because you don't know what could happen. So it's going to really start to be a necessary product for deployment. That's true for state and local, it's going to be true for fed civil. We were really excited to see those contracts come out. We were excited to be named as part of them. Still too early to tell what that means in terms of how they're splitting up those dollars across products. But it's why we talk about there being such an opportunity inside of counter-drone, and why we get the question sometimes like, "Well, was it just a World Cup event?" Right. It wasn't just a World Cup event because there's going to continue to be events and sporting events and gatherings of people, so it continues to be relevant. Right. For the World Cup in that quarter, you guys had over $100 million of quarterly revenue for counter-drone, which, to put that into context, was bigger than Body Camera, I believe, in the quarter. So maybe if you can just elaborate a little bit on that. Obviously the World Cup is such a large and seminal event. What else could be going on from an asset protection or asset monitoring perspective that could top that? Yeah. I think you could imagine that there's single events that maybe could top that. I don't know. The Olympics is going to be a big deal. I think it's less going to be like there's a single event that has to be bigger than the World Cup, and more that this is just becoming a standard required capability for everyone to have when they're doing events. As we continue to grow the business, I'm sure there could be an event we call out again in the future. But it's not going to be built on that, it's going to be built on the rest of our business proliferating out to all of our customers. But I am really excited to say that we passed that $100 million because we acquired this business two years or so ago. It was nascent. We got lots of questions of like, how big is this going to be? Is it only going to be for DFR? So it's really validating on the vision and the strategy that we set for counter-drone. Great. If we could pivot to the AI Era Plan, certainly something that has emerged as a true standout. AI revenues, I think, grew 700% year over year last quarter. Three of the top five AI Era Plan deals last quarter came from international customers, so this is really something that's seeing global demand. Could you unpack what's driving this growth? Talk about customer adoption and feedback. How important is DraftOne in driving AI Era sales? Yeah. DraftOne is important because it was really one of our first products that came out in the AI Era Plan. As a reminder, we sold the AI Era Plan as everything that we do in AI you can get. DraftOne was really the first big product inside that, probably along with transcription, and then we continue to innovate and add more products. So we went from DraftOne to FormOne. Translation has been incredibly popular inside of our AI Era Plan, and there's more to come. There's always more to come with our product roadmap. You can imagine we're really just getting started with what we can do with AI inside of that product portfolio. So I would say customers continue to believe that we will innovate and we will be leading and we will come up with product ideas first. They both like the products that we have in, but they also like the fact that we are basically future-proofing AI for them. They don't have to be out deciding who the next great startup is or what they're going to get. They know that we're going to do it, and we're going to do it in a way where we have thought through the ethics of it, we are willing to work with their DAs, we're willing to really make it a product that they can use in their ecosystem. I think that's some of the stuff that's really exciting about the AI Era Plan. Back to our earlier conversation, it also allows departments to get efficiency, which is a really nice conversation to have. DraftOne saves time. I think we put this out a couple quarters ago, but we went through and said it can save officers up to four hours a week. That's real time savings, especially relative to the price of the AI Era Plan. That's before you get into things like translation and the other products that we have. So it drives real efficiency. The point on the international customers is they're seeing it too. This doesn't just resonate in the U.S., it resonates with our international customers. Now, you have to do the work to make it apply. Everybody has different forms that they have to fill out. But just huge runway there. Right. AI Era Plan, it is a subscription. You get all the latest software- and products coming out of Axon that are AI related. Is there anything that you could share as it relates to product roadmap for AI Era Plan or how you think about pricing? Especially as you add more features and capabilities to AI Era, where are we now? Where do you think it could be? Yeah. I would say that there is lots of development going into the AI Era Plan. Nothing I can share right now. We did talk about Axon Gravity back at Axon Week, which is helping connect all of the systems together. We do have IACP coming up in October, which is usually where Rick likes to talk about some of the cool new things that we are putting on the product roadmap. But I would say you can imagine just like translation, you can imagine we are doing more and more things on the body camera or with the video that comes off of that. Those are areas that are really ripe for us. Then I forgot what the next part was. It was about anything you could share as it relates to the philosophy around pricing. We do our pricing annually. I would say coming up in the next couple of months, we'll look at our pricing for 2027. We, from a philosophy standpoint, always like to really look at the value we're providing our customers and make sure we're providing more value when we take prices up. We don't just take prices up sort of apples to apples, but we really try and add things in and add value. I think what we do on AI pricing will depend on what we're adding into the bundle, the use customers are getting out of it, making sure they really feel like we're getting value there. As we think about the long-term game, it's much more important that we become their AI provider and that they're using us, and that they believe we can provide their solutions than it is to necessarily take price day one. That's great. On TASER 10, I think the product is three years into launch and product refresh. Booked units are already outpacing lifetime units of TASER 7. Could you talk a little bit about whether or not T10 will have a five-year life cycle, which I think was the life cycle for TASER 7 before T10 came out? How much more runway is there to upgrade the installed base to T10? Yeah. We talk about TASER having, on average, a five-year life cycle, and our body cameras having, on average, a two and a half year life cycle. That doesn't necessarily mean that we get our products out perfectly on that schedule, but that's roughly the right way to think about it. I think even with five years, that would give us a little bit of time before we came out with our next TASER. To our conversation earlier, between international and between customers, we still sell TASER 7. We were still selling TASER 7 last year. There's plenty of room for customers to continue to upgrade. Great. On Axon 911, you guys have made a couple of acquisitions in this space more broadly between Carbyne and Prepared. Maybe you could just talk a little bit about the 911 strategy. Last quarter, I think you signed your first ever full scope Axon 911 customer. Yeah. We like to talk about 911 sort of giving us access to our customers all the way from when the call comes in, all the way to when they close a case. We talked about it from call to closure and helping them at all of the steps along the way. That's really what the acquisitions gave us, is they gave us that incoming call piece. We made two acquisitions, Prepared and Carbyne. That gives us both the AI overlay on top, and it actually gives us the underlying call handling system. But rather than having it be an on-prem call handling system, it's a cloud call handling system. We were really excited to announce the first customer that bought both Prepared and Carbyne, so bought our full suite of 911 products. I think we hope we'll see a lot more of that because that provides their solutions and what they need. You can imagine that doing the AI overlay is a lot faster and easier for customers to implement. They can do that pretty quickly. Going through an upgrade to their call handling system, they do that less often. It's a bigger deal for them. Carbyne has certainly done many of them. They've done a really good job with it. But you can imagine that takes longer for those RFPs to come out, but then when you win those, you are a relatively sticky call handling service until they decide to do their next RFP. We've gotten great feedback from the customers who are using these products. We had one, I think we talked about, they implemented it before July 4th. Took them about a month to implement. Even as they saw the spike in July 4th calls coming in, the actual calls that their agents had to handle went down by 33% by having Prepared as the AI agent on top. We're getting really pleased customer feedback from these implementations. Great. And just as a follow-up on that, could you talk a little bit about your desire to do more in computer-aided dispatch and whether that's kind of changed over the years and why? Then as you also try to win customers that are not your traditional constituent like fire departments and hospitals and things like that, how does that change your go-to market, if any? Yeah. I think the nice thing about our Axon 911 strategy is we can do that while integrating with existing CAD solution providers, so we don't have to do our own CAD play. You probably remember we tried that for a little bit and decided that wasn't our sweet spot. This gets us at the same goal, which is getting into these calls early and being part of these early conversations and even thinking about how and who is getting dispatched. Are you dispatching an officer? Are you dispatching a drone? What kind of information do you have? It integrates into Fusus. It really makes it really seamless to cross it without having to get into CAD or without having to get into some of those legacy systems. Great. Then on Fusus, you guys have a very powerful, unified real time, single pane of glass interface. Saw really strong growth last quarter. What's driving all this growth in real-time operations? Is it traditionally in your state and local customer? Is there much more in enterprise and retail and things like that? Yeah. I think one of the things I will say that's nice about our enterprise strategy and why we think it is such a good adjacency for us, is you can take a lot of the same capabilities that we have in state and local, and with some tweaking, have them also be really relevant for enterprise. So again, I would say Fusus is relevant across all of our markets. It's relevant across state and local, international, enterprise. The reason that is because everybody has cameras out there or sensors out there of some kind, including our fleet cameras, including our body cameras, that they want to be able to see in a real-time way. So Fusus becomes that single pane of glass where they can pull in all of their sensors, ours or other peoples. We are an open ecosystem. We are happy to integrate, but pulls in all of those sensors and allows them to look at it. So relevant for all police forces, but also relevant for enterprise customers thinking about how they do asset protection. Right. In that partnership model, could you talk a little bit about whether or not there are costs to Fusus for pulling in footage from other partners that are non-Axon cameras? Because you guys really are an open ecosystem play, right? Like Citizen's app and closed circuit cameras and all that stuff. Yeah. Yeah. Yeah, it sort of depends on the partner and what the relationship is. But I would say in general, it is best practice to have an open API for this type of integration. And so usually that's what we're working off of. Okay, great. I wanted to talk a little bit about the competitive environment within body cameras. Last quarter you talked a little bit about some competitive win backs in the body camera space. What were some of the pain points that those customers had to deal with before coming back to Axon? And maybe you can just talk about what's happening in body cam competitively overall. Yeah. I'll keep this pretty high level, but I would say, one of the things that we really like to do for our customers is we like to innovate. We like to have features that we're first to market with, and then we like to really deliver on our promises to our customers. So if we say something will work a certain way, we absolutely make sure it works a certain way. If we say it will integrate with Evidence.com A certain way, we make sure it integrates with Evidence.com a certain way. What we have seen from our customers is that often, maybe not often, sometimes when they go trial with a competitor, when they deploy it in the field, that won't happen the way that the competitor said that it would happen. It won't integrate as well, or it won't be as reliable. In those cases, that's where we see someone coming back to Axon because we really do what we say we're going to do. Right. Just on financial guidance, last quarter you raised your full-year revenue growth outlook to 32%-34%. Maybe talk a little bit about the key demand drivers, operational tailwinds that gave you that confidence to raise the full-year outlook. Yeah. As we look at the full year, usually we have pretty good visibility by the time we come into the second half of the year. Because we have future contracted bookings, we know a good chunk of our revenue that's coming in, and then by the time we get to the second half, we have pretty good visibility into the deals that we think will close for the year and what that will do for revenue for us for the year. So that's what allowed us to get to the 32%-34%. I will say, and we called this out on the call, and this is how it looked last year, that tends to be more heavily weighted to Q4 than to Q3. If you looked at the shape of our year last year, we did a little bit over 30% growth in Q3, and then we had our highest ever growth quarter, or our highest growth quarter of the year in Q4. We gave similar commentary for this year, which is we really expect Q4 to be the quarter where you see some really attractive growth, highest growth quarter for the year would be our expectation. That is just because we get a lot done as we go in to close the year. That is a real impetus for our customers to get through city council, to get things signed, to not have it drift into next year. It is not that we do not get deals done earlier in the year, but obviously that is all the deals that we have sitting out there that we know that we think we are going to get done this year, like that end-of-year line is a real push. That is what you see when you shape the year. Great. Then on gross margins, I guess one question on software, one question on connected devices. On software, what is the right way to think about steady state software-only gross margins? Maybe you could talk a little bit about the services impact on that line as well. Then on connected devices, just given how strong Dedrone and platform solutions are growing, is that going to impact the steady state margins of connected devices? Yeah, great question. I'll go in reverse order. Sure. As I think about connected devices, there's sort of three big drivers of connected devices. TASERs, no real change to how we think about TASER margins. There's our cameras. Our cameras are the one area that really are getting hit by the increase in memory costs. Memory costs keep going up. Hopefully with the new capacity coming online, that starts to change in 2028. I don't think that there's anything. We'll see where memory sort of falls out, but ultimately, we also can look at pricing. Over time, I don't know that I would call out connected devices as being any different, but there's certainly some headwinds for us on the memory part for cameras. Then there's Dedrone. I would say Dedrone is really in two pieces. There's the hardware business, and then there is a software business that comes along with Dedrone. You're seeing a lot of the hardware business up front. That business is new, it's nascent. We're scaling into it. We're figuring out how to do deployments and service and all of that. That is a drag on our connected devices overall margin. But I don't think that you should assume that it is forever a drag on our connected devices margin. I think that's just a business where we have to figure out how we scale and get more leverage in those margins, and how we operationalize that and how we deliver. From a software and services standpoint, software continues to be above 80%. I don't see that changing, but obviously it's something we keep a close eye on. The fluctuation you see in the software and services line item is services. We have services around a lot of our products. A couple of years ago, we talked about it really being around fleet. Well, now it's around a lot more than just fleet. We have to do implementations on Dedrone. We do implementations on our hardware. We also do a lot of it on our software. We have services to get Fusus up and running. We have services to get our records business up and running. That's how we look at our services business, and just depending on the deployment and the mix of our services, that's how you see the software and services fluctuate. That's great. In the last few minutes we have, maybe I can just ask you about what Axon is prioritizing over the next 1-2 years to just maintain all this growth momentum that you have. Yeah. I'll give you two different versions. One, our customers, we always prioritize our customers. That is our North Star, and we don't lose sight of that, because if we don't delight our customers, they're not going to buy all of the new products that we come up with. We really stay very focused on our customers and how happy they are with us. Two is our innovation pipeline. We continue to innovate. That's what we do. We are interested in new technologies. We do it organically. We've obviously acquired some great companies. But we're really interested in continuing to make sure that we're solving problems for our customers. Then there's how we scale that profitably, right? How do we deliver for our customers, and their product vision in a profitable and growing way? How do we do that? A lot of it is about continuing to come up with new products for our existing customers, and then taking those products into new markets. That's where you get us talking about things like enterprise and international. How can we take those products that have proven themselves out in our U.S. state and local business and sell them in more places? Perfect. That's a great place to wrap up. Brittany, thank you so much for being part of the conference. It's been a privilege to have you on stage. Thank you for having us.