3 Reasons to Buy Axon Enterprise Stock Now
Shares of Axon Enterprise (NASDAQ: AXON) have been climbing recently, fueled by another robust earnings report. The company, known for its TASER stun guns and body cameras, has demonstrated impressive growth.
Axon’s performance is noteworthy for several key reasons:
1. Strong Bookings Indicate Future Growth
Bookings are a crucial metric for software companies, acting as a leading indicator of future revenue. Axon’s recent performance highlights a promising trend. In 2024, the company recorded over $5 billion in annual bookings, pushing contracted bookings to $10.1 billion. With a revenue of $2.1 billion for 2024, this backlog represents nearly five years’ worth of total revenue.
Notably, Axon’s annual recurring revenue from its cloud products has reached $1 billion. Given this figure, the current bookings backlog represents 10 years of recurring revenue, signaling excellent future prospects for the company.
2. Expansion Beyond Law Enforcement
Axon maintains a solid presence in the law enforcement sector, supporting state, local, and international agencies. However, the company is now eyeing expansion into the private sector, with a focus on the enterprise market.
In 2024, Axon secured a significant deal with a global logistics provider, although the specific client remained unnamed. Body cameras and other products are expected to benefit frontline workers, such as delivery drivers who may need a digital record of interactions.
3. Expanding Addressable Market
Axon’s mission is to protect life, setting a broad scope for its future product development and market expansion. The company has introduced new AI-powered features. With the release of tools like Draft One, Axon’s products are becoming more useful.
Analysts estimate that Axon’s total addressable market (TAM) has reached $129 billion. This figure is based on the potential for growth in international governments, the enterprise market, and AI. Despite this large market, Axon has so far penetrated only 2% of the overall market. In U.S. state and local governments, penetration is at 15%. This indicates there is ample room for further expansion.
Axon continues to innovate with emerging technology. Costs for cloud storage and artificial intelligence are expected to decrease, allowing Axon to provide more value to its customers. This opens opportunities to broaden its product offerings through acquisitions and the rollout of new technologies.
Overall, Axon Enterprise’s future looks bright. After pulling back from its peak, the stock looks like a potentially good buy.
