Encounter the Formidable Stockspace Titan That Persistently Outshines Market Trends
Nvidia is regarded as the top-performing stock of the past decade, with a stunning 76% compound annual growth rate over the past 10 years, turning an initial $10,000 investment into over $2.69 million. However, it's not the only remarkable performer in this timeframe.
Consider Axon Enterprise (AXON 0.36%), a company with equally impressive returns. Axon's stock price has increased by 39% annually over the last 10 years, placing it in 12th position in terms of stock performance during this period. With a vast potential for growth ahead, this company is a force to be reckoned with.
How does Axon achieve this success?
Understanding a company's core business is essential when analyzing its stock performance. Axon's reputation is largely built on its first product, the Taser. Establishing itself as a pioneer in non-lethal self-defense weapons, Axon revolutionized the technology in the early 1990s. Law enforcement agencies soon embraced the Taser, and it quickly became an indispensable part of their arsenal.
had Axon chosen the path of a single-product company, it's doubtful investors would have enjoyed the same level of profitability. Savvy business moves turned Axon into a diversified corporation, expanding its product offerings and creating numerous growth opportunities.
Rick Smith, the founder and CEO of Axon, has played a crucial role in the company's success. During the third quarter of 2024, Smith emphasized the importance of customer focus in a company earnings call, stating, "I spend the majority of my time with our customers and product teams, ensuring that we are inventing and focusing on the right things, and aligning our efforts where our customers need us and where they need us to be for their future."
In other words, Axon's mission isn't to develop products and search for clients. Rather, it seeks to cater to existing clients' needs and tailor its offerings accordingly. Building such strong relationships with its customers sets Axon apart from many other businesses in the industry.
Axon's product portfolio today encompasses body cameras, software tools for simplifying paperwork, cloud storage, drones, and more. Management also revealed plans for further product diversification in the near future.
Axon's new phase of expansion
Artificial intelligence (AI) is currently garnering significant attention in the financial world, and it's no surprise that Axon is exploring the technology as well. The company aims to integrate AI into its offerings, with plans to launch approximately 10 AI products over the next year. By bundling these offerings into one subscription service, clients will gain access to new AI features as they become available.
Law enforcement agencies can benefit greatly from AI tools, such as audio transcription for body cameras, ultimately reducing paperwork for officers. Furthermore, Axon plans to introduce live translation AI in early 2025, enabling communication between officers regardless of language barriers.
This focus on AI represents another potential source of revenue, constituting a recurring income stream that has contributed to Axon's past success.
Axon's transition to a software-based revenue model has made a substantial impact. Its annual recurring revenue (ARR) has surged over 500% in just five years, from $142 million in Q3 2019 to $885 million in Q3 2024. This shift has provided both greater visibility into future growth prospects and reliable and steady revenue streams.
Axon's current contracted revenue stands at a record-high $7.7 billion, thanks to long-term contracts. The upcoming Q4 is known for strong new contract signings, providing yet another opportunity for growth. AI is not only a promising product development avenue but also serves to bolster the company's status as a recurring revenue powerhouse.
Disregard bets against Axon's future growth
Axon's stock performance over the past decade is astounding, but its potential for future growth remains exceptional. Beyond the ongoing growth opportunities brought by product development, expanding into new markets has the potential to yield even more gains.
Axon is poised to make inroads into international markets, private security, and federal agencies, in addition to its core U.S. law enforcement market. The company is well-positioned for success over the next 5 to 10 years, making it a challenge for investors to bet against its growth.
In terms of finance and investing, Axon Enterprise's strategy of diversifying its product offerings and focusing on customer needs has significantly contributed to its annual growth rate of 39%, turning an initial investment into substantial returns. As Axon continues to integrate artificial intelligence into its portfolio, it expects to launch AI products and offers a subscription service, potentially creating a recurring revenue stream that has significantly boosted its annual recurring revenue. With ambitious plans to expand into new markets, Axon provides a compelling investment opportunity for those who believe in its future growth.
