Axon President on AI, AR, and Drones as First Responders

**Josh Isner** (0:01)
We're seeing virtual reality as a major disrupter in training. And the reason is retention. We see that when you train in virtual reality, retention goes up about 40% versus conventional in-person training. And it makes sense, because you're living those scenarios in a very real convincing way. You're not firing kind of fake taser probes at a person running around in a Velcro suit or at a stationary target. Instead, you're confronting real world scenarios that are modeled after real incidents that have happened in policing. And you're training on those under tremendous stress. And the best part of all is you can do it as many times as you want and in as many different locations as you want.

**Mary Long** (0:46)
I'm Mary Long, and that's Josh Isner. He's the president at Axon Enterprise. Axon builds tasers and body cameras for law enforcement officers. They also have a cloud-based evidence management system and immersive augmented reality technologies that help police departments better train and prepare officers for stressful, very high-stakes situations. Fool analyst Jason Moser caught up with Josh to discuss why Jason thinks of Axon as the apple of its industry, the ways Axon is using artificial intelligence, augmented reality and drones to save lives, and how humanoids could be the next big innovation in law enforcement.

**Jason Moser** (1:29)
I like to view Axon as the apple of public safety, and that's a compliment in every way. You guys make market-leading hardware, you've developed a tremendous ecosystem of software and services to support it all. Can you just give us a quick breakdown of the actual business? What are the major segments of the business, and what are you guys excited about these days? For sure, for sure.

**Josh Isner** (1:50)
We do a lot at Axon, and I appreciate that compliment. That's about as lofty of a compliment as we can have, so that's very nice of you. Thank you.
And we do look at Apple as a good kind of analogy to how our products compliment each other. And so we really have two kind of core businesses. One is the iPhone iTunes model for body cameras for police. So you have your iPhone, which is your body camera, and then your version of iTunes as a police officer is called evidence.com. And that's where all of your digital evidence is managed. So all of the video coming off your body camera, video coming from CCTV, in-car video, drones, really any source of video, it's all housed in evidence.com. And we house over 30 times the amount of video in the Netflix library currently on evidence.com. And so this is a massive, massive data set. And so that's core business number one, and core business number two is very different. It's our less lethal technologies business. And tasers or conducted electrical weapons are the thing there. And we've been in that business since 1993 We're on our 10th version of the Taser, aptly called Taser 10 And certainly the intent there is to make this technology so good that a bullet will never have to be fired in policing. And of course, that's a very lofty goal, but that is what we're on a mission to do is to offer a police officer the same amount of stopping power, but make sure at the end of it that the suspect is alive. And so those are the two core businesses. And then we've got kind of these interesting businesses that we've built off of them. On the Taser side, virtual reality training is one of our fastest growing businesses. On the video side, AI, analytics, different tools that you can use within your digital evidence management platform, like automated redaction and sharing and being able to view multiple feeds that are time sync. Those are the types of kind of follow on opportunities there are, as well as a records management product that's very closely married to digital evidence. And so, we kind of operate those two businesses at the company in a way that kind of allows them to be scrappy and entrepreneurial. And we've seen a lot of growth in both over the last five or seven years here.

**Jason Moser** (4:20)
You know, something we all think about as investors is your competitive landscape. And there's no obvious Pepsi to your Coke, or Coke to your Pepsi, if you prefer. But what I'm getting at is competition here. Who do you consider your main competitors today?

**Josh Isner** (4:40)
Yeah, sure. There are plenty of competitors in the body camera space. You know, the one I think people will have heard of before is Motorola.
They're very active in this space, and that's probably our major competitor in the body camera space. But what I say a lot about Axon is our main competition is the status quo. Ultimately, government is not built to be on the front end of adoption, right? Their procurement cycles are lengthy and protracted, and their budget cycles are such that things take time. And so a lot of times it's about convincing the end user that this technology they're deploying is going to have a return on investment, is going to make them more efficient, it's going to allow them to keep communities safer. But a lot of times in government it can be challenging to kind of move the technological ball down the field. And so I'd say that's really the competition that we're kind of most focused on.