In an effort to refocus investors on its business activities beyond its namesake product, Taser International, the company known for selling conducted electrical weapons to police officers, changed its name to Axon on April 5. The new name is taken from its body camera and digital evidence cloud storage and software division.
Company co-founder and CEO Rick Smith says he approached the name-change to Axon apprehensively at first. "There is certainly some risk changing your name," says Smith. "We have 95 percent brand awareness with Taser, which is something people dream about. While the Taser name is powerful, it's really a product brand name.
"It's like Harley Davidson," says Smith. "If that company came across a great opportunity in software, people would cramp mentally, 'Wait a minute, you guys make motorcycles, what are doing with software?' We were facing the same dynamic."
But distancing the company's body cameras and software products from the Taser name also effectively side-steps decades of controversy related to the electroshock weapon. Smith says the Taser name is "powerful" and "polarizing" as the "less-lethal" weapon has wide support from police officers, but civil rights groups denounce its use. Many people have died after being Tased and many use-of-force complaints filed against cops involve the use of a Taser. Smith says the Taser name is also "distracting" for people when the company is selling, or promoting, its software products.
According to Jeff Kessler, managing director of equity and industry research at Imperial Capital, Taser's name change is a "bold move" as the company name is iconic. The bigger move, in his opinion, is Smith's decision to transition the publicly traded company away from reliance on its product sales revenue model and toward a software-as-a-service model, specifically subscription revenue from its Evidence.com data storage and processing service.
To jumpstart the transition, Axon is offering a yearlong promotion: free body cameras and cloud storage to any U.S. police department that wants one for a year. After the year is up, Smith says, Axon hopes police departments will buy more body cameras and evidence.com subscriptions. The plan will hit Axon revenues in the short term, says Kessler, while the company waits for the "free" period to wind down, but he's confident the company has the balance sheet to support the move.
Axon's stock dipped 5 percent the day of the name change announcement on April 5, but bounced back to pre-announcement levels around $23 per share shortly afterward. Kessler says Axon's strategy is a difficult one for competitors like body camera maker VieVu to beat. If investors didn't have confidence in Axon, the stock would've been more dramatically hit, he says.
The name change not only is a re-branding, but reflects a new reality for the company. Founded in 1993, Axon is now seeing much faster growth in its non-Taser business, although the stun gun still makes up a bigger percent of total company revenues. In 2016, the Scottsdale, Arizona-based company brought in $268 million in total revenue, of which $202.6 million was from the Taser. However, the weapons segment grew just 25 percent from the previous year. The Axon segment, which brought in $65.6 million in 2016, is up 85 percent from the year before.
Smith predicts that revenues from body cameras and the cloud storage services will surpass Taser revenue in a couple of years.
The future for Axon will be even more tech focused, Smith says. The footage police capture on the Axon body camera is streamed and stored on Evidence.com, which is a government-grade cloud storage platform. Using artificial intelligence software, the footage is processed and faces are redacted. smith says the software helps cops save time while editing a video and removing sensitive personal information
While police body cameras have become increasingly popular as a way to monitor policy activity, the body cameras also help police do their jobs, Smith says. According to Smith, police spend two-thirds of their time on the job doing paperwork and processing videos. But Axon's AI-powered software, Smith hopes, has the potential to make those desk-based tasks automated.
"Our ten-year audacious goal is not to reduce police paperwork but eliminate it," says Smith. "We cannot expect our police to stay in the 1950s. We should expect our police have access to the same technology as Facebook."