Axon Enterprise, Inc.

Mr. Josh Isner and Chief Product Officer Jeff Cunnins, and we feel great bringing you guys the whole team. First, we're going to give prepared remarks, and then we'll bring our analysts on camera for questions. Analysts, your lines should be muted and try to keep them muted until it's time to ask a question and a follow-up. If you have a third question, you can let us know via the chat window. We'll circle back around depending on time. Axon's moderators, Mark, Doug, and Angel will be unmuting your lines or you can mute them yourselves when we call on you. If you get into trouble, type your question in the chat window and we'll read it aloud. Hope everyone has had a chance to read the shareholder letter, which we released after the market closed. You can find it at investor.axon.com. Our remarks today are meant to build upon the information in that letter, which is very robust. If for some reason there's an internet outage beyond our control or we lose Zoom connectivity, We'll make every effort to post a copy of our prepared remarks to investor.axon.com this evening. During this call, we will discuss our business outlook and make forward-looking statements. Any forward-looking statements made today are pursuant to and within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These comments are based on our predictions and expectations as of today, are not guarantees of future performance. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks are discussed in our SEC filings. Okay, please go ahead, Rick.

Thank you, Andrea, and thank you everyone for joining us today. During our last quarterly update in May, one of the biggest issues we addressed was how we were managing our business through a pandemic. One quarter later, we have so much more to talk about because we've all watched Thousands of people take to the streets demanding police and public safety reform. Our company's reason to exist, our mission, is for exactly moments like right now. Protect life. We are on a mission to make energy weapons so safe and so effective that we make bullets obsolete. We preserve truth. Body cameras protect officers from bad claims and citizens from bad behavior, increasing transparency and reducing social conflict. We accelerate justice with advanced cloud software and AI that have potential to make the entire justice system more fair and more effective. When you think of gun violence, social conflict, and a fair justice system, most people don't think of these as technology problems, but as political problems. We frame them as problems where technology can play a transformative role. Now look, technology is no panacea and it cannot solve these problems for us. However, Almost any problem can be solved faster and more effectively with the right technology tools to help people solve them. So as we look at all the pain and anger today, we ask ourselves, what can we do to help promote equity? Our superpower is creating technology to address social problems that many others see as intractable. So we have added a fourth mission to inspire our work. Centering racial equity, inclusion, and diversity. which might make you wonder, how can you build technology to promote equity? If you want to hear specific examples of how we are using technology to support this new mission, you'll have to wait and come join us at our conference Accelerate later this month. We at Axon can't change the policies and cultural norms in policing, but we can build the tech tools to help our customers do it. We're hearing consistent and emphatic calls for change from the most prominent leaders of law enforcement, and we are excited to build the tools to help them. Back when we began investing in body cameras in 2008, we faced innumerable skeptics. But we knew that body cameras were the future. And body cameras started gaining traction after a wave of protests began in Ferguson, Missouri in 2014, which was really the birth of the Black Lives Matter movement. At the time, we were delivering the right capabilities at the right time, and our investments in cloud software made body cameras suddenly feasible and affordable for all agencies. We invested in body cameras when nobody believed they were possible. And as the investment community well knows, our core body camera and software business lost money from 2008 to 2019 when it began to turn a profit. Those 11 years of continuous investment in R&D To prove out the feasibility and sustainability of body cameras are now the foundation for our next leg of growth. In 2020, we're humbled to be developing solutions that once again find themselves relevant to a national conversation about policing. We do not shy away from these hard discussions, and we see the pain and the nuance behind demands to defund police. This is really all about reforming and reshaping the justice system. And these are issues that we engage with daily. They're not new to us. We invite input from a broad spectrum of voices. We have the industry's most relevant and productive ethics board. With renewed calls for reform, we can leverage technology and policy changes to improve public safety. We believe that our product moment fit is why our pipeline continues to strengthen as communities see the power of our platform to drive positive change. And now with that, I'm going to turn it over to our president, Luke Larson.

Thanks, Rick. In a few weeks, on August 25th, as Rick mentioned, we'll be hosting our annual technology summit, Axon Accelerate. Due to COVID, we've shifted this to a virtual event, which has allowed us to grow the event to reach a much bigger scale of our audience and customers. We're also able to offer a cutting-edge virtual reality track. If you'd like to attend, go to axon.com and register. We're very excited to share some key customer updates and product announcements on how Axon can help officers and the communities they serve ensure everyone makes it home safe. Our strategic priorities in 2020 are to continue to execute in our core market while accelerating our path to market in new product categories. Our engineering and product teams are solving some of the most difficult problems at the intersection of the physical and digital worlds to advance our mission. This is also a year where we have walked beside our customers in one of the most challenging environments they have ever faced. Our customer-facing teams have built amazing relationships with our customers, not by selling devices or software, but by becoming trusted advisors on how we can help customers with the important problems they are facing. We are helping them to source mission-critical technology amid greater public budget scrutiny, helping them to access federal dollars where available, and we aspire to be true partners to our customers. We are emphasizing the mission-critical importance of our OSP7 Plus offering. De-escalation, transparency, and productivity have never been more critical to police and community relations during this watershed moment, and our offerings address these exact situations. This emphasis drove our Q2 results, with revenue up 26% year over year. This is a strong performance in the context of one of the toughest macros we've faced, a global pandemic and massive economic uncertainty. Our strong results were also driven by a stellar quarter for international, up 80% year-over-year to $34 million. This was on top of 38% international revenue growth in Q1. We were just getting started in large markets such as Brazil and India and three countries top $1 million in revenue for the first time in the quarter, Indonesia, Panama, and Thailand. Turning to the bottom line, GAAP income was affected by stock-based compensation and tax expense. Adjusted EBITDA was $28 million, reflecting a 20% margin, which showcases our cost discipline and some travel savings related to COVID. Turning to operations, you will see the inventory build on our balance sheet. This was very intentional. We have adapted well to an ongoing supply chain environment that we've never seen. Recall that last year, we diversified our supply chain and global manufacturing footprint due to tariffs. And it turns out that those initiatives positioned us well to handle COVID-19. Even so, given the number of unforeseen challenges that could lay ahead and the fact that 2020 is full of curveballs, we've elevated our inventory build in the first half. This safety stock helps minimize shipping disruptions and also prepares us for some key Axon Body 3 shipments to major customers in Q3 and Taser orders we are expected to fulfill in the back half of the year. Currently, we expect Q3 inventory levels to remain about the same, and by the end of the year, they could come down by as much as 10%. And with that, I'll turn it over to our Chief Financial Officer, Jawad.