Axon Enterprise, Inc.

Hello, everyone. Welcome to Axon's fourth quarter 2020 earnings conference webinar. I'm Andrea Jane, Senior Vice President of Corporate Strategy and Investor Relations. This is actually our fourth quarterly earnings over Zoom, so it's great to see faces again. Today we have Axon CEO Rick Smith, President Luke Larson, CFO Jawad Ahsan, Chief Revenue Officer Josh Isner, and Chief Product Officer Jeff Cunnings. First, we're going to give prepared remarks, and then we'll bring all of our analysts up into gallery view for Q&A. I hope you all had a chance to read our shareholder letter, which was 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 robust letter. If for some reason we lose Internet or Zoom connectivity, we'll make every effort to post a copy of our prepared remarks to investor.axon.com. 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 and are not guarantees of future performance. All forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed further in our FCC filings. Finally, we really encourage you all to look at our updated ESG and corporate social responsibility report, which we published today in conjunction with our earnings. We are increasingly conscious of our social and corporate responsibility as our company and our shareholder base grows, and we're pleased to share this comprehensive report with you. Angel Ambrosio, whom you're familiar with on this call, is our senior manager of investor relations and ESG, and we welcome you to reach out to us on this topic that's interesting to you. Okay, go ahead, Rick.

Thanks, Andrea. Hi, everybody. I want to start by talking about 2020. The conventional narrative is that 2020 was a terrible year. I'd like to offer a different perspective. Challenging times bring out the best in humanity. These are the times that inspire us to rise up, to overcome, to stretch ourselves. The hardest times become our finest hours. If we choose to focus on the negative There was plenty to see in 2020. But if we look harder, we can see so many signs of hope and progress. Supercharged by a global plague, nations sprung into the kind of arms race we should want to see, competing ferociously to cure a pandemic. And we all know the result. Multiple vaccines developed 10 times faster than ever before. We adapted to a world where travel was simply off the table. So we virtualized ourselves and we learned to Zoom around the world for business. And we got to see our kids for dinner every night. My customer engagement has jumped more than tenfold as customers are now open to video conferencing. And we've enjoyed seeing you, our analysts, and our investor community face-to-face in our new quarterly conference Zoom calls. I don't mean to minimize the pain we all experienced in 2020. I understand and I shared it. My mother passed away recently. days before Christmas after contracting COVID. But even in that sorrow came progress as we came together and we healed some fractured relationships within our own family. I would not have chosen for 2020 to turn out as it did. In fact, as we've said before, we don't get to choose what the world throws at us, but we can choose how we respond. The urgency resulting from the intense social strife of 2020 is accelerating the world's readiness to move beyond bullets to a world where killing each other is no longer something we simply accept as some immutable facet of human society. It is supercharged our energy as we redouble our efforts to deliver taser energy weapons that will outperform a traditional sidearm before this decade is out. And our customers are embracing this goal. They have told us that the bar will be very high, but I'm confident our team will deliver. 2020 was also a year where Acton delivered incredible value to our customers and the communities they serve. As you can see, you can see it in our results. We knew that adversity would present opportunities for those individuals and those organizations that are nimble and adaptable. Just as ice ages create breakout opportunities for adaptable species to explosively grow in their aftermath. In the weeks following the arrival of COVID in North America, we transformed our offices into adjunct manufacturing spaces, allowing us to spread out, create social distance, and continue to deliver exceptional results that far exceeded our most optimistic expectations. We didn't just deliver on our operational goals, we significantly outperformed them. I'm personally humbled by our team's ability to deliver exceptional results in a year filled with so much turmoil and adversity. We exceeded our goals and exited 2020 better positioned than we've ever been before from an operational, strategic, and financial perspective. Here's a few highlights. We inked our first two programs of record with the federal government, including a $13 million U.S. Customs and Border Protection Order for body cameras and digital evidence management. In the fourth quarter, we signed our largest case of contract in company history, a $20 million order for Taser 7 from an international customer, eclipsing our record $15.5 million Taser order from the Department of Homeland Security in the prior quarter. In 2020, we passed $1 billion in total bookings, with the majority of that coming from our core market of state and local public safety. In 2020, we also delivered the largest single contract deal in company history, a $46 million officer safety plan with one of our major city customers. On the product side, we launched auto-transcribe, deployed customers on both respond and records, debuted unique new capabilities like priority-ranked video audit, and shipped countless cloud software and device firmware improvements. At Axon, we're continuing to look forward. We had a recent executive planning session where we asked ourselves, where do we want to be at the end of this decade? And our answer was simple. Our vision is to be globally synonymous with our mission of protecting life by building the world's largest and most trusted network of safety devices and services. What an amazing opportunity to be part of such a talented team with such an aspirational mission. I'd like to conclude by telling you what I'm hearing from our customers today. They see us as a key partner to transforming public safety. We hear stories daily about customers using our products to save lives and to protect communities. Our net promoter scores are hitting new highs, and our customers are actively and enthusiastically supporting our mission to make the bullet obsolete so that officers will no longer have to make the most terrible of choices. We know that we're welcoming a lot of new shareholders onto our growth journey, so thank you for joining us and taking an interest. And with that, I'd like to turn over the call to our president, Luke Larson.

Thanks, Rick. As 2020 showed us, a lot that happens in this world is outside of our control. Against that backdrop, Axon employees really showed up and gave their best in the areas that mattered most. I want to give an emphatic thanks to all of our employees. Thank you. At Axon, we've built an amazing team, and that talent is a huge asset and competitive advantage that doesn't show up on the balance sheet. Our team is laser focused on a clear mission, inspired by our purpose, and leaning in with an owner's mindset with a maniacal focus on delivering value for our customers. In 2020, we focused on our commitment to the mission, to our customers, and to caring for the health and safety of our employees. In 2020, Axon was able to outperform in a difficult year because we built a phenomenal team. Looking to the future, our company has the talent, infrastructure, and capabilities to manage challenging environments and thrive. The company earned this position over three decades by taking risks, making bold decisions, investing hundreds of millions of dollars in research and development, countless hours of engineering, tens of thousands of hours of customer meetings, and most importantly, maintaining an unfaltering commitment to our mission. As we look to 2021, we have four key objectives. One, grow the core. Two, scale new products. Three, unlock new markets. And four, drive efficiency to fuel growth. We're also taking care of the amazing team that we've built. Our employees' health and growth remains a top priority. We recently added Ginger, a mental health app, providing 24-7 support to our employees, as well as rolled out LinkedIn Learning to the entire company. In 2021, we will continue to look for ways to support our working parents and caregivers. In 2021, We'll continue to invest in our people, products, and sales channel, helping individuals level up, aim higher, and push harder to make our mission a reality. I'll close out by talking about one of the areas of added investment, which allows us to go after a $2 billion total addressable market, and that is our investment in virtual reality training. As a former military officer, I saw how the DOD's near-unlimited budget can create amazing training, like mock towns filled with thousands of Arabic-speaking actors, huge multi-group trainings, as well as unmatched simulator training that pilots use for flight training. In law enforcement, though, they don't have the luxury of these enormous budgets or the benefit of having the majority of their time available to training. With virtual reality, we can leverage the best-in-class instructors and training to create scenarios that can be used across hundreds of thousands of officers, bringing the cost down to a very economical price that can democratize training and Axon is poised to be a leader in creating this new category, just like we've done with the Taser devices, our Axon body cameras, our digital system, evidence.com. And we're going to do it again. with virtual reality and training. In 2021, we intend to transform how agencies train our officers by addressing the inefficiencies around the classroom, role-playing and simulator training, and by leveraging VR, we can address their two biggest issues, budget and time. We'll accomplish this through three avenues. First, we have an exciting product launch that we can't say more on, but it is coming soon. Second, we intend to regularly release new training modules, and third, We are doubling down on our community engagement training curriculum. We're seeing encouraging signs on the management of this product, and we're excited about where it can go. Earlier, I talked about the amazing team and culture we built at Axon. Before I hand it over to our CFO, Jawad Hassan, if you want to learn more about that culture, I recommend you check out his book, What They Didn't Tell Me. You can get it on Amazon. So with that, let me turn it over to our CFO, Jawad Hassan.