Axon Enterprise, Inc.

Hello everyone and welcome to our first quarter 2021 earnings conference webinar. I'm Andrea James, Senior Vice President of Corporate Strategy and Investor Relations. Today we have with us CEO Rick Smith, President Luke Larson, CFO Jawada Son, Chief Revenue Officer Josh Isner, and Chief Product Officer Jeff Cunnins. I hope you've all had a chance to read our very robust 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 robust letter. At the end of this call, we'll play our quarterly earnings video. That's our first time doing it on the earnings call, and you're welcome to stay for that. If for some reason we lose connectivity, we'll endeavor 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. They 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, now turning it over to Rick.

Thanks, Adrienne. And hello, everyone. As you can see from the shareholder letter, we've had an exceptional start to the year. Our teams have remained heads down, executing on our mission and driving growth across all of our products and markets. I couldn't be more proud of what we've built, of Axon's position as a true change agent, and ultimately, and most exciting, where we're heading. We've always been passionate about innovation and the inherent drive continues to propel our business forward. Today, I'd like to address current events, public and personal, that are relevant to our business. First, recent current events, including last year's death of George Floyd and the events that followed, forced our nation to reflect upon the values we hold true for all Americans. Axon is and will remain committed to creating technologies that save lives, increase transparency, and help communities and public safety agencies who serve them achieve a higher quality of life to ensure everyone makes it home safe. Customers in increasingly communities see us as a key thought leader and key partner in the global drive to transform public safety. We hear stories daily about customers using our products to save lives and protect their communities. And we believe our problem solving approach to these major challenges will continue to drive our growth. Two years ago, when I published my book, The End of Killing, it was a radical idea that we could actually make the bullet obsolete and create less lethal weapons that could become the primary use of force and eventually displaced lethal weapons. Customers were far more receptive to this idea than I could have anticipated. And in light of the events of the past 12 months, We are hearing pleas from our public safety customers and the broader community that they cannot wait until the deadline I had set at the end of this decade for us to achieve the goal of surpassing the sidearm in effectiveness. Our teams are working extremely hard to bring in the dates for the next generation of taser weapons, which I believe will be the largest single leap in capability in the history of less lethal weapons. Customers have even begun signing 10-year programs with us to enable seamless upgrades, and we've worked with them to create programs that will even allow them early upgrades when the next generation launches. Now, to set expectations, the next generation of Taser is a couple years out due to the intense testing a ground-up new design requires, as well as the full production automation and scaling. But I wanted to talk about the issue head on, given the growing intense public interest, and to help our investors understand why you might be seeing this dynamic behind 10-year programs. Second, on a personal note, the passing of my father, Phil Smith, our founding chairman last month, was a monumental loss. He was instrumental in helping to get Taser off the ground in its early days, and our company would not exist without him. His final 24 hours were an amazing capstone to an incredible life. His mission lives on among all of us at Axon, and I will miss calling him after the call today to discuss the results. As we look to the future, Axon can be a huge force for progress to our vision of obsoleting the bullet, reducing social conflict, enabling a fair and effective justice system, and building for racial equity, diversity, and inclusion. Luke and Jawad will now take you through some more highlights of our business.

Thanks, Rick. As stated in our shareholder letter, which we've got a ton of positive feedback on, shout out to our IR team, our teams are executing on our 2021 strategic priorities to grow our core, scale new products, unlock new markets, and drive efficiency to fuel growth. We believe Axon has been at the forefront of change. But the past year, we've been put in the center of truly unprecedented events that inspired our teams to show up in many new ways. Our body cameras are capturing the most critical events in the world. We're proud of that, and it's a responsibility we take very seriously. During the civil unrest in the capital on January 6th, for instance, DC Metropolitan Police and the Montgomery County Police, who are Axon Body customers, were called in for backup, and the Justice Department has released Axon body camera videos related to that incident. Axon body cameras are also providing critical evidence in many of the current events that we're all familiar with. Just last week, NPR published a story about a team of public safety experts and world economists that say body-worn cameras are both beneficial and cost-effective. The University of Chicago Crime Lab and the Council on Criminal Justice Task Force on Policing released the report and stated the key benefit of body-worn cameras is the reduced use of police force. For example, among the police department study, they saw complaints against police dropped 17%, and this is really the compelling statistic, is that use of force by police during fatal and non-fatal encounters fell by nearly 10%. Professor Jens Ludwig, head of the crime lab says, if you're a local government looking at adopting the cost from your narrow green eye shade bottom line, the technology probably pays for itself and the benefits to the public are a huge win and easily outweigh the cost. Our focus as a management team is to invest in growth so that we can continue delivering technologies to protect life and truth. In February, we outlined the capital investments we're making this year. including the TASER manufacturing. We have a great update to share on that front, as you see in our shareholder letter. These investments are growing TASER manufacturing capacity and driving gross margin expansion. This positions us to meet growing TASER demands globally and in our federal sector. So far this year, TASER device manufacturing and supply chain improvements are on track to deliver more than $4 million in gross cost savings in 2021. We are also excited about the momentum that we are seeing in our software and sensor segment. Later this year, we expect to launch our third generation fleet solution. This is our Dashboard CAM solution, which features AI-powered automatic license plate recognition, known in the industry as ALPR. Demand for this premium fleet bundle, which includes ALPR software add-on and the live streaming off of our cameras, is exceeding our expectations by a healthy margin. And you can read more about this in detail in our shareholder letter. We are also seeing growing adoption in the usage of LTE-enabled live streaming off of the body cameras and remote evidence uploads. And in the coming weeks, we expect to transition the Baltimore Police Department to our record solution. And the training and feedback has been going very well. Finally, we're transforming how agencies train their officers by addressing the inefficiencies around the classroom, role-playing, and simulator training. By leveraging VR, we are addressing their two biggest issues, budget and time. In the coming days, we have an exciting product launch that we can't wait to tell you more about. We just did a sneak peek of our big VR announcement yesterday with Taser's Training Advisory Board, and it was very well received. We have a lot to be excited about in 2021 and beyond. Now I'll turn the call over to our Chief Financial Officer, Jalad.