The Motley Fool on $AXON (Nov 10, 2026)

Axon. What do you like about Axon right now? Oh! So, this is a very large growing company. This company sells hardware to law enforcement agencies, such as Tasers and Axon body cameras.

It is also increasingly entering the drone market. In addition to this, it also has its own cloud platform, software services, and frankly, it is very efficient at putting all of this together.

If you look, it has achieved growth of 30% or more for four consecutive years and is on track to reach its fifth year in 2026. This is an incredible feat for any company to maintain. Axon is doing very well.

And if you look at some of the best indicators of the current state of this business, you'll see annual recurring revenue, because a large portion of that is tied to contracts.

It has a cloud platform. Annual recurring revenue grew 40% in the most recent quarter to $1.8 billion. The net revenue retention rate remains strong at 126%. What was 125% just a few quarters ago has now increased.

And future contracted bookings are up 39% year-over-year. So, it's growing faster than revenue, which is a great leading indicator. There are many favorable conditions here and there is a lot to love about this company.

Yes, and recently we got their third quarter results and there was some concern about some of the deals being delayed. I think it will last until 2027. I think these are federal contracts.

So, the numbers are quite big. But in my opinion, in the case of a company like this, you have to step back and think a little. And, you know, I've owned shares of Axon for about a decade.

And you can see from this chart here, a 30% compound annual growth rate since 2015. I mean, there aren't many companies that have managed to grow at a 30% compound annual growth rate for a decade or more. Axon is one of those companies.

It is still run by the founder. The founder has a kind of interesting history with the company. Isn't he the huge shareholder we usually think of? Because he actually sold most of his shares before body cameras and things like that came along, when it was Taser International.

But I think they have a lot of strength in their favor.

You mentioned bundling. You know, it's not like even 10 years ago they were just trying to sell Tasers to law enforcement agencies in the United States and around the world. Then they got into the body camera business.

Now they have started bundling not only Tasers with body cameras, but also software services. Now it's like a kind of operating system for law enforcement. And I think that's the kind of business that's not only valuable, but it's also very sustainable, because they have long-term contracts and the workers, the law enforcement, the prosecutors, even the people who respond to 911 calls, they're starting to understand how that operating system works.

It starts to become something that gets added to your resume. You know, I know how to use the Axon operating system. And that becomes a kind of national or international standard.

So I really like the direction they are heading.

The stock has fallen 64%. When I saw this before we started recording, I was shocked. So I think this could be a pretty good opportunity to buy. Interestingly, the stock was never cheap.

It is still being traded at about eight times the previous selling price. The price to free cash flow ratio is still around 44 as of the future. But, you know, this is the kind of company where if you keep growing revenue at a 30% compound annual growth rate for a few more years, suddenly it becomes a value stock.

Yes. And based on your words, this is its lowest price since the 2022 price drop. So I think it's worth mentioning. You've been waiting for the Axon, and now it's the cheapest it's been in years.

And you know, when you think about alternatives in a business, Axon has both of the things you want. They have new things they can sell to existing customers and they also have new customers to sell to.

So there are things like 911 that you mentioned, which is kind of a new thing and they can add it to the bundle for existing customers. That helps, but they are also leaning more and more towards federal corrections.

And this is a different customer group, one they didn't serve before. So you have double the options.

Yes, drones, this was a deal that has impacted their revenue over the last few quarters. But drones, I mean, this is going to be another big business; Because what better company to sell drones to law enforcement than the one whose body cameras you already wear and use their systems to record various information?