Shares of leading public-safety technology provider Axon Enterprise (NASDAQ: AXON) have risen by 28% this week as of 11:45 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
Axon delivered blockbuster second-quarter earnings results, with revenue growth of 35%, while guiding for full-year sales growth of 29.5% at the midpoint, up from 26% just a quarter ago.
Axon's focus on the cloud and artificial intelligence is paying dividends
The company's Axon Cloud and Services category headlined its impressive results, growing sales by 47% with a net retention rate of 122%. Management has customers in all 50 states across the U.S.A. and 90 countries, and Axon Cloud is home to over 2 billion law-enforcement evidence files. Whether used for evidence collection or for review and analysis, the company's industry-leading cloud operations are quickly becoming a must-have for local, state, federal, and international public safety agencies.
Axon has been working to incorporate the disruptive technology directly into its products as the market asks hyperscalers where the returns for their massive artificial intelligence (AI) spending are.
Its AI product suite includes license plate reading, audio-to-text transcription from body cameras, and Draft One, which uses these transcriptions to create a rough draft of a police report.
Draft One in particular could prove to be a powerful tool for customers because it offers time savings of more than 50%. Altogether, Axon's AI-enhanced products grew sales by more than 70% in the second quarter, doubling companywide revenue growth.
These innovations, paired with an extensive growth runway internationally, has the company trading at 77 times forward earnings. This valuation makes Axon a better candidate for dollar-cost averaging over time rather than an all-in investment at today's prices.
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Josh Kohn-Lindquist has positions in Axon Enterprise. The Motley Fool has positions in and recommends Axon Enterprise. The Motley Fool has a disclosure policy.
