At first glance, this would seem to be a terrible time to invest in law enforcement technology.

After all, officials in several cities have joined the movement to defund police departments.

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Consider that Austin, TX, and Los Angeles, CA have recently cut more than $143 million from their police budgets. Minneapolis has moved to slash a more modest $8 million.

Here’s the thing. As cities cut police budgets and either furlough officers or see them resign, police officers will still carry on with their everyday work.

And that actually plays to the advantage of a law-enforcement tech leader that is pioneering cloud computing for police.

The firm also sells non-lethal weapons and body cameras
that fit right in with the current environment and is set to double its earnings in less than two years…

The Tech for The Times

As a registered Independent, I don’t dive into politics, and I’m not here to talk about the complex racial and political issues that law enforcement can find themselves at the center.

Instead, we’re focusing on the fact that law enforcement departments aren’t just going to disappear.

What we’re going to see is a bigger push for non-lethal weapons.

And I’ve identified one that is perfect for the job at hand.

See, Portland, OR and Baltimore, MD have each been cut law enforcement budgets by at least $15 million following intense controversy focused on police shootings.

And New York mayor Bill De Blasio wants to shift an unspecified amount earmarked for police over to social services.

Enter Axon Enterprise Inc. (AAXN). You may know Axon better by its most famous product and former name: Taser, the electronic, non-lethal “stun gun” that shocks the target.

Axon has done an impressive job of convincing police departments across the globe to adopt the Taser, as well as its other advanced policing technologies.

See, in addition to the Taser line of electronic, non-lethal weapons, Axon is also a leader in body and dash cameras used by dozens of police agencies across the world.

By the Numbers

And it’s making a difference. Axon cites studies suggesting that the use of Tasers instead of bullets by police has prevented about 200,000 deaths or serious injuries.

Meanwhile, the firm’s dash and body cameras may have caused up to an 88% drop in complaints against police officers and a 42% drop in the use of force.

The same videos are also used as evidence, increasing guilty pleas by 20% and reducing how much time police officers have to spend in court testifying rather than working the beat by 70%.

In 2019, Axon derived just over 53% of its revenue from Taser sales and about 22% from its camera and sensors business.

The rest comes from its fast-growing cloud business, which integrates all these devices and makes the streets safer while cutting down paperwork for police officers.

For example, Axon’s latest Taser 7 and camera devices automatically log every use and save all video to Axon’s cloud-based Evidence.com portal. Once there, it’s safe from tampering and can easily be reviewed by superiors, prosecutors, defense attorneys, and so on.

Even as officers are in the field, Axon’s cloud platform allows their supervisors to see exactly where they are in real-time, relay and coordinate their locations with other officers, and even live-stream their body cam or dashcam footage.

This means dispatchers can proactively send backup if the situation gets more tense, while supervisors can combine video from several police officers and warn them of a hidden threat, for example, or warn them that what looks dangerous from one angle actually isn’t.

All this information gets logged in the cloud, where it’s automatically included in police reports.

The Unstoppable Cloud Trend

As with most cloud-based services, it’s cheap to run once it’s set up. So, for Axon, this is a very high-margin business. And with police departments across the country facing budget cuts and calls for more accountability, demand is growing rapidly.

From 2016 to 2019, Axon’s cloud business grew by 63% a year, on average. That growth rate may get even faster now.

It’s worth noting that Axon sees opportunity both in support for police departments, and support for reducing funding and increasing accountability.

In addition to selling more cameras to police departments that want to be more transparent, Axon is also pushing training initiatives to show police officers how to deescalate tense encounters and reach more often for non-lethal guns.

Now, Axon is also growing outside of U.S. police departments. Forestry and Corrections departments across the U.S. are also adopting Axon’s tech, as are the federal Department of Justice and Customs and Border Protection agencies.

Meanwhile, Axon has scored deals with agencies in Canada, the UK, and Australia, with more countries on the way.

These successes are easy to spot in the firm’s third-quarter earnings. On the back of a surge in demand for body cameras and cloud-based tools, Axon handily beat expectations.

The firm reported revenues of $166 million for the quarter, up 27% from the year before, while per-share earnings came in at twice the expected $0.20.

At this rate, Axon is growing its per-share earnings at 38% a year on average, meaning earnings will double in just under two years.

In other words, Axon isn’t just going to make America safer – it also stands to enrich its investors.