Okay. Welcome, everyone, to our Q4 2022 Update. I hope you've all had a chance to read our shareholder letter at investor.axon.com. Our prepared remarks today are meant to build on the information and tables in that very robust letter. 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 actual results to differ materially. We discuss these risks in our SEC filings. And before we turn the call over to Rick, we will play our quarterly earnings video, go ahead and settle in. It's about a 10-minute video.

All right. Thank you, Andrea and Angel. Great job. And to our investors, I hope you can feel the passion that comes through in that video. I'm just so humbled to be a part of this team. The formula that really works for us is when we focus on one of the most important problems we can solve that gets us solving the things that are also the most valuable to our customers. Ultimately, this is what drives the results that you see from last year. So TASER 10 is the most sophisticated, accurate, and effective TASER energy weapon we've ever created. It's a huge leap forward. Future generations may simply take for granted the existence of these truly capable less lethal technologies as if they had always existed. Like all technological advancements that drive our society forward, that is our goal. Customer reception has been fantastic. We're incredibly humbled to be at the forefront of breakthrough technology and societal change. Our 2022 standout performance with revenue up 38% and strong profitability and cash flow follow multiple years of exceptional results, even through difficult macro environments. Axon's history of superior execution can be traced to a few key things: our vision and mission; our long-term strategic thinking, which attracts an amazing team of passionate and talented people; and our relentless focus on customers, allowing us to build upon a solid foundation of customer trust. Finally, our conviction to double down on investments to drive unprecedented change and cumulative growth. A prime example of this is the foresight we had more than a decade ago to start building a software business. In 2022, our recurring high-margin cloud revenue comprised more than 30% of the company total. I'm excited to see our long-term strategies continuing to bear fruit. I'll take a moment to talk about areas where we're currently investing to ensure that Axon continues to drive value creation well beyond the 2025 planning horizon we're sharing today. The future of policing will certainly include more robotic security. We stood up our Axon Air program a few years ago, and we continue to invest in that. We view drone and robotics technology, first and foremost, as a way to extend visibility and communications for first responders. Robotic security is already playing an increasingly important role in search and rescue, natural disaster response, crime and accident scene reconstruction, and a new category of DFR, or drone as a first responder. We see potential for robotic security to play a greater role in de-escalation. Numerous high-profile cases have inspired police departments to do everything possible to reduce the frequency of use of force incidents. Substituting a robot for a human can help in many scenarios. One example is high-risk entry with SWAT teams. Reducing the need for officers to enter a home with firearms drawn can be pivotal. Another area we see coming is the fusion of intelligent ecosystems that integrate with public safety. How multiple types of cameras and sensors can port into one system, both to assist in real-time response and to support investigations. We're also excited about these advances in generative AI. Nearly six years ago, we published a vision video with the idea that artificial intelligence could one day extract key information from body camera videos, which, together with a brief oral description from the officer, can be used to write the police report for that officer. This vision no longer feels like science fiction. It was part of our focus in building out our cloud infrastructure over the past decade, and we are excited to see what capabilities we can leverage over the next few years to delight our customers and make public tax dollars much more efficient by automating many mundane yet very time-consuming tasks. When we build for the future, we collaborate with our trusted constituencies. We work with governments, city councils, public safety, and our Ethics and Equity Advisory Council. This council provides invaluable feedback, asks us the hard questions, and helps us to see around corners. We look to them for assistance in ensuring ethical design and continue to work with our council leaders, who are dynamic, highly successful, and impressive individuals. With that, I'd like to turn it over to our COO, Josh Isner, to talk in more detail about the business.

Thanks a lot, Rick. Last August, I talked about four major areas of focus for the back half of 2022, and I'm pleased to report that we delivered on all fronts. First, we are driving discipline and prioritization across the business. We say no to many opportunities, and when we say yes, we win. The results of our efforts include a phenomenal close to the year with revenue up 44% in the back half and more than 50% in Q4 alone, alongside the game-changing product launch of TASER 10 just a few weeks later. The second area I talked about was investing to penetrate our total addressable market. In our shareholder letter today, we introduced a new TAM analysis which outlines a $50 billion opportunity and shows growth in our core markets. That core TAM, which includes our SaaS categories, cameras, professional TASER, Axon Air, VR, and a customer base that includes U.S. federal, international, and commercial enterprises grew from $34 billion to $45 billion in our updated analysis. We see ourselves as best positioned to deliver on the future of policing that Rick discussed. Thirdly, I’m pleased to see us deliver on our promise to generate strong cash flow. For the full year, we delivered $195 million in adjusted free cash flow. This was an 84% conversion on adjusted EBITDA of $232 million. This allowed us to maintain a net cash position roughly flat to last year, while investing CapEx to drive global scale in deploying $83 million in strategic ecosystem investments to ensure we stay at the forefront of industry innovation. Finally, we are assembling a world-class team from top to bottom. This team brings financial discipline, a next-play mindset, and the capability to drive outstanding outcomes for the next five years and beyond. We are building a culture where we expect to deliver on our commitments to employees, customers, and our investors. Looking forward to 2023, working with Brittany, we have streamlined our company-wide bonus metrics to four core items. The entire organization is incentivized to measure, drive toward, and exceed the following: number one, revenue. Top-line growth remains a priority. Number two, adjusted EBITDA margin, which Brittany will take you through in a moment. Number three, new market expansion in the U.S. federal government and international markets, and number four, new product adoption, ensuring that the products we are building continue to be adopted and used by our customers. We never stop helping our existing customer base to advance through the value chain and take advantage of our new software features. Before bringing Brittany out to lay out our three-year plan to achieve $2 billion in revenue, I wanted to provide some color on what we think will help us build toward that milestone. Our path to $2 billion in revenue and beyond will be driven by a combination of selling new products into our existing markets and selling existing products into new markets. We continue to introduce new products that deliver value to our state and local law enforcement customer base, and we believe we will grow our share of wallet in that market. Items such as TASER 10, Fleet 3, virtual reality, Axon Records, Axon Dispatch, Axon Air, and the multitude of Evidence.com add-ons will drive growth among our state and local U.S. customers. In parallel, we will continue to grow internationally, federally, and among enterprises, leveraging our core product portfolio. The combination of these two simultaneous motions will create top-line growth opportunities for the future, well beyond 2025, and provide multiple paths to our annual revenue guidance year in and year out. With that, I'll turn it over to Brittany.

Thank you, Josh. It's particularly gratifying to see broad-based strength across the business and our strong 2022 execution. Both software and hardware are driving robust performance. Notably, Axon Cloud now represents about one-third of our business, carrying best-in-class metrics on growth and net revenue retention. In 2022, cloud revenue grew 50% to $368 million with a 73% gross margin. Annual recurring revenue has grown to $473 million with net revenue retention at 121%. We're incredibly proud of the fantastic job Axon has done selling hardware and subscription bundles. 9% of total revenue in 2022 was tied to a subscription, compared to just a few years ago when less than half of revenue was subscription-based. Following on Josh's commentary regarding the GAM opportunity, our updated analysis aligns with our organizational focus. Axon's core TAM of $45 billion across SaaS categories, cameras, professional TASER, Axon Air, and VR reflects opportunities with a customer base that includes public safety, U.S. federal, international, and commercial enterprises. Additionally, the consumer personal protection market remains an opportunity, and I'm currently recruiting for a permanent GM to lead the business. However, as we noted in our shareholder letter, we are reframing our analysis of this market from $18 billion to $5 billion in terms of total TAM. Almost $5 billion is still a large opportunity that we're interested in pursuing, but we are rightsizing our focus to better reflect the normalized opportunity we see in our core business. You'll also note that in Q4, we recognized $8.5 million of cloud revenue that we had previously underreported. This revenue relates to work completed in prior periods and was unrecognized due to our ERP implementation in 2021. While the impact is immaterial to our financials, it did result in a material weakness. Remediating this will be a focus in 2023, and we have laid out a detailed plan in our 10-K. Against the backdrop of an exceptional 2022 and an improving demand environment, we are thrilled to share another robust outlook for the year ahead. Additionally, now that I've had some time to dig into the business, we are introducing three-year financial goals. Looking at 2023, my key financial priorities include first, delivering revenue growth of 20%. Second, working toward long-term gross margin improvement. We feel confident in the levers we can pull on gross margin over time, which include investing in automation, improving manufacturing efficiency, further growing our software revenue mix, and offsetting inflation with pricing. In 2023, we are balancing these opportunities against ramping TASER 10 in the first half of the year and continuing to catch up on our fleet in-car camera installations. Our Fleet business carries a lower margin upfront and transitions to high-margin recurring software revenue over time. Third, controlling operating expenses by enhancing our financial discipline. In 2023, we are still digesting large investments we made in 2022 while investing for growth. We are guiding to a 20% adjusted EBITDA margin, which implies a 50 basis points improvement year-over-year. Fourth, delivering on our ecosystem vision by leveraging strategic partnerships, investments, and potential M&A. Finally, setting ourselves up to ensure we are on the path to hitting our three-year goals. Our 2025 outlook for more than $2 billion in revenue is underpinned by our confidence that we can deliver on the previously communicated 20% CAGR, alongside the drivers laid out by Josh. Over the next three years, we also expect to increase gross margins and leverage our operating expenses to achieve approximately 25% adjusted EBITDA margins. We are excited to demonstrate the increasing profitability of the business, representing significant expansion of more than 500 basis points. We are also focusing on cash flow, and through prudent management of working capital and CapEx, targeting adjusted free cash flow conversion above 60% on adjusted EBITDA. This allows us to invest in our business while delivering attractive free cash flow generation. Finally, we have heard you on share count dilution. While we will spend the next few years working through existing stock comp expenses, we are committing to reduce dilution on a go-forward basis. Personally, I'm excited by the runway we see over the next three years. Axon enjoys a compelling business model, delivering subscriptions to a stable and growing end-user market. We have low global TAM penetration, strong customer relationships, and R&D capabilities that are building solutions to meet critical market needs. With that, I would like to open it up to questions.

Just have a couple. First one is for Rick. I think Brent just mentioned that TASER 10 is going to be ramping up in 2023. But one thing I think that you laid out in the video is just the feature set and what TASER 10 actually proposes to a lot of your customers. Would there be customers that feel very strongly about maybe an early shipment or an early refresh of their actual TASER non-lethal weapon, or would they have to stick to the plan or subscription type timeline that they've already signed and are subscribed to?

Well, great question. I've never seen demand this strong in a new TASER launch in my history in the business, which is great news. The subscription model already has our customers on an upgrade pathway, but I'm working closely with Brittany and Josh on a customer-by-customer basis, and we are receiving a lot of requests from people who want to upgrade early. The revenue accounting on our contracts with the multiple deliveries is a bit complex, so we're handling those on a case-by-case basis. We believe that overall, we will be able to find ways to accommodate customers to take early upgrades in ways that also work for our shareholders, are profitable for us, and help our customers get this capability sooner without any substantial onetime expenditures, just by being able to bring forward adjustments. We hope they'll also upgrade to some of our other new capabilities, such as our new VR and other products. Overall, the business model continues to set up a win-win for us and our customers, particularly in terms of accelerating upgrade cycles.

Got it. Next one is for Josh. Josh, you talked about how compensation will be measured by four key drivers. One of the drivers was actually selling other products or cross-selling. Will that include ecosystem partners that are part of your Axon cloud feature set also being pulled through in the sales motion? Or is that very isolated to just Axon products and services?

Great question, Sam. Every time we're a sales agent, there is a revenue impact when we sell through a partner's product. But to set expectations, that will be a relatively small part of our overall revenue for next year. It's part of it. In terms of the rep-level commission plans, we have a new product sales team that is essentially compensated largely based on momentum from both new products and partner sales, so that's how we handle that.

Got it. And then one last one for Brittany. I'm curious about the 500 basis points of expansion by 2025. Is this going to be back half-loaded across these three years, just because of the comments you made regarding margin neutrality for some of these products? And then as they ramp up with software, does that raise concerns?

Yes. I interpret the question as when we might see the 25% margin. We want to ensure we achieve this by 2025, Sami. There are many factors that we are examining both for 2023. Part of achieving the operational leverage we've discussed is reaching that $2 billion in revenue. We need to pull these levers, and it's promising that we have multiple paths to reach that target, both from a gross margin and operational expense standpoint.

Congratulations on the strong results. I wanted to dig a little more into your comments about what's underpinning your confidence for the 2025 guidance. Have there been changes in some of your market assumptions or is there a particular area of the business that has proven stronger than anticipated?

Thanks, Jonathan. We are very confident in all our product categories and market segments, continuing to grow significantly year-over-year. We do track five-year normalized metrics as a forward-looking indicator of future revenue. We're optimistic about the results we're currently seeing and the growth in our five-year bookings growth rate. This combination of indicators from new markets, new product scaling, and future revenue reinforcement from bookings keeps us encouraged.

Excellent. Regarding the TASER 10 pace of adoption, can you remind us what happened when TASER 7 was released? Is there concern that customers might delay orders to purchase the TASER 10 given the notable improvements?

Absolutely. Without going into too much detail, I believe the TASER 10 forecast exceeds year one performance of TASER 7 from five years ago. This speaks to the value and utility of the product. We manage the adoption closely regarding early upgrades and new customer shipments, and this path allows us to meet and potentially exceed our guidance for the year.

A couple of questions here. First, it looks like your TASER revenue was down sequentially. What was the cause of that? Conversely, the Axon Cloud and sensor revenues were up sharply. What caused these dynamics? I believe you had some supply chain constraints that were a factor last quarter as well.

Yes, absolutely. I think it’s just timing of shipments and orders. Toward the end of the previous year, we aimed to maintain flexibility for our customers as we knew some might have interest in the upcoming product launch. We're very excited to see the supply chain opening up for the fleet. We expect substantial volume in fleet shipments this year, and our cautious optimism is that we’re past most of the earlier supply chain challenges.

As we look forward, you announced a specific data release that’s going to be deployed. Additionally, considering past rollouts of TASER weapons, what steps have you taken over the past years to identify and address issues, including how you're protecting your gross margins?

It goes from how we design the product to our manufacturing capabilities. We expect to see scale in the second half of the year. We'll call it a potential headwind in the first half, but as we get to the later half of the year, margins should stabilize.

Fleet is the first major product launch under our new structure with Hansbert leading our R&D and John Graf managing engineering and product development. Previously, we injected additional pre-release testing, resulting in Fleet 3 receiving among the lowest return rates. TASER 10 underwent similar testing, with a highly automated production line that began 6 to 9 months prior to the launch, allowing for a mature rollout. This translates to high quality scaling, avoiding challenges we experienced with TASER 7.

Has TASER 10 started shipping?

TASER 10 will start shipping in March.

If I could, Brittany, could you provide context on the convertible note offering and plans for utilizing that cash?

This was an opportunistic move on our part to strengthen our balance sheet and provide flexibility from a capital standpoint. We found attractive terms in the market. When considering M&A, we spent time discussing technology and talent that would support our future product roadmap and moonshot goals.

With regards to operating leverage through 2025, can you elaborate on OpEx base relative to gross margin expansion? Can you still aim for that 30% mark longer term?

We are focusing on the three-year guidance to replace previous targets. Our immediate plan is to get to 25% by 2025, and beyond that, we will assess where we can go next. While we’re not calling it, we may consider the 30% goal in the future. There's a balanced expectation of improvements on both gross margin and OpEx leverage.

I wanted to get additional feedback from agencies that have been using the TASER 10 in the field, particularly regarding use and effectiveness. Also, how are supply chain components looking for devices and cartridges as we move through the year?

We continue to receive great feedback from the field. I think we've had around 40 instances of use, and one noteworthy case involved TASER 10 being deployed effectively in a running situation. The agency believes the TASER 10 could have significantly changed outcomes in earlier shooting instances, which is a remarkable statement. I will soon begin an international tour to speak with international customers where demand may expand as TASER 10 could become the primary defensive weapon in some regions. Here in the U.S., while officers will continue to carry firearms due to the public gun culture, enhanced capabilities could open new markets internationally. As for the supply chain, our team has done a fantastic job staying ahead of potential challenges, and we feel good about our capacity this year and in the future.

Our supply chain team continues to excel, and we have ample inventory to support our revenue guidance for this year and next. We're actively planning for even higher demand in the foreseeable future.

It seems there are opportunities to gain competitive ground in body cams in the U.S. market. Is that what you are currently observing, or would you characterize the growth in 2022 as largely greenfield?

It's a mix of both. We're selling high volumes to both new customers and seeing existing customers deploy more products. Additionally, we're excited about expanding our feature offerings across body cameras, fleet, and virtual reality.

Could you remind us if there’s any seasonality around your products or business? How might the TASER ramp influence the first couple of quarters of the year?

We have various avenues to deliver results in each quarter. Starting the year with strong TASER 10 shipments will make the path easier, but this is not our only pathway. We continue to expect 20% year-over-year growth and are thoughtful about our guidance.

We aren't calling out anything unique in our seasonal patterns, so I would expect typical seasonality. With the TASER 10 joining, we still expect solid performance from TASER 7.

Once again, it's always a pleasure to share results like these. I'm excited to see how this year unfolds, with TASER 10, Fleet 3, and our software products scaling as reflected in our financial results. Thank you for joining us, and we look forward to our upcoming shareholder meeting and sharing more in our Q1 results soon.

Goodbye.