TASER International, Inc. (TASR)

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TASER International, Inc. (TASR)

Q2 2013 Earnings Call

July 31, 2013 11:00 AM ET


Rick Smith - CEO

Dan Behrendt - CFO


Mark Strauss - JPMorgan

Peter Mahon - Dougherty & Company

Glenn Mattson - Sidoti and Company



Good day ladies and gentlemen, and welcome to the TASER International Inc. Q2 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions to follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today, Mr. Rick Smith, CEO; you may begin.

Rick Smith

Thank you and good morning to everyone. Welcome to our second quarter of 2013 earnings conference call. Before we get started, I am going to turn the call over to Dan Behrendt, our CFO to read the Safe Harbor statement.

Dan Behrendt

Thank you. Today’s call will include forward-looking statements including statements regarding our expectations, beliefs, intentions or strategies regarding the future. We intend that such forward-looking statements be subject to the Safe Harbor provided by the Private Securities Litigation Reform Act of 1995.

The forward-looking information is based upon current information and expectations regarding TASER International, Incorporated. These estimates and statements speak only as of the date they are made, and are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict.

All forward-looking statements that are made on today’s call are subject to risk and uncertainties that could cause our actual results to differ materially. These risks are discussed in the press release which we issued today in a greater detail in our Annual Report on Form 10-K for the year ended December 31, 2012 under the caption Risk Factors. You may find both of these filings as well as our other SEC filings on our website at www.taser.com.

Rick Smith

Great. Thanks Dan. As a reminder we are going to accepting some questions today with the twitter during the Q&A portion of the call. And you can submit your questions using the hash tag TASR_EARNINGS, and to follow our updates on twitter during the call in general, just follow our account at the app sign TASER_IR, again that’ app TASER spelled out not the ticker symbol. So add TASER_IR. And we will be posting some graphics and commentary during the call. So I am proud to be kicking off another earnings call to discuss results of the hard work the team here at TASER International has been doing.

Sales for the second quarter were $32.2 million, which is the second highest quarter of sales in the company’s history on a consolidated basis. Even more impressive is the fact that this is the sixth quarter of consecutive growth year-over-year for topline and double digit growth. Our three growth pillars, the weapons upgrade cycle, the international expansion and the on-officer video opportunity continued in position as for strong growth moving forward. Specifically out CEW segment, the Weapon segment, delivered revenues that were up 12.4%, to $30.3 million year-over-year. And our Video segments grew 47.4% to $1.9 million compared to last year second quarter. In addition our international business made up about 15% of sales in the quarter so we do continue to invest in our (inaudible) as Dan will touch on later in the call.

Now before moving to more details about the quarter’s result, I would like to spend a few minutes on a significant strategic move we announced this morning; the introduction of an industry leading body camera called Axon Body at a disruptive price point under $300. We have identified three market segments for on-officer video. The first segment is focused on a high performance product that officers hit point of view from the officers’ visual perspective. Well I should be sending out over twitter, a graphic of the market segment.

So this first market segment is obviously up into the right, in purple if you could see that graphic. So our Axon Flex product is perfect for this high performance market segment for head cameras. And we believe we are winning the significant majority of the market in this segment. In fact since we introduced Flex last year, I am personally unaware of any orders that we have lost to a competitor in the United States in this segment. Of course it’s a large road out there, and there may be competitive orders, that we aren’t aware of, but we are winning the ones on our radar screen in this segment domestically.

There is a second segment in the market, which also requires a high quality, rugged and weather proof police camera. However this segment favors convenience over performance. So but if only these are the officers who don’t want to wear a camera on their head or have to run a wire from the camera to a battery package at time they suit up. This market segment is willing to accept less performance namely, the back of the video is fixed from their chest, and it doesn’t fall over the officers’ point of view or head movements. They are willing to give up that performance in exchange for more convenient and comfortable product that they just clip on their vest and go.

This market segment would end up buying police grade body cameras typically in the same price range of which we sell AXON Flex in the $700 to $1000 range. However, until now we have not had a body camera to compete in this segment.

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