TASR

TASER International, Inc. (TASR)

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TASER International, Inc. (TASR)

Investor Conference Call

October 7, 2013 12:00 PM ET

Executives

Rick Smith – Co-founder and Chief Executive Officer

Dan Behrendt – Chief Financial Officer

Jason Droege – General Manager-Evidence.com

Analysts

Steve L. Dyer – Craig-Hallum Capital Group LLC

Glenn G. Mattson – Sidoti & Co. LLC

Greg McKinley – Dougherty & Co. LLC

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the TASER International, Inc. Conference Call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions)

I will now turn the call over to your host, Rick Smith, CEO. Please go ahead.

Rick Smith

Thank you, and good morning to everyone. Before we get started, I’m going to turn the call over to Dan Behrendt, our CFO to read the Safe Harbor statement.

Dan Behrendt

Thank you. Statements made on 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, 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 our press release we issued today and in 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 these filings as well as our other SEC filings on our website at www.taser.com.

Rick Smith

Great. Thank you, Dan. We’re hosting this investor call today to walk you through some rather exciting changes to our business model that we announced last Thursday for our AXON flex and AXON body on-officer cameras and EVIDENCE.com, our digital evidence management service.

For those of you who are following us on Twitter, our Investor Relations feed is @TASER_IR. So that’s @TASER_IR on Twitter and we will be tweeting out some graphics to illustrate our pricing model as we move through the call today. So if you haven’t signed up, please do and you’ll be able to see the visualizations that will sort of help tell the story visually as we describe it here on the call.

So we are now seeing broad acceptance of the concept of on-officer video. In fact, the Police Executive Research Forum or PERF, which is one of the leading think tank in this industry recently hosted a two-day conference in September dedicated solely to this topic of on-officer video. The general theme of the conference attendees including many of the leading police chiefs and law enforcement was that they believe on-officer videos will be standard equipment within the next five to 10 years.

So given this rapidly spreading acceptance, we asked ourselves how do we accelerate this, rather than five to 10 years can we bring it down to something like one to two years. And seeing that the market is rapidly accepting the concept of on-officer video our strategy must be to accelerate adoption and to consolidate the market as rapidly as possible on to our platform to avoid market fragmentation.

Our new pricing model was designed in extensive consultation with our customers over the past six months. We previously were using a fairly complex pricing model, which required custom quotes and negotiation with every customer. This allowed us to experiment and to iterate around pricing while we dialed in what we believe would be an operable pricing model to scale the business. We now believe that we’ve refined our business model and so we have now published this new pricing model to enable faster market adoption.

The new pricing model is designed to accelerate sales – our overall sales process in four key ways; number one, by eliminating friction within the sales process; number two, by eliminating any perception that our products and services are expensive; number three, eliminating any sense of uncertainty in our customers about future costs; and number four, creating tiers of service to fit different customer segments that will allow us to both maximize penetration and profitability.

So I’m now going to go in little more detail about these factors. Let’s start with number one. Our new pricing model reduces friction in the sales process by eliminating the need for negotiating with each customer. Until now, we felt it’s prudent to maintain the flexibility of negotiating deals on a case by case basis. This enabled us to experiment and learn from our customers about their needs and their cost sensitivities, and we believe this is absolutely the right strategy in the formative stages of creating a new market.

However, we now believe that we’ve learned what we need to learn and we’ve developed the formal pricing structure that can be released to the marketplace. This new pricing model is transparent with several tiers of service and structure discount based on volume. This allows the customer to self-service the level of service versus their budget. In other words, we believe this new pricing model is far more scalable and reduces the manual intervention and the back and forth in our sales process.

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