TASER International, Inc. (TASR)

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TASER International Inc. (TASR)

Q3 2013 Earnings Call

October 30, 2013 11:00 am ET


Rick Smith - CEO

Dan Behrendt - CFO


Steve Dyer - Craig Hallum Capital

Mark Strauss - JPMorgan

Peter Mahon - Dougherty



Good day, ladies and gentlemen, and welcome to the Quarter Three 2013 TASER International, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions to be given at that time. (Operator Instructions)

I would now like to turn the conference over to your host for today, Mr. Rick Smith, Chief Executive Officer of TASER International. Sir, you may begin.

Rick Smith

Thank you and good morning to everyone. Welcome to our third quarter 2013 earnings conference call. Of course before we get started, I am going to turn the call over to Dan Behrendt, our Chief Financial Officer, 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, and strategies regarding the future, including statements around projected spending. 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 to the date in which 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 the risks 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 of these filings as well as our other SEC filings on our website at www.taser.com.

And with that, I'll turn it back over to Rick Smith, our CEO.

Rick Smith

Thanks, Dan. As a reminder we are going to be accepting some questions via twitter during the Q&A portion of the call, and you can submit those using the hash tag TASR_EARNINGS. To follow our updates on twitter during the call follow the accounts app TASR I'm sorry TASER_IR. So again our accounts to follow would be app sign and TASER_IR.

We will be posting graphics and commentary during the call. And for those you without twitter all updates and graphics will stream directly to our Investor Relations website at investor.taser.com.

I'm so excited to share with you, with our investors the results of our hard work and many exciting new announcements in the past three months on today's call. First off we had a historical record in our revenues this quarter recognizing $35.2 million on a consolidated basis. This marks the seventh consecutive quarter of year-over-year top-line double-digit growth.

I'm sure to be proud of our team. At TASER we continue to be positioned for strong growth moving forward due to the continued upgrade cycle and the exciting momentum in the EVIDENCE.com and Video segment. Specifically, our TASER Weapons business delivered revenues were up 16.8% to $31.6 million year-over-year and our EVIDENCE.com and Video segments the revenues there grew a 111.5% to $3.6 million compared to last year's third quarter. Our international business made up approximately 11% sales in the quarter.

Despite some phenomenal top-line growth, we've been very busy launching several new initiatives that we previously announced. These initiatives were all very customer focused and in an effort to continue to grow the EVIDENCE.com and Video business.

First, we announced the AXON Body, which we went into great detail about in the Q2 2013 earnings call. We spoke about its purpose to address two markets to resell that our AXON Flex did not adequately address. The first of those two were those with a preference for body worn cameras and the second tier were those year who were highly price sensitive.

We're hearing immensely positive feedback from customers who fit these market segments. Perhaps even more impressive, is that we were reentered into several bid processes that we've previously been shut out of, when we are offered only the Flex point-of-view cameras. So while we still believe that the point-of-view is the best type of camera for law enforcement officers, we think that we now have the product suite to really sweep the overall market.

With this quarter being AXON Body's first quarter in the market, it sold almost 780 units, proving that by launching this product we are killing a much desired market niche.

We've been -- we're going to be shipping this product for revenue, so we're actually backed up on getting some trial units out to customers. So it's been a pleasant surprise at how well received Axon Body has been.

Second, we redempt our entire pricing structure for EVIDENCE.com and Flex to become more transparent with very interiors of service to drive adoption into every niche of the law enforcement market. As we went over on the pricing update call a few weeks ago, this was an aggressive move to change the sentiment that on-officer video will be on every officer in five to 10 years to on every officer within two to three years.

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 the optimal pricing model in order to scale the business. We believe we now refined our business model and we've now published this new pricing model to enable faster market adoption.

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