Repositioning Axon Enterprise (A)

In November 2017, Axon Enterprise, Inc. (Axon), was amid transforming from a simple manufacturing company focused almost exclusively on its market leading TASER-brand conducted energy weapons (CEWs) for law enforcement into a multiline, technology-driven provider of low margin body-worn cameras (BWCs) and unproven cloud-based enterprise software and connected devices. The company’s stock had languished for years, and the market did not seem to understand and value Axon’s transformative business strategy. Investors became increasingly critical of Axon’s decision to reinvest an increasing amount of the cash flows generated by its lucrative TASER business into seemingly underpriced and unwanted BWCs and unproven new software and related services. Axon’s investors tended to be those that invested in the aerospace and defense industries and not technology companies per se, which only complicated matters. Axon’s relatively new CFO and his team had to figure out how to rebuild trust and credibility with investors (there had been some structural deficiencies in Axon’s accounting practices) and to ensure the company had access to the resources it would need to achieve its ambitious mission. The first step was working with Axon’s brand-new head of investor relations to determine what type of financial commitments and guidance to give investors at Axon’s upcoming Investor Day. This case describes the law enforcement industry, Axon’s history and its transformative strategy, and steps taken by the CFO to strengthen the finance/accounting function prior to the Investor Day.