If Taser's Free-Trial Gambit Is Successful, It Could Create Faster-Growing, More Competitive Company

“On 4/5/17, Taser International Inc (NASDAQ: TASR) announced that the company is changing its name to “Axon,” as management continues to turn TASER into a software-driven security company,” Imperial Capital’s Jeff Kessler said in a note, while maintaining an In-Line rating on the company, with a price target of $25.

The analyst believes the name change reflect management’s vision to transforming Taser International into a high-tech growth company.

The Transition

Kessler stated that investors and government agencies were already familiar with the Axon brand; this business sold body cameras, in-car cameras for police officers and software solutions to manage the data obtained from video streams, along with digital evidence solutions.

“While the name change to Axon, in our view, is a bold move, since the company is walking away from the TASER name, it reflects TASR’s vision of becoming a SaaS-driven company, which would command a higher market valuation,” the analyst went on to say.

However, Kessler also noted the transition from being a high margin hardware-driven company to a subscription-based model would not be easy, with Axon potentially needing to absorb the financial burden of a rise in sales and marketing costs, along with lower revenue, over the next several quarters.

What Success Would Mean

“If successful, it is likely that the company will eventually yield higher and faster growing recurring revenue with much lower labor cost,” the analyst explained.

In fact, Kessler believes that this transition to an SaaS model is necessary for Taser International to create a sustainable and competitive business model.

The company also announced that it was launching a new program to arm every police officer with a body camera in the United States, and provide software, storage, data, support and training to police departments, free of cost for a year.

“We recognize the financial burden this creates, however, if this measure is successful, it could create a faster growing and more competitive company in the future,” the analyst added.

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Taser Offers One-Year Free Body-Cam Trial To Every Police Officer In America
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Image Credit: By US Air Force from USA (Taser training) [Public domain], via Wikimedia Commons

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