What Makes Axon Enterprise (AXON) an Attractive Bet?

Sands Capital, an investment management company, released its “Sands Capital Select Growth Fund” Q4 2024 investor letter. A copy of the same can be downloaded here. Select Growth primarily targets U.S. companies that are leading the way in crucial areas of positive structural transformation within the economy. The fund returned 8.8% (net) in the fourth quarter compared to 7.1% return for the benchmark, the Russell 1000 Growth Index. The fund returned 24.3% over the one year period compared to 33.4% return for the Index. You can check the fund’s top 5 holdings to know more about its best picks for 2024.

In its fourth quarter 2024 investor letter, Sands Capital Select Growth Fund emphasized stocks such as Axon Enterprise, Inc. (NASDAQ:AXON). Axon Enterprise, Inc. (NASDAQ:AXON) manufacturers conducted energy devices (CEDs) under the TASER brand.  The one-month return Axon Enterprise, Inc. (NASDAQ:AXON) was -0.44%, and its shares gained 70.01% of their value over the last 52 weeks. On March 31, 2025, Axon Enterprise, Inc. (NASDAQ:AXON) stock closed at $525.95 per share with a market capitalization of $40.846 billion.

Sands Capital Select Growth Fund stated the following regarding Axon Enterprise, Inc. (NASDAQ:AXON) in its Q4 2024 investor letter:

“Axon Enterprise, Inc. (NASDAQ:AXON) is a leading provider of public-safety technology, including body cameras, software, and the TASER electroshock device. Axon’s mission is to “protect life, capture truth, and accelerate justice.” The company is the sole manufacturer of the TASER and is the world’s leading provider of body cameras by market share. Demand for Axon’s safety solutions is both secular and countercyclical, in our view. The company benefits from the secular shift toward safer and more accountable policing, and demand is likely to be durable in recessionary periods, when crime tends to rise and governments tend to increase spending. While its hardware and software can be purchased separately, they are increasingly sold as a bundle, resulting in highly visible and recurring revenue with long-duration contracts. This bundled ecosystem works together to automate, record, and store tamperproof evidence in the cloud. The bundle also benefits from positive flywheel effects because Axon uses anonymized usage data to drive hardware, software, and training improvements, ultimately resulting in an attractive and effective service for users. Over the next decade, we expect hardware to become a smaller part of Axon’s overall business, with the higher margin software component becoming a more meaningful revenue driver.”