How much is the Canadian Axon deal really worth?
Ever since the 2009 launch of the Axon on-body camcorder, the market for police body cameras has been dominated by TASER International (NASDAQ:TASR). But the question remains, how much the worth of the Canadian Axon deal for TASER actually is.
Latest reports suggest that the over 3,500 law enforcement agencies have bought for their officers this TASER device. Exact statistics about the number of AXONs being sold are not available. However, there has been a report that around 75,000 licenses have been issued by TASER for the store Evidence.com which catalogs and stores Axon videos to be retrieved later. Naturally, it can be estimated that a minimum of 75,000 Axon cameras are already to be found on the market.
TASER’s Expansion in Canada
Although most of the users come from the United States, TASER is witnessing expansion for its international business, and Canada is the latest country to experience this growth.
It is only last week that there has been an official announcement from TASER that its Canadian auxiliary got its first pilot project for distribution of Axon body cameras associated to accounts on Evidence.com. The first client for the company in the north of the Canadian border will be Service de Police de la Ville de Montreal (SPVM) which will distribute the cameras for a testing period of 9 months to officers of the Montreal Traffic Patrol and Montreal Subway Patrol.
Although monetary statistics of this project have not been divulged, big profits are not expected. Axons are sold at a small price of $399 per unit by TASER. Based on the data plan which is chosen, the revenue can be only $300 per year from Evidence.com. The entire project revenue could be only $31,200 or even less if TASER is expected to strike a deal with Montreal to get access to the market in Canada.
But how profitable can be the chance in Canada for TASER?
How Well Can TASER Benefit in Canada?
7 years after its Axon project initiation, it seems that TASER has entered less than 9% of the potential law enforcement market in United States. Statistics Canada mentions that Canada has slightly less than 69,000 police officers. With the acceptance of Axon body cameras, 9% of this population or just 6,300 units will be sold 7 years hence.
This means a probably $2.5 million sale for the devices or possibly higher as more superior versions of the unit are introduced by TASER and user opt for upgrades. Per year, that equates to $400,000. The annual subscription revenue over this will begin slow but can go up to around $1.9 million or more 7 years hence, considering that TASER has a higher charge for stronger data plans.
To sum up, Canada will be a profitable add-on market for TASER Guns which has seen yearly revenue of $209 million mainly in the United States. Even in this case, it will possibly be quite a few years before even 1% is added to the yearly revenue stream of TASER by Canada.
So the 6% jump in TASER’s stock value, ever since the revelation of the Canadian entry, might be an exaggerated response in reality.