Decisive is an international fund for Australian investors.
As consumers the majority of products and technology we use are foreign owned but as investors we typically only invest in Australia. We invest in global companies especially the US to give you exposure to these growth opportunities while diversifying your portfolio.
Sunday, 25 August 2013
Don't tase me bro
Taser International is famous for its electroshock weapon. Taser (TASR) became a Youtube hit in the famous don't tase me bro video below. Importantly for investors Taser has become a verb. In the public's mind Taser is the term used for being shocked much like Google is known for searching the internet. Achieving the goal of becoming a verb is normally very valuable for investors. Apparently the Taser weapon has been used 1.6 million times.
Growth shock drivers
Taser has three main growth drivers. The weapons upgrade cycle, international expansion and on officer video opportunity.
There are around 330,000 weapons
that are beyond their five year useful life. Budgets were cut during the great
recession so there is plenty of pent up equipment demand.
There is also room for international expansion with 1 in 2 sworn officers in the US users of the product vs. 1 in 50 internationally
The third factor on officer video is the companies most recent growth opportunity. US Law enforcement spends $2.5 billion on annual legal expenses around $2,555 per office per year. On officer video has significantly reduced complaints and incidents saving time and money. An International Association of Chiefs of Police study found that incident videos can reduce litigation by 93%. Police believe that once incidents are viewed from their perspective it gives third parties a better understanding of what has happened rather than a he said she said argument. Also since civilians and police know they are being recorded they tend not to do things they might have thought they could get away with.
Source Taser International investor day
The recently released Axon products can be seen in the picture above.
To management's knowledge Axon flex has not lost a tender to a competitor in the US. Axon flex includes one year of EVIDENCE.COM which is the storage site for digital evidence. When the devices are charged the evidence data is automatically uploaded to the internet. EVIDENCE.COM is an extremely interesting value add for law agencies and moves Taser from just hardware to software.
As can be seen below EVIDENCE.COM plans to be the one stop shop for digital evidence. This is important for police departments as they tend to work in small decentralised teams and tend not to have resident IT experts deployed at their stations. Multiple devices and hundreds of thousands of officers means the amount of information and time spent on evidence data is exploding. It is a software as a service model no hardware is needed, officers are also able to easily retrieve evidence no CD's needed.
Razor blade model
Individual cartridges which have unique numbers for tracking purposes accounted for 29%
of sales. 17 cartridges are used on average over the life of every Taser gun. Tasers tend to be shot twice for
training purposes every year and used once a year in the field.
With the introduction of off camera and EVIDENCE.COM Taser becomes more of a software rather than a hardware company. Investors appreciate the recurring revenue streams and stickiness of software companies just please don't tase me bro!
Disclosure: Decisive has no position in Taser (TASR) stock
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.