Welcome everyone here in New York, also welcome to the people on the webcast. Thanks so much for your interest in Axon. Thank you for joining us today. You're going to hear from six of our executives, I would just ask that you hold your question till the end of each section. Then, in the beginning, when we ask a question, if our execs could just repeat the question so that the people on the webcast can hear the question, that would be great. Then also, we're going to move to, let's see, our safe harbor statement. Over the course of the presentation today, we're going to make some forward-looking statements. We are under no obligation to update those forward-looking statements, but they are true as of today.
There are inherent risks to investing, as you all know, we list out our risks in our 10-Q and 10-K filings, which are available at axon.com and also at sec.gov. That's all for this. I'm going to turn it now over to Rick Smith, the founder and CEO of Axon Enterprise.
Thank you, Andrea. Stay away from the other mic there. Good afternoon, everyone. Thanks for joining us today. We're excited to update you on progress since we last got together really talking about the business that we have been building and some of the new initiatives that we've got ongoing. I'm going to start first with sort of the strategic vision, talking you through our long-term approach. Then I'm going to hand over to Luke Larson, who's going to talk more about our actual execution. Todd Basche is going to take you through some of our newer products and give you a little bit of a look into the future. Then specifically, we'll bring up Saysa Falk, who is leading our records management initiative, probably the largest expansion of our available market, which is in flight.
Josh Isner will come up, talk about sales and channel, finally, Jawad, our new CFO, to talk about various financial metrics. First, one step back. I am a very optimistic capitalist. I believe the system works really well, where if you solve big problems, you create value. That's sort of a core tenet for the company. We are very passionate and focused on solving big problems. I'm going to take you through sort of the three big problems we're going after today. The first, this still bothers me to my core, that the state-of-the-art in the way we defend ourselves around the world or the way police enforce the law is to deploy the same technology from the Revolutionary War in shooting lead bullets at people. I think as a species, we should have been able to do better by now than this.
You look at all the other industries where technology's made a difference. This is a problem worth solving. It's a big problem. 35,000 plus Americans die from bullet wounds within our own borders every year, and we don't get involved in the politics of this debate. We know it's a big, expensive problem that costs tremendously to society, and it's worth solving. We've made tremendous progress there with our TASER weapons. Our long-term vision, I was talking with some of you before the meeting today, is we will outperform the bullet in time to incapacitation. In fact, we already do in laboratory conditions.
If I get to go in a lab and hook the electrodes up to you, we can actually incapacitate a human being faster than a bullet impact can, unless the bullet hits into the head region, which is sort of gruesome to think about, but you know what? Bullets are gruesome, and they deserve to be made obsolete, and we're making progress. Firearms had a couple of hundred year head start on us. We have much work left to do, but we've already made significant progress. We estimate over 190,000 situations where police were legally authorized to use lethal force, and they didn't because they had access to a TASER weapon. Stay tuned. This part of our business remains very interesting. It's a big problem that we still have lots of room to go until we are actually outperforming lethal force.
I've set an internal target that within the next decade, that we should have a weapon system that's capable of becoming the primary close-quarter defensive weapon so that police don't have to rely on lethal force in situations of uncertainty. That's number 1, fairly straightforward. Let's talk about the second problem we solve, and that is social conflict. It is a huge issue today around the world, and particularly strong in the U.S., this sort of conflict between governments and the people they serve, more specifically, public safety, police officers, and the communities that they're patrolling. Well, body cameras have been a tremendous impact in that space. Agencies are deploying out of University of Cambridge, the most extensive study in this space, looking at, I think, over a dozen agencies with thousands of officers. They found an average 93% drop in complaints against police.
We see use of force dropping dramatically when officers are using cameras, guilty pleas going up dramatically, we just published recently a case study out of Queensland, Australia, where they're showing the time that officers are spending in court is dropping dramatically as well because they're able to use the video instead of having to rely on a he said, she said of officer testimony versus suspects, particularly in domestic violence disputes. If we think of the TASER and body cameras, I would characterize those as tactical problem solvers, right? They're devices that solve a very specific problem set. One is for defense, the other is for transparency and sort of preserving the truth of an incident. This third problem, we really come to a more strategic level, that is, how do we empower fair and effective public safety?
This is a need of every society on Earth. You cannot function as a society without a functioning public safety capability, and that means law enforcement as well. I mean, in the past few years, I think we've seen parts of the world where this has broken down, and I would tell you, I don't think any of us want to live in any of those countries where this function breaks down because chaos ensues. To this effect, this is bigger than any one device or any one technology. This is where this network of capabilities working in concert are what we believe has the capability to fundamentally transform both the capacity of public safety to be effective and to be trusted and fair.
To do this, it's really not about any device or app, like I said, it's the network of devices, apps, and people, because ultimately, this technology only functions when it gets into the hands of the user. Information technology is only useful when that information intersects a human being, and it's making these three things work together in concert that we are seeing is creating tremendous value. Now, when we talk about this is fairly simple, this idea of people, devices, and apps. There's actually quite a bit of complexity behind this, and I want to take a few moments to dig in. When you look at the level of investment that we've made, sometimes people say, "Well, geez, body cameras, that's pretty easy." Well, not really. There's a lot beneath the surface. Let's go in. Let's look at our device ecosystem.
We've certainly talked about the TASER weapons. We have two major models available today. We make the body cameras, whether they're wearable cameras like our Axon Flex that go up, that are more head-mounted, or the body cameras, things like our dock. This is actually a fairly complex system to do the hardware and firmware on the cameras, as well as the docks that connect seamlessly to the internet to be able to make it so that the value to the officers, they just drop this thing in a dock, like charging their phone, and they're done. We seamlessly handle moving all that data, doing all the error handling, doing it reliably in an encrypted and secure fashion.
Our new Fleet offering, in-car cameras, are also a critical part of this ecosystem, and it's one that we've introduced over the past couple of years, and it's really starting to scale today. Things like Sidearm, our new sensor that attaches to a firearm of a police officer. It turns out pulling a gun out of a holster is the type of event that should be known to this ecosystem of devices. We've built a wireless sensor that can install on virtually any holster, and that can now take advantage of what we call our Signal ecosystem. This is a wireless protocol that we use to connect all these devices together. Ultimately, we've had cases where officers have been involved in officer-involved shootings, and they haven't thought to turn the camera on. The general assumption when that happens is, oh, that this was malicious in nature.
They intentionally didn't turn the camera on. Well, my personal viewpoint is, in most cases, if you're going into a situation where the adrenaline's flowing, they may not be thinking about turning the camera on when they're pulling their gun out. The idea here is to make it so that officers don't have to think about this. We need to offload the technology workload from the officer and make the ecosystem support them so that the technology is working in a more seamless fashion. Our Signal ecosystem does it from Fleet cameras to body cameras to their sidearms, their TASER weapons, all adding a more seamless experience and ensuring that we're capturing those critical videos. We also have an interview room solution.
Basically, you can think about all the different ways and places that you've got sensors, particularly audio and video sensors, but other sensors, like the electrical sensors that are in a TASER, the logs of how they're fired or what's happening when they're fired. All this information needs to be drawn together in a cohesive way. That, of course, then begins this reliance on software applications. I think we've all seen doing software is hard, doing hardware is hard. Doing both together, it's difficult, but if you get it right, you can create a ton of customer value that is unique. Now, let's look at our application ecosystem. At the core is Evidence.com, which historically, I would say, has been sort of like iTunes for cops, right? This was the secret sauce that made the iPod so successful, was this integrated hardware-software experience.
For us, when we have 18,000 police agency customers, they shouldn't have to go figure out how to build and run server farms to do video evidence management. Between our docks and our cameras and Evidence.com, we automate all that workflow, so it just works. The same way many of the great consumer technology that we use today, they work for us without an IT department in our house. Evidence Sync is our application that runs on laptops or other computers so that you can plug in other devices, third-party cameras, et cetera, and be able to manually update information through a PC. Axon View is our application that runs on iOS and Android devices. This connects to your body camera so that we can now use the power of these app ecosystems to be able to do things like viewing, tagging your videos, and managing them for upload.
Axon View XL is our new version that's designed for our in-car video systems. Turns out the use case for in-car is quite different from on-body. They expect it to be on all the time. They expect to be able to do different things like tracking GPS in real time. That's actually a much more complex software support piece to support the in-car video case. Axon Capture. This is an app that takes photos, video, and audio, which, of course, is not rocket science. We can all do it with our cell phones.
The challenge is, when you want 1,000 officers to be doing this, and you need that data to be secure and manageable with a chain of custody from the moment it was taken into your chain of custody for legal requirements, as well as making sure that that information is secure and it's wiped from the phone after it's uploaded. We've built that so that officers can now use their mobile devices rather than carrying a separate camera or a separate voice recorder, et cetera. This has been actually quite helpful for our customers. This is a quick look at the app interface. Again, you select to take photos, video, or audio. In Washington, D.C., they processed over 200 arrests using this as their booking solution during the inauguration. I've been doing a lot of customer tours.
I was at a customer recently, and just the process of booking somebody, it's another system where there's a login. Actually, the agency I was at, the officers who were demoing it couldn't log in. They got locked out of logging into the booking station, and they called another officer over, and the same thing happened. It was somewhat comical. I'm trying not to embarrass them with this. What do you guys do if you're actually booking somebody and your login doesn't work? Simplifying this stuff and being able to do something like taking booking photos in the field actually can really streamline that officer's process. Tag Automator. We talked about how you can use your smartphone to tag videos, but it turns out for larger agencies, if you have thousands of officers, there's the fat finger effect, right?
Where officers are going to make some mistakes as they're keying things in. We now have a system where we can plug into their computer-aided dispatch or their records management system, pull those logs, match it based on officer ID and time, and automatically tag all their videos. We get dramatic improvements in accuracy and tremendous time savings. Now officers, all they have to do is start, stop recording for each incident and throw it in the dock. They literally don't have to log into anything or type anything in. We can automate everything to make sure that those videos are tagged appropriately, that they go into the right record retention queue so that they're found, and they can be managed with other information in that case in a highly automated way. Multi-Cam Sync. This is a great example of the power of our cloud model.
Officers who bought our cameras even 2 years ago came in this April, and they discovered this magical new capability where our cameras could all now talk to each other, and they would share information so that on the back end, if I look up one officer's video, it would tell me, "Hey, there were other officers that were on scene," because the cameras are already synced up. I can say, "Oh, show me that." And it will automatically time synchronize these videos into one view, and I can watch all these at the same time, and I can see it from multiple angles. This used to be an incredibly manual process.
You'd have to first find the videos, put them on disk, take them to your video expert, who would go into Final Cut Pro or some other video editing software, manually time synchronize these, hours and hours of work in every case. I had one police chief who told me they've had cases thrown out because at the end of the day, they'd forgotten, they didn't turn in all the evidence. There's typically a legal requirement that an agency turn over all the evidence to the defense. What happens if you don't have the ability to know easily and find all the videos and you find them later? In that case, some cases get thrown out because the presumption is, hey, this was intentional. You didn't provide all the evidence.
Just knowing that that evidence is linked is helpful, but being able to play it back, huge time saver. For our customers, again, this is a great example of the power of the cloud. We were able to push this out as a software update with a whole new capability that just happened seamlessly for thousands of agencies. Redaction. Another big time suck for our customers is in many parts of the country, they have to release videos of these incidents when they get a public records request. But you also have to be able to protect the identity of the people and the privacy of the people in those videos, which means historically, in the city of Seattle, for example, they were spending about eight hours for every one hour to redact video. They've got just teams of people doing this manually.
Over the past year, we've put a lot of effort into our redaction tools. One of the more compelling use cases, this skin blur tool. Imagine trying to redact this by hand if you had to go in and draw boxes over every face. But using one of our AI tools, we're able to go in and identify everywhere there's skin in the video and automatically deploy a blur. That's one of many, and I think you're going to see a little bit more coming up when Todd talks about redaction, where we're just automating all the manual workflow that's required to move this data through a business process. Another big one is search. Search is a very valuable function. If you've ever used software that doesn't have a great search function, you really miss it when it's gone.
We're running over 1 million files of evidence being searched every month. Again, this is maybe not the sexiest one to talk about from a feature perspective, but it makes a huge difference when customers use it, being able to find the files with a robust multi-factor search capability to be able to find the evidence files that they need. Security, this is another very big one. When you move to the cloud, one of the biggest concerns initially is security. Once we talk to our customers, they realize very quickly, 18,000 law enforcement agencies, many of them with small numbers of officers, simply cannot invest in the technology or the people to do cybersecurity at scale. We are now, I think, actually just hit 10 states where we're formal CJIS approval. CJIS is the FBI's Criminal Justice Information Standard.
We meet the accreditation standards, we're compliant in every state, we're getting the certification state by state. We have a dedicated team of 10 professionals monitoring over 3.5 billion security events per week. Of course, those aren't people watching each one of these login attempts or any other event. Most of this is being automated with tools that are then surfacing anything that looks remotely suspicious.
In fact, we've had cases where there was one case where we had a customer, there was an officer-involved shooting, Anonymous had come out and said, specifically, "We're going after this agency." Our InfoSec team reached out to them, we were able to help lock down their systems preemptively to take extra security steps, which you can imagine our customers really appreciate that we're able to go the extra mile and help them implement security at a higher scale. I'm going to come back to security in a couple of minutes, it's a big differentiator for us, it's a big investment, right? These are not inexpensive people to put on, to build the long-term business model, you've got to invest in those foundational capabilities. Transcription's another one. Today, we've partnered with a firm that does human-based transcription.
This will be an area where as AI and natural language processing gets better and better, that we'll be able to automate more and more of this to be able to extract transcripts from these videos. That's just a general overview of the various pieces of this ecosystem. Yes, making body cameras is one thing, creating the entire ecosystem to manage all of the business processes around ingesting, processing, sharing that video requires a ton of different technology components, both hardware and software. Let me bring you to the most important piece, that's the people piece. Guys, it's one thing to build technology, getting customers onto the platform is ultimately probably the most important phase and creates the most value long term. Today we have over 187,000 officers with Evidence.com logins. We're at 38 of the major cities.
There are 66 major U.S. cities that are part of what's called the Major Cities Chiefs Association, we're well past the 50% mark. There are three major components that are the market leaders. There's the major cities, there's the major counties. We have 25 major counties, this is really accelerating. The counties, by the way, have tended to move a little slower than the cities, for reasons maybe we can cover later if you're interested in Q&A. We're now starting to see the counties really pick up speed, then you have the state police. State police, their number 1 requirement was an in-car video system. Until we announced Axon Fleet, we had zero state police. They were not going to buy our system without in-car capability, because most of what they do happens in front of the patrol car.
Since we announced Axon Fleet, we've already picked up 10% of the market in the first year, and we're having ongoing conversations and field trials with a number of additional state police. Prosecutors. This is a really important part. If you think about the information flow in law enforcement, what starts at an agency, if it's a case of interest that has to be prosecuted, that case has to go to a prosecutor. Traditionally that's meant CDs, printed paper in a file folder, and sneakernet.
We have one customer that was telling us, it's a major state police agency, they call it the Pony Express, where for them to get a case to court, somebody's got to go to one of their district warehouses where they keep all the DVDs with the videos, find the DVDs, copy off the DVD, only the files that they need, because the DVD had a full shift with many other videos on it. They had to take that disc, put it in a file folder, and then physically deliver it to the courts, which might be in another jurisdiction. They literally have officers driving, meeting other officers at the edge of their patrol zone. They would pick it up and take it on to court. Massively inefficient. We're moving that whole process online.
This is the reason we made Evidence.com free for prosecutors, because we realized if you have to move through multiple government procurement processes at multiple agencies simultaneously, your probability of success is quite low. Since agencies are already paying to store this data, opening it up to the prosecutors, the network effects alone would be extremely valuable and the costs manageable. In fact, we now have all of the 4,000-plus crown prosecutors in the U.K. coming online with Evidence.com for sharing information from law enforcement to prosecutors. By the way, prosecutors tend to be, they can be at both the city and the county level. The county ones tend to work with all of the local cities in their jurisdiction, which creates a very rich sharing ecosystem and makes the product frankly quite sticky over time.
We're about to add our next major element, and those are the federal agencies. For federal agencies to use, I would say five years ago, when you said the term cloud, federal agencies, "Oh, nope, can't do it." Well, now we've shifted to this cloud-first philosophy at the federal level. There's a thing called FedRAMP, which is they created a federal certification that federal agencies must have in order to use a cloud supplier. We will be the first SaaS application, we believe, to get FedRAMP certification. We're in the late stages. This is a multi-year process. It is a multimillion-dollar process to go through. We have submitted our final audited package. We have independent auditors that have gone through it. Of course you never know, we might get feedback and still have some adjustments to make.
It's our understanding, and again, we've been at this for about two years, that no other digital evidence management system has really even started FedRAMP. We'll be the first with quite a lead time on any agencies. By the way, there's a lot of times you need to share information from state and local agencies up to federal agencies, and we are hopeful that we'll have FedRAMP completed relatively soon. There's public defenders. Sharing from the prosecutors, guess what? They have to share information over to public defenders. We're building a product that's going to enable that sharing to happen seamlessly. Then finally, the public. Todd's going to talk about Axon Citizen, our new product that allows private citizens that are interacting with police.
Today if a police officer goes and somebody says, "Oh, I've got a picture on my phone," well, they're not going to give that phone to the police. Most people don't want the cops going through your phone. What we see today is a lot of times they're snapping a picture of a phone screen, which is not great evidence, or they have to go back and have that person put it on a thumb drive. This, we're now enabling, both on a one-to-one and mass level, agencies to interact with the public for them to submit evidence. Hopefully that gives you an idea of the breadth of what we have built in terms of the hardware and the software and the level of customer penetration that we have at this time in building the network of people using this technology stack to share information.
What does this look like? Do we have volume we can bring up on this? All right. Let me put some color to this. Of course, we're going to use a dramatic domestic violence case to tell you the story of what this means to the officer when this information or these technologies work together seamlessly. Here comes the officer, and they've got their lights on. Guess what? Turning the lights on has activated their cameras. Cameras are already rolling. Gun comes out, Signal hits, boom, makes sure the cameras are rolling, and we now have live streaming in beta to be able to stream that video back to a command center. Of course, the TASER also has built-in Signal capability, so that now the TASER device is interacting with the cameras.
We're sort of pointing out the obvious, TASERs are far safer, and most people actually surrender versus getting into a physical fight with the police. When you're recording, we have all the information we need to create a police report. Whereas historically, officers are writing it down on a notepad and then later sitting and typing it into a computer. We believe we can automate that entire process over the next few years. That means officers will be able to keep their hands free, stay focused on the people they're interacting with, rather than writing down copious notes, which may or may not be accurate. Then ultimately, like our dock I told you about, you just plug it in at the end of the shift, you're done. You're not sitting at a computer manually tagging things. Here, this is a press information officer.
What if there's controversy about this case, and she wants to be able to share that information into the news cycle because they're getting crucified with negative stories? Well, there's a child in this video. You can't just release the video. The tools to be able to go in and, say, redact the faces, clip it, and then instead of burning a disk, just send it by email right to all of our press contacts. We're enabling agencies to move at a speed that gets them into the news cycle. Of course, on the public defender side of things, we're seeing increases in guilty pleas because when a lawyer sees the video of what happened, many times they're just advising their clients, "Let's plead this out. It doesn't make sense to fight it if we have a definitive video.
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Ultimately, the idea is to make police officers more effective, more trusted, and keep them doing actual police work, not low-value bureaucratic-type tasks. Of course, since we last talked, we changed our name from TASER to Axon. Part of the reason, frankly, is TASER is really a brand name for a product. When I say the name TASER, people immediately think of the electrical weapons. As we broadened our mission, we needed a brand that had a broader footprint. For example, when I would go speak at a police technology conference and they'd introduce me as the CEO and founder of TASER, many of the heads of IT would literally come up to me and say, "Well, jeez, why are you even speaking here?
You guys are a weapon company." No, actually, we have this whole software ecosystem that your agency should know about, and it's a larger part of the economic footprint of our business today than the TASER weapon business. All right, coming back to this sort of big picture. We're addressing these three big problems, gun violence, social conflict, and creating fair and effective policing. Now, our path to success, right? We've identified some big problems. That's step point number one, focus on solving big problems that are valuable if you can solve them. That allows us to attract some pretty amazing people. You'll meet some of them later today, the level of talent that we've been able to attract over the last couple of years has been just mind-blowing, frankly, to me.
It's become our number 1 competitive advantage, more so than our patents, even more so than our network, the talented people we've been able to attract to our mission. The third piece, and this is important, is building highly defensible and profitable business models. I've heard the critique historically, "Well, is TASER just building profitless prosperity here by solving problems, but not making money?" I assure you, as we launch into these, we are not a nonprofit. We are focused on solving problems that are big and important, but doing it in a way that does not create commodity businesses, that creates businesses that are highly defensible, that are going to create an economic engine that includes outstanding return to our shareholders. I'll give you an example.
If in 1993, I talked to you about gun violence, you wouldn't immediately jump to, "Wow, that can be a profitable business model," right? Some people think about nonprofits or maybe government's going to solve this problem. We've built a highly profitable and defensible business that's highly cash generative, and we have a deep moat between our patents, our medical studies, and the brand relationships that we've created with our customers. We've done it here, and we're in the process of building in these adjacent areas, also very highly defensible business models. If we think about our go-to-market strategy, it is a very powerful brand. It's been life-changing. I talked to some of you earlier.
Actually, I did an interview with a police magazine right before we started today, and the interviewer tells me, "Hey, I was a cop for 20 years." He goes on to tell me, "There was a market shift in the point of my career after I got a TASER versus before. It was life-changing. Literally, just the amount of violent incidents and the risk of the job went down pretty dramatically." TASER has been something that's created a very powerful brand relationship. It was life-changing for our customers. Now, the TASER does create a need for this related problem around police transparency and use of force, and documenting that use of force, and making sure things like the TASER don't get misused. There's sort of this coherence between TASER weapons and body cameras. They solve related problems. Candidly, this is a loose coupling.
You could use TASERs and you could use somebody else's body cameras. That's a viable strategy, and it happens sometimes. While they do solve related problems, and there are some advantages to having them together, that coherence is not nearly as strong as between the body cameras and the cloud software. Here we have a 100% attach rate of the major agencies, I'm looking at Josh just to validate this, of the major agencies that have selected our body cameras, every one of them is using our cloud software, Evidence.com. We do have some smaller agencies that might say, "Hey, we'll buy the cameras and store it on a laptop and figure things out." Anyone who's doing this at scale is now using our cloud software. This is a very tight coupling between these two.
We're continuing to work on increasing the coupling here, things like Signal, so that the interaction between the TASER weapons and the camera is becoming more meaningful, and we are working on further software and related services that increase the stickiness and the coherence between not only the TASER and the cameras, but between the TASER weapons and Evidence.com. Creating real value there. TASER weapons do create today quite a bit of data, and managing that data, and visualizing that data, and analyzing that data in ways that are helpful can really leverage and create the stickiness or the coherence between TASER and Evidence.com to be much stronger. Think about in-car systems. In-car video systems, there's a very tight coupling between body cameras and In-car. One of the reasons we did this, we created In-car, wasn't just the state police.
We knew that if agencies had In-car and on-body video, it was a requirement that those systems are going to have to work together. They don't want to have two different systems for two different types of video. Of course, the coupling between Evidence.com and In-car is also extremely high because the system they're going to want to use to manage that is our cloud system. We think about RMS, records management. The simple way to think about this, today, we're managing all the media evidence for agencies, but they all also have these text systems. That's where officers go in and write all their reports. It's where they write their tickets, their domestic violence reports, and go on and on and on to all the different reports they're writing today. We view this not just as a coupling, but it's a natural extension.
You don't want to have your video in system A and all the text records in system B. It's a natural evolution that those two should be together. In fact, the other thing we try to convey here is this isn't a separate system. It's actually an extension. Whereas if someone was only doing records management, you want to go in and displace an RMS system, you're starting cold at an agency, "Hey, this is a rip and replace." For us, this is a natural extension. We're already in the majority of the major agencies. We're their major cloud platform. Many of them tell us it's the most positive software experience of any software they work with. For us, this isn't some new disconnected system.
It's an extension where you can take this system that's scalable and it's working great, and you're using it to share all your information and cases with prosecutors. We can now just add more value by adding new features and capabilities that slowly displace your outdated RMS systems. Together, these capabilities create a very valuable ecosystem to where you're going to want your TASER integrating with your records for your use of force reports. It should also include your video, et cetera. There's a whole lot of ecosystem value to be had by these products and services working together, and they really fit well in our channel strategy. Josh will talk about how we've gone from a third-party distribution strategy to a direct own-the-customer relationship strategy, every one of these products builds off of that channel and becomes stronger and makes our channel stronger.
One of the things that comes out of this ecosystem is the amount of data that's being produced and managed within our ecosystem. We just passed 15 million gigabytes. That's also called 15 petabytes, but we list it out because most people don't know what the heck a petabyte is. Nobody's got a petabyte hard drive on your laptop. Petabyte's a 1,000 terabytes or 1 million gigabytes. This is the actual curve of our data growth. It is a smooth exponential at this point, and it is growing rapidly. It might be a little trite to say that data is the new oil, but data is arguably the most valuable resource in the world today, and we have the ecosystem that is hosting one of the most valuable data sets for governments anywhere.
In fact, when we completed our cloud migration from Amazon to Microsoft Azure, it's our understanding that was the largest cloud migration in history, and we are now the largest data set, not just in Azure Gov Cloud, but in Azure anywhere in the world, we've got the largest data set. I want to be really clear. That data is not our data. It's our customers' data. When I talk about the value of that data, we can't go mine that data for our own purpose. We can build the tools that enable our customers to mine that data, and we can sell those tools as services to those customers, creating very valuable long-term services no one else can do because they don't have the sensors, the users, the software, and the data all hooked together in one ecosystem.
We see this as creating one of these virtuous circles that you look for in business, right? How to create a feedback loop that extends our competitive advantage. We've got more users than any other network in law enforcement, certainly any cloud-based network like we've got. We've got this huge data storage, enormous. There's nothing even close to it in the public safety market. And we've now added a dedicated AI team through our 2 acquisitions. It's users make data feeds AI. Those AI capabilities are going to train the models and create breakthrough capabilities that we're uniquely positioned to do, which is going to help us win more users who will create more data and so forth and so on. We believe this investment, and we have some of our AI team here today.
We're really pumped to have these guys on board helping us to unlock the value in our customers' data for them. I mean, everything you'd need for a police report is in the video. Except maybe what's in the officer's head, but there's no device recording that today. The way you get in an officer's head is they sit at a keyboard and type. Really? I think they could more effectively dictate it to the video, but it's unstructured data that we have to pull out and give structure so that it's searchable and can be run through a business process. We talked about the TASER business and the moat around it. We also see a really great moat around this body camera and cloud software business, especially once you get all the sharing and business processes automated.
As we think about over the past several years, what are the threats? What are the threat vectors that are going to come after this? 5 years ago, 7 years ago, everybody was selling against the cloud. Now, people have seen, oh, this thing Axon did, this thing TASER did, when they were TASER. This thing's working. This is a valuable business. The two primary threat vectors we saw were from in-car because everybody who's selling in-car video systems, especially when they hear customers saying, "Hey, we need in-car and body cameras together." Those people were all creating body cameras, and they've all now seen the light. When you walked around at IACP, there were clouds at every booth. We knew these guys would be coming for our business. We also had RMS.
If you think about, again, the people that are making the text-based record systems realize as well, "Hey, we're going to need to be able to handle. We're moving into a multimedia world. Text records don't. That's not the future of text-only records." The good news is we identified both of these threat vectors also represented our greatest adjacent opportunities. In-car represents about a $470 million opportunity, and RMS is over a $2 billion opportunity. This is one of those where as we looked at the threats and the opportunities, they lined up pretty nicely. In a perfect world, we would've liked to take our time and say, "You know what? Let's sequence this. Let's do body cameras. Let's get it profitable. Let's go do in-car systems. Let's get it profitable.
Maybe we'll go do RMS and get it profitable." The world doesn't wait. The world is moving too fast. We couldn't afford to take the risk that one of these other folks would start to make an inroad and start to fragment our ecosystem. Over the past several years, we have invested heavily. We've taken what was a profitable business, and we've gotten it to around breakeven because of those investments. The long-term model is not only defending this becoming a profitable business, but expanding our TAM. When we build a moat, the larger moat around this ecosystem, it's even stickier and more defensible. Since we've made these decisions, we've more than doubled our TAM.
If you think about the old total available market between our body cameras, the software there, international weapons, and the Officer Safety Plan that ties our weapons and cameras together. You look at the Records system, Signal Sidearm, Fleet, et cetera, dramatic improvement in the overall available market that we can grow into. Since our last Analyst Day, I'd like to also point out that we've been very focused on gaining market share because we believe that's where the moat comes in. If we avoid a fragmented market where we have a dominant market share of people using our platform and I'm really proud of what the team has done. We have executed extremely well there. Since our last day, annual service revenues are up dramatically. Weapons segment continues to grow nicely. Our booked seats are growing nicely. We've acquired and built an AI team.
We've staffed. We've got some really solid developers working on Axon Records. Sidearm and Fleet are both relatively new. That process, Darren Steele and our marketing team just did a phenomenal job in the rebrand and tying it together with our national field trial offer. We had, I think, $4 billion of unpaid media by linking those two together. I remember the day it happened, I walked into a conference, I had like five police chiefs come and go, "Hey, it's the Axon guy." Some comment about the Axon rebranding. We think this has set the stage for our next evolution of growth. We are now starting to add.
We are at a pivot point where we've talked historically, none of our corporate metrics have been focused from the management and board level on profitability because we've been intentionally focused on gaining market share and not putting a ton of focus on profitability during that growth phase. Now that we're past the halfway mark with the major cities, we've now hit a point where we're now starting to add in profitability into this back half of the market. I also want to set expectations. This isn't going to be a hard right where all of a sudden we're shifting entirely.
We still have half of the market to consolidate, you'll see as each of the people talk that we're now building teams, like in sales, we're going to have a team that's focused on upselling existing customers in addition to the team that's out gaining new logos. We are at a point where we're now able to make an intentional shift in our overall business model. With that, I'll pause, and we'll take a few moments for questions, and then we'll go on to Luke in the next presentation. Any questions for me? Yes.
If a lot of your value proposition is around data and Evidence.com and the analytics and AI product, what is the philosophy in essentially giving that portion away for free?
What is the question for those of you that are online is, if the value is in the data, what's the philosophy behind giving it away for free? I'll give you an example. Let me give you the cleanest example, prosecutors. Sure, we could go to prosecutors and say, "Hey, this is going to be valuable. We want to sell it to you." However, if we did that, we would have to simultaneously move our products through the procurement process over at the law enforcement agencies and at prosecutor's offices. The ability to do that and build that connection simultaneously would exponentially increase the difficulty. By making it free to prosecutors, we are able to make it a much more compelling decision for them to make. Now, once we're in the prosecutor's office, we're learning, hey, guess what? These are attorneys.
We have one county attorney that's spending hundreds of hours, like 400 or 500 hours of attorney time, attorneys redacting videos. Now, do we have an upsell opportunity to come in? We're not making everything free forever. We're making the core service free for sharing. In each of these markets, we may make decisions where we come in free so that we can get in, create the customer relationship, and then over time, layer in those premium services. Generally, we don't think the optimal strategy is to try to monetize on entry. We need to make entry smooth, gain the relationship, gain market share, and monetize once we're in through premium services. Yes.
Just curious why you think now is the right time in the life cycle of the business to shift from more growth-focused to profitability-focused when-
Look at the scale of the company today relative to that TAM that you mentioned, it seems like there's still massive growth opportunities. Why now? Why make that shift?
The question for those of you online was, why is now the time to start the shift towards profitability? This is where, again, I want to calibrate. This isn't a black or white, that we're going from 100% about growth to 100% about profits. I don't know that I want to give you an exact breakout either. What I am saying is we do see that we have enough existing customers and opportunities to begin the upsell process that it doesn't have to be 100% about growth. I would say growth is still probably the larger general focus, but frankly, I think Jawad will talk about this as he came in. We've seen opportunities where perhaps the focus on growth was obscuring some opportunities to have greater operational rigor.
We are adding more rigor, our number one focus is still consolidating the market, it's a balance about getting those two things right. I think when we did a candid internal assessment, we determined there's some opportunities where there are areas where we have some products where they lend themselves for where we might have greater pricing power. In some of those cases, it makes more sense that we should treat those differently than the products like when we're entering into a new market space, like with prosecutors, where they're, hey, we're going to make it free and we're going to get them on the network. I think it's just a little bit of a rebalancing and adding more rigor given that we've come pretty far, and I think we've established ourselves as the clear market leader.
Rest assured, the number one threat to the business we worry about is market fragmentation, we're not going to do anything that puts that at risk. All right. One more question, then we're going to go to Luke. Yes.
Just coming back to the TAMs that you put out there, the $2.9 billion versus the $6.5 billion. Putting it in context with law enforcement budgets. Law enforcement budgets obviously aren't growing at anywhere near those kinds of rates. There is a limitation to how fast they can grow, 3%, something like that. How do you square that growth in your TAM with what the potential growth is in law enforcement? I know that there are some areas you can sell outside of law enforcement, over the long term, that's included in that number. How do you square those things? At what point do you, again, focus on the profitability aspect?
The question that we just had was, how do we square the TAM numbers with the growth of law enforcement, which is not growing at this sort of rate. Simplistically, this isn't predicated on law enforcement growing at all. Our customers could stay completely static, and these are not new areas where customers don't have budget. Records management systems are there today. There's big existing budgets. They're spending lots of money, and they're not having a great customer experience. Here we're coming in and displacing existing line items within their budget. Our customers spend on whole, I think around $100 billion plus. Most of that goes into manpower. Most of what you're seeing here are things where we can come in and displace other systems using the power of our ecosystem to provide a better, more cost-effective, and more effective solution.
Some of these will also be displacing just inefficiencies, right? If you were doing 400 attorney hours per month of redaction and we can cut that down by 90%, there's real savings to be had there from efficiency. We do have some much bigger players in the space. Motorola, for an example, has a multi-billion-dollar business selling technology into our same customer set. We think the budget and the dollars are there, and it's ours to extend our advantage into owning a greater share of wallet. With that, I'm going to turn over now to Luke, for those of you who haven't met Luke Larson, our President, who runs the company day-to-day, to talk about our execution focus.
Great. Good afternoon. My name's Luke Larson. I'm the President of Axon. I've been with the company just under a decade. Today I'm going to talk to you about the execution and how we really run the company. I think it's really important when you're running an organization to have a strong mission. Rick talked about the vision of the company and where we're headed. At Axon, our mission is to protect life, this is a really powerful mission, where with all of our employees and customers and all of our stakeholders, we have this intrinsic motivation where they want to be a part of that. That's really, really powerful for us to attract the best people and really get the most out of them. Our strategy that Rick talked about is really, really simple.
We want to get people on the Axon network, we want to ship great product. That's the things that we're focused on in the day-to-day running of the business. We are a values-driven organization. We really emphasize these seven core values. Today, I'm going to talk about two of them. The first is Win Right, we are fiercely competitive at Axon. You have never met a group of people more competitive than the team that we have assembled at Axon. It's awesome to be a part of something where you have that competitive spirit and drive, we're really focused on winning, we want to Win Right. We emphasize this in such a way that we want to be beyond reproach.
We say at company meetings and in our engineering teams and sales teams, we can miss a quarter or we can miss a product ship date, but we're never, ever going to compromise our integrity. I think that's really, really important when you look at some of these other big businesses that have faltered there. We are very, very focused on winning right. This is one of my favorite newest values, and it's Be Scrappy, and we're really emphasizing this within the org. Here, last night, we stayed at the Courtyard Marriott down in the Chelsea district. We went out to dinner at Meatballs. I think our average cost per employee for dinner before tip was like $25. We're really focused on being scrappy. At that hotel, I'd share an interesting insight.
We were right across from the NYPD 23rd Precinct, and my room was actually eye level with the second floor. It's a four-story building. If you've seen this, it's got a castle facade, kind of looks like a rook on a chess set. As I looked out, as I was prepping for this Analyst Day, the second, third, and fourth floor of NYPD 23rd Precinct, what I saw in the windows was shocking. I saw lieutenants and detectives doing work, but I saw piles and piles of paperwork. I'm not joking. Literally, this entire police precinct was stacked up with paper, and that's one of the big things that we're focused on going after. We've got a great vision. We've got a really powerful mission. We've got a great strategy, and it's really dependent on building a phenomenal team.
I'm going to talk about some of the fantastic people that we've brought into the organization. Todd Basche is our EVP of Worldwide Product. He comes from a long technology background in Silicon Valley, worked for Sun Microsystems, Dell. He also was the architect behind iTunes' iLife suite. He's been a great addition to the team. He's going to talk later today. Jay Reitz's our VP of Engineering, computer science grad from Stanford, previously from Microsoft and other startups. I'm not going to talk about each one, but I'll just kind of run through. Jason Hartford is our lead product manager on video products. He was the product lead for GoPro's HERO5. Wes Whalen is our product manager on Axon Fleet. He previously was at Tesla working on autonomous driving. Saysa Falk is going to talk later today. He runs our RMS systems. Jawad Ahsan, our new CFO.
Now, Jawad, I want to take a moment and talk about. Jawad has been a phenomenal addition to the team, and this guy is not a lightweight. He's come in and he's really been a great backbone in the leadership team, and it's been a great complement to recognize optimistic push for growth and saying, "How can we do this with rigor?" It's going to be great to hear him talk later today. He, Jawad, in short order, has basically rebuilt our finance team to handle this explosive growth that we're going to talk about. We've got a great mission, vision, strategy. We've built a phenomenal team. What's really exciting to me is the platform that we've built. There's six key aspects that I think makes this extremely unique. The first is we're transforming workflows.
This morning when I looked out at NYPD's 23 Precinct, we're not just going to take that paper process and automate it. We're going to revamp it so it's going to make that labor force more effective, and we're going to put more officers back on the streets with communities because we're going to transform that workflow. We own the channel. This is something that Josh Isner is going to talk about in terms of the value for cross-selling and building those customer relationships, in addition to having that feedback loop when we do product development. Massive unique data generation. No one else in the world creates the unique proprietary data that we create at Axon. Like Rick said, this isn't our data set, but it is in our platform, and we can mine that data to unlock massive value for our customers. Strong brands.
The TASER brand is one of the most recognizable brands in the world. I think in the next few years, you're going to see the same thing with Axon. The reason that you know the TASER name is because it's on the nightly news. The Hangover may have helped as well, but the reason you know the TASER name is because it's on the nightly news. We're seeing a proliferation of video. You see it when we talk to our employees about that mission-driven culture, we use examples of these videos that are coming back from the fires in Northern California. They're being captured on Axon videos. We talk about the hurricane relief in Florida and Texas. The first responders, they're wearing Axon videos, these videos are getting shared on the nightly news.
I think in the next few years, Axon is going to become a household name in America, and it's also building a strong brand connection in our market. Network effects. We've designed the system where you can share inside the agency. You can imagine a large agency like LAPD has multiple precincts. They want to share inside the agency. We want to share inter-agency, so LAPD to sister agencies in the region. We can also share outside the agency for public disclosure, sharing with district attorneys. The last key element of our platform is our training network. We've built a phenomenal training network. We've got over 30,000 TASER instructors, and we're building up the Axon Academy, and we've got a key event that we call Axon Accelerate that I'm going to talk about at the end of my presentation.
As we looked at building up the Axon brand, we really wanted to focus the TASER brand, and there was this kind of wait-and-see moment. Will this brand strategy work? As Rick said, our marketing team did a phenomenal job with the Axon brand launch. Prior to that launch, we had unaided awareness in law enforcement of 7%. In April, after we did the announcement, we've now jumped to the market leader in brand recognition with body cameras and software in law enforcement. I think you're just going to continue to see that number rise, much like you did with TASER.
Our competitive advantage is we were really the first mover in the cloud space. We were talking with some of our AI team at Meatballs over this $25 meal we had last night. We were talking about how hard it was to convince the customers to move to the cloud. When we started to do this back in 2008, 2009, 2010, Amazon was the cloud service that you would use if you were going to start a website like shoes.com or diapers.com. The thought of putting police evidence in the cloud was really out there. We were the first mover to get agencies comfortable that this is a way that they could handle these massive amounts of data in a very good way. We've not only been the first mover, we've had massive amounts of data generated that's stored on that cloud today.
We're not only the market leader in software, we're also tightly integrated with the hardware. I think that's really, really important. We go into really, really key detail with our hardware products. With Axon Flex, we really focused on the mounting options. How do we make sure this is something that's going to be seamlessly integrated with their uniform and have these integrations where it can have the auto triggering? With Axon Fleet, we're removing the complexity of the hardware where it's a very simple-to-install system. We've pushed all that complexity into the software. What's really amazing about that is as we launch new hardware versions of that, we don't have to rebuild the platform that we've built. We have this great hub in the car that runs on any MDT. That's the computer that they have in the car. It's called Axon View XL.
We can seamlessly upgrade the hardware and continue to use that same software that we've developed. We've been really just surprised at the success of Fleet. There was pent-up market demand for an integrated, elegant solution in the in-car space. This is a product where we are today, we are in market grab mode. I think over the next few years, you're going to see us take market share. Our goal would be to become the market leader in the in-car space. I think our unique advantage is the tie into this ecosystem. It's really the back end with the software workflows. We have really been focused on execution in consolidating the market. We have over 187,000 users on the Axon platform today. We've built a healthy economic engine. We have over $63 million of annual recurring service revenue.
This is just the recurring software revenue on our platform. You can see this great growth. With all this data that we've built, Rick talked about the virtuous cycle of using that data to create more value for our customers. In January, we acquired two teams, Dextro here in New York City, a team in Vietnam called Misfit. We integrated these teams very, very quickly. There are already features in our products that are shipping that customers are using from these teams. We've made massive advancements in redaction. Our team actually won an event with LAPD where they were looking for a vendor to come in and show the capabilities of AI. We won this event from the DOJ. When we talk about AI, this can be a very, very controversial subject.
If you had a spectrum of what's controversial versus what's not controversial, there's a lot of implications around facial recognition and privacy. A lot of these items can be very high impact. You can imagine if you had an Amber Alert, somebody would want to unlock those capabilities. Where we're focused, the majority of our efforts today are on low controversial items. There's no one in the world that would disagree with using AI and machine learning to make processes better. We're able to speed up video playback. We're able to make redaction more powerful. Those are the areas that we have our teams working on today. As we venture out into these more controversial items, even though there's controversy there, doesn't mean we shouldn't go after it.
We've assembled an AI ethics board, where we have varying backgrounds from attorneys, we have people that are versed in ethical literacy and work with other civil liberties groups in the community to guide us on how we develop these products. We really want to make sure that we bring along all the stakeholders there. This is very important when you think about legislation that states could pass in terms of how we use this technology. We're doing this in a very deliberate way. We've built this amazing Axon platform, and the foundation of this that has helped fund the growth and really served as a unique differentiator is our weapons business. This weapons business is a great core business. Our customers have an affinity for the brand. They really love the product, and they become advocates for the company.
With TASER, we still think there's phenomenal opportunity there. We believe every police officer in the world should carry a TASER weapon, have an Axon camera, and have a seat on the Axon network. With TASER, there's still some work to be done. There's two major cities in the U.S. that don't have meaningful deployments of TASER today, San Francisco and Boston. Boston has a small trial, and recently, within the last two months, the San Francisco City Council passed that San Francisco could pursue acquiring TASER. We're optimistic that we can achieve very, very high market penetration at the individual officer level with the TASER device. To give you an example of that, in Chicago, within the last two years, we had a high-profile incident. Chicago had a couple hundred TASERs, but they weren't issued to the frontline officers.
In this incident, the officer called for the TASER seven times, and he ultimately had to use lethal force. Within weeks, there was a community outcry that said, "We need to have these less lethal use of force options on the officers frontline." We're very optimistic we can get a TASER on every frontline officer in above the high 90% rate. We want to accelerate the upgrade cycle, and the way we're doing that is we're shifting our TASER business over to service plans. This last quarter, we had 43% of the TASER business bought on a service plan, either the Officer Safety Program, which is bundling our camera software and TASER, or a TASER payment program known as TASER 60, where they can buy the TASER over 60 months.
We're very optimistic about shifting all of our TASER business, or a very high percentage, over to these service plans. We see growth in international. The same strategy that we use domestically to build out our own direct channel, we're building that out internationally, and Josh Isner's going to talk about that later. This integration into the Axon platform that Rick talked about is really key. As we look at the next generation TASERs, these are going to be even more integrated, and we're looking at offering service plans with those as well. Now we do have a consumer business. This is a single-digit business that we have. We actually run this as kind of an external startup in the company. It gets maybe 3% of management's time.
It's kind of an optionality on the same technology in the consumer market, but it's not a big focus for the management team today. Rick talked about the competitive moats. Those competitive moats, I would say, expand to the Axon ecosystem as well. As we go out and we talk with agencies about acquiring TASERs or acquiring Axon, we see this cross-selling effect that I think we end up selling more of both products, and we even create a deeper relationship with the customer as they go all in on the Axon product. We recently had this amazing show, IACP. It's the International Association of Chiefs of Police. This was the first time that we had rolled out the Axon brand. I had multiple customers, one in particular, Fayetteville, Arkansas, came up and they said, "We're an Axon customer.
We believe in the Axon ecosystem." It's very similar to somebody saying, "Oh, no, I'm an Apple guy. I have the Apple Watch." That's what the chief of Fayetteville, Arkansas, and I heard that from numerous customers at IACP. The last thing that I'm going to talk about is this new event that we're hosting, and we've done this for a couple of years now, and it's called Axon Accelerate. You heard us talk about this virtuous cycle with the technology. We also have the same effect with our go-to-market strategy, and Josh is going to talk about this more in his section. IACP is really a police conference where they're going to go and look at police equipment and potentially police policy. What we're building, we have Bret Taylor as the former CTO of Facebook. He's the CEO of a company called Quip.
He's a direct report to Marc Benioff at Salesforce, and he's really challenged us to build what would be the Dreamforce of law enforcement, and we're doing it at Axon. We bring in hundreds of customers to Scottsdale, Arizona, and it's really a technology conference in a way that they're not going to get inside of law enforcement. We bring in speakers from Singularity University and other thought leaders. When they leave the conference, they're just really awakened to all the potential of the technology. At this conference, we get to showcase the entire Axon platform. I'm very confident we're going to get high percentage of everyone in the country on the Axon network.
I'm going to close on our really big focus is we want every police officer in the world to carry a TASER weapon, have an Axon camera, and have a seat on the Axon network. The most confident of all three of those I am is that we're going to get everyone in the country on the Axon network. With that, I will take any questions before handing it off to the next speaker. No questions? All right. Next up, we've got our head of worldwide product, Todd Basche.
Hey. Thanks, Luke. Just a couple of things. A lot of people ask me why I came to work at Axon. I've been in high tech in Silicon Valley for many years, worked at a lot of great companies like Dell and Apple, worked with Steve on the iPod and the iTunes suite. It's fantastic to be able to work on consumer products that you put out there and tens of millions of people use, and it's pretty gratifying. You talk to all your friends. It's really nothing like waking up every day and figuring out how you take everything you know about high tech and put it into something that makes a difference in people's lives every day. I could go work on the next Fitbit, but here's a chance to really help make society a better place and make an impact every day.
We really think about not resting until we've made all the products that law enforcement is using to be as fast and as powerful and as intuitive to use as all the consumer products that we know and love. That's what we think about every day. Areas for improvement. We've spent a lot of time doing voice of the customer, we'll talk a little bit about that, and reducing the bug rate at launch by some beta programs, and I'm going to talk a little bit about that from an organizational standpoint when I came in and did an assessment. There's a number of things that we've really upped the game on from a product development standpoint, all the hardware, all the software, all the program management. We strengthened up the team right away. You saw that we hired Jason from GoPro.
That's been a huge thing because cameras are very fundamental to what we do, so we've begun to hire some serious camera expertise. We've brought in Tomi, who was working on cameras up at Nokia, and we're also working to pull together a whole bunch of Nokia folks to get in a very intense focus on cameras, being able to expand that out for all the in-car work and on the body work. Wes Whalen joined our team from Tesla. He's heading up all the definition of the in-car work as well. Robert Mandrou joined us to do reliability and validation, making sure the products are rock solid before they go out. That's obviously super important. He headed that up at Apple for a long time on the iPad, and then he worked at Shure, and he's also now on the team.
These are kind of some of the things that we wake up every day and think about. Steve used to talk about making products insanely great. We try to focus on doing a small number of things and doing it well. Every day, we sit in meetings, and people propose lots of other ideas. We really try to focus every day in the product development standpoint. It makes it hard because you have to make tough choices every day to make sure you're building exactly the right product. We have this notion of the voice of the customer, where we go out and we do customer visits for everything we do. Everyone in my team has been out. There's people right now today doing ride-alongs with police officers. They're in the cars. They're in the police stations.
The obsession with the customer is really key to what we do because it's not a Fitbit app where everybody knows exactly you're your own customer. Here, it's how well you understand the customer. Through ride-alongs and agency visits, we spend a lot of time. We collect all that data back up. We actually do surveys with the officers, bouncing different ideas. We put mock-ups in front of them, hardware, software, weighted models, software user interfaces, and then we boil that all down, and we're putting that all into a centralized database that everybody will be able to draw on. That folds into the next step in the process, which is the product requirements docs, where the product managers put the detail of every single bit of the product, how it's going to work from a hardware and a software standpoint into a PRD.
In that PRD, we have boiled down everything into what we call the MVP, which is the minimum viable product. That's focus. Focus on the number of products, and within each product, we completely drill down and focus on what we're going to deliver. We have substantially upgraded the reliability and testing and validation of the product, so we know when it goes out, it's solid. Another philosophy that we have is everything is end-to-end. The teams are set up into squads, so there are creative designers working on a product. There's hardware designers working on the product, electrical designers. There's the mobile app people who are working on their piece of it. There's the cloud-based software. When we think anything, we think end-to-end solution because we believe that's what we do better than anybody in the world. We build these end-to-end solutions for public safety and law enforcement.
Try to make it as easy to use as consumer devices. We've hired subject matter experts. That's been a big step up from where we had been previously. We brought in a number of people from camera space to be able to figure out how to build the cameras, the lenses, and the optics to really optimize it for the law enforcement. Specifically, we've brought in wireless experts for Wi-Fi, LTE, 5G, 4G, high-priority networking. We've put in place the Axon product lifecycle, which is all about conception, planning, design, ramp, validation, ramp, and that is all about every step of the way in this phase gate, there are tests, there are criteria, there are checklists, there are groups of people reviewing everything. No product moves from phase to phase until it passes every single aspect of APL.
That level of rigor is the rigor that we've used at other larger companies like the Apples and the Dells of the world, and we've brought that rigor into the product development. We also try to balance the product development with profitability, trying to do everything that we can from a cost standpoint. Just taking a quick look back at 2017, I'm just going to go through this quickly. From a software standpoint, we delivered redaction that you've seen a quick video of and I have a demo of. We delivered the Multi-Cam Playback. This is all the cloud-based products that run. We came up with new evidence sharing, new case controls, the public defender portal, which is just like we work with prosecutors. We've got a portal that is set up just for defense attorneys, and we've come out with public evidence submission.
We're going to talk about that in a minute, and two-factor authentication from a security standpoint. On the hardware side, we launched Fleet. As we've talked about, that's been a great success. We came out with Flex 2, which is the point-of-view camera. We have the body cameras and the point-of-view cameras. We came out with Signal Sidearm, which is the product that when you draw your firearm, it turns on all the cameras in a radius. We came out with body camera streaming with the Body 2 and Fleet Offload with Wi-Fi. There's a lot of products in the pipe. There's a tremendous amount of new products coming for 2018 behind all these, and it's a very robust pipeline that we've got set up and built out. A quick case study just to touch on some of the things that we've talked about.
When we're doing Fleet, when we're doing Signal is the device that fits on all the holsters. Today already, if an officer pulls their TASER, it automatically turns on all the cameras. There's no, "Oops, I forgot to turn the camera on before I TASER somebody." But there's been these unfortunate incidents like in Minneapolis, where there was a shooting, and the camera got turned on late. Signal is a device that connects to any of the holsters that they may have. When the firearm gets pulled, there's an inductive sensor that automatically turns on all the cameras in the area, so the cameras are on before any shots are fired. Super important technology. We spoke to over 60 agencies in the voice of the customer that we collected up that went into the speccing of the product.
We did a beta program at 15 different agencies, where we had 1,300 units in the field. We do real-time health monitoring on all those units in the field to know have they been deployed, what kind of errors they're getting, how often they're being used every day. We're checking in with the customers, of course, and getting their feedback. But we've instrumented every device that we ship so we can pull back information every day and know how well it's doing. We do that health monitoring actually on every one of the body cameras and the in-car cameras that we're doing as well, where we're doing continuous health monitoring on all those products. We can tell if a product is running into an error and say, "Swap that particular camera out." So our customers always know they can count on the products to work.
We talked about the thing that we feel really structured about is we do hardware plus software, but we make it so it's a seamless system. We did that when we did the iPod and iTunes, what was magic about it was you plugged it in and it just worked. That's what people love about our solution. It's an end-to-end solution. We've thought it all the way through, from the cloud to the hardware and the mobile apps. Axon Citizen, you may have heard a little bit about. This is a product that I'll tell you a little bit about the story. We went out and interviewed over 20 different agencies and said, "Do you think there's a need to collect evidence from the public?" Every hand went up. In every agency we talked to, they all said this is a major issue that they have.
We then went out and surveyed people and said, "Do you think you have any evidence on your phone that could potentially be useful in a crime situation?" 20% of the people said, "I have evidence on my phone. I was there. I caught a picture of something." Everybody walks around with their cell phones today, it makes a lot of sense. We then said, "Well, would people be willing to give their phone number to a police officer?" We went out and we surveyed people again. 65% of the people said they would. Now, at the recent IACP show, I probably was with, I don't know, several hundred police officers.
When I asked them what they do today in gathering evidence, if they come up to a scene, whether it's a car accident or a crime scene, break-in or a murder, they say, "I ask, 'Can I take your cell phone? I'll give it back to you in a week.'" You can imagine how well that's received. With Axon Citizen, afterwards, if you want, I can give you a one-on-one demo of it, the officer would walk up to you if he would say, "Hey, do you have some evidence that you think is meaningful?" If you say yes, you show it to the officer on the phone, the officer says, "Can I send you a text? Give me your phone number." You send the text, I'll walk you through this, what pictures and videos would you have to share?
The person gets a text, all they have to do is pick the videos from their phone, they hit send. That request actually came from Evidence.com. It didn't even come from the officer's phone. This is all cloud-based. Those pictures are automatically tagged with the ID, the incident, the location, the GPS, everything about that, sent up into the cloud into Evidence.com. Instantly, the person doesn't have to obviously give up their phone or any of that. We have the individual invitation that we're just talking about. I'm going to show you some of these tools, this is the whole package. When we come out with something, it's a complete end-to-end solution. Individual invitations. The officer clicks Citizen on their Axon Capture on their cell phone. It sends.
They add the categories that they want to connect it to, missing person. Invitation is sent. It goes to the citizen's phone, where they get a link. It's all you have to do. This link lets them pick files or videos. They pick it, and they're done. The evidence immediately gets sent up into the cloud. The evidence is immediately available for officers to look at it from a law enforcement standpoint, and it's tagged with a map, and it knows everything about the photo and the location. People can triage the photos. If somebody sends them something and it was a picture of their dog, they know that it was not valid. It's easy for them to do that. We also have, that'll be shipping in early next year, the community portal version, where for bigger events, obviously things like the Boston Bombing.
During the Boston Bombing, Boston kind of just stood up their own server that they did really quickly. They got hundreds of thousands of photos, crashed the server all the time. What we do, because we're a big cloud-based Azure supplier, is there's a click in Evidence.com that says, "Create a community portal," and it gets set up. Then when the people go, on the news, they'll put the URL that says, "Go to this if you have any information." Then when people submit the information through the portal, it goes in, and now there are triage tools so people can look through hundreds of thousands of photos, sort them down, see photos that are common, see photos that are grouped around the location. Quickly and easily manage all the data that comes in.
The servers have been set up at Azure, so it's never going to crash from that standpoint. With one click, any city, any agency can set up this kind of community portal. Every time we hit five down. Redaction is broken. The way redaction works today is people sit and they draw little squares around the face, and then frame by frame as the person moves, as the person walks, you have to go remove that around, stop and do it again. Stop and do it again. It takes hours to redact a video. With our smart AI and our redaction, you mark the face once, and then as the person moves, it goes through the frames, finding the faces, finding the arms, finding if you had a tattoo, and automatically tracking. In real-time, that video gets redacted automatically. It's just been fantastic.
If there's a crowd and it's skin blur, literally with one click, it detects skin color, the skin tones. We're also going to be shipping next year with AI, the ability to automatically detect things like, inside the police car, so you don't see any of the MDT videos or any other screens, personal screens. That's the power of the AI that we've built into the system. That redaction is just one use of it, but I think it's a really powerful use of it. Redaction is a huge thing, especially for all the FOIA, the freedom of information requests that we get. That's it for me. I'm just going to end on one note. For 2018, what are we focused on? We obviously don't talk about products that are unannounced, but these are the big themes.
Take the AI that we've been developing with the two companies that we bought, embed that AI into all the different places in the product line. There'll be AI-oriented products, but also you'll see bits of AI showing up, things that really can't be done any other way except through machine learning, showing up throughout the product line. Continue to evolve the DEMS as a platform. Digital evidence management has a lot of aspects to it. We started with just the video from the body cameras and the in-car cameras. We're expanding that out to be more of a full-fledged DEMS in 2018. There's an area that we've had a lot of voice of the customer around, something called compliance, where it's how well are my officers using the body cameras? On average, how many minutes of video do they take for a traffic stop?
How does that compare with everybody else? Are they really turning them on when they're supposed to be turning them on? Are they keeping them on? We've paid all this money to put the body cameras in. How are they being used? There's a bunch of tools and training that we're putting together for 2018 for that. Continuing to ramp up and come out with new versions of the in-car Fleet systems and really make a big step in the evolution of our connected devices, in 2018. Those are the big themes for us in product. Questions? Yes, sir.
Hi. Thank you. In talking to some of the end users out there, some of them yours, some of them not yours, it seems to me that their biggest problem is with the time that they're spent chained to their desks and their computers doing redacting. Are you saying that the redaction software that you have is going to be completely ready for it will be a big part of 2018?
Yeah.
It seems to me that that could be the single biggest workflow management piece of revenue that you have for next year.
What you saw there is definitely ready to roll, is ready to ship. With enhancements, in Q1 that'll be shipping, then we have some other AI-oriented enhancements on that. That's definitely ready to rock. We look at each one of those pain points. We go in and we sit with agencies and see where the workflow bottlenecks are. We definitely surfaced that same thing you just pointed out, that redaction was taking forever. Yes, sir.
I heard it said that natural language processing was something out into the future. Can you tell me when you think it actually will be helpful and possibly a very important part of what you guys do?
Sure. I think 2018 is when we'll be building on all the machine learning that we acquired in 2017. I think 2019 is a good time to be looking at the natural language processing and how that fits in. There's a lot of fundamental building out the machine learning pipelines to get them to do the law enforcement ontology. Everything is different. Google and Amazon are built on an ontology that's based for consumers asking certain questions certain ways, but we have to build everything that's totally specific to law enforcement. That's our added value is the law enforcement ontology for the AI. I would say 2019.
If I could jump in here as well. Just to set expectations, it's not like one day we click it and it's fully automated. I think you're going to see pieces of how that AI comes together in sub-features over time. Just don't want my AI team over here hearing, we just committed them to the full automated system in 2019, that's when it will start.
I didn't think I said that.
I just wanted to clarify.
Did I commit to that? That's funny that you think I'm over-committing.
You heard it first.
Usually it's the other way around. Yes, please.
On one of your last slides, you said Digital Evidence Management, increasing the features and functionality, that would be one of your targets in 2018. Give us a sense of where you are today versus some of your competition in the broader DEMS world, what are some of the features that need to be added there and kind of timeline for that?
Well, I don't want to talk about things we haven't shipped yet. What I would say is when customers come into the booth, or people come into the booth who are prospects, I was in many meetings at IACP where people came in and they wanted to talk about Fleet. They had been around to everybody else's in-car system, they came in kind of pumped up saying, "Hey, we want to talk about your in-car system, but these other guys, they've got this kind of pixels and that kind of zoom and this kind of ability to do this with the front and the back." We said, "Yeah, okay. Maybe some of their speeds and feeds are a little better on the hardware piece.
End to end, what do you do with the video once you got it?" They said, "Well, what do you mean?" I said, "Well, you're going to get it in, then you want to link all those videos with the body cam videos." They went, "Wow, we can't do that." We said, "Well, you're also going to want to share it with prosecutors and defenders seamlessly be able to, with one click, share this stuff. You don't want to be burning DVDs." They said, "Oh, we're burning DVDs today. Yeah." I said, "Well, aren't you going to have to redact a lot of that video?" They said, "Yeah." We showed them the redaction demo, they stopped talking about all of, was somebody 10 pixels better or something on the camera piece.
It's that end-to-end solution that really changes the game. There are definitely places where I think we are fantastically ahead of everybody in the DEM space, but when we talk to the bleeding edge customers, the customers that push us, the ones that really keep advancing us, they say, "We'd like you to do a better job on a couple of areas." VOC-wise, those are the areas we're beefing up. I'd love to be able to talk about it, but we're planning it right now. Any other questions? Great. All right. Thank you. Yeah.
Great. Thanks.
Good afternoon, everyone. Just a process note. I think we're going to have a 10-minute break right after my session here, so I'll try not to go on too long so everyone can get something to drink, go to the restroom, that kind of thing. I want to talk a little bit about Axon Records and the product that we're building today. I was thinking about this, was talking about it with my family recently, and my father-in-law started work at J.P. Morgan back in 1970 when David Rockefeller was the CEO. I asked him, "What was the process like for you back then? How did you do your work?" He said every time that they'd do a transaction or make a trade, he would carefully write down all the details of that on a piece of paper.
A secretary would sit next to him, recalculate all the numbers, write it down again in something that looks very much like this, that would be duplicated and passed along to the other party. That would be routed within their branch and sent up to David Rockefeller, ultimately, who was also looking at a whole bunch of paper and trying to make sense of what J.P. Morgan is doing in 1970. I thought that was actually very instructive because obviously J.P. Morgan and the banking community in general has moved way beyond the age of paper. Hopefully, most of you have moved beyond the age of paper.
As Luke mentioned, with 23rd Precinct and the stacks of boxes of paper that they still have, this document right here, which is actually a police report, and it's kind of hard to see, but it's from August of this year. They've got a little bit of computer effort involved. They're able to at least type out some of that, but it's obviously still a very paper-based system. What we hear a lot as we go around and talk with agencies is that they're being inundated with that paper and with the workflows and the processes that surround that. Report writing is a huge and important component of policing.
Every time a police officer interacts with a citizen, they need to document that in some form, and then that document needs to move through the agency, and ultimately, if there's a prosecution, it needs to be passed over to the prosecutorial and judicial systems. We kind of came upon this problem from the media side of this with photos and audio and videos and Evidence.com, but we realized that there was an enormous opportunity here as we look at the market to take law enforcement out of the age of paper, the same way that the investment community and many other places in our modern economy have moved out of the age of paper. In terms of the way that we think about Axon Records and what it can do for an agency, we think of really three goals that this software should accomplish.
The first is putting officers back on the streets. Unlike all of us here who kind of make their daily work involves looking at laptops like many of you are doing right now, that is not what police do. That is not what they've signed up for. That's not what agencies and communities ask of them, and yet they spend hours a day staring at a screen, typing, and trying to route paperwork through their agency. The second thing we think about is how can we help agencies solve and prosecute crime, whether that's searching for historical data that they should have about someone, a person, an object, a vehicle, a location that they don't have, whether that's routing and sharing with a prosecutor the way that we do with Evidence.com today.
Those are very inefficient systems, if we can help alleviate that and improve that, we think we provide a significant customer and agency value there. Then lastly, and potentially most importantly down the road, is how do we prevent crime and other incidents from occurring in the first place? NYPD really was the forerunner of all of this as it's happened in law enforcement with their CompStat policies that they put in place back in the 1990s. Pretty much every agency in the country now has some process to try and do a CompStat analytical roll-up model to look at what did the last two weeks look like? What do we think the next two weeks are going to look like? How did that compare to last month? How did that compare to last year?
That helps them reallocate their resources and more efficiently place officers where they need to be. Right now, that's an incredibly manual and time-consuming task. As we got into this, a lot of this is, as Todd alluded to, as Rick and Luke alluded to, a lot of what we do in product development is stay close to our customers, stay close to our users, and understand their pain points, and then build technology and products that help alleviate those.
A lot of this are things that we saw out there as we were working with Evidence.com and deploying body cameras, we said, "Huh, actually, it seems like you could really use something a lot better than this, than what you have today." The first thing is, from the frontline officer perspective, when they do have software, it's really hard to use, it's hard to understand, it's hard to learn. I was speaking with an officer recently who said, "You know what? I feel great because after about six months, I get really familiar with my RMS." That to me was mind-boggling. That means that software is not developed well. That means that it's not meeting the needs of modern technology as we expect it as consumers or professionals in other aspects of our life. This is not, frankly, it's not rocket science.
The good folks at Intuit have taken the most complicated tax code on Earth, maybe potentially a little bit less complicated here in the next couple of months, but nonetheless, very complicated, multiple thousands of pages describing every element of the tax code and turned that into an experience that allows anyone to go in, to start their process, to be walked through, to be asked a number of simple questions, to highlight where they are in the process, to save their progress, so if they come back to it later, they can continue, and really make that workflow very seamless and very positive or at least moderately positive for people who are saying, "I have to fill out my taxes." Second thing we see, it's a little bit hard to see on this screen, but this is a photo actually from a top 10 city in the country that I visited recently, and it is the records department where they store all the paper records that they still keep.
Top 10 city in the U.S. This looks very much like that end scene from Indiana Jones where the guy is pushing the cart into the warehouse and you know for sure that thing will never be found again. That's very much what is happening with paper. When you put things down on paper, obviously that data is useless. It's hard to find. You can't solve and prosecute crimes if you can't figure out where it is. There's obviously no search function built into a filing system. That's obviously a huge challenge for agencies.
As I alluded to, at the chief and leadership level, trying to pull all of that data together to understand what is happening in my agency, what is happening in my community, what is happening with my officers, so I can proactively take action rather than reactively say, "Oh, I read about something," or, "Someone pushed something to me," or, "I heard something about the news. Now I need to go figure out what's happening." The other thing I'd say is this is not just about user experience.
Denver PD had their inspector general did a time study to understand how much time they spend working on administrative tasks, and extrapolating from that, you can see that if you reduce that time just by one percentage point, just one percentage point, you're effectively able to put 15 officers back out on the street for the amount of time that you then save. We talk with agencies, we highlight this. There's a very positive reaction from them to be able to say, look, I can deploy something and then reinvest in my agency and in my community without having to go to a council or to a mayor and ask for more personnel and more personnel, especially when those people are already doing a ton of paperwork already.
The heart of the problem as we see it is that the expectation, probably many of you still have this expectation, is that when someone joins a police force, they are out there engaging with the community, talking to citizens, responding to 911 calls. That's the expectation of our society. That's the expectation of chiefs and leaderships and agencies. That's frankly the expectation of officers themselves when they sign up. They see what we all see in the media and say, "I want to go do that noble, amazing job." The reality is they spend hours and hours a day typing up what should be no longer manualized, what technology should be able to do for them. Our goal is, frankly, to eliminate the paperwork entirely and eliminate the report writing process entirely and allow technology to do that automatically for officers.
When we do, if you're spending up to two-thirds of your time administratively on some of these things, like many agencies are, you're able to triple the number of officers back out on patrol. That's what we think is a transformative element of how we're building this product and the effect that we can have in law enforcement. Let me just show a little bit of the vision of where we're going here. It's a little bit longer term, but I think it helps frame what it is that we're trying to do.
Dispatch to 22 Bravo, report of motor vehicle theft, 2281 North 48th Street.
22 Bravo, can you send me the stolen vehicle that's holding in queue?
Complainant is Shay Lee, 37-year-old female.
Officer Swanson arriving on scene. The victim's demeanor appears to be calm. There are no bystanders in the area. Hi, ma'am.
Hi.
Did you report your vehicle stolen today?
Yes, I did.
Okay. What was your name?
I'm Shay Lee.
Shay, do you have an ID on you?
Yeah.
Perfect. Thank you so much, Shay.
What happened today?
I got here about an hour ago, and I parked right here. When I came out, my car was gone.
It was gone. What kind of vehicle do you drive?
It's a 2014 silver Honda Civic.
Okay. What's the license plate on that car?
G-O-G-I-R-L.
Go girl?
Yeah.
Okay. I just have a few more questions for you so I can complete my report. When you parked, you said it was about an hour ago.
Did you notice anybody suspicious nearby?
Well, there was a group of guys gathered on the corner, and they were kind of making obscene comments as people walked by.
Did you recognize any of them?
No, I hadn't seen them before.
Okay. No one has access to the vehicle besides you, correct?
Yeah. No, just me. I only have two keys, and the other one's at home.
You don't have a roommate who might have borrowed it?
No.
Okay, perfect. Are you current on your car payments?
Yeah, the car's paid for.
All righty. What's going to happen is that your vehicle is going to get entered into a database of national stolen vehicles. If an officer comes to find it, he'll know it's stolen. It'll also get a BOLO out in the area, so local officers know to look out for the vehicle.
Okay. All right. Now, I don't want any crazy gang members coming after me. This video is not going to be shared anywhere?
No, of course not. It'll be within the department, so detectives and sergeants in charge of the case are going to look at it, and then it'll also be shared with the Concerned Citizen Committee. Before it's shared with them, your personal information is going to be redacted, so none of your information will be released.
Okay.
Okay, perfect.
Thanks.
You'll get an emailed copy of your statements for the report just for your records.
Okay, great.
Perfect.
Thank you.
Thank you. Officer Swanson leaving the scene. The victim's demeanor appears to be normal. I believe this to be a valid vehicle theft. Please forward it to the appropriate detectives.
Attention all units, be on the lookout for a 2014 silver Honda Civic, license plate G-O-G-I-R-L. Last seen on 48th Street. Possible gang involvement.
A couple things I'd like to say about that. One, we show this with agencies. The line we often use is, "We're trying to build software so good that your officers don't even have to use it." Nowhere in that video, obviously, was there a report writing software experience because all the technology that we've built, that Rick and Todd and Luke talked about over the last two hours or so, all that is already infusing that process and generating that report automatically. That's really compelling for agencies who know how timely and time-consuming report writing is. Second, not all of that technology is in our products today, but all of that technology is in the world today. If you take a picture of a check, your bank knows how to cash that for you.
If you upload a photo to Facebook, it knows who you are and who your spouse and your friends are. If you want a push notification from ESPN every time Eli Manning is in the red zone, if that ever happens, like for the rest of the season, ESPN can do that for you, too. That's the kind of thing when we say, "Well, how do we take good technology that's already out there and build that into our experience and bring that to law enforcement?" And then the last thing I think, hopefully it's quite obvious, is everything that we're doing when we build Axon Records is predicated on the use of other Axon technology.
That opportunity to have in-car cameras connected to body-worn cameras, connected to Evidence.com in the cloud, connected to a report writing system, connected to a dispatch system, the transfer of that data all through those various products and the connectedness of those in a single network makes this a very powerful experience and a very valuable experience for agencies. I'll just go quickly through some of the highlights of where we are today and how we think about the product because that vision is a few years out, as Todd just alluded to in answer to the question there.
In terms of putting officers back on the streets in the short term, what we're thinking about is how do we build a user-specific landing page experience so that if you don't have a report writing system that's automatically doing it for you at the very least know the things you need to do to complete your tasks and get back out into the field. Similarly, incorporating video into the heart of the record. Whether you're the officer writing it and want to go back and understand exactly what a witness or a victim said, or if you're a sergeant or a captain who's reviewing it and you want to get directly to the truth of the matter, you can view that even as you're reading that written report. In terms of solving and prosecuting crime, this is what we call our Facebook profile page.
For all the folks who are involved in law enforcement, many of them are repeat offenders. They tend to have significant histories. That really matters to an officer as they approach an incident to be able to know, does this person have a history of violence? Does this person have a firearms permit? Has this person been a victim or a witness of another recent event that I should ask them about? All of those kinds of things. Similarly, how do we route this effectively within an agency and then share it beyond that agency into the prosecutorial and judicial system? We've already essentially primed our market to understand this concept through our use of Evidence.com and the prosecutor portal that exists there. We're just taking it a step further and adding in all of the report routing and sharing capabilities that are needed.
Lastly, preventing crime and other incidents from happening. In most of our experiences talking with agencies, the analytical views that they're looking at right now are very straightforward, very simple. It's a map view. You're filtering by district or beat, by activity type, by time of day. We're not trying to replace high-end tools like Tableau or Power BI, but we do think that there's an opportunity to bring in straightforward tools so that everyone in an agency can get a look at what's going on in their agency. Similarly, being able to predict some of the trend lines and history of various types of events, so that as you look at those, eventually as we start to layer in some of the AI capabilities, you can start to forecast that a little bit more effectively.
You can start to reallocate where you're putting your patrol officers, what time they're there, whether you need special units like crisis intervention, canine, domestic violence. All of those things matter enormously to an agency. Enabling that set of decisions with effective software tools, to us, is critically important. Last thing to talk about in terms of how we do this, as we're in the middle of developing this product, we use this program called the Axon Technology Partner Program. It's part of a broader approach that we call Axon Insider. It allows agencies to come in and give us great detailed feedback about the products that we're building before they're completed.
That makes sure that not only do we get their buy-in, but we learn from them and from their experience, so that when we do bring the products out to market, they're of high quality, and they meet the needs of the agencies that we're targeting. We've got a couple large agencies that we're already working with on the Axon Records product, including one that we were down with earlier this week, showing them a version of our software, allowing them to write some simple reports in it, getting their feedback. It's been great process to prove out the validity and the work that our team has already done. With that, I will take any questions, we'll break for 10 minutes after that, I believe.
Questions? Oh.
Sorry.
Sorry. Thanks.
Does every major agency already have an RMS, and you would be upgrading to your system? Or is there a lot of white space where agencies don't even have one?
Most major agencies have some version of an RMS. What they categorize an RMS can be essentially a Lotus Notes or even a Microsoft Access database with a simple UI in front of it, but they do have them, yeah.
One more, and then we'll break. Thanks.
Do you anticipate there being a way to port data over from an existing RMS, or do you see it likely that they'll use two RMSs and sort of slowly transition over time into the Axon?
It's a great question. There's a lot about a records experience and how agencies use them that is not fundamentally product-oriented, and that's one of the major issues that they have. As we've built out this team, we have what we call an integrated product and deployments team that is all sitting together and working together to do exactly those kinds of things. Some agencies choose to do it. Some agencies don't choose to do it. It's a time-consuming and costly process if you do, then you get the advantage of having deeper historical knowledge. It's really as we work with various agencies, we work with them to understand what do you need, how much of it do you need, and what format do you need it, and then act accordingly on an agency-by-agency basis. Sir.
Oh.
I believe most RMS systems work in tandem with a CAD system, the report starts off from the CAD system. Are you guys building a CAD as well? Secondly, how do you convince agencies to change the process from working backwards to forwards as opposed to starting with CAD today?
That's a great question. To answer, there's a precursor to that, which is as we're building out this, it's absolutely going to be very well integrated into the CAD systems that they have today. The large agencies we're working with today know this. They have a separate CAD system. We work with them to say, how do we extract the data that we need and port it into a records management system so it's used effectively? Down the line, I think CAD is absolutely an area that we are looking at and figuring out how to invest in appropriately given our overall goals of growth and managing that with some operational rigor.
Great. Awesome. It's 2:51. If you guys could just be back here by 3:01, we'll continue.
Sure. Perfect. Thanks for having me back. My name's Josh Isner. I'm the Head of Sales at Axon. Been at the company for about eight and a half years now. Very excited to be back at Analyst Day, and great to see all of you again. Today, I'm going to walk you through our domestic CEW sales strategy, our domestic Axon sales strategy, say a few words about international at the end.
Each business is a little different. We're built on the same sales principles, but we approach the market a little differently with each business. To start with domestic CEW, here we're really talking about continually growing by double digits while trying to lower our cost of sale and take something that's already very profitable and make it that much more profitable. This story really started in 2011. We had pretty much a distributor in every single state that we sold in that was taking about 13%-15% right off the top of these deals by selling in. These distributors were focused on selling a lot of products, we didn't feel that we had the mind share with our distribution force that we would have liked. We started to shift from a distribution-driven channel to a direct channel.
You'll see, in 2011, dominated by distributors, now we have three left in the United States. The reason they're left is they're good partners, they carry inventory, and they sell through it quickly. We view them as a force multiplier for our business as opposed to just an order-taking function. Now, there were a lot of benefits in going direct. The first was we were focused on messaging our products and our value proposition. Some of these distributors carry literally thousands of products. They carry boots and guns and bullets and vests and so forth, and TASER was just one product that they sold. When we put our people in front of the customer, they're really focused on selling our products and maximizing the value both for the customer and for our company. We've also increased our coverage.
We feel like we own the customer relationship now as opposed to having a middleman in between it, and that has a lot of benefits that we'll get into. We see better warranty and subscription plans attach rate as well. As we sell more of these things like TASER 60 and Officer Safety Plan, which we'll talk about in a minute, our sales channel is now set up properly to be able to sell in those offerings to our customers. This really tight customer relationship really leads to this virtuous cycle across our business where we have great marketing to market to our current customers to get them to buy more, great training to enable customer success and high usage of our products.
We really feel like now that we've got this channel set up, we can really start to introduce new products every year and have success selling them into these same customers. The results have been very positive. Since 2011, we've grown, this business about $135 million, and that's a projection for the rest of 2017 here. We're still seeing double-digit % growth. This was a business where generally there were a lot of questions, even in 2011, 2012, about saturation. Like, are we hitting saturation in our domestic weapons market? We've shown that we haven't, and we still don't feel like we're even close to that point at this point in time. We still feel like there's plenty of room to grow in that business.
As we looked at and we talked a little about profitable execution in this space, we recognized an opportunity to shift our sales force for 2018 and lower our cost of sale. This year and in past years, we've had 3 different levels of sales reps. We had a strategic account level, which is the biggest county, city, state police in the country. Then we had a mid-level tier for sales reps, and then we had telesales, handling 1 to 99. We actually saw telesales has a 60% attach rate on our plans. These folks over the phone are doing a fantastic job selling plans along with hardware.
Next year, we're going to bring their line size up, and we're going to optimize our outside sales force to keep them focused on the biggest deals, and then have this super profitable engine in telesales servicing customers 150 officers and fewer. Our vision is still a CEW on every officer. We believe we can get there, and the vehicle by which we get there are subscription plans, and I'll give you two quick examples. First of all, we have the Officer Safety Plan, which is where we pair a camera and a TASER together in the same license. This is really compelling for our customers because they can essentially individually issue a camera and a TASER to every single officer on the street. This is compelling to us because if there weren't this option, we think a lot of customers would still be sharing weapons.
Since cameras are individually issued and the TASER now comes with the camera, it's a really good way to get these agencies up to full deployment levels. TASER 60, similar concept, a little different way of getting there. Here we take the upfront cost of the weapon and spread it out over 5 years. Due to our contract language, we're able to recognize the revenue upfront for these weapons. You turn an agency that's looking to buy 200 weapons a year for 5 years into an agency that buys 1,000 weapons on day one, introduces that line item into their budget over the next 5 years. At the end of the fifth year, they're in a position to keep paying that operational budget line item while upgrading all of their weapons.
It really condenses that upgrade cycle as well as allows agencies to get to full deployment faster. Switching gears, we've also got our software and sensor segment in the U.S., which is our Axon sales business. Here it's really about marrying up an awesome sales channel with a best-in-class product, and the team's really done a good job executing in this space. One of the things we realized early on was the top 1,200 customers in the United States, by line size, so that's agencies over 100 officers, they constitute 70% of the total number of police officers in the United States. Whereas there are 18,000 agencies, and it's really easy to focus on all 18,000 of them, if we win the top 1,200 agencies, we will have 70% of the users. We've got a great telesales team to consolidate that long tail.
This has really been the pillar of our focus in this business, is winning this space. It's really worked well. We've won 38 major cities so far. We are winning more and more major counties. They were a little slower to adopt. The state police with Axon Fleet, we really feel like we're well-positioned. The growth here has been great, and at this point, there's no doubt we've kind of maintained and even extended our lead as the market leader in this space. This coverage model of really covering the top 1,200 well, it has a lot of benefits. Obviously, we're able to sell faster. We're close to the customer, we understand their needs, and we're able to sell into those customers. We get a lot of customer-driven feedback, which is great.
When we hit the market with our products, we're able to essentially expect pretty quick adoption because our customers are the ones who have designed our products. We have the ability to upsell future value-added services and software offerings. It's a great source of competitive intel. We learn a lot about our competitors from what our customers are telling us. As we began to plan for 2018, we saw that in the numbers this year, and this has held true in past years, about 50% of our bookings have come from existing customers. This is a good thing and a bad thing, right? It means our existing customers are really happy, and they continue to buy more and more of our products from us, which is great.
It also means that our sales team is spending a lot of time working with existing customers instead of going out and consolidating new customers on our platform. Going into next year, we're looking at a pretty big structural change in our sales team in this space to address that issue a little more head-on. We're going to have a small growth team of about eight to 10 reps, and their job is going to be solely to upsell our existing customers and to get them to full deployment. We're going to have a very small focused team on our existing customers. The rest of our sales team will be solely focused on new logos across the country. These people will be true hunters going out there and finding new business.
Everything we've seen when we focus reps on a very specific product or customer, it helps our results. We're going all in on this starting January 1st, and I'm really, really optimistic this is going to be one of the keys to continue to grow in this space and to continue to consolidate the market. We get a lot of questions about, "Hey, you guys have lost some accounts over the years. Why do you lose?" I take this question as a compliment, right? We've established ourselves as the market leader. People are legitimately surprised at this point when we lose deals. While we never want to lose, there are a couple of reasons why we do lose at times. The first is we do not do well in agencies that have a religious aversion to going to the cloud.
If the CIO there believes in on-premise, and that's the only way they're going to go, then there's not a whole lot we can do about that. We have had a few of those along the way. If you go back and look at some of our major city results, the ones we've lost, in some of the city council documents, you'll even see TASER outperformed this vendor in field testing, or Axon outperformed this vendor in field testing. Yet we believe the best thing for our agency is on-premise data storage. If that's the case, you kind of have to say, well, we did everything we could, and this one wasn't meant to be. The other one is when you have government bureaucracy just drive procurement processes in the technology space. These are, hey, we looked at the cost across all these different vendors.
They seem to be able to do about the same thing. They never really field test, and they say, "This one's the cheapest. That's what we're going to buy." We do everything we can to educate our customers going into these procurements about the risks of that and some of the downfalls of that. At times, it does happen. If cost is the only consideration in these deals, that is generally not great for us. We think we provide the highest ROI to our customers, but we also are not the cheapest vendor out there. Those are generally the two spaces where they're not set up well for us. The good news is each of those are becoming less and less frequent.
When we talk to our sales team, we talk to them multiple times per year about the things we want to focus on as a team, we have three very simple messages for them. Number one is block out the noise. People talk about our stock. People short us. There is negative press stories. There is positive press stories. It is a very talked-about company and product in general. Our reps' job is to block all that out and stay focused on what they are supposed to do, and they do a fantastic job of that. We are really confident in our sales team's ability to block out all that noise and worry about their patch of accounts and do everything they can to start getting those on the Axon network. The second one, this is one that is kind of caught on over the years, is embrace being the gorilla.
We are in the dominant spot in this space, okay? We are the market leader. Every one of our competitors wants to trade places with us. We have got to embrace that. They are going to come after us. They are going to try to price very low. They are going to try to do disruptive things in every agency that we already own. There is going to be negative media stories. There is going to be short interest in our stock. All of this stuff is happening, right? Our job is to embrace it. It makes us better. Competition makes us better, and we are going to continue to function at a very, very high level and disappoint a lot of people along the way that are rooting against us. Lastly, we are going to execute like hell. We have got a phenomenal sales team.
I say to our team internally a lot that our sales team is our biggest competitive differentiator. We believe in this team. We have hired in world-class software salespeople from some of the best software companies in the world, and they are executing at a very high level at our company. Our job as managers is to get out of their way and make things hum for them on the back end, and they can go out and do what they are very good at. That way of operating has really enabled pretty exciting growth across the video business. I think in 2013, we are about $14 million in bookings. This year, we will be in the high 200s or higher in bookings. We are really excited about the growth we have seen over the last four years. International is still a work in progress.
We are seeing great indicators, early indicators of success, yet we have got a long way to go here. This is how we are structured. Right now, we have three regions across the world, APAC, which is Asia-Pacific, EMEA, Europe, Middle East, and Africa, and the Americas, which is everything in North and South America other than the U.S. We have a managing director over each one of these spaces, and they run the business as if they are the CEO of it. In each one of these regions, we have what we would consider a Tier 1 market. These are markets where we have great product-market fit in our weapons business and in our software and sensors business. We have a history of success there, and we have continued interest and a large volume of opportunities.
The examples or the three Tier 1 markets that we have right now are the U.K., Canada, and Australia. We're seeing great results as a result of focusing on these markets. We've taken a lot of these direct, two out of the three of them, and we're seeing growth in both the weapons and software and sensor space in these markets. In Canada, CEW revenue has doubled in three years. We have a loaded pipeline going into next year in terms of video deals. In Australia, they have one of the most successful body camera programs in the world in Queensland, which is one of the northern states in Australia. They've rolled out about 3,000 body cams now, and now they are a fantastic reference for the rest of our Australian and Asian customers.
In Europe, the U.K., those agencies have been a fantastic partner to us. We've seen the X2 get approved this year for the first time. The London Met just did our largest weapons deal in the history of the company with us last quarter, and we're very excited about the future in the U.K. We've also consolidated the largest agencies in the U.K. on our platform after entering the market, with another competitor, Reveal Media, owning eight to 10 of those agencies off the bat. We're making great progress there, and we're seeing increased bookings and revenue coming out of our Tier 1 markets. As we look into next year, I feel great about the execution in our Tier 1 markets.
It's time to really drill into Tier 2 markets, and these are markets that we might have product-market fit in one of the two products, but we're dealing with large federal-level police forces where you might have 100,000 to 200,000 officers in one police force, but that means it's increasingly complex. There are more and more stakeholders, and it takes a lot of time to get these deals done. The example I'll use here is Italy. They're on the verge of approving CEWs for the first time, and now they're starting to investigate on-officer cameras as well. Their national police force, between their state police and their military police, about 200,000 officers. If we can win one of these deals in one of these Tier 2 markets, it just has the ability to really change the economics of our business overnight.
We're not going to over-invest because these deals take a long time to get done, and there's a lot of bureaucratic processes within each of them, but this is a place where we believe we can start to make some headway. We have the rest of the world, and in the rest of the world, we cover these opportunities regionally. In the past, we've gotten very distracted as a sales team on deals that never came into fruition. We are not going to let that happen anymore. Over the last couple of years, we've started to cover Tier 3 opportunities with kind of a segmented off sales team that is not involved in our Tier 1 and Tier 2 markets.
This has led to better efficiency in our top markets, and we're continuing to execute against some of these larger deals that just pop up as more or less one-timers every year or two. That's how we're structured internationally. We're seeing a lot of positive indicators, like I said. Last year, we did just under $50 million in revenue. Through three quarters this year, we're above $45 million. We're tracking very nicely to grow by double digits again in international, but we're still waiting for that kind of exponential curve to hit. Look, I feel great about our ability to win a lot of these large deals over time. The hard part is the timing. You're literally working with the federal government in markets about police technology, and these things just take time to come into fruition.
We're certainly grinding it out on the international side, and we feel like our best days are ahead of us in that space. Now, in about 45 days from now, we're going to bring the entire sales team to Scottsdale and have our kickoff. Here are really the themes we're focused on going into next year. First of all, it's all about coverage. When we are in front of the customer in deals, we win the vast majority of them. The deals we lose, we talked about some of the reasons why, but it all boils down to not having good enough coverage off the bat, not effectively communicating the value of our products, not leveraging our references well, and so forth.
We are 100% focused on making sure that we have great coverage in our markets domestically and better and better coverage in our markets across the world. Secondly, we're really focused on selling subscription plans. These are better for our customers, and they're also commercially better for us. For our customers, they make budgets very predictable and kind of limit the amount of one-time purchases that you need to make as a police agency. For us, they guarantee a quicker upgrade cycle. Historically, we've seen an eight to nine-year upgrade cycle across our weapons. Now, on these payment plans, it's a five-year upgrade cycle. The economics of that are very exciting, and we'll continue to focus on introducing these plans to the vast majority of our customers. Lastly, again, it's all about execution. We've got a team that is not going to lose.
We just need to enable them to be successful. I'm really confident we're on track to do that. We've still got some work to do in some places, but we've got great people, and the results have been fantastic over the last three or four years, and I really believe we're just getting started in that space. That is the plan for our channel here for the next year and beyond. Be happy to answer any questions at this point if there are any.
Hey, Josh. Your value proposition to customers has changed a lot over since 2011. Gone from selling stun guns to a whole ecosystem, hardware, software services, et cetera. Have you had to change out sales a lot to do that? Are you finding that the same person can effectively sell all of that to different constituencies inside an organization?
Yeah, great question. We have seen a lot of turnover in sales as a result of that. We move more and more to a solution sale, there's certain reps that are just more effective in that space, and we've really focused on bringing in that type of talent and moving out some of the more transactional type of talent over time.
Rick mentioned on the last call that you're moving into a profitability phase on the business. Your sales teams have been trained really and incentivized to grow as fast as possible, really with regard to margins and so forth. Are your team ready to walk away from deals that don't make sense?
Absolutely not. We are not going to walk away from deals, but we think our team is good enough to, and we have enough of a track record to be successful now that we can win those deals profitably. We believe in the power of the network, and our number one job is to consolidate the network. You look at the economics of some of our largest purchases, they're still very, very profitable. You look at LAPD and Chicago and so forth, and all of those numbers have been reported. They're extremely profitable for us. Our job is to make sure that our customer understands the value of what we're offering, so we don't have to drop prices to win deals.
We're not going to have kind of a mindset where we just can't make it work over pricing, but we're going to find ways to obtain those customers without sacrificing profitability.
Josh, the two sales forces, the 25 person and the 10 person, what are their average quotas on a yearly basis?
They range anywhere from, the low end is in the $5 million range. The high end, some of these reps will do $30 million-$40 million in bookings next year.
Anybody else? Thank you, Josh.
Okay. Thanks everyone.
Thanks. Sorry, it's going to bug me. All right. Is this on? Can you hear me? Good. All right. Good afternoon, everyone. I'm going to start with an introduction on myself. I've met many of you, but there are many that I haven't met, and I'm still relatively new, so I wanted to give a brief background on myself. I started my career at GE, spent about 13 years there and got really rigorous leadership training. It was really boot camp for leadership. I then moved to a private equity-backed company, MarketTrack. It was SaaS-based. Actually, I had three divisional CFO roles at GE. They were all SaaS, and my last company was also SaaS as well. I've got my MBA up there because it was really a transformative experience for me.
It really changed the way that I think about problem-solving and, just about my leadership style in general. I think the things that are most interesting, though, are the things on the right side of this page, most relevant to you. It's really all about point number 1. I've built and operated profitable SaaS businesses at scale. Points 2 through 5 are important. They're more tactics, I would say. Is there some feedback on this? This microphone. Points 2 through 5, I would say, are more tactics, and they're really in service of point number 1. The takeaway here is that I've done this as a proof point. At MarketTrack, during my period there, we basically doubled our revenues, and we almost doubled our EBITDA margins.
I'd say if I were to show you this slide three years ago, the things on the right would be exactly the same. If anything, I walked into my last job with a hypothesis, and I proved that hypothesis, and it's my intention to do the exact same thing here. Here are the three themes that we're going to talk about today. The shift to recurring cash flows, which you've heard about now is a bit of a recurring theme throughout the deck, expanding our TAM, and a renewed focus on profitability. The one thing that I'm not going to talk about, which I wanted to take a minute to address here, is the work that we've been doing behind the scenes in shoring up our finance and accounting function. When I joined earlier this year, the finance org was in tough shape.
What we've been doing, it was basically, you had structural deficiencies. We had folks not in the right roles. In some cases, we didn't even have the right roles defined. That manifested itself in things like the material weaknesses, control deficiencies. It takes us a while to close the books. In general, we expend a lot of effort and energy doing the basics, the blocking and tackling that world-class organizations like GE just get done, and you take it for granted. You get the books closed within a reasonable amount of time, and you have time to focus on things like forecasting and analysis. We don't have time for those things today, but we're assembling a team. I've spent a lot of time, actually my first six months, there's nothing I've spent more time on than shoring up that accounting function, and it's still a focus area.
We're not done. We still have a lot of work to do, but we're not going to really spend a lot more time talking about that today. I did want to highlight that we've put in that work. Is there something we can do about this mic? All right. Let's go into the next section. This is actually a similar slide to the one Luke showed earlier. I wanted to show it for a different reason. For me, one of the interesting ways I've heard investors think about owning Axon stock is that you've got this mature, profitable core business with an iconic product, and you also have optionality on this high-growth SaaS business. The thing about what's exciting about that SaaS business is that it's already starting to scale.
In the last 15 months or so, we've doubled our user base, we've tripled our recurring revenue base, and there's another half a billion dollars in future contracted revenues. There's not a lot of risk in that SaaS business. The thing is, we're just getting started, right? We're going into the next year with a lot of momentum, and we've got some new products on the horizon that are really going to help this take off. This is our vision for how we're thinking about the business long term. Today, most of our sources of revenue, the majority of it is the book and ship hardware on TASERs. We've got subscription hardware, which we've called out separate from software ARR. These are hardware programs that we're selling on a recurring plan.
The point here is that the distinction is that it's not exactly recurring revenue, it's just the nuance of the accounting is that you take that revenue up front. It is on a recurring plan. It's recurring cash flow, which is more important. Then 16% today is our SaaS business. Long term, we think that roughly half of our business is going to be SaaS. The rest of the majority of the other half is going to be hardware sold on a subscription or a payment plan, and there's always going to be a portion of hardware that's going to be sold in a book and ship manner. We want to maintain that flexibility for our customers.
Some of them still have capital budgets and that process, and they also have asset forfeiture funds, and we want to make sure that we've got the ability to be flexible for that. Longer term, this is how we see the business evolving. This slide. We wanted to talk briefly about the service plans on TASER, and there are a couple of questions that I get frequently, and I wanted to use this slide to address that. Today, the TASER upgrade cycle is roughly seven to 10 years. I've heard in some cases it's actually a bit longer, but if we say conservatively speaking, that it's about eight years, the charts on the bottom left show you how that play out. If over a 20-year period, if there's an eight-year upgrade cycle, there are three major buying events.
When we're talking about moving to a five-year upgrade cycle, there are five major buying events. One of the questions I get is, are we pulling forward sales? We're not. What we're doing is by moving to this five-year upgrade cycle, we're basically increasing the number of buying events in the same time period. The way this works, there are two things that need to make this work. One is there's got to be a compelling reason to upgrade. What we're doing with the weapons, we've committed to a five-year upgrade cycle on the weapons. Every five years, we're going to be releasing a new weapon. We're going to get more systemic about timing those in such a way that's going to coincide with a five-year upgrade cycle.
The other thing is we're thinking about, we're taking a subscription mindset to the product and not just to the pricing. It's one thing to offer a recurring payment plan, but the next generation weapons are going to have features in them that are tied to the subscription. If the subscription ends, basically there are certain features and functions that won't work. I think that's also a compelling reason for folks who want to upgrade on that five-year cycle. This slide I wanted to include for, I think one of the most exciting things about the company, one of the reasons why I joined is our data. What I've learned about data in my career, is that there are a couple of things. Relative to a software company, even for hardware, it's difficult.
Someone's always going to come along and build a better mousetrap, data is difficult to replicate. The other thing is time is the ultimate barrier. We've got five-year contracts on average. We have high retention rates. We haven't had a lot of history of renewals, but in the renewals that we have had, they've renewed at a very high rate. We've also had increased user engagement. These are all really healthy indicators of a good, strong SaaS business, and this is before we start adding on things like AI, some of these other tools that you've seen. What we've basically talked about is it's very difficult for someone to come in and replicate that.
When we have that data, we have access to it, as Rick mentioned, it's easier for us to build the tools and insights that are going to drive value when we have that data set. All right. Let's move on to expanding our TAM. This is now, again, just to address a question that came up earlier, this doesn't require the market overall to grow. What we're talking about is increasing the slice of the market that we address. Everyone's very familiar with at this point about the 600,000 police patrol officers, and the vision there is to move everyone to OSP. Then we've got things like Fleet and Signal Sidearm, which are adjacencies to our weapon and camera products. You can see there, it's the same 600,000 patrol officers for Signal Sidearm. Vehicles, that market we've pegged at 400,000.
Then you've got an opportunity, a transformative opportunity like RMS. Here, this 1.5 million, it's the 600,000 patrol officers. There's some additional administrative and support staff at the agencies, then there's staff at fire and public safety agencies as well. Then there's things like the enhanced services for TASER and advanced analytics for the software for Evidence.com. That's how we get to the $3.8 billion domestic TAM. Internationally, we've taken a little bit of a narrower view here, we've done that because, as Josh mentioned, we're still scaling that market. What we've done here is shown you the buildup to the other part of the $6.5 billion, the $2.6 billion. This is focused mostly on weapons and on cameras. The opportunity, this includes all tier 1, tier 2, and tier 3 markets. What we don't have here are things like Fleet or RMS.
The expectation is that we are going to be offering that eventually internationally, that's going to increase the TAM at that point in time. For now, we're focused on driving traction in weapons and in cameras. This chart we put together to show you how we're thinking about shifting the business overall. OSP at $108 a month, you can see the component parts. Today, we're at about 30%. This is showing you if we were to shift everyone to OSP, which as Josh mentioned, that's our vision, you can see what the resulting impact is going to be on a recurring revenue base. For recurring revenue for software then recurring cash flows for hardware. I think this one is important for us because this is really establishing the base.
Once we've moved folks to something like an OSP, it becomes easier to make that transition to upsell value-added features. All right. Now going into the third section. We wanted to put together a cohort analysis for you. When I've done this in the past, ideally for a business that has a five-year contract, what we would do is start with a cohort of 2012 customers and walk you through five years of actuals, how those upsold over those five years, then eventually, ideally, how that customer renewed. With us, we don't have enough data points to really do a meaningful analysis with entirely actuals. What we've done is we've taken a subset of our 2016 customers. We've taken a cohort from there.
Because those revenues are contractually obligated, and we also know what the costs are going to look like over the next five years, we've essentially modeled out what that five-year period is going to look for the 2016 cohort. You can see in the first year, the margins take a dip because it's the initial hardware that's shipped. That hardware often comes at a discount. The other thing that's in year one is the customer acquisition cost. Those costs, that's what's really leading to the compressed margins in year one. There's an upgrade for a camera, and this is a camera deal. There's an upgrade at year two and a half and at year five. In those years, you see some additional costs relative to that hardware, and you see the margin also take a little bit of a dip.
In years two and four, there's a lot of margin there because it's pure software. Over the life of that deal, even with the customer acquisition costs, it's a really healthy contribution margin. What's not on this page, but what's exciting for us is year six. When that customer renews, and we expect them to renew at a similarly high rate as what they're renewing today, there isn't that same customer acquisition cost, and hopefully, at that point, you've upsold them, and the margins get even higher. Over the second term, over the second five years, we're expecting the contribution margin to be even more meaningful. Speaking of upsells, again, this is just only on a camera deal. Here's what it looks like for that same 2016 cohort when we now start layering on some of our other products.
The gray portions of the bars here is the same revenue from the previous slide. The yellow bars represent Fleet, and the green bars would be things like some of the advanced AI features, and then blue is RMS. The economics on the Fleet deals would be roughly similar to body cameras as far as the margin profile. The added features, that you see in the green and the blue for like RMS, that's high margin, pure play software, right? Over time, this is really going to start to sing. Here's an example of one particular customer where we transformed them from a book and ship sort of lumpy one-off sale process to a recurring revenue. This is one customer from a major city that we've had a long relationship with.
Prior to 2014, they had accumulated about 900 TASER weapons, spent a little under $1 million. In 2014, they did a trial of Axon Flex cameras. In 2016, they purchased TASER weapons on a TASER 60 payment plan. This is actually a good example of what we see. Some of the customers don't make it to full term because they end up getting excited by the new products and wanting to get on something like a This one happened to rewrite the contract from TASER 60 to OSP. In 2017, they signed a five-year deal for a little over $13 million for 2,000 both weapons and cameras. It also has RMS integration. This is CAD RMS integration with their existing CAD.
This is a great example of a customer that we've had a long-standing relationship with that's bought devices sort of in one-offs, we've now transitioned. This is exactly the kind of customer that we're going to then upsell things like RMS to. This is a metric you're going to start seeing more often from us. This is more commonly referred to as magic number. What we've done, magic number, just to define that, it's essentially the change in ARR that you've added from one quarter to the next, divided by the previous quarter's customer acquisition cost. That number, if it's one, basically says that within a year, you've basically earned back the customer acquisition cost. For software companies, a good magic number is typically 0.75, so it takes a little bit more than a year to earn that back.
We're right about that today for just our software business. It's not just a software business that we should be looking at because that customer acquisition cost that's in our denominator is actually going to Get recurring hardware revenue as well. That's why we've looked at, we've broken it out for you so you can see both. Really what we look at is the sum of the two, which you can see is above one for the most recent quarter, which means that we're earning back the customer acquisition costs in less than a year. This is, I think, a good measure of our efficiency in sales and marketing costs. It's something that we're going to start, as Rick had mentioned, will be part of our external metrics that we share going forward.
We're going to talk a little bit more specifically about really getting down to the brass tacks of what our guidance is going to look like. To set the stage as to how we got there, I wanted to walk you through the difference in approach that we took in our planning. When I joined, the previous approach to planning was to set specific goals, but they were for sort of the long term without really defining when that was going to be. The budgeting itself was for one year at a time. The problem with that approach was that because you had defined a one-year budget and then a long-term goal that didn't really have a set date, it was really tough to get the two to eventually converge.
I think that's what you've seen sort of play out a little bit. What we did this year was shift that. We sat down as an executive team, and we said, "What do we want this business to look like in 2020, three years from now? From a revenue standpoint, gross margins, operating margins, what products do we want to have brought to market? How much of the market do we want to have captured? What do we want our cost basis to look like? How do we want that trajectory to look?" We started in 2020, we worked backwards. That first year, the 2018, basically became our budget for next year. That's what we've done, you can see, the slides at the bottom are actual slides we've taken from that session. We've sanitized them, so don't squint too closely.
We basically used. This was a three-day session we had where we had all the leadership come to Scottsdale, and we sat down around the table and agreed on a plan to hit that trajectory that you see in the middle bottom chart there. What that did is it forced trade-offs. It was a little bit of a new muscle for us because we hadn't really made as many trade-offs in the past, but now we started having those conversations. That's what really set the stage for this next thing I'm going to show you here. This is the output of that session. All right. Now, before I go into this, what I want you to know is there are numbers behind every one of the blocks on this page. Revenue, margin, cost. There's number, even out to 2020.
We've now obviously sanitized that because we're not going to get into that level of detail here. What we want you to know is that there are targets behind every one of these, and we're driving towards hitting those targets. For TASER, it's a profitable business. We expect that to continue to be more profitable, ultimately resulting in 40% margins long term. The thing with 2017, the issue you can see there is that other than TASER, everything else was a net investment. That's not really sustainable long term. What we've said is, all right, how do we now start to drive leverage across some of our products? We're going to target in both body-worn cameras and in Fleet, we're going to drive leverage in 2018, and we're going to get to break even by 2019.
By 2020, our expectation is that both of those product lines are going to be profitable and contributing to our bottom line. Axon Records, you can see that's still an investment. It's a really important strategic play for us. There's an investment that's required there, and while we don't want to let that be an investment forever, we do think there's a number of years where we're going to take a bit of a net investment approach, and we're going to start to drive leverage we expect in 2020. The overall software and sensors segment, you can see our expectation is that we're going to get to break even by 2020. This is what I think there's a question earlier around, like, okay, how do you reconcile the shift to profitability with growing top line? I've said it before, you can have both.
There's no reason you can't have both. If we were just a one-trick pony with one product, it's difficult to do that. That's not the case. We've got a diversified portfolio, and we have the ability to drive leverage in certain product lines and make investments in others. We're really excited about the market opportunity that we have ahead of us, and we're not going to step on that growth, or we're not going to give up deals. This is one of the reasons we've been aggressive about some of the pricing on some of these earlier deals, because the hardware, ultimately, it's not the hardware that excites us, it's the software. The bigger the user base that we have, the bigger the opportunity for us to upsell into that user base. Right? That's really how we're thinking about it.
For the overall company, you can see that the expectation is that we're going to now start to drive leverage, and become more profitable sequentially. Here's another look at that same view in a view that you're more used to seeing. This shows you for the next three to five years what we're expecting is the top line is going to grow at an annual growth rate, compound annual growth rate of 16%-20%, and our margins, we're going to expand 300-400 basis points per year. Beyond that, in the five to seven-year range, our revenue is going to expand 15%-18% top line and 150-250 basis points per year. Right? Just the bigger you get, the tougher it is to keep up that type of growth.
There are two things I want you to take away from this slide, and it's the two trajectories that are on this slide. Okay? One of them is this one here. Okay? This is continuing to grow. We're not expecting that we're going to top out. It is our expectation that we're going to get to those long-term margins that we shared with you on the previous slide. The other one is this line here. That's also a trajectory, and we've got to do work to get that turned around. We've got to do work. There's a bounce here, and we've got to do work to make that bounce. I also fully recognize that one of the trajectories is a dashed line, and one of them is a solid line. Right?
The solid line is actuals, and that's where we've really got to put work in to make this a reality. Here's how we're going to do that. This slide talks about the changes we're going to make in the business, really the cultural shift in mindset. The left side of the page talks to you about the short-term actions we're going to take to make that bounce, and the right side of the page talks about the systemic longer-term changes we're making to make sure that we stay on that trajectory to drive profitability. Some of these immediate actions. We've instituted a hiring freeze on all non-essential roles, support functions. We're still hiring in R&D. We're still hiring in sales.
We're going to basically freeze all non-essential roles for the next few months until we get to a point where we feel comfortable adding any of those back. We've also instituted a travel freeze on non-essential travel, non-revenue-generating travel on any international trips. This is something that Luke and Josh and I are reviewing if there are any exceptions. Luke and I are also personally reviewing any expenses above a given threshold. Now, we have a process in place to basically funnel all these requests. I'd say historically, if you looked at the way that the company spent money, if there was a spectrum between, on one end, Luke and myself approving everything, and on the other end of the spectrum, having complete autonomy, we were down here.
We basically had given autonomy and authority to folks to spend money as they saw fit, which was great that they were empowered, but that wasn't an equation that was working for us. What we're doing is we are overcorrecting a little bit, and we're going to dial that back and hopefully end up at a happy medium. For now, what we're doing is Luke and I are going to be reviewing these expenses until we feel that we've got the right rigor and right discipline in place, and once we've got that in place, then we're going to start to ease the reins a little bit. We've also today announced that we've rationalized some non-essential roles. There are employees whose livelihoods have been impacted as a result of this. What we did was we looked at our cost basis.
We looked at our trajectory going into next year. We knew where we needed to be by the end of 2018 and also heading into 2018, we felt that we needed to adjust that cost base, and we did that today. Some of the more systemic changes. Longer term, Luke and I reviewing expenses, that's really not sustainable longer term, but what we can do is put in things like a no PO, no pay policy. This is now going to require folks to get a PO if they're going to spend anything above a certain threshold, and that PO review policy is something that we're going to make systemic. We also are going to implement a delegation of authority.
Today, instead of folks being completely empowered to spend what they need to do, to spend what they need to spend to drive some outcome, we're now going to have delegation of authority so that Luke and I are reviewing certain things. It'll go on to the rest of the executive team, and it'll stop at some level of management beyond that. We've also increased the rigor on new product investment and pricing. We've had some really great discussions recently around our Fleet product and how we took that to market, what that pricing looked like, and what some lessons learned were from that we can now apply going forward.
I'm really excited by this because, again, this speaks to the fact that I think that we can drive leverage in some product lines while still continuing to invest in others, and then overall as a company, drive leverage. Finally, what we've done is, as Rick had mentioned, we've for the first time incorporated EBITDA as a metric in our compensation plans. This is true for both the annual bonus plans and the long-term performance shares that we grant. It's also true for every employee in the company, not just the executive team. All employees in the company are going to be incented on EBITDA going forward. As Luke had mentioned, we had a company-wide meeting where we rolled out this new value of being scrappy. There are some great stories going around about this.
What I'm encouraged by is that everyone's embraced this. Almost every employee that we've talked to about this has recognized that this sort of idea of spending to grow was only going to be sustainable for so long, everyone wants to make this shift, right? No one's happy with seeing the stock go sideways. They want to do something to help us drive that leverage. We've got buy-in across the board. The takeaways from today, as I mentioned, the recurring cash flows, we're making that shift. We're driving the install base for TASER to OSP. We want them on recurring cash flows. We want to have the ability to upsell them on these very lucrative and very valuable software products we're developing. We love the fact that we've got that data because that data we can use to build tools that no one else can build.
It puts a really wide moat around the business. From the standpoint of expanding our TAM, we want to drive upsells of Axon Fleet, of RMS, of these advanced features that we're developing. We really want to continue to make investments to expand that TAM. Again, we don't need the overall market to grow to do that. We're going to be driving organic growth through disciplined capital allocation. We're still going to be investing in products, but how we invest in those products, how much we invest in those products, we're having those discussions now, we're also starting to sequence. It's also something like RMS we're talking about, Saysa, he alluded to this. We're making investments, but we're also staging those investments in a way that's going to allow us to drive leverage in the software and sensor segment.
Finally, we've got a renewed focus on profitability, but it's a focus on profitability and a continued focus on top-line growth. I really want to make sure that that's clear, that we're going to deliver both, okay? It's not easy to do that, but if it was easy, anyone would do it, we wouldn't have this rockstar team here to deliver on that. We are going to do it. Like I said, I've done it before. I know we're going to do it again. We've also incentivized the executive team and the employees to do exactly that. With that, I will take questions.
Hi. I'm curious on the outlook for Axon Fleet and the profitability there. It took a few years to ramp up profitability on body-worn cameras, I'm a little surprised that you can get to breakeven, I think you said in, was it 2028?
'19.
2019.
Quickly on Fleet, what about the effects of how quickly the rollout goes and will that affect that pace of change?
I'll address the second one first. We're actually really encouraged by the rollout. The pace is probably greater than what we had expected, no concerns there. On the first question, we've really learned a lot in the body camera business over the last decade, and those lessons we applied into Fleet. Even within Fleet, we've had some discussions over the past couple of weeks around the size of the investment and some of the pricing strategies. I would tell you that we're in the process of calibrating and fine-tuning how we go to market with Fleet to make sure that we're going to hit that deadline.
Steve.
Hey, Jawad. On the weapons side of the business, operating margins historically used to be between 35%-40%.
Yep.
Since that time, Josh talked about taking out 13-15 points that used to go through distributors that's now direct, yet I think operating margin was just a hair under 30% this last quarter.
Yes.
I see you're guiding back to 40%, which is great, maybe some color as to what's happened in the meantime and how you get back there.
Yeah. I'd say the biggest factor that's driving that, Steve, is as a result of some of these bundled deals. When we have OSP, when we have a weapon product or a weapons sale with Fleet, that bundling inherently, there's discounts involved with that. Again, the focus right now is to grab land. Because we're doing that's going to impact the weapons margins in the short term. Long term, we're confident that it's going to get back to that 40% level.
Hi, Jawad.
Sure.
Three questions. Hopefully, they're quick. As a percentage of the employee base, how much did it go down in the restructuring here?
Can I share that?
I know you don't like to give headcount-
Yeah
I'm hoping we can give a percentage or just to get an idea of how much that went down.
It was 4% to 6%.
Okay. Secondly, looking at free cash flow for next year and the operating improvements and profitability, do you expect net income and free cash flow to more closely match still with the TASER 60 program, or is there still going to be a delta there?
As we make this transition to more recurring cash flow plans, there is going to be an impact on cash. We've modeled that, and we don't anticipate it to be something that's going to require us to take on debt or anything. We'll be able to self-fund that. We do have a new revolver. I don't know if you saw that, but I don't really anticipate that it's going to have a material impact on cash flows that we can't manage through. I'd say on net income, the one thing that's going to be difficult is that There was this accounting change that drove some favorability on tax for us in the early part of the quarter. That may come back to work the other way because the stocks declined in the last quarter.
I'd say net income will be just a little bit difficult to forecast. From a cash flow standpoint, we've modeled that out, and I don't anticipate it to be a material impact.
My last question is, as the financial controls and the internal finance organization improves, do you expect you will provide more guidance in terms of regular earnings on an annual basis, or will still just be quarter to quarter?
Yeah
pick your points? Thanks.
That's a great question. That's a totally fair expectation. My expectation would be exactly that. When you look at our accounting org today, 80%-85% of it is focused on closing the books, and it's doing that because we don't have systems. It's all manual. We're working, we're investing to get that shored up. We talked about that on our last earnings call. Once we've got that shored up, I think what I'd like to do is transition the org to more FP&A folks, right? We've got more analytics muscle, and we've got the ability to give better forecasts. Yeah, that's the expectation.
Okay. Little walk.
How do you interact with the sales team when they're bidding for new RFPs? Has that changed at all or?
I wouldn't say it's changed. I actually interact very frequently with the sales team. Josh and I actually sit right next to each other. I get involved in specific deals, for a variety of reasons. I would say other than the time I've spent on shoring up the core accounting, the next biggest chunk of time I've spent on is with sales. There's a question up here, Andrea.
Oh, thanks.
You guys have mentioned you don't know, there's always a possibility you would close one or more international deals with 200,000 policemen or something. Is that something that is an asterisk or is a problem in terms of near-term cash flow or anything like that in terms of how it would flow through into your earnings? Are they pretty camera-heavy deals? Can you give us a sense of the monthly revenue stream?
Yeah.
Whether the first deal was super discounted?
There's a likelihood that it would be. We're okay with that because it allows us, for some of these larger region deals we get in, we win something like a major metropolitan area, and then the surrounding areas, we end up winning as well. We have a proof point of that in the U.K. If we had the opportunity to do that in a country like Australia or some other APAC region or in EMEA, we would absolutely do that. From a cash flow standpoint, it won't really impact us. On margin, there's a chance it could be. Again, the idea is that we want to get that install base so then we can renew them over time and then also upsell them. Jeremy, yeah.
On the longer-term modeling where you're projecting out software and segment versus weapons and the margin goals, there's not a specific target in mind by 2020. I think if you just back into the math, very modest growth on the weapons side of the business. If you break even software and sensors, you'd be looking at about $100 million in total operating income? By 2020, is that kind of a target number that you're looking at in your head?
Yeah, that's about right. I'd say that we wanted to Forecasting is something we're still working on and fine-tuning. When we now get up here and say that we're going to give you specific targets for 2020, we want to make sure that we give you targets that we can hit. There's some conservatism in there. I'd say that's really the focus, is that we want to be first in the short term, make sure we're making this cultural shift, we're driving leverage, and that we're going to be showing you that leverage not just over the next short few quarters, but over the next three years.
Right. Okay. Rick, you want to wrap up?
All right, great. Let me, I'm going to turn it over to Luke now. Or to Rick, sorry.
All right. Thanks for coming. If there's any kind of final questions for the executive team, for Josh or Todd or Rick, we could probably take one or two more, and then we'll wrap.
I do want a mic then. All right, Steve, go ahead. Turn on the good one.
On the Fleet business, you had talked kind of last call around needing early stages, really discounting heavily in order to kind of, as you've done on the body cam side. It's my understanding that your Fleet solution is already significantly cheaper than competitive solutions. Why would you see the need to discount that even more?
In 2017, in all of our product launches, we've been very successful in finding key reference accounts where we go in, and our objective isn't to make money off that first deal. It's to have a really solid customer experience. With Axon Fleet, we picked several major cities, in addition to strategic accounts with state and highway patrols, where we get that initial beachhead in that section of the market. As we round the corner into 2018, we're really confident that the economics of Axon Fleet will get better, and we've got good alignment across sales and finance and the rest of the executive team to put that into play.
I would add there as well. It's a little awkward for me to use somebody else's mic. These guys are left here. I think some of the early deals with Axon Fleet as well, some of what happened was customers were getting really excited early on at this, and we were making customer commitments, and there were some things as we got closer to market, that there were some additional costs that we had not projected to the customer. In some cases, we've basically had to eat some of those higher costs to make those earlier customers have a great experience. Now they're in the market, the system's stable, it's scaling, we expect there to be less of that. Also, frankly, I think we've been taking a hard look at, we have a very cost-competitive solution.
Maybe we need a little more rigor looking at the level of discounting happening in Axon Fleet. I think that's one of the outcomes of this process of sort of coming in and putting a brighter light across the products by product line and by margin and maybe saying that some of the discounting practices that might be relevant in the body camera space. In Axon Fleet, we maybe need to hold the line a little more because we're already starting from a more aggressive cost basis.
I'd say in general, next year, all commission plans are going to be tied to discounting percentage as well. Essentially the reps are, like every single thing we've seen, every outcome we've wanted has been driven by our compensation plans and commission plans for reps. Going into next year, we know the discounting one is top of mind here, we recognize that we need to see the average sales prices going up. We will see that reflected next year in the commission plans for the reps.
Just one housekeeping item. We had a couple questions around whether or not we were going to put this deck out publicly. We're going to leave this up for the next 48 hours, and then we're going to send out kind of a summary PDF version of the slides, and we're going to clean out some of the more detailed sections for competitive reasons.
Thanks for that. Any last burning questions?
All right, great. Thank you, everyone.