Andrea James - VP, IR Luke Larson - President Rick Smith - CEO and Founder Jawad Ahsan - CFO.

Steve Dyer - Craig-Hallum Mark Strouse - J.P. Morgan Jeremy Hamblin - Dougherty & Company George Godfrey - CL King Allen Klee - Sidoti & Company Glen Madsen - Ladenburg Diamond.

Good day, ladies and gentlemen and welcome to the Q4 2017 Axon Enterprise Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference call may be recorded.

I would like to introduce your host for today's conference Luke Larson, President. You may begin. .

Thank you and good afternoon to everyone. I am Luke Larson, President of Axon. Welcome to Axon’s Fourth Quarter 2017 Earnings Conference Call. Joining on today’s call from management are Rick Smith, CEO and Founder; and Jawad Ahsan, our Chief Financial Officer.

Before we get started, Andrea James, our VP of Investor Relations, will read the Safe Harbor Statement..

Good afternoon. This call is being broadcast on the Internet and is available on the Investor Relations section of the Axon Enterprise website.

During our call we will be making references to our reported results which you can find by reading our quarterly shareholder letter and the supplemental materials both of which are available at investor.axon.com and on the SEC website. We will start today's session with prepared remarks then we will move to a live Q&A session.

Statements made on today’s call will include forward-looking statements, including statements regarding our expectations, beliefs, intentions, or strategies regarding the future, including statements around projected spending.

We intend that such forward-looking statements be subject to the Safe Harbor provided by the Private Securities Litigation Reform Act of 1995.

This forward-looking information is based upon on current information and expectations regarding Axon Enterprise and these estimates and statements speak only as of the date on which they are made, are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict.

All forward-looking statements that are made on today’s call are subject to risks and uncertainties that could cause our actual results to differ materially. These risks are discussed in greater detail in our annual reports on Form 10-K and our quarterly reports on Form 10-Q under the caption, Risk Factors.

You may find these filings as well as other SEC filings at investor.axon.com or at sec.gov by searching for filings under the Axon ticker AAXN. Okay, now turning the call over to Rick Smith, our CEO and Founder..

Thanks Andrea and good afternoon everyone. Thank you for joining us and welcome to day one in the next decade of Axon's mission to protect life. 2017 was a big year for Axon and I am extremely proud of what our team has accomplished.

We executed on our short-term goals and at the same time laid the foundation to drive continued top line growth and long-term profitability. There were several highlights from the year that I want to recap.

First and foremost we changed our name from TASER International to Axon Enterprise to better reflect what is now an unprecedented platform of devices, software, and technology. Next we completed the enormous task of migrating 20 million gigabytes or 20 petabytes of data onto Microsoft's Azure cloud.

Let me tell you this was no small feat and I could not be more proud of our team who worked tirelessly to make it happen seamlessly for our customers. Back to my recap of the year, we also launched our artificial intelligence group Axon AI.

We accelerated market adoption of our Body Camera program, we expanded our product ecosystem with Axon Fleet, an in car video system and we started to take market share in this new market. We grew our booked license count on Evidence.com to more than 200,000 seats.

We introduced Signal Sidearm which allows all of our cameras in a certain radius to begin recording after a firearm is drawn. We rolled out Axon Citizen which allows the public to submit evidence and we enhanced our Board of Directors and expanded our leadership teams across IT, product, and finance while promoting some of our existing superstars.

Notably we brought in financial leadership that significantly deepens our bench and has already facilitated a new cultural -- a new culture of discipline that will enable us to deliver increased profits and drive greater shareholder value.

I couldn't be enjoying working with anyone more than I have with Jawad this past six months, it is great to have you on board. Jawad will discuss our OpEx shortly but suffice to say we entered 2018 with good progress under our belt and expect to continue that momentum.

In 2017 we delivered record revenue of $344 million and we also ended the year with software and sensor bookings up 15%. Importantly we continued to make progress against our four key areas of growth which are, one, the TASER weapons; two, evidence management software and body cameras; three, Axon Fleet; and four, Axon Records.

With that as a backdrop I'm incredibly excited about our plans for 2018 and the way our team has come together to embrace our new mantra of being scrappy to drive leverage. We have long had a culture of excellence, hard work, and fun and what I view is a collegial atmosphere at Axon.

That will not change but it will be enhanced by disciplined financial management combined with top line growth. Broadly speaking Axon is at a new juncture, we have a platform of innovative and interconnected businesses that will allow us to continue creating and dominating new markets.

You heard our perspective and the path we are taking at our November Analyst Day. We believe our market position and the opportunity to drive shareholder value is unique. We've continued to shift our business model, our mission is clear, our teams are invigorated, and we're all looking forward to keeping you updated on our progress.

As you have no doubt seen today we also announced a new plan for me to lead this amazing company with amazing people through the next decade. Later this week I will report to accepting my last paycheck for the next ten years.

I'll be shifting to a 100% perform compensation package based on stock options that only vests if we can increase the market capitalization to a range from starting at a doubling to ten-fold increase coupled with financial operating targets to ensure we are building both shareholder value and financial rigor.

The planned development was led by Hadi Partovi and our compensation committee and is largely inspired by the recent program announced by Tesla for its CEO Elon Musk. And I will tell you I'm incredibly excited at the opportunity to earn back a share of the company I founded 25 years ago if we can deliver 10X results.

I also relish the accountability of knowing that I will take home nothing from this plan if we don't at least double the market cap based on the six month averages starting today while either doubling revenue or tripling adjusted EBITDA just to get to the first milestone.

Jawad can give some more details later and of course this plan is contingent upon you, our shareholders voting to implement it at our upcoming shareholder meeting in May. But I can tell you I'm pumped and ready to roll. With that I will turn over to Luke. .

Thanks Rick. You should all have our reported financial results and shareholder letter in front of you, let me add some color by taking a look at where our teams will be focusing their energy in the New Year. First, I'll talk about product development and second, I'll give some color about our execution.

For product 2018 is going to be another year of intense innovation for us.

We will be launching several new products including Axon Records a breakthrough record management system built to fully integrate audio and video data and to leverage artificial intelligence to streamline report creation in addition to several game changing enterprise software add ons.

Another product that fit into our four strategic growth categories highlighted by Rick, Evidence.com is constantly improving. For those of you who are new to Axon briefly Evidence.com is our cloud based digital evidence management system that stores body-worn and camera video and does so much more.

We are constantly improving this product adding new features upon our customer's requests for our different pricing tiers and we sent out updates in real time to improve the user experience. For example most recently we dramatically reduced the time it take to search for videos uploaded at Evidence.com.

We are excited about the increasing utility of Evidence.com. Today the platform posts officer [ph] body cam videos and that's great but our customers need the software to do more. We're developing enhancements that will enable Evidence.com to seamlessly take in CCTV footage and other forms of video and audio evidence.

We can't touch on all of our products today especially as our suite grows but I want to note that we are seeing good traction with Axon Citizen which is the community evidence submission tool that we announced in Q4.

Oxnard Police Department out of Southern California put out a video to their entire community outlining how they could submit evidence via their smartphones to the police agency using Axon Citizen. Fort Worth Police Department in Texas also announced they were doing an entire agency wide trial of Axon Citizen.

The second area of focus I want to cover is our ability to execute on our growing TAM. Back office operations may not be that glamorous but it's important to get these things right and we feel really confident about the decisions we are making to support our growth.

We're scaling up our offices across the world and we have set a priority in 2018 to cross pollinate our internal groups to ensure we execute against one vision for Axon. For perspective, in 2017 alone our net headcount increased by 250 reflecting 36% growth.

We have recently added staff in key markets including Scottsdale, Seattle, London, Frankfurt, Finland, Amsterdam, Sydney, Vietnam, and New York. Our senior leaders are spending time on the ground in these areas and working across functions to keep the global team marching in lockstep.

We are also consolidating our global logistics group as we prepare for continued international growth. We recently folded our EMEA logistics and operations responsibilities into one global logistics group. During the past year this group dramatically improved our HQ customer fulfillment and warehousing operations.

They also crafted a strategic warehousing plan and developed new key transportation partnerships. We also recently opened a distribution center in Melbourne, Australia which is becoming an increasingly important market for us.

Hopefully you saw our announcement earlier this month that in the first quarter of this year Victoria Police in Australia ordered 11,000 Body 2 cameras and secured a five year subscription to Evidence.com. We believe we now have a solid foundation in place to provide even better support to our international customers going forward.

Joined forces is one of our internal core values and encourages people to step outside of their individual silos. We already see this happening and we believe this will be critical to the organization as we continue to grow. Now I will hand the call over to Jawad who will talk about our financial results and outlook. .

Thanks Luke. One of the good things to talk about this quarter from a financial perspective, we delivered solid fourth quarter results with record revenue, strong gross margins and adjusted earnings per share above consensus. Fourth quarter revenue came in at $5 million reflecting 15% growth year-over-year. We saw strength across the board.

Weapons revenue grew 10% and software and sensors revenue was up a healthy 27% reflecting a large number of customer add ons and another record quarter competitor conversion wins.

We will come back to gross margin and operating margin in a minute but I wanted to jump down the bottom line first to point out that in Q4 we had an $8 million non-cash tax expense related to U.S. tax reform.

This put us at a GAAP EPS loss of $.04 per share excluding this non-cash tax expense and also excluding a non-cash intangible asset abandonment charge, our Q4 non-GAAP adjusted EPS was $0.13 which we feel really good about. Also you may have noticed in our shareholder letter that we are giving two non-GAAP EPS figures.

This is because for the first time we're excluding stock based compensation expenses from income and plan to do so going forward. Excluding stock up our non-GAAP EPS was $0.18 in Q4. As you can see on our reconciliation tables, this is up from non-GAAP EPS of $0.15 in the same period a year ago.

So to be clear the $0.13 non-GAAP EPS is what compares the consensus and the $0.18 non-GAAP EPS reflects a new adjustment that we are introducing this quarter. You have the tables in front of you so I don’t need to hit every number but I do want to take a few moments to unpack gross margin and operating margin.

Our consolidated gross margins were great this quarter coming in at 66.6%. This reflected strong pricing, lower data migration costs than in previous quarters and a favorable mix. We are proud of this result but we also believe that we had a favorable confluence of factors in Q4 that boosted our gross margin.

And so we believe that 300 to 400 basis points of the gross margin performance was non-recurring. Drilling into gross margins a little bit more you'll notice that software and sensors product gross margin flipped from negative 5% in Q3 to positive 43% in Q4.

This was mostly tied to strengthen pricing as well as the timing of shipments and favorable product mix. With all the puts and takes of the past few quarters behind us we expect software and sensors product gross margins to normalized to about 25% excluding Axon Fleet pass through hardware.

On operating expenses I want to take a minute and commend our team for working hard to implement and embrace robust cost controls in November and December. We've already started to see the results of their efforts as we started to bend the trajectory of our cost growth curve.

Our Q4 operating expenses of $55.4 million include $900,000 in restructuring costs associated with a reduction in force. We believe that this reduction in force will lead to $4.5 million in annual cost savings starting this year 2018. Q4 operating expenses also included a $1.1 million non-cash charge related to an intangible asset write down.

You can also see the results of our cost controls on the adjusted EBITDA line which came in at $15 million in Q4. This compares to $13 million a year ago and is up substantially from $7 million in Q3. Turning to the balance sheet we feel really good about our financial condition with over $80 million of cash.

Also we told you two quarters ago that we would take inventory levels to sub $50 million by the end of the year and we did exactly that. Inventory was $45.5 million at year-end. Before going over our guidance I will briefly discuss ASC 606, the new accounting standard is applicable to Axon effective January 1, 2018.

This standard effectively eliminates the concept of contingent revenue which will result in accelerating some of our revenue recognition on new contracts while at same time moving previously stored up deferred revenue straight to the retained earnings line.

We're still working through the details but our accounting team has worked hard to prepare for the accounting change and in 2018 we will disclose revenue results under both standard 605 and 606 starting with our Q1 2018 results. Now to our 2018 outlook, we are providing the following guidance.

Revenue growth of 16% to 18%, operating margin expansion of 300 to 400 basis points driven by strong gross margins and strict expense control.

We're looking at a normalized tax rate of between 20% to 25% which can fluctuate depending on changes in our stock price and the geography in which our earnings are booked, and finally capital expenditures of $12 million to $16 million.

Looking a little further ahead we're in the initial playing stages for a next generation manufacturing facility and headquarters building that will consolidate our four Scottsville locations into one complex. This is a long range project that would see us break ground sometime in 2019 with a target completion date of 2021.

The expected return on investment for this project is compelling and as it would enable us to retool our Scottsville manufacturing lines, consolidate office space, and ultimately move our Axon accelerate user conference on to our own campus. We'll have more to say on this as we move through the playing stages.

We appreciate your time today and will now be happy to take your questions. Operator we're ready to move to Q&A. .

[Operator Instructions]. And our first question comes from the line of Steve Dyer from Craig Hallum. Your line is now open..

Thanks good afternoon, nice quarter guys.

As you dig in I guess a little bit to the margins in the software segments area within hardware guessing, wondering Jawad if you could be a little more specific around kind of the puts and takes that kind of drill that outperformance? And then on the software or on the services side of it gross margin was down year-over-year which seemed a little surprising given the bigger base, so maybe just a little more detail on the puts and takes there?.

Yes sure, let's start with the first part of your question there, so we saw some upside relative to product mix and really we had the heavier portion of software versus hardware in the quarter and generally when that happens we tend to see favorable margins.

We also had some upside from adjustments to be made to inventory that came in at the end of the year as part of our inventory balance. And then the second part your question..

Yeah, just the lower recurring margins in the quarter, just on a higher revenue base?.

Could you clarify please Steve?.

Yeah, I mean just as I read through it quickly it looked like the recurring gross margins were lower year-over-year, we can take it offline if you want to, I can kind of look up to specific numbers.

I guess I'll just move on quickly so, your operating margin as reported was 3.8% in 2017, is that kind of the bogey that the 300 to 400 basis points of improvement is based on or are you -- is there something that needs to be backed out of there?.

Yes, that's correct, that is what it is based on. And sorry Steve I understand your other question now. We still had some data migration costs in Q4 since that was a bit of a headwind and then we do have some storage costs and that will continue to be in our financial profile going forward. The migration is complete, we do have storage costs. .

Okay, and then tax rate 20% to 25% is that also kind of the right way to think about the cash tax rate?.

Yes..

Okay, great. Thanks guys..

Thank you and our next question comes from the line of Mark Strouse from J.P. Morgan. Your line is now open..

Yeah, hey guys. Thanks for taking our questions and I'll add my congrats as well. So Rick just wanted to start with the weapons order that came out whenever that was a week or two ago, we were encouraged to see the NYPD included in there with a fairly large order.

I know you won't discuss any agency specifically but just generally speaking is there anything incremental that you're seeing regarding some of the larger agencies that makes you a bit more optimistic that relatively lower penetration can increase?.

Yeah, I mean I think we are continuing to see as of I would say a few years ago predominantly the larger agencies were sharing TASER weapons and I think we're now seeing that shift to where the larger agencies starting with LAPD a few years ago, with Chicago and others moving towards individual issue of the TASER weapons and I think we're seeing in New York obviously a continued expansion there.

So, I'm a little bit biased on this topic but I believe every police officer who goes out with a gun should have a TASER and I think that is starting to become a more mainstream view of the world that -- in Ferguson, Missouri that officer did not have a TASER and consequences were catastrophic.

And while we can't necessarily stop every tragedy from happening we think we can have a big quantitative impact and that's no longer seen as a sort of a futurist view. I think that's becoming the present. .

Yes Mark, this is Luke here. We're actually in San Francisco doing the call today and I might add that in November of last year, November 2017 San Francisco voted to approve TASERs for that PD.

Now that's going to be a process they have to work with to go through the actual procurement but they approved it and we were actually out on a walk here around the block and we saw the officers wearing the body cameras, so really optimistic.

Every police officer in the country will carry a TASER weapon, wear Body Camera, and have a seat on the Axon network. .

Okay, thank you.

And then can you just talk about for the remainder of 2018 how we should think about uses of cash as far as M&A opportunities, are there any kind of holes in your product portfolio or any just acquiring R&D if you will that you see that are out there that are compelling? And maybe an add on to that if there's anything new and different that you're seeing from competitors that might drive you towards one particular offering?.

Got it, great question. So I'll take that with one, we recently announced the team that we hired in Tampere, Finland.

I was just on a conference call getting them started this week and it is really exciting and energetic to have some really great talent around imaging that I think will help pick up our hardware game and sort of increase our hardware capabilities to drive future software capabilities.

So we continue to be mostly interested in finding great teams that we can acquire.

I don't know if there's any glaring holes in the product ecosystem but I would tell you I generally tend to be a skeptic on acquisitions, I’m a Chicago school guy that if we're going to look at an acquisitions it has got to have to pass a pretty high bar that it is more valuable but because it is part of us then it would be a standalone or part of someone else.

So our strategy is not to go through acquisitions unless they either have a team that we really think exhilarates us or some other unique in sense of value that is unlocked by being part of us. .

Okay, that's helpful. Thank you very much. .

Thank you and our next question comes from the line of Jeremy Hamblin from Dougherty and Company. Your line is now open..

I'll add my congratulations. I wanted to ask going back to your November Analyst Day you noted a couple of things; one, it sounds like you're realizing maybe some of the cost savings a little quicker than expected.

I think that you've implemented some incentive changes for your sales team as well to focus on selling contracts at better margins or better pay outs for lower discounts so to speak.

Tying those two things together first, how has the change in incentive plans been received for the sales team? And then secondly you noted previously that you expected the Axon or the software and sensor side of your platform to achieve profitability in two years in 2020, is that still kind of the track that you're expecting today?.

So why don't I take the first part of that question and then I will hand it over to Jawad here. On the cost savings we have just been delighted that the company has really embraced the new value that we're calling be scrappy.

So I hosted an exec dinner, had the entire executive team the 10 person team, we ate pizza it was 100 bucks and I paid for it out of my own pocket. So we feel really good about the be scrappy initiative.

On how we incentivize our sales team, we have really focused on segregating that team into hunters and farmers and so they're still -- their main incentive is to close business.

We have put in some structures that we think will help facilitate lower discounts but we're still really incentivizing them to go out and win new business, get full penetration, and add our additional tiers profitably. And let me turn it over to Jawad on the kind of that two to three year outlook. .

Yeah, I would add to that also been pleasantly surprised with just how well the cost controls and the discipline has been adopted within the company. And I would tell you we are sticking to the guidance that we gave. At this point we're not bringing anything up.

We still feel good about the three year plan that we've communicated and that we've signed up for. There are lots of things that we want to do as far as investing in products and so the roadmap that we've got we're going to continue to execute on that and I would say at this point we're still on track with the guidance that we gave in November..

Great, if I could sneak one more in quick here on the 16% to 18% sales growth for the year, on the weapon side are you expecting kind of similar like 10% growth on that, can you give us a little color on the weapons business outlook for 2018?.

Yeah I would say we would expect certainly more of the growth to come from software and sensors. And we feel great about our opportunities internationally on the weapon side and so I think you're going to see -- continue to see as a mature business domestically for weapons, lots of great opportunities internationally.

There is a bit of lumpiness given the sales like we have talked about that in the past. And then really the main growth engine for us will continue to be software and service centers. .

But just confirming, you are expecting a little bit of growth on the weapons side this year?.

Correct. .

Great, thanks so much for taking the questions guys..

Thank you and our next question comes from the line of George Godfrey from CL King, your line is now open. .

Thanks gentlemen and my congratulations, very nice job.

Two questions, one is that you mentioned winning some competitive win backs, was that this quarter and can you tell us what cities those were?.

So yes, so the ones we were referring were this quarter. I don’t know that we have disclosed exactly which cities those are. .

Okay, and I want to pay particular attention to the operating margin expansion, thank you for that clarity and just to be crystal clear because margins are always such an issue.

If I go to the midpoint the 350 basis point improvement is that inclusive of Axon Fleet or a new product introductions in the year such that once all said and done you are target is 7.3, is there going to be adjustments for new product initiatives, I heard Jawad mention the software and sensors normalizing around 25% excluding the Axon Fleet pass through hardware?.

Yeah, great question, no adjustments that is what we're targeting for bottom line..

Okay, thank you very much..

Thank you and our next question comes from the line of Allen Klee from Sidoti and Company. Your line is now open. .

Yes hi, you provided some for your adjusted income some tax affected adjustments, what tax rate were you using for that and what would you expect to be using going forward?.

So we have tax in multiple jurisdictions. For that particular adjustment we used our U.S. tax rate. It was impacted that we do have some -- we had a tax structure in the Netherlands that we wound down and there is some residual effects of that in Q4 in our tax rate..

Okay..

In the U.S. just to be clear, it's about 37%..

And for 2018 when you provide these numbers will it be similar or will it be a lower number?.

It will be lower as it -- the U.S. obviously we're going to see a lower income tax rate in the U.S. in 2018. And some of the items that helped our tax rate in 2017 we do expect some subset of those to continue in 2018.

We had an R&D credit, we had -- there is obviously if you have seen the impact from the accounting change relative to equity and so that we continue -- we expect that to continue to help our tax rate.

But there's some volatility there, we can't really obviously predict the stock price to the extent that that fluctuates and that will drive some volatility in our tax rate as well..

Thank you and then for Mr.

Smith you provided some, I missed it but some of the like the longer term targets to hit his new payment plan, can you just them?.

I'm sorry you are looking for specificity around the milestones themselves. .

Yeah. .

Sure, so what we are effectively doing are, Rick needs to achieve 12 tranches and they are not time based, they are market cap based or milestone based and there are two sets of milestones, the first one is market cap and those are in successive increments of $1 billion from 2.5 billion to 13.5 billion.

The second set of milestones are operational milestones and those there are eight revenue and eight EBITDA milestones. So 16 total and any 12 of those needs to be achieved to get effectively tied up -- tied into one market cap milestone.

So to basically achieve the full award we need to -- we would basically need to be $13.5 billion market cap company and achieve 12 of the 16 operational targets. And those targets we included in our press release but effectively they start at $700 million of revenue hundred, $125 million of EBITDA.

The highest revenue milestone is 2 billion and the highest EBITDA milestone is 230 million. And really I would think about those separately, while we thought we structured the revenue milestones independent of the EBITDA milestones because they weren’t really meant to be looked at together..

Okay, thank you..

Thank you and our next question comes from the line of Glenn Mattson from Ladenburg Thalmann. Your line is now open..

Hi, thanks for taking my questions.

Jawad I believe you had brought in some outside consultants to help you reorganize the operations and things, is that work complete now or is there still some more work to be done there?.

Yeah, that work is still continuing in Q1 so we're expecting to see there's an expense to that and actually it'll likely continue into a portion of Q2. There's a lot going on right now. I would say we brought those folks in but the bulk of the work has been done by the new team that we've got in place.

I'm very excited about the team that we have in place now led by Jim Zito our VP of Accounting. And we brought in some great leadership under Jim and in conjunction with the consultants we've put in a new system to automate our revenue recognition.

We're implementing a new HIS, we are implementing a new ERP or migrating over to a cloud based version of our earpiece. So there's a lot of work going on, and the consultants are one part of that..

Okay, thanks that's helpful. Curious on the video hardware gross margins, I mean I think when you just say mix is the reason for the outperformance but I guess maybe it is the mix of flex versus body but I thought the cards -- the docking stations also carried very high margins.

I know they were down year-over-year, was that -- can you help me get my hands around that a little better?.

So, yes the hardware that we shipped was at a significantly better margin than what we've seen in prior quarters. .

A large part of that was the international beachhead account that accounted for thousands of cameras the prior quarter. And then there was a little bit of adjustment the inventory was favorable. .

Yes that's right..

Okay, the shift in one other question on the RMS launch, when you start landing accounts with that product are you going to need -- is there like a professional services component where you need to have implementation process that help people pour it over from their old system to a new or is it more seamless than that?.

No, for sure there will be professional services components and we've been building up that team which also when you install things like Axon Fleet you are working with agencies to be doing integration for their vehicles, also requires professional services.

So Fleet has been a nice chance to cut our -- at that and then there's going to be employees we can achieve that through partnerships as well as company based employees..

Okay, great. Thanks for taking my questions..

Thank you and we have a follow up question from the line of Jeremy Hamblin from Dougherty and Company, your line is now open..

Thank you, just a quick one here on more current trends I think with the very sizable order that was received kind of a lot of nuance behind the shipment and timing on that.

Can you give us a sense for typically you might provide a little color on where the quarter is tracking and how we should be thinking about kind of the current quarter sales, do you want to provide any color on that?.

We feel good about this current quarter. We don't normally give quarter-to-quarter detailed guidance. We believe we have got strong momentum thus far..

Okay, I'll stick with that and thanks so much. Good luck guys..

Thanks Jeremy..

Thank you. [Operator Instructions]. And we have a follow-up from the line of Steve Dyer from Craig-Hallum. Your line is now open. .

Yeah, that was just going to be kind of be mine as well typically, I think you give commentary around at least directionally. I know Q1 is usually down 5% to 10% from Q4 but it sounds like maybe this year's Q1 will be a little bit stronger than it typically is.

I mean directionally should we think about it being down more flattish this year and then build from there?.

Yes Steve, I certainly appreciate the question. Last year one of the dynamics that was a little challenging for us was giving the guidance quarterly as far as revenue and OPEX. And so what we'd like to do is guide to the annual guidance 16% to 18% of the top line growth, 300 to 400 basis points in operating margin expansion.

And I would continue to expect to see some fluctuations quarter-to-quarter but for the full year we expect to deliver..

Got it and then as it relates to guidance, is the intention to update that as needed quarterly or bi-annually or just see how it goes?.

Yeah every quarter we'll give you an update on how we are tracking to the full year..

Alright, got it, thanks guys..

Thank you and I'm showing no further questions over the phone lines at this time. I'd like to turn the call back over to management for closing remarks..

Great, to the shareholders thanks for joining us today. And obviously we are pretty proud of the results team has turned in, proud of the team we've been building. I was in our Seattle office just yesterday meeting with some of our new employees and just continue to be dumbfounded at the level of talent that this organization has attracted.

And we just couldn't be more excited to continue to grow and improve. To our financial team who is listening today, you guys are doing a great job. Jawad talked a little bit about Jim and got Andrea in the room here with us and a whole bunch of new folks that really make it Axon, setting the foundation for the next 10 years of growth.

So, obviously I'm excited about this new competition plan that we've put in place. We are excited, I know I am going to be here for the next 10 years and it is going to be a lot of fun working with great people, doing great things. So stick around for the ride and we will talk to you guys in a few months for our next call.

And we will see you at our shareholder meeting in May. With that have a great day. .

Ladies and gentlemen thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone have a good day..