Axon Enterprise, Inc. (NASDAQ:AAXN) Q3 2019 Earnings Conference Call - Final Transcript
Nov 07, 2019 • 05:00 pm ET
[Operator Instructions] Your first question comes from the line of Scott Berg with Needham & Company. Please go ahead. Your line is open.
Hey, guys. This is Josh on for Scott. Congrats on the strong quarter. With the TASER production issues related to the battery now resolved, you mentioned the cartridge issue in the letter. I wanted to get some more color on how that's progressing, how many cartridges are you shipping currently with the new TASERs and what do you expect to get this to in 2020?
Yeah. Great, great question Josh. So to answer the first part of your question, the battery issues are 100% resolved. And with the cartridges, why don't I have Rick to answer that, he is pretty close to the detail.
Having built, the first one is in the garage have an affinity for our cartridges. So we're feeling really good about where we're at with getting the design -- the design modifications we talked about earlier this year. Those are through validation. We're in production. We're feeling really good about it.
In terms of the number of cartridges per handle sold with TASER 7, it typically includes about 12 cartridges in the first year, and then there is recurring cartridges in the out-years, which on the plans are typically around 12 cartridges per year as well. But we -- obviously, we don't recognize revenue on the future cartridges until they ship at the anniversary date from when we shifted it -- from the first received [Phonetic] order.
Okay, great. And then just a financial question. You raised the revenue guidance nicely up the Q3 beat, are there any other factors other than the TASER gross margin not allowing the excess revenue to flow through to EBITDA here in near-term?
Yeah. This is Jawad, I'll take that. So we -- essentially, we're looking at the full year delivering $80 million to $85 million. And unfortunately, we had some headwinds earlier in the year with the manufacturing challenges on the TASER Weapon and those are going to be difficult for us to overcome, which is why we left the EBITDA margin at the current guidance -- the previous guidance at $80 million to $85 million, but we are going to see strength in revenue.
Your next question comes from the line of Jonathan Ho with William Blair & Company. Please go ahead. Your line is open.
Hi. Thanks for taking the question. This is John Weidemoyer for Jonathan. I would like to talk about your pipeline for OSP -- well your OSP in general . I'm wondering about the pipeline of major city deals for OSP 7, 7+, to see your confidence in the visibility and such. And I also have a question about a statement you made in the shareholder letter if I'm looking at it correctly, in the US, your percentage of weapons that were sold through the OSP is -- 64%, and overall 55%. So I'm wondering -- that tells me