Axon: The Public Safety Operating System Where AI Widens the Moat

Matthew Castel of Logos LP presented his investment thesis on Axon Enterprise (US: AXON) at Wide-Moat Investing Summit 2026.

Thesis summary:

Axon Enterprise is a global leader in public safety technology, founder-led since 1993, that has grown from a TASER maker into what Matthew calls the operating system for public safety. Each layer built on the last: TASERs led to body cameras, which created a data problem solved by Evidence.com, now the largest police evidence repository and Microsoft Azure’s largest customer, holding roughly 50x the content of the Netflix library. Acquisitions including Fusus and Dedrone added real-time crime centers and counter-drone capability. Matthew frames Axon as a business whose moat AI strengthens rather than erodes, since its AI is fed by data only its own hardware can generate.

The moat rests on workflow embeddedness, with Axon spanning the chain from officer to evidence to AI-drafted report to prosecutor, so removing it becomes an institutional change rather than a software swap. Switching costs appear in multi-year contracts, 95%+ recurring revenue, and 125% NRR. CJIS compliance takes years to obtain and bars casual entrants, while the AI ethics board aids procurement wins. Axon leads across body cameras and evidence, AI reporting, drone and counter-drone, and dispatch, whereas rivals such as Motorola and Palantir hold single categories.

Axon has posted roughly nine consecutive quarters of 30%+ revenue growth. ARR is growing 35%, NRR is 125%, and future contracted bookings reached $14.3B, up 44%. Estimates imply revenue roughly doubling from FY25 to FY28. Draft One has cut officer report time from about 50% to 20% of the working day, funded within existing subscriptions rather than new budget.

Matthew points to three underpenetrated vectors. International is about 20% of revenue and grew over 100%, with management targeting parity with the US. Enterprise grew about 50%, spanning data centers, retail, and hospitals. Drone and counter-drone grew over 300%, and Dedrone has already booked more than Axon paid for it.

On valuation, the shares recently traded near $440, about 50x forward 2026 earnings. Matthew’s base case is $735, at 13x FY27E sales for 67% upside, against an upside case of $945 and a downside of $350. Adjusted EPS rising from $7.14 in FY25 to an estimated $16.14 in FY28 implies a 31% CAGR and a 29x FY28 P/E. He views Axon as a premium compounder rather than a value trap, with SBC near 17% of revenue and growth deceleration the main risks to FCF and the multiple.

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About the instructor:

Matthew Castel is the co-founder and co-General Partner at Logos LP. He is also a General Partner at Orion Legal Group LLP, a boutique law firm focused on corporate, commercial and transactional legal services. Prior to the firm’s founding, Matthew held managerial roles at high growth emerging technology companies (Fiix, Clio). In addition, Matthew was also part of the intellectual property and commercial law groups at Fasken Martineau and Davis Polk. Matthew’s research on the societal impacts of emerging technologies has been cited by the Supreme Court of Canada, featured in several respected academic journals as well as lectures at leading Canadian Universities and Organizations. Matthew has both an LL.B. and B.C.L. from McGill University’s Faculty of Law. Prior to studying law he obtained an Honours Baccalaureate in International Development and French Literature, Magna Cum Laude, from the University of Western Ontario. He has also completed a diploma of International Affairs from the Graduate Institute of International and Development Studies in Geneva as well as certificates from the Northwestern University School of Law, the Stephen M. Ross School of Business and the Wharton School of Business.

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