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 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 ~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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Wide-Moat Investing Summit 2026 was held from June 23-26, 2026. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
Slides
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