Axon: rewiring public safety

Investors should carefully consider the objectives, risks, charges and expenses of the fund before investing. This information and other information about the fund can be found in the prospectus and summary prospectus. For a prospectus or summary prospectus please visit our website at https://usmutualfund.bailliegifford.com. Please carefully read the fund’s prospectus and related documents before investing. Securities are offered through Baillie Gifford Funds Services LLC, an affiliate of Baillie Gifford Overseas Limited and a member of FINRA.

Most of the systems we rely on every day come with two quiet safeguards: an undo button and an audit trail.

In well-designed software, a mistaken click does not destroy your work. A simple “Ctrl + Z” allows you to roll back a step. At the same time, the system keeps a record of what changed and when, so that if something goes wrong, you can see how you got there and improve the process.

The frontline of public safety has historically had neither safeguard. When a situation escalates and a gun is drawn, there is no undo if the trigger is pulled. When those events are later examined, the “audit trail” is usually a patchwork of reports and recollections rather than a clean, searchable record. Axon’s proposition is to implement a version of both safeguards to the use of force and establish a feedback loop for more favourable outcomes.

The initial spark 

Axon’s “undo button” began as a thought experiment decades before the company itself existed. In 1967, NASA researcher Jack Cover read about a man who had been immobilised for hours after grabbing an electrified fence. He was badly shocked, but alive.

Intrigued by the potential for electricity to address rising crime while reducing lethal force, Cover built a device that fired two wired darts and delivered an electric jolt and named it after a childhood favourite novel, Tom Swift and his Electric Rifle: TASER. Commercial success for his invention, however, wasn’t so straightforward, and had several false starts.

In the early 1990s, the rising crime rate was visible across the US. Axon’s founder, Rick Smith, started the company after wondering if there was a better solution for citizens to protect themselves. His own mother was increasingly worried and tried to buy a TASER for protection, but she couldn’t. She bought a revolver instead.

So, Smith called the man listed on every TASER patent: Jack Cover, who, after 20 years, retained hope that his invention could reform law enforcement. Together, they went back to first principles and rebuilt the TASER. The first critical unlock was the shift from gunpowder to compressed gas, which removed the TASER from the regulatory classification of a firearm, expanded its commercial viability, and gave Axon time while the pre-existing exclusivity agreements of North American law enforcement agencies gradually expired.

The real turning point, however, came with Axon’s “audit trail:” TASER Cam. This small camera was activated automatically whenever a TASER was drawn. The benefits were manifold. It helped protect officers and Axon from wrongful use-of-force claims and, critically, shifted the public’s perception of TASERs from weapons to tools of accountability.

Today, Axon’s product line-up is broad and mutually reinforcing:

• TASER energy weapons: less-lethal devices designed to incapacitate without bullets.
• Sensors: body cameras, in-car systems, and drones that capture events as they unfold.
• Cloud software: Axon Evidence for digital evidence management, productivity tools such as Axon Records, and real-time operations products like Axon Respond, increasingly infused with AI for transcription, summarisation and workflow automation.

All of this is sold through integrated subscription plans. Devices are often the on-ramp, with long-term value residing in the software and data ecosystem that surrounds them.

Making bullets obsolete

In 2022, Axon set itself a “moonshot” goal: to cut gun-related deaths between police and the public in the US in half by 2033. An ambitious target underpinning its broader mission of “making the bullet obsolete” and “reducing social conflict.” This north star underpins where capital goes.

In practice, this translates to better TASERs, richer evidence platforms, more intuitive software, and immersive VR training that prepares officers for real-world de-escalation. Importantly, this mission is economically aligned with customers. Agencies want fewer tragedies, fewer lawsuits and more efficient operations.

If the mission were purely rhetorical, we’d be sceptical. But the numbers suggest something more substantial is happening.

• Global adoption of less-lethal force. TASER weapons are now used by more than 17,000 law enforcement agencies in over 85 countries. Axon estimates they’ve been deployed in the field over 5.5 million times, with a safety rate above 99 per cent and more than 300,000 lives saved from potential death or serious injury. In 2024, annual revenues surpassed $2bn, and they continue to grow at more than 30 per cent year-on-year.
• A rapidly scaling cloud platform. Proof that Axon has established itself as more than just a hardware provider is evident in its rapidly expanding software and services, which now account for approximately 40 per cent of revenue and are growing at an annual rate of more than 40 per cent. The company has also surpassed one million software users, reflecting the growing centrality of its systems to everyday public-safety workflows.
• A long runway of contracted demand. With more than 95 per cent of Axon customers on subscription plans, the company has greater visibility of its future growth. Future contracted revenue has climbed above $11bn, of which approximately $1.3bn is annual recurring revenue and boasts a net revenue retention of 124 per cent.

This combination of a mission-driven culture and powerful financial momentum is unusual, but it’s exactly what we look for in LTGG.

Charging the upside

As is often the case, Axon has been owned by other Baillie Gifford strategies for several years, with the small-cap team making its initial purchase back in 2018. This has given us valuable time to get to know the company. 

After we wrote our first 10 Question Stock Research Framework on Axon in July 2025, one of our analysts met with Rick Smith in the US. This, among other things, included a discussion on horseback. While he declined Smith’s offer to personally test the product and be tased, the founder’s enthusiasm and vision reaffirmed several of the outlier traits we had identified in Axon. 

For new stocks to earn a place in the LTGG strategy, we must believe there is an above-average chance that the company can increase its value five times over a five- to 10-year period. 

Despite impressive progress, Axon remains early in its growth trajectory. So far, it has implemented three major initiatives: non-lethal weapons, cameras, and cloud-based evidence logging. This has obviously been fantastic for revenue growth so far. But for LTGG, it also demonstrates something just as important to our process: that Axon has a culture that can adapt.

We’re now witnessing the early stages of several additional adaptations, including real-time operations, AI assistants embedded in devices, VR training, and drones. Each new act increases the surface area over which Axon can create value. It also deepens switching costs: once your evidence, workflows and training are all running on Axon, moving away is painful.

This continuous adaptability and iteration will be crucial for the company to continue growing its domestic market while pursuing international opportunities. Many international agencies remain underserved. TASER adoption outside the US lags domestic penetration. And new customer groups, such as private businesses, are only just beginning to become customers. Together, these could see Axon compounding revenue at approximately 40 per cent per annum.

Crucially, as software becomes a greater part of the mix, we could see some significant operating leverage, with operating margins increasing from the low-20s today to the mid-30s by 2030. Recent weakness in the shares, driven by near-term concerns, has afforded us a more attractive entry point. 

Closing the loop 

Axon is an unusually mission-driven growth company operating at meaningful scale. Its “protect life” focus has guided three decades of product development, from TASER devices through to cameras, cloud evidence management and now AI-enabled software. That mission is tightly aligned with customer needs. Agencies want fewer tragic incidents, more efficient operations and better outcomes, and Axon’s integrated platform helps them move in that direction.

Importantly, the same feedback loop operates within Axon itself. With millions of real-world deployments, vast datasets and increasingly software-led workflows, the company is continuously refining its products, training and operating model.

Each iteration improves outcomes for customers, strengthens trust and deepens reliance on the platform. If Axon continues to execute on its mission, the result should be a safer, more accountable future for law enforcement and, in our view, a compelling long-term opportunity for outlier returns.

Risk factors

This content contains information on investments which does not constitute independent research. Accordingly, it is not subject to the protections afforded to independent research and Baillie Gifford and its staff may have dealt in the investments concerned.

As with all mutual funds, the value of an investment in the fund could decline, so you could lose money.

The most significant risks of an investment in the Baillie Gifford Long Term Global Growth Fund are: Investment Style Risk, Growth Stock Risk, Long-Term Investment Strategy Risk, Non-Diversification Risk and Non-U.S. Investment Risk. The Fund is managed on a bottom up basis and stock selection is likely to be the main driver of investment returns. Returns are unlikely to track the movements of the benchmark. The prices of growth stocks can be based largely on expectations of future earnings and can decline significantly in reaction to negative news. The Fund is managed on a long-term outlook, meaning that the Fund managers look for investments that they think will make returns over a number of years, rather than over shorter time periods. The Fund may have a smaller number of holdings with larger positions in each relative to other mutual funds. Non-U.S. securities are subject to additional risks, including less liquidity, increased volatility, less transparency, withholding or other taxes and increased vulnerability to adverse changes in local and global economic conditions. There can be less regulation and possible fluctuation in value due to adverse political conditions. Other Fund risks include: Asia Risk, China Risk, Conflicts of Interest Risk, Currency Risk, Developed Markets Risk, Emerging Markets Risk, Equity Securities Risk, Environmental, Social and Governance Risk, Focused Investment Risk, Government and Regulatory Risk, Information Technology Risk, Initial Public Offering Risk, Large-Capitalization Securities Risk, Liquidity Risk, Market Disruption and Geopolitical Risk, Market Risk, Service Provider Risk, Settlement Risk, Small-and Medium-Capitalization Securities Risk, and Valuation Risk.

For more information about these and other risks of an investment in the fund, see “Additional Information about Principal Strategies and Risks” in the prospectus. The Baillie Gifford Long Term Global Growth Fund seeks to provide long-term capital appreciation. There can be no assurance, however, that the fund will achieve its investment objective.

The fund is distributed by Baillie Gifford Funds Services LLC. Baillie Gifford Funds Services LLC is registered as a broker-dealer with the SEC, a member of FINRA and is an affiliate of Baillie Gifford Overseas Limited.

All information is sourced from Baillie Gifford & Co and is current unless otherwise stated.

The images used in this article are for illustrative purposes only.

Top Ten Holdings

As at December 31, 2025

It should not be assumed that recommendations/transactions made in the future will be profitable or will equal performance of the securities mentioned. A full list of holdings is available on request. The composition of the fund's holdings is subject to change. Percentages are based on securities at market value.

816000 10060486