How Big Can TASER Become?

By Markets Fool.com

A few weeks back, we took a look at TASER International's big announcement of its first contract to deploy Axon body cameras for police in Canada. At the time, I examined the size of the contract and the size of the Canadian law enforcement market relative to that in the U.S. and concluded that, while TASER's entree into Canada was certainly good news, it wasn't quite good enough to justify investors' overenthusiastic bidding up of TASER stock.

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At the same time, though, the Canadian venture got me thinking: Forget about Canada for a moment. How big is the market for police body cameras evenhere in the U.S.?

That's what we're going to look at today.


TASER is totally going to ignore this sign and sell more Axon on-body cameras to police. Image source: Getty Images.

How big is this market?

Here are the statistics, straight from the U.S. Department of Justice.

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As of 2008, when the DOJ last conducted a full census, there were 17,985 state and local law enforcement agencies operating in the United States, including: 12,501 local police departments, 3,063 sheriffs' offices, 50 primary state law enforcement agencies (i.e., state police), 1,733 special jurisdiction agencies, and 683 other law enforcement agencies.

Collectively, these agencies employed "more than 1.1 million persons on a full-time basis, including about 765,000 sworn personnel ... with general arrest powers" -- those being the folks most likely to need police body cameras. An additional 44,000 sworn officers were employed part-time. In total, that makes upwards of 809,000 "state and local" cops on the beat.

Add"approximately 120,000 full-time [federal] law enforcement officers ... authorized to make arrests and carry firearms in the United States," and the U.S. alone has at least929,000 sworn officers -- and maybe more, as the trend in hiring cops has been going up, not down, in recent years.

That's a big market for TASER to cater to; let's see how much progress it has made.

How well has TASER exploited it already?

As of September 30, 2015, TASER counts "more than 3,500 police agencies" in the U.S. as customers of its Axon on-body cameras That's about 20% of the total U.S. market.

As of that same date, TASER had sold "154,000 cameras" globally. At first glance, this sounds like 16.5% penetration of the 929,000 potential police customers. But note that these "154,000" include customers outside the U.S. (TASER devices are deployed in 106 countries other than the U.S.). It also includes sales of "TASER Cam recorders," which are not the same as Axon.

Result: TASER has so far placed Axon cameras in the hands (on the visors, and on the breast pockets) of something less than 16.5% of all potential U.S. police customers. We don't know precisely how much less, but here's one clue: TASER says it has only issued 75,000 licensesfor EVIDENCE.com storage of data recorded from Axon cameras to date. That implies that penetration per user might be as low as 8% in the U.S.

Truth in statistics

What does all of this tell us about the prospects for TASER getting bigger?

Focusing solely on the market for Axon on-body police cameras (we'll take a look at actual TASER-brand stun guns in a later column), TASER has enjoyed a lot of growth of late -- but it also has plenty of room to keep growing.

One conservative way to look at its prospects would be to calculate market penetration at the police department level. Assume that every police department TASER has sold to has already bought all of the Axons it needs. With 20% "department-level penetration," TASER can still grow five times from its present size.

A more aggressive way to look at the picture might be to assume that at least some of the agencies where Axons are now present are conducting small trials before rolling out the products to all of their officers. In this case, "officer-level penetration" is only about 8% of the total potential market, and this would imply that TASER's Axon business might grow 12 times in size.

Whichever way you look at it, though, TASER's $1.3 billion market cap today still leaves lots of room for future growth. Whether it grows to five times its present size ($6.5 billion), 12 times ($15.6 billion), or something in between, remains to be seen, but TASER is definitely getting bigger.

The numbers command it.

The article How Big Can TASER Become? originally appeared on Fool.com.

Fool contributorRich Smithdoes not own shares of, nor is he short, any company named above. You can find him onMotley Fool CAPS, publicly pontificating under the handleTMFDitty, where he's currently ranked No. 278 out of more than 75,000 rated members.The Motley Fool recommends Taser International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.