Jordan Lyonnais

CSO said U.S. state/local is direct sales, other markets use various channels. Dedrone opens doors across all 4 customer segments more broadly than any prior product. FedRAMP will help Fusus in federal ecosystem deployments.

Rick identified two risks: (1) a privacy/data handling misstep could have outsized negative consequences; (2) customers will expect continued value delivery as AI makes technology development cheaper. Axon must keep earning its way up the value chain with new products, not just raising prices.

Brittany said gross margin is product mix driven, software tailwinds offset by hardware. Delivered 25% EBITDA margin commitment despite tariffs and R&D investments. Company delivering 55%+ against Rule of 40. Josh emphasized profitability remains important. On Dedrone NATO, Brittany said it's the most consistent product across federal, state/local, and international. Won't go market-by-market but demand is real across all segments; US state/local slowest due to regulatory issues but pent-up demand exists.

Jeff confirmed Fusus has met all FedRAMP requirements and is operating with customers knowing compliance, just awaiting final committee checkmark. Josh declined to share DoD strategy publicly but said they'll be ready when opportunities emerge.

Josh identified border security as key focus, drones, counter-drone, and real-time video. Rick added real-time translation will be hugely beneficial for Border Patrol encounters.

Jeff confirmed Fusus passed the auditor recommendation stage for FedRAMP and is in final certification. Brittany noted federal assumptions in guidance are conservative, these opportunities would be upside.

Josh praised the partnership and product-market fit. Rick gave extensive detail on Skydio's autonomy advantage, autonomous DFR at ~25% the cost of manual DJI deployment when including human labor.

Josh confirmed deals can go through either Axon or Skydio contracting. Jeff added that customers increasingly see the Fusus + Skydio + Axon combination as unmatched for DFR capability.

Won substantially all SDA tranche programs. Well positioned for Golden Dome. CapEx up 35% QoQ investing in capacity. R&D up $10M in Q1. Cautious on budget realization ('asking is one thing, getting is another').

George responded. Destocking expected through most of 2026. Strong demand and large 2026 delivery order received, but no near-term revenue uplift from rate increase. OEM sales declining offset by aftermarket growth.

Some exposure acknowledged but proactively mitigated. Not expected to affect near-term operations.

Both own drones (Black Hornet, R1 weaponized drone) and sensor supply. Santa Barbara makes $200M+ in cooled/uncooled IR sensors enabling $800M of downstream Teledyne revenue. Sells to competitors, non-competitors, defense and non-defense. Volume drives margin through cost spread.

European defense revenue $447M in 2024 (including Qioptiq/Micropac). European budgets expected to grow from $500B to $800-900B over 5 years. Manufacturing footprint in UK, Sweden, Iceland, Denmark, Netherlands supports domestic content requirements. U.S. defense growing across unmanned, EW, and components.

FLIR defense expected +6% in FY2025 after +9% in Q4. Unmanned systems, EW, and EO/IR favored regardless of program outcomes. Bullish on defense positioning but uncertain on specific program approvals.

Cliff said defense/government is a smaller part of the overall business. Products are sold on a commercial off-the-shelf basis with some light customizations, using the same platforms as commercial.

Cliff said both OEM and aftermarket were comparable and very strong. OEM benefiting from long backlogs, aftermarket from resilient consumer behavior in aircraft equipping.

Cliff acknowledged 2026 could see revenue pressure as legacy programs wind down and BMW peak adoption is anniversaried. New program expected to come online in back half of 2026.

Cliff explained MyLabs specializes in timing for competitive events. Opportunity to integrate Garmin device training data with official race timing for a dynamic, comprehensive experience.

Kastner described shift from broad entry-level hiring to targeting experienced shipbuilders, aided by congressional anomaly funding and wage increases. Welcomed DOGE efficiency focus.

Mike said they don't target an overall PMA percentage of TransDigm revenue. Standard 5-year LBO model targeting 20% IRR. PMA expected to grow slightly above market but not explosively.