SCOTTSDALE, Ariz., May 6, 2024
/PRNewswire/ --
- Axon Cloud & Services revenue grows 52% to $176 million
- Annual recurring revenue grows 50% to $825 million
- Net income of $133 million
supports non-GAAP net income of $89
million and Adjusted EBITDA of $109
million
- Raises full year revenue outlook to a range of $1.94 billion to $1.99
billion, up from $1.88 billion
to $1.94 billion
Fellow shareholders,
Axon is pleased to report a strong start to 2024 with another
quarter of impressive financial performance supporting an
improved outlook for FY 2024, and continued long-term innovation
that we expect will fuel our growth for years to come. First
quarter revenue growth of 34% marks our 9th consecutive quarter of
growth above 25%, and we delivered improved profitability with
first quarter net income margin of 28.9% and Adjusted EBITDA margin
of 23.6%.
Axon Cloud & Services revenue of $176
million grew 52% year over year, more than doubling over the
last two years. Our software revenue growth is driven by both
adoption of new products from our existing customers and attracting
new users to our ecosystem. Our net revenue retention remains
a powerful driver at 122%, and we aim to sustain robust software
growth over the longer term through disruptive product innovation.
This includes recently announced significant new
advancements leveraging artificial intelligence ("AI") and virtual
reality ("VR") to enhance officer training and productivity, and
our planned acquisition of Dedrone, which will help make our vision
for Drone as a First Responder ("DFR") a reality.
Our integrated subscription plans drive value for our customers
beyond what can be achieved through disparate point solutions and
our software growth is also linked to record demand for our TASER
and Sensors products. TASER revenue of $179
million grew 33% year over year propelled by demand for
TASER 10. Sensors & Other revenue of $106 million grew 14% year over year driven by
adoption of Axon Body 4.
Axon's consistent growth at increasing scale is a result of
execution on our strategy to build the modern technology ecosystem
for public safety and trusting partnership with our customers.
Their feedback energizes our teams to work on the next innovations
to help drive better outcomes, and we see tailwinds across our
product portfolio now and in the future. Looking ahead, we aim to
deliver improved financial performance and are increasing our
revenue and Adjusted EBITDA expectations for the year. We are
humbled to provide this update and share more detail, below.
Select Highlights
Axon Week 2024
In April, we hosted our ninth annual
user conference, combining our long-running Axon Accelerate and
second annual TASERCON into one main event — Axon Week. Our largest
user conference to date welcomed over 1,400 customer attendees and
featured 99 breakout sessions to demonstrate the Axon ecosystem and
facilitate broader conversations about public safety.
Our expanding user base was also on display, with strong
attendance across emerging customer verticals for Axon. Over 20% of
our customer attendees came from verticals outside of U.S. state
and local law enforcement, including international, U.S. federal,
justice, corrections and enterprise.
Axon Week has become one of the largest user conferences in
public safety and is an exciting way to bring our customers
together with our teams to share ideas, and showcase the full power
of the Axon ecosystem. Each year, we also use this event to
introduce and highlight new products and solution applications to
our customers. Our announcements from Axon Week 2024 include
advancements to our VR training portfolio, an improved mobile
app, and Draft One, which we explore in greater detail next in this
letter.
"Our philosophy across all of these things is simple: Saving
Seconds Saves Lives." - Rick
Smith, Axon Founder and CEO
Product Innovation Highlights
Draft One
Axon's latest AI-driven product, Draft One,
is a revolutionary new software tool that drafts high-quality
police report narratives in seconds based on auto-transcribed
body-worn camera audio. Draft One leverages the advanced power of
Generative AI and includes a range of critical safeguards,
requiring every report to be reviewed and approved by a human
officer, ensuring accuracy and accountability of the information
before reports are submitted.
We believe Draft One is a valuable tool that will drive
immediate productivity gains for our customers. Reporting is a
critical component of good police work; however, it has become a
significant part of the job that officers commonly refer to as
"burdensome." Axon found that every week officers in the United States can spend about 40% of their
time — or 15 hours per week — on what is essentially data entry.
Additionally, prosecutors and defense attorneys have shared that
they welcome the quality improvement of Draft One reports as they
can help support and accelerate the judicial process.
"Draft One is the next evolution in report-writing; as
significant as when law enforcement moved from the typewriter to
the word processor."
— Captain Brian Gossard, Lafayette Indiana Police
"You come on this job wanting to make an impact. You don't
come on this job wanting to write reports. So, this AI
feature, I'm super excited about it."
— Chief
Scott Galloway, Lafayette Indiana Police
"My experience using Draft One really blew me away.
[...] A 25 to 30 minute long report...you hit the narrative button
and it cranks something out in a few seconds."
— Officer
Nathan Stoneking, Lafayette Indiana Police
"With over 27 years of experience in law enforcement, I have
seen technology come and go, but Draft One is one of the most
exciting innovations for law enforcement I have ever
seen."
— Sergeant Robert
Younger, Fort Collins
Colorado Police Services
Draft One is one of many examples of Axon's commitment to
innovating responsibly. Axon conducted a double-blind study to
compare the quality between report narratives written with Draft
One and those without. Results showed that Draft One performed
equal to or better than officer-only report narratives across five
dimensions, including completeness, neutrality, objectivity,
terminology and coherence. In addition, we partnered with our
Ethics & Equity Advisory Council ("EEAC") to rigorously
evaluate word choice selection, draft quality and potential racial
bias. Input from Axon's EEAC also included setting the default
experience to limit report drafts to minor incident types and
charge levels, and specifically excluding incidents where
arrests took place and for felonies from the default settings. In
practice, customers can still adjust from these default settings
based on their specific preferences.
Axon VR Training
The Axon mobile app
Axon recognizes the versatile
nature of law enforcement duties, which require presence both in
the field and at the station. We also recognize the benefit of
providing tools to increase officer efficiency, enabling our
customers to get more done regardless of where they are. In
fact, Axon's 2024 Digital Evidence Trends Report found that
41% of officers return to the station multiple times per shift to
review evidence or write reports. The same report also found that
55% of officers desire a mobile app that gives them the ability to
review evidence in the field. In response, we have developed the
Axon mobile app, which consolidates crucial features of the Axon
ecosystem into one mobile platform.
The Axon mobile app is the first mobile app combining both
digital evidence and records management into the same user
interface. It enhances on-the-go accessibility and efficiency, and
improves the experience for each user of our products,
individually. Officers can handle evidence workflows and start and
complete reports from the field, all without needing to return to
the station. The app also includes a dynamic dashboard that
provides a clear visual of action items that require
attention, and it allows officers to search for, review,
request and maintain evidence including evidence categories,
identification items, titles and other metadata. Over time, we plan
to continue to build even more Axon experiences available in Axon's
desktop applications and into simplified mobile applications
purpose-built inside this new unified, modern, mobile app.
"The main challenge is trying to keep up with all the digital
evidence. You have to try to identify it, retain it and digest it
all quickly." — Commander Nicholas
Sanders, Albuquerque Police Department
Axon believes better training will play a critical role in
achieving our moonshot goal to cut gun-related deaths between
police and the public in half by 2033. VR is a core
technology powering our approach to help improve officer response
and performance through more repetition, better practice in dynamic
scenarios and more immersive experiences.
Over the last year, we introduced all-new ergonomically accurate
TASER 10, TASER 7 and firearm VR controllers and expanded our
training library to include more community engagement and
de-escalation training modules. To take VR to the next level, we
have now introduced Virtual Reality Based Training ("vRBT")
Live-Action, which incorporates 360 degree video immersions,
featuring real human actors with realistic emotions and
expressions, and vRBT Simulator CGI, which overlays VR training
with interactive computer generated imagery ("CGI") elements in
3D.
Now, Axon VR Training and TASER 10 are closely linked,
and every TASER master instructor course includes VR training
elements. Before these advances, TASER trainees would have
limited experience with deploying a live TASER 10 due to budgetary
limits on the number of cartridges that could be dedicated to
training. VR democratizes TASER training across large and small
agencies, enabling our customers to deploy hundreds of TASER 10
cartridges in VR at no incremental cost. In our newly introduced
TASER 10 VR Validation Course, each trainee will deploy TASER 10
probes in VR on 40 different targets, which equates to a savings of
more than $1,000 in real-world
cartridges.
Strategic Ecosystem Expansion
Game-changing acquisition of Dedrone to accelerate
next-generation drone solutions
Axon believes robotic
security applications through drones and related technologies will
play an enormous role in our mission to Protect Life. Today, Axon
announced we have entered into a definitive agreement to acquire
Dedrone, a global leader in airspace security. The acquisition of
Dedrone is subject to customary closing conditions and is expected
to close in the second half of 2024.
Dedrone is one of the most widely used and reliable
counter-drone systems in the world, protecting the public by
ensuring drone technology is used as a force for good. As
unauthorized drone activity increases, enhanced airspace awareness
and drone defense technology have become essential in ensuring
public safety and national security. Dedrone can help rapidly
detect, track, identify and, where permitted, mitigate drones and
locate their pilots across multiple use cases both in civilian and
professional security settings.
Dedrone's technologies are also a key resource to expanding the
authorized use of drones as first responders ("DFR") in public
safety. DFR programs are designed to deploy drones to a scene in
advance of ground units, enhancing situational awareness to improve
response strategies, optimizing the allocation of already limited
resources and reducing the risk of harm to human officers.
Dedrone is another example of our execution on our investment
strategy, which is geared to accelerate our product roadmap and
enhance our ecosystem while building our talent base in product
categories accretive to our long term growth. Dedrone follows our
acquisitions of Sky-Hero and Fusus in the last 12 months and
similarly complements our existing portfolio while expanding our
product applications across our customer verticals. We estimate
Dedrone will add approximately $14
billion to Axon's total addressable market ("TAM"). In
total, our acquisitions of Sky-Hero and Fusus and our planned
acquisition of Dedrone would expand our TAM by more than 50% over
the last year from $50 billion to
$77 billion.
Q1 2024 Summary Results
Quarterly revenue of $461
million grew 34% year over year, exceeding our expectations
driven by continued strength in Axon Cloud & Services,
increasing adoption of TASER 10 driving growth in TASER devices and
cartridges, and adoption of Axon Body 4.
Total company gross margin of 56.4% declined 310 basis
points year over year driven by an increase in stock-based
compensation expenses. Non-GAAP company gross margin of
63.2% increased 330 basis points year over year driven by increased
mix from high-margin Axon Cloud & Services revenue and the
absence of one-time items related to inventory and other cost
adjustments recognized in Q1 2023.
- Increased stock-based compensation expense in our cost of goods
sold ("COGS") was related to enhanced equity compensation
opportunities provided to employees with income below a certain
threshold. This primarily impacted gross margin due to compensation
rates for manufacturing and production employees relative to our
broader employee base. We expect the total stock-based compensation
expense from this program to be approximately $43 million for full year 2024. Axon is proud to
set the bar for inclusive equity programs for all employees from
the production line to the board room.
Operating profit of $16
million was approximately flat year over year, with higher
revenue offset by increased stock-based compensation expenses in
our COGS. Operating expenses as a percent of revenue improved to
52.9% as compared to 54.7% in Q1 2023 and included $45 million in stock-based compensation
expenses.
- COGS of $201 million, 43.6% of
revenue, included $30 million in
stock-based compensation expense.
- SG&A expense of $153 million,
33.1% of revenue, included $23
million in stock-based compensation expense.
- R&D expense of $91 million,
19.8% of revenue, included $22
million in stock-based compensation expense.
Net income of $133 million
(28.9% net income margin, compared to 13.2% in Q1 2023), or
$1.73 per diluted share, supported
non-GAAP net income of $89 million
(19.3% non-GAAP net income margin), or $1.15 per diluted share. The increase in net
income year over year was primarily driven by unrealized gains
related to our strategic investments, higher revenue and operating
leverage.
Adjusted EBITDA of $109
million increased 67.3% year over year driven by higher
revenue and operational leverage.
- Both non-GAAP net income and Adjusted EBITDA exclude
stock-based compensation expenses and net gains or losses related
to our strategic investment portfolio.
Operating cash flow reflects a $16 million outflow in the quarter, an
improvement of $40 million year over
year and in-line with expected cash flow seasonality of prepaid
expenses and other payments, such as company-wide bonus payouts and
commission payments tied to strong 2023 performance.
As of March 31, 2024, Axon had
$964 million in cash, cash
equivalents and investments, and outstanding convertible notes
in principal amount of $690 million,
for a net cash position of $274
million, down $279 million
sequentially, primarily driven by the closed acquisition of
Fusus.
Financial commentary by segment
Software &
Sensors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
CHANGE
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
|
QoQ
|
|
YoY
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Axon Cloud &
Services revenue(1)
|
|
$
|
176,467
|
|
|
$
|
163,632
|
|
|
$
|
116,453
|
|
|
7.8
|
%
|
|
51.5
|
%
|
Axon Cloud &
Services gross margin
|
|
|
72.8
|
%
|
|
|
74.6
|
%
|
|
|
73.2
|
%
|
|
(180)
|
bp
|
|
(40)
|
bp
|
Axon Cloud &
Services adjusted gross margin
|
|
|
74.5
|
%
|
|
|
75.2
|
%
|
|
|
73.8
|
%
|
|
(70)
|
bp
|
|
70
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensors & Other
revenue
|
|
$
|
105,521
|
|
|
$
|
107,167
|
|
|
$
|
92,308
|
|
|
(1.5)
|
%
|
|
14.3
|
%
|
Sensors & Other
gross margin
|
|
|
38.7
|
%
|
|
|
46.3
|
%
|
|
|
38.2
|
%
|
|
(760)
|
bp
|
|
50
|
bp
|
Sensors & Other
adjusted gross margin
|
|
|
46.9
|
%
|
|
|
46.5
|
%
|
|
|
38.6
|
%
|
|
40
|
bp
|
|
830
|
bp
|
________________
|
(1)
|
The TASER segment
includes Cloud and Services revenue, which is not included
here.
|
- Axon Cloud & Services revenue growth of 51.5% year over
year was primarily driven by user growth and increasing adoption of
premium add-on features related to Axon Evidence, real-time
operations and productivity software.
- Axon Cloud & Services gross margin of 72.8% decreased
modestly from 73.2% year over year primarily due to increased
stock-based compensation expense related to vesting events from a
one-time enhanced equity compensation program and amortization
expense of acquired intangible assets. Adjusted gross margin of
74.5% increased from 73.8% year over year due to increased mix to
higher margin software revenues relative to low-margin professional
services. Our software-only gross margin continues to exceed our
target of 80%.
- Sensors & Other revenue growth of 14.3% year over year was
driven by growth in Axon Body cameras and accessories due to higher
volumes, partially offset by lower Axon Fleet systems volumes on
more normalized deployment timelines.
- Sensors & Other gross margin of 38.7% increased modestly
from 38.2% year over year as improvement from manufacturing
overhead reallocations made in the second quarter of 2023 was
offset by an increased stock-based compensation expense related to
vesting events from a one-time enhanced equity compensation
program. Sensors & Other adjusted gross margin of 46.9%
increased from 38.6% year over year due to favorable product mix
and manufacturing overhead reallocations made in the second quarter
of 2023.
TASER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
CHANGE
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
|
QoQ
|
|
YoY
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
178,748
|
|
|
$
|
161,343
|
|
|
$
|
134,282
|
|
|
10.8
|
%
|
|
33.1
|
%
|
Gross margin
|
|
|
50.7
|
%
|
|
|
57.1
|
%
|
|
|
62.2
|
%
|
|
(640)
|
bp
|
|
(1,150)
|
bp
|
Adjusted gross
margin
|
|
|
61.8
|
%
|
|
|
57.6
|
%
|
|
|
62.4
|
%
|
|
420
|
bp
|
|
(60)
|
bp
|
- TASER segment revenue growth of 33.1% year over year was driven
by growth in professional devices and cartridges, associated with
increased volumes of TASER 10, and Evidence & Cloud services,
driven by increased connected devices in the field and growing
adoption of VR products.
- TASER segment gross margin of 50.7% decreased from 62.2%
primarily due to increased stock-based compensation expense related
to vesting events from a one-time equity compensation program.
TASER segment adjusted gross margin of 61.8% was down modestly year
over year from 62.4% due to higher product mix of TASER 10, which
has not yet reached full scale production, partially offset by the
absence of one-time items related to inventory and other cost
adjustments recognized in Q1 2023.
Forward-looking
performance indicators
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
30 SEP 2023
|
|
30 JUN 2023
|
|
31 MAR 2023
|
|
|
($ in millions)
|
|
Annual recurring
revenue (1)
|
|
$
|
825
|
|
|
$
|
732
|
|
|
$
|
652
|
|
|
$
|
590
|
|
|
$
|
551
|
|
Net revenue retention
(1)
|
|
|
122
|
%
|
|
|
122
|
%
|
|
|
122
|
%
|
|
|
122
|
%
|
|
|
121
|
%
|
Total company future
contracted revenue (1)
|
|
$
|
7,036
|
|
|
$
|
7,140
|
|
|
$
|
5,819
|
|
|
$
|
5,227
|
|
|
$
|
4,778
|
|
____________________
|
(1)
|
Refer to "Statistical
Definitions" below.
|
- Annual recurring revenue grew 49.7% year over year to
$825 million, driven by Axon Cloud
& Services growth, which reflects growing demand for our
high-value software subscription plans and a growing base of
connected devices.
- Net revenue retention was 122% in the quarter, reflecting
our ability to deliver additional value to our customers over time
and de minimis attrition. We drive adoption of our
cloud software solutions through integrated subscription plans,
which include a variety of premium software options. This
Software-as-a-Service ("SaaS") metric excludes the hardware portion
of customer subscriptions and is normalized to account for phased
customer deployments throughout the year.
- Total company future contracted revenue of $7.0 billion
decreased from $7.1 billion quarter
over quarter due to normal first quarter bookings seasonality. We
expect to recognize between 15% to 25% of this balance over the
next 12 months, and generally expect the remainder to be recognized
over the following ten years.
2024
Outlook
The following forward-looking statements reflect Axon's
expectations as of May 6, 2024, and
are subject to risks and uncertainties. Please refer
to "Forward-looking Statements" below for more
information.
- Axon expects full year 2024 revenue of $1.94 billion to $1.99
billion, representing approximately 26% annual growth at the
midpoint. This is an increase from our prior revenue guidance range
of $1.88 billion to $1.94 billion.
- Axon expects full year 2024 Adjusted EBITDA dollars of
$430 million to $445 million, implying Adjusted EBITDA margin of
approximately 22%. This is an increase from our prior Adjusted
EBITDA guidance range of $410 million
to $430 million.
- We provide Adjusted EBITDA guidance, rather than net income
guidance, due to the inherent difficulty of forecasting certain
types of expenses and gains such as stock-based compensation,
income tax expenses and gains or losses on marketable securities
and strategic investments, which affect net income but not
Adjusted EBITDA. We are unable to reasonably estimate the impact of
such expenses, which could be material, on net income. Accordingly,
we do not provide a reconciliation of projected net income to
projected Adjusted EBITDA.
- We expect stock-based compensation expenses to be approximately
$215 million to $230 million for the full year.
- Full year expected stock-based compensation expense includes
approximately $43 million in expenses
related to a one-time enhanced equity compensation program provided
to employees whose compensation is under a specified threshold. We
expect this expense to be primarily reflected within COGS.
Approximately $30 million in
stock-based expense related to this compensation opportunity was
recognized in the first quarter, in-line with vesting
schedules.
- Because our stock-based compensation expenses may vary based on
changes in our stock price or the actual timing of attainment of
certain metrics, it is inherently difficult to forecast future
stock-based compensation expense, which may also be materially
affected by any future stock-based compensation plans, subject to
shareholder approval.
- We expect 2024 CapEx to be in the range of $80 million to $95
million, up from $60 million
to $75 million previously. The
increase in our CapEx expectations is primarily a result of
accelerated capacity expansion investments to meet higher demand
for TASER 10. Our 2024 CapEx plans include investments in TASER 10
automation and capacity expansion, including cartridge capacity and
lab enhancements and global facility build-out and upgrades, such
as warehousing support for global shipping facilities.
Quarterly conference call and webcast
We will host our
Q1 2024 earnings conference call webinar on Monday, May 6th, 2 p.m.
PT / 5 p.m. ET.
The webcast will be available via a link on Axon's investor
relations website at https://investor.axon.com, or can be
accessed directly via https://axon.zoom.us/j/91234146923.
Statistical Definitions
Annual recurring revenue:
Annual recurring revenue is a performance indicator that management
believes provides more visibility into the growth of our revenue
generated by our highest margin, recurring services. Annual
recurring revenue should be viewed independently of revenue and
deferred revenue because it is an operating measure and is not
intended to be combined with or to replace GAAP revenue or deferred
revenue, as they can be impacted by contract start and end dates
and renewal rates. Annual recurring revenue is not intended to be a
replacement or forecast of revenue or deferred revenue. We
calculate annual recurring revenue as monthly recurring license,
integration, warranty, and storage revenue, annualized. As of the
first quarter of 2024, in order to comprehensively cover
recurring warranty revenue, we have recast our annual recurring
revenue figures to include recurring TASER segment warranty
revenue, in addition to the existing inclusion of recurring
warranty revenue from our Software & Sensors segment.
Net revenue retention: Dollar-based net revenue retention is an
important metric to measure our ability to retain and expand our
relationships with existing customers. We calculate it as the
software and camera warranty subscription and support revenue from
a base set of agency customers from which we generated Axon Cloud
subscription revenue in the last month of a quarter divided by the
software and camera warranty subscription and support revenue from
the year-ago month of that same customer base. This calculation
includes high-margin warranty revenue but purposely excludes
the lower-margin hardware subscription component of the
customer contracts, as it is meant to be a SaaS metric that we use
to monitor the health of the recurring revenue business we are
building. This calculation also excludes the implied monthly
revenue contribution of customers that were added since the
year-ago quarter, and therefore excludes the benefit of new
customer acquisition. The metric includes customers, if any, that
terminated during the annual period, and therefore, this metric is
inclusive of customer churn. This metric is downwardly adjusted to
account for the effect of phased deployments—meaning that, for the
year-ago period, we consider the total contractually obligated
implied monthly revenue amount, rather than monthly revenue amounts
that might have been in actuality smaller on a GAAP basis due to
the customer not having yet fully deployed their Axon solution. For
more information relative to our revenue recognition policies,
please reference our filings with the Securities and Exchange
Commission ("SEC").
Total company future contracted revenue: Total company future
contracted revenue represents remaining performance obligations and
includes both recognized contract liabilities as well as amounts
that will be invoiced and recognized in future periods. The
remaining performance obligations are limited only to arrangements
that meet the definition of a contract under Accounting Standards
Codification Topic 606 as of March 31,
2024. We currently expect to recognize between 15% to 25% of
this balance over the next 12 months, and generally expect the
remainder to be recognized over the following ten years, subject to
risks related to delayed deployments, budget appropriation or other
contract cancellation clauses.
Non-GAAP Measures
To supplement the Company's
financial results presented in accordance with GAAP, we present the
non-GAAP financial measures of EBITDA, Adjusted EBITDA, Adjusted
EBITDA Margin, Adjusted Gross Margin, Non-GAAP Net Income, Non-GAAP
Diluted Earnings Per Share, Free Cash Flow, and Adjusted Free Cash
Flow. The Company's management uses these non-GAAP financial
measures in evaluating the Company's performance in comparison to
prior periods. We believe that both management and investors
benefit from referring to these non-GAAP financial measures in
assessing its performance, and when planning and forecasting our
future periods. A reconciliation of GAAP to the non-GAAP financial
measures is presented below.
- EBITDA (Most comparable GAAP Measure: Net income) - Earnings
before interest expense, investment interest income, income taxes,
depreciation and amortization.
- Adjusted EBITDA (Most comparable GAAP Measure: Net income)
- Earnings before interest expense, investment interest
income, income taxes, depreciation, amortization, non-cash
stock-based compensation expense, fair value adjustments to
strategic investments and marketable securities, transaction costs
related to acquisitions and strategic investments, and other
unusual, non-recurring pre-tax items that are not considered
representative of our underlying operating performance (identified
and listed below in the reconciliation).
- Adjusted EBITDA Margin (Most comparable GAAP Measure: Net
income margin) – Adjusted EBITDA as a percentage of net sales.
- Adjusted Gross Margin (Most comparable GAAP Measure: Gross
Margin) – Gross Margin before non-cash stock-based compensation
expense and amortization of acquired intangible assets.
- Non-GAAP Net Income (Most comparable GAAP Measure: Net income)
- Net income excluding the costs of non-cash stock-based
compensation, gain/loss/write-down/disposal/abandonment of
property, equipment and intangible assets; fair value adjustments
to strategic investments and marketable securities; transaction
costs related to acquisitions and strategic investments; costs
related to the Federal Trade Commission ("FTC") litigation and
antitrust litigation and other unusual, non-recurring pre-tax
items that are not considered representative of our underlying
operating performance (listed below). The Company tax-effects
non-GAAP adjustments using the blended statutory federal and state
tax rates for each period presented.
- Non-GAAP Diluted Earnings Per Share (Most comparable GAAP
Measure: Earnings Per share) - Measure of Company's Non-GAAP Net
Income divided by the weighted average number of diluted common
shares outstanding during the period presented.
- Free Cash Flow (Most comparable GAAP Measure: Cash flow from
operating activities) - Cash flows provided by operating activities
minus purchases of property and equipment and intangible
assets.
- Adjusted Free Cash Flow (Most comparable GAAP Measure: Cash
flow from operating activities) - Cash flows provided by operating
activities minus purchases of property and equipment and intangible
assets, excluding the net impact of investments in our new
Scottsdale, Arizona campus and
bond premium amortization.
- We believe that free cash flow and adjusted free cash flow
excluding the impact of bond premium amortization and net campus
investment are non-GAAP measures that are useful to investors and
management to evaluate the Company's ability to generate cash.
These non-GAAP measures can also be used to evaluate the Company's
ability to generate cash flow from operations and the impact that
this cash flow has on the Company's liquidity.
Caution on Use of Non-GAAP Measures
Although these non-GAAP financial measures are not consistent
with GAAP, management believes investors will benefit by referring
to these non-GAAP financial measures when assessing the Company's
operating results, as well as when forecasting and analyzing future
periods. However, management recognizes that:
- these non-GAAP financial measures are limited in their
usefulness and should be considered only as a supplement to the
Company's GAAP financial measures;
- these non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, the Company's GAAP
financial measures;
- these non-GAAP financial measures should not be considered to
be superior to the Company's GAAP financial measures; and
- these non-GAAP financial measures were not prepared in
accordance with GAAP or under a comprehensive set of rules or
principles proposed by a third party.
- Further, these non-GAAP financial measures may be unique to the
Company, as they may be different from similarly titled non-GAAP
financial measures used by other companies. As such, this
presentation of non-GAAP financial measures may not enhance the
comparability of the Company's results to the results of other
companies.
About Axon
Axon is a technology leader in global
public safety. Our moonshot goal is to cut gun-related deaths
between police and the public by 50% before 2033. Axon is
building the public safety operating system of the future by
integrating a suite of hardware devices and cloud software
solutions that lead modern policing. Axon's suite includes TASER
energy devices, body cameras, in-car cameras, cloud-hosted digital
evidence management solutions, productivity software and real-time
operations capabilities. Axon's growing global customer base
includes first responders across international, federal, state and
local law enforcement, fire, corrections and emergency medical
services, as well as the justice sector, enterprises and
consumers.
Non-Axon trademarks are property of their respective owners.
Axon, Axon Air, Axon Body, Axon Auto-Transcribe, Axon Evidence,
Axon Fleet, Axon Records, Axon Respond, Axon Standards, Axon VR,
Sky-Hero, TASER, TASER 7, TASER 10, Protect Life, the Filled Bolt
within Circle Logo and the Delta Logo are trademarks of Axon
Enterprise, Inc., some of which are registered in the United States and other countries. For
more information, visit www.axon.com/legal. All rights
reserved.
Forward-looking Statements
Forward-looking statements
in this letter include, without limitation, statements regarding:
proposed products and services and related development efforts and
activities; expectations about the market for our current and
future products and services, including statements related to our
user base, customer profiles and TAM; the impact of pending
litigation; strategies and trends relating to subscription plan
programs and revenues; statements related to recently completed
acquisitions; our anticipation that contracts with governmental
customers will be fulfilled; the timing and realization of future
contracted revenue; the fulfillment of bookings; strategies and
trends, including the amounts and benefits of, R&D investments;
the sufficiency of our liquidity and financial resources;
expectations about customer behavior; statements concerning
projections, predictions, expectations, estimates or forecasts as
to our business, financial and operational results and future
economic performance, including our outlook for 2024 full year
revenue, stock-based compensation expense, Adjusted EBITDA,
Adjusted EBITDA margin, and capital expenditures; statements of
management's strategies, goals and objectives and other similar
expressions; as well as the ultimate resolution of financial
statement items requiring critical accounting
estimates, including those set forth in our Annual Report on
Form 10‑K for the year ended December 31,
2023 and our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2024. Such statements
give our current expectations or forecasts of future events; they
do not relate strictly to historical or current facts. Words such
as "may," "will," "should," "could," "would," "predict,"
"potential," "continue," "expect," "anticipate," "future,"
"intend," "plan," "believe," "estimate," and similar expressions,
as well as statements in future tense, identify forward-looking
statements. However, not all forward-looking statements contain
these identifying words.
We cannot guarantee that any forward-looking statement will be
realized, although we believe we have been prudent in our plans and
assumptions. Achievement of future results is subject to risks,
uncertainties and potentially inaccurate assumptions. The following
important factors could cause actual results to differ materially
from those in the forward-looking statements: our exposure to
cancellations of government contracts due to appropriation clauses,
exercise of a cancellation clause, or non-exercise of contractually
optional periods; the ability of law enforcement agencies to obtain
funding, including based on tax revenues; our ability to design,
introduce and sell new products, services or features; our ability
to defend against litigation and protect our intellectual property,
and the resulting costs of this activity; our ability to win bids
through the open bidding process for governmental agencies; our
ability to manage our supply chain and avoid production delays,
shortages and impacts to expected gross margins; the impacts of
inflation, macroeconomic conditions and global events; the impact
of catastrophic events or public health emergencies; the impact of
stock-based compensation expense, impairment expense, and income
tax expense on our financial results; customer purchase behavior,
including adoption of our software as a service delivery model;
negative media publicity or sentiment regarding our products; the
impact of various factors on projected gross margins; defects in,
or misuse of, our products; changes in the costs of product
components and labor; loss of customer data, a breach of security,
or an extended outage, including by our third party cloud-based
storage providers; exposure to international operational risks;
delayed cash collections and possible credit losses due to our
subscription model; changes in government regulations in
the United States and in foreign
markets, especially related to the classification of our products
by the United States Bureau of Alcohol, Tobacco, Firearms and
Explosives; our ability to integrate acquired businesses; the
impact of declines in the fair values or impairment of our
investments, including our strategic investments; our ability to
attract and retain key personnel; litigation or inquiries and
related time and costs; and counter-party risks relating to cash
balances held in excess of federally insured limits. Many events
beyond our control may determine whether results we anticipate will
be achieved. Should known or unknown risks or uncertainties
materialize, or should underlying assumptions prove inaccurate,
actual results could differ materially from past results and those
anticipated, estimated or projected. You should bear this in mind
as you consider forward-looking statements. Our Quarterly Report on
Form 10-Q for the quarter ended March 31,
2024, which we expect to be available on May 7, 2024, lists various important factors that
could cause actual results to differ materially from expected and
historical results. These factors are intended as cautionary
statements for investors within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended. Readers
can find them in Part II, Item 1A under the heading "Risk Factors"
in our Quarterly Reports on Form 10‑Q, and investors should refer
to them. You should understand that it is not possible to predict
or identify all such factors. You should understand that it is not
possible to predict or identify all such factors. Consequently, you
should not consider any such list to be a complete set of all
potential risks or uncertainties.
Except as required by law, we undertake no obligation to
publicly update forward-looking statements, whether as a result of
new information, future events or otherwise. You are advised,
however, to consult any further disclosures we make on related
subjects in our Form 8-K, 10‑Q and 10‑K reports to the SEC. Our
filings with the SEC may be accessed at the SEC's web site at
www.sec.gov.
Update on Legal Matters:
Antitrust Litigation/Inquiry Regarding 2018 Vievu
Acquisition
Pending in the District of New Jersey (Case No. 3:23-cv-7182-RK-RLS) is a
consolidated proposed class action lawsuit alleging Axon's 2018
acquisition of Vievu LLC from Safariland LLC was anticompetitive,
and that certain non-compete provisions in an ancillary holster
supply agreement between Axon and Safariland unlawfully restrained
trade. The complaint is based primarily on prior claims dismissed
by the FTC without condition or consent decree. Axon denies the
allegations and is vigorously defending the action.
Axon has served motions to dismiss all claims and to strike the
class allegations on numerous grounds, including that Axon's
federal, state, and municipal customers with sovereign immunity
cannot be absent class members. Motion practice is underway on
Axon's motion to dismiss and motion to strike class allegations,
with rulings unlikely in 2024. Discovery is stayed pending
these rulings.
Axon has also received a recent request for information from
the Pennsylvania Office of Attorney General regarding this
same consummated Vievu transaction. Axon intends to cooperate with
any such investigation and work to resolve any concerns of the
Commonwealth of Pennsylvania.
AXON
ENTERPRISE, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
Net sales from
products
|
|
$
|
272,048
|
|
$
|
258,405
|
|
$
|
219,389
|
Net sales from
services
|
|
|
188,688
|
|
|
173,737
|
|
|
123,654
|
Net sales
|
|
|
460,736
|
|
|
432,142
|
|
|
343,043
|
Cost of product
sales
|
|
|
151,698
|
|
|
125,664
|
|
|
107,584
|
Cost of service
sales
|
|
|
48,992
|
|
|
42,591
|
|
|
31,357
|
Cost of
sales
|
|
|
200,690
|
|
|
168,255
|
|
|
138,941
|
Gross margin
|
|
|
260,046
|
|
|
263,887
|
|
|
204,102
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Sales, general and
administrative
|
|
|
152,669
|
|
|
137,106
|
|
|
116,567
|
Research and
development
|
|
|
91,097
|
|
|
83,972
|
|
|
70,927
|
Total operating
expenses
|
|
|
243,766
|
|
|
221,078
|
|
|
187,494
|
Income from
operations
|
|
|
16,280
|
|
|
42,809
|
|
|
16,608
|
Interest Income,
net
|
|
|
10,374
|
|
|
12,325
|
|
|
9,666
|
Other income,
net
|
|
|
139,066
|
|
|
668
|
|
|
15,610
|
Income before provision
for income taxes
|
|
|
165,720
|
|
|
55,802
|
|
|
41,884
|
Provision for (benefit
from) income taxes
|
|
|
32,502
|
|
|
(1,469)
|
|
|
(3,255)
|
Net income
|
|
$
|
133,218
|
|
$
|
57,271
|
|
$
|
45,139
|
Net income per common
and common equivalent shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.77
|
|
$
|
0.76
|
|
$
|
0.62
|
Diluted
|
|
$
|
1.73
|
|
$
|
0.75
|
|
$
|
0.61
|
Weighted average number
of common and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
75,355
|
|
|
75,060
|
|
|
72,638
|
Diluted
|
|
|
77,132
|
|
|
76,178
|
|
|
73,880
|
AXON ENTERPRISE,
INC.
SEGMENT
REPORTING
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR 2024
|
|
|
31 DEC 2023
|
|
|
31 MAR 2023
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
Net sales from products
(1)
|
|
$
|
166,527
|
|
|
$
|
105,521
|
|
|
$
|
272,048
|
|
|
$
|
151,238
|
|
|
$
|
107,167
|
|
|
$
|
258,405
|
|
|
$
|
127,081
|
|
|
$
|
92,308
|
|
|
$
|
219,389
|
|
Net sales from services
(2)
|
|
|
12,221
|
|
|
|
176,467
|
|
|
|
188,688
|
|
|
|
10,105
|
|
|
|
163,632
|
|
|
|
173,737
|
|
|
|
7,201
|
|
|
|
116,453
|
|
|
|
123,654
|
|
Net sales
|
|
|
178,748
|
|
|
|
281,988
|
|
|
|
460,736
|
|
|
|
161,343
|
|
|
|
270,799
|
|
|
|
432,142
|
|
|
|
134,282
|
|
|
|
208,761
|
|
|
|
343,043
|
|
Cost of product
sales
|
|
|
86,984
|
|
|
|
64,714
|
|
|
|
151,698
|
|
|
|
68,067
|
|
|
|
57,597
|
|
|
|
125,664
|
|
|
|
50,583
|
|
|
|
57,001
|
|
|
|
107,584
|
|
Cost of service
sales
|
|
|
1,074
|
|
|
|
47,918
|
|
|
|
48,992
|
|
|
|
1,096
|
|
|
|
41,495
|
|
|
|
42,591
|
|
|
|
180
|
|
|
|
31,177
|
|
|
|
31,357
|
|
Cost of
sales
|
|
|
88,058
|
|
|
|
112,632
|
|
|
|
200,690
|
|
|
|
69,163
|
|
|
|
99,092
|
|
|
|
168,255
|
|
|
|
50,763
|
|
|
|
88,178
|
|
|
|
138,941
|
|
Gross margin
|
|
|
90,690
|
|
|
|
169,356
|
|
|
|
260,046
|
|
|
|
92,180
|
|
|
|
171,707
|
|
|
|
263,887
|
|
|
|
83,519
|
|
|
|
120,583
|
|
|
|
204,102
|
|
Gross margin
%
|
|
|
50.7
|
%
|
|
|
60.1
|
%
|
|
|
56.4
|
%
|
|
|
57.1
|
%
|
|
|
63.4
|
%
|
|
|
61.1
|
%
|
|
|
62.2
|
%
|
|
|
57.8
|
%
|
|
|
59.5
|
%
|
Adjusted gross
margin
|
|
|
61.8
|
%
|
|
|
64.1
|
%
|
|
|
63.2
|
%
|
|
|
57.6
|
%
|
|
|
63.8
|
%
|
|
|
61.5
|
%
|
|
|
62.4
|
%
|
|
|
58.2
|
%
|
|
|
59.9
|
%
|
_____________________
|
(1)
|
Software and Sensors
"products" revenue consists of sensors, including on-officer body
cameras, Axon Fleet cameras, other hardware sensors, warranties on
sensors, and other products, and is sometimes referred to as
Sensors and Other revenue.
|
(2)
|
Software and Sensors
"services" revenue comprises sales related to the Axon Cloud and
Services, which includes Axon Evidence, cloud-based evidence
management software revenue, other recurring cloud-hosted software
revenue and related professional services, and is sometimes
referred to as Axon Cloud and Services revenue.
|
AXON
ENTERPRISE, INC.
SALES BY PRODUCT AND
SERVICE
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
31 MAR 2024
|
|
|
31 DEC 2023
|
|
|
31 MAR 2023
|
|
TASER
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TASER Devices
(Professional)
|
$
|
98,676
|
|
21.4
|
%
|
|
$
|
94,758
|
|
21.9
|
%
|
|
$
|
67,472
|
|
19.7
|
%
|
Cartridges
|
|
56,198
|
|
12.2
|
|
|
|
43,781
|
|
10.1
|
|
|
|
46,800
|
|
13.6
|
|
Axon Evidence and
Cloud Services
|
|
12,221
|
|
2.7
|
|
|
|
10,105
|
|
2.4
|
|
|
|
7,201
|
|
2.1
|
|
Extended
Warranties
|
|
8,526
|
|
1.8
|
|
|
|
8,226
|
|
1.9
|
|
|
|
7,670
|
|
2.2
|
|
Other
(1)
|
|
3,127
|
|
0.7
|
|
|
|
4,473
|
|
1.0
|
|
|
|
5,139
|
|
1.5
|
|
Total TASER
segment
|
|
178,748
|
|
38.8
|
|
|
|
161,343
|
|
37.3
|
|
|
|
134,282
|
|
39.1
|
|
Software and Sensors
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axon Body Cameras and
Accessories
|
|
51,205
|
|
11.1
|
|
|
|
58,957
|
|
13.7
|
|
|
|
38,797
|
|
11.3
|
|
Axon Fleet
Systems
|
|
28,387
|
|
6.2
|
|
|
|
22,481
|
|
5.2
|
|
|
|
32,972
|
|
9.6
|
|
Axon Evidence and
Cloud Services
|
|
175,458
|
|
38.1
|
|
|
|
165,204
|
|
38.2
|
|
|
|
118,314
|
|
34.5
|
|
Extended
Warranties
|
|
18,474
|
|
4.0
|
|
|
|
17,272
|
|
4.0
|
|
|
|
14,085
|
|
4.1
|
|
Other
(2)
|
|
8,464
|
|
1.8
|
|
|
|
6,885
|
|
1.6
|
|
|
|
4,593
|
|
1.4
|
|
Total Software and
Sensors segment
|
|
281,988
|
|
61.2
|
|
|
|
270,799
|
|
62.7
|
|
|
|
208,761
|
|
60.9
|
|
Total net
sales
|
$
|
460,736
|
|
100.0
|
%
|
|
$
|
432,142
|
|
100.0
|
%
|
|
$
|
343,043
|
|
100.0
|
%
|
_________________
|
(1)
|
TASER segment "Other"
includes smaller categories, such as VR hardware, weapons training
revenue such as revenue associated with our Master Instructor
School, and TASER consumer device sales.
|
(2)
|
Software and Sensors
segment "Other" includes revenue from items including Signal
Sidearm, Interview Room, Axon Air and other sensors and
equipment.
|
AXON
ENTERPRISE, INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
|
EBITDA and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
133,218
|
|
$
|
57,271
|
|
$
|
45,139
|
|
Depreciation and
amortization
|
|
|
11,564
|
|
|
10,051
|
|
|
6,689
|
|
Interest
expense
|
|
|
1,756
|
|
|
1,772
|
|
|
1,724
|
|
Investment interest
income
|
|
|
(12,130)
|
|
|
(14,097)
|
|
|
(11,390)
|
|
Provision for (benefit
from) income taxes
|
|
|
32,502
|
|
|
(1,469)
|
|
|
(3,255)
|
|
EBITDA
|
|
$
|
166,910
|
|
$
|
53,528
|
|
$
|
38,907
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
$
|
75,115
|
|
$
|
35,130
|
|
$
|
34,350
|
|
Unrealized gain on
strategic investments and marketable securities, net
|
|
|
(97,419)
|
|
|
(521)
|
|
|
(15,570)
|
|
Gain on remeasurement
of previously held minority interest, net
|
|
|
(42,292)
|
|
|
—
|
|
|
—
|
|
Transaction costs
related to strategic investments and acquisitions
|
|
|
6,357
|
|
|
2,708
|
|
|
843
|
|
Loss on disposal,
abandonment, and impairment of property, equipment and intangible
assets, net
|
|
|
—
|
|
|
—
|
|
|
156
|
|
Costs related to
antitrust and FTC litigations
|
|
|
224
|
|
|
169
|
|
|
—
|
|
Payroll taxes related
to XSPP vesting and CEO Award option exercises
|
|
|
—
|
|
|
50
|
|
|
6,392
|
|
Adjusted
EBITDA
|
|
$
|
108,895
|
|
$
|
91,064
|
|
$
|
65,078
|
|
Net income as a percentage of net
sales
|
|
|
28.9
|
%
|
|
13.3
|
%
|
|
13.2
|
%
|
Adjusted EBITDA as a percentage of net
sales
|
|
|
23.6
|
%
|
|
21.1
|
%
|
|
19.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
expense:
|
|
|
|
|
|
|
|
|
|
|
Cost of product and
service sales
|
|
$
|
29,595
|
|
$
|
1,910
|
|
$
|
1,320
|
|
Sales, general and
administrative
|
|
|
23,155
|
|
|
15,301
|
|
|
15,445
|
|
Research and
development
|
|
|
22,365
|
|
|
17,919
|
|
|
17,585
|
|
Total
|
|
$
|
75,115
|
|
$
|
35,130
|
|
$
|
34,350
|
|
AXON ENTERPRISE,
INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES - continued
(in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
|
Non-GAAP net income:
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
|
|
$
|
133,218
|
|
$
|
57,271
|
|
$
|
45,139
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
75,115
|
|
|
35,130
|
|
|
34,350
|
|
Unrealized gain on
strategic investments and marketable securities, net
|
|
|
(97,419)
|
|
|
(521)
|
|
|
(15,570)
|
|
Gain on remeasurement
of previously held minority interest, net
|
|
|
(42,292)
|
|
|
—
|
|
|
—
|
|
Transaction costs
related to strategic investments and acquisitions
|
|
|
6,357
|
|
|
2,708
|
|
|
843
|
|
Loss on disposal,
abandonment, and impairment of property, equipment and intangible
assets, net
|
|
|
—
|
|
|
—
|
|
|
156
|
|
Costs related to
antitrust and FTC litigations
|
|
|
224
|
|
|
169
|
|
|
—
|
|
Payroll taxes related
to XSPP vesting and CEO Award option exercises
|
|
|
—
|
|
|
50
|
|
|
6,392
|
|
Income tax
effects
|
|
|
13,647
|
|
|
(9,391)
|
|
|
(6,660)
|
|
Non-GAAP net
income
|
|
$
|
88,850
|
|
$
|
85,416
|
|
$
|
64,650
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per common share
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
1.73
|
|
$
|
0.75
|
|
$
|
0.61
|
|
Non-GAAP
|
|
$
|
1.15
|
|
$
|
1.12
|
|
$
|
0.88
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of diluted common and common equivalent shares outstanding (in
thousands)
|
|
|
77,132
|
|
|
76,178
|
|
|
73,880
|
|
AXON ENTERPRISE,
INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES - continued
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
Net sales
|
|
$
|
460,736
|
|
|
$
|
432,142
|
|
|
$
|
343,043
|
|
Cost of
sales
|
|
|
200,690
|
|
|
|
168,255
|
|
|
|
138,941
|
|
Gross margin
|
|
|
260,046
|
|
|
|
263,887
|
|
|
|
204,102
|
|
Stock-based
compensation expense
|
|
|
29,595
|
|
|
|
1,910
|
|
|
|
1,320
|
|
Amortization of
acquired intangible assets
|
|
|
1,686
|
|
|
|
—
|
|
|
|
—
|
|
Adjusted gross
margin
|
|
$
|
291,327
|
|
|
$
|
265,797
|
|
|
$
|
205,422
|
|
Gross
margin
|
|
|
56.4
|
%
|
|
|
61.1
|
%
|
|
|
59.5
|
%
|
Adjusted gross
margin
|
|
|
63.2
|
%
|
|
|
61.5
|
%
|
|
|
59.9
|
%
|
Software and
Sensors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
31 MAR 2024
|
|
|
31 DEC 2023
|
|
|
31 MAR 2023
|
|
|
Axon Cloud
|
|
|
Sensors
|
|
|
|
|
|
|
Axon Cloud
|
|
|
Sensors
|
|
|
|
|
|
|
Axon Cloud
|
|
|
Sensors
|
|
|
|
|
|
|
|
& Services
|
|
|
& Other
|
|
|
Total
|
|
|
& Services
|
|
|
& Other
|
|
|
Total
|
|
|
& Services
|
|
|
& Other
|
|
|
|
Total
|
|
New sales
|
|
$
|
176,467
|
|
|
$
|
105,521
|
|
|
$
|
281,988
|
|
|
$
|
163,632
|
|
|
$
|
107,167
|
|
|
$
|
270,799
|
|
|
$
|
116,453
|
|
|
$
|
92,308
|
|
|
$
|
208,761
|
|
Cost of
sales
|
|
|
47,918
|
|
|
|
64,714
|
|
|
|
112,632
|
|
|
|
41,495
|
|
|
|
57,597
|
|
|
|
99,092
|
|
|
|
31,177
|
|
|
|
57,001
|
|
|
|
88,178
|
|
Gross margin
|
|
|
128,549
|
|
|
|
40,807
|
|
|
|
169,356
|
|
|
|
122,137
|
|
|
|
49,570
|
|
|
|
171,707
|
|
|
|
85,276
|
|
|
|
35,307
|
|
|
|
120,583
|
|
Stock-based
compensation
expense
|
|
|
1,502
|
|
|
|
8,312
|
|
|
|
9,814
|
|
|
|
964
|
|
|
|
233
|
|
|
|
1,197
|
|
|
|
697
|
|
|
|
313
|
|
|
|
1,010
|
|
Amortization of
acquired
intangible assets
|
|
|
1,348
|
|
|
|
338
|
|
|
|
1,686
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Adjusted gross
margin
|
|
$
|
131,399
|
|
|
$
|
49,457
|
|
|
$
|
180,856
|
|
|
$
|
123,101
|
|
|
$
|
49,803
|
|
|
$
|
172,904
|
|
|
$
|
85,973
|
|
|
$
|
35,620
|
|
|
$
|
121,593
|
|
Gross
margin
|
|
|
72.8
|
%
|
|
|
38.7
|
%
|
|
|
60.1
|
%
|
|
|
74.6
|
%
|
|
|
46.3
|
%
|
|
|
63.4
|
%
|
|
|
73.2
|
%
|
|
|
38.2
|
%
|
|
|
57.8
|
%
|
Adjusted gross
margin
|
|
|
74.5
|
%
|
|
|
46.9
|
%
|
|
|
64.1
|
%
|
|
|
75.2
|
%
|
|
|
46.5
|
%
|
|
|
63.8
|
%
|
|
|
73.8
|
%
|
|
|
38.6
|
%
|
|
|
58.2
|
%
|
TASER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
Net sales
|
|
$
|
178,748
|
|
|
$
|
161,343
|
|
|
$
|
134,282
|
|
Cost of
sales
|
|
|
88,058
|
|
|
|
69,163
|
|
|
|
50,763
|
|
Gross margin
|
|
|
90,690
|
|
|
|
92,180
|
|
|
|
83,519
|
|
Stock-based
compensation expense
|
|
|
19,781
|
|
|
|
713
|
|
|
|
310
|
|
Adjusted gross
margin
|
|
$
|
110,471
|
|
|
$
|
92,893
|
|
|
$
|
83,829
|
|
Gross
margin
|
|
|
50.7
|
%
|
|
|
57.1
|
%
|
|
|
62.2
|
%
|
Adjusted gross
margin
|
|
|
61.8
|
%
|
|
|
57.6
|
%
|
|
|
62.4
|
%
|
AXON ENTERPRISE,
INC.
CONSOLIDATED BALANCE
SHEETS
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
403,870
|
|
$
|
598,545
|
Marketable
securities
|
|
|
99,720
|
|
|
77,940
|
Short-term
investments
|
|
|
560,186
|
|
|
644,054
|
Accounts and notes
receivable, net
|
|
|
476,764
|
|
|
417,690
|
Contract assets,
net
|
|
|
266,172
|
|
|
275,779
|
Inventory
|
|
|
271,318
|
|
|
269,855
|
Prepaid expenses and
other current assets
|
|
|
123,677
|
|
|
112,786
|
Total current
assets
|
|
|
2,201,707
|
|
|
2,396,649
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
209,166
|
|
|
200,533
|
Deferred tax assets,
net
|
|
|
208,861
|
|
|
229,513
|
Intangible assets,
net
|
|
|
89,419
|
|
|
19,539
|
Goodwill
|
|
|
308,470
|
|
|
57,945
|
Long-term notes
receivable, net
|
|
|
2,397
|
|
|
2,588
|
Long-term contract
assets, net
|
|
|
88,209
|
|
|
77,710
|
Strategic
investments
|
|
|
295,497
|
|
|
231,730
|
Other long-term
assets
|
|
|
212,470
|
|
|
220,638
|
Total assets
|
|
$
|
3,616,196
|
|
$
|
3,436,845
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
82,075
|
|
$
|
88,326
|
Accrued
liabilities
|
|
|
127,415
|
|
|
188,230
|
Current portion of
deferred revenue
|
|
|
516,404
|
|
|
491,691
|
Customer
deposits
|
|
|
21,979
|
|
|
21,935
|
Other current
liabilities
|
|
|
9,601
|
|
|
9,787
|
Total current
liabilities
|
|
|
757,474
|
|
|
799,969
|
|
|
|
|
|
|
|
Deferred revenue, net
of current portion
|
|
|
293,878
|
|
|
281,852
|
Liability for
unrecognized tax benefits
|
|
|
18,610
|
|
|
18,049
|
Long-term deferred
compensation
|
|
|
14,700
|
|
|
11,342
|
Long-term lease
liabilities
|
|
|
32,546
|
|
|
33,550
|
Convertible notes,
net
|
|
|
677,895
|
|
|
677,113
|
Other long-term
liabilities
|
|
|
3,078
|
|
|
2,936
|
Total liabilities
|
|
|
1,798,181
|
|
|
1,824,811
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
Common stock
|
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
|
1,421,080
|
|
|
1,347,410
|
Treasury
stock
|
|
|
(155,947)
|
|
|
(155,947)
|
Retained
earnings
|
|
|
564,467
|
|
|
431,249
|
Accumulated other
comprehensive loss
|
|
|
(11,586)
|
|
|
(10,679)
|
Total stockholders' equity
|
|
|
1,818,015
|
|
|
1,612,034
|
Total liabilities and stockholders'
equity
|
|
$
|
3,616,196
|
|
$
|
3,436,845
|
AXON ENTERPRISE,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
133,218
|
|
$
|
57,271
|
|
$
|
45,139
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Gain on strategic
investments and marketable securities, net
|
|
|
(97,419)
|
|
|
(521)
|
|
|
(15,570)
|
|
Stock-based
compensation
|
|
|
75,115
|
|
|
35,130
|
|
|
34,350
|
|
Gain on remeasurement
of previously held minority interest, net
|
|
|
(42,292)
|
|
|
—
|
|
|
—
|
|
Deferred income
taxes
|
|
|
20,670
|
|
|
(19,691)
|
|
|
(9,660)
|
|
Depreciation and
amortization
|
|
|
11,564
|
|
|
10,051
|
|
|
6,689
|
|
Bond
amortization
|
|
|
(4,990)
|
|
|
(4,378)
|
|
|
(3,890)
|
|
Noncash lease
expense
|
|
|
1,795
|
|
|
1,956
|
|
|
1,395
|
|
Amortization of
debt issuance cost
|
|
|
782
|
|
|
798
|
|
|
756
|
|
Unrecognized tax
benefits
|
|
|
544
|
|
|
473
|
|
|
855
|
|
Other noncash
items
|
|
|
461
|
|
|
2,389
|
|
|
1,047
|
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable and contract assets
|
|
|
(51,132)
|
|
|
9,944
|
|
|
(50,431)
|
|
Inventory
|
|
|
(710)
|
|
|
(12,332)
|
|
|
(15,811)
|
|
Prepaid expenses and
other assets
|
|
|
2
|
|
|
(37,762)
|
|
|
(64,348)
|
|
Accounts payable,
accrued and other liabilities
|
|
|
(84,289)
|
|
|
50,961
|
|
|
(37,043)
|
|
Deferred
revenue
|
|
|
20,743
|
|
|
45,749
|
|
|
50,199
|
|
Net cash provided by
(used in) operating activities
|
|
|
(15,938)
|
|
|
140,038
|
|
|
(56,323)
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(241,457)
|
|
|
(118,995)
|
|
|
(145,124)
|
|
Proceeds from call /
maturity of investments
|
|
|
330,472
|
|
|
196,204
|
|
|
81,088
|
|
Purchases of property
and equipment
|
|
|
(16,194)
|
|
|
(24,011)
|
|
|
(8,513)
|
|
Purchases of intangible
assets
|
|
|
—
|
|
|
(56)
|
|
|
(125)
|
|
Proceeds from disposal
of property and equipment
|
|
|
34
|
|
|
31
|
|
|
—
|
|
Strategic
investments
|
|
|
(9,128)
|
|
|
—
|
|
|
—
|
|
Business acquisition,
net of cash acquired
|
|
|
(237,771)
|
|
|
—
|
|
|
—
|
|
Net cash provided by
(used in) investing activities
|
|
|
(174,044)
|
|
|
53,173
|
|
|
(72,674)
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from
equity offering
|
|
|
—
|
|
|
—
|
|
|
33,650
|
|
Proceeds from options
exercised
|
|
|
—
|
|
|
—
|
|
|
39,181
|
|
Income and payroll tax
payments for net-settled stock awards
|
|
|
(2,710)
|
|
|
(3,818)
|
|
|
(34,841)
|
|
Net cash provided by
(used in) financing activities
|
|
|
(2,710)
|
|
|
(3,818)
|
|
|
37,990
|
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
|
(1,978)
|
|
|
3,266
|
|
|
779
|
|
Net increase (decrease)
in cash and cash equivalents and restricted cash
|
|
|
(194,670)
|
|
|
192,659
|
|
|
(90,228)
|
|
Cash and cash
equivalents and restricted cash, beginning of period
|
|
|
600,670
|
|
|
408,011
|
|
|
355,552
|
|
Cash and cash
equivalents and restricted cash, end of period
|
|
$
|
406,000
|
|
$
|
600,670
|
|
$
|
265,324
|
|
|
|
|
|
|
|
|
|
|
|
|
AXON
ENTERPRISE, INC.
SELECTED CASH FLOW
INFORMATION
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
31 MAR 2023
|
Net cash provided by
operating activities
|
|
$
|
(15,938)
|
|
$
|
140,038
|
|
$
|
(56,323)
|
Purchases of property
and equipment
|
|
|
(16,194)
|
|
|
(24,011)
|
|
|
(8,513)
|
Purchases of intangible
assets
|
|
|
—
|
|
|
(56)
|
|
|
(125)
|
Free cash flow, a
non-GAAP measure
|
|
$
|
(32,132)
|
|
$
|
115,971
|
|
$
|
(64,961)
|
Bond premium
amortization
|
|
|
4,990
|
|
|
4,378
|
|
|
3,890
|
Net campus
investment
|
|
|
1,033
|
|
|
606
|
|
|
1,012
|
Adjusted free cash
flow, a non-GAAP measure
|
|
$
|
(26,109)
|
|
$
|
120,955
|
|
$
|
(60,059)
|
AXON
ENTERPRISE, INC.
SUPPLEMENTAL
TABLES
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 MAR 2024
|
|
31 DEC 2023
|
|
|
(Unaudited)
|
|
|
|
Cash and cash
equivalents
|
|
$
|
403,870
|
|
$
|
598,545
|
Short-term
investments
|
|
|
560,186
|
|
|
644,054
|
Cash and cash
equivalents and investments, net
|
|
|
964,056
|
|
|
1,242,599
|
Convertible notes,
principal amount
|
|
|
(690,000)
|
|
|
(690,000)
|
Total cash and cash
equivalents and investments, net of convertible notes
|
|
$
|
274,056
|
|
$
|
552,599
|
CONTACT:
Investor Relations
Axon Enterprise, Inc.
IR@axon.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/axon-reports-q1-2024-revenue-of-461-million-up-34-year-over-year-raises-outlook-302137174.html
SOURCE Axon