SCOTTSDALE, Ariz., May 6, 2021 /PRNewswire/ --
Dear Shareholders,
We are pleased with our robust start to 2021. Revenue growth of
33% in the quarter exceeded our expectations and drove increased
profitability, as we executed upon growing demand for TASER devices
and software-heavy body camera bundles. Solid Q1 gross margin
reflects a combination of strong TASER demand and fixed-cost
leverage on higher-than-expected revenue, which also flowed through
to the bottom line.
We are seeing healthy demand for new products, with new products
bookings up 130% year over year, driven by productivity and
real-time operations software solutions, VR training and
transcription services. We are also successfully expanding into new
markets, with new market bookings up 35% year over year.
Customers — and increasingly, communities, too — see us as a
leader and key partner in the global drive to transform public
safety. We hear stories daily about customers using our products to
save lives and protect communities. Our software usage metrics are
hitting new highs, and customers are enthusiastically supporting
our mission to protect life and make the bullet obsolete.
As communities call for more public safety transparency, not
only to record all interactions with the public but also to make
reporting more transparent, we are helping agencies meet the
critical needs of their communities. Our software products such as
Axon Performance help agencies manage compliance with body-camera
usage policies and foster greater transparency. In fact, data shows
that Axon Performance is driving body-camera usage. For example,
we've documented customers who have improved from recording only
about half of their interactions with the public, to recording
nearly four out of every five interactions, after implementing Axon
Performance software.
"We deployed body-worn cameras
to promote transparency and legitimacy in our community and we are
committed to being accountable to the community we serve. Axon
Performance is a key part of making sure the officers' cameras are
on and recording when they should be. The Performance metrics have
allowed officers and supervisors to monitor camera activations, and
over the last nine months our activation rates have increased from
54% to 78%." --Kristofer Jenny,
Police Sergeant at Napa Police Department, April 2021
Select Q1 2021 highlights
Our teams are executing on our 2021 strategic priorities of
growing our core, scaling new products, unlocking new markets and
driving efficiency to fuel growth.
Scaling new products:
Axon Fleet 3 beta trial underway, ALPR demand exceeding
expectations: In April, we began beta testing our new
AI-powered Automatic License Plate Recognition (ALPR) technology at
four agencies. We expect to launch Fleet 3 later this year
featuring ALPR notifications and Respond for Devices with location
updates and livestreaming. Our Fleet 3 backlog of orders has grown
to more than 60 agencies and more than 2,500 vehicles, representing
$25 million in bookings and
higher-than-expected demand for our premium Fleet 3 bundle that
includes subscriptions to both ALPR and Respond live streaming from
the Fleet cameras.
Axon Fleet 3 with Advanced
License Plate Reading (ALPR)
Axon Fleet 3's AI-powered
camera system for ALPR makes it disruptively affordable enough for
agencies to equip every patrol car. ALPR is a software subscription
add-on that helps to reduce officer distraction and is useful for
finding missing children and recovering stolen vehicles. Axon Fleet
3 will integrate ALPR capability in the dashboard camera of every
patrol vehicle, allowing agencies to deploy more coverage at a
fraction of the cost. Fleet 3 will also enable real-time telemetry
and video streaming capabilities and will be compatible with 5G to
leverage low-latency connectivity for enhanced real-time services
and direct video offload to the cloud. We are simultaneously
addressing industry shortcomings to improve data security,
transparency and privacy as declining costs enable more widespread
use of the technology.
Baltimore PD on track to become the largest agency to deploy
Axon Records: Axon has conducted comprehensive in-person
acceptance testing with users representing a diverse range of
agency roles. Customer feedback is positive about the product's
ease of use and the increased efficiency that the agency will gain.
Training for officers on how to use the new system is underway and
we are preparing for launch in the coming weeks.
Respond for Devices momentum continues to grow: Hundreds
of agencies representing more than 60,000 sworn officers are now
using Respond for Devices each month, including our newest feature,
Priority Evidence Upload. This allows officers to immediately
upload critical evidence over LTE right from their camera rather
than waiting to get back to the station to dock their camera or
separately connect to an app on their PC or phone. Moreover, our
beta of the AutoTranscribe Digital Notepad lets Respond for Devices
customers automatically upload all of the audio from their
recordings over LTE. As a result, transcriptions are available
immediately, enabling officers to expedite report writing rather
than waiting until the end of their shift.
Unlocking new markets:
Growing international pipeline: Our deal pipeline in
international markets is robust, with the largest new deal activity
in Q1 2021 coming from Canada, the
UK, Hungary, Brazil and New
Zealand. We achieved exciting milestones in Italy with the municipal police departments of
the cities of Venice and Udine
becoming the first agencies to equip officers with TASER devices
and Axon software licenses, and the local police in Latisana,
Riviera Friulana becoming the first city to adopt Axon Fleet 2
along with our Interview solution. Meanwhile, the government of
Ontario, Canada became the first
province to deploy Axon Evidence across public safety agencies,
highlighting the growing utility of our cloud software platform.
Additionally, Axon completed a cyber security review from the
Australian government, fulfilling a requirement from the country's
federal and defense customers to provide an added level of security
and assurances and enabling broader adoption of Axon's cloud
solutions in Australia.
Driving efficiency:
Investments drive TASER device capacity, gross margin
improvements: We are building additional manufacturing capacity
to support our TASER device and cartridge manufacturing lines, in
response to growing International and Federal demand and an
increased install base. Investments so far in 2021 have resulted in
an approximately 40% capacity increase in TASER 7 propulsion module
and cartridge line production capacity, combined with greater
per-person efficiency that will generate $1
million in gross cost annual run rate savings on the TASER
7. Thus far in 2021, TASER segment manufacturing and supply chain
improvements are on track to result in more than $4 million in gross costs savings this year.
Segment gross margins may continue to fluctuate based on customer
and product mix.
Leveraging the Axon platform: An update on strategic
partnerships and investments
To build the public safety ecosystem of the future, Axon is
aligning with other innovators and technology disrupters. Our
recently announced strategic partnership with Skydio, for instance,
makes Skydio drones and autonomy software solutions available to
agencies through Axon. This relationship paves the way for the
integration of Skydio's offerings with Axon's product suite, which
will drive ground-breaking evidence management, real-time
situational awareness and scene reconstruction capabilities for
agencies.
Axon's recent partnerships and investments are reflective of our
vision to become synonymous with public safety — and equally
important, allow us to leverage and expand our platform in a
transformative manner. Our expanding ecosystem relationships are
driven by our focus on customers and their growing needs for
digital evidence management and real-time operations.
- RapidSOS: In Q1, Axon invested $20 million in RapidSOS and recently completed a
strategic partnership that will for the first time unify
life-saving data from both Axon and RapidSOS on a single screen –
delivering it to 911 telecommunicators and first responders in
real-time. This data includes accurate location, medical and other
incident-related information from over 350 million connected
devices recognized as RapidSOS Ready, such as smart phones, as well
as live footage from Axon Body 3 cameras, Axon Fleet cameras and
Axon Air Drones. RapidSOS supports more than 4,800 emergency
communications centers.
- Cellebrite: Cellebrite completed a demo integration with
Axon Evidence in April. Upon complete integration, Cellebrite's
Pathfinder software will have the option to save device extraction
data, such as from a mobile device, laptop, or drone, and the
accompanying analytics directly to Axon Evidence. Separately, Axon
also has agreed to invest $90 million
in Cellebrite via an oversubscribed PIPE transaction in connection
with Cellebrite's business combination with TWC Tech Holdings II
Corp., a publicly-traded SPAC sponsored by True Wind Capital.
Cellebrite is the market leader in digital intelligence — allowing
agencies to collect, review, analyze, and manage investigative data
from a broad range of digital sources such as mobile devices and
PCs — and its solutions have been purchased by 6,700 public safety
agencies and private sector enterprises in over 140 countries,
helping millions of investigations globally. Cellebrite's solutions
are complementary with Axon's and empower investigators to
accelerate justice in legally sanctioned investigations.
Summary of Q1 2021 results:
- Revenue of $195 million grew 33%
year over year, on top of 27% growth in Q1 2020, reflecting
strengthened demand across our product lines. Domestic revenue grew
37% in the quarter and international revenue grew 17%.
- Gross margin of 63.3% improved 310 basis points year over year,
and was its highest in 10 quarters, reflecting strong demand for
our premium TASER offerings, engineered lower build costs in our
TASER segment and fixed-cost leverage.
-
- Although we have experienced port constraints and some
increases in raw materials costs, we have remained focused on
closely monitoring our supply chain, and mitigating impacts to keep
our gross margins predictable and our inventory steady. For
instance, during the recent global slowdown in manufacturing
affected by the blockage in the Suez Canal, we duplicated orders by
ocean and air, and worked with suppliers to hold higher buffers for
Axon on their shelves. We have also worked to mitigate raw
materials cost increases through supplier negotiations and
purchasing added non-expiring raw materials. We continue to bolster
our strategic relationships in our supply chain, work to identify
secondary sourcing, and build in shipping and inventory buffers,
which has kept our supply chain execution solid.
- Operating expenses of $174
million included $88.1 million
in stock-based compensation expense.
-
- SG&A of $127 million included
$71.0 million in stock-based
compensation expense.
- R&D of $47 million included
$17.1 million in stock-based
compensation expense.
- We recognized $75 million in
expenses related to our eXponential Stock Performance Plan ("XSPP")
and CEO Performance Award in the first quarter. As of Q1 2021, all
12 operational goals are considered probable.
-
- In Q1 2021, $9.8 million of
stock-based compensation expense was tied to "catch up" expenses
due to a 12th tranche being considered probable of attainment,
$41.6 million was tied to
acceleration in expected attainment dates, which means the time
over which we record expense is shortened, and $6.5 million was tied to achieving a tranche in
Q4 2020 that was certified as achieved during Q1 2021.
- Since the CEO Performance Award was adopted in 2018, we have
expensed $132.4 million of total
potential expense of $246.0 million
under the plan. Since the XSPP plan was adopted in 2019, we have
expensed $94.8 million of total
potential expense of $191.5 million
currently projected under the plan for XSPP grants issued to
date.
- For more details about these innovative stock-based
compensation plans, which were approved by shareholders and align
the interests of management and employees with shareholders, please
see our online FAQ at investor.axon.com.
- GAAP diluted EPS was ($0.75)
based on GAAP net loss of $48
million. GAAP EPS was lower by approximately $1.33 due to expenses related to stock-based
compensation. Non-GAAP EPS was $0.31.
- Quarterly Adjusted EBITDA grew 53% year over year to
$45.8 million, representing a 23.5%
margin on revenue.
- Cash and cash equivalents and investments totaled $674 million at March 31,
2021. Operating cash flow of $61
million was offset by a $20
million investment in RapidSOS (see strategic partnership
update, above) and $10.5 million in
capital expenditures.
- Axon has no debt.
Financial commentary by segment:
TASER
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THREE MONTHS ENDED
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CHANGE
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31 MAR
2021
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31 DEC
2020
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31 MAR
2020
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QoQ
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YoY
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(in thousands)
|
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Net sales
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$
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98,999
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$
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135,761
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$
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75,895
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(27.1)
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%
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30.4
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%
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Gross
margin
|
|
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66.7
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%
|
|
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64.5
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%
|
|
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60.1
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%
|
|
220
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bp
|
|
660
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bp
|
- TASER segment revenue of $99
million grew 30% year over year on strong demand in the US,
Canada and Brazil. The sequential decline is tied to
seasonality. Also, Q4 2020 benefitted from a $20 million order from an international
customer.
- Gross margin increased to 66.7%, the highest for the segment
since Q3 2018, as we realized the benefits of strong demand for our
premium TASER offerings and engineered lower build costs.
Software & Sensors
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THREE MONTHS ENDED
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CHANGE
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31 MAR
2021
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31 DEC
2020
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31 MAR
2020
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QoQ
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YoY
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(in thousands)
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Axon Cloud net
sales
|
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$
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52,436
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$
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50,343
|
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$
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39,154
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4.2
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%
|
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33.9
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%
|
Axon Cloud gross
margin
|
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75.1
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%
|
|
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77.7
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%
|
|
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75.3
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%
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(260)
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bp
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(20)
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bp
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Sensors and Other net
sales
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$
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43,584
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$
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40,036
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$
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32,113
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8.9
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%
|
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35.7
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%
|
Sensors and Other
gross margin
|
|
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41.1
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%
|
|
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36.3
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%
|
|
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42.0
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%
|
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480
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bp
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(90)
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bp
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- Axon Cloud revenue grew 34% year over year, reflecting growing
adoption of our software features.
- Axon Cloud gross margin of 75.1% includes expected costs to
scale our cloud business. This includes low-to-no margin
professional services costs, as well as expenses tied to standing
up new cloud environments in new markets and geographies. We expect
these factors to pressure gross margins as we further scale our
cloud business. The software-only revenue in this segment, which
includes cloud storage and compute costs, has consistently carried
a gross margin above 80%.
- Sensors & Other revenue grew 36% year over year, reflecting
healthy demand for our body camera and Fleet hardware.
- Sensors & Other gross margin was 41.1%. As a reminder, we
manage toward a 25% gross margin for camera and sensors hardware,
and the gross margin will fluctuate quarter to quarter depending on
the customer mix.
Forward-looking performance indicators:
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31 MAR
2021
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31 DEC
2020
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30 SEP 2020
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30 JUNE
2020
|
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31 MAR
2020
|
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($
in thousands)
|
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Annual recurring
revenue (1)
|
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$
|
242,357
|
|
|
$
|
221,263
|
|
|
$
|
203,815
|
|
|
$
|
183,498
|
|
|
$
|
173,919
|
|
Net revenue retention
(2)
|
|
|
119
|
%
|
|
|
119
|
%
|
|
|
120
|
%
|
|
|
119
|
%
|
|
|
119
|
%
|
Total company
future
contracted revenue (2)
|
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$
|
1,790,000
|
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$
|
1,730,000
|
|
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$
|
1,510,000
|
|
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$
|
1,340,000
|
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$
|
1,274,000
|
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Percentage of
TASER
devices sold on a recurring
payment plan
|
|
|
64
|
%
|
|
|
53
|
%
|
|
|
75
|
%
|
|
|
46
|
%
|
|
|
43
|
%
|
|
|
(1)
|
Monthly recurring
license, integration, warranty, and storage revenue
annualized.
|
(2)
|
Refer to "Statistical
Definitions" below.
|
- Annual Recurring Revenue ("ARR") grew 39% year over year to
$242 million. On a sequential basis,
ARR increased by $21 million,
reflecting robust customer demand for our growing suite of software
tools.
- Net revenue retention was 119% in the quarter, reflecting our
ability to deliver additional value to our customers over time and
our de minimis annual churn rates. We drive adoption of our cloud
software solutions through integrated bundling. We are seeing major
cities upgrading their subscriptions at individual net dollar
retention rates of 150% to 400% to take advantage of our growing
suite of productivity and digital evidence management tools. Our
law enforcement agency customers often sign up for five to ten-year
subscriptions. This SaaS metric purposely excludes the hardware
portion of customer subscriptions. We further define this metric
under "Statistical Definitions."
- Total company future contracted revenue grew to $1.79 billion. See definition of this metric
under "Statistical Definitions."
- The percentage of TASER devices sold on a subscription was 64%
in the quarter. As a reminder, Axon is transitioning its TASER
hardware business into a subscription service. Domestic
subscription orders were 70% of TASER devices sold in the quarter,
reflecting this successful transition. International subscription
rates are trending positively, and new markets often start out on a
non-subscription basis, and we transition them to subscription over
time.
Outlook:
The following forward-looking statements reflect Axon's
expectations as of May 6, 2021, and
are subject to risks and uncertainties. As our investments are
yielding results ahead of our expectations thus far in 2021, we
intend to continue investing for growth.
Our updated 2021 outlook is as follows:
- We expect to achieve revenue in the range of $780 million to $820
million, which represents a $40
million increase at the midpoint over the $740 million to $780
million expectation communicated in February.
- We are raising our expectations for Adjusted EBITDA to
$140 million to $150 million, up from $125
million to $140 million
previously.
-
- We provide Adjusted EBITDA guidance, rather than net income
guidance, due to the inherent difficulty of forecasting certain
types of expenses such as stock-based compensation and income tax
expenses, which affect net income but do not affect Adjusted
EBITDA. We are unable to reasonably estimate the impact of such
expenses, if any, on net income. Accordingly, we do not provide a
reconciliation of projected net income to projected Adjusted
EBITDA.
- We expect stock-based compensation expense to be at least
$175 million for the full year.
However, as our stock-based compensation expense may fluctuate
significantly based on changes in the probability of attaining
certain operational metrics or attainment of such metrics and with
changes in the expected or actual timing of such attainment, it is
inherently difficult to forecast future stock-based compensation
expense.
- Our expectations for capital expenditures of approximately
$65 million to $70 million in 2021 are unchanged. These include
investments to support capacity expansion and automation on TASER
device and cartridge manufacturing, and are discussed in greater
detail in our Q4 2020 shareholder letter.
- As we execute upon a scaling global profile and rapid 2021
growth, our early view of the business in 2022 includes
approximately $920 million in
revenue. We are extremely proud of the high level of execution from
our teams that has set us up for continued top-line strength, solid
margin performance and increased profitability.
Thank you for joining us on our growth journey,
Rick Smith, CEO
Luke Larson, President
Jawad Ahsan, CFO
Quarterly conference call and webcast
We will host our Q1 2021 earnings conference call webinar on
Thursday, May 6 at 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
(https://investor.axon.com/), or can be accessed directly via
https://axon.zoom.us/j/92356790862.
Statistical Definitions
Bookings: We consider bookings to be a statistical measure
defined as the sales price of orders (not invoiced sales),
including contractual optional periods we expect to be exercised,
net of cancellations, inclusive of renewals, placed in the relevant
fiscal period, regardless of when the products or services
ultimately will be provided, so long as they are expected to occur
within five years. Most bookings will be invoiced in subsequent
periods. Due to municipal government funding rules, in some cases
certain of the future period amounts included in bookings are
subject to budget appropriation or other contract cancellation
clauses. Although we have entered into contracts for the delivery
of products and services in the future and anticipate the contracts
will be fulfilled, if agencies do not exercise contractual options,
do not appropriate funds in future year budgets, or do enact a
cancellation clause, revenue associated with these bookings may not
ultimately be recognized, resulting in a future reduction to
bookings. Bookings, as presented here, represent total company
bookings inclusive of all products, and should not be confused with
our historical reported measure of Software & Sensors bookings,
which excluded TASER-related bookings. Certain customers sign
contracts for time periods longer than five-years, which generates
a larger-sized booking — but the expected exercise amounts after
the five-year period is not included in bookings, as described
here, in order to facilitate comparisons between periods.
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 but purposely excludes the
lower-margin hardware subscription contingent 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 SEC filings.
Total company future contracted revenue: Total company future
contracted revenue 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 Topic 606
as of March 31, 2021. We expect to
recognize between 20% - 25% of this balance over the next twelve
months, and generally expect the remainder to be recognized over
the following five to seven 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, Non-GAAP Net Income, Non-GAAP Diluted
Earnings Per Share and 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 herein.
- 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 and pre-tax certain other items (described
below).
- Non-GAAP Net Income (Most comparable GAAP Measure: Net income)
- Net income excluding the costs of non-cash stock-based
compensation and excluding net
gain/loss/write-down/disposal/abandonment of property, equipment
and intangible assets; loss on impairment; costs related to
business acquisitions and investments in unconsolidated affiliates;
costs related to the FTC litigation and pre-tax certain other items
(described 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.
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.
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 the global leader in connected public safety
technologies. We are a mission-driven company whose overarching
goal is to protect life. Our vision is a world where bullets are
obsolete, where social conflict is dramatically reduced, where
everyone has access to a fair and effective justice system and
where racial equity, diversity and inclusion is centered in all of
our work. Axon is also a leading provider of body cameras for US
public safety, providing more transparency and accountability to
communities than ever before.
You may learn about our Environmental, Social, and Governance
(ESG) and Corporate Social Responsibility (CSR) efforts by reading
our ESG report at investor.axon.com.
We work hard for those who put themselves in harm's way for all
of us. More than 249,000 lives and countless dollars have been
saved with the Axon network of devices, apps and people. Learn more
at www.axon.com or by calling (800) 978-2737. Axon is a global
company with headquarters in Scottsdale,
Arizona, and a global software engineering hub in
Seattle, Washington, as well as
additional offices in the US, Australia, Canada, Finland, Vietnam, the UK and the Netherlands.
Cellebrite and the Cellebrite Logo are trademarks of Cellebrite
Mobile Synchronization Ltd.; Facebook is a trademark of Facebook,
Inc.; LTE is a trademark of the European Telecommunications
Standards Institute; RapidSOS and the RapidSOS Logo are service
marks of RapidSOS, Inc.; Skydio is a trademark of Skydio, Inc.;
True Wind is a trademark of True Wind Capital, L.P.; and Twitter is
a trademark of Twitter, Inc. Axon, Axon Evidence, Axon Performance,
Fleet, TASER, TASER 7, Protect Life and the Delta Logo are
trademarks of Axon Enterprise, Inc., some of which are registered
in the US and other countries. For more information, visit
www.axon.com/legal. All rights reserved.
Follow Axon here:
- Axon on Twitter: https://twitter.com/axon_us
- Axon on Facebook:
https://www.facebook.com/Axon.ProtectLife/
Forward-looking statements
Forward-looking statements in this letter include, without
limitation, statements regarding: the impact of the COVID-19
pandemic; proposed products and services and related development
efforts and activities; expectations about the market for our
current and future products and services; strategies and trends
relating to subscription plan programs and revenues; strategies and
trends, including the benefits of, research and development
investments; the timing and realization of future contracted
revenue; 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 2021 and
2022 full year revenue, Adjusted EBITDA, stock-based compensation
expense, 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 Form 10–K for the year ended December
31, 2020. 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: the potential global
impacts of the COVID-19 pandemic; our exposure to cancellations of
government contracts due to appropriation clauses, exercise of a
cancellation clause, or non-exercise of contractually optional
periods; our ability to design, introduce and sell new products or
features; our ability to defend against litigation and protect our
intellectual property, and the resulting costs of this activity;
our ability to manage our supply chain and avoid production delays,
shortages, and impacts to expected gross margins; the impact of
stock 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 regarding our products; the impact of
product mix on projected gross margins; defects in 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 U.S. 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; our
ability to attract and retain key personnel; and counter-party
risks relating to cash balances held in excess of FDIC insurance
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 Annual Report on Form 10-K and our
Quarterly Reports on Form 10-Q list 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
Exchange Act and Section 27A of the Securities Act. Readers can
find them under the heading "Risk Factors" in the Annual Report on
Form 10-K and in the 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. 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 10-Q, 8-K and 10-K reports to the SEC.
Update on Legal Matters:
Axon v. FTC
Axon continues to both vigorously prosecute its Federal court
constitutional case against the FTC and defend the FTC's separate
antitrust administrative action against the company. The
Ninth Circuit Court of Appeals has stayed the FTC's administrative
hearing that was scheduled to begin in October 2020.
As background, Axon's Federal court constitutional challenge
against the FTC was dismissed in April
2020, without prejudice, for lack of jurisdiction, holding
that Axon must first bring its claims through the FTC's
administrative process. Axon appealed that ruling to the Ninth
Circuit (No. 20-15662). In January
2021, a Ninth Circuit panel in a 2-1 split decision affirmed
the district court ruling against Axon on the jurisdictional
question.
In March 2021, Axon filed a
petition for rehearing en banc, which was supported by multiple
amicus briefs filed by the Atlantic Legal Foundation, the
Washington Legal Foundation, the Americans for Prosperity
Foundation, the US Chamber of Commerce, and New Civil Liberties
Alliance. The petition argued that the panel's majority opinion
conflicts with both Supreme Court and Ninth Circuit precedent.
The Court denied rehearing but granted Axon's motion to stay the
appellate mandate pending the filing of a certiorari petition with
the U.S. Supreme Court. That petition is due by September 13, 2021. The FTC's administrative case
will remain stayed throughout the course of the Supreme Court
proceedings.
Links to all Court filings and opinions can be found on Axon's
FTC Investor Briefing page at https://www.axon.com/ftc.
As a reminder, in parallel to these matters Axon is evaluating
strategic alternatives to litigation, which Axon might pursue if
determined to be in the best interests of shareholders and
customers. This could include a divestiture of the Vievu entity
and/or related assets. While Axon continues to believe the 2018
acquisition of Vievu was lawful and a benefit to Vievu's customers,
the cost, risk and distraction of protracted litigation merit
consideration of settlement if achievable on terms agreeable to the
FTC and Axon
For investor relations information please contact Andrea James and Angel
Ambrosio via email at IR@axon.com.
AXON
ENTERPRISE, INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
31 MAR
2021
|
|
31 DEC
2020
|
|
31 MAR
2020
|
Net sales from
products
|
|
$
|
140,886
|
|
$
|
174,116
|
|
$
|
107,288
|
Net sales from
services
|
|
|
54,133
|
|
|
52,024
|
|
|
39,874
|
Net sales
|
|
|
195,019
|
|
|
226,140
|
|
|
147,162
|
Cost of product
sales
|
|
|
58,616
|
|
|
73,624
|
|
|
48,884
|
Cost of service
sales
|
|
|
13,050
|
|
|
11,210
|
|
|
9,670
|
Cost of
sales
|
|
|
71,666
|
|
|
84,834
|
|
|
58,554
|
Gross
margin
|
|
|
123,353
|
|
|
141,306
|
|
|
88,608
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Sales, general and
administrative
|
|
|
126,597
|
|
|
97,523
|
|
|
63,027
|
Research and
development
|
|
|
47,018
|
|
|
38,008
|
|
|
26,381
|
Total operating
expenses
|
|
|
173,615
|
|
|
135,531
|
|
|
89,408
|
Income (loss) from
operations
|
|
|
(50,262)
|
|
|
5,775
|
|
|
(800)
|
Interest and other
income, net
|
|
|
585
|
|
|
3,265
|
|
|
941
|
Income (loss) before
provision for income taxes
|
|
|
(49,677)
|
|
|
9,040
|
|
|
141
|
Provision for
(benefit from) income taxes
|
|
|
(1,760)
|
|
|
(16,794)
|
|
|
(3,933)
|
Net income
(loss)
|
|
$
|
(47,917)
|
|
$
|
25,834
|
|
$
|
4,074
|
Net income (loss) per
common and common equivalent shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.75)
|
|
$
|
0.41
|
|
$
|
0.07
|
Diluted
|
|
$
|
(0.75)
|
|
$
|
0.40
|
|
$
|
0.07
|
Weighted average
number of common and common equivalent
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
64,036
|
|
|
63,639
|
|
|
59,609
|
Diluted
|
|
|
64,036
|
|
|
65,362
|
|
|
60,394
|
AXON
ENTERPRISE, INC.
|
SEGMENT
REPORTING
|
(Unaudited)
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR
2021
|
|
|
31 DEC
2020
|
|
|
31 MAR
2020
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
Net sales from
products (1)
|
|
$
|
97,302
|
|
|
$
|
43,584
|
|
|
$
|
140,886
|
|
|
$
|
134,080
|
|
|
$
|
40,036
|
|
|
$
|
174,116
|
|
|
$
|
75,175
|
|
|
$
|
32,113
|
|
|
$
|
107,288
|
|
Net sales from
services (2)
|
|
|
1,697
|
|
|
|
52,436
|
|
|
|
54,133
|
|
|
|
1,681
|
|
|
|
50,343
|
|
|
|
52,024
|
|
|
|
720
|
|
|
|
39,154
|
|
|
|
39,874
|
|
Net sales
|
|
|
98,999
|
|
|
|
96,020
|
|
|
|
195,019
|
|
|
|
135,761
|
|
|
|
90,379
|
|
|
|
226,140
|
|
|
|
75,895
|
|
|
|
71,267
|
|
|
|
147,162
|
|
Cost of product
sales
|
|
|
32,945
|
|
|
|
25,671
|
|
|
|
58,616
|
|
|
|
48,138
|
|
|
|
25,486
|
|
|
|
73,624
|
|
|
|
30,248
|
|
|
|
18,636
|
|
|
|
48,884
|
|
Cost of service
sales
|
|
|
—
|
|
|
|
13,050
|
|
|
|
13,050
|
|
|
|
—
|
|
|
|
11,210
|
|
|
|
11,210
|
|
|
|
—
|
|
|
|
9,670
|
|
|
|
9,670
|
|
Cost of
sales
|
|
|
32,945
|
|
|
|
38,721
|
|
|
|
71,666
|
|
|
|
48,138
|
|
|
|
36,696
|
|
|
|
84,834
|
|
|
|
30,248
|
|
|
|
28,306
|
|
|
|
58,554
|
|
Gross
margin
|
|
|
66,054
|
|
|
|
57,299
|
|
|
|
123,353
|
|
|
|
87,623
|
|
|
|
53,683
|
|
|
|
141,306
|
|
|
|
45,647
|
|
|
|
42,961
|
|
|
|
88,608
|
|
Gross margin
%
|
|
|
66.7
|
%
|
|
|
59.7
|
%
|
|
|
63.3
|
%
|
|
|
64.5
|
%
|
|
|
59.4
|
%
|
|
|
62.5
|
%
|
|
|
60.1
|
%
|
|
|
60.3
|
%
|
|
|
60.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
9,243
|
|
|
|
37,775
|
|
|
|
47,018
|
|
|
|
5,231
|
|
|
|
32,777
|
|
|
|
38,008
|
|
|
|
3,032
|
|
|
|
23,349
|
|
|
|
26,381
|
|
|
|
(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, 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
revenue.
|
AXON
ENTERPRISE, INC.
|
UNIT SALES
STATISTICS
|
(Unaudited)
|
Units in whole
numbers
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
|
|
|
|
31
MAR
|
|
31
MAR
|
|
Unit
|
|
Percent
|
|
|
|
2021
|
|
2020
|
|
Change
|
|
Change
|
|
TASER 7
|
|
23,360
|
|
11,430
|
|
11,930
|
|
104.4
|
%
|
TASER X26P
|
|
8,229
|
|
11,003
|
|
(2,774)
|
|
(25.2)
|
|
TASER X2
|
|
8,838
|
|
10,478
|
|
(1,640)
|
|
(15.7)
|
|
TASER
Pulse
|
|
8,686
|
|
3,261
|
|
5,425
|
|
166.4
|
|
Cartridges
|
|
1,009,760
|
|
873,364
|
|
136,396
|
|
15.6
|
|
Axon Body
|
|
46,094
|
|
39,864
|
|
6,230
|
|
15.6
|
|
Axon Flex
|
|
1,565
|
|
3,074
|
|
(1,509)
|
|
(49.1)
|
|
Axon Fleet
|
|
1,440
|
|
2,676
|
|
(1,236)
|
|
(46.2)
|
|
Axon Dock
|
|
6,786
|
|
5,297
|
|
1,489
|
|
28.1
|
|
|
|
|
|
|
|
|
|
|
|
AXON
ENTERPRISE, INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(Unaudited)
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2021
|
|
31 DEC
2020
|
|
31 MAR
2020
|
|
EBITDA and
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(47,917)
|
|
$
|
25,834
|
|
$
|
4,074
|
|
Depreciation and
amortization
|
|
|
4,291
|
|
|
3,531
|
|
|
2,881
|
|
Interest
expense
|
|
|
5
|
|
|
11
|
|
|
7
|
|
Investment interest
income
|
|
|
(533)
|
|
|
(929)
|
|
|
(693)
|
|
Provision for (benefit
from) income taxes
|
|
|
(1,760)
|
|
|
(16,794)
|
|
|
(3,933)
|
|
EBITDA
|
|
$
|
(45,914)
|
|
$
|
11,653
|
|
$
|
2,336
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
$
|
89,610
|
|
$
|
53,448
|
|
$
|
20,195
|
|
Transaction costs
related to strategic investments
|
|
|
385
|
|
|
109
|
|
|
833
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
11
|
|
|
68
|
|
|
13
|
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
45
|
|
|
293
|
|
|
517
|
|
Costs related to FTC
litigation
|
|
|
233
|
|
|
522
|
|
|
6,135
|
|
Payroll taxes related
to XSPP vesting
|
|
|
1,452
|
|
|
—
|
|
|
—
|
|
Unrealized net gain on
strategic investment and warrants in
unconsolidated affiliate
|
|
|
—
|
|
|
(2,055)
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
45,822
|
|
$
|
64,038
|
|
$
|
30,029
|
|
Net income (loss) as
a percentage of net sales
|
|
|
(24.6)
|
%
|
|
11.4
|
%
|
|
2.8
|
%
|
Adjusted EBITDA as
a percentage of net sales
|
|
|
23.5
|
%
|
|
28.3
|
%
|
|
20.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense:
|
|
|
|
|
|
|
|
|
|
|
Cost of product and
service sales
|
|
$
|
1,489
|
|
$
|
1,294
|
|
$
|
590
|
|
Sales, general and
administrative
|
|
|
71,015
|
|
|
43,007
|
|
|
14,970
|
|
Research and
development
|
|
|
17,106
|
|
|
9,147
|
|
|
4,635
|
|
Total
|
|
$
|
89,610
|
|
$
|
53,448
|
|
$
|
20,195
|
|
AXON
ENTERPRISE, INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES - continued
|
(Unaudited)
|
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2021
|
|
31 DEC
2020
|
|
31 MAR
2020
|
|
Non-GAAP net
income:
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
|
(47,917)
|
|
$
|
25,834
|
|
$
|
4,074
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
89,610
|
|
|
53,448
|
|
|
20,195
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
11
|
|
|
68
|
|
|
13
|
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
45
|
|
|
293
|
|
|
517
|
|
Transaction costs
related to strategic investments
|
|
|
385
|
|
|
109
|
|
|
833
|
|
Costs related to FTC
litigation
|
|
|
233
|
|
|
522
|
|
|
6,135
|
|
Unrealized net gain on
strategic investment and warrants in
unconsolidated affiliate
|
|
|
—
|
|
|
(2,055)
|
|
|
—
|
|
Payroll taxes related
to XSPP vesting
|
|
|
1,452
|
|
|
—
|
|
|
—
|
|
Income tax
effects
|
|
|
(22,780)
|
|
|
(13,172)
|
|
|
(7,837)
|
|
Non-GAAP net
income
|
|
$
|
21,039
|
|
$
|
65,047
|
|
$
|
23,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2021
|
|
31 DEC
2020
|
|
31 MAR
2020
|
|
Non-GAAP diluted
earnings per share:
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
(loss) per share
|
|
$
|
(0.75)
|
|
$
|
0.40
|
|
$
|
0.07
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
1.33
|
|
|
0.82
|
|
|
0.33
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
0.00
|
|
|
0.00
|
|
|
0.01
|
|
Transaction costs
related to strategic investments
|
|
|
0.01
|
|
|
0.00
|
|
|
0.01
|
|
Costs related to FTC
litigation
|
|
|
0.00
|
|
|
0.01
|
|
|
0.10
|
|
Unrealized net gain on
strategic investment and warrants in
unconsolidated affiliate
|
|
|
—
|
|
|
(0.03)
|
|
|
—
|
|
Payroll taxes related
to XSPP vesting
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
Income tax
effects
|
|
|
(0.34)
|
|
|
(0.20)
|
|
|
(0.13)
|
|
Non-GAAP diluted
earnings per share (1)
|
|
$
|
0.31
|
|
$
|
1.00
|
|
$
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of diluted common and common equivalent
shares outstanding (in thousands)
|
|
|
67,392
|
|
|
65,362
|
|
|
60,394
|
|
|
|
(1)
|
The per share
calculations for GAAP net income, Non-GAAP adjustments and Non-GAAP
diluted earnings per share are each computed independently. Per
share amounts may not sum due to rounding.
|
AXON
ENTERPRISE, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
31 MAR
2021
|
|
31 DEC 2020
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
154,822
|
|
$
|
155,440
|
Short-term
investments
|
|
|
440,842
|
|
|
406,525
|
Accounts and notes
receivable, net
|
|
|
185,373
|
|
|
229,201
|
Contract assets,
net
|
|
|
72,472
|
|
|
63,945
|
Inventory,
net
|
|
|
89,657
|
|
|
89,958
|
Prepaid expenses and
other current assets
|
|
|
43,063
|
|
|
36,883
|
Total current
assets
|
|
|
986,229
|
|
|
981,952
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
112,119
|
|
|
105,494
|
Deferred tax assets,
net
|
|
|
46,403
|
|
|
45,770
|
Intangible assets,
net
|
|
|
8,642
|
|
|
9,448
|
Goodwill
|
|
|
25,194
|
|
|
25,205
|
Long-term
investments
|
|
|
78,464
|
|
|
90,681
|
Long-term notes
receivable, net
|
|
|
18,546
|
|
|
22,457
|
Long-term contract
assets, net
|
|
|
26,341
|
|
|
20,099
|
Other
assets
|
|
|
102,920
|
|
|
79,917
|
Total
assets
|
|
$
|
1,404,858
|
|
$
|
1,381,023
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
|
19,791
|
|
|
24,142
|
Accrued
liabilities
|
|
|
41,097
|
|
|
59,843
|
Current portion of
deferred revenue
|
|
|
165,086
|
|
|
163,959
|
Customer
deposits
|
|
|
8,134
|
|
|
2,956
|
Other current
liabilities
|
|
|
5,667
|
|
|
5,431
|
Total current
liabilities
|
|
|
239,775
|
|
|
256,331
|
|
|
|
|
|
|
|
Deferred revenue, net
of current portion
|
|
|
116,107
|
|
|
111,222
|
Liability for
unrecognized tax benefits
|
|
|
4,697
|
|
|
4,503
|
Long-term deferred
compensation
|
|
|
4,825
|
|
|
4,732
|
Deferred tax
liability, net
|
|
|
684
|
|
|
649
|
Other long-term
liabilities
|
|
|
27,866
|
|
|
27,331
|
Total
liabilities
|
|
|
393,954
|
|
|
404,768
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
Common stock
|
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
|
1,044,724
|
|
|
962,159
|
Treasury
stock
|
|
|
(155,947)
|
|
|
(155,947)
|
Retained
earnings
|
|
|
121,984
|
|
|
169,901
|
Accumulated other
comprehensive income
|
|
|
142
|
|
|
141
|
Total stockholders'
equity
|
|
|
1,010,904
|
|
|
976,255
|
Total liabilities
and stockholders' equity
|
|
$
|
1,404,858
|
|
$
|
1,381,023
|
AXON
ENTERPRISE, INC.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2021
|
|
31 DEC
2020
|
|
31 MAR
2020
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(47,917)
|
|
$
|
25,834
|
|
$
|
4,074
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
4,291
|
|
|
3,531
|
|
|
2,881
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
11
|
|
|
68
|
|
|
13
|
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
45
|
|
|
293
|
|
|
517
|
|
Stock-based
compensation
|
|
|
89,610
|
|
|
53,448
|
|
|
20,195
|
|
Deferred income
taxes
|
|
|
(598)
|
|
|
(4,858)
|
|
|
(1,548)
|
|
Unrecognized tax
benefits
|
|
|
194
|
|
|
98
|
|
|
341
|
|
Other
noncash
|
|
|
2,615
|
|
|
2,876
|
|
|
1,156
|
|
Provision for expected
credit losses
|
|
|
(335)
|
|
|
526
|
|
|
902
|
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable and contract assets
|
|
|
31,298
|
|
|
(59,211)
|
|
|
(9,700)
|
|
Inventory
|
|
|
520
|
|
|
7,215
|
|
|
(8,630)
|
|
Prepaid expenses and
other assets
|
|
|
(6,952)
|
|
|
(10,063)
|
|
|
2,277
|
|
Accounts payable,
accrued liabilities and other liabilities
|
|
|
(18,062)
|
|
|
(16,479)
|
|
|
(3,562)
|
|
Deferred
revenue
|
|
|
6,219
|
|
|
31,040
|
|
|
4,499
|
|
Net cash provided by
operating activities
|
|
|
60,939
|
|
|
34,318
|
|
|
13,415
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(155,825)
|
|
|
(139,835)
|
|
|
(99,512)
|
|
Proceeds from call /
maturity of investments
|
|
|
132,254
|
|
|
92,640
|
|
|
84,315
|
|
Purchases of property
and equipment
|
|
|
(10,521)
|
|
|
(6,606)
|
|
|
(2,209)
|
|
Purchases of intangible
assets
|
|
|
(41)
|
|
|
(64)
|
|
|
(45)
|
|
Proceeds of disposal
from property and equipment
|
|
|
10
|
|
|
1
|
|
|
78
|
|
Strategic
investments
|
|
|
(20,000)
|
|
|
(2,368)
|
|
|
(4,700)
|
|
Net cash used in
investing activities
|
|
|
(54,123)
|
|
|
(56,232)
|
|
|
(22,073)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from options
exercised
|
|
|
—
|
|
|
—
|
|
|
28
|
|
Income and payroll tax
payments for net-settled stock awards
|
|
|
(7,045)
|
|
|
(923)
|
|
|
(5,190)
|
|
Net cash used in
financing activities
|
|
|
(7,045)
|
|
|
(923)
|
|
|
(5,162)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
(392)
|
|
|
2,279
|
|
|
(1,890)
|
|
Net decrease in cash
and cash equivalents and restricted cash
|
|
|
(621)
|
|
|
(20,558)
|
|
|
(15,710)
|
|
Cash and cash
equivalents and restricted cash, beginning of period
|
|
|
155,551
|
|
|
176,109
|
|
|
172,355
|
|
Cash and cash
equivalents and restricted cash, end of period
|
|
$
|
154,930
|
|
$
|
155,551
|
|
$
|
156,645
|
|
AXON
ENTERPRISE, INC.
|
SELECTED CASH FLOW
INFORMATION
|
(Unaudited)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
31 MAR
2021
|
|
31 DEC
2020
|
|
31 MAR
2020
|
Net cash provided by
operating activities
|
|
$
|
60,939
|
|
$
|
34,318
|
|
$
|
13,415
|
Purchases of property
and equipment
|
|
|
(10,521)
|
|
|
(6,606)
|
|
|
(2,209)
|
Purchases of
intangible assets
|
|
|
(41)
|
|
|
(64)
|
|
|
(45)
|
Free cash flow, a
non-GAAP measure
|
|
$
|
50,377
|
|
$
|
27,648
|
|
$
|
11,161
|
AXON
ENTERPRISE, INC.
|
SUPPLEMENTAL
TABLES
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
31 MAR
2021
|
|
31 DEC 2020
|
|
|
(Unaudited)
|
|
|
|
Cash and cash
equivalents
|
|
$
|
154,822
|
|
$
|
155,440
|
Short-term
investments
|
|
|
440,842
|
|
|
406,525
|
Long-term
investments
|
|
|
78,464
|
|
|
90,681
|
Total cash and cash
equivalents and investments, net
|
|
$
|
674,128
|
|
$
|
652,646
|
CONTACT:
Investor Relations
Axon Enterprise, Inc.
IR@axon.com
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