SCOTTSDALE, Ariz., Aug. 5, 2021 /PRNewswire/ --
Dear Shareholders,
We are pleased to report a strong quarter and strengthening
outlook globally as we execute against our 2021 strategic
priorities of growing our core, scaling new products, unlocking new
markets and driving efficiency to fuel growth. Domestic strength
was driven by city, county and state highway patrol demand for our
TASER and body camera bundles, as well as Axon Fleet, and
international strength reflects momentum in Latin America and Asia Pacific, across product lines.
Our financial performance is being fueled by increasing global
demand for Axon's life-saving technology, including TASER devices,
and expanding use cases for body cameras as live-streaming gains
traction as a breakthrough in real-time situational awareness.
Situation: Shots fired at apartment complex
Agency: Midwestern U.S. agency with more than 100 sworn
officers
Incident: A patrol lieutenant watch commander responded
to calls about shots fired at an apartment complex. Officers
identified the correct unit in the building, and entered for a
welfare check. They discovered bullet holes in the walls and doors
and a woman who demanded that the officers leave. They removed her
from the scene and discovered two locked bedroom doors. The
lieutenant removed his Axon Body 3, focused it on the locked doors
and exited. He pulled up the body camera's live stream on his
mobile phone and gave his phone to a SWAT sniper and the assembling
quick reaction team, enabling them to surveil the apartment. A
sergeant back at the police precinct also live-streamed the
camera's view. As the SWAT team began to attempt to negotiate a
surrender, they saw via live-stream one of the doors open and an
unarmed suspect exited a room. The team quickly moved in and took
the suspect into custody.
Select highlights
Strategic priority: Unlocking New Markets
International momentum: Axon's global expansion showed
strong momentum in Q2 2021, with international revenue growing 60%
year over year and international bookings nearly tripling versus Q2
2020. Some highlights:
- In July, Axon was awarded a national tender to supply TASER
devices across Italy, hallmarking
a process that began in 2014 and included years of testing,
experimentation and regulatory approvals.
- Also in Europe, in June, the
Dutch National Police became the first Netherlands agency to equip officers across
the country with TASER devices.
- We won a large, highly competitive digital evidence management
program with an EMEA government for the management of all digital
evidence independent of body camera programs. This mirrors the
deployment we mentioned last quarter, where the government of
Ontario, Canada became the first
province to deploy Axon Evidence across public safety
agencies.
- In May, the São Paulo State Military Police became the first
police agency in Brazil to adopt
Axon's body camera solution, which is backed by Axon Cloud
software, becoming our largest body camera and software deployment
in Latin America. The São Paulo
State Military Police body camera roll-out followed the state
agency's TASER device roll-out at the end of 2020.
- The Toronto Police Service
moved to full TASER deployment.
- We've been awarded a contract with the Police Service of the
City of Montreal, which is
deploying our interview room solution.
Strategic priority: Scaling New Products
Axon Fleet 3 began shipping June
30: Built with ethics and privacy in mind, Axon's latest
generation in-car video system features our AI-powered automated
license plate reader (ALPR) service along with real-time
situational awareness, including live-streaming, through Axon
Respond.
We expect Axon Fleet 3 to be a game changer for in-car cameras
because we've elevated the simple in-car dash camera to one that
can automatically and simultaneously scan plates across multiple
lanes of traffic at closing speeds up to 140 mph. Also, we've
designed the system to be disruptively affordable to allow for ALPR
deployment across an agency's entire fleet of police vehicles
instead of just a small number of designated vehicles. We are
seeing strong interest in and demand for Axon Fleet 3 and expect
ALPR to be a software growth driver.
"We are excited to be one of the first agencies to trial the
Axon Fleet 3 in-car camera system with ALPR and we are very
impressed with the overall value of this advanced integration. Our
agency prides itself on being at the forefront of public safety
technology, and with the Fleet 3 ALPR technology, our officers will
be able to better serve our community." — Lieutenant Jon Moses of Johns Creek Police
Department
Axon VR Simulator announced: Public safety officers need
more comprehensive training across multiple fronts, including
empathy, tactical de-escalation, practical skills, and
psychological coping strategies. VR offers an opportunity to help
public safety officers better respond and we are making it easy for
agencies to procure our services through integrated bundling with
our TASER devices, body cameras and other cloud software services.
Axon's VR bookings have grown more than eight-fold to nearly
$8 million in the first half of
2021.
"We are always looking for opportunities to innovate and
improve our officers' abilities to handle various calls for
service. Axon's new training platform allows our officers to run
through scenarios in the safety of a controlled learning
environment. This technology lets us train more efficiently,
benefiting the responding officer and our community." —
Phoenix Police Chief Jeri Williams
In May, we began taking orders for our new wireless Virtual
Reality (VR) Simulator Training, which features new content
regularly. Axon's VR Simulator also integrates TASER 7 devices and
training sidearms, so officers can use real hardware in the virtual
world, creating muscle memory and familiar responses in the most
critical high-risk situations while leveraging a fully-immersive
environment. Phoenix PD plans to be the first agency to adopt
Axon's new VR Simulator into its existing training curriculum.
The wireless simulator augments Axon's Community Engagement VR
Training, first sold in 2018, and now used by more than 1,000
police agencies in the U.S. and Canada. Modules include schizophrenia, autism,
suicidal ideation, hard of hearing, Alzheimer's/dementia, veteran
post-traumatic stress injury, peer intervention and domestic
violence.
Strategic priority: Expanding our Core and Scaling New
Products
Real-Time Operations grows & evolves: Our software
category growth drivers include the decision-making and
communication tools that support real-time situational awareness
through the sharing of information across myriad media, including
voice, messaging, location mapping, and intelligence and evidence
sharing.
- Respond for Devices gains traction: We have been pleased
with the customer feedback on our live-streaming body camera
technology and continue to see strong demand for value-added
SaaS-driven capabilities, including LTE- and location-based
services.
"As the world watched our operation to support the removal of
controversial statues in Charlottesville, Axon Respond was
absolutely phenomenal in allowing us to execute a fluid plan while
having every vantage point of the removal process, crowds, exit and
entry points and anything else we needed to be aware of, right in
front of us at all times." — Captain Steve
Knick, Investigations Division Commander, Charlottesville
Police Department
Also, we are seeing expanded use cases for our services in
dispatching centers and in hostage negotiations.
-
- "The ability to monitor the negotiation live is invaluable.
Coordinators can establish real-time updates, formulate assessments
of risk and answer verbal cues from the negotiation team in real
time. These devices are worth their weight in gold." --Detective
Chief Inspector Jason Herbert,
South Wales Police, U.K.
- "When you have real-time [visibility], it's a lot easier for
you to make calls on resources and project ahead, versus waiting
until people tell you what happened to respond." --Deputy Chief
Jim Hamilton, Grants Pass Department
of Public Safety, Ore.
- "With live streaming, dispatchers and supervisors can see
what's happening, and having the complete story helps everybody."
--Chief John Wolter, Texas Medical
Center Police Department
- "The ability to pinpoint officers on a map and share
information and advice in real-time has made our SWAT responses
100% better." --Officer Robert
Benavidez, Las Cruces Police Department, N.M.
- Software development update on Dispatching: We are
continuing to deploy resources toward improving and modernizing the
computer aided dispatch market, and we are now focusing on larger
city development partners. Since April
2020, Axon has powered 100% of 911 calls in the small city
of Maricopa, Ariz. We have learned
together that the operational strain of being a development partner
on complex new software can be overly taxing for a smaller agency.
We are thankful to the City of
Maricopa for their contributions to the evolution of our
product. This agency may wind down as our development partner later
this year and migrate to a more mature traditional CAD solution.
Simultaneously, Axon has begun working with a larger development
partner as we continue to evolve and grow our software stack. We
also continue to work with fire and EMS partners and are building a
pipeline of larger dispatching operators with higher call volumes.
We are excited about our long-term strategy for our dispatching
software, which will be differentiated by the growing number of
agencies and dispatchers already using our Respond platform for
real-time alerts and live-streaming.
Summary of Q2 2021 results:
- Revenue of $219 million grew 55%
year over year, on top of 26% growth in Q2 2020, reflecting strong
demand across all product lines. Domestic revenue grew 53% and
international revenue grew 60% year over year.
- Gross margin of 63% improved year over year, reflecting strong
demand for our premium TASER offerings and the continued benefit of
engineered lower build costs in our TASER segment.
- Operating expenses of $232
million included $136 million
in stock-based compensation expense.
-
- SG&A of $178 million included
$114 million in stock-based
compensation expense.
- R&D of $54 million included
$22 million in stock-based
compensation expense.
- GAAP diluted EPS was ($0.72)
based on a GAAP net loss of $47
million. Non-GAAP EPS, which adds back stock-based
compensation expense, subtracts gains related to strategic
investments, and factors in a higher diluted share count due to
non-GAAP net income being a profitable number, was $0.38.
-
- Of the $138 million in total
stock-based compensation expense in Q2 2021, $128 million was related to our eXponential Stock
Performance Plan (XSPP) and CEO Performance
Award(1).
-
- In Q2 2021, $105 million was tied
to acceleration of expected attainment dates, which means the time
over which we record expense is shortened. Since Q1 2021, all 12
operational goals have been considered probable of attainment.
- Since the CEO Performance Award was adopted in 2018, we have
expensed $204 million of total
potential expense of $246 million
under the plan. Since the XSPP plan was adopted in 2019, we have
expensed $151 million of total
potential expense of $194 million
currently projected under the plan for XSPP grants issued to date.
Since the CEO Performance Award was issued in 2018, total
shareholder return has exceeded 550% as of Wednesday, Aug 4, 2021.
- As a result of our strong Q2 performance, as well as the
attainment of several market capitalization goals and key financial
milestones, which include the benefit of gains on our strategic
investments, we expect five tranches of these stock-based
compensation plans to vest(2) in the coming weeks. This
is reflected in the weighted average diluted share count of
approximately 72 million used to calculate non-GAAP EPS at
June 30, 2021.
- Quarterly Adjusted EBITDA grew 83% year over year to
$51 million, representing a 23.4%
margin on revenue and highlighting our ability to demonstrate
leverage while also investing to scale.
- Cash and cash equivalents and investments totaled $704 million at June 30,
2021, up $31 million
sequentially. Operating cash flow was $34
million.
- Axon has no debt.
(1)
|
These innovative
stock-based compensation plans were approved by shareholders in
2018 and 2019 and align the interests of management and employees
with shareholders.
|
(2)
|
Under the
shareholder-approved XSPP, participants have a 2.5-year mandatory
holding period on net vested shares. Under the shareholder-approved
CEO Performance Award, the CEO has a 2.5-year holding period from
option exercise.
|
Financial commentary by segment:
TASER
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THREE MONTHS ENDED
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CHANGE
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30 JUN
2021
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31 MAR
2021
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30 JUN
2020
|
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QoQ
|
|
YoY
|
|
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(in thousands)
|
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|
|
|
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Net sales
|
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$
|
112,528
|
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$
|
98,999
|
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$
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70,490
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13.7
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%
|
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59.6
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%
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Gross
margin
|
|
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66.4
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%
|
|
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66.7
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%
|
|
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61.4
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%
|
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(30)
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bp
|
|
500
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bp
|
- TASER segment revenue of $113
million grew 60% year over year due to strong demand for the
TASER 7 platform combined with legacy weapons that continued to
gain traction in international markets.
- Gross margin of 66.4% was up 500 bps year over year tied to
strong demand combined with the continued benefit of engineered
lower build costs. Gross margins declined slightly on a sequential
basis, primarily due to mix.
Software & Sensors
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THREE MONTHS ENDED
|
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|
CHANGE
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30 JUN
2021
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31 MAR
2021
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30 JUN
2020
|
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QoQ
|
|
YoY
|
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(in thousands)
|
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Axon Cloud net
sales
|
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$
|
60,477
|
|
|
$
|
52,436
|
|
|
$
|
41,891
|
|
|
15.3
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%
|
|
44.4
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%
|
Axon Cloud gross
margin
|
|
|
74.5
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%
|
|
|
75.1
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%
|
|
|
77.9
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%
|
|
(60)
|
bp
|
|
(340)
|
bp
|
|
|
|
|
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|
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Sensors and Other net
sales
|
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$
|
45,790
|
|
|
$
|
43,584
|
|
|
$
|
28,878
|
|
|
5.1
|
%
|
|
58.6
|
%
|
Sensors and Other
gross margin
|
|
|
39.7
|
%
|
|
|
41.1
|
%
|
|
|
42.6
|
%
|
|
(140)
|
bp
|
|
(290)
|
bp
|
- Axon Cloud revenue grew 44% year over year to $60 million, reflecting strong demand for our
SaaS services domestically, including federal strength. The
sequential increase in Axon Cloud revenue of $8 million included approximately $2 million of non-recurring service revenue,
including professional services.
- Axon Cloud gross margin of 74.5% includes expected costs to
scale our cloud business. This includes the low-to-no margin
professional services costs of teams who help our customers deploy
Axon's solutions. We expect these costs to continue to be reflected
in gross margins as we 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 59% year over year to
$46 million, reflecting strong body
camera demand.
- Sensors & Other gross margin was 39.7%. As a reminder, we
manage toward a 25% gross margin for camera and sensors hardware,
and the gross margin will fluctuate quarter to quarter depending on
the customer mix.
Forward-looking performance indicators:
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30 JUN
2021
|
|
31 MAR
2021
|
|
31 DEC 2020
|
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30 SEP 2020
|
|
30 JUN 2020
|
|
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($
in thousands)
|
|
Annual recurring
revenue (1)
|
|
$
|
260,178
|
|
|
$
|
242,357
|
|
|
$
|
221,263
|
|
|
$
|
203,815
|
|
|
$
|
183,498
|
|
Net revenue retention
(2)
|
|
|
119
|
%
|
|
|
119
|
%
|
|
|
119
|
%
|
|
|
120
|
%
|
|
|
119
|
%
|
Total company future
contracted revenue
|
|
$
|
2,040,000
|
|
|
$
|
1,790,000
|
|
|
$
|
1,730,000
|
|
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$
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1,510,000
|
|
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$
|
1,340,000
|
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Percentage of TASER
devices sold on a recurring payment plan
|
|
|
55
|
%
|
|
|
64
|
%
|
|
|
53
|
%
|
|
|
75
|
%
|
|
|
46
|
%
|
_______________________
|
(1)
|
Monthly recurring
license, integration, warranty, and storage revenue
annualized.
|
(2)
|
Refer to "Statistical
Definitions" below.
|
- Annual Recurring Revenue (ARR) grew 42% year over year to
$260 million. On a sequential basis,
ARR increased by $18 million,
slightly ahead of our expectation due to strong demand for added
SaaS software features in all three strategic software growth
categories: digital evidence management, productivity solutions and
real-time operations.
- 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
large customers upgrading their subscriptions at individual net
dollar retention rates of 200% to 450% 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 surpassed $2 billion for the first time, reflecting strong
bookings in the quarter. Most of our bookings are for multi-year
contracts. See definition of this metric under "Statistical
Definitions."
- The percentage of TASER devices sold on a subscription was 55%
in the quarter. As a reminder, Axon has been successfully
transitioning its TASER hardware business into a subscription
service in more mature markets and expanding into new markets where
some initial sales are not on a subscription, with the intention of
building subscription businesses in those markets over time.
Outlook:
The following forward-looking statements reflect Axon's
expectations as of August 5, 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 $825 million to $850
million, which compares with our previous expectation of
$780 million to $820 million communicated in May and reflects our
financial strategy of scaling a business that supports a 20%-plus
revenue CAGR.
- We are raising our expectations for Adjusted EBITDA to a range
of $155 million to $160 million, from $140
million to $150 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 more than
$275 million for the full year.
Because 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.
- 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 delivering
rapid 2021 growth, our strengthening view of the business in 2022
includes approximately $960 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 scaling profitability.
Thank you for investing in our mission to protect life,
Rick Smith, CEO
Luke Larson, President
Jawad Ahsan, CFO
Quarterly conference call and webcast
We will host our Q2 2021 earnings conference call webinar on
Thursday, August 5 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, or can be accessed
directly via https://axon.zoom.us/j/98547884069.
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 June 30, 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 (listed
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
(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.
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 250,000 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.
LTE is a trademark of the European Telecommunications Standards
Institute; Facebook is a trademark of Facebook, Inc.; Twitter is a
trademark of Twitter, Inc. and Vievu is a trademark of Vievu, LLC.
Axon, Axon 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 full
year revenue, Adjusted EBITDA, stock-based compensation expense,
capital expenditures, and 2022 full year revenue; 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 vigorously prosecute its Federal court
constitutional case against the FTC while the FTC's separate
antitrust administrative action against the company remains
stayed.
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. The Court then denied Axon's petition for en banc
rehearing but granted Axon's motion to stay the appellate mandate
pending resolution of the company's certiorari petition with the
U.S. Supreme Court.
Axon's Supreme Court petition (No. 21-86 docketed July 22, 2021) presents two questions:
1. Whether Congress impliedly stripped federal district courts
of jurisdiction over constitutional challenges to the Federal Trade
Commission's structure, procedures, and existence by granting the
courts of appeals jurisdiction to "affirm, enforce, modify, or set
aside" the Commission's cease-and-desist orders.
2. Whether, on the merits, the structure of the Federal Trade
Commission, including the dual-layer for-cause removal protections
afforded its administrative law judges, is consistent with the
Constitution.
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
|
|
SIX MONTHS ENDED
|
|
|
30 JUN
2021
|
|
31 MAR
2021
|
|
30 JUN
2020
|
|
30 JUN
2021
|
|
30 JUN
2020
|
Net sales from
products
|
|
$
|
156,427
|
|
$
|
140,886
|
|
$
|
98,755
|
|
$
|
297,313
|
|
$
|
206,043
|
Net sales from
services
|
|
|
62,368
|
|
|
54,133
|
|
|
42,504
|
|
|
116,501
|
|
|
82,378
|
Net sales
|
|
|
218,795
|
|
|
195,019
|
|
|
141,259
|
|
|
413,814
|
|
|
288,421
|
Cost of product
sales
|
|
|
65,301
|
|
|
58,616
|
|
|
43,825
|
|
|
123,917
|
|
|
92,709
|
Cost of service
sales
|
|
|
15,565
|
|
|
13,050
|
|
|
9,257
|
|
|
28,615
|
|
|
18,927
|
Cost of
sales
|
|
|
80,866
|
|
|
71,666
|
|
|
53,082
|
|
|
152,532
|
|
|
111,636
|
Gross
margin
|
|
|
137,929
|
|
|
123,353
|
|
|
88,177
|
|
|
261,282
|
|
|
176,785
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales, general and
administrative
|
|
|
177,662
|
|
|
126,597
|
|
|
72,293
|
|
|
304,259
|
|
|
135,320
|
Research and
development
|
|
|
53,952
|
|
|
47,018
|
|
|
29,560
|
|
|
100,970
|
|
|
55,941
|
Total operating
expenses
|
|
|
231,614
|
|
|
173,615
|
|
|
101,853
|
|
|
405,229
|
|
|
191,261
|
Loss from
operations
|
|
|
(93,685)
|
|
|
(50,262)
|
|
|
(13,676)
|
|
|
(143,947)
|
|
|
(14,476)
|
Interest and other
income, net
|
|
|
41,841
|
|
|
585
|
|
|
1,613
|
|
|
42,426
|
|
|
2,554
|
Income before
provision for income taxes
|
|
|
(51,844)
|
|
|
(49,677)
|
|
|
(12,063)
|
|
|
(101,521)
|
|
|
(11,922)
|
Provision for
(benefit from) income taxes
|
|
|
(4,727)
|
|
|
(1,760)
|
|
|
18,696
|
|
|
(6,487)
|
|
|
14,763
|
Net loss per common
and common equivalent shares:
|
|
$
|
(47,117)
|
|
$
|
(47,917)
|
|
$
|
(30,759)
|
|
$
|
(95,034)
|
|
$
|
(26,685)
|
Net loss per common
and common equivalent shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.72)
|
|
$
|
(0.75)
|
|
$
|
(0.51)
|
|
$
|
(1.47)
|
|
$
|
(0.44)
|
Diluted
|
|
$
|
(0.72)
|
|
$
|
(0.75)
|
|
$
|
(0.51)
|
|
$
|
(1.47)
|
|
$
|
(0.44)
|
Weighted average
number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
65,166
|
|
|
64,036
|
|
|
60,346
|
|
|
64,604
|
|
|
59,977
|
Diluted
|
|
|
65,166
|
|
|
64,036
|
|
|
60,346
|
|
|
64,604
|
|
|
59,977
|
AXON
ENTERPRISE, INC.
|
SEGMENT
REPORTING
|
(Unaudited)
|
(dollars in
thousands)
|
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
|
30 JUN
2021
|
|
|
31 MAR
2021
|
|
|
30 JUN
2020
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
Net sales from
products (1)
|
|
$
|
110,637
|
|
|
$
|
45,790
|
|
|
$
|
156,427
|
|
|
$
|
97,302
|
|
|
$
|
43,584
|
|
|
$
|
140,886
|
|
|
$
|
69,877
|
|
|
$
|
28,878
|
|
|
$
|
98,755
|
|
Net sales from
services (2)
|
|
|
1,891
|
|
|
|
60,477
|
|
|
|
62,368
|
|
|
|
1,697
|
|
|
|
52,436
|
|
|
|
54,133
|
|
|
|
613
|
|
|
|
41,891
|
|
|
|
42,504
|
|
Net sales
|
|
|
112,528
|
|
|
|
106,267
|
|
|
|
218,795
|
|
|
|
98,999
|
|
|
|
96,020
|
|
|
|
195,019
|
|
|
|
70,490
|
|
|
|
70,769
|
|
|
|
141,259
|
|
Cost of product
sales
|
|
|
37,701
|
|
|
|
27,600
|
|
|
|
65,301
|
|
|
|
32,945
|
|
|
|
25,671
|
|
|
|
58,616
|
|
|
|
27,242
|
|
|
|
16,583
|
|
|
|
43,825
|
|
Cost of service
sales
|
|
|
145
|
|
|
|
15,420
|
|
|
|
15,565
|
|
|
|
—
|
|
|
|
13,050
|
|
|
|
13,050
|
|
|
|
—
|
|
|
|
9,257
|
|
|
|
9,257
|
|
Cost of
sales
|
|
|
37,846
|
|
|
|
43,020
|
|
|
|
80,866
|
|
|
|
32,945
|
|
|
|
38,721
|
|
|
|
71,666
|
|
|
|
27,242
|
|
|
|
25,840
|
|
|
|
53,082
|
|
Gross
margin
|
|
|
74,682
|
|
|
|
63,247
|
|
|
|
137,929
|
|
|
|
66,054
|
|
|
|
57,299
|
|
|
|
123,353
|
|
|
|
43,248
|
|
|
|
44,929
|
|
|
|
88,177
|
|
Gross margin
%
|
|
|
66.4
|
%
|
|
|
59.5
|
%
|
|
|
63.0
|
%
|
|
|
66.7
|
%
|
|
|
59.7
|
%
|
|
|
63.3
|
%
|
|
|
61.4
|
%
|
|
|
63.5
|
%
|
|
|
62.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
12,313
|
|
|
|
41,639
|
|
|
|
53,952
|
|
|
|
9,243
|
|
|
|
37,775
|
|
|
|
47,018
|
|
|
|
3,762
|
|
|
|
25,798
|
|
|
|
29,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SIX MONTHS ENDED
|
|
|
SIX MONTHS ENDED
|
|
|
|
30 JUN
2021
|
|
|
30 JUN
2020
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
Net sales from
products (1)
|
|
$
|
207,939
|
|
|
$
|
89,374
|
|
|
$
|
297,313
|
|
|
$
|
145,052
|
|
|
$
|
60,991
|
|
|
$
|
206,043
|
|
Net sales from
services (2)
|
|
|
3,588
|
|
|
|
112,913
|
|
|
|
116,501
|
|
|
|
1,333
|
|
|
|
81,045
|
|
|
|
82,378
|
|
Net sales
|
|
|
211,527
|
|
|
|
202,287
|
|
|
|
413,814
|
|
|
|
146,385
|
|
|
|
142,036
|
|
|
|
288,421
|
|
Cost of product
sales
|
|
|
70,646
|
|
|
|
53,271
|
|
|
|
123,917
|
|
|
|
57,490
|
|
|
|
35,219
|
|
|
|
92,709
|
|
Cost of service
sales
|
|
|
145
|
|
|
|
28,470
|
|
|
|
28,615
|
|
|
|
—
|
|
|
|
18,927
|
|
|
|
18,927
|
|
Cost of
sales
|
|
|
70,791
|
|
|
|
81,741
|
|
|
|
152,532
|
|
|
|
57,490
|
|
|
|
54,146
|
|
|
|
111,636
|
|
Gross
margin
|
|
|
140,736
|
|
|
|
120,546
|
|
|
|
261,282
|
|
|
|
88,895
|
|
|
|
87,890
|
|
|
|
176,785
|
|
Gross margin
%
|
|
|
66.5
|
%
|
|
|
59.6
|
%
|
|
|
63.1
|
%
|
|
|
60.7
|
%
|
|
|
61.9
|
%
|
|
|
61.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
21,556
|
|
|
|
79,414
|
|
|
|
100,970
|
|
|
|
6,794
|
|
|
|
49,147
|
|
|
|
55,941
|
|
________________________
|
(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
|
|
|
SIX MONTHS ENDED
|
|
|
|
30
JUN
|
|
30
JUN
|
|
Unit
|
|
Percent
|
|
|
30
JUN
|
|
30
JUN
|
|
Unit
|
|
Percent
|
|
|
|
2021
|
|
2020
|
|
Change
|
|
Change
|
|
|
2021
|
|
2020
|
|
Change
|
|
Change
|
|
TASER 7
|
|
17,711
|
|
9,014
|
|
8,697
|
|
96.5
|
%
|
|
41,071
|
|
20,444
|
|
20,627
|
|
100.9
|
%
|
TASER X26P
|
|
7,012
|
|
7,658
|
|
(646)
|
|
(8.4)
|
|
|
15,241
|
|
18,661
|
|
(3,420)
|
|
(18.3)
|
|
TASER X2
|
|
9,788
|
|
13,100
|
|
(3,312)
|
|
(25.3)
|
|
|
18,626
|
|
23,578
|
|
(4,952)
|
|
(21.0)
|
|
TASER
Pulse
|
|
6,307
|
|
5,429
|
|
878
|
|
16.2
|
|
|
14,993
|
|
8,690
|
|
6,303
|
|
72.5
|
|
Cartridges
|
|
1,413,329
|
|
715,268
|
|
698,061
|
|
97.6
|
|
|
2,423,089
|
|
1,588,632
|
|
834,457
|
|
52.5
|
|
Axon Body
|
|
45,572
|
|
35,066
|
|
10,506
|
|
30.0
|
|
|
91,666
|
|
74,930
|
|
16,736
|
|
22.3
|
|
Axon Flex
|
|
1,846
|
|
1,964
|
|
(118)
|
|
(6.0)
|
|
|
3,411
|
|
5,038
|
|
(1,627)
|
|
(32.3)
|
|
Axon Fleet
|
|
2,462
|
|
2,327
|
|
135
|
|
5.8
|
|
|
3,902
|
|
5,003
|
|
(1,101)
|
|
(22.0)
|
|
Axon Dock
|
|
5,283
|
|
4,634
|
|
649
|
|
14.0
|
|
|
12,069
|
|
9,931
|
|
2,138
|
|
21.5
|
|
AXON
ENTERPRISE, INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
|
(Unaudited)
|
Dollars in
thousands
|
|
|
|
THREE MONTHS
ENDED
|
|
SIX MONTHS ENDED
|
|
|
|
30 JUN
2021
|
|
31 MAR
2021
|
|
30 JUN
2020
|
|
30 JUN
2021
|
|
30 JUN
2020
|
|
EBITDA and
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(47,117)
|
|
$
|
(47,917)
|
|
$
|
(30,759)
|
|
$
|
(95,034)
|
|
$
|
(26,685)
|
|
Depreciation and
amortization
|
|
|
4,291
|
|
|
4,291
|
|
|
2,930
|
|
|
8,582
|
|
|
5,811
|
|
Interest
expense
|
|
|
17
|
|
|
5
|
|
|
5
|
|
|
22
|
|
|
12
|
|
Investment interest
income
|
|
|
(502)
|
|
|
(533)
|
|
|
(1,499)
|
|
|
(1,035)
|
|
|
(2,192)
|
|
Provision for (benefit
from) income taxes
|
|
|
(4,727)
|
|
|
(1,760)
|
|
|
18,696
|
|
|
(6,487)
|
|
|
14,763
|
|
EBITDA
|
|
$
|
(48,038)
|
|
$
|
(45,914)
|
|
$
|
(10,627)
|
|
$
|
(93,952)
|
|
$
|
(8,291)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
$
|
137,549
|
|
$
|
89,610
|
|
$
|
33,835
|
|
$
|
227,159
|
|
$
|
54,030
|
|
Realized and
unrealized gains on strategic investments (1)
|
|
|
(40,855)
|
|
|
—
|
|
|
—
|
|
|
(40,855)
|
|
|
—
|
|
Transaction costs
related to strategic investments
|
|
|
110
|
|
|
385
|
|
|
90
|
|
|
495
|
|
|
923
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
119
|
|
|
11
|
|
|
100
|
|
|
130
|
|
|
113
|
|
Loss (gain) on
disposal and impairment of property and equipment, net
|
|
|
(2)
|
|
|
45
|
|
|
788
|
|
|
43
|
|
|
1,305
|
|
Costs related to FTC
litigation
|
|
|
147
|
|
|
233
|
|
|
3,834
|
|
|
380
|
|
|
9,969
|
|
Payroll taxes related
to XSPP vesting
|
|
|
2,217
|
|
|
1,452
|
|
|
—
|
|
|
3,669
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
51,247
|
|
$
|
45,822
|
|
$
|
28,020
|
|
$
|
97,069
|
|
$
|
58,049
|
|
Net loss as
a percentage of net sales
|
|
|
(21.5)
|
%
|
|
(24.6)
|
%
|
|
(21.8)
|
%
|
|
(23.0)
|
%
|
|
(9.3)
|
%
|
Adjusted EBITDA as
a percentage of net sales
|
|
|
23.4
|
%
|
|
23.5
|
%
|
|
19.8
|
%
|
|
23.5
|
%
|
|
20.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product and
service sales
|
|
$
|
1,838
|
|
$
|
1,489
|
|
$
|
836
|
|
$
|
3,327
|
|
$
|
1,426
|
|
Sales, general and
administrative
|
|
|
114,089
|
|
|
71,015
|
|
|
26,766
|
|
|
185,104
|
|
|
41,736
|
|
Research and
development
|
|
|
21,622
|
|
|
17,106
|
|
|
6,233
|
|
|
38,728
|
|
|
10,868
|
|
Total
|
|
$
|
137,549
|
|
$
|
89,610
|
|
$
|
33,835
|
|
$
|
227,159
|
|
$
|
54,030
|
|
|
(1)
Includes unrealized gains of $28.6 million and realized gain of
$12.3 million.
|
AXON
ENTERPRISE, INC.
|
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES - continued
|
(Unaudited)
|
Dollars in
thousands, except per share amounts
|
|
|
|
THREE MONTHS
ENDED
|
|
SIX MONTHS ENDED
|
|
|
30 JUN
2021
|
|
31 MAR
2021
|
|
30 JUN
2020
|
|
30 JUN
2021
|
|
30 JUN
2020
|
Non-GAAP net
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
|
$
|
(47,117)
|
|
$
|
(47,917)
|
|
$
|
(30,759)
|
|
$
|
(95,034)
|
|
$
|
(26,685)
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
137,549
|
|
|
89,610
|
|
|
33,835
|
|
|
227,159
|
|
|
54,030
|
Realized and
unrealized gains on strategic investments (1)
|
|
|
(40,855)
|
|
|
—
|
|
|
—
|
|
|
(40,855)
|
|
|
—
|
Loss on disposal and
abandonment of intangible assets
|
|
|
119
|
|
|
11
|
|
|
100
|
|
|
130
|
|
|
113
|
Loss (gain) on
disposal and impairment of property and equipment, net
|
|
|
(2)
|
|
|
45
|
|
|
788
|
|
|
43
|
|
|
1,305
|
Transaction costs
related to strategic investments
|
|
|
110
|
|
|
385
|
|
|
90
|
|
|
495
|
|
|
923
|
Costs related to FTC
litigation
|
|
|
147
|
|
|
233
|
|
|
3,834
|
|
|
380
|
|
|
9,969
|
Payroll taxes related
to XSPP vesting
|
|
|
2,217
|
|
|
1,452
|
|
|
—
|
|
|
3,669
|
|
|
—
|
Income tax
effects
|
|
|
(24,826)
|
|
|
(22,780)
|
|
|
(8,530)
|
|
|
(47,606)
|
|
|
(16,367)
|
Non-GAAP net
income (loss)
|
|
$
|
27,342
|
|
$
|
21,039
|
|
$
|
(642)
|
|
$
|
48,381
|
|
$
|
23,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income
(loss) per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
(0.72)
|
|
$
|
(0.75)
|
|
$
|
(0.51)
|
|
$
|
(1.47)
|
|
$
|
(0.44)
|
Non-GAAP
|
|
$
|
0.38
|
|
$
|
0.31
|
|
$
|
(0.01)
|
|
$
|
0.70
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
65,166
|
|
|
64,036
|
|
|
60,346
|
|
|
64,604
|
|
|
59,977
|
Non-GAAP
(2)
|
|
|
71,689
|
|
|
67,392
|
|
|
60,346
|
|
|
69,544
|
|
|
60,671
|
_______________________
|
(1)
|
Includes unrealized
gains of $28.6 million and realized gain of $12.3
million.
|
|
|
(2)
|
Non-GAAP diluted
income per common share factors in higher diluted weighted average
shares outstanding in periods where there is both a GAAP net loss
and non-GAAP net income.
|
AXON
ENTERPRISE, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(in
thousands)
|
|
|
|
30 JUN
2021
|
|
31 DEC 2020
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
266,372
|
|
$
|
155,440
|
Short-term
investments
|
|
|
388,895
|
|
|
406,525
|
Accounts and notes
receivable, net
|
|
|
201,907
|
|
|
229,201
|
Contract assets,
net
|
|
|
86,561
|
|
|
63,945
|
Inventory,
net
|
|
|
91,739
|
|
|
89,958
|
Prepaid expenses and
other current assets
|
|
|
45,456
|
|
|
36,883
|
Total current
assets
|
|
|
1,080,930
|
|
|
981,952
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
119,933
|
|
|
105,494
|
Deferred tax assets,
net
|
|
|
52,387
|
|
|
45,770
|
Intangible assets,
net
|
|
|
7,870
|
|
|
9,448
|
Goodwill
|
|
|
25,178
|
|
|
25,205
|
Long-term
investments
|
|
|
48,669
|
|
|
90,681
|
Long-term notes
receivable, net
|
|
|
17,466
|
|
|
22,457
|
Long-term contract
assets, net
|
|
|
31,691
|
|
|
20,099
|
Strategic
investments
|
|
|
58,520
|
|
|
11,711
|
Other assets
|
|
|
84,244
|
|
|
68,206
|
Total
assets
|
|
$
|
1,526,888
|
|
$
|
1,381,023
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
|
7,778
|
|
|
24,142
|
Accrued
liabilities
|
|
|
66,908
|
|
|
59,843
|
Current portion of
deferred revenue
|
|
|
186,909
|
|
|
163,959
|
Customer
deposits
|
|
|
4,872
|
|
|
2,956
|
Other current
liabilities
|
|
|
6,404
|
|
|
5,431
|
Total current
liabilities
|
|
|
272,871
|
|
|
256,331
|
|
|
|
|
|
|
|
Deferred revenue, net
of current portion
|
|
|
113,815
|
|
|
111,222
|
Liability for
unrecognized tax benefits
|
|
|
4,550
|
|
|
4,503
|
Long-term deferred
compensation
|
|
|
5,216
|
|
|
4,732
|
Deferred tax
liability
|
|
|
377
|
|
|
649
|
Other long-term
liabilities
|
|
|
32,360
|
|
|
27,331
|
Total
liabilities
|
|
|
429,189
|
|
|
404,768
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
Common stock
|
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
|
1,179,005
|
|
|
962,159
|
Treasury
stock
|
|
|
(155,947)
|
|
|
(155,947)
|
Retained
earnings
|
|
|
74,867
|
|
|
169,901
|
Accumulated other
comprehensive income (loss)
|
|
|
(227)
|
|
|
141
|
Total stockholders'
equity
|
|
|
1,097,699
|
|
|
976,255
|
Total liabilities
and stockholders' equity
|
|
$
|
1,526,888
|
|
$
|
1,381,023
|
AXON
ENTERPRISE, INC.
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
thousands)
|
|
|
|
THREE MONTHS
ENDED
|
|
SIX MONTHS ENDED
|
|
|
|
30 JUN
2021
|
|
31 MAR
2021
|
|
30 JUN
2020
|
|
30 JUN
2021
|
|
30 JUN
2020
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(47,117)
|
|
$
|
(47,917)
|
|
$
|
(30,759)
|
|
$
|
(95,034)
|
|
$
|
(26,685)
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
4,291
|
|
|
4,291
|
|
|
2,930
|
|
|
8,582
|
|
|
5,811
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
119
|
|
|
11
|
|
|
100
|
|
|
130
|
|
|
113
|
|
Loss (gain) on disposal
and impairment of property and equipment, net
|
|
|
(2)
|
|
|
45
|
|
|
788
|
|
|
43
|
|
|
1,305
|
|
Realized and unrealized
gains on strategic investments
|
|
|
(40,855)
|
|
|
—
|
|
|
—
|
|
|
(40,855)
|
|
|
—
|
|
Stock-based
compensation
|
|
|
137,549
|
|
|
89,610
|
|
|
33,835
|
|
|
227,159
|
|
|
54,030
|
|
Deferred income
taxes
|
|
|
(6,291)
|
|
|
(598)
|
|
|
(4,604)
|
|
|
(6,889)
|
|
|
(6,152)
|
|
Unrecognized tax
benefits
|
|
|
(147)
|
|
|
194
|
|
|
271
|
|
|
47
|
|
|
612
|
|
Other noncash,
net
|
|
|
3,145
|
|
|
2,615
|
|
|
1,440
|
|
|
5,760
|
|
|
2,596
|
|
Provision for expected
credit losses
|
|
|
397
|
|
|
(335)
|
|
|
(244)
|
|
|
62
|
|
|
658
|
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable and contract assets
|
|
|
(35,286)
|
|
|
31,298
|
|
|
325
|
|
|
(3,988)
|
|
|
(9,375)
|
|
Inventory
|
|
|
(2,368)
|
|
|
520
|
|
|
(34,641)
|
|
|
(1,848)
|
|
|
(43,271)
|
|
Prepaid expenses and
other assets
|
|
|
(6,368)
|
|
|
(6,952)
|
|
|
(10,828)
|
|
|
(13,320)
|
|
|
(8,551)
|
|
Accounts payable,
accrued liabilities and other liabilities
|
|
|
7,681
|
|
|
(18,062)
|
|
|
20,270
|
|
|
(10,381)
|
|
|
16,708
|
|
Deferred
revenue
|
|
|
19,428
|
|
|
6,219
|
|
|
725
|
|
|
25,647
|
|
|
5,224
|
|
Net cash provided by
(used in) operating activities
|
|
|
34,176
|
|
|
60,939
|
|
|
(20,392)
|
|
|
95,115
|
|
|
(6,977)
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(82,463)
|
|
|
(155,825)
|
|
|
(193,085)
|
|
|
(238,288)
|
|
|
(292,597)
|
|
Proceeds from call /
maturity of investments
|
|
|
162,560
|
|
|
132,254
|
|
|
74,355
|
|
|
294,814
|
|
|
158,670
|
|
Proceeds from sale of
strategic investments
|
|
|
14,546
|
|
|
—
|
|
|
—
|
|
|
14,546
|
|
|
—
|
|
Purchases of property
and equipment
|
|
|
(13,510)
|
|
|
(10,521)
|
|
|
(5,342)
|
|
|
(24,031)
|
|
|
(7,551)
|
|
Purchases of intangible
assets
|
|
|
(102)
|
|
|
(41)
|
|
|
(66)
|
|
|
(143)
|
|
|
(111)
|
|
Proceeds of disposal
from property and equipment
|
|
|
38
|
|
|
10
|
|
|
—
|
|
|
48
|
|
|
78
|
|
Strategic
investments
|
|
|
(500)
|
|
|
(20,000)
|
|
|
—
|
|
|
(20,500)
|
|
|
(4,700)
|
|
Net cash provided by
(used in) investing activities
|
|
|
80,569
|
|
|
(54,123)
|
|
|
(124,138)
|
|
|
26,446
|
|
|
(146,211)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from
equity offering
|
|
|
—
|
|
|
—
|
|
|
306,779
|
|
|
—
|
|
|
306,779
|
|
Proceeds from options
exercised
|
|
|
—
|
|
|
—
|
|
|
267
|
|
|
—
|
|
|
295
|
|
Income and payroll tax
payments for net-settled stock awards
|
|
|
(3,267)
|
|
|
(7,045)
|
|
|
(577)
|
|
|
(10,312)
|
|
|
(5,767)
|
|
Net cash provided by
(used in) financing activities
|
|
|
(3,267)
|
|
|
(7,045)
|
|
|
306,469
|
|
|
(10,312)
|
|
|
301,307
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
73
|
|
|
(392)
|
|
|
775
|
|
|
(319)
|
|
|
(1,115)
|
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash
|
|
|
111,551
|
|
|
(621)
|
|
|
162,714
|
|
|
110,930
|
|
|
147,004
|
|
Cash and cash
equivalents, beginning of period
|
|
|
154,930
|
|
|
155,551
|
|
|
156,645
|
|
|
155,551
|
|
|
172,355
|
|
Cash and cash
equivalents, end of period
|
|
$
|
266,481
|
|
$
|
154,930
|
|
$
|
319,359
|
|
$
|
266,481
|
|
$
|
319,359
|
|
AXON
ENTERPRISE, INC.
|
SELECTED CASH FLOW
INFORMATION
|
(Unaudited)
|
(in
thousands)
|
|
|
|
THREE MONTHS
ENDED
|
|
SIX MONTHS ENDED
|
|
|
30 JUN
2021
|
|
31 MAR
2021
|
|
30 JUN
2020
|
|
30 JUN
2021
|
|
30 JUN
2020
|
Net cash provided by
(used in) operating activities
|
|
$
|
34,176
|
|
$
|
60,939
|
|
$
|
(20,392)
|
|
$
|
95,115
|
|
$
|
(6,977)
|
Purchases of property
and equipment
|
|
|
(13,510)
|
|
|
(10,521)
|
|
|
(5,342)
|
|
|
(24,031)
|
|
|
(7,551)
|
Purchases of
intangible assets
|
|
|
(102)
|
|
|
(41)
|
|
|
(66)
|
|
|
(143)
|
|
|
(111)
|
Free cash flow, a
non-GAAP measure
|
|
$
|
20,564
|
|
$
|
50,377
|
|
$
|
(25,800)
|
|
$
|
70,941
|
|
$
|
(14,639)
|
AXON
ENTERPRISE, INC.
|
SUPPLEMENTAL
TABLES
|
(in
thousands)
|
|
|
|
30 JUN
2021
|
|
31 DEC 2020
|
|
|
(Unaudited)
|
|
|
|
Cash and cash
equivalents
|
|
$
|
266,372
|
|
$
|
155,440
|
Short-term
investments
|
|
|
388,895
|
|
|
406,525
|
Long-term
investments
|
|
|
48,669
|
|
|
90,681
|
Total cash and cash
equivalents and investments, net
|
|
$
|
703,936
|
|
$
|
652,646
|
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SOURCE Axon