SCOTTSDALE, Ariz., May 9, 2023
/PRNewswire/ --
- Axon Cloud revenue of $116
million up 51% year over year
- Annual Recurring Revenue grows 49% to $520 million
- Net income of $45 million
supports Adjusted EBITDA of $65
million
- Raises full year outlook to 22% revenue growth, maintains 20%
Adjusted EBITDA margin
Fellow shareholders,
We're pleased to report Axon's strong start to 2023 —
highlighted by two new product launches, first quarter revenue
growth of 34% and our fifth consecutive quarter of GAAP
profitability. Record quarterly revenue of $343 million was primarily driven by strong
demand for Axon Cloud SaaS services, Axon Fleet 3, and our TASER 7
platform.
Axon Cloud revenue growth of 51% reflects continuing momentum in
our software business, as our customers increasingly look to deploy
new capabilities within our highest value bundled offerings. In
addition to continued strength in our Digital Evidence Management
platform, we are also seeing growing adoption of our Real-time
Operations, Productivity, Axon Air, and Axon VR training
products.
We sell our hardware and software services via integrated
subscription bundles, which customers purchase on long-term
contracts. Axon's core customers fall into roughly four categories
of funding sources: U.S. state and local governments, the U.S.
federal government, international government customers, and
commercial enterprises. Notably, we are extending our reach beyond
law enforcement to new customers, including attorneys, fire and EMS
personnel, corrections and the U.S. military.
Our pipeline is being fueled by the underlying strength of our
business model, Axon's culture of innovation and meaningful,
long-term partnerships with our customers, who look to us for the
newest, most advanced technology. This year, we introduced two
major product innovations — the TASER 10 platform, discussed
in more detail in our February update — and our latest generation
body camera, Axon Body 4, which we highlight below. Both new
hardware products integrate with the Axon network and drive
software adoption — and both have been met with exceptional
customer response, further supporting our confidence in our
long-term growth trajectory.
Our teams executed on a record Q1 with cost discipline,
delivering a net income margin of 13% (Adjusted EBITDA margin of
19%) while ramping two new products, investing in our go-to-market
and services capacity and navigating inflationary pressures. As we
continue to invest in advancing our mission to protect life, we
remain committed to delivering strong profitability and cash
flow.
Select Highlights
Customers & Products
Axon Accelerate 2023
In April, we hosted our eighth annual Axon Accelerate conference
in Phoenix. Our user conference
has become the largest technology conference in public safety and
this year we welcomed nearly 1,000 attendees from law enforcement,
military, Fire/EMS, commercial enterprise and private security, and
more. Attendees represented several countries around the world,
including Poland, Thailand, Switzerland, and the United Kingdom, among many others,
demonstrating the global desire to invest in better technology to
improve public safety.
We also hosted over 50 curated sessions, body camera
certification courses, a global impact day for international
attendees, an Axon Awards ceremony, nearly 30 exhibitors from
Axon's growing partner ecosystem, and more.
Each year our team walks away from our Accelerate user
conference with new ideas, a better understanding of the problems
our customers face, and renewed energy and focus towards solving
those problems. The engagement with our customers and thought
leaders across the industry is instrumental in driving our company
forward and emboldens us to be a trusted partner to public safety
agencies across the globe.
Announcing Axon Body 4
Axon's market leadership in body camera technology is driven by
our investments in research and development, and constant problem
solving that keep us at the forefront of the innovation curve.
In April, we introduced our newest generation camera: Axon Body
4.
We focus our body camera development to make them easy to use,
to seamlessly fit into officer workflow, and to offer features and
functionality that ensure our customers never miss a moment. Beyond
using the body camera as a tool to capture a critical,
truth-capturing record of what happened for use as permanent
evidence, Axon innovation has further expanded the reach of body
cameras into must-have, real-time-operations devices that support
both the officer and central command.
We innovate and problem solve on the toughest challenges— like
providing full shift ready battery life in a camera that offers
live streaming and two-way voice, with high quality video and
audio, that automatically records when TASER devices or firearms
are removed from their holsters — so our customers can focus on
their task at hand, and count on their body cameras to capture all
critical moments.
Axon Body 4 enables public safety and their support teams to
communicate with one another in real-time, combining seamless video
livestreaming with new bi-directional audio. This capability is
groundbreaking in delivering additional assistance from
dispatchers, supervisors, translators, mental health experts or
anyone who can offer aid in a critical situation. Remote support
teams can watch livestreams and communicate directly through the
officer's Axon Body 4, providing real-time support, while
preserving radio bandwidth for other demands.
Feature advancements in Axon Body 4 include:
- Expanded communications ability: Axon Body 4 introduces
bi-directional communications between officers and their support
teams by enabling multiple viewers who have access to the
livestream to communicate in real-time with the camera wearer.
Officers themselves are empowered to signal for support with a new
Watch Me button on the camera, with their location and critical
alerts displayed on Axon Respond.
- More points of view: Axon Body 4 offers the option to
easily connect an optional point-of-view (POV) camera module. This
camera can attach to an officer's head or shoulder, be used
handheld or affixed to the brim of a hat or sunglasses to allow to
for alternative perspectives that more closely mirror the officer's
own point of view.
- Upgraded camera features: Sharper images, improved
visibility, a larger field of view and better camera capabilities
enable the wearer to capture more of every moment.
- More streamlined operations: Axon Body 4 improves the
officer user experience and enables agency administrators to more
easily manage their body camera programs, saving time on personnel
needed.
Axon Body 4 is currently being trialed by several agencies in
the U.S. and will begin shipping in the second half of 2023.
Our trial customers are already seeing the benefits of these new
capabilities. One U.S. southeast city police department customer,
for example, shared that Axon Body 4's talk-through feature works
"super well" for their co-response mental health program, adding
that the body camera tool is considered "vital." The body camera is
also being trialed by customers outside the public safety
sector.
"It works really well… When I am on a scene and I am writing
down information, I just talk to dispatch through the BWC." —
Security guard customer, U.S. medical campus, referring to Axon
Body 4
TASER 10
In January, Axon unveiled TASER 10 — a game-changing,
life-saving weapon that is a feat of human ingenuity and
engineering. TASER 10 represents a giant leap in innovation, with
several step-function improvements compared to previous
versions. We are seeing the strongest initial demand of any
TASER weapon in the history of our company. New TASER devices
typically take a few quarters to ramp in terms of shipments and
sales, as our customers need to trial and train before they can
fully deploy a new weapon. We expect order volume to grow
throughout 2023.
Customers currently evaluating TASER 10 are providing positive
feedback. A few quotes we have received from sergeants at our TASER
10 evaluation agencies highlight their enthusiasm:
- "If I were to sum up TASER 10 in one word, it would be,
revolutionary."
- "A total game-changer."
- "I would have never thought I could have used a TASER in
that dynamic of a situation."
- "I felt confident deploying it and hitting where I wanted
to."
Axon welcomes new board members
In March, we appointed three additional members to our board of
directors: Jeri Williams, former
Phoenix Police Department Chief of
Police, Graham Smith, former
Salesforce executive, and Erika
Ayers, CEO of Barstool Sports. We are excited to welcome
such accomplished professionals across various industry backgrounds
to help guide our next stage of growth and advancement.
Chief Jeri Williams brings over
30 years of law enforcement leadership to Axon's board of
directors. An accomplished police executive, Chief Williams served
as the first female Chief of Police for the Phoenix Police Department from 2016 to 2022
and was the first female president of the Major Cities Chief's
Association (MCCA). During her tenure as Chief, she advanced a
number of progressive strategies within the department, regarding
key areas such as community engagement, professional standards and
increased mental health resources for all police employees. Chief
Williams' veteran police experience, coupled with her honorable
leadership throughout her tenure, brings real experiential counsel
to the Axon board to help progress our mission to protect life
through public safety.
Graham Smith has held senior
financial roles across the software sector for over 25 years, most
recently serving as Chief Financial Officer at Salesforce, where
his leadership and vision for high growth at scale contributed to
the company's success, growing from $750
million in revenue to over $5
billion. He brings a wealth of financial leadership
experience to Axon.
Erika Ayers, ranked one of the
most influential executives in digital innovation, sports,
entertainment and lifestyle media, will be a welcome addition to
the Axon board of directors. Her appointment will take effect
June 1, 2023. Ms. Ayers currently
serves as the CEO of Barstool Sports and has a proven track record
of transforming start-up organizations into multi-industry
operations.
Summary of Q1 2023
results
- Quarterly revenue of $343
million grew 34% year over year, exceeding our expectations,
driven by strength in Axon Cloud software, Axon Fleet shipments and
demand for our TASER 7 platform.
- The sequential change in total company gross margin to
59.5% reflects the impact from revenue mix as we had increased Axon
Fleet sales and the professional services associated with those,
and didn't repeat the gross margin benefit of catch-up software
revenue that we saw in Q4 2022. Gross margin also reflects a 110
basis point impact of one-time items related to inventory and other
cost adjustments. Over the remaining quarters of 2023, we expect
Fleet demand to remain strong, and as a result, would expect gross
margins to remain approximately flat or improve only modestly from
Q1 levels.
- Operating profit was $17 million.
Operating expenses of $187 million in
the quarter included $33 million in
stock based compensation expenses.
-
- SG&A of $117 million included
$15 million in stock based
compensation expenses.
- R&D of $71 million included
$18 million in stock based
compensation expenses.
- Net income of $45 million
(13.2% net income margin), or $0.61
per diluted share, supported non-GAAP net income of $65 million, or $0.88 per diluted share.
- Adjusted EBITDA of $65
million drove Q1 Adjusted EBITDA margin of 19.0%.
-
- Both Non-GAAP net income and Adjusted EBITDA exclude
stock-based compensation expenses and net gains or losses related
to our strategic investment portfolio.
- Operating cash flow reflects a $56 million outflow in the quarter. Uses of
operating cash in the quarter included $64
million in prepaid expenses and other payments, such as
company-wide bonus payouts and commission payments, both tied to
strong 2022 performance, and $16
million in inventory build as we prepare to ship new
hardware products that will ramp in the back half of the year.
Operating cash flow in the quarter also included an $18 million use of cash related to settlement of
taxes on options exercised near the end of the quarter, which
reversed in the first week of the second quarter. CapEx in the
quarter was $8.5 million.
- As of March 31, 2023, Axon had
$1.07 billion in cash, equivalents
and investments, and outstanding convertible notes in principal
amount of $690 million, for a net
cash position of $380 million.
Financial commentary by segment:
Software & Sensors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
CHANGE
|
|
|
|
31 MAR
2023
|
|
31 DEC
2022
|
|
31 MAR
2022
|
|
QoQ
|
|
YoY
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Axon Cloud net
sales
|
|
$
|
116,453
|
|
|
$
|
113,538
|
|
|
$
|
77,016
|
|
|
2.6
|
%
|
|
51.2
|
%
|
Axon Cloud gross
margin
|
|
|
73.2
|
%
|
|
|
75.5
|
%
|
|
|
72.3
|
%
|
|
(230)
|
bp
|
|
90
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensors and Other net
sales
|
|
$
|
92,308
|
|
|
$
|
85,867
|
|
|
$
|
65,050
|
|
|
7.5
|
%
|
|
41.9
|
%
|
Sensors and Other gross
margin
|
|
|
38.2
|
%
|
|
|
41.5
|
%
|
|
|
40.5
|
%
|
|
(330)
|
bp
|
|
(230)
|
bp
|
- Axon Cloud revenue growth of 51% reflects strong domestic
demand for our software-heavy premium integrated bundles and
healthy momentum in our digital evidence management, productivity,
and real-time operations platforms.
- Axon Cloud gross margin of 73.2% improved year over year driven
by the benefits from our renewed contract with Microsoft Azure.
Gross margin declined quarter over quarter on mix as it also
includes low-to-no margin professional services revenue from the
teams who help our customers deploy Axon's solutions. The
software-only revenue in this segment, most of which is annually
recurring and includes cloud storage and compute costs, has
consistently exceeded our gross margin target of 80%.
- Sensors & Other revenue growth of 42% reflects strength in
shipments of Axon Fleet 3 in-car cameras. In the first quarter,
Axon Fleet 3 shipments more than doubled year over year as we
executed against demand that has exceeded our expectations. We
continue to work against our backlog in Fleet 3, which remains a
highly successful product launch. Customers have consistently
shared positive feedback and success stories using Axon Fleet 3
mobile automated license plate reading (ALPR) technology.
- Sensors & Other gross margin was 38.2%, down 230 bps
year-over-year due to a higher mix of Axon Fleet hardware sales. As
a reminder, the Axon Fleet hardware platform supports long-term
recurring, high-margin SaaS revenue related to our ALPR (automated
license plate reading) software.
TASER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
CHANGE
|
|
|
|
31 MAR
2023
|
|
31 DEC
2022
|
|
31 MAR
2022
|
|
QoQ
|
|
YoY
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
134,282
|
|
|
$
|
136,737
|
|
|
$
|
114,360
|
|
|
(1.8)
|
%
|
|
17.4
|
%
|
Gross margin
|
|
|
62.2
|
%
|
|
|
61.6
|
%
|
|
|
64.5
|
%
|
|
60
|
bp
|
|
(230)
|
bp
|
- TASER segment revenue growth of 17% was driven by higher
cartridge volumes and demand for our TASER 7 platform, including VR
and training products associated with premium subscription
bundles.
- TASER segment gross margin of 62.2% increased 60 bps
sequentially, reflecting the positive impact from product mix as we
continued to ship TASER 7, predominantly. Additionally, we made the
decision to write off excess inventory in Q1 2023 related to some
of our smaller product areas, including consumer. We remain focused
on supply chain costs and improving overhead efficiencies.
Forward-looking performance indicators
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 MAR
2023
|
|
31 DEC
2022
|
|
30 SEP
2022
|
|
30 JUN
2022
|
|
31 MAR
2022
|
|
|
($
in millions)
|
|
Annual recurring
revenue (1)
|
|
$
|
520
|
|
|
$
|
473
|
|
|
$
|
403
|
|
|
$
|
368
|
|
|
$
|
348
|
|
Net revenue retention
(1)
|
|
|
121
|
%
|
|
|
121
|
%
|
|
|
120
|
%
|
|
|
119
|
%
|
|
|
119
|
%
|
Total company future
contracted revenue (1)
|
|
$
|
4,778
|
|
|
$
|
4,647
|
|
|
$
|
3,730
|
|
|
$
|
3,330
|
|
|
$
|
2,970
|
|
Percentage of TASER
devices sold on a recurring payment plan
|
|
|
63
|
%
|
|
|
79
|
%
|
|
|
63
|
%
|
|
|
76
|
%
|
|
|
45
|
%
|
(1)
|
Refer to "Statistical
Definitions" below.
|
- Annual Recurring Revenue (ARR) grew 49% year over year to
$520 million, bolstered by sales of
our premium bundles and strong reception of our new products,
including Axon Fleet with automated license plate reading (ALPR)
technology and virtual reality.
- Net revenue retention was 121% in the quarter, reflecting our
ability to deliver additional value to our customers over time and
de minimis attrition. We drive adoption of our cloud
software solutions through integrated bundling. Our customers often
sign up for five to ten-year subscriptions. This SaaS metric
purposely excludes the hardware portion of customer
subscriptions.
- Total company future contracted revenue grew to $4.8
billion. We expect to recognize between 15% to 25% of this balance
over the next twelve months, and generally expect the remainder to
be recognized over the following ten years. This metric is also
known as "remaining performance obligations."
- The percentage of TASER devices sold on a subscription
was 63% in the quarter. Axon has successfully
transitioned our TASER hardware business into a subscription
service in more mature markets. Going forward, we will be retiring
this legacy metric, which was introduced several years ago to
demonstrate our ability to drive subscription-based hardware and
software. The percentage of total revenue tied to a subscription
crossed above 50% in 2018. In 2022, 90% of total company revenue
was tied to subscription bundles — with the remaining 10% primarily
being tied to consumer, new and emerging markets.
2023 Outlook
The following forward-looking statements reflect Axon
expectations as of May 9, 2023, and
are subject to risks and uncertainties.
- Axon's full year 2023 revenue expectation has improved to a
range of $1.44 billion to
$1.46 billion, reflecting
approximately 22% year over year growth at the midpoint.
Previously, Axon had guided to full year 2023 revenue growth of
approximately 20%, or revenue of about $1.43
billion.
- We are maintaining our expectation for Adjusted EBITDA margin
of 20% in 2023. This reflects an increase in implied Adjusted
EBITDA dollars to a range of $288
million to $292 million
compared to prior implied guidance of $286
million.
-
- We provide Adjusted EBITDA guidance, rather than net income
guidance, due to the inherent difficulty of forecasting certain
types of expenses and gains such as stock-based compensation,
income tax expenses and gains or losses on marketable securities
and strategic investments, which affect net income but not Adjusted
EBITDA. We are unable to reasonably estimate the impact of such
expenses, which could be material, on net income. Accordingly, we
do not provide a reconciliation of projected net income to
projected Adjusted EBITDA.
- We expect stock-based compensation expense to be approximately
$141 million for the full year. This
is an increase from $140 million
previously due to company outperformance. Because our stock-based
compensation expenses may vary based on changes in the actual
timing of attainment of certain operational or market
capitalization metrics, it is inherently difficult to forecast
future stock-based compensation expense, which may also be
materially affected by any future stock-based compensation plans,
subject to shareholder approval.
- We expect 2023 CapEx to be in the range of $50 million to $65
million, in line with our prior guidance. Our 2023 CapEx
plans include investments in TASER 10 automation and capacity
expansion, including cartridge capacity and lab enhancements and
global facility build-out and upgrades, including warehousing
support for global shipping facilities.
Thank you for investing in our mission.
-The Axon team
Quarterly conference call and webcast
We will host our Q1 2023 earnings conference call webinar on
Tuesday, May 9, 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 axon.zoom.us/j/96120979821
Statistical Definitions
Annual recurring revenue: Annual recurring revenue is a
performance indicator that management believes provides more
visibility into the growth of our revenue generated by our highest
margin, recurring services. Annual recurring revenue should be
viewed independently of revenue and deferred revenue because it is
an operating measure and is not intended to be combined with or to
replace GAAP revenue or deferred revenue, as they can be impacted
by contract start and end dates and renewal rates. Annual recurring
revenue is not intended to be a replacement or forecast of revenue
or deferred revenue. We calculate annual recurring revenue as
monthly recurring license, integration, warranty, and storage
revenue, annualized.
Net revenue retention: Dollar-based net revenue retention is an
important metric to measure our ability to retain and expand our
relationships with existing customers. We calculate it as the
software and camera warranty subscription and support revenue from
a base set of agency customers from which we generated Axon Cloud
subscription revenue in the last month of a quarter divided by the
software and camera warranty subscription and support revenue from
the year-ago month of that same customer base. This calculation
includes high-margin warranty revenue but purposely excludes
the lower-margin hardware subscription component of the
customer contracts, as it is meant to be a SaaS metric that we use
to monitor the health of the recurring revenue business we are
building. This calculation also excludes the implied monthly
revenue contribution of customers that were added since the
year-ago quarter, and therefore excludes the benefit of new
customer acquisition. The metric includes customers, if any, that
terminated during the annual period, and therefore, this metric is
inclusive of customer churn. This metric is downwardly adjusted to
account for the effect of phased deployments -- meaning that for
the year-ago period, we consider the total contractually obligated
implied monthly revenue amount, rather than monthly revenue amounts
that might have been in actuality smaller on a GAAP basis due to
the customer not having yet fully deployed their Axon solution. For
more information relative to our revenue recognition policies,
please reference our 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, 2023. We expect to recognize
between 15% to 25% of this balance over the next twelve months, and
generally expect the remainder to be recognized over the following
ten years, subject to risks related to delayed deployments, budget
appropriation or other contract cancellation clauses.
Non-GAAP Measures
To supplement the Company's financial results presented in
accordance with GAAP, we present the non-GAAP financial measures of
EBITDA, Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Diluted
Earnings Per Share, Free Cash Flow, and Adjusted Free Cash Flow.
The Company's management uses these non-GAAP financial measures in
evaluating the Company's performance in comparison to prior
periods. We believe that both management and investors benefit from
referring to these non-GAAP financial measures in assessing its
performance, and when planning and forecasting our future periods.
A reconciliation of GAAP to the non-GAAP financial measures is
presented 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, realized and unrealized gains/losses on
strategic investments and marketable securities and certain other
pre-tax items (identified and listed below in the
reconciliation).
- Non-GAAP Net Income (Most comparable GAAP Measure: Net income)
- Net income excluding the costs of non-cash stock-based
compensation and excluding any net
gain/loss/write-down/disposal/abandonment of property, equipment
and intangible assets; realized and unrealized gain/losses on
strategic investments and marketable securities; loss on
impairment; costs related to strategic investments and business
acquisitions; 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.
- Adjusted Free Cash Flow (Most comparable GAAP Measure: Cash
flow from operating activities) - cash flows provided by operating
activities minus purchases of property and equipment and intangible
assets, excluding the net impact of investments in our new
Scottsdale, Ariz. campus and bond
premium amortization.
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 a technology leader in global public safety. Our
moonshot goal is to cut gun-related deaths between police and the
public by 50% before 2033. Axon is building the public safety
operating system of the future by integrating a suite of hardware
devices and cloud software solutions that lead modern policing.
Axon's suite includes TASER energy devices, body cameras, in-car
cameras, cloud-hosted digital evidence management solutions,
productivity software and real-time operations capabilities. Axon's
growing global customer base includes first responders across
international, federal, state and local law enforcement, fire,
corrections and emergency medical services, as well as the justice
sector, commercial enterprises and consumers.
Non-Axon trademarks are property of their respective owners.
Axon, Axon Air, Axon Accelerate, Axon Body, Axon Fleet, Axon
Respond, Axon VR, TASER, TASER 7, TASER 10, 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.
Forward-looking statements
Forward-looking statements in this letter include, without
limitation, statements regarding: proposed products and
services and related development efforts and activities;
expectations about the market for our current and future products
and services; 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; the fulfillment of
bookings; 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 2023 full
year revenue, stock-based compensation expense, adjusted EBITDA,
adjusted EBITDA margin, and capital expenditures; statements
of management's strategies, goals and objectives and other similar
expressions; as well as the ultimate resolution of financial
statement items requiring critical accounting
estimates, including those set forth in our Form 10–K for the
year ended December 31, 2022. Such
statements give our current expectations or forecasts of future
events; they do not relate strictly to historical or current facts.
Words such as "may," "will," "should," "could," "would," "predict,"
"potential," "continue," "expect," "anticipate," "future,"
"intend," "plan," "believe," "estimate," and similar expressions,
as well as statements in future tense, identify forward-looking
statements. However, not all forward-looking statements contain
these identifying words.
We cannot guarantee that any forward-looking statement will be
realized, although we believe we have been prudent in our plans and
assumptions. Achievement of future results is subject to risks,
uncertainties and potentially inaccurate assumptions. The following
important factors could cause actual results to differ materially
from those in the forward-looking statements: our exposure to
cancellations of government contracts due to appropriation clauses,
exercise of a cancellation clause, or non-exercise of contractually
optional periods; the ability of law enforcement agencies to obtain
funding, including based on tax revenues; our ability to design,
introduce and sell new products or features; our ability to defend
against litigation and protect our intellectual property, and the
resulting costs of this activity; our ability to win bids through
the open bidding process for governmental agencies; our ability to
manage our supply chain and avoid production delays, shortages, and
impacts to expected gross margins; the impacts of inflation,
macroeconomic conditions and global events; the impact of
stock-based compensation expense, impairment expense, and income
tax expense on our financial results; customer purchase behavior,
including adoption of our software as a service delivery model;
negative media publicity or sentiment regarding our products; the
impact of product mix on projected gross margins; defects in, or
misuse of, our products; changes in the costs of product components
and labor; loss of customer data, a breach of security, or an
extended outage, including by our third party cloud-based storage
providers; exposure to international operational risks; delayed
cash collections and possible credit losses due to our subscription
model; changes in government regulations in the 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; litigation or
inquiries and related time and costs; 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. The
Annual Report on Form 10–K that we filed with the Securities
and Exchange Commission ("SEC") on February 28, 2023 lists
various important factors that could cause actual results to differ
materially from expected and historical results. These factors are
intended as cautionary statements for investors within the meaning
of Section 21E of the Exchange Act and Section 27A of the
Securities Act. Readers can find them under the heading "Risk
Factors" in the Report on Form 10–K, 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. Our
filings with the SEC may be accessed at the SEC's web site at
www.sec.gov.
Update on Legal Matters:
Axon v. FTC
Axon has been vigorously pursuing a federal court constitutional
case against the Federal Trade Commission (FTC) since January
2020. On April 14, 2023, Axon
secured a unanimous U.S. Supreme Court victory allowing its
constitutional challenges to the FTC's structure and existence to
proceed in Federal court.
"The high Court's decision vindicates what Axon has said all
along: threshold constitutional challenges to the FTC's structure
belong in Federal court where unconstitutional action can be
enjoined before it inflicts irreparable harm. We are heartened that
no Justice endorsed the alternative of making parties endure
unconstitutional agency action before it can be challenged in
court," said Pam Petersen, Axon Vice President of Litigation
and National Appellate Counsel.
Links to all court filings and opinions can be found on Axon's
FTC Investor Briefing page at https://www.axon.com/ftc.
AXON
ENTERPRISE, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
31 MAR
2023
|
|
31 DEC
2022
|
|
31 MAR
2022
|
Net sales from
products
|
|
$
|
219,389
|
|
$
|
214,735
|
|
$
|
176,204
|
Net sales from
services
|
|
|
123,654
|
|
|
121,407
|
|
|
80,222
|
Net sales
|
|
|
343,043
|
|
|
336,142
|
|
|
256,426
|
Cost of product
sales
|
|
|
107,584
|
|
|
102,641
|
|
|
79,352
|
Cost of service
sales
|
|
|
31,357
|
|
|
27,822
|
|
|
21,335
|
Cost of
sales
|
|
|
138,941
|
|
|
130,463
|
|
|
100,687
|
Gross margin
|
|
|
204,102
|
|
|
205,679
|
|
|
155,739
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Sales, general and
administrative
|
|
|
116,567
|
|
|
114,418
|
|
|
90,129
|
Research and
development
|
|
|
70,927
|
|
|
68,720
|
|
|
48,416
|
Total operating
expenses
|
|
|
187,494
|
|
|
183,138
|
|
|
138,545
|
Income from
operations
|
|
|
16,608
|
|
|
22,541
|
|
|
17,194
|
Interest and other
income, net
|
|
|
25,276
|
|
|
12,189
|
|
|
55,299
|
Income before provision
for income taxes
|
|
|
41,884
|
|
|
34,730
|
|
|
72,493
|
Provision for (benefit
from) income taxes
|
|
|
(3,255)
|
|
|
5,555
|
|
|
17,622
|
Net income
|
|
$
|
45,139
|
|
$
|
29,175
|
|
$
|
54,871
|
Net income per common
and common equivalent shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.62
|
|
$
|
0.41
|
|
$
|
0.77
|
Diluted
|
|
$
|
0.61
|
|
$
|
0.40
|
|
$
|
0.76
|
Weighted average number
of common and common equivalent shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
72,638
|
|
|
71,270
|
|
|
70,950
|
Diluted
|
|
|
73,880
|
|
|
72,976
|
|
|
72,349
|
AXON
ENTERPRISE, INC.
SEGMENT
REPORTING
(Unaudited)
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR
2023
|
|
|
31 DEC
2022
|
|
|
31 MAR
2022
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
Net sales from products
(1)
|
|
$
|
127,081
|
|
|
$
|
92,308
|
|
|
$
|
219,389
|
|
|
$
|
128,868
|
|
|
$
|
85,867
|
|
|
$
|
214,735
|
|
|
$
|
111,154
|
|
|
$
|
65,050
|
|
|
$
|
176,204
|
|
Net sales from services
(2)
|
|
|
7,201
|
|
|
|
116,453
|
|
|
|
123,654
|
|
|
|
7,869
|
|
|
|
113,538
|
|
|
|
121,407
|
|
|
|
3,206
|
|
|
|
77,016
|
|
|
|
80,222
|
|
Net sales
|
|
|
134,282
|
|
|
|
208,761
|
|
|
|
343,043
|
|
|
|
136,737
|
|
|
|
199,405
|
|
|
|
336,142
|
|
|
|
114,360
|
|
|
|
142,066
|
|
|
|
256,426
|
|
Cost of product
sales
|
|
|
50,583
|
|
|
|
57,001
|
|
|
|
107,584
|
|
|
|
52,447
|
|
|
|
50,194
|
|
|
|
102,641
|
|
|
|
40,625
|
|
|
|
38,727
|
|
|
|
79,352
|
|
Cost of service
sales
|
|
|
180
|
|
|
|
31,177
|
|
|
|
31,357
|
|
|
|
—
|
|
|
|
27,822
|
|
|
|
27,822
|
|
|
|
—
|
|
|
|
21,335
|
|
|
|
21,335
|
|
Cost of
sales
|
|
|
50,763
|
|
|
|
88,178
|
|
|
|
138,941
|
|
|
|
52,447
|
|
|
|
78,016
|
|
|
|
130,463
|
|
|
|
40,625
|
|
|
|
60,062
|
|
|
|
100,687
|
|
Gross margin
|
|
|
83,519
|
|
|
|
120,583
|
|
|
|
204,102
|
|
|
|
84,290
|
|
|
|
121,389
|
|
|
|
205,679
|
|
|
|
73,735
|
|
|
|
82,004
|
|
|
|
155,739
|
|
Gross margin
%
|
|
|
62.2
|
%
|
|
|
57.8
|
%
|
|
|
59.5
|
%
|
|
|
61.6
|
%
|
|
|
60.9
|
%
|
|
|
61.2
|
%
|
|
|
64.5
|
%
|
|
|
57.7
|
%
|
|
|
60.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
16,080
|
|
|
|
54,847
|
|
|
|
70,927
|
|
|
|
14,531
|
|
|
|
54,189
|
|
|
|
68,720
|
|
|
|
9,896
|
|
|
|
38,520
|
|
|
|
48,416
|
|
(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.
|
|
As discussed in our
February 2023 shareholder letter, we are introducing new detailed,
transparent and relevant revenue disclosures in our shareholder
letter, which we believe will be helpful to investors in evaluating
our business and measuring our success.
|
AXON
ENTERPRISE, INC.
SALES BY PRODUCT AND
SERVICE
(Unaudited)
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
31 MAR
2023
|
|
|
31 DEC
2022
|
|
|
31 MAR
2022
|
|
TASER
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TASER Devices
(Professional)
|
$
|
67,472
|
|
19.7
|
%
|
|
$
|
69,075
|
|
20.5
|
%
|
|
$
|
63,164
|
|
24.6
|
%
|
Cartridges
|
|
46,800
|
|
13.6
|
|
|
|
47,541
|
|
14.1
|
|
|
|
37,825
|
|
14.8
|
|
Axon Evidence and
Cloud Services
|
|
7,201
|
|
2.1
|
|
|
|
6,890
|
|
2.0
|
|
|
|
3,017
|
|
1.2
|
|
Extended
Warranties
|
|
7,670
|
|
2.2
|
|
|
|
7,580
|
|
2.3
|
|
|
|
6,679
|
|
2.6
|
|
Other
(1)
|
|
5,139
|
|
1.5
|
|
|
|
5,651
|
|
1.7
|
|
|
|
3,675
|
|
1.4
|
|
Total TASER
segment
|
|
134,282
|
|
39.1
|
|
|
|
136,737
|
|
40.6
|
|
|
|
114,360
|
|
44.6
|
|
Software and Sensors
segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Axon Body Cameras and
Accessories
|
|
38,797
|
|
11.3
|
|
|
|
43,882
|
|
13.1
|
|
|
|
38,517
|
|
15.0
|
|
Axon Fleet
Systems
|
|
32,972
|
|
9.6
|
|
|
|
23,177
|
|
6.9
|
|
|
|
13,820
|
|
5.4
|
|
Axon Evidence and
Cloud Services
|
|
118,314
|
|
34.5
|
|
|
|
113,225
|
|
33.7
|
|
|
|
79,939
|
|
31.2
|
|
Extended
Warranties
|
|
14,085
|
|
4.1
|
|
|
|
13,695
|
|
4.1
|
|
|
|
9,061
|
|
3.5
|
|
Other
(2)
|
|
4,593
|
|
1.4
|
|
|
|
5,426
|
|
1.6
|
|
|
|
729
|
|
0.3
|
|
Total Software and
Sensors segment
|
|
208,761
|
|
60.9
|
|
|
|
199,405
|
|
59.4
|
|
|
|
142,066
|
|
55.4
|
|
Total net
sales
|
$
|
343,043
|
|
100.0
|
%
|
|
$
|
336,142
|
|
100.0
|
%
|
|
$
|
256,426
|
|
100.0
|
%
|
|
|
(1)
|
TASER segment "Other"
includes smaller categories, such as VR hardware, weapons training
revenue such as revenue associated with our Master Instructor
School, and TASER consumer device sales.
|
(2)
|
Software and Sensors
segment "Other" includes revenue from items including Signal
Sidearm, Interview Room and Axon Air.
|
AXON
ENTERPRISE, INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2023
|
|
31 DEC
2022
|
|
31 MAR
2022
|
|
EBITDA and Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
45,139
|
|
$
|
29,175
|
|
$
|
54,871
|
|
Depreciation and
amortization
|
|
|
6,689
|
|
|
6,210
|
|
|
5,755
|
|
Interest
expense
|
|
|
1,724
|
|
|
474
|
|
|
8
|
|
Investment interest
(income) loss
|
|
|
(11,390)
|
|
|
(4,614)
|
|
|
346
|
|
Provision for (benefit
from) income taxes
|
|
|
(3,255)
|
|
|
5,555
|
|
|
17,622
|
|
EBITDA
|
|
$
|
38,907
|
|
$
|
36,800
|
|
$
|
78,602
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
$
|
34,350
|
|
$
|
31,722
|
|
$
|
25,088
|
|
Unrealized gains on
strategic investments and marketable securities, net
(1)
|
|
|
(15,570)
|
|
|
(6,445)
|
|
|
(55,851)
|
|
Transaction costs
related to strategic investments and acquisitions
|
|
|
843
|
|
|
64
|
|
|
871
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
10
|
|
|
42
|
|
|
40
|
|
Loss on disposal and
impairment of property, equipment and other assets, net
|
|
|
146
|
|
|
3,488
|
|
|
106
|
|
Costs related to FTC
litigation
|
|
|
—
|
|
|
250
|
|
|
4
|
|
Payroll taxes related
to XSPP vesting and CEO Award option exercises
|
|
|
6,392
|
|
|
—
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
65,078
|
|
$
|
65,921
|
|
$
|
48,860
|
|
Net income as
a percentage of net sales
|
|
|
13.2
|
%
|
|
8.7
|
%
|
|
21.4
|
%
|
Adjusted EBITDA as
a percentage of net sales
|
|
|
19.0
|
%
|
|
19.6
|
%
|
|
19.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense:
|
|
|
|
|
|
|
|
|
|
|
Cost of product and
service sales
|
|
$
|
1,320
|
|
$
|
1,276
|
|
$
|
1,108
|
|
Sales, general and
administrative
|
|
|
15,445
|
|
|
15,441
|
|
|
12,982
|
|
Research and
development
|
|
|
17,585
|
|
|
15,005
|
|
|
10,998
|
|
Total
|
|
$
|
34,350
|
|
$
|
31,722
|
|
$
|
25,088
|
|
|
|
(1)
|
Includes unrealized
gains of $70.4 million and an unrealized loss of $14.6 million for
the three months ended March 31, 2022.
|
AXON
ENTERPRISE, INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES - continued
(Unaudited)
Dollars in
thousands, except per share amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2023
|
|
31 DEC
2022
|
|
31 MAR
2022
|
|
Non-GAAP net
income:
|
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
|
$
|
45,139
|
|
$
|
29,175
|
|
$
|
54,871
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
34,350
|
|
|
31,722
|
|
|
25,088
|
|
Unrealized gains on
strategic investments and marketable securities, net
(1)
|
|
|
(15,570)
|
|
|
(6,445)
|
|
|
(55,851)
|
|
Transaction costs
related to strategic investments and acquisitions
|
|
|
843
|
|
|
64
|
|
|
871
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
10
|
|
|
42
|
|
|
40
|
|
Loss on disposal and
impairment of property, equipment and other assets, net
|
|
|
146
|
|
|
3,488
|
|
|
106
|
|
Costs related to FTC
litigation
|
|
|
—
|
|
|
250
|
|
|
4
|
|
Payroll taxes related
to XSPP vesting and CEO Award option exercises
|
|
|
6,392
|
|
|
—
|
|
|
—
|
|
Income tax
effects
|
|
|
(6,660)
|
|
|
(7,276)
|
|
|
7,405
|
|
Non-GAAP net
income
|
|
$
|
64,650
|
|
$
|
51,020
|
|
$
|
32,534
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per
common share
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
0.61
|
|
$
|
0.40
|
|
$
|
0.76
|
|
Non-GAAP
|
|
$
|
0.88
|
|
$
|
0.70
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
73,880
|
|
|
72,976
|
|
|
72,349
|
|
Non-GAAP
|
|
|
73,880
|
|
|
72,976
|
|
|
72,349
|
|
|
|
(1)
|
Includes unrealized
gains of $70.4 million and an unrealized loss of $14.6 million for
the three months ended March 31, 2022.
|
AXON
ENTERPRISE, INC.
CONSOLIDATED BALANCE
SHEETS
(in
thousands)
|
|
|
|
|
|
|
|
|
|
31 MAR
2023
|
|
31 DEC 2022
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
263,414
|
|
$
|
353,684
|
Marketable
securities
|
|
|
54,810
|
|
|
39,240
|
Short-term
investments
|
|
|
775,129
|
|
|
581,769
|
Accounts and notes
receivable, net
|
|
|
379,887
|
|
|
358,190
|
Contract assets,
net
|
|
|
216,869
|
|
|
196,902
|
Inventory
|
|
|
220,268
|
|
|
202,471
|
Prepaid expenses and
other current assets
|
|
|
142,319
|
|
|
73,022
|
Total current
assets
|
|
|
2,052,696
|
|
|
1,805,278
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
172,674
|
|
|
169,843
|
Deferred tax assets,
net
|
|
|
171,122
|
|
|
156,866
|
Intangible assets,
net
|
|
|
11,270
|
|
|
12,158
|
Goodwill
|
|
|
44,982
|
|
|
44,983
|
Long-term
investments
|
|
|
31,116
|
|
|
156,207
|
Long-term notes
receivable, net
|
|
|
4,467
|
|
|
5,210
|
Long-term contract
assets, net
|
|
|
54,886
|
|
|
45,170
|
Strategic
investments
|
|
|
296,563
|
|
|
296,563
|
Other long-term
assets
|
|
|
168,173
|
|
|
159,616
|
Total
assets
|
|
$
|
3,007,949
|
|
$
|
2,851,894
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
|
65,988
|
|
|
59,918
|
Accrued
liabilities
|
|
|
120,607
|
|
|
155,934
|
Current portion of
deferred revenue
|
|
|
408,061
|
|
|
360,037
|
Customer
deposits
|
|
|
13,961
|
|
|
20,399
|
Other current
liabilities
|
|
|
7,510
|
|
|
6,358
|
Total current
liabilities
|
|
|
616,127
|
|
|
602,646
|
|
|
|
|
|
|
|
Deferred revenue, net
of current portion
|
|
|
250,366
|
|
|
248,003
|
Liability for
unrecognized tax benefits
|
|
|
16,198
|
|
|
10,745
|
Long-term deferred
compensation
|
|
|
7,983
|
|
|
6,285
|
Deferred tax liability,
net
|
|
|
—
|
|
|
1
|
Long-term lease
liabilities
|
|
|
35,045
|
|
|
37,143
|
Convertible notes,
net
|
|
|
674,724
|
|
|
673,967
|
Other long-term
liabilities
|
|
|
4,511
|
|
|
4,613
|
Total
liabilities
|
|
|
1,604,954
|
|
|
1,583,403
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
Common stock
|
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
|
1,262,099
|
|
|
1,174,594
|
Treasury
stock
|
|
|
(155,947)
|
|
|
(155,947)
|
Retained
earnings
|
|
|
302,161
|
|
|
257,022
|
Accumulated other
comprehensive loss
|
|
|
(5,319)
|
|
|
(7,179)
|
Total stockholders'
equity
|
|
|
1,402,995
|
|
|
1,268,491
|
Total liabilities
and stockholders' equity
|
|
$
|
3,007,949
|
|
$
|
2,851,894
|
AXON
ENTERPRISE, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2023
|
|
31 DEC
2022
|
|
31 MAR
2022
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
45,139
|
|
$
|
29,175
|
|
$
|
54,871
|
|
Adjustments to
reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
6,689
|
|
|
6,210
|
|
|
5,755
|
|
Amortization
of debt issuance cost
|
|
|
756
|
|
|
198
|
|
|
—
|
|
Coupon interest
expense
|
|
|
863
|
|
|
211
|
|
|
—
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
10
|
|
|
42
|
|
|
40
|
|
Loss on disposal and
impairment of property, equipment and other assets, net
|
|
|
146
|
|
|
3,488
|
|
|
106
|
|
Unrealized gains on
strategic investments and marketable securities, net
|
|
|
(15,570)
|
|
|
(6,445)
|
|
|
(55,851)
|
|
Stock-based
compensation
|
|
|
34,350
|
|
|
31,722
|
|
|
25,088
|
|
Deferred income
taxes
|
|
|
(9,660)
|
|
|
(8,259)
|
|
|
18,029
|
|
Unrecognized tax
benefits
|
|
|
855
|
|
|
(44)
|
|
|
1,365
|
|
Bond
amortization
|
|
|
(3,890)
|
|
|
(1,402)
|
|
|
159
|
|
Noncash lease
expense
|
|
|
1,395
|
|
|
1,728
|
|
|
1,556
|
|
Provision for expected
credit losses
|
|
|
28
|
|
|
130
|
|
|
228
|
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable and contract assets
|
|
|
(50,431)
|
|
|
41,818
|
|
|
7,495
|
|
Inventory
|
|
|
(15,811)
|
|
|
(29,720)
|
|
|
(14,260)
|
|
Prepaid expenses and
other assets
|
|
|
(64,348)
|
|
|
(34,336)
|
|
|
(7,074)
|
|
Accounts payable,
accrued and other liabilities
|
|
|
(37,043)
|
|
|
52,073
|
|
|
(9,580)
|
|
Deferred
revenue
|
|
|
50,199
|
|
|
44,531
|
|
|
16,037
|
|
Net cash provided by
(used in) operating activities
|
|
|
(56,323)
|
|
|
131,120
|
|
|
43,964
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(145,124)
|
|
|
(570,232)
|
|
|
—
|
|
Proceeds from call /
maturity of investments
|
|
|
81,088
|
|
|
56,653
|
|
|
7,200
|
|
Purchases of property
and equipment
|
|
|
(8,513)
|
|
|
(11,584)
|
|
|
(17,098)
|
|
Purchases of intangible
assets
|
|
|
(125)
|
|
|
(114)
|
|
|
(37)
|
|
Proceeds from disposal
of property and equipment
|
|
|
—
|
|
|
61
|
|
|
87
|
|
Strategic
investments
|
|
|
—
|
|
|
(3,750)
|
|
|
(500)
|
|
Net cash used in
investing activities
|
|
|
(72,674)
|
|
|
(528,966)
|
|
|
(10,348)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from
equity offering
|
|
|
33,650
|
|
|
—
|
|
|
(71)
|
|
Proceeds from options
exercised
|
|
|
39,181
|
|
|
—
|
|
|
—
|
|
Income and payroll tax
payments for net-settled stock awards
|
|
|
(34,841)
|
|
|
(2,479)
|
|
|
(1,388)
|
|
Net proceeds from
issuance of convertible senior notes
|
|
|
—
|
|
|
673,769
|
|
|
—
|
|
Proceeds from issuance
of warrants
|
|
|
—
|
|
|
124,269
|
|
|
—
|
|
Purchase of convertible
note hedge
|
|
|
—
|
|
|
(194,994)
|
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
|
|
37,990
|
|
|
600,565
|
|
|
(1,459)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
779
|
|
|
3,403
|
|
|
(157)
|
|
Net increase (decrease)
in cash and cash equivalents and restricted cash
|
|
|
(90,228)
|
|
|
206,122
|
|
|
32,000
|
|
Cash and cash
equivalents and restricted cash, beginning of period
|
|
|
355,552
|
|
|
149,430
|
|
|
356,438
|
|
Cash and cash
equivalents and restricted cash, end of period
|
|
$
|
265,324
|
|
$
|
355,552
|
|
$
|
388,438
|
|
AXON
ENTERPRISE, INC.
SELECTED CASH FLOW
INFORMATION
(Unaudited)
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
31 MAR
2023
|
|
31 DEC
2022
|
|
31 MAR
2022
|
Net cash provided by
(used in) operating activities
|
|
$
|
(56,323)
|
|
$
|
131,120
|
|
$
|
43,964
|
Purchases of property
and equipment
|
|
|
(8,513)
|
|
|
(11,584)
|
|
|
(17,098)
|
Purchases of intangible
assets
|
|
|
(125)
|
|
|
(114)
|
|
|
(37)
|
Free cash flow, a
non-GAAP measure
|
|
$
|
(64,961)
|
|
$
|
119,422
|
|
$
|
26,829
|
Bond premium
amortization
|
|
|
3,890
|
|
|
1,402
|
|
|
(159)
|
Net campus
investment
|
|
|
1,012
|
|
|
2,724
|
|
|
5,217
|
Adjusted free cash
flow, a non-GAAP measure
|
|
$
|
(60,059)
|
|
$
|
123,548
|
|
$
|
31,887
|
AXON
ENTERPRISE, INC.
SUPPLEMENTAL
TABLES
(in
thousands)
|
|
|
|
|
|
|
|
|
|
31 MAR
2023
|
|
31 DEC 2022
|
|
|
(Unaudited)
|
|
|
|
Cash and cash
equivalents
|
|
$
|
263,414
|
|
$
|
353,684
|
Short-term
investments
|
|
|
775,129
|
|
|
581,769
|
Long-term
investments
|
|
|
31,116
|
|
|
156,207
|
Cash and cash
equivalents and investments, net
|
|
|
1,069,659
|
|
|
1,091,660
|
Convertible notes,
principal amount
|
|
|
(690,000)
|
|
|
(690,000)
|
Total cash and cash
equivalents and investments, net of convertible notes
|
|
$
|
379,659
|
|
$
|
401,660
|
CONTACT:
Investor Relations
Axon Enterprise, Inc.
IR@axon.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/axon-reports-q1-2023-revenue-of-343-million-up-34-yoy-raises-outlook-301820005.html
SOURCE Axon