SCOTTSDALE, Ariz., May 7, 2020 /PRNewswire/ -- Axon (Nasdaq:
AAXN), the global leader in connected public safety technologies,
today released the following quarterly update letter to
shareholders.
Dear Shareholders,
The first several months of 2020 are proving that Axon is
resilient. You can see this in our adaptability to change, in the
solutions-oriented culture embodied by our dedicated employees, and
in our financial position.
For more than 25 years, Axon has been dedicated to serving those
who protect and serve. Now, as always, our public safety customers
are on the front lines of protecting the public, and sadly, too
many of them have lost their lives to COVID-19. Axon mourns for
fallen officers and their families, and we have pivoted to dedicate
a portion of our supply chain to source critical safety equipment
such as masks, gloves and hand sanitizer for first responders.
We continue to ship our hardware products at volume. Axon is
viewed as "mission critical" under Department of Homeland Security
guidelines and we hear this in feedback from our customers. We are
focused on keeping our manufacturing lines open and our employees
and customers safe.
Our cloud-based software has proven more useful than ever in
supporting public safety and promoting social distancing. In March,
we began providing global access to the full feature set of Axon
Citizen, free of cost this year, to every agency that is not
already using it. Axon Citizen enables virtual evidence collection,
eliminating the need for officers to have to collect digital files
in person and reducing the need for community members to visit a
station.
Axon's core business remains robust and healthy, as seen in our
Q1 2020 results, with revenue up 27% year over year. Particularly
noteworthy was international revenue growth of 38%, driven by
strong sales in the UK, Australia
and Canada and sales to new,
untapped international markets in Asia and Latin
America — the direct result of our targeted investments in
sales channel expansion. We discuss current market trends in our
Outlook section.
We have a big mission to fulfill, which supports our robust
long-term revenue growth and profitability goals. Axon is on track
to complete record hiring through the first six months of this
year, and we continue to attract bar-raising technology talent from
the world's other top innovators.
Our strategic priorities in 2020 are to continue to execute in
our core market, while accelerating our path-to-market in new
product categories such as productivity (Records) and
communications (Dispatch), and expanding to new customer
categories, such as corrections, U.S. federal agencies and new
international markets.
Axon's response to COVID-19:
We have been clear-eyed about the challenges surrounding
COVID-19 and we aspire to lead from the front. We certainly do not
celebrate difficult times, but we do see them as challenges that
can bring out the greatness in people and companies. We believe
Axon will emerge from this crisis even stronger.
Customer support: We are supporting our customers through
a period of upheaval, doing our best to be a stable and reliable
partner in this storm. Initiatives include:
- Free access to Axon Citizen cloud software, to enable social
distancing, for the rest of 2020. After this offering, we saw
agency usage of Citizen climb by 35%.
-
- "Our officers were excited to hear that now, they can send the
link directly to the citizen from their city-issued smartphones,"
said Bakersfield Police Department Sgt. Uriel Pacheco. "The implementation has not only
saved our officers time, but reduced the need for interaction when
collecting digital evidence."
- A partnership with the National Police Foundation where Axon
has committed over $1.7 million, plus
the efforts of our operations and supply chain, in sourcing
personal protective equipment (PPE) for first responders. This
effort, which allows the public to donate, has been trending on
social media with the hashtag, #gotyoucovered, and received a
mention on Twitter from Vice President Mike
Pence.
- An online support center for our customers.
https://www.axon.com/covid-19-support-center
- The Axon Accelerate user conference in Nashville in early August is going virtual.
Axon's annual user conference has grown to be the largest
technology-focused conference in law enforcement. We're looking
forward to delivering immersive engagement to educate our customers
about our products in an online and VR format.
Employee safety & manufacturing: Axon takes health
and safety seriously, and our entire mission is to protect life.
Just days after our last quarterly update, we curbed all
non-essential employee travel and then quickly moved to support our
information workers to do their jobs from home.
Our customers are counting on us to deliver TASER 7 and Axon
body cameras. We are proud to be able to ensure that first
responders have the tools they need to keep society safe and
orderly. Early on in the US outbreak, Axon management was in
discussions with local authorities and our Board, particularly Dr.
Richard Carmona, the former US
Surgeon General, and determined that the best course of action was
to keep our critical manufacturing lines open to satisfy customer
demand.
We've also taken steps to mitigate contamination risk in our
facilities. This includes staggering work schedules, proactively
sending high-risk groups home with pay, providing access to a
registered nurse on site and increasing our cleaning standards to a
level that exceeds CDC guidance.
Supply chain: We have adapted well to ongoing challenges.
In 2019, we took action to diversify our supply chain and global
manufacturing footprint. Those initiatives positioned us well to
handle COVID-19, enabling us to produce and ship our critical core
products with little to no interruption. While we feel confident in
our preparations, there are still many unforeseen challenges that
lay ahead. We continue to manage through supply chain disruptions,
finding alternate sources when available or working with foreign
regulators to ensure that our suppliers can provide parts. We
elevated our inventory build in Q1 2020 and are continuing to do so
over the course of 2020, which is a proactive approach to building
safety stock in an effort to minimize shipping disruptions. We are
committed to working through challenges as they arise to support
our customers and deliver mission critical equipment.
Shareholder engagement: We have pivoted our shareholder
engagement to a virtual format. Our annual meeting, scheduled for
May 29, will be held online at
www.virtualshareholdermeeting.com/AAXN2020, and we will be
participating in several upcoming investor conferences utilizing
video conferencing. All investor materials and events are available
at investor.axon.com.
Progress on our core initiatives:
- Axon Dispatch is officially powering 911—we are live in
Maricopa, Ariz., with our first
paid customer: At 6 am on
April 19, Arizona's City of
Maricopa Police Department moved over from a competitor and
went live on Axon's cloud-based Computer Aided Dispatch (CAD)
solution to power their 911 incident response. We are proud of our
engineering, product, customer support and professional services
teams for delivering this key milestone, and excited that Axon is
now officially powering mission-critical 911 infrastructure in a US
city. Particularly during COVID-19, this deployment required
intense attention to detail, with more than two dozen people on
Zoom and a reduced, scrappy onsite team. We internally
live-streamed the deployment and coordinated among our staff and
with the agency using our own situational awareness tools: Axon
Body 3 camera hardware and Axon Aware live-streaming cloud
software. Axon's ability to deliver a key new product, on schedule,
in the middle of a global pandemic, is a testament to Axon's
adaptability in the face of challenges and the dedication of our
talented employees. It's also a testament to our customer, the
City of Maricopa Police
Department, led by Chief Steve Stahl
and his relentless commitment to modern policing and innovation on
behalf of the citizens he protects.
- Our SaaS strategy is driving a net revenue retention of
120%: We drive adoption of our cloud software solutions through
integrated bundling, which creates a flywheel effect of compounding
benefits for customers. Officer Safety Plan 7+, our highest-tier
bundle, combines our latest generation TASER devices and body
cameras with a growing suite of cloud software, including the Axon
Records records management system (RMS) and the Axon Aware
live-streaming and real-time situational awareness platform. We are
seeing major cities upgrading their subscriptions at individual net
dollar retention rates of 150% to 300% to take advantage of our
growing suite of productivity and digital evidence management
tools. And, because our agency customers sign up for
five-to-ten-year subscriptions, we continue to experience low
annual churn. These factors have combined to sustain a dollar-based
net revenue retention of about 120% across our entire SaaS customer
base over the past two quarters. (This SaaS metric purposely
excludes the hardware portion of customer subscriptions. We further
define this metric under "Statistical Definitions.")
- Flock Safety strategic partnership augments camera sensor
strategy: In Q1 2020, we entered into a commercial partnership
with Flock Safety, a venture-backed provider of advanced security
for neighborhoods and law enforcement. Our relationship with Flock
is three-fold: We are a channel partner, an integration partner,
and a minority investor. We intend to make it easier and more cost
effective for police departments to deploy a network of fixed and
mobile automated license plate reader (ALPR) sensors by integrating
and bundling Flock's solution alongside our upcoming Axon Fleet 3
in-car solution. Both Fleet 3 and Flock are built with an ethical
design framework, and seek guidance from Axon's independent AI
Ethics Board. We are excited that through our Flock partnership,
our camera sensor offerings now include body-worn, in-car and fixed
pole cameras.
- Increased momentum in corrections: Axon is now engaged
with more than 10 state departments of corrections, including the
five most populous states in the country — California, Texas, Florida, New
York and Pennsylvania —
which are either purchasing our products, undergoing trials at
scale, or seeking to have budget discussions and command
demonstrations of TASER devices, Axon body cameras and Axon Cloud
software. In the US, there are about 450,000 correctional officers
and about 92,000 probation and parole officers, and we estimate
that TASER device and Axon body camera penetration among them is
minimal. State departments of corrections are seeing dramatic
reductions in violence following the deployment of TASER devices,
Axon body cameras, or both. As one example, within a recent webinar
sponsored by the Department of Justice, Bureau of Justice
Assistance, the Florida Department of Corrections shared results of
a 1.5-year pilot deploying TASER devices and Axon body-worn
cameras, which resulted in a 42% reduction in staff assaults, 51%
reduction in uses of force in the general population, and a 70%
reduction in excessive force complaints.
Summary of Q1 2020 results:
- Revenue grew 27% year over year to $147
million, with strength driven by our Software & Sensors
product segment, which grew 41% year over year due to demand for
Axon Cloud software offerings and Axon Body 3, our latest
generation camera that features LTE-connectivity and location-based
services. International revenue grew 38% in the quarter to a record
$30 million.
- Gross margin increased both sequentially and year over year to
60.2%
- Operating expenses of $89 million
included $20 million in stock-based
compensation expense and $6 million
in costs related to the FTC litigation. (An update on FTC
litigation is below, under "Update on Legal Matters.")
- GAAP EPS was $0.07 and Non-GAAP
EPS was $0.40.
- Quarterly Adjusted EBITDA of $30
million more than doubled year over year, representing a 20%
margin on revenue, and delivering a 51% incremental contribution
margin on revenue when compared with Q1 2019.
- Cash and cash equivalents and investments totaled $395 million, including an investment payable of
$13.5 million at March 31, 2020.
-
- Uses of cash in the first quarter included $8.5 million tied to selling long-term hardware
subscriptions, which results in recognizing revenue ahead of
invoicing, $8.6 million tied to
building up hardware inventory, which helped us respond to strong
product demand while preparing us well to stagger factory work
schedules due to COVID-19, and $4.7
million related to a strategic investment in Flock
Safety.
- Accounts payable of $32 million
included the above mentioned $13.5
million payable, which settled in early April.
- Axon has zero debt.
Financial commentary by segment:
TASER:
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THREE MONTHS ENDED
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CHANGE
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31 MAR
2020
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31 DEC 2019
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31 MAR
2019
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QoQ
|
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YoY
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(in thousands)
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Net sales
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$
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75,895
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$
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83,955
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$
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65,391
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(9.6)
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%
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16.1
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%
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Gross
margin
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|
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60.1
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%
|
|
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60.5
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%
|
|
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64.4
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%
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(40)
|
bp
|
|
(430)
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bp
|
- Segment revenue grew 16% year over year on strong demand for
our cloud-connect TASER 7 device, and cartridges.
- Gross margin of 60.1% reflects product mix and 100 basis points
of incremental COVID-19 related manufacturing overhead.
-
- Manufacturing employees who did not work, either due to
belonging to a high risk group or to reduce the number of people in
the factory to ensure adequate spacing and physical distancing,
continued to receive payment. We incurred incremental expenses in
Q1 2020 related to this decision, which included the cost of paying
these employees in Q2 2020.
- Through at least Q2 2020, TASER segment gross margin may
continue to reflect COVID-19-related costs, including hazard pay,
an on site nurse, extra cleaning, staggered shifts, and other
precautionary measures to keep our workers safe.
Software & Sensors:
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THREE MONTHS ENDED
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CHANGE
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31 MAR
2020
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31 DEC 2019
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31 MAR
2019
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QoQ
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YoY
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(in thousands)
|
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Axon Cloud net
sales
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$
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39,154
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$
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36,805
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$
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27,631
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6.4
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%
|
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41.7
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%
|
Axon Cloud gross
margin
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|
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75.3
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%
|
|
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76.1
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%
|
|
|
73.6
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%
|
|
(80)
|
bp
|
|
170
|
bp
|
|
|
|
|
|
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|
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Sensors and Other net
sales
|
|
$
|
32,113
|
|
|
$
|
51,091
|
|
|
$
|
22,788
|
|
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(37.1)
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%
|
|
40.9
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%
|
Sensors and Other
gross margin
|
|
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42.0
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%
|
|
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27.0
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%
|
|
|
28.4
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%
|
|
1,500
|
bp
|
|
1,360
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bp
|
- Axon Cloud revenue grew 42% year over year to $39 million, driven by public safety adoption of
our high-value, software-heavy bundles.
- Axon Cloud gross margin of 75% includes some low-to-no margin
professional services that support new installations for SaaS
customers. The software-only revenue in this segment, which
includes cloud storage and compute costs, has consistently carried
a gross margin above 80%.
- Sensors & other revenue grew 41% year over year due to
strong demand and shipments of our Axon Body 3 camera.
- Sensors & other gross margin was 42%. As a reminder, we
manage toward a 25% gross margin for camera and sensors hardware,
and the gross margin will fluctuate quarter to quarter depending on
the customer mix.
Forward-Looking Performance Indicators:
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31 MAR
2020
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31 DEC 2019
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30 SEP 2019
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30 JUN 2019
|
|
31 MAR 2019
|
|
|
($in thousands)
|
|
Annual recurring
revenue (1)
|
|
$
|
173,919
|
|
|
$
|
161,277
|
|
|
$
|
141,540
|
|
|
$
|
129,452
|
|
|
$
|
122,276
|
|
Total company future
contracted revenue
|
|
$
|
1,274,000
|
|
|
$
|
1,230,000
|
|
|
$
|
1,130,000
|
|
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$
|
1,050,000
|
|
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$
|
930,000
|
|
Percentage of TASER
devices sold on a recurring payment plan
|
|
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43
|
%
|
|
|
58
|
%
|
|
|
55
|
%
|
|
|
60
|
%
|
|
|
42
|
%
|
____________________________
|
(1)
|
Monthly recurring
license, integration, warranty, and storage revenue
annualized.
|
- Annual Recurring Revenue grew 42% year over year to
$174 million.
- Total company future contracted revenue grew to $1.27 billion. This amount is limited to revenue
from arrangements that meet the definition of a contract under
Topic 606 as of March 31, 2020. We
expect to recognize between 20% to 25% of this balance over the
next 12 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.
- The percentage of TASER devices sold on a subscription fell to
43% in the quarter because of the mix of units sold
internationally, which has a lower subscription-adoption rate than
the US.
Current market trends and outlook:
The following forward-looking statements reflect Axon's
expectations as of May 7, 2020, and
are subject to substantial uncertainty due to the COVID-19
pandemic.
What we're seeing in the market: To date, we are seeing
mixed changes to buying habits among major US city police
departments — some departments are continuing to place large orders
for Axon products, and communicating gratitude that we are shipping
mission critical equipment. We are seeing some agencies move to
standard issue on Axon devices, to reduce sharing among officers,
which has boosted orders.
A small number of agency customers have delayed their body
camera programs, or postponed their subscription upgrades until
unspecified later dates. Thus far, the impact of these
COVID-19-related order delays to our full-year projections have
been more than offset by a stronger-than-expected Q1 2020,
better-than-expected international TASER orders realized through
May 2020, and a strengthening Federal
pipeline.
Through May, Axon has been executing upon orders from countries
with which Axon has not historically done business, and this
widening customer base is providing new revenue opportunities. So
far in 2020, Axon has received body camera and TASER orders from
Latin America, Asia, Southeast
Asia, and South Asia — all
representing new country markets — and we are also seeing
stronger-than-average order activity in the UK.
We have also been encouraged by the speed with which the federal
government has provided financial support to public safety. It is
still early in the federal response, and the 2020 CARES Act
contains $850 million in grants to
state and local law enforcement, through the Edward Byrne Memorial Justice Assistance Grant
(JAG), which is already more proactive than what we saw in the
global economic recession of 2008-2009, as the first JAG grant then
didn't occur until 2009. In addition, the early phase COVID-19
stimulus packages included $150
million for federal law enforcement.
Withdrawing formal guidance: Given the number of factors
outside of Axon's control, we are withdrawing our previously
provided formal full year guidance of $100
million to $105 million in
Adjusted EBITDA on revenue of $615
million to $625 million, as we
closely monitor municipal budgets and their potential impact on
customer procurement cycles, which could materially alter our
pipeline. While municipal government budget appropriations have not
been a historical challenge for Axon, the severity of the economic
slowdown related to COVID-19 increases appropriations risk.
Internal estimates & visibility: At this time, our
best estimate for our 2020 performance remains in line with our
previously issued guidance, but there is enough uncertainty in how
the current crisis will affect our customers that we don't feel
that our internal estimates should be considered formal
guidance.
Axon remains confident in its long-term, multi-year outlook, and
we firmly believe we will emerge from the COVID-19 crisis even
stronger. Our confidence is supported by our strong Q1 2020
performance and the state of our current pipeline, which remains
robust and is more geographically diverse than ever. While our
contracts are subject to appropriations risk, at this point in
time, the revenue realized in Q1 2020 plus the recurring revenue
under contract for the remaining three quarters gives Axon
visibility into approximately 50% of the midpoint of the previously
issued full-year revenue guidance range.
Axon is proud to be taking care of our customers, our employees,
and our societal stakeholders. We feel confident we will one day
look back at 2020 as a pivotal year where we not only rose to the
challenge, but we accelerated progress and created new
opportunities. More importantly, we extended a hand to help our
customers and their communities when it mattered.
Signed,
Rick Smith, CEO
Luke Larson, President
Jawad Ahsan, CFO
Quarterly conference call and Webcast
We will host our Q1 2020 earnings conference call on
May 7 at 2 p.m. PT / 5 p.m.
ET.
The webcast will be available via a link on Axon's investor
relations website at https://investor.axon.com
(https://investor.axon.com/), or can be accessed directly via
https://axon.zoom.us/j/92548816017.
Statistical Definitions
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.
Non-GAAP Measures
To supplement the Company's financial results presented in
accordance with GAAP, we present the non-GAAP financial measures of
EBITDA, Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Diluted
Earnings Per Share and Free Cash Flow. The Company's management
uses these non-GAAP financial measures in evaluating the Company's
performance in comparison to prior periods. We believe that both
management and investors benefit from referring to these non-GAAP
financial measures in assessing its performance, and when planning
and forecasting our future periods. A reconciliation of GAAP to the
non-GAAP financial measures is presented herein.
- EBITDA (Most comparable GAAP Measure: Net income) - Earnings
before interest expense, investment interest income, income taxes,
depreciation and amortization.
- Adjusted EBITDA (Most comparable GAAP Measure: Net income) -
Earnings before interest expense, investment interest income,
income taxes, depreciation, amortization, non-cash stock-based
compensation expense and pre-tax certain other items (described
below).
- Non-GAAP Net Income (Most comparable GAAP Measure: Net income)
- Net income excluding the costs of non-cash stock-based
compensation and excluding pre-tax certain other items, including,
but not limited to, net gain/loss/write-down/disposal/abandonment
of property, equipment and intangible assets; loss on impairment;
and costs related to business acquisitions. 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, intangible assets and
cash flows related to business acquisitions and other equity
investments.
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 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, and where everyone
has access to a fair and effective justice system. Axon is also a
leading provider of body cameras for US law enforcement, 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 disclosure at investor.axon.com.
We work hard for those who put themselves in harm's way for all
of us. More than 232,000 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.
Facebook is a trademark of Facebook, Inc.; LTE is a trademark of
the European Telecommunications Standards Institute; Twitter is a
trademark of Twitter, Inc. and Zoom is a trademark of Zoom Video
Communications, Inc. Axon, Axon Aware, Axon Accelerate, Axon
Evidence, Axon Records, Axon Fleet, TASER, TASER 7 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
These forward-looking statements 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; the impact of pending litigation; our
outlook for 2020 with respect to revenue, legal expenses relating
to the FTC litigation, stock compensation expense, and income tax
rate; trends relating to subscription plan programs and revenues;
our anticipation that contracts with governmental customers will be
fulfilled; expected trends, including the benefits of, research and
development investments; the sufficiency of our liquidity and
financial resources; that we may repurchase our common stock;
expectations about customer behavior; the impact on our investment
portfolio of changes in interest rates; trends in the percentage of
our revenues denominated in foreign currencies; our potential use
of foreign currency forward and option contracts; statements
concerning projections, predictions, expectations, estimates or
forecasts as to our business, financial and operational results and
future economic performance; 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, 2019.
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 our reliance on 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 product by
the United States Bureau of Alcohol, Tobacco, Firearms and
Explosives and to evolving regulations surrounding privacy and data
protection; 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. 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 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 Annual Report on Form 10-K and in the
Quarterly Report 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:
Digital Ally v. Axon
On April 22, 2020, the Federal
Circuit Court of Appeals (No. 19-2065) affirmed the Kansas district court's non-infringement
ruling and entered judgment on Digital's appeal in favor of Axon.
This ruling effectively ends this litigation filed in January 2016. Digital had claimed that Axon's
Signal Technology infringed its '452 Patent. The court of appeals
ruling may be found at https://www.axon.com/legal.
Axon v. FTC
Axon continues to both vigorously prosecute its Federal court
case against the FTC and defend the FTC's separate administrative
action against the company. Presently, the FTC's administrative
action has been stayed until June 3,
2020, due to the COVID-19 pandemic, and the hearing has been
rescheduled to September 9, 2020.
Separately, Axon's case against the FTC was dismissed on
April 8, 2020, without prejudice, for
lack of jurisdiction, holding that Axon must first bring its
constitutional claims through the FTC's administrative process.
Axon has appealed that ruling to the Ninth Circuit Court of Appeals
(No. 20-15662), which has granted expedited consideration and set
oral argument for July 17, 2020. A
copy of Axon's appellate brief can be found on Axon's FTC Investor
Briefing page at https://www.axon.com/ftc. Please visit
https://investor.axon.com, https://www.axon.com/press,
www.twitter.com/axon_us and
https://www.facebook.com/Axon.ProtectLife/ where Axon discloses
information about the company, its financial information, and its
business.
For investor relations information please contact Andrea James via email at IR@axon.com.
AXON
ENTERPRISE, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
31 MAR
2020
|
|
31 DEC 2019
|
|
31 MAR 2019
|
Net sales from
products
|
|
$
|
107,288
|
|
$
|
134,497
|
|
$
|
88,089
|
Net sales from
services
|
|
|
39,874
|
|
|
37,354
|
|
|
27,721
|
Net sales
|
|
|
147,162
|
|
|
171,851
|
|
|
115,810
|
Cost of product
sales
|
|
|
48,884
|
|
|
70,418
|
|
|
39,600
|
Cost of service
sales
|
|
|
9,670
|
|
|
8,793
|
|
|
7,293
|
Cost of
sales
|
|
|
58,554
|
|
|
79,211
|
|
|
46,893
|
Gross
margin
|
|
|
88,608
|
|
|
92,640
|
|
|
68,917
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Sales, general and
administrative
|
|
|
63,027
|
|
|
78,281
|
|
|
42,892
|
Research and
development
|
|
|
26,381
|
|
|
28,745
|
|
|
23,354
|
Total operating
expenses
|
|
|
89,408
|
|
|
107,026
|
|
|
66,246
|
Income (loss) from
operations
|
|
|
(800)
|
|
|
(14,386)
|
|
|
2,671
|
Interest and other
income, net
|
|
|
941
|
|
|
2,486
|
|
|
2,313
|
Income (loss) before
provision for income taxes
|
|
|
141
|
|
|
(11,900)
|
|
|
4,984
|
Provision for
(benefit from) income taxes
|
|
|
(3,933)
|
|
|
479
|
|
|
(1,435)
|
Net income
(loss)
|
|
$
|
4,074
|
|
$
|
(12,379)
|
|
$
|
6,419
|
Net income (loss) per
common and common equivalent shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.07
|
|
$
|
(0.21)
|
|
$
|
0.11
|
Diluted
|
|
$
|
0.07
|
|
$
|
(0.21)
|
|
$
|
0.11
|
Weighted average
number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
59,609
|
|
|
59,374
|
|
|
58,914
|
Diluted
|
|
|
60,394
|
|
|
60,257
|
|
|
59,751
|
AXON
ENTERPRISE, INC.
SEGMENT
REPORTING
(Unaudited)
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR 2020
|
|
|
31 DEC 2019
|
|
|
31 MAR 2019
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
Net sales from
products (1)
|
|
$
|
75,175
|
|
|
$
|
32,113
|
|
|
$
|
107,288
|
|
|
$
|
83,406
|
|
|
$
|
51,091
|
|
|
$
|
134,497
|
|
|
$
|
65,301
|
|
|
$
|
22,788
|
|
|
$
|
88,089
|
|
Net sales from
services (2)
|
|
|
720
|
|
|
|
39,154
|
|
|
|
39,874
|
|
|
|
549
|
|
|
|
36,805
|
|
|
|
37,354
|
|
|
|
90
|
|
|
|
27,631
|
|
|
|
27,721
|
|
Net sales
|
|
|
75,895
|
|
|
|
71,267
|
|
|
|
147,162
|
|
|
|
83,955
|
|
|
|
87,896
|
|
|
|
171,851
|
|
|
|
65,391
|
|
|
|
50,419
|
|
|
|
115,810
|
|
Cost of product
sales
|
|
|
30,248
|
|
|
|
18,636
|
|
|
|
48,884
|
|
|
|
33,144
|
|
|
|
37,274
|
|
|
|
70,418
|
|
|
|
23,278
|
|
|
|
16,322
|
|
|
|
39,600
|
|
Cost of service
sales
|
|
|
—
|
|
|
|
9,670
|
|
|
|
9,670
|
|
|
|
—
|
|
|
|
8,793
|
|
|
|
8,793
|
|
|
|
—
|
|
|
|
7,293
|
|
|
|
7,293
|
|
Cost of
sales
|
|
|
30,248
|
|
|
|
28,306
|
|
|
|
58,554
|
|
|
|
33,144
|
|
|
|
46,067
|
|
|
|
79,211
|
|
|
|
23,278
|
|
|
|
23,615
|
|
|
|
46,893
|
|
Gross
margin
|
|
|
45,647
|
|
|
|
42,961
|
|
|
|
88,608
|
|
|
|
50,811
|
|
|
|
41,829
|
|
|
|
92,640
|
|
|
|
42,113
|
|
|
|
26,804
|
|
|
|
68,917
|
|
Gross margin
%
|
|
|
60.1
|
%
|
|
|
60.3
|
%
|
|
|
60.2
|
%
|
|
|
60.5
|
%
|
|
|
47.6
|
%
|
|
|
53.9
|
%
|
|
|
64.4
|
%
|
|
|
53.2
|
%
|
|
|
59.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
3,032
|
|
|
|
23,349
|
|
|
|
26,381
|
|
|
|
4,185
|
|
|
|
24,560
|
|
|
|
28,745
|
|
|
|
3,712
|
|
|
|
19,642
|
|
|
|
23,354
|
|
_______________________
|
(1)
|
Software and Sensors
"products" revenue consists of sensors, including on-officer body
cameras, Axon Fleet cameras, other hardware sensors, warranties on
sensors, and other products, and is sometimes referred to as
Sensors and Other revenue.
|
(2)
|
Software and Sensors
"services" revenue comprises sales related to the Axon Cloud, which
includes Axon Evidence, cloud-based evidence management software
revenue, other recurring cloud-hosted software revenue and related
professional services, and is sometimes referred to as Axon Cloud
revenue.
|
AXON
ENTERPRISE, INC.
UNIT SALES
STATISTICS
(Unaudited)
Units in whole
numbers
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR
|
|
31 MAR
|
|
Unit
|
|
Percent
|
|
|
|
2020
|
|
2019
|
|
Change
|
|
Change
|
|
TASER 7
|
|
11,430
|
|
8,835
|
|
2,595
|
|
29.4
|
%
|
TASER X26P
|
|
11,003
|
|
14,985
|
|
(3,982)
|
|
(26.6)
|
|
TASER X2
|
|
10,478
|
|
9,861
|
|
617
|
|
6.3
|
|
TASER Pulse and
Bolt
|
|
3,261
|
|
1,253
|
|
2,008
|
|
160.3
|
|
Cartridges
|
|
873,364
|
|
616,517
|
|
256,847
|
|
41.7
|
|
Axon Body
|
|
39,864
|
|
25,848
|
|
14,016
|
|
54.2
|
|
Axon Flex
|
|
3,074
|
|
3,591
|
|
(517)
|
|
(14.4)
|
|
Axon Fleet
|
|
2,676
|
|
1,735
|
|
941
|
|
54.2
|
|
Axon Dock
|
|
5,297
|
|
4,994
|
|
303
|
|
6.1
|
|
TASER Cam
|
|
1,514
|
|
1,741
|
|
(227)
|
|
(13.0)
|
|
AXON
ENTERPRISE, INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR 2020
|
|
31 DEC 2019
|
|
31 MAR 2019
|
|
EBITDA and
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
4,074
|
|
$
|
(12,379)
|
|
$
|
6,419
|
|
Depreciation and
amortization
|
|
|
2,881
|
|
|
3,165
|
|
|
2,800
|
|
Interest
expense
|
|
|
7
|
|
|
19
|
|
|
6
|
|
Investment interest
income
|
|
|
(693)
|
|
|
(1,760)
|
|
|
(2,003)
|
|
Provision for (benefit
from) income taxes
|
|
|
(3,933)
|
|
|
479
|
|
|
(1,435)
|
|
EBITDA
|
|
$
|
2,336
|
|
$
|
(10,476)
|
|
$
|
5,787
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
$
|
20,195
|
|
$
|
48,300
|
|
$
|
7,905
|
|
Transaction costs
related to investment in unconsolidated affiliate
|
|
|
833
|
|
|
—
|
|
|
—
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
13
|
|
|
16
|
|
|
18
|
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
517
|
|
|
134
|
|
|
242
|
|
Costs related to FTC
litigation
|
|
|
6,135
|
|
|
240
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
30,029
|
|
$
|
38,214
|
|
$
|
13,952
|
|
Net income (loss) as
a percentage of net sales
|
|
|
2.8
|
%
|
|
(7.2)
|
%
|
|
5.5
|
%
|
Adjusted EBITDA as
a percentage of net sales
|
|
|
20.4
|
%
|
|
22.2
|
%
|
|
12.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense:
|
|
|
|
|
|
|
|
|
|
|
Cost of product and
service sales
|
|
$
|
590
|
|
$
|
790
|
|
$
|
226
|
|
Sales, general and
administrative
|
|
|
14,970
|
|
|
40,212
|
|
|
4,681
|
|
Research and
development
|
|
|
4,635
|
|
|
7,298
|
|
|
2,998
|
|
Total
|
|
$
|
20,195
|
|
$
|
48,300
|
|
$
|
7,905
|
|
AXON
ENTERPRISE, INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES - continued
(Unaudited)
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
31 MAR 2020
|
|
31 DEC 2019
|
|
31 MAR 2019
|
Non-GAAP net
income:
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
|
4,074
|
|
$
|
(12,379)
|
|
$
|
6,419
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
20,195
|
|
|
48,300
|
|
|
7,905
|
Loss on disposal and
abandonment of intangible assets
|
|
|
13
|
|
|
16
|
|
|
18
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
517
|
|
|
134
|
|
|
242
|
Transaction costs
related to investment in unconsolidated affiliate
|
|
|
833
|
|
|
—
|
|
|
—
|
Costs related to FTC
litigation
|
|
|
6,135
|
|
|
240
|
|
|
—
|
Income tax
effects
|
|
|
(7,837)
|
|
|
(11,863)
|
|
|
(2,016)
|
Non-GAAP net
income
|
|
$
|
23,930
|
|
$
|
24,448
|
|
$
|
12,568
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
31 MAR 2020
|
|
31 DEC 2019
|
|
31 MAR 2019
|
Non-GAAP diluted
earnings per share:
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings
per share
|
|
$
|
0.07
|
|
$
|
(0.21)
|
|
$
|
0.11
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
0.33
|
|
|
0.80
|
|
|
0.13
|
Loss on disposal and
abandonment of intangible assets
|
|
|
0.00
|
|
|
0.00
|
|
|
0.00
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
0.01
|
|
|
0.00
|
|
|
0.00
|
Transaction costs
related to investment in unconsolidated affiliate
|
|
|
0.01
|
|
|
-
|
|
|
-
|
Costs related to FTC
litigation
|
|
|
0.10
|
|
|
0.00
|
|
|
-
|
Income tax
effects
|
|
|
(0.13)
|
|
|
(0.20)
|
|
|
(0.03)
|
Non-GAAP diluted
earnings per share (1)
|
|
$
|
0.40
|
|
$
|
0.40
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of diluted common and common equivalent shares outstanding
(in thousands)
|
|
|
60,394
|
|
|
60,257
|
|
|
59,751
|
_____________________________________
|
(1)
|
The per share
calculations for GAAP net income, Non-GAAP adjustments and Non-GAAP
diluted earnings per share are each computed independently. Per
share amounts may not sum due to rounding.
|
AXON
ENTERPRISE, INC.
CONSOLIDATED
BALANCE SHEETS
(in
thousands)
|
|
|
|
|
|
|
|
|
|
31 MAR 2020
|
|
31 DEC 2019
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
156,540
|
|
$
|
172,250
|
Short-term
investments
|
|
|
188,673
|
|
|
178,534
|
Accounts and notes
receivable, net
|
|
|
147,945
|
|
|
146,878
|
Contract assets,
net
|
|
|
43,959
|
|
|
38,102
|
Inventory,
net
|
|
|
46,922
|
|
|
38,845
|
Prepaid expenses and
other current assets
|
|
|
34,702
|
|
|
34,866
|
Total current
assets
|
|
|
618,741
|
|
|
609,475
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
43,065
|
|
|
43,770
|
Deferred tax assets,
net
|
|
|
29,433
|
|
|
27,688
|
Intangible assets,
net
|
|
|
11,929
|
|
|
12,771
|
Goodwill
|
|
|
24,752
|
|
|
25,013
|
Long-term
investments
|
|
|
50,225
|
|
|
45,499
|
Long-term notes
receivable, net of current portion
|
|
|
27,556
|
|
|
31,598
|
Long-term contract
assets, net
|
|
|
12,293
|
|
|
9,644
|
Other
assets
|
|
|
59,457
|
|
|
40,181
|
Total
assets
|
|
$
|
877,451
|
|
$
|
845,639
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
|
31,568
|
|
|
25,874
|
Accrued
liabilities
|
|
|
36,404
|
|
|
45,001
|
Current portion of
deferred revenue
|
|
|
119,827
|
|
|
117,864
|
Customer
deposits
|
|
|
3,325
|
|
|
2,974
|
Other current
liabilities
|
|
|
3,891
|
|
|
3,853
|
Total current
liabilities
|
|
|
195,015
|
|
|
195,566
|
|
|
|
|
|
|
|
Deferred revenue, net
of current portion
|
|
|
91,886
|
|
|
87,936
|
Liability for
unrecognized tax benefits
|
|
|
4,173
|
|
|
3,832
|
Long-term deferred
compensation
|
|
|
3,430
|
|
|
3,936
|
Deferred tax
liability
|
|
|
342
|
|
|
354
|
Other long-term
liabilities
|
|
|
23,015
|
|
|
10,520
|
Total
liabilities
|
|
|
317,861
|
|
|
302,144
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
Common stock
|
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
|
543,305
|
|
|
528,272
|
Treasury
stock
|
|
|
(155,947)
|
|
|
(155,947)
|
Retained
earnings
|
|
|
175,699
|
|
|
172,265
|
Accumulated other
comprehensive loss
|
|
|
(3,468)
|
|
|
(1,096)
|
Total stockholders'
equity
|
|
|
559,590
|
|
|
543,495
|
Total liabilities
and stockholders' equity
|
|
$
|
877,451
|
|
$
|
845,639
|
AXON
ENTERPRISE, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
31 MAR 2020
|
|
31 DEC 2019
|
|
31 MAR
2019
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
4,074
|
|
$
|
(12,379)
|
|
$
|
6,419
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
2,881
|
|
|
3,165
|
|
|
2,800
|
Loss on disposal and
abandonment of intangible assets
|
|
|
13
|
|
|
16
|
|
|
18
|
Loss (gain) on
disposal and impairment of property and equipment, net
|
|
|
517
|
|
|
134
|
|
|
242
|
Stock-based
compensation
|
|
|
20,195
|
|
|
48,300
|
|
|
7,905
|
Deferred income
taxes
|
|
|
(1,548)
|
|
|
(4,041)
|
|
|
577
|
Unrecognized tax
benefits
|
|
|
341
|
|
|
389
|
|
|
307
|
Other noncash,
net
|
|
|
1,156
|
|
|
1,005
|
|
|
896
|
Provision for
expected credit losses
|
|
|
902
|
|
|
—
|
|
|
—
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable and contract assets
|
|
|
(9,700)
|
|
|
(8,333)
|
|
|
(21,994)
|
Inventory
|
|
|
(8,630)
|
|
|
1,399
|
|
|
(3,936)
|
Prepaid expenses and
other assets
|
|
|
2,277
|
|
|
2,122
|
|
|
(3,152)
|
Accounts payable,
accrued liabilities and other liabilities
|
|
|
(3,562)
|
|
|
18,495
|
|
|
(7,284)
|
Deferred
revenue
|
|
|
4,499
|
|
|
(4,463)
|
|
|
3,232
|
Net cash provided by
(used in) operating activities
|
|
|
13,415
|
|
|
45,809
|
|
|
(13,970)
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
(99,512)
|
|
|
(111,784)
|
|
|
(105,322)
|
Proceeds from call /
maturity of investments
|
|
|
84,315
|
|
|
37,876
|
|
|
—
|
Purchases of property
and equipment
|
|
|
(2,209)
|
|
|
(3,828)
|
|
|
(5,271)
|
Purchases of
intangible assets
|
|
|
(45)
|
|
|
(76)
|
|
|
(162)
|
Proceeds of disposal
from property and equipment
|
|
|
78
|
|
|
—
|
|
|
—
|
Investment in
unconsolidated affiliate
|
|
|
(4,700)
|
|
|
—
|
|
|
—
|
Net cash used in
investing activities
|
|
|
(22,073)
|
|
|
(77,812)
|
|
|
(110,755)
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from options
exercised
|
|
|
28
|
|
|
8
|
|
|
100
|
Income and payroll
tax payments for net-settled stock awards
|
|
|
(5,190)
|
|
|
(783)
|
|
|
(1,259)
|
Net cash used in
financing activities
|
|
|
(5,162)
|
|
|
(775)
|
|
|
(1,159)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
(1,890)
|
|
|
1,007
|
|
|
67
|
Net decrease in cash
and cash equivalents and restricted cash
|
|
|
(15,710)
|
|
|
(31,771)
|
|
|
(125,817)
|
Cash and cash
equivalents, beginning of period
|
|
|
172,355
|
|
|
204,126
|
|
|
351,027
|
Cash and cash
equivalents, end of period
|
|
$
|
156,645
|
|
$
|
172,355
|
|
$
|
225,210
|
AXON
ENTERPRISE, INC.
SELECTED CASH FLOW
INFORMATION
(Unaudited)
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
31 MAR
2020
|
|
31 DEC 2019
|
|
31 MAR 2019
|
Net cash provided by
(used in) operating activities
|
|
$
|
13,415
|
|
$
|
45,809
|
|
$
|
(13,970)
|
Purchases of property
and equipment
|
|
|
(2,209)
|
|
|
(3,828)
|
|
|
(5,271)
|
Purchases of
intangible assets
|
|
|
(45)
|
|
|
(76)
|
|
|
(162)
|
Investment in
unconsolidated affiliate
|
|
|
(4,700)
|
|
|
—
|
|
|
—
|
Free cash flow, a
non-GAAP measure
|
|
$
|
6,461
|
|
$
|
41,905
|
|
$
|
(19,403)
|
AXON
ENTERPRISE, INC.
SUPPLEMENTAL
TABLES
(in
thousands)
|
|
|
|
|
|
|
|
|
|
31 MAR 2020
|
|
31 DEC 2019
|
|
|
(Unaudited)
|
|
|
|
Cash and cash
equivalents
|
|
$
|
156,540
|
|
$
|
172,250
|
Short-term
investments
|
|
|
188,673
|
|
|
178,534
|
Long-term
investments
|
|
|
50,225
|
|
|
45,499
|
Investment
payable
|
|
|
(13,451)
|
|
|
—
|
Total cash and cash
equivalents and investments, net
|
|
$
|
381,987
|
|
$
|
396,283
|
CONTACT:
Investor Relations
Axon Enterprise, Inc.
IR@axon.com
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