- Axon Cloud revenue up 47% on strong SaaS demand
- Net income of $55 million,
Adjusted EBITDA of $49 million
- Operating cash flow of $44
million, adjusted free cash flow of $32 million
SCOTTSDALE, Ariz., May 10, 2022 /PRNewswire/ --
Dear Shareholders,
Our year is off to a robust start, highlighted by growing global
demand for Axon's solutions, which drove first quarter revenue
growth of 32%, net income of $55
million, and Adjusted EBITDA of $49
million.
Our full year outlook has strengthened to annual revenue growth
expectations of 25%, and we are already looking toward continued
momentum in 2023 and beyond. Bookings grew 52% year over year in
Q1, which is a forward-looking indicator given our average contract
life of five years.
Our demand pipeline remains strong and Axon is not slowing
down.
In April, we formally kicked off our moonshot goal, which is to
join forces with public safety to reduce fatal officer involved
shootings by 50% within 10 years. Most notably, we aim to break the
historical tie between injuries and weapons by emphasizing product
development on the non-lethal end of the use-of-force continuum.
Our customers are incredibly excited about this goal. We believe
Axon is uniquely situated to drive improvement in this deeply
entrenched societal problem, through our product ecosystem of TASER
devices, body cameras and VR training and software.
Select Highlights:
Key customer updates
Study proves body cameras save lives: The São Paulo State
Military Police are expanding with Axon. In June 2021, this agency became the first in
Brazil to deploy Axon body cameras
with geolocation and live-streaming. The agency subsequently saw an
85% decrease in police intervention deaths. Thanks to this success,
the agency is becoming the largest in Latin America to deploy our body cameras.
Welcoming new major city to the Axon network:
Domestically, the Columbus Division of Police (OH), a Major Cities
Chiefs Association member, signed a 5-year contract with Axon to
deploy Axon Body 3 and Axon Flex 2 cameras, Axon Interview, and
Axon Fleet 3 in-car camera systems featuring Axon's AI-powered
automated license plate reader (ALPR) and Axon Evidence, Axon's
digital evidence management system.
Commercial sector momentum builds: Our teams are
executing well in the commercial sector, which we estimate to be a
$6 billion total addressable market.
So far this year, Axon has booked more than $12 million of commercial business. Commercial
enterprises are turning to Axon for help with retail loss
prevention, investigations, and on-site security. Our recent wins
include network hospital systems, convenience stores, and big box
retail. Additionally, the Arizona Diamondbacks are the first Major
League Baseball team to adopt Axon body cameras with real-time live
streaming, for stadium security, and they'll be presenting this May
at Axon Accelerate, our annual user conference.
Product successes
Strong demand for Axon Fleet 3 with AI-enabled Automatic
License Plate Recognition
Axon Fleet 3 is proving to be a game changer for in-car cameras.
To date we have installed over 6,000 systems. Vehicles running Axon
Fleet 3 ALPR have already accurately read more than 100
million license plates.
Built from the ground up using Axon's ethical design framework
and privacy principles, Fleet 3 transforms the traditional dash
camera into one that can automatically scan plates across multiple
lanes of traffic at closing speeds up to 140 mph, making it
disruptively affordable for agencies to deploy our AI-powered
automated license plate reader (ALPR) solution across their entire
fleet.
Evidence.com leadership creates Justice pipeline
For years, Axon has made it easy for public safety customers to
share body camera video and other types of digital evidence with
their local prosecutors by providing them with access to Axon
Evidence services at no extra cost. As a result, thousands of
attorneys are familiar with Axon's cloud software, paving the way
for adoption of Axon's new Justice software, including Attorney
Premier, the first digital evidence management system designed
specifically for attorneys, which we rolled out at the end of 2021.
Our early customers are thrilled with the platform, and we have a
growing pipeline of prosecutors and district attorneys, defense
lawyers and others in the courts. In fact, we closed the first
quarter with over 20 justice sector customers, including
prosecutors purchasing body cameras and Evidence.com and public
defenders upgrading to paid Evidence.com licenses to take advantage
of more advanced features.
We view this positive initial response as validating and look
forward to building on this early momentum. Because the
connectivity between Axon Attorney Premier and Axon Evidence
streamlines workflows between prosecutors and all the law
enforcement agencies in a particular region, we believe network
effects will continue to drive adoption.
Our early success with Axon Attorney Premier also highlights our
ability to leverage the past decade of Axon Evidence software
R&D into new products that drive broader user adoption.
Axon Records momentum accelerates
Axon's momentum with Records is starting to accelerate.
Including our latest major city launch in Tucson, we now have more than 25 agencies with
nearly 11,000 sworn officers live on Axon Records, including nine
that are already using it to fully replace their legacy records
management system. Such deployments are complex for our customers,
similar to an ERP implementation for a corporate enterprise.
Axon Records is part of our broader "productivity" software
suite, which includes Axon Auto-Transcribe. The AI-enabled
transcription capability is a force multiplier for our customers,
allowing them to speed up time-consuming tasks. Axon's internal
data shows that customers who use Axon Auto-Transcribe enjoy a 36%
time savings when reviewing evidence. And our priority ranked video
audit feature helps supervisors find videos that most need their
attention. The goal of our productivity software suite is to help
agencies claw back the time that the typical officer spends doing
administrative tasks.
Another key productivity suite tool is Axon Standards, our
use-of-force reporting module built into Axon Records. We had more
customers "turn on" Standards in the first quarter of 2022 than in
all of 2021. This momentum seeds the market for customers to
naturally upgrade to a full deployment of Axon Records when they're
ready to replace their legacy records management system.
We remain excited and confident in our long-term trajectory. Our
short-term focus is on driving customer success one deployment at a
time.
New TASER StrikeLight for self defense is both flashlight and
stun device
Progress in Axon's consumer business continues with the launch
of the TASER StrikeLight 2. The TASER StrikeLight 2 provides
electrical stun capabilities in the form of a portable flashlight.
With the push of a button, electricity arcs across the face of the
flashlight, which can stun on close contact as well as provide a
warning at a distance. Separately, we also released a new consumer
app, Axon Protect.
ESG updates
TASER cartridge and battery recycling introduced
Axon has announced an exciting partnership with Battery
Solutions, the leader in end-to-end battery recycling management in
North America, to enhance our
Environmental, Social and Corporate Governance (ESG) efforts in
the United States. This
partnership will create a first-of-its-kind program that will give
all U.S.-based Axon customers a recycling kit at no cost, which
will facilitate sustainable disposal of product batteries and
deployed TASER cartridges.
Axon sells over 3 million TASER cartridges and over 300,000
batteries each year. This program ensures the majority of these
cartridges and batteries can be disposed of responsibly. Along with
deployed TASER cartridges and product batteries, all other types of
batteries (AA, cell phone, iPod, 9 V, etc.) can also be recycled
using the same container.
Battery Solutions' battery recycling programs support many of
the UN's Sustainable Development Goals and expands Axon's existing
ESG plan.
Community Advisory Coalition welcomes new members
Axon announced new members for the 2022 Community Advisory
Coalition (CAC). Formed in 2021, the CAC brings together community
leaders to share perspectives and inform Axon's products and
services. By bringing diverse perspectives to the table, Axon
continues to demonstrate commitment to one of its core pillars:
centering racial equity, diversity and inclusion.
"Axon recognizes that communities are the
ultimate end-users of public safety technologies. The CAC will
continue to help us develop fresh ideas to impart the principles of
justice and equity in the product development cycle. We are
committed to establishing a community voice within our technology
and using outreach to educate communities on our products. In doing
so, we are able to develop responsible technology and further our
mission to protect life." — Regina
Holloway, Axon's VP of Community Impact
Axon has always embraced a bold vision for the future of public
safety. Axon's ground-breaking, independent AI Ethics Board is made
up of experts from varying fields including AI, computer science,
privacy, law enforcement, civil liberties and public policy. The
CAC builds upon Axon's track record of soliciting community input
and feedback and was developed with the goal of connecting Axon's
product leadership with representatives from diverse and untapped
communities.
- Dr. Desmond Patton, PhD,
MSW, Associate Professor of Social Work and Senior Associate Dean
of Academic Affairs and Curriculum Innovation at Columbia University. Dr. Patton studies the
relationship between youth, gang violence, and social media.
- Bertha Purnell, Founder
of Mothers on a Mission 28, Chapter
Coordinator for Crime Survivors for Safety & Justice, and
retired nurse. Purnell became a community advocate against violence
after her youngest son was killed by gun violence.
- Devon Simmons, Project
Director at Columbia Law School for the Paralegal Pathways
Initiative and Atlantic Fellow for Racial Equity. Simmons is a
justice reform advocate, having experienced the prison system
first-hand.
- Rev. Kelvin Sauls,
Network Strategist with Community Health Councils, former Executive
Director for New Ministries in the California-Pacific Conference of
the United Methodist Church. Sauls is a faith-rooted community
organizer connecting pan-African liberation theology with
progressive pastoral leadership.
- Louis Frye, Co-founder of
Movement Thru Hoops, Wealth Relationship Strategist for PNC Bank.
Frye focuses on mentorship in underprivileged communities, having
grown up in poverty in the New York City Housing Projects.
- Jeff Eadie, President of
The Indigenous Institute, publishing agent and producer. Eadie
helps promote concepts of cognitive and social science to help
indigenous people achieve their full potential.
- Jeff Taylor, prison
reform lobbyist. Taylor writes legislation around drug treatment,
homelessness, and prison reform, drawing from his personal
experience with addiction, homelessness, and incarceration.
- Michelle Vilchez, Co-CEO
of Innovate Public Schools, past Executive Director of the
Peninsula Conflict Resolution Center, California State Assembly
2016 Woman of the Year. Vilchez advances equity by bringing
together community, law enforcement, faith-based groups, and local
government.
- Dr. Broderick Turner,
PhD, Assistant Professor of Marketing at the Pamplin College of
Business at Virginia Tech, founder of
The Technology, Race, and Prejudice Lab. Dr. Turner focuses on
video surveillance technology and the impacts on people's
judgments.
- Dr. Wilneida Negrón, PhD, MPA, MPhil, Adjunct Assistant
Professor of Political Science at John Jay
College of Criminal Justice. Dr. Negrón is currently
exploring the impact and sustainability of public interest
technology projects across the U.S., Europe, and the Global South with The Ford
Foundation.
- Dr. Tonya Strozier, PhD,
Founding President of Tucson Alliance of Black School Educators,
and elementary School Principal. Dr. Strozier is an education
consultant and school principal and dedicated to driving
improvements in low-performing schools.
Strategic initiatives
Axon acquires Foundry 45, augmenting VR product
roadmap
Foundry 45 is an industry-leading virtual reality (VR) studio
focused on developing immersive training modules for large
enterprises. Founded in 2015, Foundry 45 has delivered virtual and
augmented reality training applications to global enterprise
customers including several Fortune 100 companies.
The acquisition, which closed on April 5,
2022, integrates Foundry 45 into the Axon VR team. Axon's VR
team is transforming public safety by making training more
accessible, relevant and affordable — with the goal of using new
immersive technologies to better prepare officers for real-life
situations in the field.
Virtual reality is rapidly becoming a game-changing training
tool across many industries, and the acquisition of Foundry 45 will
catalyze Axon's expansion into new growth markets globally. The
purchase price was not material.
Summary of Q1 2022 results:
- Quarterly revenue of $256 million
grew 32% year over year, and exceeded our expectations. Revenue
growth was driven by continued strength in both TASER and software,
highlighted by Axon Cloud revenue growth of 47%, as we add new
users to our cloud platform.
- Total company gross margin of 60.7% reflected higher fixed
costs as we scale our global manufacturing and distribution
footprint, increased freight and labor costs, and an increased mix
of professional services and hardware sensors revenue. We expect
gross margins to improve as we continue to increase manufacturing
output, with some variability based on product mix. We discuss
gross margins in more detail in the segment commentary below.
- Operating profit was $17 million.
Operating expenses for the quarter of $139
million included $24 million
in stock based compensation expenses.
-
- SG&A of $90 million included
$13 million in stock-based
compensation expenses.
- R&D of $48 million included
$11 million in stock-based
compensation expenses.
- Our quarterly net income of $55
million, or $0.76 per diluted
share, included $25 million in stock
based compensation expenses, a $15
million non-cash, unrealized, mark-to-market loss related to
our strategic investment in Cellebrite, and $70 million in unrealized gains related to
strategic investments.
-
- Our stock based compensation expenses have declined
significantly compared with 2021. Of the $25
million in total stock-based compensation expense in Q1
2022, $6 million was related to our
specialized stock based compensation plans.(1) A year
ago, we recognized $90 million of
stock based compensation in the first quarter. The decline is due
to the fact that we have expensed 93% of the total projected
expenses for the plans since the CEO Performance Award was adopted
in 2018 and the XSPP was adopted in 2019, including for XSPP grants
issued to date.
- Non-GAAP net income was $33
million, or $0.45 per
share.
- Adjusted EBITDA was $49
million.
- Operating cash flow of $44
million supported free cash flow generation of $27 million and adjusted free cash flow
generation of $32 million. We define
free cash flow as operating cash flow less capital expenditures and
purchases of intangible assets. Adjusted free cash flow excludes an
additional $5 million in campus
investments, which we described in detail in our Q4 2021
shareholder letter.
- As of March 31, 2022 Axon had
$424 million in cash, equivalents and
investments.
- Axon has zero debt.
(1)
|
These innovative
stock-based compensation plans were approved by shareholders in
2018 and 2019 and align the interests of management and employees
with shareholders.
|
Financial commentary by segment:
TASER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
CHANGE
|
|
|
|
31 MAR
2022
|
|
31 DEC
2021
|
|
31 MAR
2021
|
|
QoQ
|
|
YoY
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
114,360
|
|
|
$
|
103,909
|
|
|
$
|
98,999
|
|
|
10.1
|
%
|
|
15.5
|
%
|
Gross
margin
|
|
|
64.5
|
%
|
|
|
63.9
|
%
|
|
|
66.7
|
%
|
|
60
|
bp
|
|
(220)
|
bp
|
- TASER segment revenue growth of 16% year over year was driven
by TASER 7 unit growth of 34% and U.S. federal government demand
for our legacy devices.
- Q1 2022 TASER segment gross margin of 64.5% improved
sequentially and declined year over year, reflecting a heavier mix
of TASER 7, higher fixed costs and rising freight and labor costs.
We are working to offset these costs by investing in automation and
engineering toward lower bill of materials costs.
Software & Sensors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
CHANGE
|
|
|
|
31 MAR
2022
|
|
31 DEC
2021
|
|
31 MAR
2021
|
|
QoQ
|
|
YoY
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
Axon Cloud net
sales
|
|
$
|
77,016
|
|
|
$
|
68,668
|
|
|
$
|
52,436
|
|
|
12.2
|
%
|
|
46.9
|
%
|
Axon Cloud gross
margin
|
|
|
72.3
|
%
|
|
|
74.3
|
%
|
|
|
75.1
|
%
|
|
(200)
|
bp
|
|
(280)
|
bp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensors and Other net
sales
|
|
$
|
65,050
|
|
|
$
|
45,001
|
|
|
$
|
43,584
|
|
|
44.6
|
%
|
|
49.3
|
%
|
Sensors and Other
gross margin
|
|
|
40.5
|
%
|
|
|
39.3
|
%
|
|
|
41.1
|
%
|
|
120
|
bp
|
|
(60)
|
bp
|
- Axon Cloud revenue grew 47%year over year to $77 million, reflecting strong user growth for
our Evidence.com platform, and software features including
transcription and body-camera enabled real-time operations
capabilities across location-based services, live streaming and
incident event alerts.
- Axon Cloud gross margin of 72.3% included expected costs to
scale our cloud business. This includes the low-to-no margin
professional services costs of teams who help our customers deploy
Axon's solutions. We expect these costs to continue to be reflected
in gross margins as we scale our cloud business. The software-only
revenue in this segment, which includes cloud storage and compute
costs, has consistently carried a gross margin above 80%.
- Sensors & Other revenue grew 49% year over year to
$65 million, reflecting growth in
Fleet 3 shipments followed by body camera unit growth.
- Sensors & Other gross margin was 40.5%, reflecting a
favorable product mix. As a reminder, we manage toward a 25% gross
margin for camera and sensors hardware, and the gross margin will
fluctuate quarter to quarter depending on the customer mix.
Forward-looking performance indicators:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 MAR
2022
|
|
31 DEC
2021
|
|
30 SEP 2021
|
|
30 JUNE
2021
|
|
31 MAR
2021
|
|
|
($
in thousands)
|
|
Annual recurring
revenue (1)
|
|
$
|
347,613
|
|
|
$
|
327,488
|
|
|
$
|
288,691
|
|
|
$
|
260,178
|
|
|
$
|
242,357
|
|
Net revenue retention
(2)
|
|
|
119
|
%
|
|
|
119
|
%
|
|
|
119
|
%
|
|
|
119
|
%
|
|
|
119
|
%
|
Total company
future
contracted revenue (2)
|
|
$
|
2,970,000
|
|
|
$
|
2,800,000
|
|
|
$
|
2,390,000
|
|
|
$
|
2,040,000
|
|
|
$
|
1,790,000
|
|
Percentage of
TASER
devices sold on a recurring
payment plan
|
|
|
45
|
%
|
|
|
65
|
%
|
|
|
58
|
%
|
|
|
55
|
%
|
|
|
64
|
%
|
(1)
|
Monthly recurring
license, integration, warranty, and storage revenue
annualized.
|
(2)
|
Refer to "Statistical
Definitions" below.
|
- Annual Recurring Revenue (ARR) grew 43% year over year to
$347.6 million.
- Net revenue retention was 119% 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 law enforcement agency
customers often sign up for five to ten-year subscriptions. This
SaaS metric purposely excludes the hardware portion of customer
subscriptions. We further define this metric under "Statistical
Definitions."
- Total company future contracted revenue grew to $2.97 billion, reflecting strong bookings in the
quarter. Most of our bookings are for multi-year contracts. See
definition of this metric under "Statistical Definitions."
- The percentage of TASER devices sold on a subscription was 45%
in the quarter, reflecting a stronger mix of our legacy handles,
which tend to be less subscription-based, sold into new customer
markets. As a reminder, Axon has been successfully transitioning
its TASER hardware business into a subscription service in more
mature markets and expanding into new markets where some initial
sales are not on a subscription, with the intention of building
subscription businesses in those markets over time.
Outlook
The following forward-looking statements reflect Axon's full
year 2022 expectations as of May 10,
2022, and are subject to risks and uncertainties.
- Axon's upwardly revised full year 2022 revenue expectation has
improved to a range of $1.05 billion
to $1.1 billion, reflecting
approximately 25% annual growth at the midpoint. Previously, Axon
had guided to $1.04 billion,
reflecting 20% annual growth.
- Axon's upwardly revised full year 2022 Adjusted EBITDA range is
$190 million to $200 million, up from $185
million to $195 million
previously.
-
- This guidance represents our ability to accelerate revenue
growth by reinvesting back into the business with both rigor and
discipline. We are re-investing our anticipated revenue
outperformance into R&D that we expect will contribute to
revenue growth starting in 2023, including international VR
capabilities and TASER-related engineering. We are also facing
higher labor, freight and materials costs, which we are working to
offset with automation, additional distribution facilities and
engineering R&D on products to lower component costs.
- We provide Adjusted EBITDA guidance, rather than net income
guidance, due to the inherent difficulty of forecasting certain
types of expenses such as stock-based compensation and income tax
expenses, which affect net income but not Adjusted EBITDA. We are
unable to reasonably estimate the impact of such expenses, if any,
on net income. Accordingly, we do not provide a
reconciliation of projected net income to projected Adjusted
EBITDA.
- We expect stock-based compensation expense to be more than
$104 million for the full year.
Because our stock-based compensation expense may vary based on
changes in the probability of attaining certain operational or
market capitalization metrics or attainment of such metrics and
with changes in the expected or actual timing of such attainment,
it is inherently difficult to forecast future stock-based
compensation expense.
- We are maintaining our expected adjusted free cash flow range
of $125 million to $145 million in 2022, compared with $85 million in 2021. This range reflects our
expectations for operating cash flow, minus our expected purchases
of property and equipment (CapEx), excluding any investments made
in our campus facility.
- Our expected 2022 capital expenditures of approximately
$135 million to $160 million remain unchanged. We discussed these
investments in more detail in our Q4 2021 shareholder letter,
published in February.
We entered 2022 with strong momentum and tremendous confidence
in our ability to continue accelerating growth and
profitability.
Thank you for investing in our mission to protect life,
-The Axon team
Quarterly conference call and webcast
We will host our Q1 2022 earnings conference call webinar on
Tuesday, May 10, 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/96235977236.
Statistical Definitions
Bookings: We consider bookings to be a statistical measure
defined as the sales price of orders (not invoiced sales),
including contractual optional periods we expect to be exercised,
net of cancellations, inclusive of renewals, placed in the relevant
fiscal period, regardless of when the products or services
ultimately will be provided, so long as they are expected to occur
within five years. Most bookings will be invoiced in subsequent
periods. Due to municipal government funding rules, in some cases
certain of the future period amounts included in bookings are
subject to budget appropriation or other contract cancellation
clauses. Although we have entered into contracts for the delivery
of products and services in the future and anticipate the contracts
will be fulfilled, if agencies do not exercise contractual options,
do not appropriate funds in future year budgets, or enact a
cancellation clause, revenue associated with these bookings may not
ultimately be recognized, resulting in a future reduction to
bookings. Bookings, as presented here, represent total company
bookings inclusive of all products, and should not be confused with
our historical reported measure of Software & Sensors bookings,
which excluded TASER-related bookings. Certain customers sign
contracts for time periods longer than five-years, which generates
a larger-sized booking — but the expected exercise amounts after
the five-year period is not included in bookings, as described
here, in order to facilitate comparisons between periods.
Net revenue retention: Dollar-based net revenue retention is an
important metric to measure our ability to retain and expand our
relationships with existing customers. We calculate it as the
software and camera warranty subscription and support revenue from
a base set of agency customers from which we generated Axon Cloud
subscription revenue in the last month of a quarter divided by the
software and camera warranty subscription and support revenue from
the year-ago month of that same customer base. This calculation
includes high-margin warranty but purposely excludes the
lower-margin hardware subscription contingent of the customer
contracts, as it is meant to be a SaaS metric that we use to
monitor the health of the recurring revenue business we are
building. This calculation also excludes the implied monthly
revenue contribution of customers that were added since the
year-ago quarter, and therefore excludes the benefit of new
customer acquisition. The metric includes customers, if any, that
terminated during the annual period, and therefore, this metric is
inclusive of customer churn. This metric is downwardly adjusted to
account for the effect of phased deployments -- meaning that for
the year-ago period, we consider the total contractually obligated
implied monthly revenue amount, rather than monthly revenue amounts
that might have been in actuality smaller on a GAAP basis due to
the customer not having yet fully deployed their Axon solution. For
more information relative to our revenue recognition policies,
please reference our SEC filings.
Total company future contracted revenue: Total company future
contracted revenue includes both recognized contract liabilities as
well as amounts that will be invoiced and recognized in future
periods. The remaining performance obligations are limited only to
arrangements that meet the definition of a contract under Topic 606
as of March 31, 2022. We expect to
recognize between 15% - 20% of this balance over the next twelve
months, and generally expect the remainder to be recognized over
the following five to seven years, subject to risks related to
delayed deployments, budget appropriation or other contract
cancellation clauses.
Non-GAAP Measures
To supplement the Company's financial results presented in
accordance with GAAP, we present the non-GAAP financial measures of
EBITDA, Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Diluted
Earnings Per Share, 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 and pre-tax certain other 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; 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.
Caution on Use of Non-GAAP Measures
Although these non-GAAP financial measures are not consistent
with GAAP, management believes investors will benefit by referring
to these non-GAAP financial measures when assessing the Company's
operating results, as well as when forecasting and analyzing future
periods. However, management recognizes that:
- these non-GAAP financial measures are limited in their
usefulness and should be considered only as a supplement to the
Company's GAAP financial measures;
- these non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, the Company's GAAP
financial measures;
- these non-GAAP financial measures should not be considered to
be superior to the Company's GAAP financial measures; and
- these non-GAAP financial measures were not prepared in
accordance with GAAP or under a comprehensive set of rules or
principles.
Further, these non-GAAP financial measures may be unique to the
Company, as they may be different from similarly titled non-GAAP
financial measures used by other companies. As such, this
presentation of non-GAAP financial measures may not enhance the
comparability of the Company's results to the results of other
companies.
About Axon
Axon is the global leader in connected public safety
technologies. We are a mission-driven company whose overarching
goal is to protect life. Our vision is a world where bullets are
obsolete, where social conflict is dramatically reduced, where
everyone has access to a fair and effective justice system and
where racial equity, diversity and inclusion is centered in all of
our work. Axon is also a leading provider of body cameras for US
public safety, providing more transparency and accountability to
communities than ever before.
You may learn about our Environmental, Social, and Governance
(ESG) and Corporate Social Responsibility (CSR) efforts by reading
our ESG report at investor.axon.com.
We work hard for those who put themselves in harm's way for all
of us. More than 266,000 lives and countless dollars have been
saved with the Axon Network of devices, apps and people. Learn more
at www.axon.com or by calling (800) 978-2737. Axon is a global
company with headquarters in Scottsdale,
Arizona, and a global software engineering hub in
Seattle, Washington, as well as
additional offices in the US, Australia, Canada, Finland, Vietnam, the UK and the Netherlands.
Arizona Diamondbacks is a service mark of AZPB Limited
Partnership; Cellebrite is a trademark of Cellebrite Mobile
Synchronization Ltd.; Dedrone is a trademark of Dedrone Holdings,
Inc., Facebook is a trademark of Facebook, Inc.; Flock Safety is a
trademark of Flock Group, Inc. dba Flock Safety; iPod is a
trademark of Apple, Inc.; John Jay College of
Criminal Justice is a service mark of The City University of New York; Major League Baseball
is a service mark of Major League Baseball Properties, Inc.; PNC
Bank is a service mark of the PNC Financial Services Group;
RapidSOS is a trademark of RapidSOS Inc.; Twitter is a trademark of
Twitter, Inc.; Vievu is a trademark of Vievu, LLC; Virginia Tech is a trademark of Virginia Polytechnic Institute and Sate University
and Zoom is a trademark of Zoom Video Communications, Inc. Axon,
Axon Accelerate, Axon Attorney Premier, Axon Auto-Transcribe,
Axon Body, Axon Evidence, Axon Fleet, Axon Flex, Axon Network, Axon
Protect, Axon Records, Axon Respond, Axon VR, StrikeLight 2, TASER,
TASER 7, Protect Life, the Delta Logo and the Lightning Bolt in
Circle Logo are trademarks of Axon Enterprise, Inc., some of which
are registered in the US and other countries. For more information,
visit www.axon.com/legal. All rights reserved.
Follow Axon here:
- Axon on Twitter: https://twitter.com/axon_us
- Axon on Facebook:
https://www.facebook.com/Axon.ProtectLife/
Forward-looking statements
Forward-looking statements in this letter include, without
limitation, statements regarding: proposed products and services
and related development efforts and activities; expectations about
the market for our current and future products and services;
strategies and trends relating to subscription plan programs and
revenues; strategies and trends, including the benefits of,
research and development investments; the timing and realization of
future contracted revenue; expectations about customer behavior;
statements concerning projections, predictions, expectations,
estimates or forecasts as to our business, financial and
operational results and future economic performance, including our
outlook for 2022 full year revenue, adjusted EBITDA, stock-based
compensation expense, adjusted free cash flow, 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, 2021.
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 or other catastrophic events; our
ability to manage our supply chain and avoid production delays,
shortages and impacts to expected gross margins; changes in the
costs of product components and labor; our ability to attract and
retain key personnel; the impact of product mix on projected gross
margins; our ability to defend against litigation and protect our
intellectual property, and the resulting costs of this activity;
the impact of stock compensation expense, impairment expense, and
income tax expense on our financial results; 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
design, introduce, sell and deploy new products or features;
customer purchase behavior, including adoption of our software as a
service delivery model; delayed cash collections and possible
credit losses due to our subscription model; exposure to
international operational risks; our exposure to cancellations of
government contracts due to appropriation clauses, exercise of a
cancellation clause, or non-exercise of contractually optional
periods; defects in our products; loss of customer data, a breach
of security, or an extended outage, including by our third party
cloud-based storage providers; our ability to integrate acquired
businesses; negative media publicity regarding our products; 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 25, 2022 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.
Update on Legal Matters:
Axon v. FTC
Axon continues to vigorously prosecute its federal court
constitutional case against the Federal Trade Commission (FTC)
while the FTC's separate antitrust administrative action against
the company regarding its 2018 acquisition of Vievu LLC remains
stayed.
On January 24, 2022, the U.S.
Supreme Court accepted review of an important jurisdictional issue
raised by Axon's constitutional challenges to the FTC's internal
administrative structure and procedures. The high Court's action is
a critical first step for all businesses seeking to vindicate their
constitutional rights and hold government regulators accountable.
Argument is expected at the beginning of the Supreme Court's next
term in October. A decision is unlikely before February 2023.
Links to all court filings and opinions can be found on Axon's FTC
Investor Briefing page at https://www.axon.com/ftc.
Parallel to these matters Axon is evaluating strategic
alternatives to litigation, which Axon might pursue if determined
to be in the best interests of shareholders and customers. This
could include a divestiture of the Vievu entity and/or related
assets. While Axon continues to believe the acquisition was lawful
and a benefit to Vievu's customers, the cost, risk and distraction
of protracted litigation merit consideration of settlement if
achievable on terms agreeable to the FTC and Axon.
For investor relations information please contact Investor
Relations via email atIR@axon.com.
CONTACT:
Investor Relations
Axon Enterprise, Inc.
IR@axon.com
|
|
|
|
|
|
|
|
|
|
AXON
ENTERPRISE, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands,
except per share data)
|
|
|
|
|
|
THREE MONTHS ENDED
|
|
|
31 MAR
2022
|
|
31 DEC
2021
|
|
31 MAR
2021
|
Net sales from
products
|
|
$
|
176,204
|
|
$
|
145,409
|
|
$
|
140,886
|
Net sales from
services
|
|
|
80,222
|
|
|
72,169
|
|
|
54,133
|
Net sales
|
|
|
256,426
|
|
|
217,578
|
|
|
195,019
|
Cost of product
sales
|
|
|
79,352
|
|
|
64,845
|
|
|
58,616
|
Cost of service
sales
|
|
|
21,335
|
|
|
17,672
|
|
|
13,050
|
Cost of
sales
|
|
|
100,687
|
|
|
82,517
|
|
|
71,666
|
Gross
margin
|
|
|
155,739
|
|
|
135,061
|
|
|
123,353
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Sales, general and
administrative
|
|
|
90,129
|
|
|
111,453
|
|
|
126,597
|
Research and
development
|
|
|
48,416
|
|
|
50,674
|
|
|
47,018
|
Total operating
expenses
|
|
|
138,545
|
|
|
162,127
|
|
|
173,615
|
Income (loss) from
operations
|
|
|
17,194
|
|
|
(27,066)
|
|
|
(50,262)
|
Interest and other
income (expense), net
|
|
|
55,299
|
|
|
(10,148)
|
|
|
585
|
Income (loss) before
provision for income taxes
|
|
|
72,493
|
|
|
(37,214)
|
|
|
(49,677)
|
Provision for
(benefit from) income taxes
|
|
|
17,622
|
|
|
(23,706)
|
|
|
(1,760)
|
Net income
(loss)
|
|
$
|
54,871
|
|
$
|
(13,508)
|
|
$
|
(47,917)
|
Net income (loss) per
common and common equivalent shares:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.77
|
|
$
|
(0.19)
|
|
$
|
(0.75)
|
Diluted
|
|
$
|
0.76
|
|
$
|
(0.19)
|
|
$
|
(0.75)
|
Weighted average
number of common and common equivalent shares
outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
70,950
|
|
|
69,310
|
|
|
64,036
|
Diluted
|
|
|
72,349
|
|
|
69,310
|
|
|
64,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AXON
ENTERPRISE, INC.
SEGMENT
REPORTING
(Unaudited)
(dollars in
thousands)
|
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
THREE MONTHS ENDED
|
|
|
|
31 MAR
2022
|
|
|
31 DEC
2021
|
|
|
31 MAR
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
|
TASER
|
|
|
Sensors
|
|
|
Total
|
|
Net sales from
products (1)
|
|
$
|
111,154
|
|
|
$
|
65,050
|
|
|
$
|
176,204
|
|
|
$
|
100,408
|
|
|
$
|
45,001
|
|
|
$
|
145,409
|
|
|
$
|
97,302
|
|
|
$
|
43,584
|
|
|
$
|
140,886
|
|
Net sales from
services (2)
|
|
|
3,206
|
|
|
|
77,016
|
|
|
|
80,222
|
|
|
|
3,501
|
|
|
|
68,668
|
|
|
|
72,169
|
|
|
|
1,697
|
|
|
|
52,436
|
|
|
|
54,133
|
|
Net sales
|
|
|
114,360
|
|
|
|
142,066
|
|
|
|
256,426
|
|
|
|
103,909
|
|
|
|
113,669
|
|
|
|
217,578
|
|
|
|
98,999
|
|
|
|
96,020
|
|
|
|
195,019
|
|
Cost of product
sales
|
|
|
40,625
|
|
|
|
38,727
|
|
|
|
79,352
|
|
|
|
37,539
|
|
|
|
27,306
|
|
|
|
64,845
|
|
|
|
32,945
|
|
|
|
25,671
|
|
|
|
58,616
|
|
Cost of service
sales
|
|
|
—
|
|
|
|
21,335
|
|
|
|
21,335
|
|
|
|
—
|
|
|
|
17,672
|
|
|
|
17,672
|
|
|
|
—
|
|
|
|
13,050
|
|
|
|
13,050
|
|
Cost of
sales
|
|
|
40,625
|
|
|
|
60,062
|
|
|
|
100,687
|
|
|
|
37,539
|
|
|
|
44,978
|
|
|
|
82,517
|
|
|
|
32,945
|
|
|
|
38,721
|
|
|
|
71,666
|
|
Gross
margin
|
|
|
73,735
|
|
|
|
82,004
|
|
|
|
155,739
|
|
|
|
66,370
|
|
|
|
68,691
|
|
|
|
135,061
|
|
|
|
66,054
|
|
|
|
57,299
|
|
|
|
123,353
|
|
Gross margin
%
|
|
|
64.5
|
%
|
|
|
57.7
|
%
|
|
|
60.7
|
%
|
|
|
63.9
|
%
|
|
|
60.4
|
%
|
|
|
62.1
|
%
|
|
|
66.7
|
%
|
|
|
59.7
|
%
|
|
|
63.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
9,896
|
|
|
|
38,520
|
|
|
|
48,416
|
|
|
|
14,104
|
|
|
|
36,570
|
|
|
|
50,674
|
|
|
|
9,243
|
|
|
|
37,775
|
|
|
|
47,018
|
|
(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
|
|
|
|
2022
|
|
2021
|
|
Change
|
|
Change
|
|
TASER 7
|
|
31,395
|
|
23,360
|
|
8,035
|
|
34.4
|
%
|
TASER X26P
|
|
6,338
|
|
8,229
|
|
(1,891)
|
|
(23.0)
|
|
TASER X2
|
|
2,006
|
|
8,838
|
|
(6,832)
|
|
(77.3)
|
|
TASER Consumer
devices
|
|
6,201
|
|
8,686
|
|
(2,485)
|
|
(28.6)
|
|
Cartridges
|
|
1,089,939
|
|
1,009,760
|
|
80,179
|
|
7.9
|
|
Axon Body
|
|
62,562
|
|
46,094
|
|
16,468
|
|
35.7
|
|
Axon Flex
|
|
3,127
|
|
1,565
|
|
1,562
|
|
99.8
|
|
Axon Fleet
|
|
5,747
|
|
1,440
|
|
4,307
|
|
299.1
|
|
Axon Dock
|
|
8,064
|
|
6,786
|
|
1,278
|
|
18.8
|
|
|
|
|
|
|
|
|
|
|
|
AXON
ENTERPRISE, INC.
RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
Dollars in
thousands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2022
|
|
31 DEC
2021
|
|
31 MAR
2021
|
|
EBITDA and
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
54,871
|
|
$
|
(13,508)
|
|
$
|
(47,917)
|
|
Depreciation and
amortization
|
|
|
5,755
|
|
|
5,274
|
|
|
4,291
|
|
Interest
expense
|
|
|
8
|
|
|
1
|
|
|
5
|
|
Investment interest
(income) expense
|
|
|
346
|
|
|
(353)
|
|
|
(533)
|
|
Provision for (benefit
from) income taxes
|
|
|
17,622
|
|
|
(23,706)
|
|
|
(1,760)
|
|
EBITDA
|
|
$
|
78,602
|
|
$
|
(32,292)
|
|
$
|
(45,914)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
$
|
25,088
|
|
$
|
41,110
|
|
$
|
89,610
|
|
Unrealized (gains)
losses on strategic investments and marketable
securities
|
|
|
(55,851)
|
|
|
11,160
|
|
|
—
|
|
Transaction costs
related to strategic investments and acquisitions
|
|
|
871
|
|
|
1,180
|
|
|
385
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
40
|
|
|
16
|
|
|
11
|
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
106
|
|
|
18
|
|
|
45
|
|
Costs related to FTC
litigation
|
|
|
4
|
|
|
119
|
|
|
233
|
|
Payroll taxes related
to XSPP vesting and CEO Award option exercises
|
|
|
—
|
|
|
9,195
|
|
|
1,452
|
|
Adjusted
EBITDA
|
|
$
|
48,860
|
|
$
|
30,506
|
|
$
|
45,822
|
|
Net income (loss) as
a percentage of net sales
|
|
|
21.4
|
%
|
|
(6.2)
|
%
|
|
(24.6)
|
%
|
Adjusted EBITDA as
a percentage of net sales
|
|
|
19.1
|
%
|
|
14.0
|
%
|
|
23.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense:
|
|
|
|
|
|
|
|
|
|
|
Cost of product and
service sales
|
|
$
|
1,108
|
|
$
|
1,405
|
|
$
|
1,489
|
|
Sales, general and
administrative
|
|
|
10,998
|
|
|
27,740
|
|
|
71,015
|
|
Research and
development
|
|
|
12,982
|
|
|
11,965
|
|
|
17,106
|
|
Total
|
|
$
|
25,088
|
|
$
|
41,110
|
|
$
|
89,610
|
|
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
2022
|
|
31 DEC
2021
|
|
31 MAR
2021
|
|
Non-GAAP net
income:
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$
|
54,871
|
|
$
|
(13,508)
|
|
$
|
(47,917)
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
25,088
|
|
|
41,110
|
|
|
89,610
|
|
Unrealized (gains)
losses on strategic investments and marketable
securities
|
|
|
(55,851)
|
|
|
11,160
|
|
|
—
|
|
Transaction costs
related to strategic investments and acquisitions
|
|
|
871
|
|
|
1,180
|
|
|
385
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
40
|
|
|
16
|
|
|
11
|
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
106
|
|
|
18
|
|
|
45
|
|
Costs related to FTC
litigation
|
|
|
4
|
|
|
119
|
|
|
233
|
|
Payroll taxes related
to XSPP vesting and CEO Award option exercises
|
|
|
—
|
|
|
9,195
|
|
|
1,452
|
|
Income tax
effects
|
|
|
7,405
|
|
|
(15,605)
|
|
|
(22,780)
|
|
Non-GAAP net
income
|
|
$
|
32,534
|
|
$
|
33,685
|
|
$
|
21,039
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income
(loss) per common share
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
0.76
|
|
$
|
(0.19)
|
|
$
|
(0.75)
|
|
Non-GAAP
|
|
$
|
0.45
|
|
$
|
0.46
|
|
$
|
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
|
72,349
|
|
|
69,310
|
|
|
64,036
|
|
Non-GAAP
(1)
|
|
|
72,349
|
|
|
72,683
|
|
|
67,392
|
|
(1)
|
Non-GAAP diluted
income per common share factors in higher diluted weighted average
shares outstanding in periods where there is both a GAAP net loss
and non-GAAP net income.
|
|
|
|
|
|
|
|
AXON
ENTERPRISE, INC.
CONSOLIDATED
BALANCE SHEETS
(in
thousands)
|
|
|
|
|
|
|
|
31 MAR
2022
|
|
31 DEC 2021
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
386,367
|
|
$
|
356,332
|
Marketable
securities
|
|
|
57,600
|
|
|
72,180
|
Short-term
investments
|
|
|
20,024
|
|
|
14,510
|
Accounts and notes
receivable, net
|
|
|
344,907
|
|
|
320,819
|
Contract assets,
net
|
|
|
147,861
|
|
|
180,421
|
Inventory,
net
|
|
|
122,150
|
|
|
108,688
|
Prepaid expenses and
other current assets
|
|
|
67,208
|
|
|
56,540
|
Total current
assets
|
|
|
1,146,117
|
|
|
1,109,490
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
149,505
|
|
|
138,457
|
Deferred tax assets,
net
|
|
|
108,840
|
|
|
127,193
|
Intangible assets,
net
|
|
|
14,399
|
|
|
15,470
|
Goodwill
|
|
|
43,607
|
|
|
43,592
|
Long-term
investments
|
|
|
17,731
|
|
|
31,232
|
Long-term notes
receivable, net
|
|
|
10,184
|
|
|
11,256
|
Long-term contract
assets, net
|
|
|
29,616
|
|
|
29,753
|
Strategic
investments
|
|
|
154,452
|
|
|
83,520
|
Other long-term
assets
|
|
|
98,003
|
|
|
98,247
|
Total
assets
|
|
$
|
1,772,454
|
|
$
|
1,688,210
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
|
49,348
|
|
|
32,220
|
Accrued
liabilities
|
|
|
69,435
|
|
|
103,707
|
Current portion of
deferred revenue
|
|
|
326,627
|
|
|
265,591
|
Customer
deposits
|
|
|
18,411
|
|
|
10,463
|
Other current
liabilities
|
|
|
6,858
|
|
|
6,540
|
Total current
liabilities
|
|
|
470,679
|
|
|
418,521
|
|
|
|
|
|
|
|
Deferred revenue, net
of current portion
|
|
|
140,938
|
|
|
185,721
|
Liability for
unrecognized tax benefits
|
|
|
5,162
|
|
|
3,797
|
Long-term deferred
compensation
|
|
|
5,833
|
|
|
5,679
|
Deferred tax liability,
net
|
|
|
348
|
|
|
811
|
Long-term lease
liabilities
|
|
|
20,112
|
|
|
20,440
|
Other long-term
liabilities
|
|
|
4,593
|
|
|
5,392
|
Total
liabilities
|
|
|
647,665
|
|
|
640,361
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Preferred
stock
|
|
|
—
|
|
|
—
|
Common stock
|
|
|
1
|
|
|
1
|
Additional paid-in
capital
|
|
|
1,118,859
|
|
|
1,095,229
|
Treasury
stock
|
|
|
(155,947)
|
|
|
(155,947)
|
Retained
earnings
|
|
|
164,754
|
|
|
109,883
|
Accumulated other
comprehensive income
|
|
|
(2,878)
|
|
|
(1,317)
|
Total stockholders'
equity
|
|
|
1,124,789
|
|
|
1,047,849
|
Total liabilities
and stockholders' equity
|
|
$
|
1,772,454
|
|
$
|
1,688,210
|
AXON
ENTERPRISE, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
31 MAR
2022
|
|
31 DEC
2021
|
|
31 MAR
2021
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
54,871
|
|
$
|
(13,508)
|
|
$
|
(47,917)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
5,755
|
|
|
5,274
|
|
|
4,291
|
|
Loss on disposal and
abandonment of intangible assets
|
|
|
40
|
|
|
16
|
|
|
11
|
|
Loss on disposal and
impairment of property and equipment, net
|
|
|
106
|
|
|
18
|
|
|
45
|
|
Net unrealized loss
(gain) on strategic investments and marketable
securities
|
|
|
(55,851)
|
|
|
11,160
|
|
|
—
|
|
Stock-based
compensation
|
|
|
25,088
|
|
|
41,110
|
|
|
89,610
|
|
Deferred income
taxes
|
|
|
18,029
|
|
|
(22,410)
|
|
|
(598)
|
|
Unrecognized tax
benefits
|
|
|
1,365
|
|
|
(783)
|
|
|
194
|
|
Bond premium
amortization
|
|
|
159
|
|
|
611
|
|
|
1,504
|
|
Noncash lease
expense
|
|
|
1,556
|
|
|
1,486
|
|
|
1,111
|
|
Provision for expected
credit losses
|
|
|
228
|
|
|
(829)
|
|
|
(335)
|
|
Change in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable and contract assets
|
|
|
7,495
|
|
|
(87,675)
|
|
|
31,298
|
|
Inventory
|
|
|
(14,260)
|
|
|
(15,118)
|
|
|
520
|
|
Prepaid expenses and
other assets
|
|
|
(7,074)
|
|
|
(11,252)
|
|
|
(6,952)
|
|
Accounts payable,
accrued and other liabilities
|
|
|
(9,580)
|
|
|
16,773
|
|
|
(18,062)
|
|
Deferred
revenue
|
|
|
16,037
|
|
|
88,057
|
|
|
6,219
|
|
Net cash provided by
operating activities
|
|
|
43,964
|
|
|
12,930
|
|
|
60,939
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
|
Purchases of
investments
|
|
|
—
|
|
|
—
|
|
|
(155,825)
|
|
Proceeds from call /
maturity of investments
|
|
|
7,200
|
|
|
219,445
|
|
|
132,254
|
|
Purchases of property
and equipment
|
|
|
(17,098)
|
|
|
(13,385)
|
|
|
(10,521)
|
|
Purchases of intangible
assets
|
|
|
(37)
|
|
|
(235)
|
|
|
(41)
|
|
Proceeds of disposal
from property and equipment
|
|
|
87
|
|
|
12
|
|
|
10
|
|
Purchases of strategic
investments
|
|
|
(500)
|
|
|
(25,000)
|
|
|
(20,000)
|
|
Business acquisition,
net of cash acquired
|
|
|
—
|
|
|
(21,693)
|
|
|
—
|
|
Net cash used in
investing activities
|
|
|
(10,348)
|
|
|
159,144
|
|
|
(54,123)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from
equity offering
|
|
|
(71)
|
|
|
(101)
|
|
|
—
|
|
Proceeds from options
exercised
|
|
|
—
|
|
|
51,614
|
|
|
—
|
|
Income and payroll tax
payments for net-settled stock awards
|
|
|
(1,388)
|
|
|
(148,792)
|
|
|
(7,045)
|
|
Net cash used in
financing activities
|
|
|
(1,459)
|
|
|
(97,279)
|
|
|
(7,045)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
(157)
|
|
|
(155)
|
|
|
(392)
|
|
Net increase
(decrease) in cash and cash equivalents and restricted
cash
|
|
|
32,000
|
|
|
74,640
|
|
|
(621)
|
|
Cash and cash
equivalents and restricted cash, beginning of period
|
|
|
356,438
|
|
|
281,798
|
|
|
155,551
|
|
Cash and cash
equivalents and restricted cash, end of period
|
|
$
|
388,438
|
|
$
|
356,438
|
|
$
|
154,930
|
|
AXON
ENTERPRISE, INC.
SELECTED CASH FLOW
INFORMATION
(Unaudited)
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
31 MAR
2022
|
|
31 DEC
2021
|
|
31 MAR
2021
|
Net cash provided by
operating activities
|
|
$
|
43,964
|
|
$
|
12,930
|
|
$
|
60,939
|
Purchases of property
and equipment
|
|
|
(17,098)
|
|
|
(13,385)
|
|
|
(10,521)
|
Purchases of
intangible assets
|
|
|
(37)
|
|
|
(235)
|
|
|
(41)
|
Free cash flow, a
non-GAAP measure
|
|
$
|
26,829
|
|
$
|
(690)
|
|
$
|
50,377
|
Net campus
investment
|
|
|
5,217
|
|
|
3,391
|
|
|
908
|
Adjusted free cash
flow, a non-GAAP measure
|
|
$
|
32,046
|
|
$
|
2,701
|
|
$
|
51,285
|
AXON
ENTERPRISE, INC.
SUPPLEMENTAL
TABLES
(in
thousands)
|
|
|
|
|
|
|
|
|
|
31 MAR
2022
|
|
31 DEC 2021
|
|
|
(Unaudited)
|
|
|
|
Cash and cash
equivalents
|
|
$
|
386,367
|
|
$
|
356,332
|
Short-term
investments
|
|
|
20,024
|
|
|
14,510
|
Long-term
investments
|
|
|
17,731
|
|
|
31,232
|
Total cash and cash
equivalents and investments, net
|
|
$
|
424,122
|
|
$
|
402,074
|
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SOURCE Axon